Rights Offering of 19.1 Billion KRW, 70% Dilution from New Shares

Issuance of 11,000,000 common shares via rights offering followed by public offering of unsubscribed shares. Expected issue price of 1,735 KRW, total proceeds of 19.085 billion KRW. Dilution ratio of 70.38% relative to current 15,629,471 shares.
All proceeds allocated to operating capital: 12.0 billion KRW for marketing, 7.085 billion KRW for raw materials and outsourcing. No facility investment.
Consolidated operating loss of 17.3 billion KRW and net loss of 9.0 billion KRW in FY2025. Q1 2026 operating profit of 0.38 billion KRW, but net loss of 0.9 billion KRW. Negative operating cash flow of -2.84 billion KRW continues.
Major shareholder and related parties' stake drops from 27.40% to 20.61% after the offering (assuming 40% subscription). Further dilution to 19.92% if outstanding CBs are converted. Risk of control change if 2nd largest shareholder (Minishe Technology, 18.17%) overtakes.
Exposed to strengthened delisting criteria (market cap below 30 billion KRW, penny stock below 1,000 KRW). Five investment caution designations in recent years. Frequent capital policy changes (capital reduction, stock split) risk market confidence.

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