[Edaily Reporter KIM SAE-MI ] The shadow of another capital increase is looming over the artificial intelligence (AI) diagnostics company Noul Co., Ltd.(376930). Having raised approximately 25 billion won through a capital increase late last year, the company has already depleted about 60% of those funds in just half a year. Compounded by the risk of being designated as a “managed stock” due to capital impairment and operating losses before income tax (LBIT), the need to bolster its equity capital by year-end is growing.

Raised 87.

5 billion won after listing… 60% of rights offering funds depleted in just six months

Noul Co., Ltd. raised 14.8 billion won through a public offering upon its listing on the KOSDAQ market in March 2022, followed by 47.7 billion won in 2023 via a rights offering with a public offering of unsubscribed shares. Last year, the company also secured 25 billion won through a rights offering using the same method. The total funds raised in the public market since its listing amount to 87.5 billion won.

The issue lies in the speed at which the funds raised late last year are being depleted. By the end of June this year, Noul Co., Ltd. had spent a total of 15 billion won, including 12.9 billion won for working capital, 2 billion won for debt repayment, and 54 million won for facility investments. This means the company has spent approximately 60% of the total raised funds in just half a year.

In particular, while 2.6 billion won was allocated for facility expenses, the actual amount spent was only 54 million won. Although the company initially planned to invest in facilities to expand production capacity for “miLab” devices and cartridges, it has since been expanding its outsourcing of device and cartridge production. Even without large-scale facility investments getting underway, funds—primarily working capital—were rapidly depleted.

As of the end of the first half of the year, approximately 10 billion won remained from the rights offering. This amount is also earmarked for specific uses, including approximately 5.4 billion won for working capital, approximately 2.6 billion won for facility investments, and 2 billion won for business and rights acquisitions.

Cash flow from operating activities in the first half of this year also recorded a net outflow of 8.9 billion won. Liquidity assets—comprising cash, short-term financial instruments, and money market funds (MMFs)—totaled 22.6 billion won at the end of last year but had decreased to approximately 10 billion won by the end of June this year. If cash outflows similar to those in the first half continue, the need to secure additional funds is expected to resurface around early next year.

An additional loss of 3.6 billion won would result in 50% capital erosion… Legal loss provisions also pose a burden

The risk of being designated as a “monitored stock” is another factor increasing the likelihood of needing to raise funds. As of the end of June this year, Noul Co., Ltd.’s paid-in capital was approximately 25.6 billion won, and total capital was approximately 16.4 billion won, resulting in a capital erosion rate of 35.9%.

Assuming no separate capital increase or other changes in capital, if additional net losses in the second half exceed 3.6 billion won, the capital erosion rate could surpass the 50% mark by year-end. Noul Co., Ltd. recorded a net loss of approximately 9.3 billion won in the first half alone and posted a net loss of 4.7 billion won in the second quarter alone.

Tax-based losses are also a burden. Last year’s tax-based losses totaled approximately 20 billion won, amounting to 78.4% of shareholders’ equity. In the first half of this year, they totaled approximately 9.3 billion won, representing 56.9% of shareholders’ equity at the end of the half-year.

Based on a simple calculation—assuming no capital changes such as a capital increase—the company would need to generate at least 700 million won in pre-tax profit in the second half of the year to bring the annual statutory loss ratio below 50%. Given that the company posted an operating loss of 9.7 billion won in the first half of this year, following last year’s operating loss of 20.1 billion won, this is no easy task.

Noul Co., Ltd. official told E-Daily, “We recognize the listing maintenance requirements related to statutory capital deficiency as a significant risk and are monitoring the situation closely,” adding, “We are working to reduce losses by expanding sales in the second half, improving the product mix, and cutting costs and streamlining operating expenses through the shift to contract manufacturing.” Regarding capital erosion, the official stated, “If necessary, we plan to review additional measures to stabilize our financial structure.”

Sales Target of 500 Units Also Under Review… Repeat Sales Figures Not Disclosed

The problem is that the prospects for improving performance through business operations remain unclear. At the time of its IPO, Noul Co., Ltd. projected revenue of 21.9 billion won in 2023, 40.2 billion won in 2024, and 83.7 billion won in 2025; however, actual revenue amounted to only 2.7 billion won, 1.6 billion won, and 5.1 billion won, respectively. Last year’s actual revenue was only about 6% of the forecast. While the company had projected an operating profit of 39.4 billion won last year, it actually posted an operating loss of 20.1 billion won.

In the first half of this year as well, revenue totaled only 1.3 billion won, and the company posted an operating loss of 9.7 billion won. Consequently, the company is currently reevaluating the sales target of over 500 DEVICES it had set earlier this year. Noul Co., Ltd. stated, “We are reviewing the feasibility of the target and the need for adjustments, taking into account first-half performance and the progress of projects with individual clients.”

As of the end of June, device inventory stood at 190 units, up from 156 units at the end of last year. The company did not disclose the specific volume of unsold units or those supplied under conditional purchase agreements or for evaluation purposes but not yet recognized as revenue. A Noul Co., Ltd. official stated, “It is difficult to disclose this information as it contains internal sales data.”

The effectiveness of the business model—which aims to boost profitability through repeat sales of cartridges following DEVEICE deployment—has yet to be confirmed. The company has not disclosed the number of active devices with regular cartridge purchases, the average monthly usage and revenue per device, or the proportion of cartridge sales within total product revenue for the first half of the year. The company’s position is that these metrics are difficult to disclose publicly.

Ultimately, if performance does not improve significantly by the end of the year, pressure to bolster equity capital will inevitably increase. While debt financing, such as borrowing, helps secure liquidity, it has limitations in reducing the equity erosion ratio and the legal loss ratio. Some observers note that it will be difficult to improve the financial structure based solely on second-half performance, making it hard to rule out the possibility of additional capital raising.

Regarding the possibility of additional fundraising, Noul Co., Ltd. emphasized, “We are keeping various funding options open—including attracting strategic and financial investors—and reviewing them from multiple angles,” while adding, “At present, we are not operating our business plan on the premise of an additional paid-in capital increase or the issuance of convertible bonds.”