JKN's auditor, in compliance with Section 89/25 of the Securities and Exchange Act B.E. 2535 (1992) (“SEA”), notified the company’s audit committee of observations regarding several unreasonable commercial aspects of content licensing transactions, including the purchase of licenses in 2024 that duplicated existing licenses that had not yet expired, the purchase of a large number of additional licenses despite having existing licenses and JKN’s facing liquidity problems, some potentially non-existing buy orders, incomplete accounting records, and licensing purchase documents that were inconsistent with the information obtained by the auditor during the audit. As a result, the auditor was unable to express an opinion on JKN's consolidated financial statements and separate financial statements for the year 2023.

 
The SEC reviewed JKN’s financial statements for the years 2020 – 2023 and found that the company’s licensing assets increased considerably, inconsistent with the licensing revenue and the accounts receivables balance at year-end, which was close to or higher than the licensing revenue. It was believed that for licensing sales each year, JKN was unable to collect payments from accounts receivables or was able to collect only a small amount. Therefore, there were questions regarding the reasonableness of the licensing purchases and the actual existence of the content licenses, as well as the actual existence of the accounts receivables and the sales of licenses to those accounts receivables.
 
The findings led to the consideration that two offenders – namely (1) Mr. Jakkaphong Jakrajutatip, Managing Director and Chief Executive Officer, and (2) Ms. Pimauma Jakrajutatip, Director and Deputy Managing Director for Content – colluded to order or create fictitious creditor and debtor records, which were then included in the accounting records and the annual financial statements for the year 2023 as well as the accounting documents for the first quarter of 2024 and other related documents or reports of JKN. As a result, JKN’s financial statements overstated revenue and liabilities. It was also found that accounts payable for royalties were recorded incorrectly in periods other than those in which they actually arose. These acts caused JKN’s 2023 financial statements to understate liabilities and assets compared to their true amounts, while trade payables were recorded in 2024 in order to mislead any person into believing that JKN had an increase in trade payables in 2024. Such trade payables were then used to exercise voting rights to select the rehabilitation plan preparer of JKN. These acts constitute offenses under Section 312 of the SEA.
 
In addition, JKN, by Jakkaphong, submitted or disclosed the annual financial statements for the year 2023 together with the annual registration statement containing such false financial statements to the SEC, which constitutes an offense under Section 281/10 of the SEA. 

The misconduct of the three persons above constitutes offenses under Section 312 and Section 281/10 in conjunction with Section 300 of the SEA (as the case may be). The SEC has therefore filed the criminal complaint against these persons with the DSI for consideration of further legal action.

The filing of the criminal complaint has resulted in the persons subject to the complaint being deemed to have untrustworthy characteristics and, consequently, being disqualified from holding positions as directors or executives of securities issuing companies and listed companies for the entire period during which the complaint is pending, commencing from the date on which the SEC filed the criminal complaint with the DSI.

In addition to the case addressed in this criminal complaint, the SEC is currently conducting further investigations into other suspicious matters and will coordinate with the DSI. Once such actions are completed, the results will be disclosed in due course.
 
Following the criminal complaint filed by the SEC, the criminal enforcement process will proceed with an investigation by the inquiry official, a prosecution of the public prosecutor, and an adjudication of the court of justice, respectively. In this regard, the SEC will monitor progresses in the legal proceedings and will cooperate fully with relevant agencies to support legal enforcement under the SEA after the criminal complaint have been filed.