FlexPie, a flexible display foldable smartphone developed by Royole is displayed at the 7th China (Shanghai) International Technology Fair on April 18, 2019. Photo: VCG

Royole Corporation, a fully flexible displays (FFD) producer, said that the company is operating normally and has promised a corresponding cash compensation and share option compensation to unpaid employees after the company was recently exposed to have large amounts of unpaid wages.

Industry experts said that Royole's flexible screen products are in the forefront of the industry but its poor financial data, low capacity utilization and product unsalable risk also caused doubts in the market.

"In the darkest hour of life, do not expect help in the nick of time, the only thing you can do is to stick it out," posted Royole's founder Liu Zihong on his WeChat account on Thursday.

Employees revealed that the company only paid part of the salary of September and paychecks were completely suspended in October. Royole has not taken the initiative to lay off employees but is trying to find financing channels, media reported.

Green Pine Capital Partners, an investor of Royole's financing in A, B and C rounds, is helping coordinate its fundraising, according to an exclusive report by chinastarmarket.cn.

Royole's investors include IDG Capital Partners, Alpha Wealth, Jack & Fischer Investment and CITIC Capital. Since 2017, Royole has also carried out seven rounds of investor funding, involving 21 shareholders.

"The founder of Royole is a technical bull. The whole team has a good technical atmosphere but lacks a commercial bull to navigate," Zhang Xiaorong, Director of the Beijing-based Cutting-Edge Technology Research Institute, told the Global Times on Sunday.

"Royole's own problems are the lack of ability on commercialization and ineffective  market expansion. From an industrial point of view, flexible screen products are too advanced and lack enough application scenarios. Having technology but no market makes Royole rely on financing to survive. But now that financing is gone, the cash flow has cut off," Zhang said.

A senior investor based in Shenzhen told the Global Times that Royole's cash crunch should be serious, adding that "companies do not default on wages unless they are desperately strapped for cash, because when production is shut down for unpaid wages, the company basically committed suicide."

Insiders also say that Royole's unique technology will lead to a closed ecosystem and adversely affect market promotion as it adopts a different technical route from other enterprises. Meanwhile, Royole has to build up the entire industrial and supply chain which is a huge burden for a company.

In fact, Royole has been "hungry" for cash for a long time. It planned to generate 14.434 billion yuan ($2.27 billion) on December 31, 2020, when it filed the IPO in the Shanghai Stock Exchange.

Royole's cumulative loss from 2017 to the first half of 2020 totaled 3.195 billion yuan ($502 million), while the total revenue for the same period was only 517 million yuan (81 million), according to its data.

The company attributed the loss to the small scale of product sales and the huge investment in the research and development of new products, and continued losses are predicted for some time to come.

Royole's folding mobile phone only got 11 orders on its flagship store on e-commerce platform Tmall while other products did not have more than 30 sales.