NQ Mobile

Muddy Waters: NQ Mobile's Top Ten Lies Since Friday

Just out via Muddy Waters Research on NQ Mobile Inc (NASDAQ:NQ)
Muddy Waters noted numerous lies and deceptions in NQ Mobile Inc (NASDAQ:NQ)’s responses to our October 24, 2013 report. This report lists the ten most egregious falsehoods we noted from the October 25th conference call, and Co-CEO Omar Khan’s television interviews that same day with Fox Business News and Bloomberg.

NQ Mobile

Muddy Waters noted numerous lies and deceptions in NQ Mobile Inc (NASDAQ:NQ)’s responses to our October 24, 2013

report. This report lists the ten most egregious falsehoods we noted from the October 25th conference call, and Co-CEO Omar Khan’s television interviews that same day with Fox Business News and Bloomberg.

Lie # 1: Xu Rong was a consultant who worked at NQ Mobile Inc (NASDAQ:NQ) for about six months before she joined Yidatong in 2007.

This is an enormous lie because it goes to the heart of our conclusion that NQ’s largest customer is really NQ, dressed up in a shell company called Yidatong (“YDT”) that is nominally 75% owned by Xu Rong.

NQ wrote the below on July 31, 2013 (emphasis added):

“How did Xu Rong come to own Yidatong? In 2007 she bought 75% of Yidatong.

Did Xu Rong work at NQ?

Yes, in 2007, when NQ was a very small company, they did not have a good person running marketing. They asked Xu Rong to join as an advisor directing the marketing of the business. She was with NQ for less than six months before leaving and buyin her interest in Yidatong.”

That was a repeat of a lie dating back at least as far as NQ’s prospectus:

“The principal shareholder of Yidatong was our consultant in 2006 and 2007 and received certain share options and consulting fees in connection with her services. In addition, we provided Yidatong with an interest-free advance in order to fund Yidatong’s short-term liquidity needs and to further cultivate our long-term commercial relationship with Yidatong.”

On the conference call, NQ was forced to admit it had lied about her departure date after we had showed she was still with the company in 2008. Note that Matt Mathison is now referring to her as an “employee”, rather than a “consultant”.
MW_NQ_10292013

MW_NQ_10292013.pdf

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