The Glamorous Facade of 70 Billion Won in Sales, the Collapse Behind It... 'FashionOn' Receives 'Disclaimer of Opinion' in Accounting Audit

Promising startup 'FashionOn', which had garnered high expectations from the industry with its Dongdaemun fashion wholesale and retail B2B SCM (Supply Chain Management) service, is facing its biggest crisis after receiving a 'Disclaimer of Opinion' on its 2025 accounting audit from an external auditor. It is pointed out that the severe financial uncertainty and poor internal controls hidden behind its glamorous outward growth have finally surfaced.

According to the 4th (2025) audit report submitted by Haesol Accounting Corporation on April 3, 2026, the audit opinion on FashionOn's financial statements was expressed as a 'Disclaimer of Opinion'. The auditor stated that they did not even receive basic financial statements, such as the statement of financial position, statement of comprehensive income, statement of changes in equity, and statement of cash flows as of December 31, 2025 and 2024, from the company's management. Furthermore, the company entirely failed to submit any related materials, including basic statements, evidentiary documents, and written representations from management required to conduct the audit, resulting in a severe limitation on the scope of the audit. Consequently, the auditor explained that they were unable to obtain sufficient and appropriate audit evidence to form a basis for an audit opinion.

[Source: FashionOn Homepage]

Such a financial crisis for FashionOn is not sudden. A fatal warning light was already on in the previous year's 2024 (3rd) audit report. At that time, the auditor issued a 'Qualified Opinion' on the grounds that they were unable to attend the physical inventory counting at the beginning and end of the period, and thus could not obtain satisfactory results regarding the quantity of inventory.

What is even more serious was the poor financial soundness threatening the company's survival. FashionOn recorded a net loss of approximately 1.139 billion won for the year 2024. As of the end of 2024, the company's total assets were merely about 599 million won, while its total liabilities reached about 1.753 billion won. The company had fallen into a state of severe 'complete capital impairment', where current liabilities exceeded total assets by 1.036 billion won and total liabilities exceeded total assets by a staggering 1.155 billion won. Accordingly, the auditor had already warned of the risk of collapse in the 2024 report by stating, "There is a material uncertainty that may cast significant doubt on the company's ability to continue as a going concern."

FashionOn, founded by CEO Min-jun Kim in April 2022, rapidly emerged in a short period as a platform that automates the entire wholesale purchasing management process, including orders, settlements, deposits, and tax invoice issuance between Korea's Dongdaemun market and retailers. It has continued a dazzling, ultra-fast outward growth, recording massive sales of 26.1 billion won in its first year of establishment in 2022, 57.3 billion won in 2023, and 72.2 billion won in 2024.

Its growth potential was also recognized externally. In July 2023, it was selected as a 'Step-up Challenge Company' in the Korea Credit Guarantee Fund's innovative startup growth support program, and it obtained the 'Excellent Technology Evaluation Certification Company (T-5)' mark from NICE Information Service. Recently, it was selected as a 2025 'Incheon Rising Star' by the Incheon Technopark, presenting a global vision to connect Korea's Dongdaemun and the LA Jobber wholesale market in the US, as well as launching an AI-based content generation service.

However, this 'Disclaimer of Opinion' in the 2025 audit implies that such a rosy vision and outward growth were virtually a 'sandcastle'. Despite generating tens of billions of won in sales every year, the company fell into complete capital impairment as it could not prevent massive operating losses and net losses, and ultimately revealed a complete paralysis of its internal control system by failing to submit even the most basic accounting settlement data to the external auditor.

Deep concerns and keen attention from the industry are focused on whether FashionOn, which sought to leap into a global B2B platform by leading the digital transformation of Dongdaemun fashion distribution where cash payment practices are prevalent, will be able to find a breakthrough for management normalization amidst financial uncertainty, or if it will be stranded at the crossroads of its survival.