Management's Discussion and Analysis of Financial Condition and Results of Operations.
You should read this discussion and analysis together with our audited financial statements, the notes to such statements and the other financial information included in this Form 10-K. This discussion contains forward-looking statements that involve risks and uncertainties. As a result of many factors, such as those set forth under the section entitled "Risk Factors" and elsewhere in this Form 10-K, our actual results may differ materially from those anticipated in these forward-looking statements. See "Special Note Regarding Forward-Looking Statements" for a discussion of the uncertainties, risks and assumptions associated with these statements.
Overview
Global Interactive Technologies, Inc. ("Global Interactive Technologies" or the "Company") is a Delaware corporation operating and developing Faning, a global digital fan engagement platform focused on Korean entertainment and culture, including K-pop.
Faning is designed to support online fan communities, user interaction, multilingual communication, and digital engagement experiences across mobile and web-based services. The platform evolved from the legacy Fantoo platform ecosystem.
During 2025, the Company's primary operational focus was the continued development, maintenance, and support of the Faning platform, along with preparation for future commercialization initiatives. The Company also focused on public company compliance activities, operational restructuring, and financing initiatives.
Although the Company continued developing monetization-related functionality during 2025, including digital engagement features, subscription-related functionality, and advertising infrastructure, the Faning platform remained in an early-stage commercialization phase as of December 31, 2025. Revenue generated from the platform during the year remained limited.
The Company believes that continued global interest in Korean entertainment and culture may create future opportunities for user engagement and platform growth; however, the Company's future growth and commercialization efforts remain subject to substantial uncertainty, including user adoption, successful execution of monetization initiatives, availability of capital resources, and overall market conditions.
Faning Platform
The Faning platform includes community engagement tools, messaging and communication features, multilingual support functionality, user-generated content capabilities, and digital participation systems intended to facilitate interaction among users with shared entertainment and cultural interests.
The Company has also explored and developed various monetization initiatives associated with the platform, including digital engagement tools, subscription-related functionality, advertising infrastructure, and other fandom-related digital services. As of December 31, 2025, these monetization initiatives remained in early stages of commercialization.
Key Performance Indicators
Management monitors certain operational metrics and key performance indicators ("KPIs") to evaluate platform activity and future business opportunities. These metrics include registered users, monthly active users ("MAUs"), average revenue per user ("ARPU"), and user acquisition cost ("UAC").
The legacy Fantoo platform historically accumulated approximately 26.6 million registered accounts as of December 31, 2024. The Company views this historical registered account base as a potential long-term strategic asset; however, the Company did not complete a migration or reactivation of this historical user base during 2025 and cannot currently predict the extent to which such historical users may become active users, retained users, or monetizable users within the Faning platform.
ARPU remained limited during 2025 as the Company continued operating in an early-stage commercialization phase. Management expects that future operational performance, if commercialization initiatives are successfully implemented, may depend on user engagement, monetization adoption, marketing efficiency, and broader platform growth initiatives.
Components of Results of Operations
Functional Currency
The functional currency of the Company's operations is the Korean Won ("KRW"). The Company's some accounting records are maintained in KRW and translated into the U.S. Dollar("USD") for financial reporting purposes. Exchange rate fluctuations between KRW and USD may affect the Company's reported financial results.
Revenue
The Company's revenue is currently derived primarily from limited early-stage Faning platform-related activities and certain legacy business activities. Revenue during 2025 remained limited as the Company continued operating in an early-stage commercialization phase.
The Company has been developing monetization initiatives associated with the Faning platform, including digital engagement features, subscription-related functionality, advertising-related infrastructure, and other platform-based services. However, these monetization initiatives remained in early stages during 2025 and did not generate material revenue during the fiscal year.
Cost of Revenue
Cost of revenue consists primarily of platform-related service costs, hosting and infrastructure expenses, and other costs directly associated with revenue-generating activities.
Sales and Marketing Expense
Sales and marketing expenses consist primarily of advertising, promotional activities, user acquisition initiatives, consulting expenses, travel, and other marketing-related costs. Advertising costs are expensed as incurred.
Sales and marketing expenses may fluctuate depending on the timing and scale of future marketing initiatives and commercialization activities.
Research and Development Expense
Research and development expense consists primarily of costs associated with maintaining, supporting, and developing the Faning platform, including software development, contractors, technology infrastructure, and related personnel costs.
General and Administrative Expense
General and administrative expenses consist primarily of personnel-related costs, professional fees, public company compliance expenses, legal and accounting costs, investor relations expenses, consulting fees, office expenses, and other corporate administrative costs.
During 2025, a substantial portion of the Company's operating expenses related to public company compliance activities, financing initiatives, legal and professional fees, and corporate administrative matters.
Results of Operations
Year Ended December 31, 2025 Compared to Year Ended December 31, 2024
Revenue
Revenue for the year ended December 31, 2025 was approximately $1,932, compared to no material revenue during the year ended December 31, 2024.
Revenue during 2025 primarily reflected limited early-stage commercialization activities associated with the Faning platform. The Company remained in the development and user integration phase throughout most of 2025, and monetization initiatives had not yet achieved material scale.
Operating Expenses
Operating expenses for the year ended December 31, 2025 were approximately $2.44 million, compared to approximately $0.89 million for the year ended December 31, 2024.
| Line Item | FY2025 | FY2024 | Change | |||||||||
| Revenue | 1,932 | 0 | 1,932 | |||||||||
| Operating Expenses | 2,440,752 | 888,363 | 1,552,389 | |||||||||
| Other Expenses | 2,194,073 | 3,895,288 | (1,701,215 | ) | ||||||||
| Net Loss | 4,632,893 | 6,171,969 | (1,539,076 | ) | ||||||||
| Cash and Cash Equivalents | 6,990 | 2,352 | 4,638 | |||||||||
| Stockholders' Equity | 3,442,705 | 5,736,084 | (2,293,379 | ) | ||||||||
The increase in operating expenses was primarily attributable to public company operating costs, including legal, accounting, audit, investor relations, Nasdaq compliance, and other professional expenses associated with operating as a publicly listed company, as well as expenses related to attempted financing and capital markets activities during 2025. The increase was not primarily driven by material revenue-generating operations.
The Company also incurred additional expenses related to corporate governance, SEC reporting obligations, financing initiatives, and administrative infrastructure associated with maintaining and supporting its public company operations. During 2025 and 2024, Research and Development expenses and Sales and Marketing expenses remained minimal, as the Company primarily focused its resources and liquidity on establishing its public company infrastructure and corporate governance. However, the Company expects these expenses to increase significantly in future periods as it shifts focus toward platform development and user growth.
The Company expects operating expenses to remain elevated as it continues investing in platform functionality, infrastructure scalability, and user acquisition initiatives, while also continuing to incur significant public company compliance and professional service costs.
Impairment Loss on Intangible Assets
The Company recorded an impairment loss on intangible assets of approximately $1.02 million during the year ended December 31, 2025, compared to approximately $94,000 during the year ended December 31, 2024.
The impairment charge primarily reflected management's reassessment of projected future cash flows and commercialization timelines associated with certain intangible assets, taking into account the Company's limited current revenues, ongoing operating losses, and revised near-term market assumptions.
Net Loss
Net loss for the year ended December 31, 2025 was approximately $ 4.63 million, compared to approximately $6.17 million during the year ended December 31, 2024.
The decrease in net loss was primarily attributable to the gain on disposal of subsidiaries recognized during 2024, partially offset by increased operating expenses and higher impairment charges during 2025.
Liquidity and Capital Resources
As of December 31, 2025, the Company had cash and cash equivalents of approximately $6,990, compared to approximately $2,352 as of December 31, 2024.
The following table summarizes our cash flows from continuing operations for the periods presented:
| December 31, 2025 ($) | December 31, 2024 ($) | Change ($) | ||||||||||
| Not cash used in operating activities | (751,197 | ) | (456,431 | ) | (294,766 | ) | ||||||
| Net cash provided by investing activities | 0 | 154,418 | (154,148 | ) | ||||||||
| Net cash provided by financing activities | 757,344 | 368,152 | 389.192 | |||||||||
| Total Net Change in Cash - Continued Operations | 6,147 | 65,887 | (59,740 | ) | ||||||||
| Cash beginning of period - continued operations | 2,352 | 69,688 | (67,336 | ) | ||||||||
| Cash end of period - continued operations | 6,990 | 2,352 | 4,638 | |||||||||
Operating Activities
Net cash used in operating activities from continuing operations was $751,197 for the year ended December 31, 2025, compared to $456,431 for the year ended December 31, 2024. Although our net loss decreased slightly from $4,783,651 in 2024 to $4,632,893 in 2025, the cash outflow from operations increased by $294,766. This increased cash usage was primarily driven by cash paid for public company operating costs and compliance activities, partially offset by significant non-cash adjustments in 2025, including $1,021,192 in amortization, $1,168,228 in debt extinguishment loss, and $1,019,611 in impairment loss on intangible assets, as well as a $459,096 increase in non-trade accounts payable.
Investing Activities
Net cash provided by investing activities from continuing operations was $0 for the year ended December 31, 2025, compared to $154,148 for the year ended December 31, 2024. The cash inflow in 2024 was primarily attributable to $84,154 from the collection of short-term loan receivables and $84,097 from the disposal of property and equipment, whereas there were no such investing activities or asset disposals during 2025.
Financing Activities and Capital Resources
The Company has historically financed operations through equity issuances, debt financing, and related-party support. Net cash provided by financing activities from continuing operations was $757,344 for the year ended December 31, 2025, compared to $368,152 for the year ended December 31, 2024. The $389,192 increase in financing cash inflow was primarily driven by capital raising and liquidity management initiatives in 2025, which included $358,573 in proceeds from short-term loan payable, $220,727 in proceeds from short-term loan payable from related parties, and $178,044 in proceeds from the exercising of warrants. These inflows were utilized to fund our working capital requirements and support ongoing public company compliance operations.
Stockholders' equity decreased from approximately $5.7 million as of December 31, 2024 to approximately $3.4 million as of December 31, 2025. The decrease was primarily driven by the Company's net loss for 2025, debt conversions and warrant exercise and the impairment charge on intangible assets. The Company also effected a 1-for-20 reverse stock split in January 2025, which reduced the number of outstanding shares but did not materially affect total stockholders' equity.
Going Concern
The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern.
As of December 31, 2025, we had cash and cash equivalents of $6,990. For the year ended December 31, 2025, we incurred a net loss of $4,632,893 and used cash in operating activities of $751,197. These conditions raise substantial doubt regarding the Company's ability to continue as a going concern.
Management intends to address these conditions by continuing the launch and commercialization of the upgraded Faning 2.0 platform, pursuing K-food products and entertainment-related business ventures, seeking to increase user engagement and monetization, controlling operating costs, and pursuing additional capital through equity financings, borrowings, or other available financing arrangements.
The Company currently believes that its existing cash on hand is sufficient to support operations for approximately two months based on the current operating cash burn rate.
Management estimates that the Company will require approximately $250,000 per month to support ongoing operations and execute its business plan. Accordingly, the Company estimates that approximately $3.0 million of additional capital will be required over the next 12 months.
To address its liquidity needs and support future operations, the Company entered into an Equity Purchase Agreement with Hudson Global Ventures providing access to up to $18 million in equity financing through an equity line facility, subject to the terms and conditions of the agreement. Management believes this financing arrangement provides the Company with access to sufficient capital resources to support its planned operations and growth initiatives.
There can be no assurance that the Company will be successful in obtaining additional financing or achieving profitable operations.
Critical Accounting Policies and Estimates
The preparation of the Company's consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and disclosures of contingent assets and liabilities at the date of the financial statements, as well as the reported amounts of revenues and expenses during the reporting period.
Significant estimates and assumptions include:
| ● | Fair value measurements including the fair value of the Company's common stock; | |
| ● | Stock-based compensation; | |
| ● | Recoverability, useful lives, and impairment assessments of long-lived and intangible assets; | |
| ● | Valuation allowance relating to the Company's deferred tax assets; and | |
| ● | Assumptions related to projected future cash flows and commercialization timing. |
Management evaluates these estimates on an ongoing basis using historical experience and various other assumptions believed to be reasonable under the circumstances. Actual results may differ materially from these estimates and assumptions.
Recent Developments and Outlook
During 2025, the Company continued transitioning the Faning platform from a development-focused stage toward early-stage commercialization. Management expects future operational focus to include:
| ● | migration and re-engagement of legacy Fantoo users; | |
| ● | enhancement of monetization tools and subscription functionality; | |
| ● | targeted user acquisition in selected international markets; | |
| ● | strategic partnerships involving entertainment and digital content; and | |
| ● | expansion of platform engagement features. |
The Company's future growth remains dependent on successful user adoption, execution of its commercialization strategy, and access to external financing.
Convertible Debt
On March 19, 2025, the Company issued 300,000 shares of Common Stock at a conversion price of $0.70 per share in connection with the conversion of $210,000 of indebtedness payable to Evan Trust. Debt conversion loss was $300,030.
On May 7, 2025, the Company issued 90,123 shares of Common Stock at a conversion price of $1.19 per share, together with warrants to purchase 81,739 shares of Common Stock at an exercise price of $1.29 per share and expiring on the fifth anniversary of the issuance date, in connection with the conversion of $105,444 of indebtedness payable to Hangmuk Shin. Debt conversion loss was $178,748.
On May 7, 2025, the Company issued 135,817 shares of Common Stock at a conversion price of $1.27 per share, together with warrants to purchase 125,383 shares of Common Stock at an exercise price of $1.42 per share and expiring on the fifth anniversary of the issuance date, in connection with the conversion of $175,205 of indebtedness payable to Jeyoun Baeg. Debt conversion loss was $257,054.
On May 7, 2025, the Company issued 135,817 shares of Common Stock at a conversion price of $1.27 per share, together with warrants to purchase 125,383 shares of Common Stock at an exercise price of $1.42 per share and expiring on the fifth anniversary of the issuance date, in connection with the conversion of $175,205 of indebtedness payable to Jungok You. Debt conversion loss was $257,054.
On May 20, 2025, the Company issued 246,666 shares of Common Stock at a conversion price of $0.70 per share in connection with the conversion of $172,666 of indebtedness payable to PixelArc LLC. Debt conversion loss was $175,343.
On August 19, 2025, warrants held by Jungok You were exercised at an exercise price of $1.42 per share, resulting in the issuance of 125,383 shares of Common Stock for aggregate cash proceeds of approximately $ 178,044.
During the year ended December 31, 2025, the company recorded loss on extinguishment of debt of $1,168,228.
Contractual Obligations
As of December 31, 2025, the Company did not have any material long-term contractual obligations, other than obligations incurred in the ordinary course of business, including accrued professional fees and other accounts payable reflected in the Company's consolidated financial statements.
Off-Balance Sheet Arrangements
As of December 31, 2025, the Company did not have any off-balance sheet arrangements, as defined under applicable SEC rules, that have or are reasonably likely to have a material current or future effect on the Company's financial condition, results of operations, liquidity, capital expenditures, or capital resources.
Critical Accounting Policies and Estimates
The preparation of the Company's consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and disclosures of contingent assets and liabilities at the date of the financial statements, as well as the reported amounts of revenues and expenses during the reporting period.
Significant estimates and assumptions include:
| ● | Fair value measurements (including the fair value of the Company's common stock); | |
| ● | Stock-based compensation; | |
| ● | Recoverability, useful lives, and impairment assessments of long-lived and intangible assets; | |
| ● | Valuation allowance relating to the Company's deferred tax assets; and | |
| ● | Assumptions related to projected future cash flows and commercialization timing. |
Management evaluates these estimates on an ongoing basis using historical experience and various other assumptions believed to be reasonable under the circumstances. Actual results may differ materially from these estimates and assumptions.
Recent Accounting Pronouncements
We have determined that all other issued, but not yet effective accounting pronouncements are inapplicable or insignificant to us and once adopted are not expected to have a material impact on our financial position.