20:1 Reverse Stock Split and 99.99% Dilutive Rights Offering, Persistent Operating Losses Signal Severe Financial Distress
20:1 reverse stock split (uncompensated reduction of shares to 1/20) attempted to offset deficits but failed to resolve capital impairment
Rights offering (with public offering of unsubscribed shares) to raise approximately 18.7 billion KRW, diluting existing shareholders by 99.99% relative to outstanding shares
Consolidated operating losses for 2023-2025 (2025: -93.2 billion KRW) and Q1 2026: -19.8 billion KRW; negative operating cash flow continues
Debt-to-equity ratio rose to 53.05% in 2025 and 59.13% in Q1 2026; interest coverage ratio negative
Outstanding convertible bonds of 13.1 billion KRW (if converted, 1.19 million shares, 30.06% of outstanding) pose additional dilution risk
Among three lawsuits (total 6.11 billion KRW), the injunction to stop new share issuance was dismissed on May 12, 2026, but loan and damage claims are ongoing
Major shareholder (Satoshi Holdings) stake expected to drop to 18.81% (assuming 50% participation) after rights offering, raising governance instability
Past investment losses of approximately 10 billion KRW (NGVI, RIFTEC, etc.) and game subsidiary Needs Games' new title service termination risk further impairments
Share buyback and cancellation under review but no concrete plan; no dividends paid
KOSDAQ Filing Information
Filing: [Correction of Description] Securities Registration Statement (Equity Securities)