Revenue Performance - For the nine months ended September 30, 2025, revenue was $1,867, generated from the FANING platform, marking a 100% increase compared to the previous period[182]. - For the three months ended September 30, 2025, revenue was $1,838, also generated from the FANING platform, reflecting a 100% increase compared to the previous period[186]. - The company expects to begin generating revenue from new sources, including merchandise sales and K-Food sales, starting in the fourth quarter of 2025[182]. - The platform's monetization strategy includes direct revenue from advertising, digital content, and commerce, as well as commissions on user-to-user transactions[215]. Net Loss and Financial Performance - The net loss for the nine months ended September 30, 2025, was $1,787,707, a decrease of approximately 15% from the net loss of $2,100,679 for the same period in 2024[184]. - The net loss for the three months ended September 30, 2025, was $542,977, representing an approximate 10% increase compared to the net loss of $491,708 for the same period in 2024[186]. - The company anticipates improved financial performance starting from the fourth quarter of 2025 due to the launch of the restructured FANING platform[193]. Expenses and Cost Management - General and administrative expenses for the nine months ended September 30, 2025, increased by 152% to $1,783,508 compared to $708,559 in 2024[182]. - Cost of revenue is expected to increase proportionately with the growth of the user base for the FANING platform[176]. - The company is currently in the process of raising additional operating capital following cost-saving measures implemented in 2024[191]. User Growth and Market Position - FANING platform had over 26.6 million registered users globally as of September 30, 2025, capitalizing on the global rise in K-Culture fandom exceeding 229 million fans in 119 countries[213]. - The company executed a 1-for-20 reverse stock split on January 27, 2025, reducing total issued shares from 52,808,589 to 2,640,402[190]. Assets and Liabilities - As of September 30, 2025, the company reported cash and cash equivalents of $36,915, an increase from $2,352 as of December 31, 2024[191]. - Total current assets increased to $120,071 from $2,987 as of December 31, 2024[191]. - Total current liabilities decreased to $631,216 from $668,339, representing a reduction of $37,123 due to the conversion of existing debt into equity[192]. - The company has an accumulated deficit of $39,689,008 as of September 30, 2025, compared to $37,901,301 as of December 31, 2024[190]. Capital Raising and Future Plans - The company is in the process of raising operating capital through a public offering to increase revenue and generate income from new business lines[185]. - The company plans to diversify revenue streams through user-to-user commissions and advertising agreements starting in the fourth quarter of 2025[175]. Market Risks and Accounting Standards - The company is exposed to market risks primarily due to fluctuations in foreign currency and credit, impacting its financial position[203]. - The company is currently evaluating the impact of new accounting standards issued by the FASB, which are not expected to have a material effect on its financial statements upon adoption[219]. Platform Update - The FANING platform was updated and relaunched in April 2025, with revenue generation beginning in May 2025[167]. - The company has no contractual obligations or off-balance sheet commitments as of September 30, 2025[199][201].

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2025 ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from __________ to __________ Commission File Number: 001-41763 Global Interactive Technologies, Inc. (Exact name of Registrant as specified in its charter) | Delaware ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2025 ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from __________ to __________ Commission File Number: 001-41763 Global Interactive Technologies, Inc (Exact name of Registrant as specified in its charter) | Delaware ...

PART I [Business](index=5&type=section&id=Item%201.%20Business) Global Interactive Technologies, Inc. operates the FANING platform, a social media ecosystem for Korean culture fans, which reached over 26.6 million users by year-end 2024 and plans U.S. expansion in 2025 following significant 2024 restructuring - The company changed its name from Hanryu Holdings, Inc. to Global Interactive Technologies, Inc. on December 5, 2024, and its Nasdaq ticker from HRYU to GITS[20](index=20&type=chunk) - The core business is the FANING platform, a social ecosystem for Korean culture fans, which succeeded the Fantoo platform and reached over **26.6 million users** by year-end 2024[19](index=19&type=chunk)[25](index=25&type=chunk)[32](index=32&type=chunk) FANING User Demographics (as of Dec 31, 2024) | Metric | Value | | :--- | :--- | | **Total Users** | > 26.6 million | | **Primary Age Group** | 20-39 years (over 80% of users) | | **Median Age** | 27 years old | | **Language Support** | Real-time translation for 17 languages | - The company plans to expand its marketing and services into the U.S. by establishing branches in the first half of 2025 and hiring approximately 20 developers to localize the FANING platform[71](index=71&type=chunk) - In 2024, the company restructured by divesting subsidiaries Hanryu Bank, FNS, and Marine Island, and acquiring Faning Korea, LLC, which is now its primary operating subsidiary[21](index=21&type=chunk)[22](index=22&type=chunk) [Risk Factors](index=18&type=section&id=Item%201A.%20Risk%20Factors) The company faces substantial risks including recurring net losses, going concern doubts, limited operating history, regulatory challenges, potential securities law exposure, and material weaknesses in internal controls Financial Performance and Position Risk | Metric | 2024 | 2023 | | :--- | :--- | :--- | | **Net Loss** | $(6.2) million | $(9.4) million | | **Accumulated Deficit** | $(37.9) million | $(38.9) million | - The company's independent auditor has included an explanatory paragraph in their report expressing substantial doubt about the company's ability to continue as a going concern due to recurring losses and a working capital deficiency[99](index=99&type=chunk) - The company is a holding company with no operations of its own, relying on its South Korean subsidiaries (like Faning Korea, LLC) for cash flow, making it subject to Korean regulations and potential restrictions on fund repatriation[105](index=105&type=chunk)[107](index=107&type=chunk) - The company faces risks related to complex and evolving data privacy laws, particularly Korea's Personal Information Protection Act (PIPA), which imposes strict consent and data breach notification requirements[133](index=133&type=chunk) - Potential securities law exposure exists from the previous issuance of Kingdom Coin (KDC), as it may be determined that the offering fell under U.S. jurisdiction without a proper exemption, which could lead to rescission rights or penalties[198](index=198&type=chunk)[200](index=200&type=chunk) - The company received and subsequently resolved several delinquency notices from Nasdaq in 2024 for failure to timely file periodic reports and for its stock price falling below the $1.00 minimum bid requirement[212](index=212&type=chunk)[214](index=214&type=chunk)[216](index=216&type=chunk) [Unresolved Staff Comments](index=45&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) The company reports no unresolved staff comments from the SEC - Not applicable[252](index=252&type=chunk) [Cybersecurity](index=45&type=section&id=Item%201C.%20Cybersecurity) The company manages cybersecurity risks through an information security program overseen by the Audit Committee, with no material incidents reported as of the filing date - The Board of Directors has delegated oversight of cybersecurity risks to the Audit Committee, which receives periodic reports from management[258](index=258&type=chunk)[259](index=259&type=chunk) - Management is responsible for the overall cybersecurity risk management program, supervising internal personnel and external consultants to prevent, detect, and remediate threats[260](index=260&type=chunk)[261](index=261&type=chunk) - As of the filing date, no cybersecurity incidents have materially and adversely affected the company's business, operations, or financial condition[257](index=257&type=chunk) [Properties](index=46&type=section&id=Item%202.%20Properties) The company utilizes approximately 19,200 square feet of office space at the Seoul Marina, which is provided free of charge - The Company uses approximately **19,200 square feet** of office space at the Seoul Marina free of charge[262](index=262&type=chunk) [Legal Proceedings](index=46&type=section&id=Item%203.%20Legal%20Proceedings) As of December 31, 2024, the company is not involved in any material pending legal proceedings, with prior matters related to divested subsidiaries - The Company is not subject to any material pending legal proceedings or claims as of December 31, 2024[263](index=263&type=chunk) [Mine Safety Disclosures](index=46&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This section is not applicable to the company - Not applicable[264](index=264&type=chunk) PART II [Market for Registrant's Ordinary Shares, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=47&type=section&id=Item%205.%20Market%20for%20Registrant's%20Ordinary%20Shares,%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) The company's Class A Common Stock trades on Nasdaq under 'GITS', underwent a 1-for-20 reverse stock split in January 2025, and has not paid cash dividends to its 59 record holders as of year-end 2024 - The company's stock is listed on The Nasdaq Capital Market under the symbol "GITS"[266](index=266&type=chunk) - A **1-for-20 reverse stock split** of Class A Common Stock was effected on January 27, 2025[266](index=266&type=chunk) - As of December 31, 2024, there were **59 holders of record** of the common stock[267](index=267&type=chunk) - The company has not paid any cash dividends and does not anticipate doing so in the near future[268](index=268&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=47&type=section&id=Item%207.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) In fiscal year 2024, the company reported zero revenue from continuing operations and a net loss of $(6.2) million, with severe liquidity constraints raising going concern doubts despite a 26.6 million user base and plans for 2025 monetization Consolidated Results of Operations (Years Ended Dec 31) | Metric | 2024 | 2023 | | :--- | :--- | :--- | | Sales (Continuing Operations) | $0 | $0 | | Loss from Operations | $(888,363) | $(2,005,925) | | Gain on disposal of subsidiary | $12,400,373 | $0 | | Bad-debt expense of other assets | $(16,179,823) | $0 | | Net Loss from continuing operations | $(4,783,651) | $(1,851,332) | | Net Loss | $(6,171,969) | $(9,407,635) | | Basic Net Loss Per Share | $(2.34) | $(3.68) | Key Balance Sheet Data (as of Dec 31) | Metric | 2024 | 2023 | | :--- | :--- | :--- | | Cash and Cash Equivalents | $2,352 | $69,688 | | Total Current Assets | $2,987 | $20,420,926 | | Total Current Liabilities | $668,339 | $7,476,491 | | Accumulated Deficit | $(37,901,301) | $(38,893,762) | - The company's financial condition, including a working capital deficiency and significant accumulated deficit, raises substantial doubt about its ability to continue as a going concern[274](index=274&type=chunk)[291](index=291&type=chunk) Key Performance Indicators (2024) | KPI | Value | | :--- | :--- | | **Average User Base** | ~26.6 million | | **Monthly Active Users (MAU) % of Base** | 2.35% - 3.47% | | **Average Revenue Per User (ARPU)** | $0 | | **User Acquisition Cost (UAC)** | $0.18 | [Quantitative and Qualitative Disclosures About Market Risk](index=54&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) As a smaller reporting company, the company is not required to provide this information - The company is a smaller reporting company and is not required to provide the information under this item[308](index=308&type=chunk) [Financial Statements and Supplementary Data](index=54&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section incorporates by reference the company's audited financial statements and supplementary data, which begin on page F-1 of the report - The required Financial Statements and Supplementary Data are incorporated by reference to the information beginning on Page F-1 of the Form 10-K[309](index=309&type=chunk) [Changes in and Disagreements with Accountants on Accounting and Financial Disclosure](index=54&type=section&id=Item%209.%20Changes%20in%20and%20Disagreements%20with%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure) The company reports no disagreements with its accountants on accounting and financial disclosure - None[310](index=310&type=chunk) [Controls and Procedures](index=54&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were ineffective as of December 31, 2024, due to material weaknesses in accounting resources and segregation of duties - Management concluded that as of December 31, 2024, the company's disclosure controls and procedures were ineffective[311](index=311&type=chunk) - Material weaknesses were identified due to inadequate accounting resources and a lack of segregation of duties, stemming from the small size of the accounting staff[312](index=312&type=chunk) - Management concluded that internal control over financial reporting was not effective as of December 31, 2024[315](index=315&type=chunk) PART III [Directors, Executive Officers and Corporate Governance](index=56&type=section&id=Item%2010.%20Directors,%20Executive%20Officers%20and%20Corporate%20Governance) The report details executive officers and directors, including the CEO change to Taehoon Kim in February 2024, and outlines the Board's structure, committees, and risk oversight responsibilities - On February 26, 2024, CEO Changhuyk Kang was terminated for cause and Taehoon Kim was appointed as Interim CEO[321](index=321&type=chunk) Executive Officers and Directors (as of Dec 31, 2024) | Name | Position | | :--- | :--- | | Taehoon Kim | Chief Executive Officer | | Juhyon Shin | Chief Financial Officer | | David Gregg | Chief Communications Officer | | John S. Morris | Director | | Amy Shi | Director | | Jay Hyong Woo | Director | | Aram Ahn | Director | | Larry Namer | Director | - The Board has an Audit Committee composed of three independent directors, with John S. Morris serving as the audit committee financial expert[337](index=337&type=chunk)[338](index=338&type=chunk) - The Board is responsible for risk oversight, including cybersecurity, which is managed through its committees and regular reports from senior management[341](index=341&type=chunk) [Executive Compensation](index=60&type=section&id=Item%2011.%20Executive%20Compensation) The company's Named Executive Officers, CEO Taehoon Kim and CFO Juhyon Shin, had accrued salaries in 2024, with no equity awards granted or outstanding, and non-employee directors received no compensation despite a retainer entitlement 2024 Named Executive Officer Compensation | Name and Principal Position | Year | Salary Received ($) | Salary Accrued ($) | | :--- | :--- | :--- | :--- | | Taehoon Kim, CEO | 2024 | 0 | 58,600 | | Juhyon Shin, CFO | 2024 | 7,368 | 44,000 | - There were no outstanding stock option awards or other equity-based awards held by any Named Executive Officers as of December 31, 2024[365](index=365&type=chunk) - The company's 2022 Omnibus Equity Incentive Plan has **1,500,000 shares** of common stock available for future issuance[366](index=366&type=chunk)[367](index=367&type=chunk) - Non-employee directors are entitled to a **$3,000 monthly retainer**, but no compensation was paid to them as of December 31, 2024[379](index=379&type=chunk) [Security Ownership of Certain Beneficial Owners and Management and Related Shareholder Matters](index=65&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Shareholder%20Matters) As of April 15, 2025, executive officers and directors collectively owned 3.85% of common stock, with Hangmuk Shin and Si Young Jang holding significant beneficial ownership Beneficial Ownership as of April 15, 2025 | Beneficial Owner | Percentage of Common Stock | | :--- | :--- | | Executive Officers and Directors as a Group (9 persons) | 3.85% | | Hangmuk Shin and related parties | 13.13% | | Si Young Jang | 5.49% | [Certain Relationships and Related Transactions, and Director Independence](index=66&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions,%20and%20Director%20Independence) In 2024, the company secured short-term loans from related parties, including President Jaeman Lee and largest shareholder Hangmuk Shin, primarily at a 4.6% annual interest rate, to fund operations Short-Term Loan Payables to Related Parties (as of Dec 31, 2024) | Related Party | Amount Owed | | :--- | :--- | | Jaeman Lee (President) | $255,286 | | Hangmuk Shin (Largest Shareholder) | $94,321 | | **Total** | **$349,607** | - The company entered into numerous short-term loan agreements with President Jaeman Lee and largest shareholder Hangmuk Shin throughout the second half of 2024, with most loans carrying a **4.6% annual interest rate**[388](index=388&type=chunk)[402](index=402&type=chunk) [Principal Accountant Fees and Services](index=68&type=section&id=Item%2014.%20Principal%20Accountant%20Fees%20and%20Services) One Stop Assurance PAC served as the independent auditor for 2023-2024, billing $189,000 in 2024, and was retained after the previous auditor was barred by the SEC Fees Billed by Principal Auditor (ONESTOP) | Fee Type | 2024 | 2023 | | :--- | :--- | :--- | | Audit fees | $180,000 | $230,000 | | Audit related fees | $9,000 | $11,500 | | **Total** | **$189,000** | **$241,500** | - The company retained ONESTOP for the fiscal year 2022 audit after the previous auditor, BF Borgers, PC, was barred from practicing before the SEC[418](index=418&type=chunk) PART IV [Exhibits and Financial Statement Schedules](index=70&type=section&id=Item%2015.%20Exhibits%20and%20Financial%20Statement%20Schedules) This section lists the financial statements, notes, and other exhibits filed as part of the Form 10-K report - This section provides an index of the financial statements and exhibits filed with the report, including corporate governance documents, employment agreements, and SEC certifications[423](index=423&type=chunk)[425](index=425&type=chunk) [Form 10-K Summary](index=70&type=section&id=Item%2016.%20Form%2010-K%20Summary) This section is not applicable to the company - Not applicable[426](index=426&type=chunk) Financial Statements and Supplementary Data [Report of Independent Registered Public Accounting Firm](index=71&type=section&id=Report%20of%20Independent%20Registered%20Public%20Accounting%20Firm) Onestop Assurance PAC issued an unqualified opinion on the financial statements but included a 'Going Concern' paragraph due to recurring losses and working capital deficiency - The auditor's report contains an explanatory paragraph expressing substantial doubt about the Company's ability to continue as a going concern due to recurring losses from operations and a working capital deficiency[429](index=429&type=chunk) [Consolidated Financial Statements](index=72&type=section&id=Consolidated%20Financial%20Statements) The consolidated financial statements show a significant decrease in total assets to $6.4 million, a net loss of $(6.2) million in 2024, and severe cash depletion to $3,760 at year-end Key Financial Statement Figures (Year-End) | Metric | 2024 | 2023 | | :--- | :--- | :--- | | **Total Assets** | $6,404,423 | $20,544,956 | | **Total Liabilities** | $668,339 | $7,476,491 | | **Total Stockholders' Equity** | $5,736,084 | $13,068,465 | | **Net Loss** | $(6,171,969) | $(9,407,635) | | **Cash and Equivalents (End of Year)** | $3,760 | $5,427,830 | [Notes to Consolidated Financial Statements](index=77&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) The notes detail accounting policies, including 'Going Concern' uncertainty, subsidiary divestitures, goodwill impairment, related-party loans, the history of the KDC digital asset, and the January 2025 reverse stock split - The company's financial statements are prepared on a going concern basis, but management acknowledges that recurring losses and a working capital deficit of **$(665,352)** as of Dec 31, 2024, raise substantial doubt about this assumption[455](index=455&type=chunk) - In 2024, the company divested its interests in Hanryu Bank Co. Ltd, FNS Co. Ltd, and Marin Island Co. Ltd. These entities are now classified as discontinued operations, resulting in a gain on disposal of **$12.4 million**[461](index=461&type=chunk)[599](index=599&type=chunk)[601](index=601&type=chunk) - The company acquired Faning Korea, LLC on December 4, 2024, recognizing goodwill of **$94,264**, which was subsequently fully impaired by December 31, 2024[520](index=520&type=chunk)[522](index=522&type=chunk) - On January 27, 2025, the company executed a **1-for-20 reverse stock split**. All share and per-share data in the financial statements have been retroactively adjusted to reflect this split[565](index=565&type=chunk)[566](index=566&type=chunk)

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Delaware 88-1368281 (State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification Number) 160, Yeouiseo-ro, Yeongdeungpo-gu, Seoul, Republic of Korea 07231 (Address of principal executive offices) (Zip Code) Title of each class Trading Symbol(s) Name of each exchange on which registered Common Stock, $0.001 par value per share HRYU The Nasdaq Stock Market LLC FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSU ...

User Growth and Market Potential - FANTOO platform has exceeded 27 million users since its launch in May 2021, primarily driven by the popularity of K-Culture[112] - The global purchasing power of K-Culture was estimated at $124.3 billion in 2020, indicating significant market potential[116] - The company expects to continue growing its user base while maintaining a high percentage of Monthly Active Users (MAUs) due to the ongoing popularity of K-Culture[116] Financial Performance - Revenue for Q1 2024 was $185, a decrease of $38 or 17% compared to $223 in Q1 2023[126] - For the three months ended March 31, 2024, the company reported a net loss of $1,047,071, compared to a net loss of $2,823,259 for the same period in 2023, reflecting a 62.9% improvement in losses year-over-year[135] - Cash used in operating activities for the three months ended March 31, 2024, was $402,054, significantly lower than $3,958,869 used in the same period of 2023, indicating improved cash flow management[139] Cost Management - Marketing and advertising expenses for Q1 2024 were $3,500, down 99% from $289,973 in Q1 2023, due to restructuring efforts[131] - General and administrative expenses decreased by $1,350,789 or 55% in Q1 2024 compared to Q1 2023, attributed to reduced consulting and labor costs[133] - Research and development expenses were $0 in Q1 2024, down from $71,732 in Q1 2023, reflecting strategic management decisions[132] Income and Cash Flow - Other income for Q1 2024 was $50,930, an increase of $67,732 or 403% compared to a loss of $16,802 in Q1 2023, mainly due to interest income[134] - The company generated net cash provided by financing activities of $432,835 for the three months ended March 31, 2024, compared to $3,630,331 for the same period in 2023, showing a decrease of 88.1%[142] - The company experienced a significant decrease in cash used in investing activities, with a net cash provided of $5,288,926 for the three months ended March 31, 2024, compared to cash used of $653,290 in the same period of 2023, representing a 909.58% change[141] Future Plans and Capital Needs - The company anticipates generating steady revenue from FANTOO operations and other subsidiaries by 2024[116] - The company aims to diversify revenue streams through direct sales, user-to-user commissions, and marketing services[115] - The company plans to raise additional capital to fund future operations, although there are no current agreements regarding the timing or amount of such financing[137] Foreign Currency Risk - The company is exposed to foreign currency risk, particularly with fluctuations in the Korean Won (KRW) against the USD, which could impact its financial results[149] - A hypothetical 10% adverse change in average exchange rates would have resulted in a decline in total net revenues of $72,197 and a change in net loss of $744,726 for the year ended December 31, 2023[151] - The company generates the majority of its revenue from customers within Korea, which may lead to volatility in financial performance due to reliance on non-KRW priced products and services[149] Accounting and Reporting - Recent accounting standards updates, such as ASU 2023-09 and ASU 2023-07, will improve transparency in income tax disclosures and segment reporting, effective in 2025 and 2024 respectively[155][156] - The company is expected to report as an "emerging growth company," allowing it to take advantage of certain reporting exemptions for up to five years[161] - The company is currently evaluating the impacts of new accounting standards on its financial statements and disclosures[155] Legal and Credit Risks - The company assesses contingencies related to potential legal proceedings, which may result in material losses if deemed probable[160] - The company has significant credit risk exposure related to cash and cash equivalents placed with financial institutions, which are evaluated based on credit quality[153]

Financial Reporting and Internal Controls - The company has experienced ineffective internal control over financial reporting, leading to the restatement of financial statements[383] - The company has been advised that its internal controls over financial reporting are currently ineffective, as evidenced by the restatement of financial statements[411] - The company has identified weaknesses in its internal controls over financial reporting, which could lead to material misstatements and loss of investor confidence[468] - The company is not required to evaluate the effectiveness of its internal control over financial reporting until after filing its Annual Report on Form 10-K for the years ending December 31, 2023, and December 31, 2022[527] Financial Performance and Projections - The company incurred a net loss of approximately $(9.4) million for the year ended December 31, 2023, compared to a net loss of $(6.4) million for the year ended December 31, 2022[402] - As of December 31, 2023, the company had an accumulated deficit of approximately $(38.9) million, up from $(29.6) million as of December 31, 2022[402] - The company anticipates continued operating losses and cash usage through the foreseeable future, necessitating significant additional capital[402] - The company believes its current cash and net proceeds from debt issuances will be sufficient to fund working capital requirements beyond the next 12 months, assuming successful equity financing[402] Regulatory and Compliance Risks - The company is subject to various foreign and domestic laws regarding user privacy and data protection, which could increase compliance costs and affect business operations[385] - The introduction of new regulations, such as the GDPR and CCPA, may impose additional operational requirements and increase costs for the company[386] - Compliance with laws governing anti-money laundering and electronic funds transfer may require significant management resources and could lead to penalties if violated[387] - The company is exposed to potential fines and penalties under the U.S. Foreign Corrupt Practices Act, which could adversely affect its business[388] - The company faces risks related to government regulations that could restrict access to its services in certain countries, impacting user growth and engagement[385] - The company is subject to scrutiny by the Korean Fair Trade Commission regarding its business relationships and transactions with subsidiaries, which may lead to administrative fines if violations are found[417] - The company is committed to compliance with anti-corruption laws, but violations could result in substantial fines and damage to its reputation[445] - Regulatory changes regarding digital assets could negatively impact the company's operations and prospects[454] - The company is subject to various regulations in South Korea, which may affect its operations and the issuance of digital assets[455] Currency and Economic Risks - A significant portion of the company's revenue and costs are denominated in Korean Won, which may adversely affect liquidity and cash flows due to currency fluctuations[389] - Fluctuations in the exchange rate between the Korean Won and the U.S. dollar could materially impact the company's operational costs and financial results[389] - The company is exposed to fluctuations in exchange rates due to foreign subsidiaries' accounts maintained in local currencies[524] - The company is at risk of adverse effects from developments in the Korean economy, which could impact customer spending and revenue growth[392] Operational Challenges and Investments - The company expects to continue investing heavily in product development and operations, particularly focusing on the FANTOO platform to increase its user base[402] - The company relies on interoperability with mobile operating systems like Android and iOS, which it does not control, potentially affecting user growth and engagement[421] - The company’s products depend on complex software and hardware systems, and any errors or vulnerabilities could lead to negative user experiences and financial losses[423] - The company anticipates ongoing efforts related to privacy and security will identify misuse of user data, which could impact user trust and engagement[422] - The company has faced challenges related to copyright and patent infringement, which could result in sanctions or penalties affecting its operations in Korea[392] - Rapid technological changes in the social media market require the company to continuously adapt, with risks associated with the adoption of new technologies[450] Stock and Market Risks - The company is facing potential delisting from Nasdaq due to failure to comply with continued listing requirements, including timely filing of reports and maintaining a minimum bid price of $1.00 per share[460] - The company received a delinquency compliance alert from Nasdaq for not timely filing its Quarterly Report for Q1 2024 and Annual Report for 2023, with a deadline to submit a compliance plan by June 17, 2024[460] - If the compliance plan is accepted, the company may have an extension of up to 180 days to regain compliance, until October 14, 2024[460] - The trading price of the company's common stock may fluctuate significantly, influenced by market conditions and factors beyond its control[461] - Future issuances of debt or preferred stock may adversely affect the returns for common stockholders[463] - The company has not paid cash dividends in the past and does not expect to do so in the foreseeable future, limiting returns to stock price appreciation[463] - The company does not expect to pay dividends in the foreseeable future, relying instead on stock price appreciation for returns[469] Cybersecurity and Information Security - The company may face significant costs related to cybersecurity incidents, which could adversely affect its business and reputation[460] - The company has an information security program in place to manage cybersecurity risks, but there are no assurances of its effectiveness[471] Growth Potential - The company has significant potential for user base growth due to the popularity of K-Culture, which generated approximately $21.5 billion in global revenue in 2019[444] - The company may experience intellectual property infringement claims, which could divert resources and incur legal costs[457] - The company expects significant legal, accounting, and compliance costs as it transitions to a public company, particularly after losing its emerging growth company status[465] - The company may take advantage of scaled disclosures available to smaller reporting companies, which could affect the attractiveness of its common stock to investors[468]

About Hanryu Holdings, Inc. Hanryu Holdings, Inc., is the creator of the engaging and innovative social media platform, "FANTOO". FANTOO connects users around the world that share similar interests by providing distinctive service offerings, technologies, applications, and websites. Through FANTOO, we provide a global multi-media platform for our users to interact with other like-minded users, to share their appreciation of various types of entertainment and cultures, create their own content, enjoy other u ...

User Growth and Market Opportunity - FANTOO platform has exceeded 27 million users since its launch in May 2021, primarily driven by the popularity of K-Culture[227]. - The global purchasing power of K-Culture was estimated at $124.3 billion in 2020, indicating a substantial market opportunity for FANTOO[234]. Financial Performance - Revenue for the nine months ended September 30, 2023, was $1,347,975, representing a 49% increase from $904,040 in the same period of 2022[247]. - Net loss for the nine months ended September 30, 2023, was $9,163,826, an increase of 82% from a net loss of $5,038,818 in 2022[247]. - The gross profit margin decreased to 38% for the nine months ended September 30, 2023, down from 49% in 2022[248]. - Other income decreased by $66,231 or 27% to $176,906 for the nine months ended September 30, 2023, primarily due to a prior gain on extinguishment of debt recognized in 2022[255]. Expenses and Cost Management - Cost of revenue increased by 80% to $832,915 for the nine months ended September 30, 2023, compared to $463,586 in 2022[249]. - Marketing and advertising expenses surged by 533% to $1,914,786 for the nine months ended September 30, 2023, up from $302,688 in 2022[247]. - General and administrative expenses increased by $2,479,654 or 48% to $7,646,654 for the nine months ended September 30, 2023, mainly due to higher commissions and consulting costs[253]. - Research and development expenses rose to $277,624 for the nine months ended September 30, 2023, compared to $231,697 in 2022, driven by increased personnel costs related to the upgraded FANTOO app[252]. Cash Flow and Financing - Net cash used in operating activities was $11,444,953 for the nine months ended September 30, 2023, compared to $3,421,125 in 2022, reflecting a net loss of $9,163,826[265]. - Net cash provided by financing activities was $23,566,502 for the nine months ended September 30, 2023, significantly up from $1,715,561 in 2022, driven by increased proceeds from issuing common stock and exercising warrants[267]. - The company completed its IPO in July 2023, raising gross proceeds of $8,174,860 from the sale of 877,328 shares at $10.00 per share, with net proceeds of approximately $6.8 million after expenses[260]. Debt and Obligations - As of September 30, 2023, the company had outstanding convertible debt of approximately $3,346,222, a decrease from $3,550,856 at the end of 2022[268]. - The company has fixed contractual obligations totaling $165,345, with $32,682 due within one year and $132,663 due in 1-3 years[271]. Currency Risk and Financial Reporting - The company is exposed to foreign currency risk, particularly with the Korean Won (KRW), which affects its financial position due to fluctuations in exchange rates[276][278]. - A hypothetical 10% adverse change in average exchange rates would have resulted in a decline in total net revenues of $122,543 and a change in net loss of $833,075 for the nine months ended September 30, 2023[278]. - The company expects to become a public reporting company under the Exchange Act and will report as an "emerging growth company" for up to five years, unless the market value of its common stock held by non-affiliates exceeds $700 million[290][292]. - The company will benefit from relaxed ongoing public reporting requirements, which are less rigorous than those for non-emerging growth companies, potentially resulting in less information for stockholders[291]. Future Plans and Revenue Streams - The company anticipates generating revenue from user-to-user transactions, which is expected to become a significant revenue stream in the long term[232]. - FANTOO plans to roll out a premium ERP service option for clients, which will be available for a subscription fee[239]. - The entertainment agency business, FANTOO Entertainment, is expected to start generating revenue by 2024 through advertisement agreements and performance-based contracts[240]. Accounting and Estimates - The preparation of financial statements requires management to make estimates and assumptions that could differ from actual results, impacting reported amounts of assets and liabilities[282]. - The company plans to evaluate the impact of recent accounting pronouncements, including ASU 2016-13 and ASU 2020-06, on its consolidated financial statements in future periods[284][286].

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2023 ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from __________ to __________ Commission File Number: Hanryu Holdings, Inc | (Exact name of Registrant as specified in its charter) | | --- | | Delaware | 7370 | 88-13 ...