[Edaily Reporter Kim Hyung-il ] The listed company with the highest debt-to-equity ratio on the KOSDAQ market is the software specialist MAXST CO., LTD(377030). BITMAX, which started as an augmented reality (AR) software company, has recently been pursuing a treasury strategy that involves holding Bitcoin as a financial asset. In the process, while raising funds through convertible bonds (CBs) and other means, the company incurred valuation losses on its Bitcoin holdings, leading to a significant reduction in capital and pushing its debt-to-equity ratio above 9,000%.

According to the securities industry on the 23rd, BITMAX’s debt-to-equity ratio for the second quarter of this year stood at 9,435.28% on a standalone basis, a sharp increase of 8,475.60 percentage points from 959.68% at the end of last year. This is the highest level among KOSDAQ-listed companies. The primary reason for this sharp rise in the debt-to-equity ratio was not so much an increase in debt as it was a drastic decline in equity. As of the end of the second quarter of this year, BITMAX’s total liabilities were 72.67114 billion won, while total equity stood at 770.20 million won. This structure means that liabilities exceed equity by more than 94 times.

The decline in equity was influenced by valuation losses on Bitcoin. As of the end of the first half of the year, BITMAX held approximately 551 Bitcoins. Since BITMAX holds Bitcoin as a financial asset, it recognizes valuation gains and losses resulting from price fluctuations. The price of Bitcoin, which stood at around 170 million won last October, has since fallen and is currently hovering around 100 million won, affecting the valuation of the company’s holdings.

As part of its Bitcoin treasury strategy, BITMAX also continued to raise funds through convertible bonds (CBs). In fact, BITMAX linked the issuance of CBs with Bitcoin purchases, announcing plans to use a portion of the funds raised from the issuance of its 4th Series CB—totaling 50 billion won—to purchase Bitcoin.

At the end of the second quarter of this year, BITMAX’s book value of convertible bonds stood at 74.15 billion won. This represents a decrease of approximately 15.3 billion won from the 89.48684 billion won recorded at the end of last year. Although BITMAX has reduced the outstanding balance this year by early redemption and cancellation of some convertible bonds, the amount remains substantial when considering its total capital.

Convertible bonds (CBs) are bonds that come with the right to convert them into shares of the issuing company under certain conditions. If an investor exercises the conversion right, the company’s debt is converted into equity, which can improve its financial structure. Conversely, if the bonds are not converted, they remain as debt. In a situation like the current one, where total capital is only in the 700 million won range, the financial structure could change depending on whether the CBs are converted or redeemed in the future.

There is also a significant gap between the stock price at the time of the CB issuance and the current stock price. When the second series of CBs was issued in February of last year, the closing price was approximately 1,200 won; when the third series was issued in March, it was approximately 1,400 won; but by the time the fourth series was issued in June, the closing price had risen to about 7,000 won. Since then, the stock price has fallen again, with BITMAX’s closing price on the 21st standing at 1,708 won.

This financial strain also led to the company being designated as a “monitored stock.” During its financial closing process last February, BITMAX incurred a loss from continuing operations before income tax expenses exceeding 50% of its equity in two of the last three fiscal years, which constituted grounds for designation as a monitored stock. Subsequently, in March, it was designated as a monitored stock by the Korea Exchange.

Improving the profitability of its core business also remains a challenge. In the first half of this year, standalone revenue reached 10.44554 billion won, a 4,215.3% increase compared to the same period last year. While the revenue growth rate ranked third among KOSDAQ-listed companies—indicating a significant increase—the company recorded an operating loss of 1.38839 billion won. This shows that revenue growth has not yet translated into improved profitability.

A BITMAX official explained, “Capital has decreased significantly due to large valuation losses on the Bitcoin side, which has contributed to a higher debt-to-equity ratio,” adding, “The structure is such that if Bitcoin prices recover and generate valuation gains, these will be reflected in equity.” The official continued, “We have also reduced the outstanding amount of convertible bonds by repaying and canceling previously issued bonds, bringing the current outstanding balance to approximately 63 billion won,” and noted, “For now, we are prioritizing the improvement of our financial structure over additional Bitcoin purchases.”