Global Interactive Technologies, Inc.

Global Interactive Technologies, Inc. (the "Company") operates in the rapidly evolving social media and content creation sector, specifically focusing on connecting global fans of Korean culture (Hallyu) through its FANING interactive platform. The global K-Culture fan base reached approximately 229 million fans across 119 countries in 2023, a nearly 50% increase from 156.6 million in 2021 ¹. The global K-Culture purchasing power was estimated at $147.3 billion as of 2023 ². The Company aims to leverage this growth, particularly given that over 60% of the global population is active on social media platforms ³ and mobile-first access dominates K-Culture content consumption. The global virtual events market, relevant to FANING's offerings, was valued at approximately $114.1 billion in 2023 and is projected to reach $657.6 billion by 2030, growing at a CAGR of 21.4% ⁴.

The Company's core business model revolves around its FANING platform, which facilitates content discovery, monetization, user-generated content, and deep community engagement. Revenue generation is anticipated from multiple sources: advertising sales (banners, splash ads, pop-up ads, in-platform promotions, branded content), direct content sales (original web series, licensed third-party content), and e-commerce goods through the FANING Fanshop (gifts, pre-paid cards, concert tickets, fandom goods) ⁵. Additionally, the Company generates revenue from commissions on user-to-user transactions, including emojis, AR filters, digital stickers, web novels, and webtoons, where it collects 30% of the sale price ⁶. For transactions involving tangible goods or non-platform fandom items, a 3.5% transaction fee is charged ⁷. The platform also features a user reward system where 50% of daily net advertising profits are distributed as Faning Points (FP) to users based on their activity, with approximately 30% going to content creators and 20% to general participants ⁸. FP has a fixed value of 1 FP for every 100 Korean Won ⁹.

The FANING platform, an evolution of the previous FANTOO platform, had attracted more than 26.6 million users as of December 31, 2024 ¹⁰. The primary age groups composing the user base are 20-29 and 30-39 years, accounting for over 80% of all users with a median age of 27 years old ¹¹. The platform supports automatic, real-time translation services for 17 languages ¹². Key features include FANING Clubs for specific topics, Club Vaults for aggregating FP to purchase services like fan events or live concert streams, and open community forums ¹³. Content offerings include user-created fanart, web novels, and webtoons, which can be monetized, and Company-created original shows, web series, and hosted concerts ¹⁴. The Fanshop also supports user-to-user transactions for digital items like emojis, AR filters, and digital stickers, and offers a video commerce service ¹⁵. The Company has also set up an international logistics service for FANING with the Epic eCommerce platform, targeting markets including South Korea, Hong Kong, Japan, Malaysia, Singapore, Thailand, Indonesia, and Taiwan ¹⁶.

For the fiscal year ended December 31, 2024, the Company reported no revenue from continuing operations ¹⁷, a significant change from the prior year due to the reclassification of revenue from divested subsidiaries as discontinued operations. Loss from continuing operations was $(4,783,651) ¹⁸, compared to $(1,851,332) in 2023 ¹⁹. Net loss attributable to equity holders of the Company was $(6,171,969) ²⁰ for 2024, an improvement from $(9,285,910) in 2023 ²¹. Basic and diluted net loss per share were both $(2.34) ²² for 2024, compared to $(3.68) ²³ for 2023. Operating costs and expenses from continuing operations decreased by 56% to $888,363 ²⁴ in 2024 from $2,005,925 ²⁵ in 2023. The Company's cash and cash equivalents from continuing operations were $2,352 ²⁶ as of December 31, 2024, down from $69,688 ²⁷ as of December 31, 2023. Total current assets were $2,987 ²⁸ and total current liabilities were $668,339 ²⁹ as of December 31, 2024, resulting in a working capital deficit. The accumulated deficit as of December 31, 2024, was $(37,901,301) ³⁰.

During 2024, the Company underwent significant restructuring, including the termination of its former CEO, Changhuyk Kang, for cause on February 26, 2024, and the appointment of Mr. Taehoon Kim as Interim CEO on the same day ³¹. The Company divested Hanryu Bank on December 28, 2024, and FNS and Marine Island on November 5, 2024 ³². Faning Korea, LLC was acquired on December 4, 2024 ³³. These divestitures led to the reclassification of prior revenue and expenses from these entities as discontinued operations. The Company also recorded a gain on disposal of subsidiaries of $12,400,373 ³⁴ and a bad-debt expense of other assets of $16,179,823 ³⁵ in 2024.

The Company anticipates an improvement in its financial structure starting in 2025, driven by the launch of the upgraded, user-centric FANING platform and enhanced cost efficiency resulting from the 2024 restructuring efforts. Management expects future growth to be driven by organic user expansion, improved marketing efficiency, and the commercial rollout of the upgraded FANING platform beginning in April 2025 ³⁶.

A major growth area for the Company is the continued expansion of its FANING platform. The Company intends to develop short content (two minutes) focusing on pop music and cultural topics, which will be distributed through FANING and concurrently on third-party social media platforms and video sharing websites ³⁷. This initiative aims to enhance community engagement and increase global visibility for K-Pop. Furthermore, the Company plans to continuously expand its product and service offerings within the FANING platform as its user base and revenue grow, with the objective of creating a one-stop platform across all fandoms ³⁸.

Another significant growth vector is geographic expansion and localized marketing. The Company plans to set up branches in the U.S. in the first half of 2025 and hire approximately 20 developers to localize FANING's services for the U.S. market ³⁹. They also intend to partner with U.S. marketing experts and agencies to reach U.S. audiences through online marketing, sponsoring advertisements, and hosting user-engagement events in major U.S. cities ⁴⁰. Following the establishment of U.S. operations, the Company plans to expand into Europe by setting up a branch office in the United Kingdom ⁴¹. The Company explicitly states it has no intention of expanding into China, Hong Kong, or Macau due to regulatory concerns and unofficial bans on K-Culture and foreign social media platforms ⁴².

Operationally, the Company has adopted a leaner model by outsourcing key development and administrative functions to third-party providers to conserve capital and stabilize near-term cash flow ⁴³. This is expected to enhance cost efficiency. The Company intends to continue investing in research and development to implement new technologies for a better and more secure user experience compared to other social media platforms ⁴⁴. This includes AI-driven content curation, AI speech synthesis, AI-powered nudity detection, and AI-enabled deepfake detection ⁴⁵.

Regarding capital allocation, the Company believes its current cash, net proceeds from debt issuances, and future common stock issuances will be sufficient to fund working capital requirements beyond the next 12 months ⁴⁶. This belief is predicated on successfully raising additional equity financing and implementing its business strategy. The Company's 2022 Omnibus Equity Incentive Plan authorizes the issuance of up to 1.5 million shares of common stock for equity incentives to attract and retain management, key employees, and non-management directors ⁴⁷.

The Company explicitly flags structural headwinds and execution risks. Its ability to continue as a going concern depends on successfully raising additional capital and executing its platform monetization strategies ⁴⁸. There is no assurance that additional funds will be available when needed or on acceptable terms, and future equity financing would be dilutive to existing stockholders ⁴⁹. The Company also faces challenges in sustaining rapid growth, diversifying revenue streams, retaining users, and adapting to evolving business models and market demands in the fast-evolving social media and content creation sector ⁵⁰.

Global Interactive Technologies faces several material risks, including significant recurring losses from operations and a working capital deficiency, which raise substantial doubt about its ability to continue as a going concern ⁵¹. The Company has a limited operating history and may struggle to sustain rapid growth, manage future expansion, diversify revenue streams, and retain users in the fast-evolving social media and content creation sector ⁵². Legal and content liability risks are present, particularly concerning third-party or user-generated content, which could lead to costly defense against claims of deceptive advertising, copyright, or trademark infringement ⁵³. The Company's dependence on third-party relationships for content production and distribution is critical, and adverse changes in these relationships could harm its financial performance ⁵⁴. The decision not to operate in China, Hong Kong, or Macau limits its total addressable market and potential growth ⁵⁵. Intense competition in the social media platform and content creation industry, including from companies with greater financial resources, poses a risk to user attraction, engagement, and retention ⁵⁶. Systems failures, cyber-attacks, and data breaches, including to the separate FP database, could harm the Company's reputation and lead to significant financial, legal, and operational consequences ⁵⁷. The Company is subject to complex and evolving U.S. and foreign laws and regulations regarding privacy, data use, data protection, content, and consumer protection, with potential for monetary penalties and increased compliance costs, particularly under regulations like the Korean Personal Information Protection Act (PIPA) and the EU's GDPR ⁵⁸. Fluctuations in exchange rates, especially between the Korean Won and the U.S. dollar, could adversely affect liquidity and cash flows, as a substantial percentage of revenue and costs are denominated in Korean Won ⁵⁹. Tensions with North Korea could also have an adverse effect on the business and the price of common stock ⁶⁰.

Management's message to shareholders emphasizes a commitment to turnaround efforts and securing long-term sustainability following a year of significant restructuring in 2024. The Company underwent leadership changes, including the termination of the former CEO and the appointment of Mr. Taehoon Kim as Interim Chief Executive Officer on February 26, 2024 ⁶¹. Management has streamlined the workforce by transitioning core functions to outsourced development and operational support to reduce capital expenditure and enhance flexibility ⁶². A key strategic priority is the launch of the upgraded, user-centric FANING platform in 2025, specifically beginning in April 2025 ⁶³, which is expected to drive revenue growth and improve cost efficiency. Management is actively pursuing additional funding through equity issuances and potential debt financing to address liquidity constraints and support operations ⁶⁴. Another strategic focus is expanding the user base and diversifying revenue streams, including through localized marketing efforts in the U.S. starting in the first half of 2025 ⁶⁵, and eventually into Europe.