Hanryu (US:HRYU)2025-04-29 23:21PART I Business 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 GITS20 - 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 2024192532 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 platform71 - 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 subsidiary2122 Risk Factors 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 deficiency99 - 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 repatriation105107 - 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 requirements133 - 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 penalties198200 - 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 requirement212214216 Unresolved Staff Comments The company reports no unresolved staff comments from the SEC - Not applicable252 Cybersecurity 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 management258259 - Management is responsible for the overall cybersecurity risk management program, supervising internal personnel and external consultants to prevent, detect, and remediate threats260261 - As of the filing date, no cybersecurity incidents have materially and adversely affected the company's business, operations, or financial condition257 Properties 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 charge262 Legal Proceedings 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, 2024263 Mine Safety Disclosures This section is not applicable to the company - Not applicable264 PART II Market for Registrant's Ordinary Shares, Related Stockholder Matters and Issuer Purchases of Equity Securities 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 - A 1-for-20 reverse stock split of Class A Common Stock was effected on January 27, 2025266 - As of December 31, 2024, there were 59 holders of record of the common stock267 - The company has not paid any cash dividends and does not anticipate doing so in the near future268 Management's Discussion and Analysis of Financial Condition and Results of Operations 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 concern274291 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 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 item308 Financial Statements and Supplementary Data 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-K309 Changes in and Disagreements with Accountants on Accounting and Financial Disclosure The company reports no disagreements with its accountants on accounting and financial disclosure - None310 Controls and Procedures 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 ineffective311 - Material weaknesses were identified due to inadequate accounting resources and a lack of segregation of duties, stemming from the small size of the accounting staff312 - Management concluded that internal control over financial reporting was not effective as of December 31, 2024315 PART III Directors, Executive Officers and Corporate Governance 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 CEO321 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 expert337338 - The Board is responsible for risk oversight, including cybersecurity, which is managed through its committees and regular reports from senior management341 Executive Compensation 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, 2024365 - The company's 2022 Omnibus Equity Incentive Plan has 1,500,000 shares of common stock available for future issuance366367 - Non-employee directors are entitled to a $3,000 monthly retainer, but no compensation was paid to them as of December 31, 2024379 Security Ownership of Certain Beneficial Owners and Management and Related Shareholder Matters 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 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 rate388402 Principal Accountant Fees and Services 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 SEC418 PART IV Exhibits and Financial Statement Schedules 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 certifications423425 Form 10-K Summary This section is not applicable to the company - Not applicable426 Financial Statements and Supplementary Data Report of Independent Registered Public Accounting Firm 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 deficiency429 Consolidated Financial Statements 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 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 assumption455 - 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 million461599601 - The company acquired Faning Korea, LLC on December 4, 2024, recognizing goodwill of $94,264, which was subsequently fully impaired by December 31, 2024520522 - 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 split565566