Kolon TissueGene, which avoided delisting with a one-year grace period last year, is still facing the risk of delisting because of its financial instability.

The Korea Exchange (KRX) said on Monday that it added one more reason to designate Kolon TissueGene as an administrative issue because the company’s net losses before income tax from continuing operation exceeded 50 percent of its equity capital for two business years out of the three recent business years.

According to Kolon TissueGene’s business performance report, the company recorded net losses before income tax from continuing operation exceeding 50 percent of its equity capital for the past three years consecutively – 49.9 billion won ($40.8 million) loss in 2019, 41.7 billion won loss in 2020, and 47.2 billion won loss in 2021.

Kolon TissueGene’s equity capital has gradually decreased from 92.1 billion won in 2019 to 48.1 billion won in 2020 and 38.6 billion won in 2021.

According to the Kosdaq market regulations, the regulator designates a company as an administrative issue if it reports losses exceeding 50 percent of equity capital for twice or more for the recent three years. If the company reports one more loss exceeding 50 percent of equity capital, it is eligible for delisting.

The company’s large-scale capital increase through rights issue late last year was an attempt to prevent a rapid decrease in equity capital.

In December, the company raised about 35.4 billion won through a third-party rights issue.

Still, Kolon TissueGene’s capital is too small to prevent losses from accounting for over 50 percent of equity capital. If the company continues to raise capital this year, it can avoid the criteria for delisting, but the market will question if it can continue normal operations.

Separately from the continued losses, the KRX reviews two cases to decide whether Kolon TissueGene is apt for a listed company. The one is controversies over changes in the ingredient of Invossa-K, and the other is charges of embezzlement and breach of trust by former executives.

On Feb. 7, the KRX held a meeting of the Kosdaq Market Committee to review the delisting of Kolon TissueGene but could not finalize a ruling.

The KRX plans to hold a meeting of the Corporate Evaluation Committee in August to review Kolon TissueGene’s eligibility for a listed company regarding former executives’ embezzlement and breach of trust.

Late last year, the company said it resumed a U.S. phase 3 trial of Invossa-K (TG-C), cell-mediated gene therapy for osteoarthritis, to treat knee osteoporosis.