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Prospectus

Link Motion Reports Unaudited Financial Results for the Fourth Quarter and Fiscal Year 2017

BEIJING, April 10, 2018 /PRNewswire/ -- Link Motion Inc., formerly NQ Mobile Inc. (NYSE: LKM), a leading smart car and smart ride company, reported its unaudited financial results for the fourth quarter and full year ended December 31, 2017. 

Fourth Quarter and Full Year 2017 Financial Highlights:

  • Q4 2017 net revenues totaled $13.4 million, a 23.1% decrease from $17.5 million in Q4 2016; 2017 net revenues totaled $57.6 million, a 5.0% decrease from $60.6 million in 2016.
  • Q4 2017 GAAP net income attributable to Link Motion increased to $111.4 million or $1.10 per fully diluted ADS versus net loss of $111.2 million or $1.12 per fully diluted ADS in Q4 2016; 2017 GAAP net loss attributable to Link Motion was $5.3million or $0.05 per fully diluted ADS versus net loss of $127.6 million or $1.29 per fully diluted ADS in 2016.
  • At the end of 2017 cash, cash equivalents and term deposits increased to $319.8 million compared to $266.9 million at the end of 2016. In addition, the Company has a note receivable of $270.9 million from the Q4 2017 divestment of FL Mobile and sale of Showself. 

2017 and Subsequent Operational Highlights:

  • Completed the FL Mobile Divestment and the Sale of Showself's Live Social Video Business. The excess of total consideration over the carrying value of the disposed entities was $342.0 million. The Company recognized $161.5 million of gain in the fourth quarter and booked $180.4 million as deferred gain from the disposal of discontinued operations to be recognized when the receivables from purchasers are collected in future periods.
  • Shifted the corporate focus to becoming a leading smart car and smart ride company by leveraging Link Motion's CarBrain platform.  This rebranding from NQ Mobile Inc. to Link Motion Inc. and the ticker symbol for the Company's ADS traded on the NYSE from "NQ" to "LKM".
  • Formed a partnership with Hangzhou First Technology Co., a leading car design and engineering firm, to design Link Motion's passenger-centric smart car for its future Smart Ride business.
  • Extended Link Motion's product offerings beyond passenger cars to public transportation vehicles and was selected as the platform vendor for pure electric buses being demonstrated in the city of Qingdao.
  • Formed a partnership with Chery Automotive Co., to jointly develop a technology platform for the connected vehicle of the future including fully autonomous vehicles.
  • Established a partnership with Irdeto, one of the world leaders in digital platform security, to integrate its secure vehicle access solution into our CarBrain platform for new lines of connected and autonomous cars.

Management Commentary

"2017 was a transformational year for Link Motion, as we prepared the company to capitalize on the massive smart car opportunity we believe is in the early stages of its growth cycle," said Dr. Vincent Shi, Founder and Chairman of Link Motion. "Our Company, NQ Mobile was founded for the smart phone revolution and today Link Motion is built for the upcoming smart car "revolution."

"Over the last several months, we have made great strides in the development of our future businesses and have put in place the skilled talent needed to execute upon our operational plans. As we move forward into 2018, we expect to continue to form key partnerships with major industry players and have identified three key operational milestones we expect to achieve in 2018 including the commercial rollout of our Smart Ride business in the summer, the further growth of our CarBrain platform, and the resulting revenue growth from these new businesses."

"Our entire management team is confident in our ability to ramp our smart car and smart ride businesses in the quarters to come. We are focused on delivering the key milestones for 2018."

"To further support the transparency amongst our shareholder base and new institutional investors, Link Motion will be hosting investor and analyst events in China expected in the Summer of 2018 after our launch city is announced. As part of our new strategic investor relations and communication program, we plan to be aggressive with our progress updates and adhering to best practices in the United States and abroad. We also expect to be attending multiple investor conferences throughout 2018 in key global markets." Concluded Dr. Shi.

Financial Results

The Company announced in a press release on December 14, 2017 (the "disposal date") that it had completed the divestment of FL Mobile and sale of Showself's Live Social Video Business (the "Divestments").  Accordingly, the financial results were deconsolidated as of December 14, 2017.  The key financial information related to the Divestments for the period up to the disposal date, is quantified in the discontinued sections below. All results presented for the current period reflect these changes and the comparable periods presented have also been adjusted retrospectively.

Additionally, the excess of total consideration over the carrying value of the disposed entities was $342.0 million. The Company has recognized $161.5 million of gain in the fourth quarter, which represents the percentage of the cash received of the overall consideration.  The remaining portion of the excess which represents the percentage of the consideration that is still receivable, is $180.4 million and recorded as deferred gain from the disposal of discontinued operations on the balance sheet.  The Company will recognize these gains pro-rata as it receives cash from the purchasers in future periods. 

Fourth Quarter 2017 Financial Results

Revenues

Net revenues in the fourth quarter of 2017 decreased 23.1% year-over-year to $13.4 million from $17.5 million in the same period in 2016.  

Consumer Services revenues consist of advertising and other consumer services.  Advertising revenues increased 14.2% year-over-year to $3.2 million from $2.8 million in the same period in 2016. The increase in advertising revenues was mainly due to overseas promotional business. Other services revenues decreased 17.6% year-over-year to $0.9 million from $1.1 million in the same period a year ago. The decrease in other service revenues was mainly due to lower premium consumer security revenues as a result of the Company moving away from premium subscription services to an advertising-based model.

Enterprise Mobility revenues decreased 31.2% year-over-year to $9.4 million from $13.6 million in the same period in 2016. The decrease in enterprise product revenues was mainly due to weakness in customer demand in the fourth quarter of the year compared to the same period of last year.

Cost of Revenues

Cost of revenues in the fourth quarter of 2017 decreased 45.3% year-over-year to $11.4 million from $20.8 million in the same period in 2016. The year-over-year decrease was primarily due to lower hardware sales within the enterprise business and lower customer acquisition cost within the consumer services segment.

Gross Profit and Gross Margin

Gross profit in the fourth quarter of 2017 was $2.0 million from a gross loss of $3.4 million in the same period in 2016. Gross margin, or gross profit as a percentage of net revenues, was 15.2% in the fourth quarter of 2017, compared with negative gross margin of 19.2% in the same period in 2016.

Operating Expenses

Selling and marketing expenses in the fourth quarter of 2017 decreased 41.5% year-over-year to $1.2 million from $2.1 million in the same period in 2016. Non-GAAP selling and marketing expenses, which exclude share-based compensation decreased 42.9% year-over-year to $1.2 million from $2.1 million in the same period in 2016. The year-over-year decrease is primarily driven by a reduction in overall staff costs and lower overall marketing and advertising expenses.

General and administrative expenses in the fourth quarter of 2017 increased 135.5% year-over-year to $28.8 million from $12.2 million in the same period in 2016. Non-GAAP general and administrative expenses, which exclude share-based compensation and amortization of intangible assets arising from acquisitions, increased 153.5% year-over-year to $28.7 million from $11.3 million in the same period in 2016. The year-over-year increase is primarily driven by a non-cash accounting treatment of allowance for bad debt in the quarter.

Research and development expenses in the fourth quarter of 2017 increased 98.2% year-over-year to $7.9 million from $4.0 million in the same period in 2016. Non-GAAP research and development expenses, which exclude share-based compensation and amortization of intangible assets arising from acquisitions, increased 93.8% to $7.8 million from $4.0 million in the same period in 2016. The increase is mainly due to the Link Motion business and development projects. 

Impairment of goodwill and intangible assets in the fourth quarter of 2017 was $4.9 million as the result of a one-time, non-cash impairment of goodwill in the enterprise reporting unit.

Total operating expenses in the fourth quarter of 2017 decreased 63.5% year-over-year to $42.8 million from $117.2 million in the same period in 2016. The decrease was mainly the result of less impairment of goodwill and intangible assets in the period, offset by increases in general and administrative expenses and research and development expenses.

Non-GAAP operating expenses, which exclude share-based compensation, the amortization of intangible assets arising from acquisitions, and impairment of goodwill and intangible assets in the fourth quarter of 2017 increased 116.1% year-over-year to $37.7 million from $17.4 million in the same period in 2016. The increase is mainly due to the increase in general and administrative expenses and research and development expenses as described above. See below under the heading "Non-GAAP Financial Measures" for a discussion of Non-GAAP operating expenses and a reconciliation of such measure to the most comparable measure calculated under U.S. generally accepted accounting principles ("GAAP").

Share-based Compensation Expenses

Share-based compensation expenses, which were allocated to related operating cost and expenses line items, amounted to $0.1 million in the fourth quarter of 2017, compared to $0.1million in the corresponding period in 2016.

Loss from Operations

Loss from operations in the fourth quarter of 2017 was $40.8 million, compared with $120.5 million in the same period in 2016. 

Non-GAAP loss from operations, which excludes share-based compensation, amortization of intangible assets arising from acquisitions, and impairment of goodwill and intangible assets, was $35.6 million compared to $19.8 million in the same period in 2016. See below under the heading "Non-GAAP Financial Measures" for a discussion of Non-GAAP loss from operations and a reconciliation of such measure to the most comparable measure calculated under U.S. generally accepted accounting principles ("GAAP").

Foreign Exchange Gain/(Loss), Interest Expenses and Other Income

Foreign exchange gain was $1.2 million in the fourth quarter of 2017, compared with a loss of $0.6 million in the same period in 2016, which was affected by fluctuations in the foreign exchange rates. Interest expenses were $4.8 million in the fourth quarter of 2017, compared with $6.1 million in the same period a year ago. Interest expenses were primarily derived from interest expense related to convertible debts, offset by the interest income from certain term deposits. The decrease of interest expenses is mainly due to we early redeemed $ 88 million convertible debt.

Impairment Loss

In the fourth quarter of 2017, we recognized impairment losses of $1.4 million, primarily driven by one-time non-cash write-downs of long-term investments.

Income Tax

Income tax expense was $0.5 million in the fourth quarter of 2017, compared with income tax benefit of $3.1 million in the same period in 2016.

Discontinued Operations

The Company announced in a press release on December 14, 2017 that it had completed the divestment of FL Mobile and Showself's Live Social Video Business. Accordingly, the financial statements of FL Mobile and Showself were deconsolidated as of the disposal date. Up to the disposal date, the total net revenues, net loss attributable to Link Motion, and net loss attributable to our non-controlling interests from FL Mobile in the fourth quarter of 2017 was $30.7 million, $13.2 million, and $8.4 million respectively. Up to the disposal date, the total net revenues, net income attributable to Link Motion, and net income attributable to our non-controlling interests from Showself in the fourth quarter of 2017 were $22.9 million, $3.3 million, and $1.7 million respectively. Loss from discontinued operations, net of income tax, was $16.6 million in the fourth quarter of 2017 compared to income of $11.2 million in the same period in 2016. Additionally, the excess of total consideration over the carrying value of the disposed entities was $342.0 million. The Company has recognized $161.5 million of gain in the fourth quarter, which represents the percentage of the cash received of the overall consideration.  The remaining portion of the excess which represents the percentage of the consideration that is still receivable, is $180.4 million and recorded as deferred gain from the disposal of discontinued operations on the balance sheet.  The Company will recognize these gains pro-rata as it receives cash from the purchasers in future periods. 

Net Income/Loss

Net Income attributable to Link Motion was $111.4 million in the fourth quarter of 2017, compared with net loss of $111.2 million in the same period in 2016. Non-GAAP net income attributable to Link Motion, which excludes share-based compensation, interest expenses related to convertible debts ,fair value change of derivative liability and loss of early redemption of convertible debts, amortization of intangible assets arising from acquisitions, impairment losses from goodwill, intangible assets and investment, and income tax provision related to the amortization of intangible assets arising from acquisitions and impairment loss from goodwill, intangible assets and investment, was $121.9 million in the fourth quarter of 2017, compared with non-GAAP net income attributable to Link Motion of $9.8 million in the same period in 2016. See below under the heading "Non-GAAP Financial Measures" for a discussion of Non-GAAP net income and a reconciliation of such measure to the most comparable measure calculated under U.S. generally accepted accounting principles ("GAAP").

Cash and Cash Equivalents, Term Deposits and Restricted Cash

Cash and cash equivalents, term deposits and restricted cash together amounted to $319.8 million as of December 31, 2017. 

Cash Flow

Net cash flow used in operations for the fourth quarter of 2017 was $13.7 million.

Fiscal Year 2017 Financial Results

Revenues

Net revenues for the fiscal year 2017 decreased 5.0% year-over-year to $57.6 million from $60.6 million in 2016.

Consumer Services revenues consist of advertising and other consumer services. Advertising revenues decreased 33.1% year-over-year to $10.4 million from $15.6 million in the same period in 2016. The decrease in advertising revenues was mainly due to lower overall activity within many of the traffic-related businesses as the Company prepares to optimize its operations and change focus to the smart car and smart ride businesses in the future. Other services revenues decreased 32.4% year-over-year to $4.0 million from $5.9 million in the same period a year ago. The decrease in other services revenues was mainly due to lower premium consumer security revenues as a result of the Company moving away from premium subscription services to an advertising-based model. 

Enterprise Mobility revenues increased 10.3% year-over-year to $43.2 million from $39.2 million in the same period in 2016.  The increase in enterprise mobility revenues was mainly due to stronger overall hardware sales of Trustek in the year. 

Cost of Revenues

Cost of revenues for the fiscal year 2017 decreased 12.1% year-over-year to $56.6 million from $64.4 million in the same period in 2016. The year-over-year decrease was primarily due to lower overall customer acquisition costs associated with the overall smartphone related businesses and lower overall amortization cost of intangible assets arising from acquisition as impaired in 2017.

Gross Profit and Gross Margin

Gross profit for the fiscal year 2017 increased to $1.1 million from a gross loss of $3.7 million in 2016. Gross margin, or gross profit as a percentage of net revenues, was 1.8% for the fiscal year 2017, compared with a negative gross margin of 6.1% in 2016.

Operating Expenses

Selling and marketing expenses for the fiscal year 2017 decreased 37.4% year-over-year to $4.8 million from $7.6 million in 2016. Non-GAAP selling and marketing expenses for the fiscal year 2017, which exclude share-based compensation, decreased 33.5% year-over-year to $4.8 million from $7.2 million in 2016. The year-over-year decrease was primarily the driven by a reduction in overall staff costs and lower overall marketing and advertising expenses.

General and administrative expenses for the fiscal year 2017 increased 18.6% year-over-year to $57.8 million from $48.8 million in 2016. Non-GAAP general and administrative expenses for the fiscal year 2017, which exclude share-based compensation and the amortization of intangible assets arising from acquisitions, increased 53.1% year-over-year to $52.3 million from $34.2 million in 2016. The increase is primarily driven by a non-cash accounting treatment of allowance for bad debt expense.

Research and development expenses for the fiscal year 2017 increased 32.5% year-over-year to $17.4 million from $13.2 million in 2016. Non-GAAP research and development expenses for the fiscal year 2017, which exclude share-based compensation and the amortization of intangible assets arising from acquisitions, increased 37.2% to $17.1 million from $12.4 million in 2016. This year-over-year increase is mainly due to the Link Motion business and other development projects.

Impairment of goodwill and intangible assets for the fiscal year 2017 was $102.7 million which is mainly the result of a one-time, non-cash impairment of goodwill and intangible assets in the remaining portion of the Security and Others reporting unit and Enterprise reporting unit. 

Total operating expenses for the fiscal year 2017 increased 8.5% year-over-year to $182.8 million from $168.5 million in 2016 driven mostly from the one-time, non-cash impairment of goodwill and intangible assets recorded during the year of $102.7 million.

Non-GAAP operating expenses, which exclude share-based compensation expenses, the amortization of intangible assets arising from acquisitions, and impairment of goodwill and intangible assets increased 37.8% year-over year to $74.2 million from $53.8 million in 2016.

Share-based Compensation Expenses

Share-based compensation expenses, which were allocated to related operating cost and expenses line items, amounted to $5.6 million for the fiscal year 2017, compared to $12.6 million in the fiscal year 2016. The decrease in share-based compensation expenses was mainly due to less performance-based share options and equity granted in relation to acquisitions and performance in comparable periods.

Loss from Operations

Loss from operations for the fiscal year 2017 was $181.7 million, compared with $172.2 million in fiscal year 2016.

Foreign Exchange Gain, Interest Expenses/Income

Foreign exchange gain was $1.8 million for the fiscal year 2017, compared with a foreign exchange loss of $1.2 million in 2016. The gain in foreign exchange was primarily attributable to the fluctuation in foreign exchange rates. Interest expenses were $24.0 million for the fiscal year 2017, compared with $11.7 million in 2016. Interest expenses were primarily derived from interest expense related to convertible debts, offset by the interest income from certain term deposits.

Impairment Loss

In the fiscal year 2017, we recognized impairment losses of $3.5 million, primarily driven by one-time non-cash write-downs of long-term investments.

Income Tax

Income tax benefit was $0.7 million for the fiscal year 2017, compared with income tax benefit of $4.8 million in 2016.

Discontinued Operations

The Company announced in a press release on the disposal date that it had completed the divestment of FL Mobile and sale of Showself's Live Social Video Business. Accordingly, the financial results were de-consolidated as of the disposal date.  Up to the disposal date, the total net revenues, net loss attributable to us, and net loss attributable to our non-controlling interests from FL Mobile in the fiscal year 2017 was $152.3 million, $5.1 million, and $3.0 million respectively. Up to the disposal date, the total net revenues, net income attributable to us, and net income attributable to our non-controlling interests from Showself in the fiscal year 2017 was $112.7 million, $14.2 million, and $7.1million respectively. Income from discontinued operations, net of income tax, was $13.2 million in the fiscal year 2017 compared to $58.7 million in the same period in 2016. Additionally, the excess of total consideration over the carrying value of the disposed entities was $342.0 million. The Company has recognized $161.5 million of gain in the fourth quarter, which represents the percentage of the cash received of the overall consideration.  The remaining portion of the excess which represents the percentage of the consideration that is still receivable, is $180.4 million and recorded as deferred gain from the disposal of discontinued operations on the balance sheet.  The Company will recognize these gains pro-rata as it receives cash from the purchasers in future periods. 

Net Loss/Income

Net loss attributable to Link Motion was $5.3 million for the fiscal year 2017, compared with Net Loss attributable to Link Motion of $127.6 million in 2016.

Non-GAAP net income attributable to Link Motion, which excludes share-based compensation, interest expenses related to convertible debts, fair value change of derivative liability and loss of early redemption of convertible debts, amortization of intangible assets arising from acquisition, impairment losses from goodwill, intangible assets and investments and income tax provision related to the amortization of intangible assets arising from acquisitions and impairment loss from goodwill, intangible assets and investment was $137.0 million for the fiscal year 2017, compared with $21.8 million in 2016.

Cash Flow

Net cash used in operating activities for the fiscal year 2017 was $66.2 million.

Cash, cash equivalents, term deposits on December 31, 2017 totaled $319.8 million, as compared to $266.9 million on December 31, 2016. In addition, the company had $270.9 million in notes receivable at December 31, 2017. The substantial balance of cash, cash equivalents, term deposits and notes receivable as of December 31, 2017 resulted primarily from the divestment process as Link Motion shifts into a leading smart car and smart ride company.

Other Significant Events

The Company announced the effective date for the Corporate Name Change and Ticker Symbol Change

In a press release dated January 22, 2018, the Company announced that the board of directors had approved a rebranding effort around its new focus as a smart ride company.  In conjunction with this rebranding, the Company proposed to change its name from "NQ Mobile Inc" to "Link Motion Inc" and change its ticker from "NYSE: NQ" to "NYSE: LKM" and scheduled an extraordinary general meeting of shareholders on February 27, 2018. 

In a press release dated February 27, 2018, the Company announced the results of the Extraordinary General Meeting and resolved as a special resolution to change the Legal Name to Link Motion Inc. and the ticker to LKM.

In a press release dated March 12, 2018, the Company announced that the effective date of the corporate name change and ticker change would be effective at the opening of trading on the NYSE on March 14, 2018.  

The Company engaged MZ Group to lead a strategic investor relations and shareholder communication program.

In a press release dated Feb 13, 2018, the Company announced it had engaged MZ Global, an International IR Specialist firm to lead a comprehensive strategic investor relations and financial communication program across all key markets.  MZ Group works closely with management in executing a comprehensive capital markets strategy designed to increase the Company's visibility throughout the investment community.

The Company releases a Letter to Shareholders from the Chairman of the Board.

In a press release dated February 7, 2018, the Company released a letter from the Chairman of the Board which can be found here:  http://ir.lkmotion.com/phoenix.zhtml?c=243152&p=irol-newsArticle&ID=2330954

Conference Call Information

Link Motion Founder & Chairman Vincent Shi, CEO Zemin Xu, CFO Roland Wu, President Justin Chen and Vice President of Capital Markets, Matt Mathison will host the conference call, followed by a question and answer period.

To access the call, please use the following information:

Date:

Tuesday, April 10, 2018

Time:

8:00 p.m. ET, 5:00 p.m. PT, (April 11, 2018 - 8:00 a.m. HKT)

Toll-free dial-in number:

1-866-519-4004

International dial-in number:

+1-845-675-0437

Hong Kong:

+852-3018-6771

United Kingdom:

+44 203-621-4779

China Mainland:

4006208038 or 8008190121

Conference ID:

1355718

Please call the conference telephone number 5-10 minutes prior to the start time. An operator will register your name and organization. If you have any difficulty connecting with the conference call, please contact MZ Group at 1-949-491-8235.

The conference call will be broadcast live and available for replay https://edge.media-server.com/m6/p/y9fj7vrj and via the investor relations section of the Company's website here.

A replay of the conference call will be available after 11:00 p.m. Eastern time through April 17, 2018.

Toll-free replay number:

1-855-452-5696

International replay number:

+1-646-254-3697

Replay ID:

1355718

About Link Motion Inc.

Link Motion Inc. ("Link Motion" or the "Company", NYSE: LKM) is a leading smart car and smart ride company. Link Motion's portfolio of offerings includes enabling technology solutions and secure connected carputers for the ecosystem of car businesses, consumer ride sharing services, as well as legacy mobile security, productivity and other related applications. For more information on Link Motion, please visit www.lkmotion.com or the company's U.S. investor relations site here

Non-GAAP Financial Measures

To supplement the Company's financial results prepared in accordance with United States Generally Accepted Accounting Principles ("GAAP"), Link Motion's management uses non-GAAP measures of cost of revenues, operating expenses, income from operations and net income attributable to Link Motion, which are adjusted from results based on GAAP to exclude share-based compensation expenses, interest expenses related to convertible debts and fair value change of derivative liability related to the convertible debts and the loss of early redemption of convertible debts, amortization of intangible assets arising from acquisitions, impairment losses from goodwill, intangible assets and investments, and income tax provision related to the amortization of intangible assets arising from acquisitions and impairment loss from goodwill, intangible assets and investment. The Company also uses non-GAAP fully diluted earnings per ADS, which is the non-GAAP net income attributable to common shareholders divided by weighted average number of diluted ADS.

The Company's non-GAAP financial information is provided as additional information to help the Company's investors compare business trends among different reporting periods on a consistent basis and to enhance investors' overall understanding of the historical and current financial performance of the Company's continuing operations and its prospects for the future. The Company's non-GAAP financial information should be considered in addition to results prepared in accordance with GAAP, but should not be considered a substitute for, or superior to, GAAP results. In addition, the Company's calculation of this non-GAAP financial information may be different from the calculation used by other companies, and therefore comparability may be limited.

The non-GAAP financial measures are provided to enhance investors' overall understanding of Link Motion's current financial performance and prospects for the future. A limitation of using non-GAAP cost of revenues, operating expenses, income from operations and net income attributable to Link Motion, excluding share-based compensation expenses, interest expenses related to convertible debts  and fair value change of derivative liability related to the convertible debts and loss of early redemption of the convertible debts, amortization of intangible assets arising from acquisitions, impairment losses from goodwill, intangible assets and investments, and income tax provision related to the amortization of intangible assets arising from acquisitions and impairment loss from goodwill, intangible assets and investment are that these items has been and may continue to be a significant expense in the Company's business for the foreseeable future. In order to mitigate these limitations, the Company has provided specific information regarding the GAAP amounts excluded from each non-GAAP measure. The accompanying tables include details on the reconciliation between GAAP financial measures that are most directly comparable to the non-GAAP financial measures the Company has presented.

Forward Looking Statements

This news release 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.

INVESTOR RELATIONS:

MZ North America

Chris Tyson
Managing Director
949-491-8235 
LKM@mzgroup.us 
www.mzgroup.us

Luke Zimmerman
Senior Associate 
949-259-4987 
LKM@mzgroup.us
www.mzgroup.us

 

 

LINK MOTION INC.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)

  

As of

  

December 31,
2017

 

December 31,
2016

  

US$

 

US$

ASSETS

    

Current assets:

    

Cash and cash equivalents

 

60,887

 

43,220

Term deposits

 

258,945

 

223,728

Accounts receivable, net of allowance of US$24,072 and US$16,423 as of December 31, 2017 and December 31, 2016, respectively

 

6,127

 

16,148

Inventory

 

1,659

 

1,922

Deferred tax assets, current portion

 

-

 

188

Prepaid expenses and other current assets, net of allowance of US$24,443 and US$7,144 as of Dec 31, 2017 and December 31, 2016, respectively

 

59,279

 

33,907

Receivable of  security deposit for loan

 

88,062

 

-

Assets held for sale classified as current assets

 

-

 

176,585

Total current assets

 

474,959

 

495,698

Non-current assets:

    

Equity investments, net

 

87,404

 

67,911

Property and equipment, net

 

2,077

 

2,798

Intangible assets, net

 

1,694

 

9,067

Goodwill

 

1,668

 

118,851

Deferred tax assets, non-current portion

 

748

 

1,427

Investment prepayment

 

8,642

 

4,081

Other non-current assets

 

54,512

 

1,003

Notes receivable

 

270,882

 

-

Assets held for sale classified as non-current assets

 

-

 

152,792

Total Assets

 

902,586

 

853,628

LIABILITIES

  

Current liabilities:

    

Advance from customers

 

414

 

852

Accounts payable

 

9,845

 

8,537

Deferred revenue

 

4,583

 

4,626

Accrued expenses and other current liabilities

 

41,654

 

20,039

Tax payable

 

3,750

 

2,946

Short term borrowing

 

94,520

 

2,850

Derivative liability

 

4,696

 

-

Convertible debt

 

128,504

 

-

Consideration received from shareholder

 

-

 

46,521

Liabilities held for sale classified as current liabilities

 

-

 

73,272

Total current liabilities

 

287,966

 

159,643

Non-current liabilities:

    

Derivative liability

 

-

 

7,205

Convertible debt

 

-

 

207,040

Deferred tax liabilities

 

95

 

3,247

Deferred gain of disposal of subsidiaries

 

180,443

 

-

Liabilities held for sale classified as non-current liabilities

 

-

 

729

Total Liabilities

 

468,504

 

377,864

EQUITY

    

Link Motion Inc.'s  shareholders' equity

 

446,030

 

385,843

Non-controlling interest

 

(11,948)

 

89,921

Total equity

 

434,082

 

475,764

Total Liabilities and Equity

 

902,586

 

853,628

 

 

 

LINK MOTION INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In thousands, except for share and per share data)

 

Three months ended

 

Twelve months ended

 

December 31,

 

September 30,

 

December 31,

 

December 31,

 

December 31,

 

2017

 

2017

 

2016

 

2017

 

2016

 

US$

 

US$

 

US$

 

US$

 

US$

          

Net Revenues

         

Consumer     

         

Advertising

3,181

 

2,317

 

2,785

 

10,400

 

15,554

Other services

878

 

1,191

 

1,066

 

3,986

 

5,897

Enterprise

         

Enterprise mobility

8,887

 

13,790

 

13,165

 

42,250

 

36,944

Services

486

 

186

 

451

 

975

 

2,249

          

Total net revenues

13,432

 

17,484

 

17,467

 

57,611

 

60,644

          

Cost of revenues

(11,385)

 

(16,906)

 

(20,823)

 

(56,559)

 

(64,352)

          

Gross profit

2,047

 

578

 

(3,356)

 

1,052

 

(3,708)

          

Operating expenses:

         

Selling and marketing expenses*

(1,205)

 

(1,194)

 

(2,061)

 

(4,783)

 

(7,645)

General and administrative expenses*

(28,829)

 

(6,715)

 

(12,244)

 

(57,834)

 

(48,780)

Research and development expenses*

(7,887)

 

(2,573)

 

(3,980)

 

(17,447)

 

(13,165)

Impairment of goodwill and intangible assets

(4,878)

 

(17,254)

 

(98,902)

 

(102,736)

 

(98,902)

          

Total operating expenses

(42,799)

 

(27,736)

 

(117,187)

 

(182,800)

 

(168,492)

          

Loss from operations

(40,752)

 

(27,158)

 

(120,543)

 

(181,748)

 

(172,200)

          

Interest expense

(4,813)

 

(6,428)

 

(6,115)

 

(24,019)

 

(11,656)

Foreign exchange gain/(loss)

1,173

 

266

 

(604)

 

1,815

 

(1,200)

Realized gain/(loss) on disposal of a subsidiary

367

 

-

 

(2,963)

 

1,405

 

(2,963)

Investment income/(loss)

51

 

(17)

 

100

 

86

 

1,454

Impairment loss

(1,370)

 

(2,091)

 

(12,203)

 

(3,461)

 

(12,203)

FV change of derivative liability

5,020

 

(1,381)

 

(1,157)

 

2,508

 

(1,157)

Other(expense)/ income, net

(2,129)

 

542

 

739

 

(435)

 

2,774

Loss before income taxes

(42,453)

 

(36,267)

 

(142,746)

 

(203,849)

 

(197,151)

          

Income tax (expense)/benefit 

(543)

 

572

 

3,121

 

711

 

4,835

Net loss from continuing operation

(42,996)

 

(35,695)

 

(139,625)

 

(203,138)

 

(192,316)

Discontinued operations:

         

(Loss)/Income from discontinued operations (net of income tax benefit/(expense) of US$3,510, US$1,211, US$(1,477) for three months ended December 31,2017, September 30, 2017 and December 31. 2016 respectively, and net of income tax benefit/(expense) of US$ 4,894 and US$ (4,392) for twelve months ended December 31,2017 and December 31, 2016, respectively)

(16,607)

 

10,567

 

11,195

 

13,234

 

58,713

Gain from disposal of discontinued operation

161,511

 

-

 

-

 

161,511

 

-

Income from disposal of discontinued operations, net of income tax expenses (net of income tax benefit/(expense) of US$3,510, US$1,211, US$(1,477) for three months ended December 31,2017, September 30, 2017 and December 31, 2016, respectively and net of income tax benefit/(expense) of US$ 4,894 and US$ (4,392) for twelve months ended December 31,2017 and December 31, 2016, respectively)

144,904

 

10,567

 

11,195

 

174,745

 

58,713

Net income/(loss)

101,908

 

(25,128)

 

(128,430)

 

(28,393)

 

(133,603)

Net loss/(income) attributable to the non-controlling interest

         

Net loss attributable to the non-controlling interest from continuing operation

2,762

 

4,670

 

20,799

 

27,127

 

23,164

Net loss/(income) attributable to the non-controlling interest from discontinued operation

6,711

 

(3,969)

 

(3,618)

 

(4,008)

 

(17,154)

Net income/(loss) attributable to Link Motion Inc. 

111,381

 

(24,427)

 

(111,249)

 

(5,274)

 

(127,593)

          

Net income/(loss) 

101,908

 

(25,128)

 

(128,430)

 

(28,393)

 

(133,603)

Other comprehensive income/(loss): Foreign currency translation adjustment

11,382

 

11,402

 

(9,319)

 

37,613

 

(28,362)

Comprehensive income/(loss)

113,290

 

(13,726)

 

(137,749)

 

9,220

 

(161,965)

Comprehensive income/(loss) attributable to non-controlling interest

9,056

 

(800)

 

19,918

 

19,870

 

10,579

Comprehensive income/(loss) attributable to Link Motion Inc.

122,346

 

(14,526)

 

(117,831)

 

29,090

 

(151,386)

          

Net earnings/(loss) per Class A and Class B common share, basic & diluted

0.2193

 

(0.0481)

 

(0.2238)

 

(0.0104)

 

(0.2588)

Net loss per Class A and Class B common share from continuing operations, basic & diluted

(0.0792)

 

(0.0611)

 

(0.2390)

 

(0.3487)

 

(0.3431)

Net earnings per Class A and Class B common share from discontinued operations, basic & diluted

0.2985

 

0.0130

 

0.0152

 

0.3383

 

0.0843

Net earnings/(loss) per ADS, basic & diluted

1.0965

 

(0.2405)

 

(1.1190)

 

(0.0520)

 

(1.2940)

Net loss per ADS from continuing operations, basic & diluted

(0.3960)

 

(0.3055)

 

(1.1950)

 

(1.7435)

 

(1.7155)

Net earnings per ADS from discontinued operations, basic & diluted

1.4925

 

0.0650

 

0.0760

 

1.6915

 

0.4215

          

Weighted average number of common shares outstanding:

         

Basic & Diluted

507,800,671

 

507,475,590

 

497,129,411

 

504,750,685

 

492,939,263

* Share-based compensation expenses included in:

         

Cost of revenues

6

 

7

 

(62)

 

124

 

(53)

Selling and marketing expenses

6

 

7

 

(39)

 

(21)

 

416

General and administrative expenses

126

 

163

 

369

 

5,522

 

12,350

Research and development expenses

-

 

-

 

(145)

 

(63)

 

(106)

Total

138

 

177

 

123

 

5,562

 

12,607

           

 

 

 

LINK MOTION INC.

NON-GAAP MEASURE RECONCILIATIONS

(In thousands, except for share and per share data)

 

Three months ended

 

Twelve months ended

 

December 31,
201
7

September 30,
2017

December 31,
201
6

 

December 31,
2017

December 31,
2016

 

US$

US$

US$

 

US$

US$

Selling and marketing expenses under GAAP

(1,205)

(1,194)

(2,061)

 

(4,783)

(7,645)

Adjustment (a)

6

7

(39)

 

(21)

416

Non-GAAP selling and marketing expenses

(1,199)

(1,187)

(2,100)

 

(4,804)

(7,229)

       

General and administrative expenses under GAAP

(28,829)

(6,715)

(12,244)

 

(57,834)

(48,780)

Adjustment (a)

126

163

369

 

5,522

12,350

Adjustment (c)

-

-

551

 

-

2,270

Non-GAAP general and administrative expenses

(28,703)

(6,552)

(11,324)

 

(52,312)

(34,160)

       

Research and development expenses under GAAP

(7,887)

(2,573)

(3,980)

 

(17,447)

(13,165)

Adjustment (a)

-

-

(145)

 

(63)

(106)

Adjustment (c)

114

114

114

 

456

838

Non-GAAP research and development expenses

(7,773)

(2,459)

(4,011)

 

(17,054)

(12,433)

       

Loss from operations under GAAP

(40,752)

(27,158)

(120,543)

 

(181,748)

(172,200)

Adjustment (a)

138

177

123

 

5,562

12,607

Adjustment (c)

138

358

1,724

 

1,403

6,978

Adjustment (d)

4,878

17,254

98,902

 

102,736

98,902

Non-GAAP loss from operations

(35,598)

(9,369)

(19,794)

 

(72,047)

(53,713)

       

Net income/(loss) attributable to Link Motion Inc. under GAAP

111,381

(24,427)

(111,249)

 

(5,274)

(127,593)

Adjustment (a)

138

177

123

 

5,562

12,607

Adjustment (b)

3,474

8,730

8,325

 

27,848

15,646

Adjustment (c)

662

1,067

3,316

 

4,645

13,722

Adjustment (d)

6,248

19,345

111,105

 

106,197

111,105

Adjustment (e)

(49)

(570)

(1,814)

 

(1,997)

(3,727)

Non-GAAP net income attributable to Link Motion Inc.

121,854

4,322

9,806

 

136,981

21,760

       

Non-GAAP weighted average number of diluted ADS outstanding:

      

Basic

101,560,134

101,495,118

99,425,882

 

100,950,137

98,587,853

Diluted

102,031,817

101,896,886

100,371,595

 

101,475,544

99,723,579

Non-GAAP  earnings per ADS, basic

1.1998

0.0426

0.0986

 

1.3569

0.2207

Non-GAAP  earnings per ADS, diluted

1.1943

0.0424

0.0977

 

1.3499

0.2182

        

 

(a)  Adjustment to exclude the share-based compensation expenses for each period
(b)  Adjustment to exclude the interest expenses related to convertible debt, fair value change of derivative liability related to the convertible debts and loss of early redemption of convertible debts.
(c)  Adjustment to exclude the amortization of intangible assets arising from acquisitions
(d)  Adjustment to exclude impairment loss from goodwill, intangible assets arising from acquisitions and investment
(e)  To adjust income tax provision related to item (c) and (d). Deferred tax liabilities was recognized along with intangible assets recognized related to acquisitions. The amortization and impairment of such intangible assets resulted in reversal of corresponding deferred tax liabilities that impact deferred income tax expense. Other non-GAAP to GAAP reconciling items have no income tax effect *

*The reconciliation items (a) and (b) were recorded in entities in tax free jurisdictions hence no income tax implications.

          

Cision View original content:http://www.prnewswire.com/news-releases/link-motion-reports-unaudited-financial-results-for-the-fourth-quarter-and-fiscal-year-2017-300627637.html

SOURCE Link Motion Inc.

NQ MOBILE INC.
UNAUDITED CONDENSED CONSOLIDATED
BALANCE SHEETS
(In thousands)






As of



September 30,

2017


June 30,

2017


March 31,

2017


December 31,

2016



US$


US$


US$


US$

ASSETS









Current assets:









Cash and cash equivalents


9,896


13,661


44,616


43,220

Term deposits


228,065


229,978


225,830


223,728

Restricted cash


10,848


-


-


-

Accounts receivable, net of allowance of US$21,790,
US$20,481, US$18,544 and US$16,423 as of September 30,
June 30, March 31, 2017 and December 31, 2016 respectively


11,086


12,721


12,324


16,148

Inventory


3,878


1,707


3,784


1,922

Deferred tax assets, current portion


-


-


-


188

Prepaid expenses and other current assets, net of allowance of
US$7,257, US$7,160, US$7,076 and US$7,144 as of
September 30, June 30, March 31, 2017 and December 31,
2016, respectively


31,264


35,561


35,710


33,907

Assets held for sale classified as current assets


365,299


361,423


356,260


176,585

Total current assets


660,336


655,051


678,524


495,698

Non-current assets:









Equity investments, net


86,018


85,792


75,733


67,911

Property and equipment, net


2,548


2,650


2,689


2,798

Intangible assets, net


1,872


5,089


5,549


9,067

Goodwill


6,512


20,639


20,279


118,851

Deferred tax assets, non-current portion


1,865


1,582


1,461


1,427

Consideration prepaid for acquiring an investee


1,354


1,354


990


4,081

Other non-current assets


3,591


3,303


232


1,003

Assets held for sale classified as non-current assets


-


-


-


152,792

Total Assets


764,096


775,460


785,457


853,628

LIABILITIES









Current liabilities:









Advance from customers


3,012


1,202


993


852

Accounts payable


6,827


7,877


8,672


8,537

Deferred revenue


4,528


4,413


4,358


4,626

Consideration received from shareholder


48,625


47,638


46,776


46,521

Consideration received from investors


28,355


28,587


28,182


-

Accrued expenses and other current liabilities


8,375


15,414


20,700


20,039

Tax payable


2,797


2,980


2,965


2,946

Short term borrowing


5,850


2,850


2,850


2,850

Liabilities held for sale classified as current liabilities


55,133


55,232


62,362


73,272

Total current liabilities


163,502


166,193


177,858


159,643

Non-current liabilities:









Derivative liability of contingent interest


9,716


8,336


5,419


7,205

Convertible debt, net of unamortized debt issuance costs and
derivative liability of contingent interest


212,403


210,553


208,766


207,040

Deferred tax liabilities


1,721


2,136


2,446


3,247

Liabilities held for sale classified as non-current liabilities


-


-


-


729

Total Liabilities


387,342


387,218


394,489


377,864










EQUITY









NQ Mobile Inc.'s shareholders' equity


299,777


312,065


317,292


385,843

Non-controlling interest


76,977


76,177


73,676


89,921

Total equity


376,754


388,242


390,968


475,764

Total Liabilities and Equity


764,096


775,460


785,457


853,628

NQ MOBILE INC.
UNAUDITED CONDENSED CONSOLIDATED
STATEMENTS OF COMPREHENSIVE LOSS
(In thousands, except for share and per share data)








Three months ended



September 30,

2017

June 30,

2017


March 31,

2017


September 30,
2016


June 30,

2016


March 31,

2016




US$


US$


US$


US$


US$


US$


Net Revenues




























Consumer














-Advertising


2,317


2,594


2,308


4,225


5,043


3,501


-Other services


1,191


919


998


1,410


1,501


1,920


Enterprise














-Sales of product


13,790


11,092


8,481


8,047


5,649


10,083


-Service


186


86


217


456


554


788


Total net revenues


17,484


14,691


12,004


14,138


12,747


16,292


Cost of revenues*


(16,906)


(15,358)


(12,910)


(14,393)


(11,667)


(17,469)


Gross profit/ (loss)


578


(667)


(906)


(255)


1,080


(1,177)
















Operating expenses:














Selling and marketing expenses*


(1,194)


(1,258)


(1,126)


(1,773)


(2,296)


(1,515)


General and administrative expenses*

(6,715)


(13,570)


(8,720)


(12,579)


(7,113)


(16,844)


Research and development expenses*

(2,573)


(3,505)


(3,482)


(3,194)


(3,399)


(2,592)


Impairment of goodwill and intangible assets

(17,254)


-


(80,604)


-


-


-


Total operating expenses


(27,736)


(18,333)


(93,932)


(17,546)


(12,808)


(20,951)


Loss from operations


(27,158)


(19,000)


(94,838)


(17,801)


(11,728)


(22,128)
















Interest expense


(6,428)


(6,393)


(6,385)


(1,947)


(1,794)


(1,800)


Foreign exchange gain /(loss), net


266


217


159


(291)


(283)


(22)


Realized gain on disposal of a subsidiary

-


-


1,038


-


-


-


Investment (loss) /income , net


(17)


47


5


770


(352)


936


Investment impairment loss


(2,091)


-


-


-


-


-


Fair value change of derivative liability

(1,381)


(2,917)


1,786


-


-


-


Other income, net


542


521


631


824


859


352


Loss before income taxes


(36,267)


(27,525)


(97,604)


(18,445)


(13,298)


(22,662)
















Income tax benefit


572


201


481


999


292


423


Net loss from continuing operation


(35,695)


(27,324)


(97,123)


(17,446)


(13,006)


(22,239)


Discontinued operations:














Income from discontinued operations
(net of income tax benefit/(expense) of
US$ 1,211, US$197, US$(24), US$ 367,
US$(665) and US$(2,617) for three
months ended September 30, 2017, June
30, 2017, March 31, 2017, September
30, 2, 016June 30, 2016 and March 31,
2016 respectively)

10,567


8,572


10,702


14,696


18,355


14,467


Net (loss)/income


(25,128)


(18,752)


(86,421)


(2,750)


5,349


(7,772)


Net loss/(income) attributable to the
non-controlling interest














Net loss attributable to the non-
controlling interest from continuing
operation

4,670


852


18,843


700


671


994


Net income attributable to the non-
controlling interest from discontinued
operation

(3,969)


(2,976)


(3,774)


(6,972)


(5,512)


(1,052)


Net (loss)/income attributable to
NQ Mobile Inc.


(24,427)


(20,876)


(71,352)


(9,022)


508


(7,830)
















Net (loss)/income


(25,128)


(18,752)


(86,421)


(2,750)


5,349


(7,772)


Other comprehensive income/(loss):
foreign currency translation adjustment

11,402


9,503


5,326


(4,658)


(17,880)


3,495


Comprehensive loss


(13,726)


(9,249)


(81,095)


(7,408)


(12,531)


(4,277)


Comprehensive (income)/loss
attributable to non-controlling interest

(800)


(2,501)


14,115


(5,765)


(3,095)


(479)


Comprehensive loss attributable
to NQ Mobile Inc.


(14,526)


(11,750)


(66,980)


(13,173)


(15,626)


(4,756)















Net (loss)/earnings per Class A and
Class B common share, basic & diluted

(0.0481)


(0.0414)


(0.1429)


(0.0182)


0.0010


(0.0160)
















Net loss per Class A and Class B
common share from continuing
operations, basic & diluted


(0.0611)


(0.0525)


(0.1567)


(0.0338)


(0.0252)


(0.0435)
















Net earnings per Class A and Class
B common share from discontinued
operations, basic & diluted


0.0130


0.0111


0.0138


0.0156


0.0262


0.0275
















Net (loss)/earnings per ADS, basic &
diluted

(0.2405)


(0.2070)


(0.7145)


(0.0910)


0.0050


(0.0800)
















Net loss per ADS from continuing
operations, basic & diluted


(0.3055)


(0.2625)


(0.7835)


(0.1690)


(0.1260)


(0.2175)
















Net earnings per ADS from
discontinued operations, basic & diluted

0.0650


0.0555


0.0690


0.0780


0.1310


0.1375
















Weighted average number of common shares

outstanding:










Basic & Diluted

507,475,590

504,407,621

499,461,680

495,837,463

490,111,171

488,601,213















*Share-based compensation expenses included in:












Cost of revenues


7


8


103


(10)


9


10

Selling and marketing expenses


7


(54)


20


(33)


330


158

General and administrative expenses

163


5,233


-


3,424


686


7,871

Research and development expenses


-


(66)


3


(16)


27


28

Total


177


5,121


126


3,365


1,052


8,067

NQ MOBILE INC.

UNAUDITED CONDENSED CONSOLIDATED

STATEMENTS OF COMPREHENSIVE LOSS

(In thousands, except for share and per share data)



Nine months ended


Six months ended



September 30,

2017


September 30,

2016


June 30,

2017


June 30,

2016



US$


US$


US$

US$

Net Revenues


















Consumer









-Advertising services


7,219


12,769


4,902


8,544

-Other services


3,108


4,831


1,917


3,421

Enterprise









-Sales of product


33,363


23,779


19,573


15,732

-Service


489


1,798


303


1,342

Total net revenues


44,179


43,177


26,695

29,039

Cost of revenues*


(45,174)


(43,529)


(28,268)


(29,136)

Gross loss


(995)


(352)


(1,573)

(97)









Operating expenses:









Selling and marketing expenses*


(3,578)


(5,584)


(2,384)


(3,811)

General and administrative expenses*


(29,005)


(36,536)


(22,290)


(23,957)

Research and development expenses*


(9,560)


(9,185)


(6,987)


(5,991)

Impairment of goodwill and intangible assets


(97,858)


-


(80,604)


-

Total operating expenses


(140,001)


(51,305)


(112,265)

(33,759)

Loss from operations


(140,996)


(51,657)


(113,838)

(33,856)









Interest expense


(19,206)


(5,541)


(12,778)


(3,594)

Foreign exchange gain /(loss), net


642


(596)


376


(305)

Realized gain on disposal of a subsidiary


1,038


-


1,038


-

Investment income


35


1,354


52


584

Investment impairment loss


(2,091)


-


-


-

Fair value change of derivative liability


(2,512)


-


(1,131)


-

Other income, net


1,694


2,035


1,152


1,211

Loss before income taxes


(161,396)


(54,405)


(125,129)

(35,960)









Income tax benefit


1,254


1,714


682


715

Net loss from continuing operation


(160,142)


(52,691)


(124,447)

(35,245)

Discontinued operations:








Income from discontinued operations (net of income tax
benefit/(expense) of US$ 1,384, US$ (2,915) ,US$173,
US$(3,282) for nine months ended September 30, 2017, and
September 30, 2016 and six months ended June 30, 2017, and
June 30, 2016respectively)

29,841


47,518


19,274


32,822

Net loss


(130,301)


(5,173)


(105,173)


(2,423)

Net loss/(income) attributable to the non-controlling interest








Net loss attributable to the non-controlling interest
from continuing operation


24,365


2,365


19,695


1,665

Net income attributable to the non-controlling
interest from discontinued operation


(10,719)


(13,536)


(6,750)


(6,564)

Net loss attributable to NQ Mobile Inc.


(116,655)


(16,344)


(92,228)

(7,322)









Net loss


(130,301)


(5,173)


(105,173)

(2,423)

Other comprehensive income/(loss): foreign
currency translation adjustment


26,231


(19,043)


14,829

(14,385)

Comprehensive loss


(104,070)


(24,216)


(90,344)

(16,808)

Comprehensive loss/(income) attributable to non-
controlling interest

10,814


(9,339)


11,614

(3,574)

Comprehensive loss attributable to NQ Mobile Inc.


(93,256)


(33,555)


(78,730)

(20,382)

Net loss per Class A and Class B common share, basic
& diluted

(0.2315)


(0.0333)


(0.1837)


(0.0150)










Net loss per Class A and Class B common share
from continuing operations, basic & diluted


(0.2695)


(0.1024)


(0.2087)


(0.0686)










Net earnings per Class A and Class B common
share from discontinued operations, basic & diluted


0.0380


0.0691


0.0250


0.0536










Net loss per ADS, basic & diluted


(1.1575)


(0.1665)


(0.9185)


(0.0750)










Net loss per ADS from continuing operations, basic &
diluted

(1.3475)


(0.5120)


(1.0435)


(0.3430)










Net earnings per ADS from discontinued operations, basic &
diluted

0.1900


0.3455


0.1250


0.2680








Weighted average number of common shares outstanding:














-Basic & Diluted


503,810,985


491,532,385


501,948,313


489,356,192










*Share-based compensation expenses included in:









Cost of revenues


118


9


111


19

Selling and marketing expenses


(27)


455


(34)


488

General and administrative expenses


5,396


11,981


5,233


8,557

Research and development expenses


(63)


39


(63)


55

Total


5,424


12,484


5,247


9,119







(a)



Adjustment to exclude the share-based compensation expenses for each period

(b)



Adjustment to exclude the interest expenses related to convertible debt and fair value change of derivative liability

(c)



Adjustment to exclude the amortization of intangible assets arising from acquisitions

(d)



Adjustment to exclude impairment loss from goodwill, intangible assets arising from acquisitions and investment

(e)



To adjust income tax provision related to item (c) and (d). Deferred tax liabilities was recognized along with intangible assets recognized related to acquisitions. The amortization and impairment of such intangible assets resulted in reversal of corresponding deferred tax liabilities that impact deferred income tax expense. Other non-GAAP to GAAP reconciling items have no income tax effect *




*The reconciliation items (a) and (b) were recorded in entities in tax free jurisdictions hence no income tax implications.

NQ MOBILE INC.
NON-GAAP MEASURE RECONCILIATIONS
(In thousands, except for share and per share data)










Nine months ended


Six months ended




September 30,

2017


September 30,

2016


June 30,

2017


June 30,

2016




US$


US$


US$


US$


Selling and marketing expenses under GAAP


(3,578)


(5,584)


(2,384)


(3,811)


Adjustment (a)


(27)


455


(34)


488


Non-GAAP selling and marketing expenses


(3,605)


(5,129)


(2,418)

(3,323)











General and administrative expenses under GAAP


(29,005)


(36,536)


(22,290)


(23,957)


Adjustment (a)


5,396


11,981


5,233


8,557


Adjustment (c)


-


1,719


-


1,154


Non-GAAP general and administrative expenses


(23,609)


(22,836)


(17,057)

(14,246)











Research and development expenses under GAAP


(9,560)


(9,185)


(6,987)


(5,991)


Adjustment (a)


(63)


39


(63)


55


Adjustment (c)


342


724


228


610


Non-GAAP research and development expenses


(9,281)


(8,422)


(6,822)

(5,326)











Loss from operations under GAAP


(140,996)


(51,657)


(113,838)


(33,856)


Adjustment (a)


5,424


12,484


5,247


9,119


Adjustment (c)


1,265


5,254


907


3,628


Adjustment (d)


97,858


-


80,604


-


Non-GAAP loss from operations


(36,449)


(33,919)


(27,080)

(21,109)











Net loss attributable to NQ Mobile Inc. under GAAP


(116,655)


(16,344)


(92,228)


(7,322)


Adjustment (a)


5,424


12,484


5,247


9,119


Adjustment (b)


24,374


7,321


15,644


4,668


Adjustment (c)


3,983


10,406


2,916


7,081


Adjustment (d)


99,949


-


80,604


-


Adjustment (e)


(1,948)


(1,913)


(1,378)


(1,411)


Non-GAAP net income attributable to NQ Mobile Inc.


15,127


11,954


10,805

12,135











Non- GAAP weighted average number of diluted ADS outstanding:









-Basic


100,762,197

98,306,477


100,389,663


97,871,238


-Diluted


101,305,512

99,561,290


100,980,038


99,157,386












Non-GAAP earnings per ADS, basic


0.1501


0.1216


0.1076


0.1240


Non-GAAP earnings per ADS, diluted


0.1493


0.1201


0.1070


0.1224







(a)



Adjustment to exclude the share-based compensation expenses for each period

(b)



Adjustment to exclude the interest expenses related to convertible debt and fair value change of derivative liability

(c)



Adjustment to exclude the amortization of intangible assets arising from acquisitions

(d)



Adjustment to exclude impairment loss from goodwill, intangible assets arising from acquisitions and investment

(e)



To adjust income tax provision related to item (c) and (d). Deferred tax liabilities was recognized along with intangible assets recognized related to acquisitions. The amortization and impairment of such intangible assets resulted in reversal of corresponding deferred tax liabilities that impact deferred income tax expense. Other non-GAAP to GAAP reconciling items have no income tax effect *




*The reconciliation items (a) and (b) were recorded in entities in tax free jurisdictions hence no income tax implications.

Cision View original content:http://www.prnewswire.com/news-releases/nq-mobile-inc-reports-unaudited-financial-results-for-the-first-second-and-third-quarters-of-fy-2017-300571716.html

SOURCE NQ Mobile Inc.


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