Skonec Says "No Grounds for Issue-Management Designation Until End-2025 Under Tech Exception"

Skonec Entertainment (hereinafter Skonec) announced on the 9th that it has completed a company-wide restructuring last month and will begin full-scale efforts to attract investment through convertible bonds (CB) based on improved financial stability and earnings visibility.

Through this restructuring, Skonec adjusted approximately 37% of its total workforce and secured an annual reduction in fixed costs of about 2 billion won. As a result, its cost structure has been fundamentally improved, its break-even point has been significantly lowered, and its financial structure is now considered to be more stable.

Based on this structural improvement, the company is targeting consolidated sales of 12.5 billion won and operating profit of more than 1 billion won in 2026. It explained that this is a conservative earnings guidance calculated mainly from confirmed revenues already secured in its existing XR, game, and public system integration (SI) businesses.

Skonec plans to prioritize the use of funds raised for improving its financial structure and strengthening liquidity, while also gradually allocating them to strategic investments and small-scale M&A in adjacent business areas that can generate synergies with its XR business. The company expects to enter a phase of normalized profit-and-loss structure starting in 2026 based on this business structure.

A Skonec representative said, "As a company listed under the technology exception program, we have had no risk directly related to being designated as an issue-management stock under the relevant regulations through the end of last year."

If losses from continuing operations before corporate tax exceed 50% of equity capital over the most recent three fiscal years, a company can be designated as an issue-management stock. However, Skonec explained that, under the special provisions for technology-growth companies, this requirement will not apply until December 31, 2025.

In terms of capital impairment conditions as well, Skonec is currently not subject to the criteria for designation as an issue-management stock. The company stated that, considering the level of its capital stock and equity capital as of the end of 2025, it will be able to close its books without falling into a state where capital impairment reaches 50% or more, even if it applies conservative accounting treatments such as bad debt amortization.

Skonec also explained that it is classified as a technology-growth company and therefore subject to exception rules regarding the criteria for designation as an "investment-alert stock," which can be applied when operating losses occur for five consecutive fiscal years.

A company representative added, "We expect to enter a phase from 2026 in which the effects of restructuring and business reorganization will be fully reflected in our results, and in the mid to long term we will transition to a normal listed-company structure that does not rely on institutional grace periods, through revenue growth and improved profitability."

This content was produced with the assistance of AI translation services.