SEC Form 10-Q filed by Global Interactive Technologies Inc.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Mark One)
For the quarterly period ended
For the transition period from __________ to __________
Commission File Number:
(Exact name of Registrant as specified in its charter)
| 7370 | ||||
| (State or other jurisdiction of incorporation or organization) | (Primary Standard Industrial Classification Code Number) | (I.R.S. Employer Identification Number) |
(Address, including zip code, and telephone number, including area code, of Registrant’s principal executive offices)
N/A
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
value per share | The |
Indicate by check mark whether
the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Indicate by check mark whether the registrant
has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405
of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer | ☐ | Accelerated filer | ☐ |
| ☒ | Smaller reporting company | ||
| Emerging growth company |
If an emerging growth company, indicate by check
mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting
standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as
defined in Rule 12b-2 of the Exchange Act). Yes ☐ No
On January 27, 2025, the Company effected a 1-for-20
reverse stock split of its common stock. As a result, the number of issued shares was proportionally reduced, and as of March 31, 2025,
a total of
However, the charter amendment to formalize the par value change is scheduled to be approved at the shareholders’ meeting to be held during 2025. Accordingly, references to par value outside the consolidated financial statements reflect the current legal par value of $0.001.
TABLE OF CONTENTS
i
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, that are based on our management’s beliefs and assumptions and on information currently available to management, and which statements involve substantial risk and uncertainties. All statements contained in this Quarterly Report on Form 10-Q other than statements of historical fact, including statements regarding our future operating results and financial position, our business strategy and plans, market growth and trends, and objectives for future operations are forward-looking statements. Forward- looking statements generally relate to future events or our future financial or operating performance. In some cases, you can identify forward- looking statements because they contain words such as “may,” “will,” “should,” “expects,” “plans,” “anticipates,” “could,” “intends,” “target,” “projects,” “contemplates,” “believes,” “estimates,” “predicts,” “potential,” or “continue” or the negative of these words or other similar terms or expressions that concern our expectations, strategy, plans or intentions.
These risks and uncertainties include, among other things, the risk that we may not be able to successfully implement our growth strategy due to the following reasons;
| ● | overall strength and stability of general economic conditions and of the social media platform and content creation industry in the United States and globally; |
| ● | our ability to continue as a going concern; | |
| ● | the accuracy of our estimates regarding expenses, future revenue, capital requirements, and needs for additional financing; |
| ● | changes in consumer demand for, and acceptance of, our services, including our platform, as well as social media platforms in general; |
| ● | changes in the competitive environment, including adoption of technologies, services and products that compete with our own; |
| ● | our expectations regarding our future operating and financial performance; |
| ● | our ability to effectively execute our business plan and continue to expand internationally; |
| ● | our ability to recruit, retain, and motivate skilled personnel, including key members of senior management; |
| ● | changes in the price of equipment, network infrastructure, hosting and maintenance; |
| ● | uncertainties around the successful improvement and modification of our existing applications and development of new products and services, which may require significant expenditures and time; |
| ● | changes in laws or regulations governing our business and operations; |
| ● | our ability to maintain adequate liquidity and financing sources and an appropriate level of debt on terms favorable to us; |
| ● | our ability to effectively market our services; |
| ● | costs and risks associated with litigation brought against us; |
| ● | our ability to obtain and protect our existing intellectual property protections, including trademarks and copyrights; |
| ● | changes in accounting principles, or their application or interpretation, and our ability to make estimates and the assumptions underlying the estimates, which could have an effect on earnings; |
| ● | our ability to maintain the listing of our shares on the Nasdaq Capital Market or any other exchange; and |
| ● | other risks described from time to time in periodic and current reports that we file with the SEC. |
You should not rely upon forward-looking statements as predictions of future events. We have based the forward-looking statements contained in this Quarterly Report on Form 10-Q primarily on our current expectations and projections about future events and trends that we believe may affect our business, financial condition, results of operations, and prospects. The outcome of the events described in these forward-looking statements is subject to risks, uncertainties, and other factors described in the section titled “Risk Factors” and found on Form 10-K/A filed for the year ended December 31, 2024. We undertake no obligation to update any forward-looking statements after the date of this Quarterly Report on Form 10-Q or to conform such statements to actual results or revised expectations, except as required by law.
ii
PART I—FINANCIAL INFORMATION
Item 1. Financial Statements.
GLOBAL INTERACTIVE TECHNOLOGIES, INC. AND
ITS SUBSIDIARIES
Condensed Consolidated Balance Sheets
March 31, 2025 and December 31, 2024
(Unaudited)
| March 31, 2025 | December 31, 2024 | |||||||
| ASSETS | ||||||||
| CURRENT ASSETS: | ||||||||
| Cash and Cash Equivalents | $ | $ | ||||||
| Short-term loans receivable, net | ||||||||
| Non-trade receivables | ||||||||
| Total current assets | ||||||||
| PROPERTY PLANT AND EQUIPMENT, NET | ||||||||
| INTANGIBLE ASSETS, NET | ||||||||
| OPERATING LEASE RIGHT-OF-USE ASSET | ||||||||
| Total Assets | $ | $ | ||||||
| LIABILITIES AND STOCKHOLDER’S DEFICIT | ||||||||
| CURRENT LIABILITIES: | ||||||||
| Short-term loans payable | $ | $ | ||||||
| Short-term loans payable from related parties | ||||||||
| Non-trade accounts payable | ||||||||
| Accrued expenses and other current liabilities | ||||||||
| Total current liabilities | ||||||||
| Total Liabilities | ||||||||
| Commitments and contingencies (Note 13) | ||||||||
| STOCKHOLDER’SDEFICIT: | ||||||||
| Common Stock, $ | ||||||||
| Authorized | ||||||||
| Additional paid-in capital | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Accumulated other comprehensive loss | ( | ) | ( | ) | ||||
| Total Stockholders’ Equity | ||||||||
| Total Liabilities and Stockholders’ Equity | $ | $ | ||||||
On January 27, 2025, the Company executed a 1-for-20 reverse stock split, reducing the total issued shares from 52,808,589 to 2,640,402, and adjusted the par value from $0.001 to $0.02 in the consolidated financial statements. However, the charter amendment to formalize the par value change is scheduled to be approved at the shareholders’ meeting to be held during 2025. Accordingly, references to par value outside the consolidated financial statements reflect the current legal par value of $0.001.
The accompanying footnotes are an integral part of these unaudited consolidated financial statements
F-1
GLOBAL INTERACTIVE TECHNOLOGIES, INC. AND ITS SUBSIDIARIES
Condensed Consolidated Statements of Operations
For the Three Months Ended March 31, 2025 and 2024
(Unaudited)
| March 31, 2025 | March 31, 2024 | |||||||
| Sales | $ | $ | ||||||
| Cost of Revenue | ||||||||
| Gross profit | ||||||||
| Operating cost and expenses | ( | ) | ( | ) | ||||
| Loss from operations | ( | ) | ( | ) | ||||
| OTHER INCOME (EXPENSE): | ||||||||
| Loss on disposal of tangible assets | ( | ) | ||||||
| Interest income (expense), net | ( | ) | ||||||
| Gain on foreign currency transactions | ||||||||
| Other expense, net | ( | ) | ||||||
| Net other(expense)/ income | ( | ) | ( | ) | ||||
| Net Loss from continuing operations before taxes | ( | ) | ( | ) | ||||
| Income tax expense | ||||||||
| Net loss from continuing operations | ( | ) | ( | ) | ||||
| Discontinued operations: | ||||||||
| Loss from discontinued operations | ( | ) | ||||||
| Income tax benefit | ||||||||
| Loss from discontinued operation | ( | ) | ||||||
| Net Loss | ( | ) | ( | ) | ||||
| Basic net loss per share: | ||||||||
| Loss from continuing operations | ( | ) | ( | ) | ||||
| Loss from discontinued operations | ( | ) | ||||||
| Total basic net loss per share | ( | ) | ( | ) | ||||
| Diluted net loss per share | ||||||||
| Loss from continuing operations | ( | ) | ( | ) | ||||
| Loss from discontinued operations | ( | ) | ||||||
| Total diluted net loss per share | ( | ) | ( | ) | ||||
| Weighted average number of common shares outstanding: | ||||||||
| Basic and Diluted | ||||||||
The accompanying footnotes are an integral part of these unaudited consolidated financial statements
F-2
GLOBAL INTERACTIVE TECHNOLOGIES, INC. AND
ITS SUBSIDIARIES
Condensed Consolidated Statements of Changes in Stockholders’ Equity
For the Three Months Ended March 31, 2025 and 2024
(Unaudited)
| Common Stock | Additional Paid-in and Other | Accumulated | Accumulated other Comprehensive | Total Stockholder’s Equity | ||||||||||||||||||||
| Shares | Amount | Capital | Deficit | Gain (Loss) | (Deficit) | |||||||||||||||||||
| Balance at December 31, 2023 | $ | $ | $ | ( | ) | $ | $ | |||||||||||||||||
| Currency translation adjustment | — | $ | ( | ) | $ | ( | ) | |||||||||||||||||
| Net loss | — | $ | ( | ) | $ | ( | ) | |||||||||||||||||
| Balance at March 31, 2024 | $ | $ | $ | ( | ) | $ | ( | ) | $ | |||||||||||||||
| Balance at December 31, 2024 | $ | $ | $ | ( | ) | $ | ( | ) | $ | |||||||||||||||
| Issuance of common stock upon debt conversion at $ | $ | $ | $ | |||||||||||||||||||||
| Currency translation adjustment | — | $ | $ | |||||||||||||||||||||
| Net loss | — | $ | ( | ) | $ | ( | ) | |||||||||||||||||
| Balance at March 31, 2025 | $ | $ | $ | ( | ) | $ | ( | ) | $ | |||||||||||||||
On January 27, 2025, the Company executed a 1-for-20 reverse stock split, reducing the total issued shares from 52,808,589 to 2,640,402, and adjusted the par value from $0.001 to $0.02 in the consolidated financial statements. However, the charter amendment to formalize the par value change is scheduled to be approved at the shareholders’ meeting to be held during 2025. Accordingly, references to par value outside the consolidated financial statements reflect the current legal par value of $0.001.
The accompanying footnotes are an integral part of these unaudited consolidated financial statements
F-3
GLOBAL INTERACTIVE TECHNOLOGIES, INC. AND
ITS SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
For the Three Months Ended March 31, 2025 and 2024
(Unaudited)
| March 31, 2025 | March 31, 2024 | |||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
| Net loss from continuing operations | $ | ( | ) | $ | ( | ) | ||
| Depreciation | ||||||||
| Loss on disposal of tangible assets | ||||||||
| Amortization of right-of-use asset | ||||||||
| Amortization of intangible assets | ||||||||
| Non-trade receivable | ( | ) | ( | ) | ||||
| Prepaid expenses and other current assets | ( | ) | ( | ) | ||||
| Non-trade payable | ( | ) | ||||||
| Accrued expenses and other current liabilities | ||||||||
| Net cash used in operating activities of continuing operations | ( | ) | ( | ) | ||||
| CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||
| Receipt from collection of short-term loan receivable | ||||||||
| Proceeds from the sale of property, plant, and equipment | ||||||||
| Net cash (used in) provided by investing activities of continuing operations | ||||||||
| CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||
| Proceeds from short-term loan payable | ||||||||
| Proceeds from short-term loan payable from related parties | ||||||||
| Repayment of short-term loan payable from related parties | ( | ) | ||||||
| Net cash provided by financing activities of continuing operations | ||||||||
| Net change in cash – continued operations | ( | ) | ||||||
| Cash from discontinued operations: | ||||||||
| Net cash used in operating activities of discontinued operations | ( | ) | ||||||
| Net cash used in investing activities of discontinued operations | ( | ) | ||||||
| Net cash used in financing activities of discontinued operations | ||||||||
| Net change in cash – discontinued operations | ( | ) | ||||||
| Cash beginning of the year- continued operations | ||||||||
| Cash beginning of the year - discontinued operations | ||||||||
| Beginning cash | ||||||||
| Cash end of the year – continued operations | ||||||||
| Cash end of the year - discontinued operations | ||||||||
| Ending cash | ||||||||
| NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS | ( | ) | ||||||
| EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS | ( | ) | ( | ) | ||||
| CASH AND CASH EQUIVALENTS AT BEGINNING OF THE PERIOD | ||||||||
| CASH AND CASH EQUIVALENTS AT END OF THE PERIOD | $ | $ | ||||||
| SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: | ||||||||
| Cash receipt (paid) for interest – all operations | ( | ) | ||||||
| Less Cash receipt for interest - discontinued operations | ||||||||
| Cash receipt (paid) for interest – continued operations | $ | ( | ) | $ | ||||
| Cash receipt (paid) during the period for interest | $ | ( | ) | $ | ||||
| Supplemental disclosure of non-cash investing and financing activities: | ||||||||
| Offsetting borrowings by converting short-term loans into | ||||||||
| Total | $ | $ | ||||||
The accompanying footnotes are an integral part of these unaudited consolidated financial statements
F-4
GLOBAL INTERACTIVE TECHNOLOGIES, INC. AND
ITS SUBSIDIARIES
Condensed Consolidated Statements of Comprehensive Income
For the Three Months Ended March 31, 2025 and 2024
(Unaudited)
| March 31, 2025 | March 31, 2024 | |||||||
| NET LOSS | $ | ( | ) | $ | ( | ) | ||
| Other comprehensive income (loss): | ||||||||
| Change in foreign currency translation adjustment | ( | ) | ||||||
| COMPREHENSIVE LOSS | $ | ( | ) | $ | ( | ) | ||
The accompanying footnotes are an integral part of these unaudited consolidated financial statements
F-5
GLOBAL INTERACTIVE TECHNOLOGIES, INC. AND
SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
NOTE 1 — NATURE OF OPERATIONS AND BASIS OF PRESENTATION
Business
Global Interactive Technologies, Inc. is a corporation incorporated
in the State of Delaware (together with its subsidiaries, collectively, “GITS”, the “Company”, “we”,
“us”, or “our”), and in 2024, we acquired
Corporate History
Since the inception of Global Interactive Technologies, Inc in 2018, we have accomplished a number of key objectives, as follows:
| Date | Event/Milestone | |
| October 18, 2018 | HBC is incorporated under the laws of the ROK with the idea of creating an all-in-one product to capture the growing global momentum and popularity of K-Culture. | |
| October 29, 2020 | HBC establishes FNS Co., Ltd (“FNS”). and begins the initial stages of designing and implementing a platform that can create a fandom networking system. | |
| March 11, 2021 | HBC establishes Hanryu Times Co., Ltd (“Hanryu Times”). Hanryu Times begins operations as HBC’s media outlet, reporting on and providing up-to-date K-Culture news within the FANTOO platform, across a number of languages, including English, Japanese, Chinese (simplified/traditional), Indonesian, Spanish, Russian, and Portuguese. | |
| March 31, 2021 | HBC consummates an agreement and plan of merger (the “Merger Agreement”) with RnDeep, Co. Ltd, a Korean corporation (“RnDeep”), pursuant to which RnDeep merged with and into HBC, with HBC continuing as the surviving corporation (the “RnDeep Acquisition”). As consideration for the RnDeep Acquisition, HBC ratably issued a total
As a result of the RnDeep Acquisition, HBC acquired the underlying technologies that the Company plans on utilizing in the future development of new functions and integrations within the FANTOO platform. Once the FANTOO platform is ready to integrate the technology acquired, this technology will support new functions and integrations including, without limitation, the Company’s enterprise resource planning solution, and its artificial intelligence (“AI”), which the Company plans on using to power many of FANTOO’s upcoming features such as speech synthesis, curated content delivery, deepfake detection and blocking, and nudity detection and blocking. | |
| May 17, 2021 | The FANTOO platform is launched and made available to the public. | |
| June 30, 2021 | HBC enters into an agreement to acquire all the issued and outstanding common shares of Marine Island (the “Marine Island Acquisition”), which owns the right to use and occupy |
F-6
GLOBAL INTERACTIVE TECHNOLOGIES, INC. AND
SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
NOTE 1 — NATURE OF OPERATIONS AND BASIS OF PRESENTATION (cont.)
| August 30, 2021 | HBC establishes Fantoo Entertainment Co.,Ltd (“Fantoo Entertainment”). Fantoo Entertainment provides a variety of content to the Company’s FANTOO platform, which contributes to the spread of the Korean Wave by promoting new entertainers and artists. | |
| October 3, 2021 | HBC consummates the Marine Island Acquisition, making it the owner of | |
| October 3, 2021 | HBC consummates a strategic acquisition of
HBC’s investment into K-Commerce was a strategic acquisition in order to integrate K-Commerce’s retail platform, “SelloveLive” into the FANTOO ecosystem as the FANTOO Fanshop. When launched as the FANTOO Fanshop, K-Commerce’s platform will offer combined services of shopping and live broadcasting, allowing users to easily live-stream travel and share local attractions, local festivals, cultures, and news from around the world.
Prior to HBC’s acquisition of its shares in K-Commerce, K-Commerce
was | |
| October 20, 2021 | Hanryu Holdings is incorporated in the State of Delaware. | |
| February 25, 2022 through May 10, 2022 | Hanryu Holdings, HBC, and the shareholders of HBC (the “HBC Shareholders”) enter into a share exchange agreement (the “Share Exchange Agreement”), pursuant to which the HBC Shareholders agreed to assign, transfer, and deliver, free and clear of all liens,
Concurrently with entering into the Share Exchange Agreement, the Company, HBC, and the holders (the “HBC Warrantholders”) of all outstanding warrants to purchase Common Shares (“HBC Warrants”) enter into a warrant exchange agreement, pursuant to which the HBC Warrantholders agreed to assign, transfer, and delivery, free and clear of any liens,
The Warrants and Common Shares of HBC transferred to the Company in the Share Exchange and the Warrant Exchange constituted |
F-7
GLOBAL INTERACTIVE TECHNOLOGIES, INC. AND
SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
NOTE 1 — NATURE OF OPERATIONS AND BASIS OF PRESENTATION (cont.)
| June 16, 2022 | Hanryu Holdings, HBC, the HBC Shareholders, and the HBC Warrantholders consummate the Share Exchange and Warrant Exchange concurrently, pursuant to which HBC became a wholly owned subsidiary of the Company, and the HBC Stockholders and HBC Warrantholders, collectively, acquired a controlling interest in the Company. | |
| June 22, 2022 | The Company divests itself of all Kingdom Coin (“KDC”) holdings and terminates all crypto-currency-related activity, including, without limitation, the operation of the MainNet (FandomChain) and the Kingdom Wallet, pursuant to a Business Transfer Agreement (the “Divestiture Agreement”) between HBC and an unaffiliated and unrelated third party, Kingdom Coin Holdings, a Cayman Islands Foundation Company (the “KDC Foundation”) (the “KDC Divestiture”), to substantially reduce its involvement with blockchain technologies. Pursuant to the Divestiture Agreement, as of June 22, 2022, the Company no longer owns any KDC, and no longer conducts or controls the operations, issuances, or sales of KDC. In connection with the KDC Divestiture, the Company revised its procedures regarding FP and no longer allows, nor has the technology to allow, for the transfer of FP outside of the FANTOO platform or the exchange of FP and KDC | |
| August 1, 2023 | The shares of the Company are listed on that Nasdaq Capital Market. | |
| December 28, 2023 | HBC sold owned whole shares of Hanryu Times, Fantoo Entertainment, and K-Commerce, so the business from the three companies became the discontinued operations. | |
| November 5, 2024 | HBC sold its | |
| December 4, 2024 | We acquired | |
| December 28, 2024 | We sold |
F-8
GLOBAL INTERACTIVE TECHNOLOGIES, INC. AND
SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
NOTE 1 — NATURE OF OPERATIONS AND BASIS OF PRESENTATION (cont.)
Going Concern
As of March 31, 2025, the Company had an accumulated
deficit of $
These uncertainties raise substantial doubt about the Company’s ability to continue as a going concern beyond the issuance date of these financial statements. The accompanying financial statements have been prepared assuming the Company will continue as a going concern. These financial statements do not include any adjustments that might result from the Company’s potential inability to continue as a going concern, including potential effects on the recoverability and classification of assets or the amounts and classification of liabilities.
The Company carried out updates to diversify revenue streams within its primary income source, the FANING platform, over several months and launched the newly revamped FANING platform in April 2025. The revamped FANING platform has been restructured with a user-centric approach and is designed to focus on achieving profitability. In addition, through its subsidiary, Faning Korea, LLC, the Company plans to pursue K-Food products and entertainment business ventures. Furthermore, to secure additional working capital, the Company intends to proceed with a capital increase and borrowings. However, there can be no assurance as to the outcome of these plans or that future financing efforts will generate sufficient capital to sustain the Company’s operations.
As of March 31, 2025, the Company had an accumulated
deficit of $38,467,982 and a working capital deficiency of $(719,575). In addition, the Company incurred an operating loss of $
F-9
GLOBAL INTERACTIVE TECHNOLOGIES, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
NOTE 2 — SIGNIFICANT ACCOUNTING POLICIES
A summary of the significant accounting policies followed by the Company in the preparation of the accompanying consolidated financial statements follows:
Principles of Consolidation
The Company’s consolidated financial statements include Global Interactive Technologies and its wholly owned subsidiary Faning Korea, LLC, which was acquired on December 4, 2024. Additionally, all significant intercompany transactions and balances have been eliminated in consolidation.
Changes in the consolidated group’s interest in a subsidiary that do not result in a loss of control are accounted for as equity transactions.
On November 5, 2024, Hanryu Bank Co. Ltd (“HBC”) sold all of its equity interests in FNS Co. Ltd and Marin Island Co. Ltd. Furthermore, on December 28, 2024, Global Interactive Technologies (“the Company”) sold all of its equity interest in Hanryu Bank Co. Ltd (“HBC”). As a result, these subsidiaries will be excluded from consolidation starting from the date of the equity sales.
Goodwill
Goodwill represents the excess of the purchase
price over the fair value of the identifiable net assets acquired in a business combination. Goodwill is not amortized but is tested for
impairment at least annually, or more frequently if events or changes in circumstances indicate that the carrying value may not be recoverable.
The Company performs its annual impairment assessment on goodwill as of December 31 of each fiscal year. As of December 31, 2024, the
Company performed an impairment assessment and fully impaired goodwill in the amount of $
Intangible Assets
Intangible assets acquired separately are recorded
at cost, and those acquired in a business combination are recognized at fair value as of the acquisition date. The Company’s intangible
assets primarily consist of trademarks, customer relationships, and software, which are amortized on a straight-line basis over their
estimated useful life of
F-10
GLOBAL INTERACTIVE TECHNOLOGIES, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
NOTE 2 — SIGNIFICANT ACCOUNTING POLICIES (cont.)
Foreign Currency
The Company’s functional currency for all operations is the KRW. The
Company’s accounting records are maintained in KRW, and translated into U.S. Dollars at year-end for the purposes of presentation.
During the translation process, the year-end closing exchange rate is used for the valuation of all assets and liabilities, historical
exchange rate is used to value stockholder’s equity, and the average exchange rate for the year is used for the calculation of the
consolidated financial statements. The net impact of the translation into the U.S. Dollar is included in the accumulated other comprehensive
income (loss) of the Company’s consolidated balance sheet as of March 31, 2025 and December 31, 2024. During the periods ended
March 31, 2025, there was a fluctuation in the exchange rates ranging from KRW
Use of Estimates
The preparation of the Company’s consolidated financial statements and related disclosures in conformity with U.S. Generally Accepted Accounting Principles (“US GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and disclosures of contingent liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Management evaluates its estimates on an ongoing basis. Although estimates are based on the Company’s historical experience, knowledge of current events and actions it may undertake in the future, actual results may materially differ from these estimates and assumptions.
Cash and Cash Equivalents
The Company considers all highly liquid investments with maturities of three months or less at the date of purchase to be cash equivalents. The Company maintains its cash in bank deposit accounts which, at times, may exceed the federal insurance limit, and the balance of deposit accounts of the Company exceed the federal insurance limit as of March 31, 2025.
F-11
GLOBAL INTERACTIVE TECHNOLOGIES, INC. AND
SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
NOTE 2 — SIGNIFICANT ACCOUNTING POLICIES (cont.)
Accounts Receivable
Accounts receivables are recorded at the invoiced
amount and do not bear interest. Amounts collected on trade accounts receivable are included in net cash provided by operating activities
in the consolidated statements of cash flows. The Company maintains an Allowance for credit losses for estimated losses inherent in its
accounts receivable portfolio. In establishing the required allowance, management considers historical losses adjusted to take into account
current market conditions and customers’ financial condition in dispute, and the current receivables aging and current payment patterns.
The Company reviews its Allowance for credit losses quarterly. Past-due balances over 90 days and over a specified amount are reviewed
individually for collectability. Account balances are written off against the allowance after all means of collection have been exhausted
and the potential for recovery is considered remote. The Company recorded the allowance of $
Non-Trade Receivables
Non-trade receivables are recorded at the invoiced
amount and do not bear interest. Amounts collected on non-trade receivables are included in net cash provided by operating activities
in the consolidated statements of cash flows. The Company maintains an Allowance for credit losses for estimated losses inherent in its
non-trade receivables portfolio. In establishing the required allowance, management considers historical losses adjusted to take into
account current market conditions and customers’ financial condition in dispute, and the current receivables aging and current payment
patterns. The Company reviews its Allowance for credit losses quarterly. Past-due balances over 90 days and over a specified amount
are reviewed individually for collectability. Account balances are written off against the allowance after all means of collection have
been exhausted and the potential for recovery is considered remote. The Company has allowance for credit losses as of March 31, 2025,
and has set an allowance for credit losses of $
Credit Losses
The Company maintains current receivable amounts with most of its customers and vendors. The Company regularly monitors and assesses its
risk of not collecting amounts owed by them. This evaluation is based upon an analysis of current and past due amounts, along with relevant
history and facts particular to the customer. The Company records its allowance for credit losses based on the results of this analysis.
The analysis requires the Company to make significant estimates and as such, changes in facts and circumstances could result in material
changes in the allowance for credit losses. The Company considers as past due any receivable balance not collected within its contractual
terms.
The Company wrote off $
Revenue Recognition
The Company anticipates generating revenues from (i) FANING platform through advertising, direct sales, and user to user commissions, and (ii) other businesses. Revenue billed or collected in advance will be recorded as deferred revenue until the event occurs or until applicable performance obligations are satisfied.
Revenue is recognized when the Company transfers promised goods or services to customers in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods and services. In this regard, revenue is recognized when: (i) the parties to the contract have approved the contract (in writing, orally, or in accordance with other customary business practices) and are committed to perform their respective obligations; (ii) the entity can identify each party’s rights regarding the goods or services to be transferred; (iii) the entity can identify the payment terms for the goods or services to be transferred; (iv) the contract has commercial substance (that is, the risk, timing, or amount of the entity’s future cash flows is expected to change as a result of the contract); and (v) it is probable that the entity will collect substantially all of the consideration to which it will be entitled in exchange for the goods or services that will be transferred to the customer.
Transaction prices are based on the amount of consideration to which we expect to be entitled in exchange for transferring promised goods or services to a customer, excluding amounts collected on behalf of third parties, if any. We consider the explicit terms of the revenue contract, which are typically written and executed by the parties, our customary business practices, the nature, timing, and the amount of consideration promised by a customer in connection with determining the transaction price for our revenue arrangements. Refunds and sales returns historically have not been material.
F-12
GLOBAL INTERACTIVE TECHNOLOGIES, INC. AND
SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
NOTE 2 — SIGNIFICANT ACCOUNTING POLICIES (cont.)
For the Periods ended March 31, 2025 and March
31, 2024, the Company recognized product sales revenue amounting to $
Revenue is recognized when control of the product passes to the customer, typically at the date of delivery of the merchandise to the customer, or the date a service is provided and is recognized in an amount that reflects the expected consideration to be received in exchange for such goods or services. As such, customer orders are recorded as unearned revenue prior to delivery of products or services ordered. If the Company ships high volumes of packages through multiple carriers, the Company will use estimates to determine which shipments are to be delivered and, therefore, recognized as revenue at the end of the period. Delivery date estimates are based on average shipping transit times, which are calculated using the following factors: (i) the type of shipping carrier (as carriers have different in-transit times); (ii) the fulfilment source; (iii) the delivery destination; and (iv) actual transit time experience, which shows that delivery date is typically one to eight business days from the date of shipment. The Company reviews and updates our estimates on a quarterly basis based on our actual transit time experience. However, actual shipping times may differ from our estimates.
Generally, the Company requires authorization from credit cards or other payment vendors whose services the Company offers to customers or verification of receipt of payment, before the Company ships products to purchasers. The Company generally receives payments from our customers before our payments to our suppliers are due. The Company does not recognize assets associated with costs to obtain or fulfill a contract with a customer.
Shipping and handling is considered a fulfillment activity, as it takes place prior to the customer obtaining control of the merchandise, and fees charged to customers are included in net revenue upon completion of our performance obligations. The Company presents revenue net of sales taxes, discounts, and expected refunds.
Merchandise sales contracts include terms that could cause variability in the transaction price for items such as discounts, credits, or sales returns. Accordingly, the transaction price for product sales includes estimates of variable consideration to the extent it is probable that a significant reversal of revenue recognized will not occur. At the time of sale, the Company estimates a sales return liability for the variable consideration based on historical experience, which is recorded within “Accrued Liabilities” in the consolidated balance sheet. The Company records an allowance for returns based on current period revenues and historical returns experience. The Company analyzes actual historical returns, current economic trends and changes in order volume, and acceptance of our products when evaluating the adequacy of the sales returns allowance in any accounting period.
The Company evaluates the criteria outlined in the Financial Accounting
Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 606-10-55, Principal
versus Agent Considerations, in determining whether it is appropriate to record the gross amount of merchandise sales and related
costs or the net amount earned as commissions. When the Company is the principal in a transaction and controls the specific good or service
before it is transferred to the customer, revenue is recorded gross; otherwise, revenue is recorded on a net basis. Currently, the Company
records all advertising revenue as a net basis, and other revenues are recorded as a gross basis, and the revenues as a gross basis for
the periods ended March 31, 2025 and March 31, 2024 are $
F-13
GLOBAL INTERACTIVE TECHNOLOGIES, INC. AND
SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
NOTE 2 — SIGNIFICANT ACCOUNTING POLICIES (cont.)
Cost of Revenue
Cost of revenue is recognized at the time the products or services are delivered to the customers. Cost of revenue includes all direct labor, material, shipping and handling cost and other direct costs such as travel, postage, telecommunication, vehicle charge, printing, and training, and allocated indirect costs related to revenue such as supplies, utilities, office equipment rental, and computers.
Property Plant and Equipment
Property plant and equipment are carried at cost
(see Note 5). Depreciation expense is provided over the estimated useful lives of the assets using the straight line method for vehicles
and the declining balance method for fixtures and equipment.
| Classification | Estimated Useful Life in Years | |||
| Vehicles | ||||
| Fixtures | ||||
| Equipment | ||||
Maintenance and repairs are charged to expense as incurred, while any additions or improvements are capitalized.
The Company evaluates property and equipment for impairment when facts and circumstances indicate that the carrying values of such assets may not be recoverable. When evaluating for impairment, the Company first compare the carrying value of the asset to the asset’s estimated future undiscounted cash flows. If the estimated undiscounted future cash flows are less than the carrying value of the asset, the Company determines if there is an impairment loss by comparing the carrying value of the asset to the asset’s estimated fair value and recognizes an impairment charge when the asset’s carrying value exceeds its estimated fair value. The fair value of the asset is estimated using a discounted cash flow model based on forecasted future revenues and operating costs, using internal projections. There were no significant property and equipment asset impairment charges recorded during the year ended March 31, 2025, and the year ended December 31, 2024.
Impairment of Long-Lived Assets
The Company assesses the recoverability of long-lived assets whenever events or changes in circumstances indicate that their carrying value may not be recoverable. If the cost basis of a long-lived asset is greater than the projected future undiscounted net cash flows from such asset, an impairment loss is recognized. Impairment losses are calculated as the difference between the cost basis of an asset and its estimated fair value. There were no significant long-lived assets impairment charges recorded during the year ended March 31, 2025 and the year ended March 31, 2024.
F-14
GLOBAL INTERACTIVE TECHNOLOGIES, INC. AND
SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
NOTE 2 — SIGNIFICANT ACCOUNTING POLICIES (cont.)
Concentrations of Credit Risk
Cash and cash equivalents are financial instruments that potentially subject the Company to concentrations of credit risk. The Company may maintain deposits in financial institutions in excess of government insured limits. The Company believes that it is not exposed to significant credit risk as its deposits are held at financial institutions that management believes to be of high credit quality and the Company has not experienced any losses on these deposits. The Company is also potentially subject to concentrations of credit risk in its accounts receivable and loans. Credit risk with respect to receivables is limited due to the number of companies comprising the Company’s customer base. Credit risk with respect to loans is limited since they are made principally related to the collaborative activities between the Company and loan holders. Since the Company is directly affected by the financial condition of its customers and loan holders, management carefully watch if any significant credit risks exist, and they will make actions to remove or mitigate such risks if there are any. As of March 31, 2025 and December 31, 2024, there were no outstanding accounts receivable balances. The Company believes that the credit risk related to accounts receivable is manageable and controllable as of March 31, 2025 and December 31, 2024. Generally, the Company does not require collateral or other securities to support its accounts receivable and loans.
Fair Value of Financial Instruments
The fair value of Company’s financial instruments, consisting of cash and cash equivalents, accounts receivable, accounts payable, accrued liabilities, debt receivables, debt payables approximate their recorded amounts due to their relatively short settlement terms.
Fair Value Measurements
The Company applies a three-level valuation hierarchy for fair value measurements. The categorization of assets and liabilities within the valuation hierarchy is based on the lowest level of input that is significant to the measurement of fair value.
| Level 1 | Inputs to the valuation methodology utilize unadjusted quoted market prices in active markets for identical assets and liabilities. | |
| Level 2 | Inputs to the valuation methodology are other observable inputs, including quoted market prices for similar assets and liabilities, quoted prices for identical and similar assets and liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data. | |
| Level 3 | Inputs to the valuation methodology are unobservable inputs based on management’s best estimate of the inputs that market participants would use in pricing the asset or liability at the measurement date, including assumptions about risk. |
A change to the level of an asset or liability within the fair value hierarchy is determined at the end of a reporting period.
Earning (Loss) Per Share
Basic earning (loss) per share is computed by dividing the income or loss by the weighted-average number of outstanding shares of Common Stock for the applicable period. Diluted earning (loss) per share is computed by dividing the income or loss by the weighted-average number of outstanding shares of Common Stock for the applicable period, including the dilutive effect of Common Stock equivalents. Potentially dilutive Common Stock equivalents primarily consist of warrants issued in connection with financings. For purposes of computing both basic and diluted earning (loss) per share, income or loss shall exclude the income or loss attributable to the non-controlling interest. The Company calculates net loss per share in accordance with FASB ASC Topic 260, Earnings Per Share. Basic net loss per share amounts have been computed by dividing net loss excluded loss attributable to the non-controlling interest by the weighted-average number of common shares outstanding during the period. For the Periods ended March 31, 2025 and 2024, the Company reported net losses and, accordingly, potential common shares were not included since such inclusion would have been anti-dilutive. As a result, our basic and diluted net loss per share are the same because the Company generated a net loss in all periods presented.
F-15
GLOBAL INTERACTIVE TECHNOLOGIES, INC. AND
SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
NOTE 2 — SIGNIFICANT ACCOUNTING POLICIES (cont.)
Income Taxes
Deferred income tax assets and liabilities are determined based on differences between the financial statement reporting and tax basis of assets and liabilities and are measured using the enacted tax rates and laws in effect when the differences are expected to reverse. The measurement of deferred income tax assets is reduced, if necessary, by a valuation allowance for any tax benefits which are not expected to be realized. The effect on deferred income tax assets and liabilities of a change in tax rates is recognized in the period that such tax rate changes are enacted. We have determined that all of our deferred tax benefits are not likely to be realized due to our historical and expected future taxable losses. Accordingly, we have maintained a full valuation allowance.
The Company applies the provisions of FASB ASC Topic 740-10, Uncertainty in Income Taxes. The Company has evaluated our tax positions, and there are none as of March 31, 2025 and December 31, 2024.
Income taxes on the Company’s taxable income from operating activities are subject to various tax laws and determinations of the authority in the ROK. Regarding taxes payable in the ROK, if a certain portion of taxable income is not used for investments or for increases in wages or dividends, in accordance with the Tax System for Recirculation of Corporate Income, the Company is liable to pay additional income tax calculated based on Korean tax law.
The Company assesses uncertainty over a tax treatment. When the Company concludes it is not probable that the taxation authority will accept an uncertain tax treatment, the Company will reflect the effect of uncertainty for each uncertain tax treatment by using either of the following methods, depending on which method the Company expects to better predict the resolution of the uncertainty;
| ● | The most likely amount: The single most likely amount in a range of possible outcomes. |
| ● | The expected value: The sum of the probability-weighted amounts in a range of possible outcomes. |
Lease
Under ASC 842, the determination of whether an arrangement is a lease is made at the lease’s inception and a contract is (or contains) a lease if it conveys the right to control the use of an identified asset for a period of time in exchange for consideration. Control is defined under the standard as having both the right to obtain substantially all of the economic benefits from use of the asset and the right to direct the use of the asset. Management only reassesses its determination if the terms and conditions of the contract are changed. Operating leases are included in operating lease right-of-use (“ROU”) assets, other current liabilities, and operating lease liabilities in our balance sheets. Finance leases are included in property and equipment, other current liabilities, and other long-term liabilities in our balance sheets.
ROU assets represent our right to use an underlying asset for the lease term, and lease liabilities represent our obligation to make lease payments. Operating lease ROU assets and liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term. The Company uses the implicit rate when it is readily determinable. Since most of the Company’s leases do not provide an implicit rate, to determine the present value of lease payments, management uses the Company’s incremental borrowing rate based on the information available at lease commencement. Operating lease ROU assets also includes any lease payments made and excludes any lease incentives. Lease expense for lease payments is recognized on a straight-line basis over the lease term. Leases with an initial term of 12 months or less are not recorded on the balance sheet.
F-16
GLOBAL INTERACTIVE TECHNOLOGIES, INC. AND
SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
NOTE 2 — SIGNIFICANT ACCOUNTING POLICIES (cont.)
Recently Issued Accounting Standards
In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. This update enhances the transparency of income tax disclosures by requiring detailed information on the effective tax rate reconciliation and income taxes paid by jurisdiction. The amendments are effective for annual periods beginning after December 15, 2024, with early adoption permitted.
In March 2024, the FASB issued ASU 2024-03, Income Statement—Reporting Comprehensive Income (Subtopic 220-40): Expense Disaggregation Disclosures. This update requires entities to disclose more detailed information about the nature of the expenses within certain income statement captions (such as cost of sales, SG&A, etc.). The standard is effective for fiscal years beginning after December 15, 2024, and interim periods within fiscal years beginning after December 15, 2025. Early adoption is permitted.
The Company is currently evaluating the impact of these new standards and does not expect them to have a material effect on its financial statements upon adoption.
NOTE 3 — SHORT-TERM LOAN RECEIVABLES
The following table summarizes information with
regard to short-term loan receivables outstanding as of March 31, 2025 and December 31, 2024, and the interest income from short-term
loan receivables is $
| Interest Rate | March 31, 2025 | December 31, 2024 | ||||||||||
| LA PRIMERA CAPITAL INVESTMENTS | % | $ | $ | |||||||||
| AMERIDGE CORPORATION | % | |||||||||||
| HANRYU BANK CO.LTD | % | |||||||||||
| FNS CO.LTD | % | |||||||||||
| Due to exchange rate fluctuations | ||||||||||||
| Sub Total | ||||||||||||
| (-)Allowance for credit losses | ( | ) | ( | ) | ||||||||
| Total short-term loans | $ | $ | ||||||||||
| * | For the fiscal year ended December 31, 2024, the Company wrote
off short-term loan receivables in the amount of $ |
| * | Allowance for credit losses related to short-term loan receivables denominated in foreign currencies was recognized. The bad debt expense presented in the statement of operations was translated using the average exchange rate, while the allowance balance in the balance sheet was translated using the closing exchange rate. The difference between these amounts arises from exchange rate fluctuations and does not represent an actual change in the amount of credit loss or additional provision. |
F-17
GLOBAL INTERACTIVE TECHNOLOGIES,
INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
NOTE 4 — PROPERTY PLANT AND EQUIPMENT
Property plant and equipment consist of the following:
| March 31, 2025 | December 31, 2024 | |||||||
| Fixtures | $ | $ | ||||||
| Less accumulated depreciation | ( | ) | ( | ) | ||||
| Property plant and equipment, net | $ | $ | ||||||
Total depreciation expense for the three months
ended March 31, 2025 and 2024 are $
NOTE 5 — SOFTWARE
The Company acquired the software through two
transactions: (1) an asset transfer agreement with its former subsidiary, Hanryu Bank Co., Ltd., from which all equity interest was sold
in December 2024, and (2) the transfer of the Faning application. The acquisition cost of $
| March 31, 2025 | December 31, 2024 | |||||||
| Acquisition cost | $ | $ | ||||||
| Less Accumulated amortization | ( | ) | ) | |||||
| Due to exchange rate fluctuations | ||||||||
| Net book value | $ | $ | ||||||
The Company regularly evaluates the recoverability of its software assets. As of March 31, 2025, and December 31, 2024, based on the recoverability analysis, impairment of the software assets was deemed necessary.
The accumulated amortization and amortization expense related to the software are reported in foreign currency and have been affected by exchange rate fluctuations. The accumulated amortization is reported using the closing exchange rate, while the amortization expense is calculated using the average exchange rate. As a result, differences arising from exchange rate fluctuations occurred. These differences do not reflect an actual change in the value of the asset or additional amortization expense, but rather reflect the impact of exchange rate fluctuations.
F-18
GLOBAL INTERACTIVE TECHNOLOGIES, INC. AND
SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
NOTE 6 — LEASE
The Company uses approximately
At the time of initial acquisition from SMC in July 2021, the Company used the following assumptions:
| ● | Annual lease cost: |
| ● |
| ● | Assumed annual rent increase: - |
| ● | Interest rate: |
| ● |
| ● | Exchange rate: |
Based on the assumptions outlined, the Company
calculated the present value of 10 years of free rent to be $
As the Company initially allocated $
In December 2024, the Company sold its entire
equity interest in Hanryu Bank Co., Ltd. (“HBC”), a subsidiary that held the rent-free rights to the Seoul Marina building.
However, through an asset transfer agreement between the Company and HBC, the Company acquired the rent-free rights to the Seoul Marina
building. The transfer amount was based on the net book value of the ROU asset as of the contract date and was offset against the Company’s
outstanding loan receivable. As of March 31, 2025 and December 31, 2024, the carrying amounts of the ROU asset were $
NOTE 7 — SHORT-TERM LOAN PAYABLES
The following table summarizes information with regard to short-term loan payables outstanding as of March 31, 2025 and December 31, 2024.
| Interest Rate | March 31, 2025 | December 31, 2024 | ||||||||||
| Mijung Oh | % | |||||||||||
| Changhyuk Kang | % | |||||||||||
| PIXELARC, LLC | % | |||||||||||
| Total short-term loan payables | $ | $ | ||||||||||
The Company recognized interest expense of $
As of March 31, 2025, the balance of short-term borrowings includes
amounts borrowed in Korean Won, which have been converted into U.S. dollars using the exchange rate as of March 31, 2025 (e.g.,
F-19
GLOBAL INTERACTIVE TECHNOLOGIES, INC. AND
SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
NOTE 8 — SHORT-TERM LOAN PAYABLES FROM RELATED PARTIES
The following table summarizes information regarding short-term loan payables from related parties as of March 31, 2025 and December 31, 2024. Taehoon Lee is the Company’s CEO, Jaman Lee is the Company’s President, and Hangmuk Shin is the largest shareholder of Global Interactive Technologies, Inc.
| March 31, 2025 | December 31, 2024 | |||||||
| Taehoon Kim | $ | $ | ||||||
| Jaeman Lee | ||||||||
| Hangmuk Shin | ||||||||
| Total | $ | |||||||
As of March 31, 2025, the interest rate on the
loan payables is
NOTE 9 — FAIR VALUE MEASUREMENTS
Fair value has been determined on a basis consistent with the requirements of FASB ASC Topic 825, Financial Instruments, and the Company adopted on a prospective basis required provisions of FASB ASC Topic 820, Fair Value Measurement.
Financial Items Measured at Fair Value on a Recurring Basis
The carrying amounts reported in the Condensed Consolidated balance sheet for short-term financial instruments, including cash and cash equivalents, short-term loans, accounts receivable, prepaid expenses, short-term borrowings, accrued expense and other current liabilities due to the short maturities of these instruments.
Assets and liabilities measured at fair value on a recurring basis as of March 31, 2025 and December 31, 2024 are summarized in the table below.
| March 31, 2025 | ||||||||||||||||
| Level 1 | Level 2 | Level 3 | Total | |||||||||||||
| Assets | ||||||||||||||||
| Investments | $ | $ | $ | $ | ||||||||||||
| Liabilities | ||||||||||||||||
| Bonds with warrants | $ | $ | $ | $ | ||||||||||||
F-20
GLOBAL INTERACTIVE TECHNOLOGIES, INC. AND
SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
NOTE 9 — FAIR VALUE MEASUREMENTS (cont.)
| December 31, 2024 | ||||||||||||||||
| Level 1 | Level 2 | Level 3 | Total | |||||||||||||
| Assets | ||||||||||||||||
| Investments | $ | $ | $ | $ | ||||||||||||
| Liabilities | ||||||||||||||||
| Bonds with warrants | $ | $ | $ | $ | ||||||||||||
Financial Items Measured at Fair Value on a Nonrecurring Basis
There are no financial assets or liabilities measured at fair value on a nonrecurring basis as of March 31, 2025 and December 31, 2024.
Nonfinancial Items Measured at Fair Value on a Recurring Basis
There are no nonfinancial assets measured at fair value on a recurring basis as of March 31, 2025 and December 31, 2024.
Nonfinancial Items Measured at Fair Value on a Nonrecurring Basis
The fair value of long-lived assets is measured whenever the carrying value of long-lived asset or asset group is not recoverable on an undiscounted cash flow basis. No impairment is recognized for long-lived assets as of March 31, 2025 and December 31, 2024.
NOTE 10 — SIGNIFICANT NON-CASH TRANSACTION
The company engaged in the following significant non-cash investing and financing activities for the three months ended March 31, 2025 and March 31, 2024.
| March 31, 2025 | March 31, 2024 | |||||||
| Offsetting borrowings by converting short-term loans into | $ | $ | ||||||
| Total | $ | $ | ||||||
For the three months ended March 31, 2025, the
conversion of short-term loan payables to equity amounted to $
F-21
GLOBAL INTERACTIVE TECHNOLOGIES, INC. AND
SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
NOTE 11 — SHARE CAPITAL
As of March 31, 2025 and December 31, 2024,
Global Interactive Technologies’ total authorized capital stock is
On January 4, 2023, through March 8,
2023, warrants of $
In February and March of 2023, the Company closed
two private placements solely to accredited investors (as defined by Rule 501(a) of Regulation D of the Securities Act)
pursuant to which the Company sold an aggregate amount of
On March 24, 2023, warrants of $
On April 13, 2023, warrants of $
On May 4, 2023, thorough May 8, 2023, warrants
of $
On May 31, 2023, the Company completed a
private placement to solely to an accredited investor (as defined by Rule 501(a) of Regulation D of the Securities Act)
pursuant to which the Company sold an aggregate amount of
On July 31 2023, the Company consummated its initial
public offering (the “IPO”) of
The Company also granted the underwriters a 45-day
option to purchase up to
As a result, the total number of issued and outstanding
shares of Common Stock issued increased from
F-22
GLOBAL
INTERACTIVE TECHNOLOGIES, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
NOTE 11 — SHARE CAPITAL (cont.)
On January 27, 2025, the Company implemented a
On February 17, 2025, the Company converted a loan of $
NOTE 12 — COMMITMENTS AND CONTINGENCIES
Legal Matters
As of March 31, 2025, the Company is not subject to any material pending legal proceedings or claims. Previously disclosed legal matters were related to subsidiaries that have since been divested and no longer impact the Company’s operations or financial position.
NOTE 13 — RELATED PARTY TRANSACTIONS
The company conducts transactions with related parties under standard commercial terms and follows appropriate procedures to protect the company’s interests. Below are the related party transaction details as of March 31, 2025, and December 31, 2024.
| March 31, 2025 | December 31, 2024 | |||||||
| Taehoon Kim | $ | $ | ||||||
| Jaeman Lee | ||||||||
| Hangmuk Shin | ||||||||
| Total | $ | |||||||
Taehoon Kim(CEO)
- On January 8, 2025, the Company entered into
a short-term loan agreement with Taehoon Kim with a principal amount of $
Jaeman Lee(President)
- The Company entered into a short-term loan
agreement with President Jaeman Lee for the period from July 1, 2024, to December 31, 2024, and the outstanding loan balance as of
December 31, 2024, was $
(The loan was partially deposited in KRW, which may result in a slight difference in the loan amount when converted to USD due to exchange rate fluctuations.)
- On February 4, 2025, the Company entered into a short-term loan agreement with Jaeman Lee for a principal amount of $
- On February 7, 2025, the Company entered into
a short-term loan agreement with Jaeman Lee for a principal amount of $
- On February 17, 2025, Jaeman Lee, with the Company’s
consent, transferred the Company’s loan of $
F-23
GLOBAL INTERACTIVE TECHNOLOGIES,
INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
NOTE 13 — RELATED PARTY TRANSACTIONS (cont.)
- On March 5, 2025, the Company entered into a
short-term loan agreement with Jaeman Lee for a principal amount of $
Hangmuk Shin(Global Interactive Technologies’s Largest Shareholder)
- The Company entered into a short-term loan agreement
with Hangmuk Shin for the period from July 1, 2024, to December 31, 2024, and the outstanding loan balance as of December 31, 2024, was
$
(The loan was partially deposited in KRW, which may result in a slight difference in the loan amount when converted to USD due to exchange rate fluctuations.)
- On January 14, 2025, the Company entered into
a short-term loan agreement with Hangmuk Shin for a principal amount of $
- On March 6, 2025, the Company entered into a
short-term loan agreement with Hangmuk Shin for a principal amount of $
On March 24, 2025, the Company entered into a
short-term loan agreement with Hangmuk Shin for a principal amount of $
On March 26, 2025, the Company entered into a
short-term loan agreement with Hangmuk Shin for a principal amount of $
F-24
GLOBAL INTERACTIVE TECHNOLOGIES, INC. AND
SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
NOTE 14 — DISPOSAL OF SUBSIDIARIES AND DISCONTINUED OPERATIONS
Hanryu Bank Co. Ltd (“HBC”) sold
The following table outlines the calculation of the gain on disposal related to the sale of the subsidiaries on November 5, 2024, and December 28, 2024.
| As of December 28, 2024 | ||||
| Consideration received (sale price) | $ | |||
| The carrying amount of any noncontrolling interest | ||||
| Net liabilities | ||||
| foreign exchange difference | ||||
| Gain on disposal of subsidiaries | $ | |||
1. In connection with the deconsolidation of Hanryu
Bank Co.Ltd in 2024, the Company reclassified $
2. The gain or loss on the disposal of investments in subsidiaries was calculated based on the difference between the consideration received and the net assets of the subsidiaries. In this process, the net assets of the subsidiaries were translated using the exchange rate as of December 31, 2024, while the gain or loss on disposal was calculated using the average exchange rate for the year 2024. As a result, a foreign exchange difference arose due to the use of different exchange rates. This difference was not recognized separately as a foreign exchange gain or loss, but was included in the gain or loss on disposal.
F-25
GLOBAL INTERACTIVE TECHNOLOGIES,
INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
NOTE 14 — DISPOSAL OF SUBSIDIARIES AND DISCONTINUED OPERATIONS (cont.)
The financials of the three companies for the years ended December 31, 2024 are as follows.
| December 31, 2024 | ||||
| CURRENT ASSETS: | $ | |||
| Cash and Cash Equivalents | ||||
| Short-term loans | ||||
| Accounts receivable, net of allowance | ||||
| Non-trade receivables | ||||
| Prepaid expenses and other receivables | ||||
| PROPERTY PLANTAND EQUIPMENT, NET | ||||
| Operating lease right-of-use asset | ||||
| Other Asset | ||||
| Total Assets | $ | |||
| CURRENT LIABILITIES: | $ | |||
| Short-term borrowings | ||||
| Non-trade accounts payable | ||||
| Bonds with Warrants | ||||
| Accrued expenses and other current liabilities | ||||
| Total Liabilities | $ | |||
| Total Stockholder’s Equity (Deficiency) | $ | ( | ) | |
| December 31, 2024 | ||||
| Sales | ||||
| Cost of Revenue | ||||
| Gross profit (Loss) | $ | |||
| OPERATING EXPENSES: | ||||
| OPERATING LOSS | ( | ) | ||
| OTHER INCOME(EXPENSE): | ||||
| Net loss before taxes | ( | ) | ||
| Income tax expense | ||||
| NET INCOME(LOSS) | $ | ( | ) | |
NOTE 15 — SUBSEQUENT EVENTS
The Company has evaluated subsequent events through the date of this filing and determined that the following events occurred after March 31, 2025 and prior to the issuance of these financial statements:
- The Company entered into a short-term borrowing agreement of KRW
F-26
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
You should read the following discussion and analysis of our financial condition and results of operations together with our unaudited condensed consolidated financial statements and the related notes and other financial information included elsewhere in this Quarterly Report on Form 10-Q and with our audited consolidated financial statements included on in our Annual Report on Form 10-K for the year ending December 31, 2024. As discussed in the section titled “Note Regarding Forward-Looking Statements,” the following discussion and analysis contains forward-looking statements that involve risks and uncertainties, as well as assumptions that, if they never materialize or prove incorrect, could cause our results to differ materially from those expressed or implied by such forward-looking statements. Factors that could cause or contribute to these differences include, but are not limited to, those identified those discussed in the section titled “Risk Factors” in our Annual Report on Form 10-K for the year ending December 31, 2024.
Overview
Global Interactive Technologies, Inc. (together with its subsidiaries, collectively, the “Company”, “we”, “us”, or “our”), a Delaware corporation formerly known as Hanryu Holdings, Inc., is a technology-driven platform company connecting global fans of Korean culture through innovative digital experiences. The Company operates Faning, a comprehensive interactive platform designed to facilitate content discovery, monetization, user-generated content, and deep community engagement among global fandom communities. The Company focuses on leveraging technology to expand Korean culture (Hallyu) beyond traditional K-Pop, spanning digital media, entertainment, and interactive platform services.
The Company is a corporation that was incorporated in the state of Delaware on October 20, 2021, as Hanryu Holdings, Inc. On December 5, 2024, the Company formally changed its name from Hanryu Holdings, Inc. to Global Interactive Technologies, Inc. pursuant to an amendment to its Certificate of Incorporation filed with the Secretary of State of Delaware. In connection with the name change, the Company also changed its Nasdaq ticker symbol from HRYU to GITS.
Corporate Structure and Subsidiaries
As of March 31, 2025, the Company’s primary operating subsidiary is Faning Korea, LLC, a wholly-owned subsidiary based in Seoul, Republic of Korea (“Faning Korea”). Faning Korea oversees the development, maintenance, and operation of the Faning application and related web services.
Throughout 2024, the Company restructured its subsidiaries, including the divestiture of Hanryu Bank on December 28, 2024, and FNS and Marine Island on November 5, 2024. Faning Korea was acquired on December 4, 2024.
Our Business Model and Growth Strategies
FANING has become a globally recognized platform for providing an amazing and active community among people that have an interest in K-POP and modern Korean culture. The multifaceted nature of the Company’s operations has solidified the business’ reputation as one of the preeminent platforms for fandom. FANING’s users are able to seamlessly interact with each other to discuss exciting K-POP topics.
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FANING allows fans to interact within their fandoms and discuss these interests, create and share content, and interact through a number of channels, including (i) secure, direct messaging, (ii) open social pages, and (iii) virtual spaces (“FANING Clubs” or “Clubs”). FANING Clubs concentrate on a specific topic, allowing moderators to control the Club functions, and the Club members to aggregate their FP rewards. Integrated within each FANING Club is a “Club Vault,” a service provided by FANING that allows the individual members of a Club to donate their personal FP to an account held by the Club. The Club Vault allows the Club’s members to aggregate their FP and increase their purchasing power. This increase in purchasing power allows the Club’s individual users to more rapidly accumulate FP and pool their rewards with other users, in order to purchase services such as fan events or the ability to live stream a concert from their favorite band. Decisions regarding the use of the accumulated FP within the Club Vault are determined by a vote of the Club members.
Our users are the core of our business. We provide our users with customized experiences, including unique interactions within the FANING community. FANING algorithms curate individual user experiences, recommending content, clubs to join, users to connect with, and enabling users to subscribe to keywords and access automatic content geared toward their interests. Through these services, FANING provides the fandom community a way to stay connected and up to date with their fandom communities.
FANING further offers each user the ability to freely create, upload, and monetize their own content by earning in-platform rewards of FP. FANING removes language barriers, providing live chat ability between users worldwide, and global access to platform content, as the FANING platform supports automatic, real-time translation services for 17 languages. FANING also offers a fast, secure, and easy-to-use commerce and user-to-user transaction system. These unique features will allow FANING to generate user loyalty, maintain user interest in the platform, and attract new users.
For growth, we intend to develop short content (two minutes) that will focus on interesting pop music and cultural topics. These videos will be distributed through FANING while concurrently being shown on third party social media platforms and video sharing websites. This new aspect of growth is important for a few reasons. First, it will further enhance the strength of the FANING community by fostering a greater degree of engagement. Second, it will allow for greater visibility for K-POP on a global basis. Management will continue to expand this aspect of operations through the life of the business.
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Components of Results of Operations
Revenue
We anticipate that our primary source of revenue will be generated from FANING platform operations.
To diversify the revenue streams within our primary income source, the FANING platform, we carried out updates over several months. As
a result, the newly revamped FANING platform was launched in April 2025. Accordingly, we expect revenue to begin generating from May
2025. In addition, we anticipate that revenue from goods and K-Food products will also begin to be generated in the first half of the
year.
We expect that our primary sources of revenue on the FANING platform will be derived from (i) direct sales and (ii) commissions from user-to-user sales. We started generating revenue from FANING platform.
(i) Direct Sales We started generating direct sales revenue through: (i) original content sales, such as FANING produced web series that can be purchased by users on our platform or licensed to distributors; (ii) e-commerce goods through FANING’s Fanshop, which sells items such as the latest fandom goods and upcoming concert tickets; and (iii) advertising sales, including banner placements, splash advertising, pop-up advertisements within the platform, in-platform promotions, and branded content productions. For advertising sales, we act as an agent in arranging third-party promotions to our users. Our business model provides for the distribution of a percentage of our advertising revenue to FANING users in the form of FP as incentives for certain activities within the FANING platform. Users can then spend FP within the FANING platform to purchase goods and/or services, either directly from us or from other users.
(ii) User-to-User Commissions We intend to generate commissions on user-to-user transactions when FANING users sell their own products, content, and services to other users. Users can sell: (i) items they have created or produced such as emojis, online stickers, web novels, and webtoons; and (ii) tangible goods or other non-FANING platform based fandom items, such as concert tickets. For each sale by a user of content and non-tangible goods, we intend to collect a percentage of the gross purchase price. For sales of tangible goods and non-FANING platform based fandom goods, transactions are processed through a secure escrow account, for which we will receive a commission based upon the aggregate purchase price of the transaction.
Revenue from retail sales is generated through services offering a wide variety of products for purchase. Although we have generated limited revenue from such services in the past, we expect to earn more steady revenue from this business model starting in May 2025.
Revenue from marketing services is generated by other subsidiaries of the Company, such as Faning Korea, and includes various activities such as creating and distributing flyers, hosting events and giveaways, producing advertisement videos, and more. Although we have generated limited revenue from such services in the past, we expect to earn more steady revenue from this business model starting in May 2025.
Revenue from news agency content sales is generated by providing news articles and original content to other third-party media outlets. Although we have generated a de minimis amount of revenue from such services in the past, we expect to earn more steady revenue from this business model starting in May 2025.
As we continue to diversify our product and service offerings, we anticipate additional revenue streams, including Our entertainment agency business supports influencers in expanding their influence both inside and outside the FANING platform. As each influencer’s influence grows, we expect to monetize their status through advertising agreements or performance-based contracts. We anticipate generating revenue from this business model starting in May 2025.
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We expect to begin generating revenue from our entertainment agency business starting in May 2025. However, there can be no assurance that we will be able to successfully launch such affiliated businesses, or that they will be successful even if launched.
Cost of Revenue
Cost of revenue consists primarily of service costs, hosting costs, and production costs such as advertising costs, down payments, and royalty payments to artists under entertainment contracts for original FANING platform content, such as web series and concerts. We expect that cost of revenue will increase proportionately with the growth of the user base for the FANING platform.
Sales, Marketing and Advertising Expense
Sales and marketing expense consists of compensation and commission costs of the sales and related support teams, as well as travel, trade show, and other marketing related costs. Advertising costs are expensed to operations when incurred. Expense also includes the cost of creating and implementing marketing strategies, conducting market research, and producing advertisements. Those expenses are recognized as incurred based on the accrual basis of accounting. We expect that sales, advertising, and marketing expense will increase on a proportionate basis with user-growth, and will vary from period-to-period as a percentage of revenue for the foreseeable future. This variation is due to our plans to continue to invest in marketing in order to grow both sales and our user-base by way of increasing brand awareness. The trend and timing of our marketing costs will depend in part on the timing of marketing campaigns.
Research and Development Expense
Research and development expense includes costs to maintain and develop the FANING platform. Costs incurred for research and product development are expensed as incurred and include salaries, taxes and benefits, contracting, and travel expense related to research and development.
General and Administrative Expense
General and administrative expense consists primarily of personnel-related costs, including salaries and benefits, non-cash stock compensation expense, equipment expense, office and facilities costs, legal, accounting and other professional fees, public relations costs and other corporate and administrative costs.
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Results of Operations
Three months Ended March 31, 2025 Compared to three months ended March 31, 2024
The following table sets forth a summary of our statements of operations for the three months ended March 31,2025 and 2024:
| Three months ended | ||||||||||||||||
| March 31, | Increase / (Decrease) | |||||||||||||||
| 2025 | 2024 | $ | % | |||||||||||||
| Revenue | $ | — | $ | — | $ | — | — | % | ||||||||
| Cost of Revenue | — | — | — | — | ||||||||||||
| Gross Profit | — | — | — | — | % | |||||||||||
| Operating Expense | ||||||||||||||||
| Marketing and advertising expense | — | — | $ | — | — | % | ||||||||||
| Research and Development | — | — | $ | — | — | % | ||||||||||
| General and administrative expense | 563,468 | 164,563 | $ | 398,905 | 242 | % | ||||||||||
| Loss from operations | (563,468 | ) | (164,563 | ) | $ | 398,905 | 242 | % | ||||||||
| Net Other(expense)/ Income | (3,213 | ) | (23,562 | ) | $ | (20,349 | ) | (86 | )% | |||||||
| Loss from discontinued operations | — | (858,946 | ) | (858,946 | ) | (100 | )% | |||||||||
| Net Loss | $ | (566,681 | ) | $ | (1,047,071 | ) | $ | (480,390 | ) | (46 | )% | |||||
1. During the fiscal year 2024, the Company underwent a restructuring process, which included replacing the management team that had been operating the Company ineffectively and divesting financially distressed subsidiaries. As a result, no revenue was generated during the fiscal quarter ended March 31, 2025. In addition, revenue for the comparative period ended March 31, 2024, was reclassified as discontinued operations following the divestiture of subsidiaries in 2024, and therefore, no revenue was recognized from continuing operations.
2. The operating loss for the first quarter of 2025 was $563,468, representing a 45% decrease compared to an operating loss of $1,023,569 in the first quarter of 2024 (which included (i) a loss from continuing operations of $164,563 and (ii) a loss from discontinued operations of $858,946). The primary reason for this decrease was the workforce reduction and the sale of subsidiaries in 2024.
3. Starting in the second quarter of 2025, the Company expects to generate revenue from the newly updated FANING platform, which was relaunched in April 2025. Additionally, revenue is expected from the sales of goods and K-Food products, gradually improving profitability. The cost-saving effects of the 2024 restructuring are also expected to contribute to improved financial stability.
Liquidity and Going Concern
As of March 31, 2025, the Company had an accumulated deficit of $38,467,982 and a working capital deficiency of $(719,575). As of December 31, 2024, the accumulated deficit was $37,901,301 and the working capital deficiency was $(665,352). In addition, the Company incurred operating losses of $566,681 and $1,047,071 for the periods ended March 31, 2025 and March 31, 2024, respectively. These uncertainties raise substantial doubt about the Company’s ability to continue as a going concern beyond the issuance date of these financial statements. The accompanying financial statements have been prepared assuming the Company will continue as a going concern. These financial statements do not include any adjustments that might result from the Company’s potential inability to continue as a going concern, including potential effects on the recoverability and classification of assets or the amounts and classification of liabilities.
The Company carried out updates to diversify revenue streams within its primary income source, the FANING platform, over several months and launched the newly revamped FANING platform in April 2025. The revamped FANING platform has been restructured with a user-centric approach and is designed to focus on achieving profitability. In addition, through its subsidiary, Faning Korea, LLC, the Company plans to pursue K-Food products and entertainment business ventures. Furthermore, to secure additional working capital, the Company intends to proceed with a capital increase and borrowings. However, there can be no assurance as to the outcome of these plans or that future financing efforts will generate sufficient capital to sustain the Company’s operations.
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Contractual Obligations
We have no contractual obligations as of March 31, 2025.
Off-Balance Sheet Arrangements
We have not entered into any off-balance sheet financial guarantees or other off-balance sheet commitments to guarantee the payment obligations of any third parties. We have not entered into any derivative contracts that are indexed to our shares and classified as stockholder’s equity or that are not reflected in our financial statements included elsewhere in this prospectus. Furthermore, we do not have any retained or contingent interest in assets transferred to an unconsolidated entity that serves as credit, liquidity or market risk support to such entity. We do not have any variable interest in any unconsolidated entity that provides financing, liquidity, market risk or credit support to us or engages in leasing, hedging or product development services with us.
Quantitative and Qualitative Disclosures about Market Risk
We are exposed to market risks in the ordinary course of our business. Market risk represents the risk of loss that may impact our financial position due to adverse changes in financial market prices and rates. Our market risk exposure is primarily the result of fluctuations in foreign currency and credit.
Foreign Currency Risk
We have accounts on our foreign subsidiaries’ ledgers, which are maintained in the respective subsidiary’s local currency and translated into USD for reporting of our condensed consolidated financial statements. As a result, we are exposed to fluctuations in the exchange rates of various currencies against the USD and other currencies, including KRW.
Transactional
We generate the majority of our revenue from customers within Korea. Typically, we aim to align costs with revenue denominated in the same currency, but we are not always able to do so. As a result of the geographic spread of our operations and due to our reliance on certain products and services priced in currencies other than KRW, our business, results of operations, and financial condition have been and will continue to be impacted by the volatility of the KRW against foreign currencies.
Translational
Our functional and reporting currency is the U.S. Dollar (USD). The local and functional currency of our subsidiary, Faning Korea, LLC, is the Korean Won (KRW). The subsidiary’s assets and liabilities are translated into USD at the exchange rate in effect at the end of the reporting period, and its revenues and expenses are translated using the average exchange rate in effect during the period. The assets and liabilities of the subsidiary are translated into USD at the exchange rate in effect at the end of each period, and revenues and expenses are translated using average rates that approximate those in effect during the respective period. As a result, the value of these items in the condensed consolidated financial statements related to non-USD-denominated operations is affected by changes in the value of the USD, even if their value has not changed in the original currency. For example, a stronger USD will reduce the reported operating results of non-USD-denominated operations, while a weaker USD will increase the reported operating results of non-USD-denominated operations.
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At this time, we do not invest in derivatives or other financial instruments to hedge foreign currency risk. However, we may consider such hedging activities in the future. It is difficult to predict the impact that such hedging activities would have on our results of operations.
Credit Risk
Our cash and cash equivalents, deposits, and loans with banks and financial institutions are potentially subject to concentration of credit risk. We place cash and cash equivalents with financial institutions that management believes are of high credit quality. The degree of credit risk will vary based on many factors including the duration of the transaction and the contractual terms of the agreement. As appropriate, management evaluates and approves credit standards and oversees the credit risk management function related to investments.
Critical Accounting Policies and Estimates
The preparation of financial statements in conformity with U.S. generally accepted accounting principles (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, and expenses, as well as related disclosures.
Significant accounting estimates and judgments include:
| ● | Classification and presentation of discontinued operations resulting from the divestiture of subsidiaries. |
| ● | Assessment of going concern and the recoverability of assets and obligations. |
| ● | Allocation of shared operating expenses and liabilities between continuing and discontinued operations. |
| ● | Potential impairment of intangible assets related to platform development. |
Management regularly reviews its estimates and assumptions, which are based on historical experience and other relevant factors, including the current economic environment. Actual results may differ materially from these estimates. Any material changes in assumptions could have a significant impact on our financial statements.
FANING is a fandom-centered platform designed to deliver an all-in-one ecosystem that enriches the fan experience through content, community, commerce, and creativity. The platform is available in 17 languages and supports real-time multilingual translation, enabling global fan engagement. Users can consume K-culture content, interact socially, and monetize creative work, including fan art, webtoons, and merchandise.
The platform’s monetization strategy includes:
| ● | Direct revenue from advertising, digital content, and commerce |
| ● | Commissions on user-to-user transactions, including gifts, stickers, translation matching, and creator content |
As of March 31, 2025, FANING had over 26.6 million registered users globally. The platform is positioned to capitalize on the global rise in K-Culture fandom, now exceeding 229 million fans in 119 countries.
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Recent Accounting Pronouncements
In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. This update enhances the transparency of income tax disclosures by requiring detailed information on the effective tax rate reconciliation and income taxes paid by jurisdiction. The amendments are effective for annual periods beginning after December 15, 2024, with early adoption permitted.
In March 2024, the FASB issued ASU 2024-03, Income Statement—Reporting Comprehensive Income (Subtopic 220-40): Expense Disaggregation Disclosures. This update requires entities to disclose more detailed information about the nature of the expenses within certain income statement captions (such as cost of sales, SG&A, etc.). The standard is effective for fiscal years beginning after December 15, 2024, and interim periods within fiscal years beginning after December 15, 2025. Early adoption is permitted.
The Company is currently evaluating the impact of these new standards and does not expect them to have a material effect on its financial statements upon adoption.
Contingencies
Certain conditions may exist as of the date the financial statements are issued, which may result in a loss to the Company, but which will only be resolved when one or more future events occur or fail to occur. The Company’s management, in consultation with its legal counsel as appropriate, assesses such contingent liabilities, and such assessment inherently involves an exercise of judgment. In assessing loss contingencies related to legal proceedings that are pending against the Company or unasserted claims that may result in such proceedings, the Company, in consultation with legal counsel, evaluates the perceived merits of any legal proceedings or unasserted claims, as well as the perceived merits of the amount of relief sought or expected to be sought therein. If the assessment of a contingency indicates it is probable that a material loss has been incurred and the amount of the liability can be estimated, then the estimated liability would be accrued in the Company’s financial statements. If the assessment indicates a potentially material loss contingency is not probable, but is reasonably possible, or is probable, but cannot be estimated, then the nature of the contingent liability, together with an estimate of the range of possible loss, if determinable and material, would be disclosed. Loss contingencies considered remote are generally not disclosed unless they involve guarantees, in which case the guarantees would be disclosed.
Relaxed Ongoing Reporting Requirements
We an “emerging growth company” (as defined in the JOBS Act) under the reporting rules set forth under the Exchange Act. For so long as we remain an “emerging growth company,” we may take advantage of certain exemptions from various reporting requirements that are applicable to other Exchange Act reporting companies that are not “emerging growth companies,” including but not limited to:
| ● | not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act; |
| ● | taking advantage of extensions of time to comply with certain new or revised financial accounting standards; |
| ● | being permitted to comply with reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements; and |
| ● | being exempt from the requirement to hold a non-binding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved. |
We will be subject to ongoing public reporting requirements that are less rigorous than Exchange Act rules for companies that are not “emerging growth companies,” and our stockholders could receive less information than they might expect to receive from more mature public companies.
We expect to take advantage of these reporting exemptions until we are no longer an emerging growth company. We would remain an “emerging growth company” for up to five years, although if the market value of our common stock that is held by non-affiliates exceeds $700 million as of any June 30 before that time, we would cease to be an “emerging growth company” as of the following December 31.
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Item 3. Quantitative and Qualitative Disclosures About Market Risk.
We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act of 1934, as amended (the “Exchange Act”) and are not required to provide information under this item.
Item 4. Controls and Procedures.
Evaluation of Disclosure Controls and Procedures
Our management has evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under “Exchange Act”), as of March 31, 2025. Based on such evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that as of March 31, 2025, our disclosure controls and procedures were ineffective to provide reasonable assurance that information required to be disclosed by us in the reports that we file or submit under the Exchange Act (a) is recorded, processed, summarized and reported within the time periods specified by Securities and Exchange Commission (“SEC”) rules and forms and (b) is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding any required disclosure.
Management has identified control deficiencies regarding inadequate accounting resources, the lack of segregation of duties and the need for a stronger internal control environment. Our management believes that these material weaknesses are due to the small size of our accounting staff. The small size of our accounting outsourced staff may prevent adequate controls in the future due to the cost/benefit of such remediation.
To mitigate the current limited resources and limited employees, we rely heavily on direct management oversight of transactions, along with the use of external legal and accounting professionals. As we grow, we expect to increase our number of employees, which will enable us to implement adequate segregation of duties within the internal control framework.
These control deficiencies could result in a misstatement of account balances that would result in a reasonable possibility that a material misstatement to our financial statements may not be prevented or detected on a timely basis. In light of this material weakness, we performed additional analyses and procedures in order to conclude that our financial statements for the quarter ended March 31, 2025, included in this Quarterly Report on Form 10-Q were fairly stated in accordance with GAAP. Accordingly, management believes that despite our material weaknesses, our financial statements for the quarter ended March 31, 2025, are fairly stated, in all material respects, in accordance with GAAP.
Changes in Internal Control Over Financial Reporting
There were no changes in our internal control over financial reporting during the quarter ended March 31, 2025 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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PART II—OTHER INFORMATION
Item 1. Legal Proceedings.
As of March 31, 2025, the Company is not subject to any material pending legal proceedings or claims. Previously disclosed legal matters were related to subsidiaries that have since been divested and no longer impact the Company’s operations or financial position.
Item 1A. Risk Factors.
As a “smaller reporting company” as defined by Rule 12b-2 of the Exchange Act, we are not required to provide information required by this item.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
On February 18, 2025, Global Interactive Technologies, Inc., a Delaware corporation (the “Company”), entered into that certain Debt Conversion Agreement (the “Debt Conversion Agreement”) with Evan Trust, a trust, for which, Amy Shi, a director of the Company, serves as the trustee (the “Trust”). Pursuant to the Debt Conversion Agreement, the Company and the Trust agreed to convert certain debt in the amount of $210,000 owed by the Company to the Trust, into 300,000 shares of the Company’s Common Stock. The transaction was conducted pursuant to Regulation S under the Securities Act of 1933, as amended.
Item 3. Defaults Upon Senior Securities
Not applicable.
Item 4. Mine Safety Disclosures
Not applicable.
Item 5. Other Information
During the three months ended March 31, 2025, none of our directors
or officers (as defined in Rule 16a-1(f) of the Exchange Act)
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Item 6. Exhibits.
The following exhibits are included herein or incorporated herein by reference:
| * | Filed herewith. |
| ** | Furnished herewith. |
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| Global Interactive Technologies, Inc |
| Signature | Title | Date | ||
| /s/ Taehoon Kim | Interim Chief Executive Officer | May 20, 2025 | ||
| Taehoon Kim | (Principal Executive Officer) | |||
| /s/ Juhyon Shin | Chief Financial Officer | May 20, 2025 | ||
| Juhyon Shin | (Principal Financial and Accounting Officer) |
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