We wanted to provide you with a summary of some of the highlighted concerns over the past few days with some additional color.  We will continue to walk you through any additional questions you may have, but we wanted to highlight these insights in a general update.  In addition to letting you know that the company did establish a 10b-5 trading plan during the Q4 open trading window and was actively buying stock in the market yesterday as part of that pre-determined plan — we are also continuing to consider other things as we deem this most recent selloff entirely unacceptable and ridiculous.  In the end, we remain confident in our business, in our financials, in our strategic positioning, and in our future.  We believe this extreme volatility will prove short lived.

As we already detailed in our earnings release and on our earnings conference call, there were numerous extraordinary factors in the fourth quarter, some of which were one-time and others which will continue in the future, but initially showed up in the quarter so were surprising relative to the street’s operating models.  In fact, there was almost $8 million in expenses and costs that impacted our operating and net results in the quarter.  $2.4 million of direct professional services fees/costs tied to the work of the Special Committee/Fighting false allegations from short seller reports.  $1 million in indirect expenses including extra marketing and PR which was not included in the one-time break out.  $2.8 million in expenses and professional fees from the CB offering.  And, we forfeited $1.6 million in interest income due to the early termination of term deposits from the transferring of ~ $103 million.

While some of these extraordinary measures will continue in Q1 — and we specifically said that an additional $5-$8 million of directly tied extraordinary expenses would impact the first quarter — these are not a reflection of our ongoing operating model and will not impact our financial performance going forward besides the CB’s interest and fair value of embedded option expenses.

On the cash flow from operations front — again, due to the extreme measures the company underwent, we also made the very purposeful decision to ensure continuity and comfort with our business partners, vendors and relationships.  This resulted in the biggest impacts to our operating cash flows as we prepaid for game titles and content up front, prepaid other partners for services and paid down our accounts payables to vendors much more than normal treasury mandates.  The total cash flow impact in Q4 from those factors alone (and there were others) was more than $16 million.  In other words, the operating cash flow impacts were felt in Q4, but again, taking away the extraordinary costs in Q1, this will not impact our business going forward and we continue to expect to be a business with strong FCF generation as we have historically been.

As for the management share purchase — as stated in our earnings release, during the open window in Q4, we were unable to purchase stock based on applicable securities laws.  There were numerous material and significant deals that have since come to light to obviously indicate the possession of material non-public information during this time – among others.  We remain committed and look forward to buying stock as soon as we’re able to.  Additionally, the company did establish a 10b-5 trading plan during the open window in Q4 and was active in the market yesterday according to that pre-determined plan.

Regarding the vLife acquisition, there are a few things that should be considered.  First, we previously owned around 10% of this company.  As we announced during our NQ Live product introduction conference call in the fall, the vLife interactive wall paper technology was key to the building out of our NQ Live platform.  The purchase price detailed as described in our Q4 earnings release last week, is the cumulative consideration that we paid to own our 58% controlling interest.  As we discussed in our earnings call, we are already seeing more than 8 million MAU and more than 2 million DAU on the platform.  With already more than 35 million devices shipped with the product preloaded and expectations much higher than that — this was an important and very compelling company to gain control over as the IP and technology are key components of our product offering going forward — additionally we were able to scale up our rollout much faster.  We provided some views about where we see MAU and DAU of the platform going even just this year that will prove to be very strategically and financially important to our business.

In conclusion, the management remains committed and confident in our business, in our financials, in our strategic positioning and in our future.

Please let us know if you have any questions.

NQ Mobile IR

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