Alchera, an AI company specializing in video recognition, faced significant financial challenges despite a promising start. The company’s various problems such as severe stock price declines, substantial operating losses, and mounting pressures from creditors cast the darkness on the company’s future viability.
Alchera received investment from Naver’s subsidiary Snow, which was a wildly popular AI camera application at the time, immediately after its establishment in June 2016.
This boost allowed Alchera to attempt to go public within four years. However, continuous losses hindered its progress, and the company eventually entered the KOSDAQ market in Dec. 2020 through a special technology exception. On its first day of trading, Alchera’s stock price double the initial public offering price, raising high expectations.
However, the expected bright future didn’t come to pass. Instead of turning a profit, Alchera’s losses increased, and its deficits kept growing. Although Alchera raised funds through annual rights issues and convertible bonds (CB), recent interventions by financial authorities thwarted these efforts.
The company’s audit report highlighted ‘significant uncertainty about its ability to continue,’ causing its stock price to plummet by over 90%. Creditors, seeing no further hope, demanded the conversion of their bonds, leading the CEO to relinquish his shares.
According to the Financial Supervisory Service’s electronic disclosure system, Hwang Young-kyu, CEO of Alchera, saw his shareholding decrease from 9.18% to 1.60% on Jun. 11, a reduction of 7.58 percentage points (1,635,004 shares). Based on the closing price of 3,545 won ($2.59) that day, the value amounted to $4.2 million
In Nov. 2021, Alchera issued its second round of CB worth $16.7 million to raise operating funds and acquire other corporate securities. However, with cumulative operating losses reaching $33.9 million over the past three years and the stock price dropping to one-twelfth of its value over the same period, Alchera faced pressure from creditors demanding early repayment (put option). As a result, Alchera initially repaid $4.1 million last month. The initial conversion price for the second CB was $27.84.
Though Alchera managed to address the immediate financial need, it still owed $8.2 million, prompting the company to negotiate additional terms with its creditors for the second CB, which included pledging Hwang’s shares as collateral.
This decision indicates that creditors doubted Alchera’s ability to repay the remaining amount with its own funds. Subsequently, on Jun. 10, creditors demanded the conversion of $6.5 million worth of the second CB at a conversion price of $15.51, which was six times the closing price of $2.57 that day. Assuming the sale at the closing price, this would result in an 83.4% loss.
Alchera was founded in Jun. 2016 by Hwang Young-kyu and Kim Jeong-bae, former research specialists from Samsung Advanced Institute of Technology. They secured strategic investment by supplying facial recognition technology to Snow, which remains the largest shareholder with an 11.73% stake.
Despite ongoing losses, Alchera managed to list on KOSDAQ with the help of Shinyoung Securities. However, economic downturns led to consecutive operating losses of $8.1 million in 2021, $12.2 millionn in 2022, and $13.5 million in 2023, accumulating a total deficit of $55.8 million.
Facing difficulties in raising funds internally, Alchera began relying on external funding for operational costs. Since going public in 2020, the company issued annual rights offerings or CBs. However, recent inspection by financial authorities has blocked this route. Alchera planned a $41.6 million rights offering last September but withdrew this February after the Financial Supervisory Service requested additional information regarding the securities report.
Currently, Alchera’s audit report includes a warning about the sustainability of its operations. A financial investment industry official stated, “The term ‘going concern uncertainty’ indicates a lack of liquidity or capital impairment of Alchera. Companies with such uncertainties, even if receiving an unqualified opinion from auditors, risk receiving a non-standard opinion in the future or facing delisting. Investors need to exercise caution.”
