Hanryu Holdings, Inc. reported significant financial challenges in its 10-Q filing for the nine months ended September 30, 2024. The company generated revenue of only $198, a stark decline from $980,641 in the same period of 2023, marking a decrease of 100%. Gross profit mirrored this trend, falling from $466,327 to $198. The company’s total operating expenses decreased to $2,110,025 from $9,018,805, reflecting a reduction of 77%. Despite these cost-cutting measures, Hanryu Holdings still reported a net loss of $2,100,679, an improvement from the $9,163,826 loss recorded in the prior year, indicating a 77% reduction in losses.

The company’s cash position deteriorated significantly, with cash and cash equivalents dropping to $6,975 from $5,427,830 at the end of 2023. Total assets also decreased to $19,415,675 from $20,544,956, while total current liabilities rose to $8,799,901 from $7,476,491. The accumulated deficit increased to $(40,994,441) from $(38,893,762) at the end of 2023, and total stockholders’ equity fell to $10,615,774 from $13,068,465.

In terms of operational changes, Hanryu Holdings has focused on its FANTOO platform, which serves as a social media hub for K-Culture enthusiasts. The company has launched FANTOO House in Seoul and plans to introduce an Epic branded e-commerce platform and dedicated video production operations targeting K-POP fandom. However, the company has also faced challenges, including a significant reduction in revenue from product sales, which dropped to $0 from $71,521 in the previous year.

The company’s financing activities have also changed, with net cash provided by financing activities decreasing to $599,508 from $24,605,548 in the same period last year. This decline was primarily due to a reduced influx from short-term loans and other financing sources.

Additionally, Hanryu Holdings sold its subsidiaries—Hanryu Times, Fantoo Entertainment, and K-Commerce—on December 28, 2023, which resulted in a gain of $3,390,323. The company is currently in discussions regarding bonds with warrants totaling approximately $3,410,124 that matured on July 2, 2024.

Management has acknowledged material weaknesses in internal controls, attributing these to the small size of the accounting staff, which may hinder future control adequacy. Despite these challenges, management believes that the financial statements for the quarter ended September 30, 2024, are fairly stated in accordance with GAAP.