21st Century Business Herald, 3/26/11
An industry source has claimed that Chinese mobile security provider NetQin may have falsified revenue figures in either its IPO prospectus or filings with the Beijing Administration for Industry and Commerce, which record 2008 revenue of USD 4 mln and RMB 3.76 mln, respectively. NetQin has yet to respond to the allegations.
The securities industry source said that Chinese private companies have an incentive to report low revenues and income in order to reduce tax exposure before listing publicly, followed by pressure to report high revenue and income once listed. It is common to see companies paying two years in back taxes after listing, according to the source, but a gap of 7-8 times between pre-IPO and post-IPO revenue figures is rarely seen.
NetQin's Cayman Islands-registered holding company NetQin Mobile Inc. filed an IPO prospectus with the US Securities and Exchange Commission on March 16 with the aim of raising up to USD 100 mln in funding.
Editor's Note: For more background on this topic, please see "NetQin Files for NYSE IPO" MD 3/16/11 issue, "NetQin Responds to CCTV Malware Expose" MD 3/16/11 issue and "Rumor: Operators Remove NetQin from App Stores" MD 3/21/11 issue.