One year before the expiration of the fundraising investment project, Yoozoo Interactive(002174.SZ) plans to terminate it.

Yoozoo Interactive announced tonight that the company plans to terminate the convertible bond fundraising projects for "network game development and operation construction projects" and "network game operation platform upgrade construction projects" in 2019, and use the remaining funds raised plus interest, totaling about RMB 627.5 million for permanent replenishment of working capital.

On September 23, 2019, Yoozoo Interactive issued 11.5 million convertible corporate bonds with a total value of RMB 1.15 billion and a term of 6 years. The convertible bonds were listed on October 21, 2019. After deducting issuance expenses, the net proceeds actually raised by the company was RMB 1.13 billion.

According to the previous plan, of the RMB 1.13 billion, RMB 650 million would be invested in "network game development and operation construction projects", RMB 150 million would be invested in "network game operation platform upgrade construction projects", and the rest would be used to supplement working capital (about RMB 330 million).

According to the feasibility analysis report on the use of convertible bond funds disclosed by Yoozoo Interactive at that time, the "network game development and operation construction projects" planned to develop four new games and distribute and operate 11 network games. Among them, the in-house games include three card games and one MMO game, all with an S-level copyright rating. The "network game operation platform upgrade construction project" is to accelerate investment in software and hardware infrastructure and R&D personnel.

Today, Yoozoo Interactive explained the reason for terminating the fundraising project, stating that the feasibility analysis report was made based on factors such as the market environment, industry trends, technological development, and the company's business development plan at the time. And indicated that based on the consideration of the current market competition environment and the far-reaching impact of AI technology on the game industry, combined with the actual situation of the company's current business development and future development strategy, and after careful consideration, it was decided to terminate to further promote the company's steady and high-quality development and improve the efficiency of the use of raised funds.

Looking at the present moment, while the domestic game market has rebounded, there are still competition and operational pressures, and the breakthrough of new technologies such as AI brings new opportunities and challenges to the industry.

In addition to changes in the external environment, Yoozoo Interactive has also undergone a major transformation internally in the past five years, mainly reflected in changes at the board of directors level and the control level. Last year, the company carried out a comprehensive reform and proactive downsizing in the board of directors, research and development, front-end and back-end functional systems, and adjusted the organization structure around the principles of "integration of research and development and operation" and "independent management". As of the end of 2023, the total number of the company's employees was 1,028, a 34.90% YoY decrease.

In April 2023, after the board of directors of Yoozoo Interactive completed the selection process, CEO Chen Fang released an open letter stating that Yoozoo Interactive will transform and empower the studios around the principles of "integration of research and development and operation" and "independent management", bring the game operators of the in-house products back into the studio system, and support this with a more clear and more "value-creating tilted" incentive mechanism, so that the five major studios can continue to launch high-quality games, especially those with long operational cycles, with the help of a global distribution platform.

In addition, Yoozoo Interactive has also adjusted its company strategy from the "high-quality", "globalization", and "big IP" strategies of that year to the "globalization card +" strategy. And last year, it established the "AI Innovation Institute", focusing on breakthroughs in "AIGC" and "AI Empowerment Game Globalization".

According to the announcement of Yoozoo Interactive, after the foregoing projects are terminated, the remaining funds raised will be used to supplement working capital related to the company's main business activities. Yoozoo Interactive stated that this is a prudent adjustment made by the company based on the specific situation of the fundraising projects, considering the actual operation and future development plan of the company, which is conducive to improving the efficiency of the use of raised funds, optimizing the allocation of resources, and reducing the company's financial costs.