Abandoning Its Franchise Business, Will 'Socar Elecle' Become a 'Bottomless Pit' for Parent Company Socar?

Nine2One is one of the service companies that have pioneered the domestic personal mobility (PM) market by operating the shared electric bicycle brand 'Elecle' (now Socar Elecle). It has grown under the goal of being responsible for so-called 'last-mile' transportation, which is difficult to reach by car or public transit. In January 2019, it formed a relationship with Socar by receiving a seed investment, and was incorporated as a wholly owned subsidiary of Socar in December 2021 when Socar acquired a 100% stake in anticipation of synergy with its car-sharing business.

However, Nine2One, which had gathered expectations while receiving full-fledged financial infusions from its parent company, has currently reached the point of voluntarily canceling its franchise business registration with the Fair Trade Commission amid a severe financial crisis and loss of market competitiveness. It is understood that the company has been pushed to a marginal situation where normal corporate operations are virtually impossible, with the number of employees plummeting from the 150s to recently just 13.

The Inside Story of the Voluntary Cancellation of the 'Franchise Business': A Risky Shift to Direct Management, But a Painful '4.6 Billion Won Penalty'

On May 4, 2026, Nine2One raised the white flag by voluntarily canceling the franchise business registration of 'Socar Elecle' with the Fair Trade Commission.

Behind this decision lies the overall stagnation of the personal mobility (PM) market and a change in Socar's operational strategy. It has been confirmed that Socar judged it difficult to guarantee business efficiency under the existing franchise system within a shrinking market environment, and thereby shifted its operational stance toward completely clearing out the franchise business so that the headquarters can control and manage services more directly.

However, massive bleeding occurred during the process of unreasonably clearing out the franchise business. The penalty incurred from terminating franchise contracts alone amounted to a whopping 4.6 billion won, which was reflected entirely as a one-off expense. Furthermore, as some franchise contracts were terminated, a situation arose where the electric bicycles and lease receivables held by the company were offset, and the allowance for doubtful accounts for trade receivables, set aside in preparation for uncollectible funds, nearly doubled from 290 million won in 2024 to 550 million won in 2025, placing omnidirectional pressure on its financial structure.

[Source: Socar Elecle Homepage]

The Swamp of 'High-Risk Deficits' Hidden Behind Outward Growth

In the early days of its business, Nine2One achieved explosive growth based on aggressive equipment investment. Operating revenue (sales), which was only at the level of 390 million won in 2019, jumped steeply every year to 1.28 billion won in 2020 and 3.58 billion won in 2021. During this period, operating losses ballooned to 760 million won, 1.07 billion won, and 1.71 billion won, respectively, but this was considered a 'planned deficit' to preempt new businesses. Subsequently, in 2022, sales broke the 10 billion won barrier at 11.1 billion won, and the company made a brief turnaround to surplus, generating an operating profit of 290 million won. In 2023, sales exploded more than twofold to 23.84 billion won, recording an operating profit of 80 million won. However, this was merely an optical illusion on the operating front, as the final net income showed terrifyingly growing losses of 580 million won in 2022 and 1.92 billion won in 2023 due to the interest generated on the massive borrowings drawn from entities like Socar.

The year 2024 was the peak of Nine2One's outward growth. Annual sales recorded 30.53 billion won, achieving the highest figure since its founding. However, by unreasonably increasing the number of operating electric bicycles, depreciation and maintenance costs for its equipment increased explosively. Ultimately, despite growing its size to over 30 billion won, operating loss turned to a deficit again at 2.42 billion won, and with the interest on borrowings also weighing down the company, the net loss for the year rose to 5.07 billion won.

In 2025, as the slowdown in the growth of the PM market intertwined with the aftermath of the aforementioned franchise business withdrawal, even the expanding sales were broken. Sales in 2025 were 20.18 billion won, retreating by about 33.9% compared to the previous year. Unable to overcome the burden of fixed costs for the massive amount of equipment already secured, the company incurred a whopping operating loss of 7.72 billion won in 2025 alone. Compounded by one-off costs such as the 4.6 billion won penalty from shrinking the franchise business and snowballing interest expenses, the net loss surged more than threefold year-on-year to record 16.55 billion won. In just one year, it generated a loss equivalent to its total annual sales.

'Accumulated Deficit of 28.3 Billion Won' Becoming a Time Bomb and an Overwhelming Liquidity Crisis

This worst-ever performance has shattered the foundation of the company's existence. The undisposed accumulated deficit, which was 6.8 billion won at the end of 2023, passed 11.91 billion won at the end of 2024, and explosively ballooned to a staggering 28.34 billion won as of the end of 2025, when it produced its worst performance.

The part to note is its short-term liquidity, which has been slashed to a one-sixth level. As of the end of 2025, current assets disposable within a year are about 6.03 billion won, whereas current liabilities that must be repaid immediately reach about 38.8 billion won. Current liabilities exceed assets by as much as 32.77 billion won. Pure cash assets available immediately also dried up from 4.57 billion won at the end of 2024 to the 460 million won level at the end of 2025. Ultimately, following 2024, the external auditor stated in the 2025 audit report that "there is a material uncertainty that may cast significant doubt on the entity's ability to continue as a going concern," mentioning 'material uncertainty related to going concern' for two consecutive years.

A Structure Entirely Subordinated to Parent Company Socar... The Dilemma of Sale Amid Merger Withdrawal

Currently, Nine2One appears to be in a state where survival on its own is impossible. Although the total equity on the financial statements at the end of 2025 seems to have turned positive at about 700 million won, this is merely an accounting illusion created by a debt-to-equity swap (replacing debt with shares) of 18.3 billion won out of the borrowings from Socar into common stock. Despite this measure, there is still 27.2 billion won in short-term borrowings remaining to be repaid to Socar. If Socar's financial infusions or maturity extensions stop, the company could find itself in a considerably difficult situation.

Previously, Socar had unanimously resolved on an absorption merger to resolve Nine2One's financial risks, but abruptly withdrew it in just two months. This is interpreted as an unavoidable measure to leave it as a subsidiary, out of concern that if Nine2One is absorbed into the headquarters, its insolvency would spread to the entirety of Socar in the future.

Although it has thrown a risky gamble on a cliff-edge 'direct management system' by even abandoning its franchise business, the fate of Socar Elecle, having lost its independent survival path, stands at a critical crossroads amid growing market doubts over how long the parent company can bear the debt guarantees and cash infusions into a bottomless pit.