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  "docSlug": "69cc18cfe079",
  "documentTitle": "NQ Mobile (NQ)",
  "authorId": "51_Muddy_Waters",
  "authorName": "Carson C. Block",
  "documentKindSlug": "research-note",
  "documentKindLabel": "Research note",
  "sourceTypeSlug": "short_seller",
  "sourceTypeLabel": "Short seller",
  "presentationDate": "2013-10-24 00:00:00",
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  "notes": "The slide uses a corporate structure diagram to illustrate the complexity and potential for fund diversion in VIE structures.",
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      "kind": "callout",
      "text": "Our view is that most to all of the cash transfer never happened, and that by purporting to have somehow circumvented China's capital controls in order to transfer the money directly to the VIE, it makes it easier for NQ to carry out its fraud by forging its cash balances.",
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      "text": "Corporate structure diagram showing offshore and PRC entities connected by ownership and contractual arrangements.",
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      "text": "One therefore wonders what NQ is showing its auditors as evidence of the existence of the cash and the term deposits, and why the auditor deemed it necessary to reclassify 2011 cash and term deposits.",
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      "text": "The proper way to move money into the PRC is by downstreaming cash from NQ Hong Kong to NQ Beijing. This may be in either the form of registered capital increase or a loan. NQ did this with $20 million in January 2012.",
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      "text": "NQ's purported implausible movement of funds makes it easier to divert funds without detection. When analyzing NQ's SEC filings alongside its (fraudulent) SAIC financials, it becomes clear that NQ purports to have moved $47 million of IPO proceeds to its VIE.",
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