Hanryu (US:HRYU)2024-09-30 19:00User 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]