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Investments

12 Months Ended

Dec. 31, 2023

NOTE 6 — INVESTMENTS

The following table summarizes information with regard to investments outstanding as of December 31, 2023 and December 31, 2022.

Changes in investments, for the years ended December 31, 2023 and December 31, 2022, are as follows

	December 31, 2023		December 31, 2022
Beginning	$	—	$	1,695,299
Increase		—		635,000
Decrease		—		(2,183,822	)
Loss on sale of investments		—		(6,794	)
Translation Adjustment		—		(139,683	)
Total Investments	$	—	$	—

On October 18, 2021, the Company purchased bonds with warrants issued by Setopia Co., Ltd. (“Setopia”), for total consideration of $1,687,052 (the “Setopia Bonds with warrants”). The form of consideration was a mix of: (i) warrants to purchase 666,666 Common Shares of HBC, valued at $873,805; and (ii) distribution of 100,000,000 KDC.

The transaction with Setopia as a beneficial owner of more than 10% of the Company’s outstanding securities, was a related-party transaction. However, neither Setopia nor the Company control the other by any methods including, without limitation, contract, lease, agreements between shareholders, or court decree. Further, each of Setopia and HBC have different principal owners, management, and there have been no transactions between any members of the principal owners’ or managements’ immediate families. On October 27, 2022, Setopia became an unaffiliated and unrelated third party of the Company since, as of that date, Setopia is a stockholder who owns less than 10% of the Company’s outstanding securities.

The Company accounted for the investment in Setopia at fair value. The Company determined this investment to be a “debt security” classified into trading debt securities under ASC 320-10-20, as the Company intended to sell it in the near term at the time of acquisition. There has been no unrealized holding gains and losses for trading securities included in earnings since the value of the Setopia Bonds with warrants did not change until it is sold to the third party for the year ended December 31, 2022. Prior to the acquisition of the Setopia Bonds with warrants, the Company owned no interest in Setopia. After the acquisition the Setopia Bonds with warrants, the Company became the owner of record or known beneficial owner of 2.06% of the voting interest of Setopia.

The acquisition of the Setopia Bonds with warrants is a related-party transaction under ASC 850-10-05-3(d).

On February 11, 2022, the Company sold the acquired Setopia Bonds with warrants to an unaffiliated and unrelated third party in exchange for the consideration of cash totaling $696,621 and a non-trade receivable for $851,426 due by December 30, 2022, which resulted in a decrease of the investment balance of $1,687,052 including the currency translation adjustment of ($139,004) as of December 31, 2022. The Company and a third party entered into an extension agreement for a non-trade receivable due by April 30, 2023.

On October 4, 2022, the Company purchased convertible bonds issued by Setopia, for total consideration of $635,000 (the “Setopia Convertible Bonds”). The Setopia Convertible Bonds were initially issued on January 27, 2022, with no annual interest and a maturity date of January 27, 2025. The form of consideration was to accept the consideration of warrants with an exercise price of $1.27 to purchase 500,000 shares of Common Stock. On October 4, 2022, warrants were exercised with an exercise price of $1.27 to purchase 500,000 shares of common stock.

On December 30, 2022, the Company sold the Setopia Convertible Bonds to an unaffiliated and unrelated party by receiving non-trade receivables of $710,171 due by February 28, 2023, which resulted in a decrease of the investment balance of $635,000 including the currency translation adjustment of $75,171 as of December 31, 2022. The Company collected such non-trade receivables by cash in full on March 23, 2023. There was no gain or loss realized on this transaction during the year ended December 31, 2022.

On June 30, 2021, HBC and Sewang entered into the Contract and Share Assignment, pursuant to which HBC acquired: (i) the Marine Island Shares, and thereby the Lien, which gave Marine Island the right to use and occupy the Seoul Marina until the Lien is repaid; (ii) the SMC Shares; and (iii) the SMC Receivable.

The aggregate consideration paid to Sewang for the rights and assets under the Contract was $2,943,905, initially allocated as follows: (1) $8,247 to the purchase SMC Shares at a price of $0.87 per share, constituting 24.53% of the issued and outstanding common shares of SMC; and (2) $2,935,658 to SMC Receivable and the Lien, calculated by determining the present value of leasing the Seoul Marina facilities for free over 10 years. Sewang received $2,009,752 in the form of 23,000,000 KDC, and the remaining $934,153 in the form of cash.

On December 30, 2022, the Company sold the SMC shares to an unaffiliated and unrelated third party in exchange for the consideration of cash totaling $774, which resulted in a decrease of the investment balance of $8,247 including the currency translation adjustment of ($679) as of December 31, 2022 and loss on sale of investments of $6,794 for the year ended December 31, 2022.

The Company recorded the Marine Island Shares as affiliated stocks, and the SMC Shares as an investment, and the remaining SMC Receivable and Lien as Operating Lease Right-Of-Use Asset which is being amortized over a ten year period under the guidelines of ASC 842. See Note 7 “Lease”. The SMC Shares and the Marine Island Shares were calculated by the number of shares multiplied by the par value of $0.87 and $0.44. The value of SMC Receivable and the Lien was calculated by determining the present value of the Lien on the assumption the Company would lease the Seoul Marina facilities for free for at least 10 years.

The Company is not a principal owner of SMC. In addition, neither SMC nor the Company control the other by any methods including, without limitation, contract, lease, agreements between shareholders, or court decree. Further, each of SMC and HBC have different principal owners, management, and there have been no transactions between any members of the principal owners’ or managements’ immediate families.

For the Marine Island Shares, the Company applied ASC 805 as the Company owns more than 50% of the issued and outstanding shares of Marine Island, and the Company consolidates the financial statements. For the SMC Shares, the Company applies ASC Topic 321-10-20 and 321-10-35-2, and it is recorded as an equity investment by the cost method. For SMC right, the Company recorded these rights as Operating Lease Right-Of-Use Asset-see Note 7.