After proudly becoming the first domestic startup to directly list on the NASDAQ, Hanryu Holdings is facing a red light for its continued listing just half a year after going public. Hanryu Holdings is the holding company of Hanryu Bank, which operates the Korean wave fandom platform FANTOO. FANTOO is an application that provides a communication community for K-pop fans.
According to the U.S. Securities and Exchange Commission (SEC) on Jan. 10, Hanryu Holdings stated in its third-quarter report that additional losses and negative cash flow is expected. The company added, “Such uncertainty raises substantial doubt about whether the company can continue to exist as a business for the next 12 months after the issuance of this quarterly report.” Hanryu Holdings submitted its third-quarter report on Nov. 17 of last year.
The reason for the uncertainty about the continued existence as a going concern is the approximately twofold increase in losses. In the first three quarters of 2022, Hanryu Holdings reported a net loss of US$5.03 million. However, the figure grew to US$9.16 million in the same period of last year. Operating expenses surged by 76.98% over the year, primarily driven by a sharp increase in marketing and advertising expenses as well as general administrative expenses such as personnel costs, while revenue only increased by 49.10%.
The stock performance since the listing has been lackluster for Hanryu Holdings. After going public at US$10 per share in August, the company closed at US$7.80 on the first day of trading. Subsequently, the stock continued to decline, dropping to US$1.00 per share on Nov. 10 of last year. On the day the third-quarter report, which highlighted the increased net loss, was submitted, the stock plummeted to US$0.50. On the most recent trading day, Jan. 9, it closed at US$0.84. If Hanryu Holdings’ stock continues to trade below US$1.00, the company could receive a delisting warning from the SEC.