[Edaily Reporter Kim Jinsoo ] IoFlow is filing an appeal against the delisting decision made by the Korea Exchange’s Corporate Review Committee (CRC). IoFlow maintains that if the appeal is accepted, it will be able to resolve a significant portion of its financial issues during the subsequent improvement period and is taking proactive measures to prevent delisting.

On the 21st, Kim Jae-jin, CEO of EoFlow, told PharmDaily, “We will, of course, file an appeal against the exchange’s delisting decision. We will focus on financial improvement even during the appeal period and will do our utmost to secure a grace period.”

On the 19th, the Korea Exchange’s Listing Review Committee voted to delist IoFlow. Previously, in June, the committee had decided to postpone deliberations on IoFlow and monitor the company’s progress in implementing corrective measures for a certain period; however, it issued the delisting decision shortly thereafter.

At the time, the Committee attached the condition that it could resume deliberations early if it became clearly evident that the grounds for delisting could not be resolved within a short period; this is interpreted as the Committee having made a negative assessment of Eoflow’s prospects for improvement.

Consequently, EoFlow is filing an appeal against the IRB’s decision. Following the IRB’s delisting decision, the company has a set period to file an appeal; upon filing, the KOSDAQ Market Committee will review the matter again to determine whether the company should be delisted. After its review, the KOSDAQ Market Committee will either uphold the delisting decision or, if it determines there is a possibility of improvement, grant a period for remediation.

In the pharmaceutical and biotech industry, there have been several cases where companies received a grace period from the KOSDAQ Market Committee following a delisting decision by the Listing Review Committee and ultimately resumed trading. The first such case was SillaJen, which received a delisting decision from the Listing Review Committee in January 2022 but was granted a six-month grace period by the KOSDAQ Market Committee in February of the same year. Following a review of the implementation of its improvement plan, a decision was made in October of that year to maintain its listing, and trading resumed. DXVX is another example of a company that received a grace period from the KOSDAQ Market Committee after the Preliminary Delisting Committee’s decision to delist, and ultimately received a decision to maintain its listing.

EoFlow has also been granted a remediation period and is aiming to improve its financial position. As of the first half of this year, EoFlow’s equity stood at approximately minus (-) 47.6 billion won, with a capital erosion rate of 1,237.78%, indicating a state of complete capital erosion. Even if we factor in the approximately 26 billion won rights offering through a contribution-in-kind and the issuance of 2 billion won in equity securities that EoFlow is currently pursuing, its equity would still amount to approximately minus 19.6 billion won based on a simple calculation. Additional capital injection is therefore essential to escape the state of complete capital impairment.

CEO Kim emphasized, “We plan to prioritize improving financial aspects, such as capital impairment. We have already secured commitments for a significant portion of the necessary funds.” He added, “While many parties have shown interest in investing, some are hesitating at the final stage due to various issues. Our challenge is to persuade them to follow through with actual investments. Although there is still a shortfall to be covered, I do not believe the amount is beyond our ability to raise.”

In particular, since the KOSDAQ Market Committee does not assess the company’s improvement status based solely on expressions of interest or promises, the immediate priority is to sign actual contracts.

He explained, “There are details that cannot be disclosed specifically as they have not yet been finalized, but we plan to proceed as much as possible with what we can do until the results of the appeal are announced. Our goal is to demonstrate as much progress as possible before the results are released, and if we are granted a grace period, to improve to a level satisfactory to the exchange within that timeframe.”

In addition to improving the financial structure, restoring revenue is also a key task to prevent delisting. On the 14th of this month, the Korea Exchange added grounds for a substantive review of listing eligibility, confirming that IoFlow’s most recent half-year revenue was less than 700 million won, its most recent quarterly revenue was less than 300 million won, and its equity was fully eroded at the end of the most recent half-year.

This was due to factors such as restrictions on new business operations resulting from the lawsuit with Insulet; however, IoFlow has resumed new business operations since June 23. IoFlow plans to sufficiently demonstrate progress in terms of revenue during the improvement period and to make its results as visible as possible to the extent that the exchange finds them convincing.

CEO Kim stated, “I’ve heard that the Corporate Review Committee has been issuing many delisting decisions recently,” adding, “Therefore, we believe it is crucial for the company to actively demonstrate its potential for improvement and tangible results during the appeal process following this decision.”

Finally, he said, “Rather than asserting with certainty that we are confident in resolving our financial issues, our stance is to do our very best,” adding, “We plan to implement all possible measures to demonstrate the company’s potential for improvement during the appeal and the review process for the improvement period.”