Business Context and Reporting Period
This Form 6-K filing by GRAVITY Co., Ltd. (NasdaqCM: GRVY) covers the month of April 2015, with the announcement dated April 22, 2015. Gravity is a South Korea-based developer and publisher of online and mobile games, best known for its principal product, Ragnarok Online, which is commercially offered in 71 countries.
Key Financial Metrics
The filing text does not provide specific values for revenue, profit, cash flow, margins, debt, or liquidity. This report focuses exclusively on a corporate action regarding the company's American Depositary Shares (ADSs).
Material Changes
- Reverse ADS Split: The Board of Directors approved a 1-for-8 reverse split of its ADSs, effective May 11, 2015.
- Ratio Change: The ratio of ADSs to common shares will change from 4:1 to 1:2.
- Mandatory Surrender: ADS holders must surrender existing ADRs for cancellation to exchange for new ADSs; fractional ADSs will be sold for cash.
- Common Shares: The reverse split will have no effect on the company's underlying common shares.
Outlook, Risks, and Management Commentary
Background and Compliance: The split is a response to the company failing to meet the minimum bid price requirement (US$1.00 per ADS) for 30 consecutive business days as of May 28, 2014. After a transfer to the NASDAQ Capital Market, the company was granted a second 180-day grace period ending May 26, 2015, to regain compliance.
Management Commentary: While the ADS price is expected to increase proportionally, the Company explicitly states it can give no assurance that this event will result in meeting the minimum bid price requirement of the NASDAQ Capital Market.
Risks: The primary risk identified is the potential failure to regain compliance with NASDAQ listing standards despite the reverse split.
Investor Verification Checklist
- Verify the effective date of the 1-for-8 reverse ADS split (May 11, 2015).
- Confirm the new ADS-to-common share ratio (1:2).
- Monitor whether the post-split ADS price meets the NASDAQ Capital Market minimum bid price requirement by the grace period deadline (May 26, 2015).
- Review the handling of fractional ADSs, which will be sold for cash by the depositary.