UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 6-K/A
REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13A-16 OR 15D-16
OF THE SECURITIES EXCHANGE ACT OF 1934
For the month of February 2020
Commission File Number 001-37593
BORQS TECHNOLOGIES, INC. | ||
(Translation of registrant’s name into English) |
Building B23-A, Universal Business Park No. 10 Jiuxianqiao Road Chaoyang District, Beijing, China | ||
(Address of principal executive offices) |
Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.
Form 20-F ☒ Form 40-F ☐
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): ☐.
Note: Regulation S-T Rule 101(b)(1) only permits the submission in paper of a Form 6-K if submitted solely to provide an attached annual report to security holders.
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): ☐.
Note: Regulation S-T Rule 101(b)(7) only permits the submission in paper of a Form 6-K if submitted to furnish a report or other document that the registrant foreign private issuer must furnish and make public under the laws of the jurisdiction in which the registrant is incorporated, domiciled or legally organized (the registrant’s “home country”), or under the rules of the home country exchange on which the registrant’s securities are traded, as long as the report or other document is not a press release, is not required to be and has not been distributed to the registrant’s security holders, and, if discussing a material event, has already been the subject of a Form 6-K submission or other Commission filing on EDGAR.
As required by Nasdaq Rule 5250(c)(2), on December 30, 2019, Borqs Technologies, Inc. (the “Company”) submitted its unaudited interim balance sheet and income statement for the six months ended on June 30, 2019 (the “Interim Submission”). The consolidated financial statements contained in the Interim Submission were unaudited and non-reviewed and prepared by management of the Company.
On February 4, 2020, the Company filed with the Securities and Exchange Commission (the “SEC”) its Annual Report on Form 20-F (the “2018 Annual Report”) with its audited financial results for the fiscal year ended December 31, 2018. In the 2018 Annual Report, the Company certain write-offs and provisions for doubtful receivables and also impairments on certain assets during the fiscal year ended December 31, 2018, as discussed in “Results of Operations” in “Item 5 – Operating and Financial Review and Prospects” of the 2018 Annual Report and in Note 9 (Long-Term Investments) to the consolidated financial statements contained in the 2018 Annual Report. This report on Form 6-K/A is filed for the purpose of amending the Interim Submission to reflect corresponding write-offs, provisions and impairments, as well as other adjustments to certain expenses, to the interim balance sheet and income statement for the period ended June 30, 2019.
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BORQS TECHNOLOGIES, INC.
UNAUDITED CONSOLIDATED BALANCE SHEETS
(Amounts in thousands of US dollar (“$”), unless otherwise stated)
As of June 30, | ||||||||
2018 | 2019 | |||||||
$ | $ | |||||||
ASSETS | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | 747 | 8,153 | ||||||
Accounts receivable, net | 32,699 | 6,501 | ||||||
Inventories, net | 13,901 | 5,060 | ||||||
Deferred cost of revenues | 730 | 1,784 | ||||||
Prepaid expenses and other current assets, net | 33,439 | 28,614 | ||||||
Amounts due from discontinued operations | 13,800 | 3,428 | ||||||
Current assets held for sale | 7,281 | 8,678 | ||||||
Total current assets | 102,597 | 62,218 | ||||||
Non-current assets: | ||||||||
Property and equipment, net | 414 | 229 | ||||||
Intangible assets, net | 12,565 | 11,235 | ||||||
Long-term investments | 11,662 | - | ||||||
Deferred tax assets | 273 | 373 | ||||||
Deferred cost of revenues | 3,889 | 3,806 | ||||||
Other non-current assets | 3,555 | 555 | ||||||
Non-current assets held for sale | 12,472 | 11,790 | ||||||
Total non-current assets | 44,830 | 27,988 | ||||||
Total assets | 147,427 | 90,206 | ||||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||
Current liabilities: | ||||||||
Accounts payable | 8,672 | 13,479 | ||||||
Accrued expenses and other payables | 13,921 | 18,908 | ||||||
Advances from customers | 6,307 | 3,557 | ||||||
Amount due to related parties-current | - | 1,071 | ||||||
Deferred revenues | 2,708 | 3,364 | ||||||
Income tax payable | 677 | 700 | ||||||
Short-term bank and other borrowings | 11,615 | 6,343 | ||||||
Long-term bank borrowings - current portion | 6,532 | 2,000 | ||||||
Current liabilities held for sale | 25,603 | 25,244 | ||||||
Total current liabilities | 76,035 | 74,666 | ||||||
Non-current liabilities: | ||||||||
Unrecognized tax benefits | 2,780 | 2,072 | ||||||
Deferred tax liabilities | 2,635 | 2,348 | ||||||
Deferred revenues | 4,277 | 4,462 | ||||||
Other non-current liabilities | - | 11,765 | ||||||
Long-term payables | 5,563 | 6,663 | ||||||
Deferred government grants | 1,933 | 1,860 | ||||||
Non-current liabilities held for sale | 1,415 | 1,951 | ||||||
Total non-current liabilities | 18,603 | 31,121 | ||||||
Total liabilities | 94,638 | 105,787 | ||||||
Commitments and contingencies | ||||||||
Shareholders’ equity: | ||||||||
Ordinary shares | - | - | ||||||
Additional paid-in capital | 124,058 | 134,462 | ||||||
Statutory reserve | 2,156 | 2,143 | ||||||
Accumulated deficit | (71,482 | ) | (149,808 | ) | ||||
Accumulated other comprehensive loss | (1,494 | ) | (2,223 | ) | ||||
Total Borqs Technologies, Inc. shareholders’ equity | 53,238 | (15,426 | ) | |||||
Noncontrolling interest | (449 | ) | (155 | ) | ||||
Total shareholders’ equity | 52,789 | (15,581 | ) | |||||
Total liabilities, noncontrolling interest and shareholders’ equity | 147,427 | 90,206 |
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BORQS TECHNOLOGIES, INC.
UNAUDITED CONSOLIDATED STATEMENT OF OPERATIONS
(Amounts in thousands of US$, unless otherwise stated)
For the six months ended June 30, | ||||||||
2018 | 2019 | |||||||
US$ | US$ | |||||||
Net Revenues: | ||||||||
Software | 3,880 | 6,692 | ||||||
Hardware | 95,136 | 20,497 | ||||||
Total net revenues | 99,017 | 27,189 | ||||||
Software | (1,437 | ) | (4,983 | ) | ||||
Hardware | (85,934 | ) | (11,800 | ) | ||||
Total cost of revenues | (87,371 | ) | (16,783 | ) | ||||
Total gross profit (loss) | 11,646 | 10,406 | ||||||
Operating expenses: | ||||||||
Sales and marketing expenses | (1,198 | ) | (510 | ) | ||||
General and administrative expenses | (5,036 | ) | (6,061 | ) | ||||
Research and development expenses | (1,709 | ) | (2,648 | ) | ||||
Changes in the fair value of warrant liabilities | - | |||||||
Total operating expenses | (7,943 | ) | (9,219 | ) | ||||
Other operating income | - | - | ||||||
Operating income (loss) | 3,703 | 1,187 | ||||||
Interest income | 1 | 1 | ||||||
Interest expense | (1,361 | ) | (1,231 | ) | ||||
Other income | 12 | 8 | ||||||
Other expense | (4 | ) | (804 | ) | ||||
Foreign exchange gain (loss) | 259 | 38 | ||||||
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Income (loss) from continuing operations, before income taxes | 2,610 | (801 | ) | |||||
Income tax expense | (1,106 | ) | (407 | ) | ||||
Net income (loss) from continuing operations | 1,504 | (1,208 | ) | |||||
Discontinued operations | ||||||||
(Loss) income from operations of discontinued entities | 1,822 | (2,329 | ) | |||||
Income tax benefit (expense) | 69 | (178 | ) | |||||
Net (loss) income on discontinued operations | 1,891 | (2,507 | ) | |||||
Net income (loss) | 3,395 | (3,715 | ) | |||||
Less: net income (loss) attributable to noncontrolling interest | 366 | (99 | ) | |||||
Net income (loss) attributable to Borqs Technologies, Inc. | 3,029 | (3,616 | ) |
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Amended Summary Discussions on the Results of the Six Months Ended June 30, 2019
Due to the pending sale of the Company’s MVNO Business Unit (the “MVNO BU”), intended to be completed approximately by October 20, 2020, the historical unaudited interim financial statements presented above for the six months ended June 30, 2019 and 2018, are prepared with the assets and liabilities of the MVNO BU classified as assets and liabilities held for sale and the activities of the MVNO BU as discontinued operations.
For the six months ended June 30, 2019, the Company’s revenues included $6.8 million of sales activities that were not recognized in 2018, while its corresponding costs of goods were recorded in the fourth quarter of 2018; and as such, the gross margin in the six months ended June 30, 2019 was significantly higher than that in the same period in 2018. General and administrative expenses in the six months ended June 30, 2019 included $2.0 million of provision for doubtful receivables. Other expenses of $0.8 million incurred in the six months ended June 30, 2019 were expenses the Company paid due to our arbitration loss to Samsung (as disclosed on our Current Report on Form 8-K filed with the SEC on December 6, 2018).
The Company’s revenues for the six months ended June 30, 2019 were $27.2 million as compared to $99.0 million for the same period of 2018. However, the Company captured significantly more sales in the third quarter of 2019 recording $100.2 million in revenues for the nine months ended September 30, 2019 and recorded $83.6 million in costs of goods. For the same nine months ended September 30, 2018, the Company recorded $121.3 million in revenues and $108.4 million in costs of goods.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
BORQS TECHNOLOGIES INC. | ||
(registrant) | ||
Dated: February 7, 2020 | By: | /s/ Anthony K. Chan |
Anthony K. Chan | ||
Chief Financial Officer |
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