SenseTime. Photo: CFP

Chinese AI software company SenseTime refuted a short-seller report by Grizzly Research LLC on Tuesday in a filing to the Hong Kong Exchanges and Clearing Limited (HKEX), saying the report is untenable, while the board is reviewing the allegations and will take appropriate measures to protect the company’s interests.

SenseTime said that the report is “without merit” and contains unfounded allegations and misleading conclusions and interpretations, which also shows a lack of understanding of the company’s business model and financial reporting structure, and a lack of thorough reading of its public filings, the company said.

The board of directors is reviewing all the allegations, considering taking “appropriate course of action” to safeguard the interests of its all shareholders, according to the filing. 

Grizzly Research LLC released a report on Tuesday, alleging its research exposes SenseTime for what appears to be “a pattern of falsifying revenue through employment of revenue fabrication schemes.” 

“SenseTime describes itself as ‘a leading AI software company,’ however, we believe that in this case AI stands for Artificially Inflated revenue,” the Grizzly Research report said. 

SenseTime said that the author of the report did not contact the company to verify relevant information or gain any understanding of its financial statements. The company will make additional disclosures in due course consistent with the requirements of applicable rules and regulations of the HKEX, it said.

SenseTime shares plunged on the Hong Kong stock market on Tuesday’s opening, with its shares trading at HK$1.37 ($0.18), a 4.86 percent drop as of the mid-day close. 

Global Times