Topic: The History of Link Motion Inc.
We commenced operations in October 2005, when our founders incorporated Beijing NQ Technology Co. Ltd. ("Beijing Technology") in China. Beijing Technology is primarily engaged in the research and development of products and services related to mobile security, privacy and productivity. We have been a pioneer in the consumer mobile security industry since 2005.
Prior to our IPO, we received Pre-IPO investments from private equity funds such as Sequoia and Fidelity, and introduced strategic investors such as HTC and Qualcomm. The Company completed its IPO on the NYSE in May 2011. Building upon the success of our mobile security offerings, we expanded our product and service offerings to provide mobile privacy and productivity, and started to offer additional mobile value added services, such as mobile entertainment applications and platforms and other mobile applications. We also started to offer a full set of enterprise mobility solutions. Additionally, we began offering our products and services to our channel partners to provide these products and services to their own users. We also enhanced our ability to monetize our mobile users through advertising and technology licensing.
In order to seize the opportunities arising from the smart car industry, and to position the company for that future development, the company acquired a controlling stake of Linkmotion Holdings Ltd. ("Linkmotion"), a smart car company in 2015. We believe the new focus on smart cars will become our major business focus in the future. With this new major business focus in mind, we completed the divestments of many of our existing smartphone related businesses that would not be a part of our smart car related business focus in the future and changed our name from "NQ Mobile Inc." to "Link Motion Inc."
The Company trades on the NYSE under the ticker symbol of LKM.
No. 4 Building, 11 Heping Li East Street, Dongcheng District, Beijing, 100013, the People's Republic of China
As a company that trades publicly on the NYSE, shares can be bought and sold through your registered representative.
If you are a stockholder of record, please contact our transfer Agent: Deutsche Bank, Depository Receipts, Trust & Agency Services.
General investor questions about us or our common stock?
|Chris Tyson||Luke Zimmerman|
|Managing Director||Senior Associate|
Topic: The Divestments
A summary of the divestments of the Company's many existing smartphone related businesses can be found on pages 39 and 40 of the annual report on Form 20-F for the year 2016 filed with the SEC on April 26, 2017. Below please find the relevant abstract:
"During 2010 and 2012, we acquired 100% of the equity interests in FL Mobile. Following subsequent reorganization in 2014, FL Mobile became one of our consolidated affiliated entities and controlled by us through contractual arrangements. See "Item 7. Major Shareholders and Related Party Transactions—B. Related Party Transactions—Contractual Arrangements—Contractual Agreements with FL Mobile."
In August 2015, we entered into a framework agreement (the "FL Framework Agreement") with Beijing Jinxin Rongda Investment Management Co. Ltd. ("Beijing Jinxin"), a subsidiary of Tsinghua Holdings Co., Ltd., to begin the divestment of the FL Mobile business ("FL Mobile Divestment"). In connection with the FL Mobile Divestment, FL Mobile was reorganized as a subsidiary of Xinjiang NQ in March 2016.
We have discussed the FL Mobile Divestment with several potential purchasers since 2015, including Gansu Huangtai Wine-Marketing Industry Co., Ltd. and Shenzhen Prince New Materials Co., Ltd., both listed on the Shenzhen Stock Exchange, and private equity investment fund. These three transactions, however, did not come to fruition due to various reasons, including ongoing changes in the capital market conditions and uncertainty surrounding relevant policies in China.
On the other hand, we sold (i) 16.34% equity interests in FL Mobile to Dr. Vincent Wenyong Shi, our chairman and chief operating officer pursuant to a termination and share purchase agreement in March 2016, (ii) total of 20.66% of equity interests in FL Mobile to several affiliates of Beijing Jinxin in May 2016 and August 2016, and (iii) the remaining 63% equity interests in FL Mobile to an affiliate private equity investment fund of Tsinghua Tongfang in March 2017. The total purchase price of the sales of our interests in FL Mobile pursuant to the above three transactions was RMB4 billion. In connection with the transaction with the above, we also sold all our interests in Showself (Beijing), the operator of our live social video business, to the same affiliate fund of Tsinghua Tongfang for a consideration of RMB800 million.
We have transferred our equity interests in FL Mobile and Showself (Beijing) to these purchasers pursuant to our contracts with them, and are in the process to collect remaining purchase price and close the whole FL Mobile and Showself (Beijing) Divestment. For risks associated with the collection of full purchase price, see "Item 3.D. Risk Factors—Risks Related to Our Business and Industry—We have not received all considerations for the sale of FL Mobile and Showself (Beijing). Uncertainties exist as to whether the counterparties will perform pursuant to the contracts, and we may have to incur expenses to enforce the payment or revert the transactions. "In addition to purchasing FL Mobile and Showself (Beijing), the affiliate private equity fund of Tsinghua Tongfang also has the option to purchase US$100 million worth of Class A Common shares of our Company at a price of US$1.05 per share, or US$5.25 per ADS within 3 months after the date of the full payment pursuant to the agreements to purchase FL Mobile."
After we entered into the definitive agreements with Tongfang Investment Fund Series SPC ("Tongfang"), the affiliate private equity investment fund of Tsinghua Tongfang for the above-mentioned divestments in March 2017, we collected the remaining purchase price in several installments, and filed press releases on 6-Ks on June 2, 2017, November 13, 2017, November 21, 2017 and December 15, 2017, respectively to update investors as to the progress of the divestments.
After the formal completion of the divestments, which occurred on December 14, 2017, we filed a press release on 6-K to report the completion of the FL Mobile Divestment and Sale of Showself's Live Social Video Business on December 15, 2017.
Below please find the relevant abstract:
"NQ Mobile Inc. ("NQ Mobile" or the "Company"), a leading global provider of mobile internet services, today announced that it has completed the FL Mobile Divestment and the Sale of Showself's Live Social Video Business. The Company today received additional approximately RMB1.97 billion of consideration for the transaction, consisting of approximately RMB200 million in cash and RMB1,770 million in a senior note from Tongfang Investment Fund Series SPC (the "Investor"), an affiliate of Tongfang Securities Limited, a part of Tsinghua Tongfang. This brings the total consideration received to approximately RMB3.32 billion, or 100% of the agreed upon price pursuant to the definitive agreements between the Company and the Investor in March 2017. As compensation to the Company, the senior note issued to the Company bears an interest of 8% per annum. This one-year senior note may be extended by another 12 months at the Company's option, and can be redeemed early by the Investor for principle plus accrued interest to the Company at any time."
Topic: The Smart Car and Smart Ride Business
In the previous decade, technology innovation and advancement within the mobile landscape has been centered around the smartphone device. We believe the connected automotive and smart car markets will lead mobile innovation and technology advancements over the next decade. Put simply, the smartphone was the dominant technology device of the past and we believe the connected car is the device of the future.
The automotive OEMs and carmakers today are laying the groundwork for the software-defined vehicle for the future. Linkmotion is primarily engaged in development of an optimized software and hardware in-vehicle platform that enables the automotive OEMs and carmakers to provide highly secure, robust, customizable and a fully integrated solution that helps them reduce their overall costs and increase their smart solution offering.
Through Linkmotion, we are selling this hardware and software solution, in the form of our CarBrain platform, directly to the carmakers and OEMs. In addition, we also are selling the platform to public transportation end-markets as well. We expect to utilize the CarBrain platform in our own Smart Ride service as we believe that the smart car of the future will become a personalized mobile "smart space" for passengers to enjoy and use their transportation time to the fullest.
We will bring a full internet experience to passengers, enabling the smart car to act as a "smart space", which will link your home and office to create a seamless internet lifestyle while you are riding from one location to another. Growing urbanization trends in China raise major traffic issues and congestion that are being addressed partially by various ridesharing businesses. We will offer ridesharing services, along with our unique "smart space" services and passenger-centric smart cars, to allow riders to enjoy the time they spend in a car in any way that they desire. Our mission is to help people enjoy their ride time through our smart space services, bringing hardware and car design together with software and services. We will own our own fleet of customized smart cars with a special "smart space" designed for the passenger.
Topic: Financial Information
The Company's cash, cash equivalents, term deposits and restricted cash as of the last reported results on September 30, 2017 totaled $248.8 million. Between September 30, 2017 and December 31, 2017, the Company also received approximately $220 million more in cash from Tongfang. In addition, the Company has a senior note from Tongfang worth approximately RMB1.77 billion that bears interest of 8% per annum. Our cash and equivalents position has put us in a strong position to address future smart car and smart ride business opportunities.
An important part of our monetization plans, being the plans to monetize many of our existing smartphone related businesses that would not be a part of our smart car related business focus in the future, contemplated leveraging our cash balance position to achieve specific shareholder friendly actions including buybacks. On November 13, 2017, the board authorized the Company to repurchase up to US$150 million of its shares or convertible notes over the next 12 months and to date we have used $93 million. This included the early redemption of $88 million of the Company's outstanding convertible notes and about $5 million for the repurchase of ADSs on the open market. The average price of the ADSs repurchased so far is $3.95.
With the roll out of our new business, we expect to end the year of 2018 on an annualized revenue run-rate of approximately $100 million, or $25 million per quarter.
We would also point you to our IR presentation: (http://ir.lkmotion.com/phoenix.zhtml?c=243152&p=irol-EventDetails&EventId=5267731)
where you will find more information relating to our 2018 expectations for our smart car and smart ride business opportunities.
Topic: Corporate Actions
The Company announced the following in the press release on February 27, 2018 linked below:
The legal name of the Company is now Link Motion Inc. and the ticker of the Company will be changed from "NQ" to "LKM" following the necessary procedures as required by the NYSE. The Company will communicate further about the ticker change as appropriate.
On November 13, 2017, the board authorized the Company to repurchase up to US$150 million of its shares or convertible notes over the next 12 months and to date we have used $93 million. This included the early redemption of $88 million of the Company's outstanding convertible notes and about $5 million for the repurchase of ADSs on the open market. The average price of the ADSs repurchased so far is $3.95.
Topic: Past Fraud Allegations made by Muddy Waters LLC
On October 25, 2013, the Company's board of directors formed a special committee, consisting of four independent directors of the Company at the time, to conduct an independent review of certain fraud allegations raised in a report issued by short seller Muddy Waters Inc. ("Muddy Waters") dated October 24, 2013 (and in subsequent reports and letters issued through January 13, 2014) . The committee was authorized to retain independent advisors in connection with its investigation. The special committee subsequently retained the global law firm of Shearman & Sterling LLP to conduct the independent review, and Shearman & Sterling LLP in turn engaged Deloitte & Touche Financial Advisory Services Limited as forensic accountants to assist it in the matter (together, the "Investigation Team"). On June 4, 2014, the results of the independent investigation conducted by the special committee were announced. The announcement described the scope of the work carried out during the more than seven month investigation, including substantive procedures performed to investigate each allegation. The special committee reported it did not find any evidence that we had engaged in the fraudulent conduct alleged by Muddy Waters LLC. It also noted that the Investigation Team had not been able to verify that certain devices containing electronic data that it collected and copied contained all responsive information at the time the copies were made, and that on some devices there were indications that data might be missing, for which there was not a credible explanation.
The complete summary on the special committee's scope of investigations and principal findings was posted on our IR website on June 4, 2014 here:
Subsequent to the release of the special committee's findings, our audit committee engaged DLA Piper LLP as its outside counsel to advise it with respect to matters relating to the completion of the audit, including matters relating to the observation that some data might be missing on some devices which was identified by the special committee. With respect to devices as to which there were indications that data might be missing, the audit committee's counsel retained the computer forensic consultant, Control Risks Group, to conduct a thorough examination of images made from devices that were collected and imaged during the course of the special committee's investigation and hired Stroz Friedberg to review the examination protocol. As a result of this forensic examination, the audit committee's advisers were able to recover and review many files on certain devices, which files had been deleted between the October 24 publication of the Muddy Waters report and the collection of data from those devices by the Special Committee. None were relevant to the Muddy Waters allegations. The audit committee's advisers performed additional forensic procedures to recover documents deleted prior to system reinstallations on certain of the devices following the publication of the Muddy Waters report, and similarly recovered no documents relevant to the allegations or special committee's investigation. In sum, the Audit Committee found no evidence of an effort to prevent the collection of documents or data relevant to the special committee's investigation.
We have responded to requests from the Staff of both the New York Stock Exchange and the Securities and Exchange Commission related to the Muddy Waters allegations and the special committee investigation. There are no outstanding requests, although either the SEC or NYSE Staff may make further requests and we intend to cooperate with such requests.
The Company filed its annual report for the year ended December 31, 2013 on Form 20-F with the U.S. Securities and Exchange Commission, which contained the unqualified audited financial statements for the three years ended December 31, 2013. The audited financial results contain no qualification and no adverse findings and are consistent with the Company's previous financial disclosures and reports.
The annual report for the year ended December 31, 2013 on Form 20-F filed with the U.S. Securities and Exchange Commission on October 27, 2014 can be found here:
Finally, the Company's most current annual report for the year ended December 31, 2016 on Form 20-F filed with the U.S. Securities and Exchange Commission on April 26, 2017 which contains disclosure of such investigation on pages 101 and 102 can be found here:
Forward Looking Statements
This FAQ sheet contains "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and as defined in the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as "will," "expects," "anticipates," "future," "intends," "plans," "believes," "estimates" and similar statements. All statements other than statements of historical fact in this press release are forward-looking statements and involve certain risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements. These forward-looking statements are based on management's current expectations, assumptions, estimates and projections about the Company and the industry in which the Company operates, but involve a number of unknown risks and uncertainties. Further information regarding these and other risks is included in the Company's filings with the U.S. Securities and Exchange Commission. The Company undertakes no obligation to update forward-looking statements to reflect subsequent occurring events or circumstances, or changes in its expectations, except as may be required by law. Although the Company believes that the expectations expressed in these forward looking statements are reasonable, it cannot assure you that such expectations will turn out to be correct, and actual results may differ materially from the anticipated results. You are urged to consider these factors carefully in evaluating the forward-looking statements contained herein and are cautioned not to place undue reliance on such forward-looking statements, which are qualified in their entirety by these cautionary statements.