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  "documentTitle": "NQ Mobile (NQ)",
  "authorId": "51_Muddy_Waters",
  "authorName": "Carson C. Block",
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  "presentationDate": "2014-07-06 00:00:00",
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  "notes": "This is a research note page detailing a sequence of events regarding NQ Mobile's audit status and management's misleading statements.",
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      "text": "This latest deception is just another in a string of misrepresentations about the state of NQ's audit.",
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      "text": "By releasing Q4 results and hosting a conference call, NQ was sending a strong signal that an unqualified audit opinion was fait accompli. It is highly unusual for a company to release its full year results when there is even a reasonable doubt about whether it will receive an unqualified opinion.",
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      "text": "On the April 10th call, Mr. Khan twice stated that he expected NQ to file its 20-F on or by April 30th. To quote Mr. Khan “...based on the current [audit] schedule, the fully integrated schedule that all the parties that are associated with the process are working from, we're planning on – we're currently planning on meeting the statutory deadline for the 20F which is April 30.”",
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      "text": "After NQ missed the second filing deadline of May 15th, Matt Mathison privately reassured investors that the audit opinion was “on the goal line”, and that PwC merely needed to perform some more compliance procedures.",
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      "text": "NQ’s June 4th release of the investigation results shows that by early June, NQ felt strongly it would not ultimately receive an unqualified audit opinion. NQ had stated on April 10th, and reiterated on April 30th, that it was going to release the final results of the independent committee’s investigation in the 20-F. However, NQ ultimately did not wait until the 20-F to release the results. On June 4th, NQ issued a press release touting the final results of the investigation. This change of plan was a clear indicator that NQ felt strongly that it would not receive an unqualified audit opinion. (The positive release also pushed the stock up 30.9% on the day, likely giving insiders another opportunity to dump stock.)",
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      "kind": "paragraph",
      "text": "At these stock price levels, we would not be surprised to see the consideration mix for acquisitions go toward cash, given that there should be real cash in the company from the October 2013 convertible bond offering. At the same time, NQ will likely issue more bullish press releases about “partnerships” with big names (and no disclosed economics), report more terrific but fake financials, and enter into more (likely corrupt) partial sales of subsidiaries that",
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      "kind": "paragraph",
      "text": "This latest deception is just another in a string of misrepresentations about the state of NQ’s audit.",
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      "text": "an indication that something was going awry. Ultimately, NQ released its Q4 earnings on April 10, 2014. NQ’s failure to announce a date of earnings release until it was challenged by the J Capital report shows it did not have PwC’s buy-in to announce results because the audit was troubled.",
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      "text": "We believe NQ’s misleading statement that PwC wants to expand the scope of the audit, and that the board is reviewing the request, is merely to create a pretext for NQ to change auditors. In other words, NQ has likely already decided to fire PwC, or PwC has already informed NQ it is resigning. It is highly unlikely that another affiliate of a Big Four (or BDO for that matter) would touch NQ with a 10-foot pole. While the long-term game for NQ is to avoid becoming another tombstone in the graveyard of China frauds, we expect that insiders will continue to make more acquisitions in order to drain the company of value.",
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      "text": "…based on the current [audit] schedule, the fully integrated schedule that all the parties that are associated with the process are working from, we're planning on – we're currently planning on meeting the statutory deadline for the 20F which is April 30. — Mr. Khan",
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      "text": "What Now?",
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