United States securities and exchange commission logo
December 22, 2022
Chang-Hyuk Kang
Chief Executive Officer
Hanryu Holdings, Inc.
160, Yeouiseo-ro
Yeongdeungpo-gu, Seoul
Republic of Korea 07231
Re: Hanryu Holdings,
Inc.
Amendment No. 4 to
Draft Registration Statement on Form S-1
Submitted December
6, 2022
CIK No. 001911545
Dear Chang-Hyuk Kang:
We have reviewed your amended draft registration statement and
have the following
comments. In some of our comments, we may ask you to provide us with
information so we
may better understand your disclosure.
Please respond to this letter by providing the requested
information and either submitting
an amended draft registration statement or publicly filing your
registration statement on
EDGAR. If you do not believe our comments apply to your facts and
circumstances or do not
believe an amendment is appropriate, please tell us why in your
response.
After reviewing the information you provide in response to these
comments and your
amended draft registration statement or filed registration statement, we
may have additional
comments. References to our prior comments refer to our letter dated
November 23, 2022.
Amendment No. 4 to Draft Registration Statement on Form S-1
General
1. Please tell us whether
you expect to repurchase Fantoo Points ( FP ) from users after
issuance. If so,
describe the terms of such repurchases and explain what happens if FP is
not redeemed by a user
after a prolonged period of time.
2. Explain to us how the
KDC Foundation expects to generate sales that may result in
payments to the company
under the Business Transfer Agreement dated June 22, 2022.
3. Please explain to us
what the principal business of Seoul Marina Co., Ltd. is, which we
understand from prior
filings is a minority-owned subsidiary of Marine Island Co., Ltd., a
Chang-Hyuk Kang
FirstName LastNameChang-Hyuk Kang
Hanryu Holdings, Inc.
Comapany22,
December NameHanryu
2022 Holdings, Inc.
December
Page 2 22, 2022 Page 2
FirstName LastName
wholly-owned subsidiary of the company that holds the rights to
possess and manage the
Seoul Marina.
4. Please provide more detail on the $729,963 received from the sale of
investments as
disclosed on pages 68 and F-5. Advise us how this impacts your
analysis of the
company s status as an investment company as that term is
defined under the
Investment Company Act of 1940, as amended, that you provided in your
response letter
dated October 28, 2022.
Prospectus Summary
Financial, page 4
5. Please revise, here and throughout the prospectus, to update your
statement regarding
revenue from the FANTOO platform and recurring losses to reflect the
amounts included
in your financial statement for the most recent period presented,
which is
currently September 30, 2022.
FANTOO Platform, page 5
6. We note from your revised disclosure in response to prior comment 2
that no FP have
been issued to date since no advertising revenue has been generated on
the FANTOO
platform. However, it appears that you generated advertising revenue
through the pilot
campaign during the nine months ended September 30, 2022. Please
explain these
apparent inconsistencies or revise as necessary. To the extent
advertising revenue was
generated but no FP were issued, explain that further. Also, revise
your disclosures
throughout the prospectus where you state that no advertising revenue
has been generated
to date, or explain why such statements are still appropriate.
FP and Divestiture of Kingdom Coin ("KDC"), page 5
7. Please incorporate your response to prior comment 7 that you do not
anticipate generating
any revenue from the revenue sharing provision of the Business
Transfer Agreement in
your summary section and/or your management's discussion and analysis
section.
Capitalization, page 53
8. Please revise to reflect this information as well as the dilution
information as of the date
of most recent financial statements included in the filing.
Management's Discussion and Analysis of Financial Condition and Results of
Operations, page
57
9. Please revise to discuss the pilot campaign with the South Korean
partner, including the
nature of the arrangement and the services provided to date and those
that still need to
provided, if any. Also, explain the nature of the revenue earned from
this program during
the nine months ended September 30, 2022.
Chang-Hyuk Kang
FirstName LastNameChang-Hyuk Kang
Hanryu Holdings, Inc.
Comapany22,
December NameHanryu
2022 Holdings, Inc.
December
Page 3 22, 2022 Page 3
FirstName LastName
Key Performance Indicators, page 59
10. Please revise to include the user acquisition cost for the nine months
ended September 30,
2022.
Components of Results of Operations
Revenue, page 60
11. Tell us whether revenue generated from the pilot campaign with the
South Korean
company relates to any of the of the revenue streams discussed here.
If so, include a
discussion of such campaign within such revenue stream disclosures or
revise to include a
separate discussion of revenue related to the pilot program. Also,
revise to discuss the
nature of the revenue generated from the K-Commerce website.
Liquidity and Going Concern, page 66
12. You state that since the period ended September 30, 2022, you
generated approximately
$1.1million from the exercise of warrants and $800,000 from a pilot
campaign. However,
it appears from your disclosures on page 69 that certain of these
events occurred prior
to September 30, 2022. Please explain or revise to ensure your
disclosures are consistent
throughout. To the extent the $800,000 was not received as of
September 30, 2022, please
indicate where it is reflected on the balance sheet as of September
30, 2022 and the date
the cash was subsequently received.
Relaxed Ongoing Reporting Requirements, page 73
13. Please revise your disclosures to note that you would cease to be an
emerging growth
company as of December 31st if the market value of your common stock
held by non-
affiliates exceeds $700 million as of the prior June 30.
Condensed Consolidated Statements of Operations, page F-3
14. We note cost of goods sold, (also referred to as cost of revenue) for
the nine months ended
September 30, 2022, is less than the amount previously disclosed for
the six months ended
June 30, 2022. Please explain why and revise your disclosures, as
necessary. Also, tell us
the amount and type of costs included in cost of revenue related to
the pilot campaign.
Lastly, revise to use a consistent title for these costs in your
financial statements and
throughout the prospectus.
Notes to Condensed Consolidated Financial Statements
Note 2 - Significant Accounting Policies
Revenue Recognition, page F-11
15. Please describe to us, in detail, the pilot campaign with the South
Korean company and
ensure you address the following:
the specific nature of the services to be provided;
Chang-Hyuk Kang
FirstName LastNameChang-Hyuk Kang
Hanryu Holdings, Inc.
Comapany22,
December NameHanryu
2022 Holdings, Inc.
December
Page 4 22, 2022 Page 4
FirstName LastName
the promises and performance obligations;
all of the pertinent terms, such as the period of performance and
pricing;
how you accounted for this arrangement; and
how revenue was earned in the current period.
Also, revise your disclosures here to address this arrangement and the
related accounting.
Note 8 - Investments, page F-23
16. We note your response and revised disclosures to prior comment 19.
Please further revise
to clarify that the consideration received was cash totaling $729,963
and a non-trade
receivable for $846,205, and remove your references to "total cash
consideration of
$1,576,168" throughout. Similar revisions should be made on page F-61.
Further, revise
Note 13 to include the portion of the bond sale in which the non-trade
receivable was
received as consideration.
Notes to Consolidated Financial Statements
Note 2 - Significant Accounting Policies, page F-47
17. Revise to include your accounting policy for costs of goods sold and
include a description
of the nature of such costs. Similar revisions should be made to the
footnotes to your
interim financial statements.
Revenue Recognition, page F-49
18. We note your response to prior comment 13, however, it is still
unclear how you control
the goods and services you sell under your contracts with the
"partners" referenced in your
disclosure. Please explain who these partners are and whether they are
third parties in the
arrangements with your customers. To the extent they are involved in
providing goods or
services to your customers, tell us how you determined whether the
nature of your
promise is a performance obligation to provide the specified good or
service or to arrange
for those goods or services to be provided by the third party. Refer
to ASC 606-10-55-
36. Further, if the performance obligation is to provide the specified
good or service, tell
us how you determined you have the ability to control, (i.e. the
ability to direct the use of
and obtain substantially all of the remaining benefits from), the good
or service before it is
transferred to the customer. Refer to 606-10-55-36A and 606-10-25-25.
Note - 9 Investments, page F-61
19. We note your response to prior comment 20. Please tell us whether the
right to receive
payment from SMC is a debt security or an other asset. If it is a debt
security, tell us
whether it is classified as trading, available-for-sale, or held to
maturity, how your
accounting and subsequent measurement is consistent with that
classification, and revise
your disclosures, as necessary Refer to ASC 320-10. If it is an other
asset, tell us what
specific accounting guidance you relied upon, reclassify the amount on
the balance sheet,
and revise your disclosures accordingly.
Chang-Hyuk Kang
Hanryu Holdings, Inc.
December 22, 2022
Page 5
You may contact Melissa Kindelan, Senior Staff Accountant, at (202)
551-3564 or Kathy
Collins, Accounting Branch Chief at (202) 551-3499 if you have questions
regarding comments
on the financial statements and related matters. Please contact Edwin Kim,
Staff Attorney, at
(202) 551-3297or Larry Spirgel, Office Chief, at (202) 551-3815 with any other
questions.
Sincerely,
FirstName LastNameChang-Hyuk Kang
Division of
Corporation Finance
Comapany NameHanryu Holdings, Inc.
Office of Technology
December 22, 2022 Page 5
cc: Matthew Ogurick, Esq.
FirstName LastName