Luckin's net revenue inflated by over 2b yuan in 2019

Luckin Coffee Inc's net revenue was inflated by 2.12 billion yuan ($300.3 million) in 2019, the company announced on Wednesday on its official website.

The company made the announcement after substantial completion of the independent internal investigation by its Special Committee of the Board of Directors.

The committee, which was formed on March 19, has also found that the company's costs and expenses were inflated by 1.34 billion yuan in 2019 and the fabrication of transactions began in April 2019.

The company's former CEO Qian Zhiya and former COO Liu Jian allegedly participated in the fabricated transactions.

In addition, Luckin Coffee chairman Lu Zhengyao was asked to resign as a director and the chairman of the Board, along with 12 other employees who participated in or had knowledge of the fabricated transactions.

An additional 15 employees face other disciplinary actions and Luckin is in the process of terminating relationships with all third parties involved in the fabricated transactions, the report said.

During the investigation over 550,000 documents from over 60 custodians were reviewed, over 60 witnesses were questioned and extensive forensic accounting and data analytics testing were performed.

Luckin Coffee delisted from Nasdaq on June 29 and its share price was fixed at $1.38.

However, over 4,000 Luckin stores are operating normally and the company has even begun to attract older users and promote store sales by providing coupons and vouchers through community marketing last month, according to Sina Finance.