Neofect Improves Financial Structure Through Paid-in Capital Increase and CB Conversion: "Secured Funds to Be Invested in New Businesses"

Neofect announced on December 18 that it has successfully completed a paid-in capital increase.

Neofect finalized the third-party allocation paid-in capital increase in two rounds, on November 27 and December 17, securing a total of 1.15 billion KRW (approximately 11.5 billion KRW per round) in operating funds. These funds will be used to expand the company’s existing artificial intelligence (AI) robot rehabilitation medical business, as well as new device (medical and beauty) and inorganic material businesses. The main purposes are to increase production capacity and invest in research and development (R&D).

In particular, the company expects a sharp increase in sales from its new inorganic material (magnesium silicate) business. Given that the contribution margin of magnesium silicate typically exceeds 50%, this is also expected to improve profitability. Contribution margin refers to the profit that contributes to covering fixed costs and increasing net income; the higher the contribution margin, the greater the operating profit.

Additionally, the convertible bonds (CB) that were previously classified as liabilities in accounting have been converted into capital. As of the end of the third quarter, the outstanding balance of CBs was approximately 1.36 billion KRW, with related liabilities totaling 2.37 billion KRW. By December 16, more than half of the CBs, amounting to 710 million KRW, had been converted into shares, reducing CB-related liabilities by more than half. Until now, CB liabilities had placed a burden on both the debt ratio and profit and loss.

A Neofect representative stated, “With further financial improvements and asset revaluation, we expect total equity to more than double compared to the 26.9 billion KRW recorded at the end of the third quarter this year.”

Since the change in its largest shareholder, Neofect achieved a successful turnaround by recording a consolidated comprehensive income of 300 million KRW in the third quarter of this year. Through restructuring and financial improvement efforts, the company has increased its capital and significantly reduced its debt ratio, thereby securing financial stability.

A Neofect official commented, “This improvement in our financial structure will provide a stable foundation for the next stage of our business growth,” adding, “We will focus on developing new markets for both our existing and new businesses using the funds we have secured.”