b'Pinduoduo, adding that the sites 1.7 million merchants were ultimately responsible for the sourcing of their products, and that the company had historically been subject to claims related to the sale of counterfeit goods and could continue to be subject to such claims in the future. The offering documents also discussed the companys marketing efforts. Specifically, they stated that users were encouraged to share product information over social networks and to make team purchases at discounted prices. The Registration Statement added that as a result of team purchases, buyers on our platform actively introduce us to and share products offered on our platform and their shopping experiences with their friends, family and social contacts. New buyers in turn refer our platfrom [sic] to their broader family and social networks, generating low-cost organic traffic and active interactions and leading to exponential growth of our buyer base. In the twelve-month periods ended December 31, 2017 and June 30, 2018, the number of active buyers on our platform reached 245 million and 344 million, respectively. The registration statement also disclosed that companys marketing expenses had increased more than sixteen-fold over the period of a year, providing that sales and marketing expenses increased from RMB 73.9 million in the three months ended March 31, 2017 to RMB 1,217.5 million (US $194.1 million) in the three months ended March 31, 2018, while sales and marketing expenses as a percentage of our revenues decreased from 199.5% in the three months ended March 31, 2017 to 87.9% in the three months ended March 31, 2018. Further, the prospectus disclosed that the companys results of operations depend on our ability to manage our costs and expenses. We expect our costs and expenses to continue to increase as we grow our business and attract more buyers and merchants to our platform, and [i]f we continue to incur substantial marketing expenses without being able to achieve anticipated buyer and merchant growth, our operating results may be materially and adversely affected. As a result we may fail to improve our operating margin and may continue to incur net losses in the future. On July 28, 2018, Skyworth, a major television manufacturer, published a statement demanding that Pinduoduo remove all counterfeit Skyworth products from its platform. Other major Chinese brands followed suit, including book publishers and manufacturers of electronics and mobile phones. On August 1, 2018, Chinas State Administration for Market Regulation (SAMR) ordered an investigation into Pinduoduo for its sales of counterfeit products, and publicly summoned Pinduoduo to a formal meeting. The same day, the price of the Companys ADSs dropped from $22.59 to $20.31. On August 3, 2018, SAMR posted a'