NQ Mobile Inc (NQ) saw its shares drop over 33% on the last day of trading in the prior week after news about Board changes, and audit ‘issues’ spooked investors. Muddy Waters, which holds a highly publicized negative view of the company responded to the news last night, suggesting the company sold shares illegally over the long Holiday weekend. NQ Mobile has responded to the latest development with the following statement.
NQ Mobile Statement
Today’s IR update marks the beginning of a new chapter for NQ Mobile Inc (ADR) (NYSE:NQ). We recognize that the past three months have marked a sequence of unintended disappointments around the timing of events and related communications. From a communications standpoint, the Company has been hindered in our capacity to substantively provide continuous updates to investors over the past several months as the most significant and meaningful updates that matter to the capital markets have centered around both the completion and findings of the independent investigation led by the Special Committee and the pending annual financial audit led by our independent auditors. An important element to stress is the autonomous nature of these independent processes; which explains why we were limited in our ability to communicate with the markets.
NQ Mobile’s Investor Relations update
However, today’s IR update marks the beginning of a determined effort to reinitiate regular updates with investors:
1. The Company completed an exhaustive and broad-based independent investigation led by senior partners in the U.S. by the reputable and global law firm of Shearman & Sterling with assistance on forensic accounting reviews by Deloitte & Touche Financial Advisory Services. The summary findings are detailed in their press release dated June 4, 2014. The allegations of fraud and wrongdoing were invalidated. The cash was explicitly verified. The revenues were examined and found consistent with reported results and filings. The partnerships and business relationships were verified. The relationship and business dealings with Yidatong were closely examined and found that the revenues and cash flows from customers to carriers through Yidatong are verifiable and consistent with our public disclosures. The allegations by Muddy Waters, various bloggers, and other short sellers are just flat out wrong. The Company continues to stand by confidently in our business, our strategy and in our financials and filings.
2. Despite the distractions and disappointments related to the timing of the independent investigation and the pending annual audit, our employees and management continue to remain focused on developing great products and services. Our businesses are performing well. Our platform strategy is working as we are well positioned in the mobile environment, which represents the most important and fast-growing markets for both consumers and enterprises. We will begin to provide the market with updates related to the various consumer and enterprise businesses more consistent with what we were doing as an IR department previously.
3. There are many pathways forward. We have great businesses, great employees, and a strong future. While the near term has been extremely frustrating and difficult, there are many pathways forward for NQ Mobile Inc (ADR) (NYSE:NQ). Our Company, our Board, and our Management Team are diligently working on delivering further growth and returning value for the benefit of shareholders:
- We are working diligently toward the completion of our 2013 financial audit.
- We are pursuing many avenues to continue the strong expansion of our many businesses.
- We are determined to do what is needed to regain the confidence and trust of the capital markets.
We are committed to working through this difficult period until our annual audit can be completed and look forward to reinitiating more frequent updates about our business to investors through emails and blog posts.
In the meantime, our businesses are performing strongly.