decrease in interest income was primarily contributed by forfeited interest income of $1.6 million due to early termination of term deposits and the $1.7 million of interest expenses related to the convertible debt issued in the fourth quarter of 2013. The loss from the change in fair value of the embedded call option of the convertible debt was $1.1 million and other income was $1.7 million due to the re-measurement gain of Yinlong investment and government subsidies.
Income Tax
Income tax benefits were $0.2 million in the fourth quarter of 2013, compared with an income tax benefit of $0.07 million in the same quarter a year ago and income tax expense of $0.9 million in previous quarter.
Net Income / (Loss)
Net loss attributable to NQ Mobile was $5.2 million in the fourth quarter of 2013, compared with net income of $4.9 million in the same quarter a year ago and a loss of $2.4 million in the previous quarter. Non-GAAP net income attributable to NQ Mobile was $14.9 million in the fourth quarter of 2013, up 20.8% year-over-year and down 14.4% sequentially.
Cash Flows
Net cash used in operations for the fourth quarter of 2013 was $13.4 million, compared with net cash flow generated from operations of $3.9 million in the same quarter a year ago and net cash flow generated from operations of $22.2 million in the previous quarter. The negative cash flow from operations was mainly the result of prepayment for game content and titles, prepayments for marketing and to our business partners in this quarter as well as a significant pay down of accounts payables to suppliers during the quarter. As of December 31, 2013, the Company resumed its regular cash management and deposits across its operating bank accounts following the extreme measures taken during the quarter including the transferring of approximately $103 million (RMB 628 million) into a branch at Standard Chartered Bank in Beijing as previously announced. The Company has returned most of our cash balances from Standard Chartered Bank to its normal operating accounts at domestic Chinese banks. As of December 31, 2013, the Company’s total cash position is $283.0 million ($179.7million in cash and cash equivalents and $103.3 million in term deposits), mainly comprised of RMB 756 million ($124 million) in mainland China and $ 158 million in Hong Kong. The significant increase of cash position in the fourth quarter of 2013 is mainly due to the issue of convertible debt of $166 million.
Fiscal Year 2013 Results
Revenues
Net revenues for fiscal year 2013 were $196.7 million, up 114.3% from $91.8 million in 2012.
Mobile Value Added Service revenues, which include consumer mobile security revenues and mobile games revenues, were $103.5 million in 2013. Comparing with the net revenues of $68.3 million in 2012, the increases were mainly due to increase in the consumer mobile securities revenues and mobile game revenues. The Company has total $82.8 million mobile security revenues and $20.7 million mobile games revenues in 2013.
Advertising revenues were $36.6 million for 2013, up 312.0% year-over-year from $8.9 million in 2012. The robust growth was due to increased monetization through advertising and promotional revenue in the form of 3rd party application referrals through our mobile security products, mobile games and our advertising network platforms.
Enterprise Mobility revenues increased to $53.0 million in 2013, up from $12.6 million for three quarters of 2012, due to the strong growth in the enterprise business and new customer gains.
Other revenues in fiscal year 2013 were $3.6 million, up 78.7% from $2.0 million in 2012. Other revenues are generated primarily by providing technical contract services to third parties and thus the revenues fluctuate as such since the business is driven by individual projects.
Cost of Revenues
Cost of revenues in fiscal year 2013 was $80.9 million, up 214.4% from $25.7 million in 2012. The increase was primarily due to the increased hardware procurement cost for NationSky’s Enterprise Mobility business, increased customer acquisition cost, increased revenue sharing with game content providers and mobile payment service providers, amortization of intangible assets resulted from acquisitions, and higher staff costs.
Gross Profit and Gross Margin
Gross profit in fiscal year 2013 was $115.8 million, up 75.3% from $66.0 million in 2012. Gross margin was 58.9% in fiscal year 2013, compared with 72.0% in 2012. Excluding the impact from NationSky, gross profit for NQ Mobile in 2013 was $102.3 million, up 62.8% year-over-year, and the gross margin was 71.2%.
Operating Expenses
Total operating expenses in fiscal year 2013 were $120.3 million, up 88.6% from $63.8 million in 2012. Non-GAAP operating expenses were $62.9 million in fiscal year 2013, up 59.4% from $39.4 million in 2012.
Selling and marketing expenses were $25.8 million in fiscal year 2013, up 48.4%
