The Independent Review
As previously disclosed by the Company in its Notification of Late Filing (Form 12b-25) on
Summary of Findings
The Review is now substantially complete. The Review identified certain transactions carried out by the Next-Day Delivery BU in 2021 that exhibited characteristics of questionable transactions, such as undisclosed relationships between suppliers and customers, different customers or suppliers sharing the same contact information, and/or lack of supporting logistics information. As a result, certain revenue associated with these reporting periods in 2021 may have been inaccurately recorded in the Company’s financial statements.
Based on the Review’s investigative steps as described above, the individual employees in the Next-Day Delivery BU responsible for carrying out the questionable transactions have been identified. All of them had given notices of resignation to the Company before the conclusion of the Review. The Review did not uncover any evidence indicating that Company management-level executives, including the CEO and Co-CFOs, were involved in or aware of any misconduct relating to the questionable transactions at the time of their occurrence.
Remedial Measures in Response to Review
To enhance the Company’s internal controls in light of the aforementioned findings, the Company, under the supervision of the Audit Committee, has begun and will continue implementing a remediation plan. The remedial measures include, among other things: (i) disciplinary actions against individual employees found to be responsible or knowingly took part in the questionable transactions identified; and (ii) enhancement of the Company’s internal controls and risk management policies and procedures for the Next-Day Delivery BU, including follow-on employee trainings. Given the Review findings and in an abundance of caution, the Company has also terminated its relationships with suppliers and customers involved in the high-risk questionable transactions identified.
Follow-up Financial Impact Assessment
The Company has conducted a preliminary assessment of the overall financial impact of the Review findings on the relevant financial statements, as shown in the table below. While the Company does not expect any further adjustments to be needed, the Company’s management is committed to full and transparent disclosure and will provide timely updates if needed, as its financial impact assessment continues.
Unaudited | ||||||||||||||||||||||||||||
As Previously Announced | Adjustments | As Adjusted | ||||||||||||||||||||||||||
For the three months ended | For the three months ended | For the three months ended | ||||||||||||||||||||||||||
(All amounts in thousands, except for share, per share data or otherwise noted) | March 31, 2021 | June 30, 2021 | September 30, 2021 | March 31, 2021 | June 30, 2021 | September 30, 2021 | March 31, 2021 | June 30, 2021 | September 30, 2021 | |||||||||||||||||||
RMB | RMB | RMB | RMB | RMB | RMB | RMB | RMB | RMB | ||||||||||||||||||||
Net revenues | ||||||||||||||||||||||||||||
Sales of products through online platforms | 1,492,780 | 1,854,120 | 2,078,226 | (156,824 | ) | (256,482 | ) | (263,873 | ) | 1,335,956 | 1,597,638 | 1,814,353 | ||||||||||||||||
Other revenues | 37,447 | 40,360 | 43,706 | - | - | - | 37,447 | 40,360 | 43,706 | |||||||||||||||||||
Total net revenues | 1,530,227 | 1,894,480 | 2,121,932 | (156,824 | ) | (256,482 | ) | (263,873 | ) | 1,373,403 | 1,637,998 | 1,858,059 | ||||||||||||||||
Cost of revenues | (1,341,249 | ) | (1,752,626 | ) | (1,861,290 | ) | 161,696 | 265,495 | 272,358 | (1,179,553 | ) | (1,487,131 | ) | (1,588,932 | ) | |||||||||||||
Fulfillment expenses | (440,224 | ) | (540,990 | ) | (637,869 | ) | - | - | - | (440,224 | ) | (540,990 | ) | (637,869 | ) | |||||||||||||
Sales and marketing expenses | (167,615 | ) | (304,700 | ) | (256,208 | ) | (4,872 | ) | (9,013 | ) | (8,485 | ) | (172,487 | ) | (313,713 | ) | (264,693 | ) | ||||||||||
General and administrative expenses | (86,853 | ) | (396,012 | ) | (192,176 | ) | - | - | - | (86,853 | ) | (396,012 | ) | (192,176 | ) | |||||||||||||
Technology and content | (94,794 | ) | (393,829 | ) | (145,121 | ) | - | - | - | (94,794 | ) | (393,829 | ) | (145,121 | ) | |||||||||||||
Total cost and operating expenses | (2,130,735 | ) | (3,388,157 | ) | (3,092,664 | ) | 156,824 | 256,482 | 263,873 | (1,973,911 | ) | (3,131,675 | ) | (2,828,791 | ) | |||||||||||||
Loss from operations | (600,508 | ) | (1,493,677 | ) | (970,732 | ) | - | - | - | (600,508 | ) | (1,493,677 | ) | (970,732 | ) | |||||||||||||
Other income/(expense), net | (2,772 | ) | 6,193 | 7,241 | - | - | - | (2,772 | ) | 6,193 | 7,241 | |||||||||||||||||
Change in fair value of options and embedded conversion feature | 10,292 | 69,094 | - | - | - | - | 10,292 | 69,094 | - | |||||||||||||||||||
Interest expense, net | (17,158 | ) | (14,649 | ) | (10,025 | ) | - | - | - | (17,158 | ) | (14,649 | ) | (10,025 | ) | |||||||||||||
Share of results of equity investees | (201 | ) | (195 | ) | (195 | ) | - | - | - | (201 | ) | (195 | ) | (195 | ) | |||||||||||||
Loss before income tax expenses | (610,347 | ) | (1,433,234 | ) | (973,711 | ) | - | - | - | (610,347 | ) | (1,433,234 | ) | (973,711 | ) | |||||||||||||
Income tax expenses | (2 | ) | (15 | ) | (15 | ) | - | - | - | (2 | ) | (15 | ) | (15 | ) | |||||||||||||
Net loss | (610,349 | ) | (1,433,249 | ) | (973,726 | ) | - | - | - | (610,349 | ) | (1,433,249 | ) | (973,726 | ) | |||||||||||||
Net loss attributable to non-controlling interests shareholders | (67 | ) | (390 | ) | 58 | - | - | - | (67 | ) | (390 | ) | 58 | |||||||||||||||
Net loss attributable to | (610,416 | ) | (1,433,639 | ) | (973,668 | ) | - | - | - | (610,416 | ) | (1,433,639 | ) | (973,668 | ) | |||||||||||||
Accretion of convertible redeemable preferred shares and convertible redeemable non-controlling preferred shares to redemption value | (153,785 | ) | (164,191 | ) | - | - | - | - | (153,785 | ) | (164,191 | ) | - | |||||||||||||||
Net loss attributable to ordinary shareholders of | (764,201 | ) | (1,597,830 | ) | (973,668 | ) | - | - | - | (764,201 | ) | (1,597,830 | ) | (973,668 | ) | |||||||||||||
Shares used in calculating loss per share: | ||||||||||||||||||||||||||||
Weighted average number of ordinary shares: | ||||||||||||||||||||||||||||
Basic and diluted | 104,132,597 | 141,586,134 | 688,715,943 | - | - | - | 104,132,597 | 141,586,134 | 688,715,943 | |||||||||||||||||||
Net loss per share attributable to ordinary shareholders of | ||||||||||||||||||||||||||||
Net loss per share-Basic and diluted | (7.34 | ) | (11.29 | ) | (1.41 | ) | - | - | - | (7.34 | ) | (11.29 | ) | (1.41 | ) | |||||||||||||
Net loss per ADS1 attributable to ordinary shareholders of | ||||||||||||||||||||||||||||
Net loss per ADS-Basic and diluted | - | (33.87 | ) | (4.23 | ) | - | - | - | - | (33.87 | ) | (4.23 | ) | |||||||||||||||
About
Leveraging its core capabilities,
For more information, please visit: http://ir.missfresh.cn.
Safe Harbor Statement
This announcement contains statements that may constitute “forward-looking” statements which are made pursuant to the “safe harbor” provisions of the
For investor and media inquiries, please contact:
In
Investor Relations
Tel: +86 (10) 5954-4422
Email: ir@missfresh.cn
Tel: +86 (10) 6508-0677
E-mail: missfresh@tpg-ir.com
In
Tel: +1-212-481-2050
E-mail: missfresh@tpg-ir.com
_______________
1 Each ADS represents three Class B ordinary shares.
Source:
2022 GlobeNewswire, Inc., source