Storm Group: If the net assets are negative by the end of 2019 the company’s shares may be suspended from listing

On October 28, Storm Group announced that the Shenzhen Stock Exchange may suspend the listing of the company’s shares if the company’s audited financial and accounting report for 2019 shows negative net assets at the end of 2019. As of June 30, 2019, the Company’s consolidated financial statements had total assets of RMB92,460.00 and total liabilities of RMB 210,949.82 million.

As of June 30, 2019, the total assets of the subsidiary Storm Intelligence were RMB47,132.85 million and the total liabilities amounted to RMB166,409.82 million, the existence of such matters may result in uncertainty about the Company’s continuing business capabilities. The Company is at risk of negative net assets attributable to shareholders of listed companies at the end of 2019 after audit.

At the same time, the company is at risk of continuing difficulties.

1, the company’s operating conditions have undergone major adverse changes, funds are tight, it is difficult to maintain the normal operation of the company. The company’s main business income fell sharply, accounts receivable recovery difficulties, business development is seriously constrained. The company’s cash flow is tight, cash inflows have been difficult to support day-to-day operations. The company is heavily indebted and faces a liquidity shortage and is unable to service its debts in a timely manner.

2, by the above-mentioned adverse changes in business conditions and other negative effects, the company’s compensation difficulties for employees, the company continued to lose personnel.

The following is the full text of the announcement:

The Company and all members of the Board of Directors warrant that the information disclosure is true, accurate and complete, and that there are no false records, misleading statements or material omissions.

Special Note: The Net Assets attributable to the Owners of the Parent Company at the Consolidated Financial Statements of June 30, 2019 are -23,939.82 million yuan, and the Company is at risk of negative net assets attributable to shareholders of listed companies at the end of 2019 after an audit. According to the relevant regulations, the Shenzhen Stock Exchange may suspend the listing of the company’s shares if the company’s audited financial and accounting report for the year 2019 shows negative net assets at the end of 2019.

Risk solely with net assets for the full year 2019

Storm Group Co., Ltd. (the “Company”) released its 2019 Semi-Annual Report on August 30, 2019. As of June 30, 2019, the Company’s consolidated financial statements had total assets of RMB92,460.00 and total liabilities of RMB 210,949.82 million. As of June 30, 2019, the total assets of the subsidiary Storm Smart was RMB47,132.85 million and the total liabilities amounted to RMB166,409.82 million, the existence of the above-mentioned matters may result in uncertainty about the Company’s continuing business ability, and the Company’s existence is subject to the listing at the end of 2019 after an audit. The net assets of the company’s shareholders are a negative risk. In accordance with the provisions of Article 13.1.1 (c) of the Rules on the Listing of GEM shares of the Shenzhen Stock Exchange, “The financial and accounting report for the most recent year shows that the audited net assets at the end of the year are negative, and the Shenzhen Stock Exchange may decide to suspend its stock listing”, The Shenzhen Stock Exchange may suspend the listing of the company’s shares if the Company’s audited financial and accounting report for the year 2019 shows negative net assets for the end of 2019.

Risk of continuing difficulties

1, the company’s operating conditions have undergone major adverse changes, funds are tight, it is difficult to maintain the normal operation of the company. The company’s main business income fell sharply, accounts receivable recovery difficulties, business development is seriously constrained. The company’s cash flow is tight, cash inflows have been difficult to support day-to-day operations. The company is heavily indebted and faces a liquidity shortage and is unable to service its debts in a timely manner.

2, due to the above-mentioned adverse changes in business conditions and other negative effects, the company’s compensation to employees difficult, the company’s staff continued to lose.

Third, the arrangement of risk tips

On August 30, 2019, September 12, 2019, September 20, 2019, September 27, 2019, October 11, 2019, the Company disclosed the “Indicative Notice on the Risk of Suspension of Stock Listing” (Announcement No. 2019-065), Prompt Notice on the Risk of Stock Suspension (Announcement No. 2019-070), “Indicative Notice on the Risk of Suspension of Stock Listing” (Announcement No. 2019-072), “Indicative Notice on the Risk of Suspension of Stock Listing” (Announcement No. 2019-073), “Indicative Notice on the Risk of Stock Suspension of Listing” (Announcement No. 2019-074), “Indicative Announcement on the Risk of Suspension of Stock Listing” (Announcement No. 2019-076). In accordance with the relevant requirements of the Shenzhen Stock Exchange GEM Listing Rules, the Company will continue to fulfill the relevant obligations of listed companies, after which the company’s shares may be suspended from listing every five trading days, until the risk of suspension of listing is eliminated or the exchange makes a decision to suspend the listing of the company’s stock.

Other matters

1, September 4, 2019, the Company disclosed the “Notice on the Company received the China Securities Regulatory Commission investigation notice” (announcement no. 2019-068). According to the relevant regulations, the listed company is under investigation by the CSRC for suspected violations of the law and regulations, and does not meet the conditions for issuing shares to purchase assets.

2. On September 16, 2019, the Shenzhen Stock Exchange decided to give the company and Mr. Feng Xin a public condemnation of the punishment. According to the relevant regulations, in the last 12 months by the stock exchange public condemnation, not to issue securities.

3, the company will be in accordance with the progress of the matter in a timely manner to fulfill the obligation of information disclosure. Please pay attention to the investment risk, rational investment.

4, investor consultation mode:

Phone: 010-62309948

E-mail: ir.baofeng.com

Storm Group Co., Ltd.

Board

October 28, 2019

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