BEIJING, May 15, 2018 /PRNewswire/ -- Link Motion
Inc., (NYSE: LKM), a leading smart car and smart ride company,
today provided an update on the filing of its 2017 annual report on
Form 20-F (the "2017 20-F") as well as its previously issued
unaudited financial statements for the relevant periods in 2016
including the entire financial year of 2016, each of the periods in
2017 including the entire financial year of 2017, and the audited
financial statements for 2016 in its 2016 annual report on Form
20-F (the "2016 20-F").
During the final preparation of its 2017 20-F, the Company's
management identified an error regarding the classification of
RMB512 million of its term deposits
("Term Deposits") and notified the Audit Committee and Marcum Bernstein & Pinchuk LLP, its
independent accountant of this identified error. Management
also identified that certain agreements related to the Term
Deposits, such as a joint custodian agreement, pledge agreement and
the related personal bank loan agreements for Dr. Shi should have
been disclosed and the Term Deposits should have been classified as
restricted in the Company's audited financial statements as of and
for the year ended 2016. The management team began a comprehensive
review process in order to make necessary adjustments and any
required disclosures.
These identified term deposits consist of (i) RMB72 million related to a foreign
currency-related loan with China Merchants Bank which was
previously disclosed in the Company's 2016 20-F and (ii)
RMB440 million exclusively related to
Dr. Shi's initial 50% payment in consideration for his purchase of
22% of the equity interests in FL Mobile Jiutian Technology Co.,
Ltd. (or "FL Mobile"). These term deposits were disclosed in
the previously issued financial statements for the periods ended in
FYQ3 2016, FYQ4 & Full Year 2016, 2016 20-F, and each of the
periods in 2017 including entire financial year of 2017 as
non-restricted.
As part of the comprehensive review process, the Company has
thus far identified the following potential inaccuracies related to
the above-mentioned factors: (i) the proper classification of
RMB512 million of Term Deposits
resulting in the overstatement of term deposits and understatement
of restricted term deposits (ii) the accurate disclosures
associated with the Term Deposits (iii) the proper accounting of
and accurate disclosures about the RMB113.2
million payment to Dr. Shi concerning the reversal of the
5.66% equity in FL Mobile and (iv) other associated accounting
treatments and disclosure resulting from the agreements
related to the Term Deposits, such as a joint custodian
agreement, a pledge agreement and the related personal bank
loan agreements for Dr. Shi.
As a result of these errors and until the comprehensive review
process is completed with the accurate restatements and
disclosures, the Company determined on May
15, 2018 with its Audit Committee that the previously issued
financial statements for the periods ending in FYQ2 2016, FYQ3
2016, FYQ4 & Full Year 2016, the 2016 20-F, and the unaudited
financials released in each of the periods in 2017 including the
entire financial year of 2017 should no longer be relied
upon. This includes its 2016 20-F filed on April 26, 2017; the press releases and associated
6k's filed on August 23, 2016,
December 1, 2016; April 7, 2017, December
15, 2017, and April 11, 2018,
along with any related other press releases or shareholder
communications describing our financial statements for those same
periods. The Audit Committee has discussed these matters with its
independent accountants.
In addition, a committee of independent directors of our Board,
with the assistance of outside counsel, has been investigating
allegations raised by a former senior executive of our company. The
Company has received emails and been contacted by counsel
purporting to be acting on behalf of a former senior executive of
our company advancing allegations regarding the circumstances
surrounding the executive's departure from the company, changes in
the shareholding, leadership and control of our controlling
shareholder RPL Holdings Ltd., including the authority of
signatories on associated documents, changes in the shareholding of
FL Mobile Jiutian Technology Co., Ltd., and other subsidiaries,
our company's sale of interest in certain affiliated entities
and the consideration paid by the purchasers, our company's
internal controls, including with respect to cash and
associated related party transactions, administrative expenses,
including executive compensation, and our Board's investigation
into and our public disclosures about these issues.
The Company will provide the updated financial statements and
disclosures as soon as the review process is completed.
About Link Motion Inc.
Link Motion Inc. ("Link Motion" or the "Company" NYSE: LKM)
is a leading smart car and smart ride company. Link Motion's
portfolio of offerings includes enabling technology solutions and
secure connected carputers for the ecosystem of car businesses,
consumer ride sharing services, as well as legacy mobile security,
productivity and other related applications. For more
information on Link Motion, please
visit www.lkmotion.com.
Forward-Looking Statements
This news release contains "forward-looking statements" within
the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as
amended, and as defined in the U.S. Private Securities Litigation
Reform Act of 1995. These forward-looking statements can be
identified by terminology such as "will," "expects," "anticipates,"
"future," "intends," "plans," "believes," "estimates" and similar
statements. All statements other than statements of historical fact
in this press release are forward-looking statements and involve
certain risks and uncertainties that could cause actual results to
differ materially from those in the forward-looking statements.
These forward-looking statements are based on management's current
expectations, assumptions, estimates and projections about the
Company and the industry in which the Company operates, but involve
a number of unknown risks and uncertainties. Further information
regarding these and other risks is included in the Company's
filings with the U.S. Securities and Exchange Commission. The
Company undertakes no obligation to update forward-looking
statements to reflect subsequent occurring events or circumstances,
or changes in its expectations, except as may be required by law.
Although the Company believes that the expectations expressed in
these forward-looking statements are reasonable, it cannot assure
you that such expectations will turn out to be correct, and actual
results may differ materially from the anticipated results. You are
urged to consider these factors carefully in evaluating the
forward-looking statements contained herein and are cautioned not
to place undue reliance on such forward-looking statements, which
are qualified in their entirety by these cautionary statements.
Media & Investor Relations
MZ North America
Chris
Tyson
Managing Director
949-491-8235
LKM@mzgroup.us
www.mzgroup.us
Luke Zimmerman
Senior Associate
949-259-4987
LKM@mzgroup.us
www.mzgroup.us
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SOURCE Link Motion Inc.