[Edaily Reporter KIM SAE-MI ] EOFlow Co., Ltd.(294090), which is currently undergoing a delisting review, has revised its audit opinion for the 2024 fiscal year from the previous “disclaimer of opinion” to “unqualified.”
While the formal grounds for delisting related to this issue have been resolved, the discovery of full capital impairment during the re-audit has created additional grounds for a substantive review of the company’s eligibility for listing. Since grounds for delisting based on a “disclaimer of opinion” for the 2025 fiscal year remain, trading in the company’s shares will continue to be suspended.
EOFlow Co., Ltd. announced on the 29th that it had reissued the audit report for its consolidated and separate financial statements for the 2024 fiscal year, changing the audit opinion from “disclaimer of opinion” to “unqualified.”
Accordingly, the Korea Exchange stated that the formal grounds for delisting due to the inadequate audit opinion for the 2024 fiscal year have been resolved. A grace period has been granted for the formal grounds for delisting resulting from the adverse audit opinion for the 2025 fiscal year. The grace period runs from April 1 to April 10 of next year.
Although the audit opinion was changed to “unqualified,” the financial statement figures deteriorated significantly. EOFlow Co., Ltd. restated its 2024 financial statements by correcting provisions for litigation, related accounts payable, and errors in the valuation of convertible bonds.
Consequently, net assets on a consolidated basis were revised to -22.4 billion won, a decrease of 27.9 billion won from the previous figure. Operating loss widened to 73.5 billion won, an increase of 12.5 billion won, and net loss for the period expanded to 91.9 billion won, an increase of 27.2 billion won. On a standalone basis, net assets also decreased by 30.2 billion won to -24.4 billion won. The operating loss was revised to 63.4 billion won, an increase of 11.2 billion won, and the net loss for the period was revised to 89.7 billion won, an increase of 27.5 billion won.
The issue is the complete erosion of capital revealed during the re-audit process. The exchange announced that, based on the financial statements in the re-audit report—which received an unqualified opinion—it was confirmed that EOFlow Co., Ltd. was in a state of complete capital erosion for the 2024 fiscal year. The exchange viewed this as equivalent to a de jure delisting due to complete capital erosion and added it as a ground for a substantive review of listing eligibility.
The resolution of the delisting grounds related to the audit opinion for the 2024 fiscal year itself became a separate reason for a substantive review. KOSDAQ listing regulations stipulate that a company may be subject to a substantive review of its listing eligibility if it resolves delisting grounds related to the audit opinion through a change in the audit opinion or by receiving an unqualified opinion in the next audit report. Accordingly, additional grounds for a substantive review were added for EOFlow Co., Ltd. on this day, including the resolution of the delisting grounds related to the audit opinion and the complete erosion of equity.
Uncertainty regarding the company’s financial structure also remains. The auditor determined that, as EOFlow Co., Ltd. recorded an operating loss of 73.5 billion won and a net loss of 91.9 billion won on a consolidated basis in 2024, and its current liabilities exceeded its current assets by approximately 39.4 billion won, there exists significant uncertainty that raises substantial doubt about the company’s ability to continue as a going concern. However, the auditor explicitly stated that these matters did not affect the unqualified audit opinion issued this time.
Previously, in March of last year, EOFlow Co., Ltd. received a disclaimer of opinion in its audit report for the 2024 fiscal year due to limitations on the scope of the audit and uncertainty regarding its ability to continue as a going concern, which constituted grounds for delisting and led to the suspension of trading in its shares. In March of this year, the company received another disclaimer of opinion regarding its fiscal year 2025 financial statements due to limitations on the scope of the audit and uncertainties regarding its ability to continue as a going concern, creating an additional ground for delisting.
Although this re-audit has resolved the formal grounds for delisting related to the 2024 fiscal year audit opinion, this does not mean that trading will resume immediately or that the company’s listing status has been confirmed. This is because the formal grounds for delisting resulting from the refusal of the 2025 fiscal year audit opinion remain, and the existing substantive review of listing eligibility—as well as the additional grounds for substantive review introduced this time—have not been resolved.
The Korea Exchange’s Corporate Review Committee voted to delist EOFlow Co., Ltd. on the 19th of last month. The company contested this decision and submitted an appeal on the 9th. The Exchange plans to convene the KOSDAQ Market Committee within 20 business days of the appeal’s filing to deliberate and decide on whether to proceed with delisting or grant a grace period for improvement.
A representative from EOFlow Co., Ltd. stated, “To resolve uncertainties regarding our going concern status, we plan to secure liquidity by selling assets such as investment stocks and patent rights, and to negotiate extensions for the conversion and redemption of convertible bonds as well as for the repayment of bank loans.” The representative added, “We also plan to pursue additional fundraising through measures such as a rights offering.”
