| Income taxes |
13. Income taxes
Income tax expense is recognized based on management’s best estimate of the average annual effective income tax rate expected for the full financial year, multiplied by the pre-tax income of the interim reporting period. No discrete tax items were recognized during the six months ended June 30, 2026 and 2025.
For the six months ended June 30, 2026 and 2025, the Company’s effective tax rate was 0.0%. The effective income tax rate differs significantly from the statutory tax rate applicable to the Company primarily due to the full recognition of valuation allowances of deferred tax assets and temporary differences incurred during the period.
|
17. Income taxes
| A. |
Amounts recognized in profit or loss and other comprehensive income |
The total income tax expense recognized in profit or loss and other comprehensive income for the years ended December 31, 2025 and 2024 was nil. This results from a current tax expense of nil and no movement in deferred tax assets or liabilities arising from temporary differences, as the Company did not have any transactions recognized in other comprehensive income during the year.
| B. |
Reconciliation between income tax (credit) expense and accounting loss: |
| Schedule of effective tax rate |
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
2025 |
|
|
2024 |
|
| |
|
|
|
(In thousands of Korean won) |
|
| Loss before income tax |
|
₩ |
|
|
(6,141,476 |
) |
|
|
(8,065,334 |
) |
| Tax at the statutory income tax rate |
|
|
|
|
(608,006 |
) |
|
|
(798,468 |
) |
| Adjustments: |
|
|
|
|
|
|
|
|
|
|
| Tax-exempt income |
|
|
|
|
(36,427 |
) |
|
|
(13,673 |
) |
| Expenses not deductible for tax purposes |
|
|
|
|
215,761 |
|
|
|
374,340 |
|
| Changes in unrecognized temporary difference |
|
|
|
|
125,382 |
|
|
|
683,633 |
|
| Other |
|
|
|
|
303,290 |
|
|
|
(245,832 |
) |
| Income tax expenses |
|
₩ |
|
|
- |
|
|
|
- |
|
| Effective
income tax rate (*) |
|
|
|
|
0.0 |
% |
|
|
0.0 |
% |
| (*) |
The effective tax rate is not calculated as the Company incurred a loss before income taxes for the years ended December 31, 2025 and 2024. |
| C. |
Movement in deferred tax balances |
| |
i. |
Movement in deferred tax balances for the year ended December 31, 2025 |
| Schedule of deferred tax balances |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
Tax effect |
|
| |
|
|
|
Beginning |
|
|
Increase
(decrease) |
|
|
Ending |
|
| |
|
|
|
(In thousands of Korean won) |
|
| Impairment Losses on Intangible Assets |
|
₩ |
|
|
198,000 |
|
|
|
8,009 |
|
|
|
206,009 |
|
| Allowance for doubtful accounts |
|
|
|
|
236,570 |
|
|
|
(110,216 |
) |
|
|
126,354 |
|
| Lease liabilities |
|
|
|
|
66,234 |
|
|
|
(11,524 |
) |
|
|
54,710 |
|
| Property and equipment |
|
|
|
|
(6,265 |
) |
|
|
(44,292 |
) |
|
|
(50,557 |
) |
| Bond with warrants, net |
|
|
|
|
(163,930 |
) |
|
|
(4,339 |
) |
|
|
(168,269 |
) |
| Leasehold deposit receivables |
|
|
|
|
7,278 |
|
|
|
(1,145 |
) |
|
|
6,133 |
|
| Defined benefit liabilities |
|
|
|
|
94,072 |
|
|
|
3,031 |
|
|
|
97,103 |
|
| Derivative liabilities |
|
|
|
|
145,908 |
|
|
|
(20,396 |
) |
|
|
125,512 |
|
| Accrued expenses |
|
|
|
|
(6,092 |
) |
|
|
(1,270 |
) |
|
|
(7,362 |
) |
| Accrued income |
|
|
|
|
(18,219 |
) |
|
|
(10,536 |
) |
|
|
(28,755 |
) |
| Inventories, net |
|
|
|
|
25,372 |
|
|
|
- |
|
|
|
25,372 |
|
| Provisions for restoration |
|
|
|
|
4,786 |
|
|
|
31 |
|
|
|
4,817 |
|
| Others |
|
|
|
|
13,499 |
|
|
|
(4,106 |
) |
|
|
9,393 |
|
| Total |
|
₩ |
|
|
597,213 |
|
|
|
(196,753 |
) |
|
|
400,460 |
|
| Loss carried forward |
|
₩ |
|
|
3,402,320 |
|
|
|
378,738 |
|
|
|
3,781,058 |
|
| Carryover tax credit |
|
|
|
|
526,463 |
|
|
|
(56,604 |
) |
|
|
469,859 |
|
| Unrecognized deferred tax assets |
|
|
|
|
(4,525,996 |
) |
|
|
(125,381 |
) |
|
|
(4,651,377 |
) |
| Deferred tax assets (liabilities) |
|
₩ |
|
|
- |
|
|
|
- |
|
|
|
- |
|
| |
ii. |
Movement in deferred tax balances for the year ended December 31, 2024 |
| |
|
|
|
Tax effect |
|
| |
|
|
|
Beginning |
|
|
Increase
(decrease) |
|
|
Ending |
|
| |
|
|
|
(In thousands of Korean won) |
|
| Impairment Losses on Intangible Assets |
|
₩ |
|
|
198,000 |
|
|
|
- |
|
|
|
198,000 |
|
| Allowance for doubtful accounts |
|
|
|
|
282,093 |
|
|
|
(45,523 |
) |
|
|
236,570 |
|
| Lease liabilities |
|
|
|
|
76,862 |
|
|
|
(10,628 |
) |
|
|
66,234 |
|
| Property and equipment |
|
|
|
|
(77,619 |
) |
|
|
71,354 |
|
|
|
(6,265 |
) |
| Bond with warrants, net |
|
|
|
|
(273,033 |
) |
|
|
109,103 |
|
|
|
(163,930 |
) |
| Leasehold deposit receivables |
|
|
|
|
5,828 |
|
|
|
1,450 |
|
|
|
7,278 |
|
| Defined benefit liabilities |
|
|
|
|
71,120 |
|
|
|
22,952 |
|
|
|
94,072 |
|
| Derivative liabilities |
|
|
|
|
213,102 |
|
|
|
(67,194 |
) |
|
|
145,908 |
|
| Accrued expenses |
|
|
|
|
4,132 |
|
|
|
(10,224 |
) |
|
|
(6,092 |
) |
| Accrued income |
|
|
|
|
(9,587 |
) |
|
|
(8,632 |
) |
|
|
(18,219 |
) |
| Inventories, net |
|
|
|
|
25,372 |
|
|
|
- |
|
|
|
25,372 |
|
| Provisions for restoration |
|
|
|
|
4,753 |
|
|
|
33 |
|
|
|
4,786 |
|
| Others |
|
|
|
|
17,197 |
|
|
|
(3,698 |
) |
|
|
13,499 |
|
| Total |
|
₩ |
|
|
538,220 |
|
|
|
58,993 |
|
|
|
597,213 |
|
| Loss carried forward |
|
₩ |
|
|
2,893,763 |
|
|
|
508,557 |
|
|
|
3,402,320 |
|
| Carryover tax credit |
|
|
|
|
410,379 |
|
|
|
116,084 |
|
|
|
526,463 |
|
| Unrecognized deferred tax assets |
|
|
|
|
(3,842,362 |
) |
|
|
(683,634 |
) |
|
|
(4,525,996 |
) |
| Deferred tax assets (liabilities) |
|
₩ |
|
|
- |
|
|
|
- |
|
|
|
- |
|
| D. |
Deferred assets (liabilities) |
| |
i. |
Details of unrecognized deferred income tax assets as of December 31, 2025 and 2024 are as follows: |
| Details of unrecognized deferred income tax assets |
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
December 31,
2025 |
|
|
December 31,
2024 |
|
| |
|
|
|
(In thousands of Korean won) |
|
| Unrecognized temporary difference |
|
₩ |
|
|
400,460 |
|
|
|
597,213 |
|
| Loss carried forward |
|
|
|
|
3,781,058 |
|
|
|
3,402,320 |
|
| Carryover tax credit |
|
|
|
|
469,859 |
|
|
|
526,463 |
|
| Total |
|
₩ |
|
|
4,651,377 |
|
|
|
4,525,996 |
|
| |
ii. |
Details of unused loss carried forward and unused carryover tax credit that are not recognized as deferred income tax assets as of December 31, 2025 are as follows: |
| Schedule of unused tax loss carryforwards |
|
|
|
|
|
|
|
|
|
|
| Year of expiration |
|
|
|
Unused
loss carried
forward |
|
|
Unused
carryover
tax credit |
|
| |
|
|
|
(In thousands of Korean won) |
|
| 2026 |
|
₩ |
|
|
722,024 |
|
|
|
- |
|
| 2027 |
|
|
|
|
292,098 |
|
|
|
- |
|
| 2028 |
|
|
|
|
319,426 |
|
|
|
- |
|
| 2029 |
|
|
|
|
383,584 |
|
|
|
- |
|
| 2030 |
|
|
|
|
49,670 |
|
|
|
- |
|
| 2031 |
|
|
|
|
281,727 |
|
|
|
- |
|
| After 2031 |
|
|
|
|
1,732,529 |
|
|
|
469,859 |
|
| Total |
|
₩ |
|
|
3,781,058 |
|
|
|
469,859 |
|
| |
iii. |
The timing of recovery of deferred tax assets and liabilities as of December 31, 2025 and 2024 are as follows: |
| Schedule of recovery of deferred tax assets and liabilities |
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
December 31,
2025 |
|
|
December 31,
2024 |
|
| |
|
|
|
(In thousands of Korean won) |
|
| Deferred tax assets |
|
|
|
|
|
|
|
|
|
|
| - Deferred tax assets to be recovered after more than 12 months |
|
₩ |
|
|
4,574,362 |
|
|
|
4,305,986 |
|
| - Deferred tax assets to be recovered within 12 months |
|
|
|
|
324,775 |
|
|
|
468,181 |
|
| Sub-total |
|
|
|
|
4,899,137 |
|
|
|
4,774,167 |
|
| Deferred tax liabilities |
|
|
|
|
|
|
|
|
|
|
| - Deferred tax liabilities to be recovered after more than 12 months |
|
|
|
|
(75,235 |
) |
|
|
(81,256 |
) |
| - Deferred tax liabilities to be recovered within 12 months |
|
|
|
|
(172,525 |
) |
|
|
(166,915 |
) |
| Sub-total |
|
|
|
|
(247,760 |
) |
|
|
(248,171 |
) |
| Unrecognized deferred tax assets |
|
|
|
|
(4,651,377 |
) |
|
|
(4,525,996 |
) |
| Deferred tax assets (liabilities), net |
|
₩ |
|
|
- |
|
|
|
- |
|
|