Exion Group, which only recently scraped past a delisting crisis, abruptly hit the brakes on its plan to push into a virtual asset-related business. The decision reflected expert advice that, because virtual assets are only now entering the regulated sphere in an early phase, rushing into a new business could result in not receiving an unqualified opinion from an external auditor.
On top of that, Exion Group recently saw trading in its shares temporarily suspended while undergoing a Korea Exchange review to determine whether it should be subject to a substantive examination of listing eligibility. That was because its second-quarter sales fell short of the threshold. With the company having come close to a potential delisting crisis, it appears to have concluded that it should also pursue any new business conservatively.
Exion Group changed the shareholders meeting, which had been set for the 26th of this month, to Jul. 31 next month, and significantly revised the agenda to be submitted to the meeting.
Initially, the company planned to discuss ways to enter a new virtual asset business at this shareholders meeting. Specifically, it included adding to the company's business purposes: ◇ token issuance and token securities (STO)-related business ◇ blockchain-based crypto-asset trading and brokerage ◇ other information services related to blockchain technology, and an agenda item to appoint two blockchain experts as inside directors.
The company had planned to appoint Chief Executive Song Han-eol of First Soul Korea and Director Jin Dae-ho of First Soul Korea. Song previously served as a hedge fund manager at Samsung Asset Management and as head of the LS Management Division at Mirae Asset Global Investments, while Director Jin served as Director General at the Seoul branch of JPMorgan Chase Bank. First Soul Korea, which has a subsidiary in Hong Kong, is said to specialize in blockchain-based asset trading.
Exion Group also decided in April to issue convertible bonds (CB) to raise 20 billion won, and planned to use 10 billion won of that to purchase virtual assets.
However, the company suddenly postponed the shareholders meeting and put the related agenda items on hold. According to a recently amended filing, all items to add content related to a new virtual asset business to the company's business purposes were removed, and the director appointment agenda was changed to "candidate undecided."
Regarding this, the company said, "We received advice from a consulting accounting firm that if we push a virtual asset business, problems could arise when receiving an audit opinion in the future," adding, "We are reconsidering the originally planned new business to avoid the risk of not receiving an unqualified audit opinion."
The reason the company is taking a conservative stance on pushing a new business appears to be related to the recent temporary suspension of share transactions.
Exion Group's second-quarter sales this year fell short of 300 million won, triggering grounds for a substantive review of listing eligibility under KOSDAQ market listing rules. As a result, trading in Exion Group shares was suspended on Aug. 18.
The company resolved the shortfall in sales by completing its merger with MJ Tech, which had been underway since Jun., and, as a result, escaped the risk of a substantive review and resumed trading. An Exion Group official explained, "Since share trading was suspended once before, another audit opinion issue must not arise."
The company is not expected to pursue a virtual asset business for the time being. The company said it will "for now focus on successfully steering the merged company."
Exion Group, an e-commerce company, has seen profitability deteriorate and performance remain weak. On a consolidation basis for the first half of this year, sales came to 1.91068 billion won and the operating loss totaled 3.36883 billion won. By contrast, MJ Tech is a manufacturing company specializing in piping construction. It has been in the black for three consecutive years since 2022, and last year posted sales of 74.1 billion won and operating profit of 4.6 billion won.