NQ Mobile Inc (ADR) (NYSE:NQ) announced a few changes to its board of directors today including the departure of Ying Han, current Chair of the Audit Committee of the board of directors, citing personal reasons. Regardless of why she chose to leave, such a significant change to the audit committee was sure to get people’s attention as PricewaterhouseCooper’s 2013 audit has yet to be completed and allegations from Carson Block’s Muddy Waters Research have been dragging on the stock price for month. But a drop of more than 30% is probably more than NQ Mobile was expecting.
Han replaced by Yao as audit committee chief
“We remain confident in our business, our strategy, and our financials,” said Omar Khan, co-CEO of NQ Mobile. “We believe that the steps we are taking strengthen the collective global experience and expertise of our Board and further enhance our corporate governance.”
Han will be replaced by Max Yao, the founder of Chinese venture capital firm HaiBang Ventures and the publicly traded tech firm Focused Photonics Inc, who has been named as an independent director and chair of the audit committee. Justin Chen of the PacGate Law Group has also been named an independent director, and Toro Investment Partners managing partner Taek Kwon has been named an advisor to the board. NQ Mobile says that it intends to name a shareholder representative to the board soon, which probably means Kwon since Toro is a large NQ Mobile Inc (ADR) (NYSE:NQ) shareholder.
PwC delay likely reason for NQ Mobile’s plummeting stock price
You would expect a high profile change during such a tense moment to startle investors, but it’s hard to believe that’s all there is to the 30% drop (so far, it continues to drop while writing). What’s more discouraging, and probably behind today’s plummeting stock price, is that PricewaterhouseCoopers’s 2013 audit work has apparently been delayed even more.
“Following the June 4, 2014 release of the summary findings of the independent investigation conducted by the independent Special Committee of the Board, the Company’s independent auditors, PricewaterhouseCoopers Zhong Tian LLP (“PwC”), communicated to the Company that it would need to perform additional procedures and expand the scope of its 2013 audit work. The Company’s Board and Audit Committee are considering PwC’s request,” NQ Mobile wrote in its statement.
There had been speculation that NQ Mobile Inc (ADR) (NYSE:NQ) was close to filing its delayed annual report, but today’s announcement seems to have pushed that back indefinitely.