Asset Entities Inc.

Company Overview

Business Model: Asset Entities Inc. is a technology company specializing in social media marketing and content delivery across platforms such as Discord, TikTok, X, Instagram, and YouTube. The company designs, develops, and manages servers for communities on Discord. Its services are categorized into three main areas: (1) Discord investment education and entertainment services, (2) social media and marketing services, and (3) "AE.360.DDM" brand services. Additionally, Asset Entities Inc. offers Ternary v2, a cloud-based subscription management and payment processing solution for Discord communities, which includes customer relations management tools and Stripe-verified payment processing. The Discord investment education and entertainment services primarily target Generation Z retail investors, creators, and influencers, with an expanding focus on real estate content for older generations.

Market Position: Asset Entities Inc. positions itself as a pioneering entity in delivering Wall Street trading education and entertainment to Generation Z through social media, particularly Discord. The company holds Discord domain names such as "STOCKS", "CRYPTOS", "NFTS", and "REALTY", believing these to be among the first of their kind. With approximately 206,899 combined members across its Discord servers as of December 31, 2024, and a social media presence exceeding 2 million followers and over 1 billion interactions by the same date, Asset Entities Inc. asserts a leading position in its service areas. Key competitive strengths include a "Superior Social Influencer Team" comprising young entrepreneurial executives and experienced professionals, a "First-Mover Advantage" with its "AE.360.DDM" service, "Best-in-Class Investment Education, Entertainment and Technology," and "Service Synergy" across its business categories.

Recent Strategic Developments:

• March 2024: Launched "The Lounge," an official YouTube channel featuring podcast interviews with celebrities, sports figures, and business professionals.
• March 2024: Entered into an agreement with Zendrop, an e-commerce leader, to provide services and solutions through Ternary v2, including CRM, Discord customer analytics, and payment processing.
• April 2024: Filed a Shelf Registration Statement on Form S-3, declared effective on April 26, 2024, authorizing potential offerings of up to $100,000,000 in aggregate securities, subject to public float limitations.
• May 2024: Completed the first closing of a Series A Preferred Stock financing, raising gross proceeds of $1.5 million from an institutional investor.
• June 2024: Acquired the assets of TommyBoyTV, LLC, a company specializing in Discord development, social media, online community management, marketing, and analytics, to expand its Discord community market share.
• July 2024: Completed the second closing of the Series A Preferred Stock financing, raising an additional $1.5 million, totaling $3.0 million from the institutional investor.
• September 2024: Commenced an "at the market offering" (ATM Financing) of Class B Common Stock, initially for up to $1,791,704, later increased to $5,489,399 by November 2024. As of March 31, 2025, 5,417,700 shares were sold, generating net proceeds of $4,830,648.
• October-November 2024: Secured contracts to design, develop, and manage Discord servers for Maxx Talent Awards, social media influencer Scott Mathison, Grammy Award-winning artist Macy Gray, and dog behavioralist Jas Leverette.
• November 2024: Acquired the assets of "TikTok Money Machine," a TikTok Shop space and its associated Discord community, which connects brands with content creators for sales commissions. Secured consulting agreements with TikTokers having an aggregate of approximately 280,000 Instagram and 4,700,000 TikTok followers.
• November 2024: Signed an agreement with Jeff Blue to acquire a 50% ownership interest in all film, TV, streaming, and media rights to his story, "One Step Closer: From Xero to #1: Becoming Linkin Park."
• December 2024: Approved as a TikTok Shop Partner, aiming to connect brands with creators for affiliate marketing.

Geographic Footprint: Asset Entities Inc. operates on a remote-first basis, with its principal executive offices located in Dallas, Texas. Its online service delivery model inherently provides a global reach, serving users across various social media platforms. The company's operations are subject to data privacy and security regulations in multiple jurisdictions, including U.S. federal and state laws (e.g., CAN-SPAM Act, TCPA, COPPA, CCPA, CPRA, and various state privacy acts), as well as international regulations such as the European Union's General Data Protection Regulation (GDPR) and the United Kingdom's Data Protection Act 2018 (UK GDPR).

Financial Performance

Revenue Analysis

Profitability Metrics:

• Operating Margin: -1010.9%
• Net Margin: -1009.3%

Investment in Growth:

• R&D Expenditure: $0.42 million (66.8% of revenue)
• Capital Expenditures: $0.40 million (primarily intangible assets)
• Strategic Investments:
  • Acquisition of TommyBoyTV, LLC assets: $0.20 million cash and 5,000 shares of Class B Common Stock (valued at $9,500).
  • Acquisition of TikTok Money Machine assets: $0.04 million cash.
  • Acquisition of 50% ownership in film/TV/streaming rights to "One Step Closer: From Xero to #1: Becoming Linkin Park": $0.16 million cash.

Capital Allocation Strategy

Shareholder Returns:

• Share Repurchases: $0 (2024); $0.18 million (2023) (all treasury stock from 2023 was cancelled in 2024).
• Dividend Payments: $0.05 million (2024) (related to Series A Preferred Stock); $0 (2023).
• Future Capital Return Commitments: The Series A Certificate of Designation prohibits the company from declaring or paying cash dividends on its capital stock, except as required for outstanding Series A Preferred Stock.

Balance Sheet Position:

• Cash and Equivalents: $2.66 million (2024)
• Total Debt: Not explicitly stated as a single line item; current liabilities include accounts payable and credit card liability ($0.43 million in 2024) and contract liabilities ($369 in 2024). No long-term debt is disclosed.
• Net Cash Position: $2.23 million (2024)

Cash Flow Generation:

• Operating Cash Flow: $(4.90) million (2024)
• Free Cash Flow: $(5.30) million (2024)

Operational Excellence

Production & Service Model: Asset Entities Inc. operates on a remote-first principle, focusing on content creation, social media marketing, and Discord server design, development, and management. For its Discord investment education and entertainment services, it offers premium content (live trading diaries, prerecorded videos, private group discussions) to paying subscribers, alongside non-premium video, live day trading, and chat sessions for all members. Content is managed and uploaded by the company. Social media and marketing services include white-label marketing, content creation, content management, and TikTok promotions/consulting, leveraging its "SiN" (Social Influencer Network) of independent contractors. The "AE.360.DDM" service provides a comprehensive suite for Discord server creation, encompassing design and development (from basic setups to advanced features, private channels, third-party integrations, and specialized bots) and ongoing management (moderation, community management, support, announcements, and a ChatGPT AI bot for customer service). Ternary v2 is a cloud-based SaaS platform for Discord communities, enabling monetization, user management, Stripe-verified payment processing, digital product sales, and automated user authentication and role management via a Discord bot.

Supply Chain Architecture: Key Suppliers & Partners:

• Social Media Platforms: Discord, TikTok, X, Instagram, YouTube (core platforms for content delivery and marketing).
• Payment Processing: Stripe (integrated with Ternary v2 for payment processing).
• E-commerce/Dropshipping: Zendrop (partner for services and solutions via Ternary v2).
• AI Technology: ChatGPT AI bot (integrated into AE.360.DDM for customer service).

Facility Network:

• Manufacturing: Not applicable, as the company primarily provides digital services.
• Research & Development: R&D costs are expensed as incurred, focusing on developing new processes, products, services, and applications, including enhancements to Ternary v2 and AI integration.
• Distribution: Primarily digital distribution through various online platforms.
• Headquarters: Leased office space at 100 Crescent Ct, 7th Floor, Dallas, TX 75201.

Operational Metrics:

• Total Discord Server Members: Approximately 206,899 (as of December 31, 2024).
• Paying Discord Subscribers: 1,302 (2024), 298 (2023).
• Social Media Followers: Over 2 million (as of December 31, 2024).
• Social Media Interactions: Over 1 billion (as of December 31, 2024).
• Total Employees: 9 full-time employees, 1 executive consultant, and 41 independent contractors (as of March 25, 2025).

Market Access & Customer Relationships

Go-to-Market Strategy: Asset Entities Inc. employs a multi-channel approach to customer acquisition, leveraging its strong social media presence and specialized services. Distribution Channels:

• Channel Partners: Utilizes its "SiN" (Social Influencer Network) of independent contractors for social media outreach to expand Discord server bases and drive traffic for both internal communities and client businesses. Approved as a TikTok Shop Partner to connect brands with creators for affiliate marketing.
• Digital Platforms: Engages in frequent social media campaigns across Discord, TikTok, X, Instagram, and YouTube, posting free videos and content to promote its Discord servers. Employs search engine optimization (SEO), Facebook Ads, Google Ads, and Google Analytics to acquire paying subscribers and customers for its "AE.360.DDM" service.
• Targeted Outreach: For its "AE.360.DDM" service, the company conducts targeted outreach to venture capitalists, social media influencers, digital technology brands, and other businesses.

Customer Portfolio: Enterprise Customers:

• Strategic Partnerships: Zendrop (e-commerce), Maxx Talent Awards (talent platform), Scott Mathison (social media influencer), Macy Gray (artist), Jas Leverette (dog behavioralist) for Discord server design, development, and management.
• Customer Concentration: Not explicitly disclosed.

Competitive Intelligence

Market Structure & Dynamics

Industry Characteristics: The social influencer and online media landscape is characterized by rapid expansion and evolution, particularly with Generation Z's deep immersion in platforms like TikTok, X, and Instagram. This trend has fostered opportunities for social influencers to achieve financial success. The market for financial education and entertainment, especially for young, digitally native investors, is growing due to limited formal personal finance education and the rise of accessible trading platforms and phenomena like "meme stocks." The global influencer marketing market has surpassed $13 billion. Discord, a community-based platform, has seen explosive growth, reaching over 259 million active monthly users as of March 2025, expanding beyond gaming to diverse interest groups and offering premium subscriptions without advertisements.

Competitive Positioning Matrix:

Direct Competitors

Primary Competitors:

• Xtrades Discord Server: Focuses on stocks and options trading communities with real traders and analysis; monthly fee of $38; approximately 110,000 members (March 2025).
• WallStreetBets Discord Server and Subreddit: Offers free advice on high-risk investing; approximately 484,305 Discord members and 18 million subreddit users (March 2025).
• Eagle Investors: Online investment education service with a Discord server (~156,000 members), free community, diverse channels, webinars, premium content ($67-$140/month for trading alerts), and paid courses/private sessions.
• @Fourtoeight (Wiseguyinvesting Discord server): Social influencer-owned server offering investment education resources with various payment plans ($25/week to $800/year); community size similar to Asset Entities Inc.
• @moneylinemark (StockVIP Discord server): Social influencer-owned server with approximately 254,000 members (March 2025); revenue model is 100% reliant on Discord memberships.

Emerging Competitive Threats: The technology industry is subject to rapid change, including evolving industry standards, frequent new product and service introductions, and the emergence of new industry standards and practices that could render existing offerings obsolete. The company faces risks from new entrants, disruptive technologies, and alternative solutions.

Competitive Response Strategy: Asset Entities Inc. aims to maintain its competitive advantage by continually evolving and upgrading the user experience, internally developing and marketing leading brands and businesses, and growing its community-based platforms to increase visibility and reach across social media. Key strategies include expanding its "SiN" social influencer network, leveraging Discord server community outreach through strategic pricing and cross-marketing, and expanding and synergizing its "AE.360.DDM" service.

Risk Assessment Framework

Strategic & Market Risks

Market Dynamics: The company faces risks from its limited operating history and the unproven nature of its business and market, leading to unpredictable future revenue and operating results. Dependence on social media platforms (Discord, TikTok, Instagram, YouTube, X) for revenue generation and marketing exposes the company to platform-specific terms, conditions, and potential bans (e.g., the U.S. ban on TikTok), which could severely impact its ability to market effectively. Risks associated with the blockchain, cryptocurrencies, and NFT industries, including price volatility and limited regulation, could lead to subscriber losses and reputational damage if users incur investment losses. There is also a risk that demand for the company's services may not develop as expected. Technology Disruption: The technology sector is characterized by rapid change, requiring continuous evolution and upgrades to user experience. Failure to anticipate or adequately respond to changes in technology, customer preferences, or emerging industry standards could adversely affect financial performance. Risks are inherent in the development of new products and services, including the possibility of market non-acceptance, restrictions, or superior/more cost-effective offerings from third parties.

Operational & Execution Risks

Supply Chain Vulnerabilities: The company's operations are highly dependent on the continued functionality and accessibility of third-party social media platforms. Any deterioration in relationships with these platforms or changes in their policies could harm the business. Capacity Constraints: Rapid growth could strain financial, management, and operating resources, potentially leading to disproportionate cost increases, revenue decline, or customer dissatisfaction. The company may face difficulties scaling and adapting its existing infrastructure to accommodate a larger customer base, technological advances, or evolving customer requirements, potentially incurring substantial costs or service interruptions. Other Operational Risks: The company may experience negative cash flow and incur significant losses, with no assurance of future profitability. Disruption to servers or software due to natural/man-made disasters, telecommunications failures, cyberattacks, or viruses could lead to customer loss, litigation, and increased costs. A failure or breach of security systems could disrupt business, lead to disclosure of confidential information, damage reputation, and increase costs.

Financial & Regulatory Risks

Market & Financial Risks: Current market conditions and recessionary pressures could impact business growth. The Class B Common Stock may experience volatility or decline, regardless of operating performance, and its small public float may amplify price fluctuations. The company's ability to use net operating loss carryforwards and other tax attributes may be limited due to "ownership change" rules. Regulatory & Compliance Risks: The company is subject to evolving laws and regulations governing internet businesses, including those related to privacy, defamation, advertising, and intellectual property. Specific regulations include the CAN-SPAM Act, TCPA, Credit Card Accountability Responsibility and Disclosure Act of 2009, Digital Millennium Copyright Act, and Communications Decency Act. International data privacy laws like GDPR and UK GDPR, and various U.S. state privacy laws (e.g., CCPA, CPRA, Texas, Oregon, Montana), impose stringent requirements and potential penalties. The company relies on the "publisher's exclusion" under the Investment Advisers Act of 1940, and failure to meet its requirements could necessitate costly registration or cessation of investment education services. Growing regulatory and compliance requirements for cybersecurity, data protection, and internal IT controls are costly and time-consuming. Legal Proceedings: The company is not currently aware of any material legal proceedings or claims that would have a material adverse effect on its business, financial condition, or operating results.

Geopolitical & External Risks

Geopolitical Exposure: Regulatory actions, such as the potential ban of TikTok in the United States, could significantly impact the company's ability to market and promote its services. Climate Change: Increased focus by governmental organizations on sustainability issues, including climate change, may result in new regulations, legislation, and customer/vendor requirements, potentially leading to additional costs or operational changes. While currently exempt as a smaller reporting company/emerging growth company, SEC climate disclosure rules will eventually require compliance, potentially incurring significant costs.

Innovation & Technology Leadership

Research & Development Focus: Asset Entities Inc.'s R&D efforts are focused on the continuous development of new processes, products, services, and applications. Core Technology Areas:

• Discord Server Development: Expertise in designing, developing, and managing Discord servers, including advanced features, private channels, and bot integrations.
• Subscription Management: Development of Ternary v2, a cloud-based platform for Discord community monetization, user management, and payment processing.
• AI Integration: Integration of ChatGPT AI bot as a customer service feature within its "AE.360.DDM" Discord servers. Innovation Pipeline: The company's business objectives include ongoing development of new processes, products, services, and applications, with a focus on enhancing its offerings and adapting to technological and market developments.

Intellectual Property Portfolio:

• Owned IP: Asset Entities Inc. holds common law rights to marks such as "Asset Entities Where Assets Are Created", "SiN", "Social Influencer Network", and "AE 360 DDM". It owns the internet domain name assetentities.com, trademarks "Ternary D" and "OptionsSwing", and domain names ternarydev.com and optionsswing.com. The company also owns various social media handles (@optionsswing on Instagram, Facebook, TikTok, YouTube, X; @TernaryDevelopments on Instagram; @TernaryDev on Facebook, TikTok, X), and the Ternary Developments and OptionsSwing Discord servers. Additionally, it owns social media accounts and payment accounts related to the Pure Profits Group Discord and TikTok Shop services.
• IP Litigation: Not explicitly mentioned.

Technology Partnerships: Asset Entities Inc. collaborates with technology providers such as Stripe for payment processing within Ternary v2 and integrates third-party AI solutions like ChatGPT into its Discord server management services.

Leadership & Governance

Executive Leadership Team

Leadership Continuity: The company's future performance is dependent on the continued services of its senior management and key employees. New employment and consulting agreements were entered into on March 27, 2025, with Arshia Sarkhani, Matthew Krueger, Kyle Fairbanks, Arman Sarkhani, and Michael Gaubert, extending their terms until April 1, 2027. These agreements include non-competition and non-solicitation provisions.

Board Composition: The board of directors consists of seven members, with four independent directors: Richard A. Burton, John A. Jack II, Scott K. McDonald, and David Reynolds.

• Audit Committee: Richard A. Burton (Chairman, "audit committee financial expert"), John A. Jack II, Scott K. McDonald.
• Compensation Committee: John A. Jack II (Chairman), Richard A. Burton, Scott K. McDonald.
• Nominating and Corporate Governance Committee: Scott K. McDonald (Chairman), John A. Jack II, Richard A. Burton.

Human Capital Strategy

Workforce Composition: As of March 25, 2025, Asset Entities Inc. has 9 full-time employees, 1 executive consultant, and 41 independent contractors. The workforce operates on a remote-first basis.

• Skill Mix: Independent contractors and employees fulfill roles such as Discord server moderators, analysts, server developers, customer service, sales, and marketing outreach. The executive team possesses diverse expertise in accounting, legal, technology, sales, and management.

Talent Management: The company's success relies on its ability to attract, retain, and motivate skilled and qualified personnel. Strategies include expanding its "SiN" social influencer network. Executive employment agreements include non-competition and non-solicitation clauses to aid retention. Employees are eligible for standard benefits plans.

Environmental & Social Impact

Environmental Commitments: Climate Strategy: Asset Entities Inc. is subject to new SEC rules requiring disclosure of climate-related risks and impacts. However, as a "smaller reporting company" and "emerging growth company," it is exempt from certain greenhouse gas emissions disclosure and related auditor assurance requirements until fiscal years beginning in 2027 and 2028, respectively. No specific emissions targets or carbon neutrality commitments are disclosed in the filing.

Social Impact Initiatives: The company's core mission includes bringing Wall Street trading education and entertainment to Generation Z, focusing on financial literacy education and entertainment programs.

Business Cyclicality & Seasonality

Demand Patterns: Asset Entities Inc. states that it does not experience significant seasonality in its sales cycle. Economic Sensitivity: The company acknowledges that current market conditions and recessionary pressures could impact its ability to grow its business.

Regulatory Environment & Compliance

Regulatory Framework: Asset Entities Inc. operates within a complex and evolving regulatory landscape governing internet businesses. Industry-Specific Regulations:

• Internet & E-commerce: Subject to laws concerning privacy, defamation, pricing, credit card fraud, advertising, taxation, content regulation, and intellectual property. Specific U.S. laws include the CAN-SPAM Act, Telephone Consumer Protection Act of 1991 (TCPA), Credit Card Accountability Responsibility and Disclosure Act of 2009, Digital Millennium Copyright Act, and Communications Decency Act.
• Data Privacy: Complies with U.S. federal laws like the Children’s Online Privacy Protection Act (COPPA) and various state-level comprehensive data privacy laws, including the California Consumer Privacy Act (CCPA), California Privacy Rights Act (CPRA), and similar laws in Texas, Oregon, Montana, Iowa, Delaware, Nebraska, New Hampshire, New Jersey, Minnesota, Tennessee, Maryland, Indiana, Kentucky, and Rhode Island. Internationally, the company is subject to the European Union's General Data Protection Regulation (GDPR) and the United Kingdom's Data Protection Act 2018 (UK GDPR).
• Investment Advisers Act of 1940: The company relies on the "publisher's exclusion" from the definition of an "investment adviser" under Section 202(a)(11)(D) of the Investment Advisers Act, aiming to avoid registration requirements.
• Public Company Requirements: As a public company, Asset Entities Inc. is subject to reporting requirements of the Exchange Act, Sarbanes-Oxley Act of 2002, and Nasdaq listing standards. As an "emerging growth company" and "smaller reporting company," it benefits from certain exemptions from disclosure and compliance requirements.

Legal Proceedings: Asset Entities Inc. is not currently aware of any material legal proceedings or claims that are expected to have a material adverse effect on its business, financial condition, or operating results.

Tax Strategy & Considerations

Tax Profile: Asset Entities Inc. has incurred net operating losses (NOLs) since its inception in 2020. NOLs generated since March 2022 can be carried forward indefinitely but are limited to offsetting 80% of annual taxable income. The company has not recognized any deferred tax assets or liabilities as of December 31, 2024, or December 31, 2023, due to a valuation allowance.

Insurance & Risk Transfer

Risk Management Framework: Asset Entities Inc. maintains cybersecurity insurance coverage to protect against potential losses from certain cybersecurity incidents. It also has standard Directors and Officers Liability Insurance policies. Insurance Coverage:

• Cybersecurity Insurance: Provides protection against potential losses arising from certain cybersecurity incidents.
• Directors and Officers Liability Insurance: Covers directors and executive officers against losses from claims made due to breach of duty or other wrongful acts.