Luckin Coffee Announces Formation of Independent Special Committee and Provides Certain Information Related to Ongoing Inte...
April 02 2020 - 9:00AM
Luckin Coffee Inc. (“Luckin Coffee” or the “Company”)
(NASDAQ: LK) today announced that the Company’s Board of
Directors (the “Board”) has formed a special committee (the
“Special Committee”) to oversee an internal
investigation into certain issues raised
to the Board’s attention during the audit of
the consolidated financial statements for the fiscal year ended
December 31, 2019 (the “Internal Investigation”).
The Special Committee is comprised
of three independent directors of the Board, Mr. Sean
Shao, Mr. Tianruo Pu and Mr. Wai Yuen Chong, with
Mr. Shao serving as its chairman. The Special Committee
has retained independent advisors, including independent legal
advisors and forensic accountants, in connection with the
Internal Investigation. The Special Committee has retained
Kirkland & Ellis as its independent outside counsel. Kirkland
& Ellis is assisted by FTI Consulting as an independent
forensic accounting expert. The Internal Investigation is
at a preliminary stage.
The Special Committee today brought to the attention of the
Board information indicating that, beginning in the second quarter
of 2019, Mr. Jian Liu, the chief operating officer and a director
of the Company, and several employees reporting to him, had engaged
in certain misconduct, including fabricating certain transactions.
The Special Committee recommended certain interim remedial
measures, including the suspension of Mr. Jian Liu and such
employees implicated in the misconduct and the suspension and
termination of contracts and dealings with the parties involved in
the identified fabricated transactions. The Board accepted
the Special Committee’s recommendations and implemented them with
respect to the currently identified individuals and parties
involved in the fabricated transactions. The Company will take all
appropriate actions, including legal actions, against the
individuals responsible for the misconduct.
The information identified at this preliminary stage of the
Internal Investigation indicates that the aggregate sales
amount associated with the fabricated transactions from the second
quarter of 2019 to the fourth quarter of 2019
amount to around RMB2.2 billion. Certain costs and
expenses were also substantially inflated by fabricated
transactions during this period. The above
figure has not been independently verified by the Special
Committee, its advisors or the Company’s independent
auditor, and is subject to change as the Internal Investigation
proceeds. The Company is assessing the overall financial
impact of the misconduct on its financial statements. As a
result, investors should no longer rely upon the
Company’s previous financial statements and earning releases
for the nine months ended September 30, 2019 and the two quarters
starting April 1, 2019 and ended September 30, 2019, including the
prior guidance on net revenues from products for the
fourth quarter of 2019, and other communications relating to
these consolidated financial statements. The investigation is
ongoing and the Company will continue to assess its
previously published financials and other potential
adjustments.
Luckin Coffee will release additional information concerning the
Internal Investigation in due course and is committed to taking
appropriate measures to improve its internal controls.
Safe Harbor Statement
This announcement contains forward-looking statements within the
meaning of Section 21E of the Securities Exchange Act of
1934, as amended. These forward-looking statements are made under
the “safe harbor” provisions of the U.S. Private Securities
Litigation Reform Act of 1995. These statements can be identified
by terminology such as “will,” “expects,” “anticipates,” “future,”
“intends,” “plans,” “believes,” “estimates,” “potential,”
“continue,” “ongoing,” “targets,” “guidance” and similar
statements. The Company may also make written or oral
forward-looking statements in its periodic reports to the U.S.
Securities and Exchange Commission (the “SEC”), in its annual
report to shareholders, in press releases and other written
materials and in oral statements made by its officers, directors or
employees to third parties. Any statements that are not historical
facts, including statements about the Company’s beliefs and
expectations, are forward-looking statements. Forward-looking
statements involve inherent risks and uncertainties. A number of
factors could cause actual results to differ materially from those
contained in any forward-looking statement, including but not
limited to the following: the Company’s growth strategies; its
future business development, results of operations and financial
condition; its ability to understand buyer needs and provide
products and services to attract and retain buyers; its ability to
maintain and enhance the recognition and reputation of its brand;
its ability to rely on merchants and third-party logistics service
providers to provide delivery services to buyers; its ability to
maintain and improve quality control policies and measures; its
ability to establish and maintain relationships with merchants;
trends and competition in China’s e-commerce market; changes in its
revenues and certain cost or expense items; the expected growth of
China’s e-commerce market; PRC governmental policies and
regulations relating to the Company’s industry, and general
economic and business conditions globally and in China and
assumptions underlying or related to any of the foregoing. Further
information regarding these and other risks, uncertainties or
factors is included in the Company’s filings with the SEC. All
information provided in this press release and in the attachments
is as of the date of this press release, and the Company undertakes
no obligation to update any forward-looking statement, except as
required under applicable law.
About Luckin Coffee Inc.
Luckin Coffee Inc. (NASDAQ: LK) has pioneered a
technology-driven retail network to provide coffee and other
products of high quality, high affordability, and high
convenience to customers. Empowered by big data analytics, AI, and
proprietary technologies, the Company pursues its mission to be
part of everyone’s everyday life, starting with coffee. The Company
was founded in 2017 and is based in China. For more
information, please visit investor.luckincoffee.com.
Investor and Media Contacts
Investor Relations:Luckin Coffee Inc.
IREmail: ir@luckincoffee.com
Bill Zima / Fitzhugh TaylorICR, Inc.Phone: 646 880 9039
Media Relations:Luckin Coffee Inc.
PREmail: pr@luckincoffee.com
Ed Trissel / Jack KelleherJoele Frank,
Wilkinson Brimmer KatcherPhone: 212 355 4449
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