[At a Crossroads] BL Pharmtech ② Massive Losses Lead to Capital Impairment... Uncertainty Over Business Continuity

BL Melanis' Book Value Halved Despite Claims of Trillion-Won Technology Transfers
Net Loss of 16 Billion Won, Accumulated Deficit of 99.6 Billion Won... Auditor Flags "Going Concern Uncertainty"

KOSDAQ-listed company BL Pharmtech has reported losses for six consecutive years, ultimately falling into a state of capital impairment. As a result, the external audit firm pointed out that there is uncertainty regarding BL Pharmtech's ability to continue as a going concern.

According to the Financial Supervisory Service's electronic disclosure system on March 26, BL Pharmtech posted standalone sales of 5.3 billion won last year, a decrease of approximately 31% compared to the previous year. The company also recorded an operating loss of 1.6 billion won, marking six consecutive years of deficits. On a consolidated basis, the company has been in the red for seven consecutive years.

BL Pharmtech is engaged in the business of selling health functional foods, in vitro diagnostic medical devices, and developing anti-cancer therapies. As of last year, 65.7% of its sales came from the health functional food segment, while the remaining 34.3% was generated from other products such as food, diagnostic kits, and feminine hygiene pads.

The company's operating loss was due to selling and administrative expenses exceeding gross profit. Last year, BL Pharmtech achieved gross profit of 3.6 billion won but spent 5.1 billion won on selling and administrative expenses. Of these expenses, sales commissions were the highest at 2.1 billion won, presumed to be costs related to health functional food distribution.

Despite declining sales, some costs increased. BL Pharmtech spent 800 million won on commission fees last year, a 57% increase compared to the previous year. Other expenses, the exact details of which are unknown, also surged by 55% compared to 2024.

Notably, BL Pharmtech recorded a massive net loss of 16 billion won last year, causing its financial condition to sharply deteriorate. This amount is equivalent to about 70% of its total equity as of 2024. The reason for the net loss was "investment costs." At the end of last year, BL Pharmtech processed 10.8 billion won as investment costs in a lump sum, representing a 181% increase from the previous year.

The investment costs recognized as losses included the value of BL Melanis shares. BL Pharmtech reflected 3.3 billion won of the value of its shares in BL Melanis as impairment losses, meaning that more than half of its previous book value was recognized as a loss.

BL Melanis is the company that recently caused BL Pharmtech's stock price to soar. On January 22, CEO Park Youngcheol of BL Pharmtech announced that BL Melanis possesses a molecular adhesive platform technology and is in discussions about technology transfers worth trillions of won with global big pharma companies. As a result, BL Pharmtech's stock price surged by 1,300% in just about two weeks.

Having suffered such large-scale losses, BL Pharmtech has fallen into capital impairment. As of the end of last year, the company’s total equity stood at 7 billion won, which is less than its paid-in capital of 13.3 billion won. If the company fails to raise additional capital or generate profits this year and posts losses similar to last year, it could enter a state of complete capital impairment.

Accordingly, the auditor also pointed out that there are significant uncertainties regarding BL Pharmtech's status as a going concern. In the audit report, the auditor stated, "BL Pharmtech’s current liabilities exceed its current assets, and accumulated deficits amount to 99.6 billion won," adding, "These circumstances indicate that there are significant uncertainties that cast substantial doubt on the company's ability to continue as a going concern." The auditor also noted that the audit opinion is not affected by this matter.

Park Youngcheol, CEO of BL Pharmtech, stated, "The appropriateness of the audit opinion was determined after a rigorous audit process by Samil PwC, the external auditor," adding, "All work is handled according to due procedures and regulations, so there is no issue."

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