Document and Entity Information
Document and Entity Information | 12 Months Ended |
Dec. 31, 2019shares | |
Document and Entity Information [Abstract] | |
Entity Registrant Name | Borqs Technologies, Inc. |
Entity Central Index Key | 0001650575 |
Amendment Flag | false |
Current Fiscal Year End Date | --12-31 |
Document Type | 20-F |
Document Period End Date | Dec. 31, 2019 |
Document Fiscal Period Focus | FY |
Document Fiscal Year Focus | 2019 |
Entity Emerging Growth Company | true |
Entity Well-known Seasoned Issuer | No |
Entity Voluntary Filers | No |
Entity Current Reporting Status | Yes |
Entity Filer Category | Non-accelerated Filer |
Entity Ex Transition Period | false |
Entity Shell Company | false |
Document Transition Report | false |
Document Annual Report | true |
Document Shell Company Report | false |
Entity Common Stock, Shares Outstanding | 38,881,294 |
Entity Interactive Data Current | Yes |
Entity Incorporation State Country Code | D8 |
Entity File Number | 001-37593 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 |
Current assets: | ||
Cash and cash equivalents | $ 1,001 | $ 1,931 |
Restricted cash | 5,011 | |
Accounts receivable, net | 1,699 | 2,454 |
Inventories, net | 4,543 | 6,788 |
Deferred cost of revenues - current | 3,736 | |
Prepaid expenses and other current assets, net | 15,966 | 27,016 |
Amounts due from related parties | 933 | 9,354 |
Current assets held for sale | 5,997 | 2,555 |
Total current assets | 35,150 | 53,834 |
Non-current assets: | ||
Property and equipment, net | 241 | 305 |
Intangible assets, net | 9,430 | 11,442 |
Right of use asset | 703 | |
Deferred tax assets | 969 | 639 |
Deferred cost of revenues - non-current | 3,195 | |
Other non-current assets | 556 | |
Non-current assets held for sale | 10,305 | 10,421 |
Total non-current assets | 21,648 | 26,558 |
Total assets | 56,798 | 80,392 |
Current liabilities: | ||
Accounts payable | 16,286 | 18,813 |
Accrued expenses and other payables | 32,529 | 18,997 |
Advances from customers | 5,446 | |
Contract liabilities | 6,538 | |
Lease liabilities - current | 814 | |
Amount due to related parties-current | 3,484 | 1,071 |
Deferred revenues - current | 84 | 2,347 |
Income tax payable | 879 | 968 |
Short-term bank and other borrowings | 5,000 | 11,010 |
Long-term bank borrowings - current portion | 12,975 | 5,770 |
Current liabilities held for sale | 20,984 | 18,725 |
Total current liabilities | 99,573 | 83,147 |
Non-current liabilities: | ||
Unrecognized tax benefits | 1,987 | 2,020 |
Deferred tax liabilities | 1,832 | 2,453 |
Deferred revenues - non-current | 4,940 | |
Long-term payables | 361 | 6,663 |
Deferred government grants | 1,864 | |
Non-current liabilities held for sale (including non-current liability of the Consolidated VIEs without recourse to the primary beneficiary of $1,779 and $1,750 as of December 31, 2018 and 2019, respectively) | 1,750 | 1,779 |
Total non-current liabilities | 5,930 | 19,719 |
Total liabilities | 105,503 | 102,866 |
Commitments and contingencies | ||
Shareholders' equity (deficit): | ||
Ordinary shares (no par value; unlimited shares authorized; 31,307,522 shares and 38,881,294 shares issued and outstanding as of December 31, 2018 and 2019, respectively) | ||
Additional paid-in capital | 150,455 | 124,062 |
Subscriptions receivable | (15,287) | |
Statutory reserve | 2,097 | 2,097 |
Accumulated deficit | (179,672) | (146,194) |
Accumulated other comprehensive loss | (1,904) | (2,143) |
Total Borqs Technologies, Inc. shareholders' equity (deficit) | (44,311) | (22,178) |
Noncontrolling interest | (4,394) | (296) |
Total shareholders' equity (deficit) | (48,705) | (22,474) |
Total liabilities, noncontrolling interest and shareholders' equity (deficit) | $ 56,798 | $ 80,392 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Common stock, par value | ||
Common stock , authorized | Unlimited | Unlimited |
Common stock, issued | 38,881,294 | 31,307,522 |
Common stock, outstanding | 38,881,294 | 31,307,522 |
VIEs | ||
Non-current liabilities held for sale | $ 1,750 | $ 1,779 |
Consolidated Statement of Opera
Consolidated Statement of Operations - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Income Statement [Abstract] | |||
Software | $ 14,975 | $ 8,131 | $ 11,116 |
Software - related party | 1,372 | 96 | |
Hardware | 83,983 | 118,917 | 111,021 |
Total net revenues | 98,958 | 128,420 | 122,233 |
Software | (17,822) | (8,720) | (7,247) |
Hardware | (80,567) | (125,723) | (96,247) |
Total cost of revenues | (98,389) | (134,443) | (103,494) |
Total gross profit (loss) | 569 | (6,023) | 18,739 |
Operating expenses: | |||
Sales and marketing expenses | (1,524) | (2,456) | (4,252) |
General and administrative expenses | (24,776) | (52,031) | (18,616) |
Research and development expenses | (5,278) | (6,338) | (6,194) |
Changes in the fair value of warrant liabilities | (200) | ||
Total operating expenses | (31,578) | (60,825) | (29,262) |
Other operating income | 1,854 | 180 | 2,116 |
Operating income (loss) | (29,155) | (66,668) | (8,407) |
Interest income | 15 | 2 | 4 |
Interest expense | (4,972) | (2,578) | (1,832) |
Other income | 1,330 | 36 | 574 |
Other expense | (18) | (8) | |
Foreign exchange gain (loss) | 250 | 499 | (779) |
Income (loss) from continuing operations, before income taxes | (32,532) | (68,727) | (10,448) |
Income tax (expense) benefit | 949 | (331) | (2,342) |
Net income (loss) from continuing operations | (31,583) | (69,058) | (12,790) |
Discontinued operations | |||
(Loss) income from operations of discontinued entities | (4,151) | (1,300) | 408 |
Income tax benefit (expense) | (1,641) | 23 | |
Net (loss) income on discontinued operations | (4,151) | (2,941) | 431 |
Net income (loss) | (35,734) | (71,999) | (12,359) |
Net (loss) attributable to noncontrolling interest - continuing operations | 5 | (104) | (82) |
Net income (loss) attributable to noncontrolling interest - discontinued operations | (1,330) | (131) | 292 |
Less: net income (loss) attributable to noncontrolling interest | (1,325) | (235) | 210 |
Net income (loss) attributable to Borqs Technologies, Inc. | (34,409) | (71,764) | (12,569) |
Add: Accretion to redemption value of Convertible Redeemable Preferred Shares | (6,956) | ||
Net loss attributable to ordinary shareholders | $ (34,409) | $ (71,764) | $ (19,525) |
Net earnings (loss) per share from continuing operations attributable to Borqs Technologies, Inc. | |||
Earnings (loss) per share-Basic: | $ (0.88) | $ (2.21) | $ (1.53) |
Earnings (loss) per share-Diluted: | (0.88) | (2.21) | (1.53) |
Net (loss) earnings per share from discontinued operations attributable to Borqs Technologies, Inc. | |||
(Loss) earnings per share-Basic: | (0.08) | (0.09) | 0.01 |
(Loss) earnings per share-Diluted: | (0.08) | (0.09) | 0.01 |
Net loss per share attributable to Borqs Technologies, Inc. | |||
Loss per share-Basic: | (0.96) | (2.30) | (1.52) |
Loss per share-Diluted: | $ (0.96) | $ (2.30) | $ (1.52) |
Number of ordinary shares used in earnings per share computation: | |||
Weighted-average number of ordinary shares used in calculating continuing operations-basic | 35,919,014 | 31,200,056 | 12,842,671 |
Weighted-average number of ordinary shares used in calculating continuing operations-diluted | 35,919,014 | 31,200,056 | 12,842,671 |
Weighted-average number of ordinary shares used in calculating discontinued operations-basic | 35,919,014 | 31,200,056 | 12,842,671 |
Weighted-average number of ordinary shares used in calculating discontinued operations-diluted | 35,919,014 | 31,200,056 | 12,842,671 |
Consolidated Statement of Compr
Consolidated Statement of Comprehensive Income (Loss) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Statement of Comprehensive Income [Abstract] | |||
Net income (loss) | $ (35,734) | $ (71,999) | $ (12,359) |
Other comprehensive (loss) income, net of tax of nil: | |||
Foreign currency translation adjustments, net of tax of nil | (62) | (1,709) | 2,207 |
Other comprehensive (loss) income, net of tax of nil | (62) | (1,709) | 2,207 |
Comprehensive income (loss) | (35,796) | (73,708) | (10,152) |
Less: comprehensive (loss) income attributable to noncontrolling interest | 504 | (308) | 298 |
Comprehensive income (loss) attributable to Borqs Technologies, Inc. | $ (36,300) | $ (73,400) | $ (10,450) |
Consolidated Statements of Shar
Consolidated Statements of Shareholders' (Deficit) Equity - USD ($) $ in Thousands | Number of ordinary shares | Series E-1 Preferred Shares | Additional paid-in capital | Subscription receivable | Accumulate Statutory reserves | Accumulated Other comprehensive loss | Accumulated deficit | Total Borqs Technologies,Inc. shareholders' equity | Noncontrolling interest | Total | |
Balance at Dec. 31, 2016 | $ 1,178 | $ 1,898 | $ (2,626) | $ (54,706) | $ (54,256) | $ (1,095) | $ (55,351) | ||||
Balance, Shares at Dec. 31, 2016 | 4,224,725 | ||||||||||
Consolidated net loss | (12,569) | (12,569) | 210 | (12,569) | |||||||
Foreign exchange difference | 2,119 | 2,119 | 88 | 2,207 | |||||||
Issuance of ordinary shares | 386 | 386 | 386 | ||||||||
Issuance of ordinary shares, Shares | 35,173 | ||||||||||
Issuance of Series E-1 Preferred Shares | 2,708 | 2,708 | 2,708 | ||||||||
Beneficiary conversion feature of Series E Preferred Shares | 3,258 | 3,258 | 3,258 | ||||||||
Reclassification of warrants upon the consummation of the Merger | 1,544 | 1,544 | 1,544 | ||||||||
Conversion of Convertible Redeemable Preferred Shares into ordinary shares upon the consummation of the Merger | 78,860 | (6,956) | 71,904 | 71,904 | |||||||
Conversion of Convertible Redeemable Preferred Shares into ordinary shares upon the consummation of the Merger, Shares | 16,622,491 | ||||||||||
Conversion of Series E-1 Preferred Shares into ordinary shares upon the consummation of the Merger | (2,708) | 2,708 | |||||||||
Conversion of Series E-1 Preferred Shares into ordinary shares upon the consummation of the Merger, Shares | 558,725 | ||||||||||
Change in equity due to the Merger | 26,818 | 26,818 | 26,818 | ||||||||
Change in equity due to the Merger, Shares | 9,363,521 | ||||||||||
Share-based compensation | 5,890 | 5,890 | 14,667 | ||||||||
Balance at Dec. 31, 2017 | 120,642 | 1,898 | (507) | (74,231) | 47,802 | (797) | 47,005 | ||||
Balance, Shares at Dec. 31, 2017 | 30,804,635 | ||||||||||
Consolidated net loss | (71,764) | (71,764) | (235) | (71,764) | |||||||
Appropriation of statutory reserves | 199 | (199) | |||||||||
Foreign exchange difference | (1,636) | (1,636) | (72) | (1,708) | |||||||
Shareholders contribution | (808) | (808) | 808 | ||||||||
Issuance of ordinary shares | 3,274 | 3,274 | 3,274 | ||||||||
Issuance of ordinary shares, Shares | 502,887 | ||||||||||
Repurchase of ordinary shares | (22) | (22) | (22) | ||||||||
Repurchase of ordinary shares, Shares | (4,172) | ||||||||||
Share-based compensation | 976 | 976 | 976 | ||||||||
Balance at Dec. 31, 2018 | 124,062 | 2,097 | (2,143) | (146,194) | (22,178) | (296) | (22,474) | ||||
Balance, Shares at Dec. 31, 2018 | 31,303,350 | ||||||||||
Consolidated net loss | (34,408) | (34,408) | (1,325) | (34,409) | |||||||
Foreign exchange difference | 437 | 437 | (284) | 153 | |||||||
Transactions related to equity interests in Yuantel | [1] | 7,767 | (198) | 7,570 | (2,489) | 5,081 | |||||
Effect of ASC 606 adoption | 930 | 930 | 930 | ||||||||
Issuance of ordinary shares | [2] | $ 8,539,908 | 28,179 | (15,287) | 12,892 | 12,892 | |||||
Issuance of ordinary shares, Shares | [2] | ||||||||||
Repurchase of ordinary shares | [3] | $ (966,136) | (10,048) | (10,048) | (10,048) | ||||||
Repurchase of ordinary shares, Shares | [3] | ||||||||||
Share-based compensation | 495 | 495 | 495 | ||||||||
Balance at Dec. 31, 2019 | $ 38,877,122 | $ 150,455 | $ (15,287) | $ 2,097 | $ (1,904) | $ (179,672) | $ (44,311) | $ (4,394) | $ (48,705) | ||
Balance, Shares at Dec. 31, 2019 | |||||||||||
[1] | Refer to Note 1(c) for information regarding transactions related to equity interests in Yuantel. | ||||||||||
[2] | Refer to Note 2(z) for information regarding subscription receivables. | ||||||||||
[3] | Refer to Note 20(d) for information regarding repurchase of ordinary shares. |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
CASH FLOWS FROM OPERATING ACTIVITIES | |||
Net income (loss) | $ (35,734) | $ (71,999) | $ (12,359) |
Adjustments to reconcile net income (loss) to net cash used in operating activities: | |||
Foreign exchange (gain) loss | (499) | 779 | |
Accounts receivable write offs | 1,462 | ||
Other receivable write offs | 2,207 | ||
Provision on accounts receivables & other current assets | 13,637 | 21,999 | |
Depreciation of property and equipment | 93 | 395 | 744 |
Amortization of intangible assets | 5,984 | 6,088 | 3,935 |
Impairment of inventory | (268) | 864 | |
Impairment of long term investment | 13,000 | ||
Deferred income tax benefits | (978) | 1,572 | 937 |
Interest expense | 338 | 661 | |
Share-based compensation expenses | 495 | 976 | 14,667 |
Non-employee compensation expenses | 2,493 | ||
Changes in the fair value of warrant liabilities | 200 | ||
MVNO BU management compensation | 1,497 | ||
Effect of ASC 606 adoption | 930 | ||
Changes in operating assets and liabilities, net of the effects of an acquisition: | |||
Accounts receivable | (1,204) | 41,185 | (37,463) |
Amounts due from related parties | 490 | ||
Receivable from MVNO franchisees | 3,317 | 805 | |
Inventories | 2,472 | 9,225 | (4,349) |
Deferred cost of revenues | 6,931 | (3,782) | (1,491) |
Prepaid expenses and other current assets | (13,268) | (6,763) | (12,140) |
Accounts payable | 2,051 | (29,138) | 26,999 |
Accrued expenses and other payables | 18,852 | 5,489 | 5,215 |
Unrecognized tax benefits | (101) | 366 | |
Advances from customers and contract liabilities | 5,060 | 1,873 | 3,623 |
Amounts due to related parties | 2,414 | 1,071 | |
Deferred revenues | (10,695) | 1,313 | (5,117) |
Long-term payable | (6,303) | 2,497 | |
Income tax payable | (89) | (264) | 1,016 |
Deferred government grants | (1,864) | (93) | (151) |
Right of use asset | 1,499 | ||
Lease liabilities | (1,380) | ||
Net cash (used in) generated from operating activities | (7,373) | 2,581 | (12,633) |
CASH FLOWS FROM INVESTING ACTIVITIES | |||
Purchases of property and equipment | (117) | (155) | (842) |
Purchases of intangible assets | (4,417) | (5,575) | (7,649) |
Proceeds from disposal of non-controlling interest | 5,296 | ||
Payments to acquiring non-controlling interest | (1,497) | ||
Receipts of loans to third parties | 1,469 | 371 | |
Net cash used in investing activities | (735) | (4,261) | (8,120) |
CASH FLOWS FROM FINANCING ACTIVITIES | |||
Proceeds from issuance of ordinary shares | 10,399 | 62 | |
Cash received from the Merger | 18,034 | ||
Proceeds from issuance of Series E Preferred Shares | 9,000 | ||
Proceeds from exercise of warrants for Series E-1 Preferred Shares (“Series E-1 Warrants”) | 8 | ||
Payment of issuance costs for Series E Preferred Shares | (312) | ||
Prepayment for repurchase of shares | (10,070) | ||
Proceeds from short-term bank and other borrowings | 5,000 | 1,124 | 10,456 |
Repayments of short-term bank and other borrowings | (11,003) | (2,594) | (4,756) |
Proceeds from long-term bank borrowings | 9,500 | 4,000 | 2,000 |
Repayments of long-term bank and other borrowings | (2,295) | (4,000) | (2,631) |
Net cash generated from (used in) financing activities | 11,601 | (11,540) | 31,861 |
Effect of foreign exchange rate changes on cash and cash equivalents and restricted cash | 1,840 | (324) | 648 |
Net (decrease) increase in cash and cash equivalents and restricted cash | 5,333 | (13,544) | 11,756 |
Cash and cash equivalents and restricted cash at the beginning of year | 2,975 | 16,519 | 4,763 |
Cash and cash equivalents and restricted cash at the end of year | 8,308 | 2,975 | 16,519 |
Less: cash and cash equivalents and restricted cash of discontinued operations at the end of year | 2,296 | 1,044 | 3,510 |
Cash and cash equivalents and restricted cash of continuing operations at the end of year | 1,001 | 1,931 | 13,009 |
Cash and cash equivalents of continuing operations at the end of year | 1,001 | 1,931 | 13,009 |
Restricted cash of continuing operations at the end of year | 5,011 | ||
Total cash and cash equivalents and restricted cash of continuing operations | 6,012 | 1,931 | 13,009 |
Reconciliation of cash and cash equivalents and restricted cash of the discontinued operations | |||
Cash and cash equivalents of discontinued operations at the end of year | 1,528 | 336 | 51 |
Restricted cash of discontinued operations at the end of year | 768 | 708 | 3,459 |
Total cash and cash equivalents and restricted cash of discontinued operations | 2,296 | 1,044 | 3,510 |
Supplemental disclosures of cash flow information: | |||
Interest paid | (4,972) | (2,580) | (1,877) |
Interest received | 43 | 14 | 14 |
Supplemental schedule of non-cash activities: | |||
Acquisition of fixed assets included in account payable, accrued expenses and other liabilities | 50 | 52 | |
Repurchase of shares for a decrease in prepayment | 10,048 | ||
Issuance of shares for an increase in subscription receivable | 15,287 | ||
Issuance of shares in exchange for advisory services | $ 2,493 |
Organization
Organization | 12 Months Ended |
Dec. 31, 2019 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
ORGANIZATION | 1. ORGANIZATION Borqs Technologies, Inc. (formerly known as "Pacific Special Acquisition Corp.", the "Company" or "Borqs Technologies") was incorporated in the British Virgin Islands on July 1, 2015. The Company was formed for the purpose of acquiring, engaging in a share exchange, share reconstruction and amalgamation, purchasing all or substantially all of the assets of, entering into contractual arrangements, or engaging in any other similar business combination with one or more businesses or entities. On August 18, 2017, the Company acquired 100% equity interest of BORQS International Holding Corp. ("Borqs International") and its subsidiaries, variable interest entities (the "VIE") and the VIE's subsidiaries (collectively referred to as "Borqs Group" hereinafter) (the Company and Borqs Group collectively referred to as the "Group") in an all-stock transaction (the "Merger"). Concurrent with the completion of the acquisition of Borqs International, the Company changed its name from Pacific Special Acquisition Corp." to Borqs Technologies, Inc. In November 2018, the Company's board of directors approved the plan to dispose all of its tangible and intangible assets related to the VIE and the VIE's subsidiaries through a series of agreements as discussed in Note 1 (c). Borqs Group are principally engaged in the provision of commercial grade Android+ platform solutions, hardware product sales and MVNO services in the People's Republic of China (the "PRC"). (a) As of the balance sheet date, the VIE structure was effective and the details of the Company's major subsidiaries, the VIE, and the subsidiaries of the VIE are as follows: Entity Date of Acquisition Place of Percentage of Principal Direct Subsidiaries: BORQS International July 27, 2007 Cayman 100 % Holding company BORQS Hong Kong Limited ("Borqs HK") July 19, 2007 Hong Kong 100 % Provision of software and service solutions and hardware products sales BORQS Beijing Ltd. ("Borqs Beijing") (1) September 4, 2007 PRC 100 % Provision of software and service solutions and hardware products sales BORQS Software Solutions Private Limited ("Borqs India") July 17, 2009 India 100 % Provision of software and service solutions VIE (discontinued): Beijing Big Cloud Network Technology Co., Ltd. ("Big Cloud Network") (1) / (2) April 18, 2014 PRC Nil Holding company Subsidiaries of the VIE: Yuantel (Beijing) Investment Management Co., Ltd. ("Yuantel") (2) / (3) / (4) July 11, 2014 PRC 45 % Holding company Yuantel (Beijing) Telecommunications Technology Co., Ltd. ("Yuantel Telecom") (2) / (3) / (4) July 11, 2014 PRC 45 % Provision of MVNO and other services (1) Collectively, the "PRC Subsidiaries". (2) Collectively, the "Consolidated VIEs". (3) On July 11, 2014, Borqs International through Big Cloud Network acquired the controlling interest in Yuantel and its subsidiary. (4) We are in the process of selling Yuantel Telecom. In the process of this sales, the Group owned 45% of Yuantel (Beijing) Investment Management which owned 100% of Yuantel Telecom and therefore we effectively owned 45% of Yuantel Telecom as of December 31, 2019. (b) PRC laws and regulations prohibit foreign ownership in certain telecommunication related businesses. To comply with these foreign ownership restrictions, the Group conducts its businesses in the PRC through the VIE using contractual agreements (the "VIE Agreements"). The Group funds Big Cloud Network through loans to the two Big Cloud Network's shareholders, (collectively the "Nominee Shareholders"). The effective control of Big Cloud Network is held by the Group, through a series of contractual agreements between Borqs Beijing and Big Cloud Network whereby Big Cloud Network became the Consolidated VIE of the Group. Through the contractual agreements, the Group receives substantially all of the economic benefits of Big Cloud Network. Big Cloud Network provides MVNO services in China through its 79% owned entity of Yuantel which owns 95% of Yuantel Telecom; therefore Big Cloud Network effectively owns 75.05% of Yuantel Telecom which is the entity that operates the business and holds the MVNO license from the Chinese Ministry of Industry and Information Technology as of December 31, 2018. Refer to Note 1(c) for transitions related to equity interests in Yuantel during the year ended December 31, 2019. The following is a summary of the key terms of the latest VIE Agreements: Loan agreements Borqs Beijing and the Nominee Shareholders entered into loan agreements for Borqs Beijing to provide interest free loans of RMB50,000 to the Nominee Shareholders, respectively, for the purpose of providing capital to Big Cloud Network to develop its MVNO business. There is no fixed term for the loans. Power of attorney agreement The Nominee Shareholders of Big Cloud Network entered into the power of attorney agreement whereby they authorized Borqs Beijing or its designated party to act on behalf of the Nominee Shareholders as exclusive agent and attorney with all respect to all matters concerning the shareholding including but not limited to (1) attend shareholders' meetings of Big Cloud Network; (2) exercise all the shareholders' rights, including voting rights; and (3) designate and appoint on behalf of each shareholder the senior management members of Big Cloud Network. The power of attorney remains irrevocable and continuously valid from the date of execution so long as each Nominee Shareholder remains as a shareholder of Big Cloud Network. The power of attorney agreement was subsequently reassigned to Borqs International. Exclusive option agreement Pursuant to the exclusive option agreement entered into between the Nominee Shareholders and Borqs Beijing or its designated party, the Nominee Shareholders granted Borqs Beijing or its designated party, an irrevocable and exclusive right to purchase all or part of the equity interests held by the Nominee Shareholders in Big Cloud Network, to the extent permitted under the PRC laws, at an amount equal to RMB10 or the minimum consideration permitted under the applicable PRC law. The purchase consideration in excess of RMB10 shall be refunded by the Nominee Shareholders to Borqs Beijing or Borqs Beijing may deduct the excess amount upon payment of consideration. The Nominee Shareholders shall not declare dividend or any form of distribution or grant loans in any form without the prior consent of Borqs Beijing or its designated party. The term of the agreement is 10 years, expiring on June 22, 2024 which will be automatically renewed every three-year thereafter if Borqs Beijing or its designated party does not provide notice of termination to the Nominee Shareholders fifteen days prior to expiration. Exclusive technical & support agreement Pursuant to the agreement entered into between Borqs Beijing and Big Cloud Network, Big Cloud Network engaged Borqs Beijing or its designated party as its exclusive provider of technical, consulting and other services in relation to its major business during the contractual period in return for service fees which will be determined at the sole discretion of Borqs Beijing or its designated party. The term of the agreement is 10 years, expiring on June 22, 2024, which will be automatically renewed every three-year thereafter if Borqs Beijing or its designated party does not provide notice of termination to the Nominee Shareholders fifteen days prior to expiration. Business cooperation agreement Pursuant to the business cooperation agreement entered into between Borqs Beijing and Big Cloud Network, Borqs Beijing or its designated party agreed to provide unlimited financial support for the VIE's daily operating activities through entrusted loans and agree to forgo the right to seek repayment. Share pledge agreements Pursuant to the agreement, the Nominee Shareholders pledged all of their equity interests in Big Cloud Network to Borqs Beijing as collateral to guarantee the repayment of the loans and to secure their obligations under the above agreements. The Nominee Shareholders agreed not to transfer or otherwise create any encumbrance on their equity interests in Big Cloud Network without prior consent of Borqs Beijing. The share pledge agreements will remain effective until all the obligations under above agreements have been satisfied in full or all of the guarantee liabilities have been repaid. Despite the lack of technical majority ownership, there exists a parent-subsidiary relationship between Borqs Beijing's designee, Borqs International, and Big Cloud Network through the irrevocable power of attorney agreement, whereby the Nominee Shareholders effectively assigned all of the voting rights underlying their equity interest in Big Cloud Network to Borqs International. Furthermore, pursuant to the exclusive option agreement and share pledge agreements, Borqs International, via Borqs Beijing, obtained effective control over Big Cloud Network through the ability to exercise all the rights of Nominee Shareholders and therefore the power to govern the activities that most significantly impact the economic performance of Big Cloud Network. In addition, through the VIE Agreements, Borqs International demonstrates its ability and intention to continue the ability to absorb substantially all the expected losses and the majority of the profit of the VIE, and therefore have the rights to the economic benefits of the VIE. Thus, Borqs International consolidates Big Cloud Network and its subsidiaries under ASC Subtopic 810-10, Consolidation Overall In the opinion of the Group's management and PRC counsel, (i) the ownership structure of the Consolidated VIEs is in compliance with all existing PRC laws and regulations in any material respect, (ii) each of the VIE Agreements is valid, legally binding and enforceable to each party of such agreements and will not result in any violation of PRC laws or regulations currently in effect; and (iii) each of the Group's PRC subsidiaries, VIE and VIE's subsidiaries have the necessary corporate power and authority to conduct its business as described in its business scope under its business license, which is in full force and effect, and the Group's business operation in PRC are in compliance with existing PRC laws and regulations. However, uncertainties in the PRC legal system could cause the relevant regulatory authorities to find the current VIE Agreements and businesses to be in violation of any existing or future PRC laws or regulations. If Borqs International, the primary beneficiary or any of its current or future VIEs are found in violation of any existing or future laws or regulations, or fail to obtain or maintain any of the required permits or approvals, the relevant PRC regulatory authorities would have broad discretion in dealing with such violations, including levying fines, confiscating the income of the primary beneficiary, and the VIE, revoking the business licenses or operating licenses of the primary beneficiary, and the VIE, shutting down the Group's servers, discontinuing or placing restrictions or onerous conditions on the Group's operations, requiring the Group to undergo a costly and disruptive restructuring or enforcing actions that could be harmful to the Group's business. Any of these actions could cause significant disruption to the Group's business operations and severely damage the Group's reputation, which would in turn materially and adversely affect the Group's business and results of operations. In addition, if the imposition of any of these penalties causes the primary beneficiary to lose the rights to direct the activities of the VIE or the right to receive its economic benefits, Borqs International would no longer be able to consolidate the VIE. In addition, if the VIE or the Nominee Shareholders fail to perform their obligations under the VIE Agreements, the Group may have to incur substantial costs and expend resources to enforce the primary beneficiary' rights under the contracts. The Group may have to rely on legal remedies under PRC laws, including seeking specific performance or injunctive relief and claiming damages, which may not be effective. All of these VIE Agreements are governed by PRC laws and provide for the resolution of disputes through arbitration in the PRC. Accordingly, these contracts would be interpreted in accordance with PRC laws and any disputes would be resolved in accordance with PRC legal procedures. The legal system in PRC is not as developed as in other jurisdictions, such as the United States. As a result, uncertainties in the PRC legal system could limit the Group's ability to enforce these contractual arrangements. Under PRC laws, rulings by arbitrators are final, parties cannot appeal the arbitration results in courts, and prevailing parties may only enforce the arbitration awards in PRC courts through arbitration award recognition proceedings, which would incur additional expenses and delay. In the event the Group is unable to enforce these VIE Agreements, the primary beneficiary may not be able to exert effective control over its VIE, and the Group's ability to conduct its business may be negatively affected. (c) VIE and discontinued operation disclosures The Consolidated VIEs contributed 21%, 18% and 29% of the Group's consolidated revenues for the years ended December 31, 2017, 2018 and 2019, respectively. As of December 31, 2018 and 2019, the Consolidated VIEs accounted for an aggregate of 16% and 22%, respectively, of the consolidated total assets, and 22% and 18%, respectively, of the consolidated total liabilities. The Group believes that there are no assets held in the Consolidated VIEs that can be used only to settle obligations of the Consolidated VIEs, except for registered capital and the PRC statutory reserves. Relevant PRC laws and regulations restrict the Consolidated VIEs from transferring a portion of their net assets, equivalent to the balance of its statutory reserve and its share capital, to the Group in the form of loans and advances or cash dividends. Please refer to Note 19 for disclosure of restricted net assets. As the Consolidated VIEs are incorporated as limited liability companies under the PRC Company Law, creditors of the Consolidated VIEs do not have recourse to the general credit of the Group for any of the liabilities of the Consolidated VIEs. There were no pledges or collateralization of the Consolidated VIEs' assets. In November 2018, the Company's board of director approved the plan to dispose all of its tangible and intangibles assets related to the Consolidated VIEs through a series of agreements with Jinan Yuantel Communication Technology LLP ("Jinan Yuantel"), a Company controlled by a non-controlling interest shareholder individual. The Company originally owned 79% of Yuantel (Beijing) Investment Management Co., Ltd which in turn owned 95% of Yuantel Telecom, and therefore the Company effectively owned 75% of Yuantel Telecom prior to receiving any sales proceeds from the disposal of Yuantel. In February 2019, the Company purchased 21% of equity interest in Yuantel (Beijing) Investment Management Co., Ltd at a consideration of RMB20.5 million. In the same month, the Company firstly sold to Jinan Yuantel 25% of equity interest in Yuantel (Beijing) Investment Management Co., Ltd at a consideration of RMB22 million. In April 2019, the Company secondly sold to Jinan Yuantel 20% of equity interest in Yuantel (Beijing) Investment Management Co., Ltd at a consideration of RMB25 million. In May 2019, the Company also authorized Jinan Yuantel to actively seek for investors on behalf of the Company to sell 45% of the equity interest in Yuantel held by Big Cloud Network at a consideration which is based on the expected share valuation no less than RMB180 million by June 30, 2019, for which, Jinan Yuantel will be granted the option to purchase the remaining 10% of the equity interest in Yuantel held by Big Cloud Network at a consideration of RMB10 upon achievement of the sale. The Company only received partial proceeds from the buyers in the year 2019 and as a result the Company owned 45% of Yuantel as of December 31, 2019, however still maintaining control of the operations of Yuantel through influence on the board and operational management. Since the sale has not yet been completed as of the filing of this annual report, the Company has the right to not grant the option for the remaining 10% of equity interest. The disposal of the Consolidated VIEs represents a strategic shift for the Company and has a major effect on the Company's results of operations. Accordingly, assets and liabilities related to the Consolidated VIEs were reclassified as held for sale for the carrying amounts will be recovered principally through a sale and revenues and expenses related to the Consolidated VIEs have been reclassified in the accompanying consolidated financial statements as discontinued operations for all periods presented. The consolidated balance sheets as of December 31, 2018 and 2019 and consolidated statements of operations for the years ended December 31, 2017, 2018 and 2019 have been adjusted to reflect this change. There were no gain or loss recognized on the reclassification of the discontinued operations as held for sale. As of the reporting date, the disposal transaction was not yet closed (Note 25). As of December 31, 2018 2019 $ $ Carrying amounts of major classes of assets included as part of the assets held for sale Cash and cash equivalents 336 1,528 Restricted cash 708 768 Accounts receivable 97 1,614 Receivable from MVNO franchisees 377 374 Inventories 154 210 Prepaid expenses and other current assets 883 1,503 Current assets held for sale 2,555 5,997 Property and equipment, net 637 719 Intangible assets, net 7,175 7,786 Goodwill 701 689 Deferred tax assets - - Other non-current assets 1,908 1,111 Non-current assets held for sale 10,421 10,305 Total assets of the Consolidated VIEs classified as held for sale in the Consolidated Balance Sheets 12,976 16,302 Carrying amounts of major classes of liabilities included as part of liabilities held for sale Accounts payable 1,739 6,317 Accrued expenses and other payables 4,055 9,715 Amounts due to continuing operations 9,354 933 Advances from customers 50 4,018 Deferred revenues 3,491 - Short-term bank borrowings 36 - Current liabilities held for sale 18,725 20,983 Deferred tax liabilities 1,779 1,750 Non-current liabilities held for sale 1,779 1,750 Total liabilities of the Consolidated VIEs classified as held for sale in the Consolidated Balance Sheets 20,504 22,733 For the years ended December 31, 2017 2018 2019 $ $ $ Net revenues 32,074 27,359 39,836 Cost of revenues (23,647 ) (18,587 ) (24,748 ) Total gross profit 8,427 8,772 15,088 Operating expenses: Sales and marketing expenses (4,979 ) (5,067 ) (13,213 ) General and administrative expenses (2,702 ) (3,691 ) (4,907 ) Research and development expenses (249 ) (1,320 ) (1,147 ) Asset impairment loss - - Total operating expenses (7,930 ) (10,078 ) (19,267 ) Other operating income - - - Operating (loss) income 497 (1,306 ) (4,179 ) Interest income (expense), net (35 ) 10 28 Other (expense) income, net (54 ) (4 ) - (Loss) income from discontinued operation, before income taxes 408 (1,300 ) (4,151 ) Income tax benefit (expense) 23 (1,641 ) - (Loss) income from discontinued operations 431 (2,941 ) (4,151 ) Less: net income (loss) attributable to noncontrolling interest 292 (131 ) (1,330 ) Net income (loss) attributable to Borqs Technologies, Inc. 139 (2,810 ) (2,821 ) For the Years Ended December 31, 2017 2018 2019 $ $ $ CASH FLOWS FROM OPERATING ACTIVITIES Net (loss) income 431 (2,941 ) (4,151 ) Adjustments to reconcile net (loss) income to net cash used in operating activities: Impairment of doubtful debt - - 2,241 MNVO BU management compensation - - 1,497 Provision on prepaid expenses and other current assets - 2,617 - Depreciation of property and equipment 232 269 - Amortization of intangible assets 1,108 975 - Deferred income tax benefits (23 ) 1,641 (29 ) Changes in operating assets and liabilities 1,241 (3,972 ) (1,321 ) Net cash (used in) generated from operating activities 2,989 (1,411 ) (1,763 ) CASH FLOWS FROM INVESTING ACTIVITIES Purchases of property and equipment (204 ) (80 ) (92 ) Purchases of intangible assets (77 ) (1,011 ) (706 ) Proceeds from disposal of non-controlling interest - - 5,296 Payments to acquiring non-controlling interest - - (1,497 ) Net cash used in investing activities (281 ) (1,091 ) 3,001 CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from short-term bank and other borrowings - 36 - Repayments of short-term bank and other borrowings (765 ) - (36 ) Net cash generated from (used in) financing activities (765 ) 36 (36 ) Effect of foreign exchange rate changes on cash and short-term investment - - 50 Net change in cash and cash equivalents and restricted cash 1,943 (2,466 ) 1,252 Cash and cash equivalents and restricted cash at beginning of year 1,567 3,510 1,044 Cash and cash equivalents and restricted cash at end of year 3,510 1,044 2,296 |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2019 | |
Accounting Policies [Abstract] | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (a) Basis of presentation The accompanying consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles ("U.S. GAAP"). (b) Liquidity and going concern The Group's consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and liquidation of liabilities during the normal course of operations. As of December 31, 2019, the Group had cash and cash equivalents of $1.0 million and restricted cash of $5.0 million and has generated a net loss from continuing operations of $31.6 million and cash inflows for continuing operations of $4.1 million for the year then ended. In addition, as disclosed in Note 11, the Group has certain bank and other borrowings in default or past due. The Group's funding secured during 2019 from the equity investment by Chongqing City Youtong Equity Investment Fund, LLP was sufficient to meet its normal operational needs for working capital and capital expenditures in the year 2019. The cash level at December 31, 2019 was not adequate for operations in the 2020 fiscal year and financing was needed; and the due to the COVID-19 pandemic, negative effects from slow collection from receivables and significant cancellation of otherwise signed purchase orders from customers were felt as early as January 2020. The Group's operations in the first six months of 2020 was reduced to minimal levels due to lock down of cities in India and in China, and our contracted manufacturing with third parties was also reduced to about one third of the previous year's volume. We had to rely on customer advances and short-term supply chain related load to sustain such minimal operation during the months affected most severely affected by the COVID-19 pandemic. Except for one significant customer in the U.S., all other purchase order from different countries of the world have been reduced or cancelled. The Group is in default with the terms of our loans and revolving credit lines Partners For Growth ("PFG") which is the prime lender. The Group is in negotiations with PFG5 to seek alternatives to either converting some of the loans into equities of the Group, and/or restructuring the borrowings; however, as of the filing of this annual report, definitive agreements with PFG have not been reached. The Group also has plans to raise funds based on equity and/or debt immediately after the filing of this annual report which will allow the Group to be back in compliance with rules and regulations of the SEC and Nasdaq. However, there is no assurance that the Group will be able to raise adequate funds at acceptable terms to fund its operations going forward. These conditions raise substantial doubt about the Group's ability to continue as a going concern. The consolidated financial statements have been prepared assuming that the Group will continue as a going concern and, accordingly, do not include any adjustments that might result from the outcome of this uncertainty. (c) Principles of consolidation The consolidated financial statements include the financial statements of the Company, its subsidiaries and Consolidated VIEs, for which, the Company is the primary beneficiary. All significant inter-company transactions and balances between the Company, its subsidiaries and the Consolidated VIEs are eliminated upon consolidation. Results of its subsidiaries and its Consolidated VIEs are consolidated from the date on which control is transferred to the Company. (d) Discontinued operations A component of a reporting entity or a group of components of a reporting entity that are disposed or meet the criteria to be classified as held for sale, such as the management, having the authority to approve the action, commits to a plan to sell the disposal group, should be reported in discontinued operations if the disposal represents a strategic shift that has (or will have) a major effect on an entity's operations and financial results. Discontinued operations are reported when a component of an entity comprising operations and cash flows that can be clearly distinguished, operationally and for financial reporting purposes, from the rest of the entity is classified as held for disposal or has been disposed of, if the component either (1) represents a strategic shift or (2) have a major impact on an entity's financial results and operations. In the consolidated statement of operations, result from discontinued operations is reported separately from the income and expenses from continuing operations and prior periods are presented on a comparative basis. Cash flows for discontinued operations are presented separately in Note 1 (c). Assets and liabilities of the discontinued operations are classified as held for sale when the carrying amounts will be recovered principally through a sale transaction. (e) Use of estimates The preparation of the consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the year. Areas where management uses subjective judgment include, but are not limited to, estimating the useful lives of long-lived assets and intangible assets and the subsequent impairment assessment of long-lived assets, intangible assets and goodwill, determining the provisions for accounts receivable, prepaid expenses and other current assets and inventories, determining the valuation allowance for deferred tax assets and accounting for deferred income taxes, uncertain tax benefits, determining the valuation for share-based compensation arrangements, warrants for Series D convertible redeemable preferred shares and beneficiary conversion feature on the Series E Preferred Shares. Changes in facts and circumstances may result in revised estimates. Actual results could differ from those estimates, and as such, differences may be material to the consolidated financial statements. (f) Foreign currency The functional currency of the Group and its non-PRC subsidiaries, excluding Borqs India, is the United States dollar ("$"). The functional currency of Borqs India is Rupee ("INR"), whereas the functional currency of the Group's PRC subsidiaries and its Consolidated VIEs is the Chinese Renminbi ("RMB") as determined based on the criteria of ASC Topic 830, Foreign Currency Matters Assets and liabilities of the Group's PRC subsidiaries are translated into $ at fiscal year-end exchange rates. Equity amounts are translated at historical exchange rates. Income and expense items are translated at average exchange rates prevailing during the fiscal year. Translation adjustments arising from translation of foreign currency financial statements are reported as cumulative translation adjustments and are shown as a separate component of other comprehensive income (loss) in the consolidated statements of comprehensive income (loss). (g) Cash and cash equivalents Cash and cash equivalents consist of cash on hand and demand bank deposits which are unrestricted as to withdrawal and use have original maturities less than three months. All highly liquid investments with a stated maturity of 90 days or less from the date of purchase are classified as cash equivalents. (h) Restricted cash Restricted cash mainly represents the deposits for a short-term loan with HSBC, and also short-term deposits with China United Network Communications Group Co., Ltd. ("China Unicom") as guarantee for minimum purchase requirements, which are not available for the Group's use until the end of contract period with China Unicom. The Company adopted Accounting Standards Update ("ASU") No. 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash, ("ASU 2016-18"), effective January 1, 2018 using the retrospective transition method and included all restricted cash with cash and cash equivalent when reconciling beginning-of-period and end-of-period total amounts presented in the consolidated statements of cash flows. (i) Accounts receivable Accounts receivable are carried at net realizable value. An allowance of doubtful accounts is recorded in the period when the collection of full amount is no longer probable. The Group reviews the accounts receivable on a periodic basis and makes specific allowances when there is doubt as to the collectability of individual balances. In evaluating the collectability of individual receivable balances, the Group considers many factors, including the age of the balance, the customer's payment history, its current credit-worthiness and current economic trends. As of December 31, 2019, the Group evaluated and created provision for doubtful debt for the accounts that were unlikely to be collected. As a result, such provisions of $21.9 million and $11.4 million were created for the 2018 and 2019 fiscal years, respectively. (j) Inventories Inventories are stated at the lower of cost or market. Cost is determined using the first-in, first-out method. Adjustments to reduce the cost of inventories to its net market value are made, if required, for decreases in sales prices, obsolescence or similar reductions in the estimated net realizable value. Inventories provision of $1,782 and $1,513 were recorded as of December 31, 2018 and 2019, respectively. (k) Property and equipment Property and equipment are stated at cost and are depreciated using the straight-line method over the estimated useful lives of the assets, as follows: Category Estimated useful life Computer and network equipment 3-5 years Office equipment 5 years Motor vehicles 5 years Leasehold improvements Over the shorter of lease term or the estimated useful lives of the assets Repair and maintenance costs are charged to expense as incurred, whereas the costs of betterments that extend the useful life of property and equipment are capitalized as additions to the related assets. Retirements, sale and disposals of assets are recorded by removing the cost and accumulated depreciation with any resulting gain or loss reflected in the consolidated statements of operations. (l) Intangible assets Intangible assets are carried at cost less accumulated amortization and any recorded impairment. Intangible assets acquired in a business combination are recognized initially at fair value at the date of acquisition. Intangible assets with finite useful lives are amortized using the straight-line method. These amortization methods reflect the estimated pattern in which the economic benefits of the respective intangible assets are to be consumed. Development costs of software to be sold, leased, or otherwise marketed are subject to capitalization beginning when technological feasibility is reached and ending when the software is available for general release to customers, in accordance with ASC 350-20, Costs of Software to be Sold, Leased, or Marketed Intangible assets have weighted average useful lives from the date of purchase as follows: Purchased software 4.5 years MVNO license 10 years Capitalized software development costs 3 years Internal-use software 5 years (m) Goodwill Goodwill represents the excess of the purchase price over the amounts assigned to the fair value of the assets acquired and the liabilities assumed of an acquired business. The Group's goodwill as of December 31, 2018 and 2019 was related to its acquisition of Yuantel. In accordance with ASC Topic 350, Goodwill and Other Intangible Assets The performance of the impairment test in accordance to ASC 350 involves a two-step process. The first step of the impairment test involves comparing the fair value of the reporting unit with its carrying amount, including goodwill. Fair value is primarily determined by computing the future discounted cash flows expected to be generated by the reporting unit. If the reporting unit's carrying value exceeds its fair value, goodwill may be impaired. If this occurs, the Group performs the second step of the goodwill impairment test to determine the amount of impairment loss. The fair value of the reporting unit is allocated to its assets and liabilities in a manner similar to a purchase price allocation in order to determine the implied fair value of the reporting unit's goodwill. If the implied goodwill fair value is less than its carrying value, the difference is recognized an impairment loss. In accordance with ASC 350, the Group assigned and assessed goodwill for impairment at the reporting unit level. A reporting unit is an operating segment or one level below the operating segment. The Group has determined that it has two operating segments as its reporting units, namely Yuantel and Connected Solution. Goodwill is recorded at the Yuantel reporting unit. The Group evaluated all relevant factors including, but not limited to, macroeconomic conditions, industry and market conditions, financial performance, and the share price of the Company. The Group weighed all factors in their entirety and concluded that it was not more-likely-than-not the fair value was less than the carrying amount of the reporting unit, and further impairment testing on goodwill was unnecessary. No impairment loss of goodwill in Yuantel reporting unit were recognized during the years ended December 31, 2017, 2018 and 2019, respectively. (n) Long-term investments The Group's long-term investments consist of cost method investment. In accordance with ASC Subtopic 325-20, Investments-Other: Cost Method Investments (o) Impairment of long-lived assets The Group evaluates its long-lived assets or asset group, including intangible assets with indefinite and finite lives, for impairment. Intangible assets with indefinite lives that are not subject to amortization are tested for impairment at least annually or more frequently if events or changes in circumstances indicate that the assets might be impaired in accordance with ASC 350. Such impairment test compares the fair values of assets with their carrying values with an impairment loss recognized when the carrying values exceed fair values. For long-lived assets and intangible assets with finite lives that are subject to depreciation and amortization are tested for impairment whenever events or changes in circumstances (such as a significant adverse change to market conditions that will impact the future use of the assets) indicate that the carrying amount of an asset or a Group of long-lived assets may not be recoverable. When these events occur, the Group evaluates impairment by comparing the carrying amount of the assets to future undiscounted net cash flows expected to result from the use of the assets and their eventual disposition. If the sum of the expected undiscounted cash flows is less than the carrying amount of the assets, the Group would recognize an impairment loss based on the excess of the carrying amount of the asset group over its fair value. The impairment loss of long-lived assets was nil, $13,000 and nil for the years ended December 31, 2017, 2018 and 2019, respectively, based on the impairment test performed. (p) Fair value of financial instruments The Group's financial instruments include cash and cash equivalents, restricted cash, accounts receivable and payable, accounts receivable from related parties, receivable from MVNO franchisees, short-term bank and other borrowings and long-term bank borrowings. Other than the long-term bank borrowings, the carrying values of these financial instruments approximate their fair values due to their short-term maturities. The carrying amounts of long-term bank borrowings approximated their fair values since they bear interest rates which approximate market interest rates. The Group applies ASC Topic 820, Fair Value Measurements and Disclosures ASC 820 establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows: Level 1 — Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets. Level 2 — Other inputs that are directly or indirectly observable in the marketplace. Level 3 — Unobservable inputs which are supported by little or no market activity. ASC 820 describes three main approaches to measuring the fair value of assets and liabilities: (1) market approach; (2) income approach; and (3) cost approach. The market approach uses prices and other relevant information generated from market transactions involving identical or comparable assets or liabilities. The income approach uses valuation techniques to convert future amounts to a single present value amount. The measurement is based on the value indicated by current market expectations about those future amounts. The cost approach is based on the amount that would currently be required to replace an asset. During the years ended December 31, 2018 and 2019, there were no financial instrument measured at fair value. (q) Revenue recognition The Group is mainly engaged in the business of providing 1) Android+ platform solutions and services, 2) hardware product sales, and 3) MVNO services. The Group adopted the new revenue recognition standards, or ASC 606, effective January 1, 2019 using the modified retrospective method for contracts which were not completed at the date of initial adoption. In accordance with ASC Topic 606, revenues are recognized when control of the promised goods or services is transferred to the Group's customers, in an amount that reflects the consideration the Group expects to be entitled to in exchange for those goods or services. In determining when and how much revenue is recognized from contracts with customers, the Group performs the following five-step analysis: (1) identify the contract(s) with a customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to the performance obligations in the contract; (5) recognize revenue when (or as) the entity satisfies a performance obligation. When either party to a contract has performed, the Group presents the contract in the consolidated balance sheet as a contract asset or a contract liability, depending on the relationship between the entity's performance and the customer's payment. A contract asset is the Group's right to consideration in exchange for goods and services that the Group has transferred to a customer. A receivable is recorded when the Group has an unconditional right to consideration, and it is probable that substantially all of the consideration will be collected. If a customer pays consideration or the Group has a right to an amount of consideration that is unconditional, before the Group transfers a good or service to the customer, the Group presents the contract liability when the payment is made or a receivable is recorded (whichever is earlier). A contract liability is the Group's obligation to transfer goods or services to a customer for which the Group has received consideration (or an amount of consideration is due) from the customer. The Group's contract with customers do not include significant financing component and material variable consideration. Generally, the Group recognizes revenue under ASC Topic 606 for each type of its major revenue streams as follows: 1. Android+ platform solutions and services Android+ platform solutions The Group provides customized Android+ software platform solutions that are developed to maximize the commercial grade quality or performance of open source Android+ software for integration with particular chipsets. The Group also provides customized Android+ service platform solutions that are end-to-end software developed for mobile operators to allow data synchronization between their platform and mobile devices. The Group charges its customers, mainly including mobile device manufacturers and mobile operators, fixed fees for project-based software contracts, as well as per chip or per mobile device royalty fees. There are executed contracts and purchase orders between the Group and each customer, and each party's rights regarding the service to be rendered are written on the contracts. For this type of customers, the Group enters contract with them, which has the commercial substance to identify each party's rights and obligations. There are two major performance obligations in the contracts with this type of customers: the delivery of the software product and the completion of the post-contract-service ("PCS "). The allocation of the transaction price between the two major performance obligations is based on the estimated standalone selling prices. The selling price for the performance obligation of PCS is estimated as the reasonable cost budget plus a margin or industrial standard. The rest of the transaction price other than the reasonable cost budget plus a margin for PCS will be allocated to the performance obligation of the delivery of the software product. For the sales derived from software development project in which the customer's contract specifies the technical requirements of the software product, the Group recognizes revenue in accordance with the satisfaction of each performance obligation. For the performance obligation of the delivery of the software product, the Group recognizes the revenue at the point of time, upon the customers sign off the final acceptance. For the performance obligation of the completion of PCS Period, the Group recognizes the revenue over the period of the PCS Period. Service contracts The Group provides research and development services to certain customers for their mobile-computing related development projects where fees are charged on a time and material basis and the Group is not responsible for the outcome of such development projects. The revenue is recognized proportionately over the time. The Group elects right to invoice expedient as the measure of progress. The revenue arising from contracts related to Android+ platform solutions and services is included as "Software Revenues" on the Group's consolidated statement of operations. 2. Hardware product sales The Group provides total solutions on original design manufacturer ("ODM") basis to customers of mobile devices. The Group recognizes revenue at the point of time, upon the delivery of products to customers, which is when the goods delivered to the designated address and it is probable that substantially all of the consideration will be collected. Warranty is provided to all customers, which is not considered an additional service; rather, an integral part of the product sales. ASC Topic 450, Contingencies, specifically addresses the accounting for standard warranties. The Group believes that accounting for its standard warranty pursuant to ASC 450 does not impact revenue recognition because the cost of honoring the warranty can be reliably estimated. The Group has determined the likelihood of claims arising from warranties to be remote based on strong quality control procedures in the production process and historical experience with regard to claims being made by customers. The basis for the warranty accrual will be reviewed periodically based on actual experience. The Group does not sell extended warranty coverage. The revenue arising from contracts related to hardware product sales is included as "Hardware Revenues" on the Group's consolidated statement of operations. 3. MVNO On July 11, 2014, the Group, through the VIE, acquired and obtained control of Yuantel, which mainly operates the MVNO business. The license to operate such MVNO business is issued by the Chinese Ministry of Industry and Information Technology and the core mobile network is provided by the PRC government owned China Unicom. Yuantel receives wholesale rates for mobile voice and data services from China Unicom and repackages the voice and data services into competitive bundles for Chinese consumers. In accordance with ASC Subtopic 606-10-55, the Group is the principal in providing the bundled voice and data services to Chinese consumers, thus revenue is recognized on a gross basis. As sales of bundled services are mostly pre-paid by the consumers, cash received in advance of voice and data consumption are recognized as advances from customers. Revenue is recognized over the time by measuring the consumption of the time of voice and the amount of data. Pre-paid bundled services do not expire. The revenue arising from contracts related to MVNO business is included in the line of "(Loss) income from operations of discontinued entities" on the Group's consolidated statement of operations. Impact of initial adoption As result of the adoption of ASC Subtopic 606, we made an adjustment to increase the opening balance of retained earnings as of January 1, 2019 by US$ 930. In accordance with Topic 606, the disclosure of the impact of adoption on the consolidated statements of balance sheets and operations was as follows: Year Ended December 31, 2019 As Reported Amounts without adoption of Topic 606 Effect of Change Higher/(Lower) (US$ in thousands) Revenue: Software* 14,975 9,648 5,327 Hardware 83,983 83,983 - Total net revenues 98,958 93,631 5,327 Cost of revenue: Software (17,822 ) (12,092 ) (5,730 ) Hardware (80,567 ) (80,567 ) - Total cost of revenue (98,389 ) (92,659 ) (5,730 ) Total gross profit (loss) 569 972 (403 ) Operating expense: Sales and marketing expenses (1,524 ) (1,524 ) - General and administrative expenses (24,776 ) (24,776 ) - Research and development expenses (5,277 ) (4,082 ) (1,195 ) Total operating expense (31,578 ) (30,382 ) (1,195 ) Net income (loss) from continuing operations (31,583 ) (29,984 ) (1,599 ) Basic income (loss) per share (0.88 ) (0.84 ) (0.04 ) Diluted income (loss) per share (0.88 ) (0.84 ) (0.04 ) December 31, 2019 As Reported Balances without adoption of Topic 606 Effect of Change Higher/(Lower) (US$ in thousands) Deferred cost of revenues - current - 2,308 (2,308 ) Deferred cost of revenues - non-current - 4,617 (4,617 ) Advances from customers - 6,538 (6,538 ) Contract liabilities 6,538 - 6,538 Deferred revenues – current * 84 5,411 (5,327 ) Accumulated deficit (179,672 ) (178,073 ) (1,599 ) * For the contracts related to Android+ platform solutions, the Group initially defers and then recognizes the entire revenue from the contracts through the PCS period under ASC 605, and recognizes the revenue derived from the performance obligation of the delivery of software at a point in time when the customers sign off the acceptance in accordance with ASC 606. Practical expedients and exemptions Besides the right to invoice expedients, the Group generally expenses sales commissions if any incurred because the amortization period would have been one year or less. Remaining performance obligations The following table includes estimated revenue expected to be recognized in the future related to performance obligations that are unsatisfied or partially unsatisified at the end of the reporting period. 2020 2021 2022 (US$ in thousands) Software development service 2,019 524 165 Hardware product sales 2,589 452 789 (r) Contract Costs Costs of fulfilling a contract are recognized as an asset if those costs meet all the following criteria: (1) the costs relate directly to a contract that the Group can specifically identify; (2) the costs generate or enhance resources of the Group that will be used in satisfying performance obligations in the future; (b) the costs are expected to be recovered. The Group chooses to use consistent method to amortize such contract costs, with the timing of the transfer of goods and services to customers. Over time, the carrying amount of the contract costs may become impaired. (s) Contract Liabilities Contract liabilities primarily relate to multiple element arrangements for which billing has occurred but transfer of control of all elements to the customer has either partially or not occurred at the balance sheet date. This includes cash received from customers for services or products in advance of the transfer of control. For the year ended December 31, 2019, the Group recognized revenue of $7,227 that was included in the advances from customers and deferred revenue at January 1, 2019. (t) Cost of revenues Cost of revenues consists primarily of telecommunication costs, depreciation of long-lived assets, amortization of acquired intangible asset, payroll and other related costs of operations. Deferred cost of revenues was $6,931 and $nil for the years ended December 31, 2018 and 2019, respectively. (u) Advertising expenditures Advertising expenditures are expensed as incurred and are included in sales and marketing expenses, which amounted to $20, $29 and nil for the years ended December 31, 2017, 2018 and 2019, respectively. (v) Research and development expenses Research and development expenses include payroll, employee benefits, and other headcount-related expenses associated with research and platform development. Research and development expenses also include rent, depreciation and other related expenses. Research and development expenses are expensed as incurred. (w) Government grants Government grants are provided by the relevant PRC municipal government authorities to subsidize the cost of certain technology development projects. The amount of such government grants are determined solely at the discretion of the relevant government authorities and there is no assurance that the Group will continue to receive these government grants in the future. Government grants are recognized when it is probable that the Group will comply with the conditions attached to them, and the grants are received. When the grant relates to an expense item, it is recognized in the consolidated statement of operations over the period necessary to match the grant on a systematic basis to the costs that it is intended to compensate, as a reduction of the related operating expense. When the grant relates to an asset, it is recognized as deferred government grants and released to the consolidated statement of operations in equal amounts over the expected useful life of the related asset, when operational, as a reduction of the related depreciation expense. (x) Leases On January 1, 2019, the Group adopted ASU No. 2016-02, Leases (Topic 842), as amended, which supersedes the lease accounting guidance under Topic 840, and generally requires lessees to recognize operating and financing lease liabilities and corresponding right-of-use assets on the balance sheet and to provide enhanced disclosures surrounding the amount, timing and uncertainty of cash flows arising from leasing arrangements. The Group elected to apply practical expedients permitted under the transition method that allow the Group to use the beginning of the period of adoption as the date of initial application, to not recognize lease assets and lease liabilities for leases with a term of twelve months or less, to not separate non-lease components from lease components, and to not reassess lease classification, treatment of initial direct costs, or whether an existing or expired contract contains a lease. The Group used modified retrospective method and did not adjust the prior comparative periods. Under the new lease standard, the Group determines if an arrangement is or contains a lease at inception. Right-of-use assets and liabilities are recognized at lease commencement date based on the present value of remaining lease payments over the lease terms. The Group considers only payments that are fixed and determinable at the time of lease commencement. ASC 842 requires a lessee to discount its unpaid lease payments using the interest rate implicit in the lease or, if that rate cannot be readily determined, its incremental borrowing rate. As most of the Group's leases do not provide an implicit rate, the Group uses its incremental borrowing rate as the discount rate for the lease. The Group's incremental borrowing rate is estimated to approximate the interest rate on a collateralized basis with similar terms and payments. The right-of-use asset is initially measured at cost, which comprises the initial amount of the lease liability adjusted for lease payments made at or before the lease commencement date, plus any initial direct costs incurred less any lease incentives received. The Group's lease terms may include options to extend or terminate the lease. Renewal options are considered within the right-of-use assets and lease liability when it is reasonably certain that the Group w |
Concentration of Risks
Concentration of Risks | 12 Months Ended |
Dec. 31, 2019 | |
Risks and Uncertainties [Abstract] | |
CONCENTRATION OF RISKS | 3. CONCENTRATION OF RISKS (a) Credit risk Financial instruments that potentially subject the Group to significant concentrations of credit risk consist primarily of cash and cash equivalents, restricted cash, accounts receivable and accounts receivable from related parties. As of December 31,2018 and 2019, the aggregate amount of cash and cash equivalents and restricted cash from continuing operations were $1,931 and $6,012, respectively. As of December 31, 2018 and 2019, the aggregate amount of cash and cash equivalents and restricted cash from discontinued operations were $1,044 and $2,296, respectively. As of December 31, 2018 and 2019, the aggregate amount of cash and cash equivalents and restricted cash of $1,336 and $2,512 respectively, were held at major financial institutions located in the PRC, and $1,639 and $5,796, respectively, were deposited with major financial institutions located outside the PRC. Management believes that these financial institutions are of high credit quality and continually monitors the credit worthiness of these financial institutions. Historically, deposits in Chinese banks are secure due to the state policy on protecting depositors' interests. However, China promulgated a new Bankruptcy Law in August 2006 that came into effect on June 1, 2007, which contains a separate article expressly stating that the State Council may promulgate implementation measures for the bankruptcy of Chinese banks based on the Bankruptcy Law. Under the new Bankruptcy Law, a Chinese bank may go into bankruptcy. In addition, since China's concession to the World Trade Organization, foreign banks have been gradually permitted to operate in China and have been significant competitors against Chinese banks in many aspects, especially since the opening of the Renminbi business to foreign banks in late 2006. Therefore, the risk of bankruptcy of those Chinese banks in which the Group has deposits has increased. In the event of bankruptcy of one of the banks which holds the Group's deposits, the Group is unlikely to claim its deposits back in full since the bank is unlikely to be classified as a secured creditor based on PRC laws. Accounts receivable, and accounts receivable from related parties are both typically unsecured and are derived from revenues earned from customers. The risk is mitigated by credit evaluations the Group performs on its ongoing credit evaluations of its customers' financial conditions and ongoing monitoring process of outstanding balances. (b) Business supplier, customer, and economic risk The Group participates in a dynamic and competitive high technology industry and believes that changes in any of the following areas could have a material adverse effect on the Group's future financial position, results of operations or cash flows: changes in the overall demand for services; competitive pressures due to new entrants; advances and new trends in new technology; control of telecommunication infrastructures by local regulators and industry standards; strategic relationships or customer relationships; regulatory considerations; and risks associated with the Group's ability to attract and retain employees necessary to support its growth. (i) Customer concentration risk – the Group's main operations are dependent upon a few customers, with one particularly large customer representing 63.8 % of our net revenues in the 2019 fiscal year. It is always considered at least reasonably possible that any customer can be lost in the near time. There is no guarantee that the large customer will continue to place orders with the Group or award similar volume of business to the Group. The Group's top five customers accounted for 66.9%, 74.8% and 87.2% of our net revenues in the years ended December 31, 2017, 2018 and 2019, respectively. The accounts receivable from the largest single customer accounted for 55% and 4% of the Group's total accounts receivable for the years ended December 31, 2018 and 2019, respectively. (ii) Product concentration and geography concentration risks – For the 2019 fiscal year, approximately 67.9% of the Group's net revenues was focused on the handset mobile device, and there is no guarantee that this product type will continue to have demand in the fast changing telecom industry or that the Group can continue to feasibly compete as a designer and manufacturer of such products. (iii) Business supplier risk – the Group's MVNO operations are dependent upon telecommunication resources provided by China Unicom. There is no guarantee that the supply of telecommunication resources provided by China Unicom will be renewed annually. Further, there is no guarantee around the continuance of the MVNO license granted by the PRC government Ministry of Industry and Information Technology which may be amended or discontinued in light of changes to political, economic and social reforms. In November 2018, the Company's board of directors approved the plan to dispose all of its reporting units operating the MVNO business (Note 1 (c)). For the Group's continuous operations, the Group's top five suppliers accounted for 71.0% and 73.8% of our cost of goods sold in the years ended December 31, 2018 and 2019, respectively. (iv) Economic risk – the Group's operations could be adversely affected by significant political, economic and social uncertainties in the PRC. Although the PRC government has been pursuing economic reform policies for more than 40 years, no assurance can be given that the PRC government will continue to pursue such policies or that such policies may not be significantly altered, especially in the event of a change in leadership, social or political disruption or unforeseen circumstances affecting the PRC political, economic and social conditions. There is also no guarantee that the PRC government's pursuit of economic reforms will be consistent or effective. (c) Foreign currency exchange rate risk From July 21, 2005, the RMB is permitted to fluctuate within a narrow and managed band against a basket of certain foreign currencies. The appreciation / (depreciation) of the United States $ against RMB was approximately (5.7%), 4.9% and 1.4% in the years ended December 31, 2017, 2018 and 2019, respectively. The appreciation / (depreciation) of the United States $ against Rupee was approximately (4.7%). 0.5% and 9.5% in the years ended December 31, 2017, 2018 and 2019, respectively. (d) Interest rate risk The Group is exposed to interest rate risk on its interest-bearing liabilities. As part of its liability risk management, the Group reviews and takes appropriate steps to manage its interest rate exposures on its interest-bearing liabilities. The Group has not been exposed to material risks due to changes in market interest rates, and not used any derivative financial instruments to manage the interest risk exposure during the years presented. |
Acquisitions
Acquisitions | 12 Months Ended |
Dec. 31, 2019 | |
Business Combinations [Abstract] | |
ACQUISITIONS | 4. ACQUISITIONS Reverse Acquisition The Company was a NASDAQ listed special purpose acquisition company formed for the purpose of effecting a merger, acquisition, or similar business combination. On August 18, 2017, the Company completed the Merger. The Company issued 25,913,950 of its ordinary shares ("Merger Consideration Shares") to Borqs International's shareholders in exchange for the transfer of 100% equity interest in Borqs International to the Company and Borqs International became the Company's wholly own subsidiary. Of the Merger Consideration Shares, a total of 25,913,950 ordinary shares were issued to Borqs International's shareholders at closing, with 942,467 of such shares deposited into escrow for indemnification obligations ("Indemnity Shares"), 2,352,285 of such shares deposited in escrow subject to Borqs Technologies meeting certain earn-out requirements, ("Earnout Shares" and together with the Indemnity Shares, the "Escrow Shares") in the event certain net income earnout conditions are met during the period from July 1, 2017 to June 30, 2018 and 1,178,084 ordinary shares were issued to a financial advisor engaged by Borqs International in connection with the Merger. As transfers between the shareholders of the Company, the Escrow Shares did not have any impact on the Company's financial statements. Additionally, at the effective time of the Merger, the holders of Borqs International issued and outstanding warrants received replacement warrants to acquire an aggregate of 417,166 Borqs Technologies' ordinary shares ("Replacement Warrants"), and the holders of Borqs International issued and outstanding options (Note 16) had their options assumed by Borqs Technologies to hold options to acquire Borqs Technologies' ordinary shares upon the exercise of those options ("Assumed Options"). Equity classified instruments including (i) an option to purchase up to 400,000 units at $10.00 per unit ("Unit Purchase Option"), (ii) 5,750,000 public warrants and (iii) 531,875 private warrants issued by the Company prior to the Merger remain outstanding. Each unit consists of one ordinary share of the Company, one right (convertible into one tenth of an ordinary share) and one warrant to purchase one half of one ordinary share at $12. Each public and private warrant also entitles the holder to purchase one half of one ordinary share at $12.00 per whole share. Borqs International was determined as the accounting acquirer in the Merger in accordance with ASC Topic 805, Business Combinations As the Merger occurred between a public accounting acquiree and a private accounting acquirer, the determination of consideration is based on the fair value of the legal acquirer's stock. Difference between the purchase consideration of $45,734 transferred and net assets of $18,059 acquired, which was predominately cash, was recorded in additional paid-in capital. Transaction Expenses Advisory, financing, integration and other transaction costs directly related to the Merger totaled $15,300 for the year ended December 31, 2017, including $8,800 in share-based compensation expense recorded for the ordinary shares issued to the financial advisors. |
Inventories, Net
Inventories, Net | 12 Months Ended |
Dec. 31, 2019 | |
Inventory Disclosure [Abstract] | |
INVENTORIES, NET | 5. INVENTORIES, NET Inventories consisted of the following: As of December 31, 2018 2019 $ $ Raw materials 6,056 4,107 Goods in transit 1,443 - Work in process 155 908 Finished goods 917 1,041 8,570 6,056 Less: provision (1,782 ) (1,513 ) Inventories, net 6,788 4,543 Provisions were $1,782 and $1,513 in the years ended December 31, 2018 and 2019, respectively, due to obsolescence including the inventories from previous years. |
Prepaid Expenses and Other Curr
Prepaid Expenses and Other Current Assets, Net | 12 Months Ended |
Dec. 31, 2019 | |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |
PREPAID EXPENSES AND OTHER CURRENT ASSETS, NET | 6. PREPAID EXPENSES AND OTHER CURRENT ASSETS, NET Prepaid expenses and other current assets consisted of the following: As of December 31, 2018 2019 $ $ Staff advances 303 301 Prepayment for products 812 1,539 Advance to OEMs 11,479 15,897 Rental and other deposits 591 718 VAT recoverable 2,610 2,400 Receivable from an agent 1,545 6,410 Prepayment for share repurchase 10,048 - Rebate receivable - 1,448 Others 198 124 27,586 28,837 Less: provision (570 ) (12,871 ) 27,016 15,966 The prepayment for share repurchase of $10,048 was for a transaction in which the Company repurchased shares from the sponsor of the SPAC merger. The transaction was completed in May 2019, and the equity originally issued to the Zhengqi International Holding Ltd, the SPAC Sponsor, of 966,136 ordinary shares were cancelled as of May 20, 2019. |
Right of Use Assets
Right of Use Assets | 12 Months Ended |
Dec. 31, 2019 | |
Right of Use Assets [Abstract] | |
RIGHT OF USE ASSETS | 7. RIGHT OF USE ASSETS The Group leases office space under non-cancelable operating lease agreements, which expire at various dates through 2020. As of December 31, 2019, the Group's operating leases had a weighted average discount rate of 11.3%. Future lease payments under operating leases as of December 31, 2019 were as follows: As of 2019 $ 2020 827 Total lease payments 827 Less: imputed interest 13 Present value of lease liabilities 814 Rent expense under operating leases was $1,129 and $1,489 for the years ended December 31, 2017 and 2018, respectively. Operating lease cost for the year ended December 31, 2019 was $1,647, which excluded cost of short-term contracts. Short-term lease cost for the year ended December 31, 2019 was $45. Cash paid for amounts included in the measurement of operating lease liabilities was $1,547 for the year ended December 31, 2019. Non-cash transaction amount of lease liabilities arising from acquisition of right-of-use assets was $1,517. Future minimum lease payments under non-cancelable operating lease agreements at December 31, 2018 were as follows: Year Ended December 31 Amount $ 2019 1,528 2020 827 Total 2,355 |
Property and Equipment, Net
Property and Equipment, Net | 12 Months Ended |
Dec. 31, 2019 | |
Property, Plant and Equipment [Abstract] | |
PROPERTY AND EQUIPMENT, NET | 8. PROPERTY AND EQUIPMENT, NET Property and equipment consisted of the following: As of December 31, 2018 2019 $ $ At cost: Leasehold improvements 846 833 Computer and network equipment 4,367 4,305 Office equipment 900 925 Motor vehicles 218 184 6,331 6,247 Less: accumulated depreciation (6,026 ) (6,006 ) 305 241 Depreciation expense from continuing operations was $512, $264 and $175 for the years ended December 31, 2017, 2018 and 2019, respectively. For the years ended December 31, 2017 2018 2019 $ $ $ Cost of revenues 266 104 46 Sales and marketing expenses 25 3 1 General and administrative expenses 63 47 53 Research and development expenses 158 110 75 512 264 175 |
Intangible Assets, Net
Intangible Assets, Net | 12 Months Ended |
Dec. 31, 2019 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
INTANGIBLE ASSETS, NET | 9. INTANGIBLE ASSETS, NET The following table presents the intangible assets as of the respective balance sheet dates: Software Capitalized software Total $ $ $ Balance as of January 1, 2018 74 11,600 11,674 Additions - 5,347 5,347 Amortization expense (28 ) (5,250 ) (5,278 ) Foreign currency translation difference (3 ) (298 ) (301 ) Balance as of December 31, 2018 43 11,399 11,442 Additions 1 4,030 4,031 Amortization expense (20 ) (5,965 ) (5,985 ) Foreign currency translation difference - (58 ) (58 ) Balance as of December 31, 2019 24 9,406 9,430 The intangible assets are amortized using the straight-line method, which is the Group's best estimate of how these assets will be economically consumed over their respective estimated useful lives of 3-10 years. The annual estimated amortization expenses for the intangible assets for each of the next five years were as follows: $ 2020 5,251 2021 2,988 2022 1,191 9,430 |
Long-Term Investments
Long-Term Investments | 12 Months Ended |
Dec. 31, 2019 | |
Debt Disclosure [Abstract] | |
LONG-TERM INVESTMENTS | 10. LONG-TERM INVESTMENTS On January 18, 2018, the Company entered into an agreement with Colmei Technology International Ltd ("Colmei") and its affiliate Shenzhen Crave Communication Co., Ltd ("Crave"), along with the shareholders of Crave and Colmei (the "Selling Shareholders"), pursuant to which the Selling Shareholders sold to the Company 13.8% of the outstanding shares of Crave and 13.8% of the outstanding shares of Colmei. Under the agreement, the Company paid purchase consideration consisting of the Company's 473,717 ordinary shares at the fair value of $3,000 and cash in the amount of $10,000 to be paid to the Selling Shareholders by the end of 36 months from the date of agreement, which the Company has not yet paid as of December 31, 2018. Subject to board approval, the Company agreed to issue 183,342 additional shares to the Selling Shareholders if the aggregate value of the ordinary shares initially issued at the closing to the Selling Shareholders was less than $3,000 in fair value as of August 18, 2018. The board of directors approved and 183,342 shares that were issued on January 10, 2019. The Company does not have significant influence over the investees and therefore the investment was accounted for under the cost method. Cost of the long-term investments originally consisted of the fair value of the ordinary shares on the dates of issuance and the present value of the cash consideration determined based on management's estimated payment schedule. Due to significant numbers of claims against Crave and Colmei in the year 2019, the Company recorded $13,000 of impairment loss as of December 31, 2018. In June 2020, Crave and Colmei filed for bankruptcy, the Company impaired the balance of the long-term investment into Crave and Colmei in the amount of $13,000 for the year ended December 31, 2018 and have cancelled any further investment into these entities. |
Bank and Other Borrowings
Bank and Other Borrowings | 12 Months Ended |
Dec. 31, 2019 | |
Debt Disclosure [Abstract] | |
BANK AND OTHER BORROWINGS | 11. BANK AND OTHER BORROWINGS Bank and other borrowings were as follows as of the respective balance sheet dates: As of December 31, 2018 2019 $ $ Short-term bank and other borrowings (i) 11,010 5,000 Long-term bank borrowings, current portion (ii) 5,770 12,975 16,780 17,975 Long-term bank borrowings, non-current portion (ii) - - Total borrowings 16,780 17,975 (i) The short-term bank and other borrowings outstanding as of December 31, 2018 and December 31, 2019 bore a weighted average interest rate of 13.92% and 13.76% per annum, respectively, and were denominated in RMB, INR and US$. These borrowings were obtained from financial institutions, a third-party entity and a related party (Note 18). The outstanding balances as of December 31, 2018 and 2019 were comprised of the following loans: a) The Group entered into a line of credit facility amounted to $8,623 with SPD Silicon Valley Bank Co., Ltd, a PRC banking institution ("SSVB") in 2015, which had an original maturity date of August 31, 2018. The outstanding principal balance as of December 31, 2017 was $7,648 and an additional $956 was drawn during 2018. The outstanding principal balance as of December 31, 2018 was $8,604. The loan was payable on demand as of December 31, 2017 and 2018 due to the Group having breached a financial covenant under the loan. The loan bore an interest rate of 8% per annum based on the LIBOR rate. The Company paid interest of $521 and $168 during the years ended December 31, 2018 and 2019. The principal balance of $8,604 remaining as of December 31, 2018 was fully repaid in March 2019. b) On November 28, 2017, the Group entered into a short-term loan agreement with HHMC Microelectronic Co., Limited ("HHMC') for $5,000 bearing an interest rate of 0.04% per day, to fund the Company's working capital purposes. The loan had an original term of three months. According to the agreement, the interest rate increased to 0.1% per day from February 28, 2018 prospectively when the loan became overdue. The outstanding principal balance as of December 31, 2017 was $5,000 of which $2,595 was repaid during 2018. The accrued interest of $68 as of December 31, 2017 was fully paid in 2018. The outstanding principal balance as of December 31, 2018 was $2,405. The accrued interest of $1,080 as of December 31, 2018 was fully repaid in 2018 and the remaining principal is fully repaid in June 2019. The accrued interest of US$456 as of December 31, 2019 was fully paid in 2019. (ii) The long-term bank borrowings as of December 31, 2018 and 2019 were loans from Partners For Growth IV, L.P. ("PFG4") and Partners For Growth V, L.P ("PFG5") that are financial institutions located in the United States, bearing weighted average interest rates of 8.40% and 10.07% per annum, respectively. The loans were denominated in US$. The outstanding loans as of December 31, 2018 and 2019 were comprised of the following loans and prior loans: a) On April 30, 2018, the Group entered into a long-term loan agreement with PFG5 for $3,000, bearing an interest rate of 8% per annum from May 1, 2018 to October 31, 2018 and an interest rate of 12% per annum from November 1, 2018 to April 30, 2021, which is the maturity date. The outstanding principal balance as of December 31, 2018 was $3,146 and accrued interests of $185 was fully repaid in 2018. The accrued interest of US$420 as of December 31, 2019 was fully paid in 2019. b) On December 17, 2018, the Group entered into a convertible term loan agreement (the "PFG note") with PFG5, bearing an interest rate of 12% per annum. The principal of this loan is $1,000 which matures in full on December 17, 2023. The outstanding principal balance of $1,000 as of December 31, 2018 and accrued interest of $5 was fully repaid in December 2018. At any time while the PFG note was outstanding, upon notice only, PFG may elect to convert the PFG note into 208,768 ordinary shares of the Company at the conversion price of $4.79 per share. The accrued interest of US$159 as of December 31, 2019 was fully paid in 2019. c) On March 8, 2019, the Group entered into a new revolving line of credit facility (the "RLOC") with PFG5 for $12,500. Under the agreement: (i) $9,500 may be drawn upon request at any time on or after the closing date and (ii) so long as there is no uncured default at the time of drawdown and if the Company has received at least $10,000 in cash proceeds from the sale of its equity securities to investors, then an additional $3,000 may be drawn. Any outstanding amounts under the RLOC will accrue interest at a rate of 11% per annum with a maturity date of March 8, 2021 (the "Maturity Date"). The Group shall pay interest only on principal outstanding on the RLOC until the Maturity Date, on which date the entire unpaid principal balance on the RLOC plus any and all accrued and unpaid interest shall be repaid. In March 2019, the Company drew down $9,500 from the RLOC. The Group accrued interest of $1,201 as of December 31, 2019 with $212 unpaid in 2019. The outstanding principal balances as of December 31, 2019 included a term loan due to PFG4 in the amount of $100, outstanding principal balances due to PFG5 of a term loan in the amount of $2,375, a convertible term loan in the amount of $1000 and a revolving line of credit in the amount of $9,500. The breach of the financial covenant beginning in September 2019 resulted in the acceleration of the repayments of the PFG borrowings and increased rate of interest. Therefore, certain outstanding balances of the PFG loans became payable on demand and was reclassified as a current liability as of December 31, 2019. Interests and penalties payable of about $2 million have been accrued. Borrowings from PFG4 and PFG5 as of December 31, 2019 were pledged by all accounts receivable and assets of the Company. As of the filing of this annual report, the Company is in negotiation with PFG on converting a portion of the principal amounts into equities of the Company. (iii) Warrants In August 2016, the Group issued 2,515,123 and 1,900,800 warrants ("2016 Warrants") to two banks in connection with a short term loan facility of $2,000,000 and a long term loan facility of $6,000,000 respectively, for working capital purpose. The 2016 Warrants entitled the banks to subscribe for Series D convertible redeemable preferred shares at the exercise price of $0.5059. The 2016 Warrants shall lapse and expire after 5 and 7 years from their issuance dates, respectively. The 2016 Warrants were replaced by Replacement Warrants to acquire an aggregate of 417,166 the Group's ordinary shares at the consummation date of the Merger. As the 2016 Warrants were granted to the banks for loan facilities, their fair value on the issuance date were recognized as deferred borrowing costs presented as deductions of the carrying value of the term loans. The deferred borrowing costs were recognized over the lives of the term loans as financing cost, using the effective interest rate method. Given the 2016 Warrants were convertible into Series D convertible redeemable preferred shares classified as mezzanine equity, the 2016 Warrants were financial liabilities in accordance with ASC 480, Distinguishing Liabilities from Equity As part of the Merger, the 2016 Warrants were replaced by Replacement Warrants to acquire an aggregate of 417,166 the Group's ordinary shares classified as permanent equity. As the modification of the 2016 Warrants term resulted in the reclassification of the 2016 Warrants from liability to equity, the 2016 Warrants amounted to US$1,544 were re-measured at fair value upon Merger and reclassified to additional paid in capital as of December 31, 2017. |
Accrued Expenses and Other Paya
Accrued Expenses and Other Payables | 12 Months Ended |
Dec. 31, 2019 | |
Payables and Accruals [Abstract] | |
ACCRUED EXPENSES AND OTHER PAYABLES | 12. ACCRUED EXPENSES AND OTHER PAYABLES The components of accrued expenses and other payables were as follows: As of December 31, 2018 2019 $ $ Payroll and welfare payable 3,606 4,918 VAT, and other taxes payable 2,551 489 Payables for office supply and utilities 547 437 Payables for purchase of property and equipment 50 49 Professional service fees 3,347 1,414 Payables for share purchase consideration 5,821 10,000 Payables for Samsung arbitration compensation 2,767 4,356 Interest and penalty payable - 3,178 Advance from customers - 4,076 Payables to an agent - 3,571 Others 308 41 18,997 32,529 |
Deferred Government Grants
Deferred Government Grants | 12 Months Ended |
Dec. 31, 2019 | |
Revenue Recognition and Deferred Revenue [Abstract] | |
DEFERRED GOVERNMENT GRANTS | 13. DEFERRED GOVERNMENT GRANTS The government grants received are required to be used in construction of property and equipment. These grants are initially deferred and subsequently recognized in the statement of operations over the lives of the related assets as other operating income. For the years ended December 31, 2017 2018 2019 $ $ $ Balance at beginning of the year 2,108 1,957 1,864 Recognized as other operating income (281 ) - (1,854 ) Foreign currency translation difference 130 (93 ) (10 ) Balance at ending of the year 1,957 1,864 - |
Accumulated Other Comprehensive
Accumulated Other Comprehensive Loss | 12 Months Ended |
Dec. 31, 2019 | |
Stockholders' Equity Note [Abstract] | |
ACCUMULATED OTHER COMPREHENSIVE LOSS | 14. ACCUMULATED OTHER COMPREHENSIVE LOSS The changes in accumulated other comprehensive loss, net of tax of nil, were as follows: Foreign currency Total $ $ Balance as of January 1, 2017 (2,626 ) (2,626 ) Current year other comprehensive loss 2,119 2,119 Balance as of December 31, 2017 (507 ) (507 ) Current year other comprehensive income (1,636 ) (1,636 ) Balance as of December 31, 2018 (2,143 ) (2,143 ) Current year other comprehensive loss (income) (163 ) 239 Balance as of December 31, 2019 (2,306 ) (1,904 ) |
Mainland China Employee Contrib
Mainland China Employee Contribution Plan | 12 Months Ended |
Dec. 31, 2019 | |
Retirement Benefits [Abstract] | |
MAINLAND CHINA EMPLOYEE CONTRIBUTION PLAN | 15. MAINLAND CHINA EMPLOYEE CONTRIBUTION PLAN As stipulated by the regulations of the PRC, full-time employees of the Group in the PRC participate in a government-mandated multiemployer defined contribution plan organized by municipal and provincial governments. Under the plan, certain pension benefits, medical care, unemployment insurance, employee housing fund and other welfare benefits are provided to employees. The Group is required to make contributions to the plan based on certain percentages of employees' salaries. The total expenses for the plan from continuing operations were $2,103, $2,029 and $1,600 and from discontinued operations were $424, $517 and $538 for the years ended December 31, 2017, 2018 and 2019, respectively. |
Share Based Compensation
Share Based Compensation | 12 Months Ended |
Dec. 31, 2019 | |
Share-based Payment Arrangement [Abstract] | |
SHARE BASED COMPENSATION | 16. SHARE BASED COMPENSATION (a) Share-based awards under the 2007 Plan In order to provide additional incentives to employees and to promote the success of the Group's business, the Group adopted a share incentive plan in (the "2007 Plan") December 2007, which was last amended in February 2011. The 2007 Plan allows the Group to grant options to employees, directors, consultants or members of the board of directors of the Group. Under the 2007 Plan, the maximum aggregate number of shares that may be issued shall not exceed 38,700,000. The terms of the options shall not exceed ten years from the date of grant. 25% of the shares subject to the options shall vest on the first anniversary of the vesting commencement date, and 1/48 of the shares subject to the options shall vest each month thereafter over the next three years, provided the optionee continues to be a service provider to the Group. Thus, there is an explicit service condition of 4 years. In addition, the options contain a performance condition whereby vesting will commence upon the earlier to occur of an initial public offering or a change in control as defined in the 2007 Plan, provided there is continued employment of the optionees on such date. During the year ended December 31, 2016 and the period ended August 18, 2017, the Group granted 610,000 and 9,085,000 shares of options, respectively, to purchase ordinary shares to employees, officers, and directors with the exercise price of $0.56 and $0.678 ~ $0.859 per share, respectively. The following table summarizes the Group's option activities under the 2007 Plan: Number of Weighted exercise price Weighted Aggregate ($) (Years) ($) Outstanding, January 1, 2016 32,037,240 0.30 4.97 308 Granted 610,000 0.56 Forfeited (5,190,297 ) 0.34 Outstanding, December 31, 2016 27,456,943 0.30 5.26 308 Vested and expected to vest at December 31, 2016 27,456,943 0.30 5.26 308 Outstanding, January 1, 2017 27,456,943 0.30 5.26 308 Granted 9,085,000 0.70 Forfeited (8,007,606 ) 0.04 Outstanding, August 18, 2017 28,534,337 0.48 6.99 - Vested and expected to vest at August 18, 2017 28,534,337 0.48 6.99 - As of August 18, 2017, no options were vested and exercisable given the performance condition in place described above. Historically, compensation cost related to performance options that only vest upon the consummation of an initial public offering or change in control event was recognized when the offering or change in control event was consummated. Accordingly, the Group did not recognize any compensation cost under the 2007 Plan. The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying awards and the fair value of the underlying stock at each reporting date, for those awards that have an exercise price below the estimated fair value of the Group's shares. As of December 31, 2016 and August 18, 2017, the Group had options outstanding to purchase an aggregate of 5,500,000 shares and nil with an exercise price below the fair value of the Group's shares, resulting in an aggregate intrinsic value of $308 and nil, respectively. (b) Consummation of reverse acquisition in 2017 Upon the consummation of the Merger, the holders of Borqs International issued and outstanding options had their options assumed by the Company and now hold options to acquire a total of 2,695,194 of the Company's ordinary shares upon exercise of those options. In addition, the performance condition whereby vesting will commence upon the earlier to occur of an initial public offering or a change in control (collectively, "IPO condition") as defined in the 2007 Plan was removed. Pursuant to ASC 718, the cancellation of the terms or conditions of an equity award under original award in exchange for a new award should be treated as modification. As the IPO condition was not expected to be satisfied as of the modification date, the original grant-date fair value is no longer used to measure compensation cost for the awards. As a result, the compensation cost recognized for the replacement awards would be based on the modification date fair value of the awards. For those awards that were fully vested at the time of the modification, the Group recognized a one-time catch up of $5,658 in share-based compensation expense upon the Merger. The Group granted 180,000 shares of options to directors to purchase ordinary shares with the exercise price of $5.30 share on August 18, 2017 and nil shares of options during the year ended December 31, 2018. The Group granted 180,000 shares of options to directors with the exercise price of $4.06 on March 4, 2019 and 100,000 options to an employee with the exercise price of $2.92 on June 17, 2019. Number of Weighted exercise price Weighted average Aggregate ($) (Years) ($) Converted under Assumed Options: Outstanding, August 18, 2017 2,695,194 5.08 6.99 6,561 Granted 180,000 5.30 Forfeited (49,804 ) 6.58 Outstanding, December 31, 2017 2,825,390 5.38 6.43 6,860 Outstanding, January 1, 2018 2,825,390 5.38 6.43 6,860 Granted - - Forfeited (316,585 ) 3.09 Outstanding, December 31, 2018 2,508,805 5.29 6.01 312 Outstanding, January 1, 2019 2,508,805 5.29 6.01 312 Granted 280,000 3.65 Forfeited (272,580 ) 2.26 Outstanding, December 31, 2019 2,516,225 5.29 5.52 5,653 As of December 31, 2018 and 2019, the Group had options outstanding to purchase an aggregate of 2,508,805 and 2,516,225 shares with an exercise price below the fair value of the Group's shares, resulting in an aggregate intrinsic value of $312 and $5,653, respectively. At the IPO of the predecessor company of Pacific Special Acquisition Corp ("PSAC") in October 2015, an option was issued to the underwriter of the IPO, EarlyBird Capital, Inc., to purchase up to 400,000 units at $10.00 per unit ("Unit Purchase Option"), where each unit of the option consists of one ordinary share of the Company, one right (convertible into one tenth of an ordinary share) and one warrant to purchase one half of one ordinary share at $12 per whole share. The option is fully vested at the merger of PSAC with Borqs International Holding Corp, and expires five years from the IPO, which is October 2020. (b) Consummation of reverse acquisition in 2017 (continued) The Group calculated the estimated fair value of the options on the respective grant dates using the binomial-lattice option valuation model with the following assumptions for each applicable period which takes into account variables such as volatility, dividend yield, and risk-free interest rate, contractual term of the option, the probability that the option will be exercised prior to the end of its contractual life, and the probability of termination or retirement of the option holder in computing the value of the option: Year 2017 Year 2018 Year 2019 Risk-free interest rates 1.06%-2.32 % * 1.64%-2.72% Expected life (years) 10 years * 10 years Expected volatility 31.9%-43.9% * 44.1%-45.0% Expected dividend yield 0% * 0% Exercise multiple 2.20 * 2.2 Post-vesting forfeit rate 10% * 12% Fair value of underlying ordinary shares $7.45 * $1.80 Fair value of share option $2.34-$7.45 * $1.8-$4.19 Total compensation expenses relating to share options granted to employees recognized for the years ended December 31, 2018 and 2019 were as follows: For the years ended 2018 2019 Sales and marketing expenses 359 103 General and administrative expenses 254 232 Research and development expenses 363 159 976 494 (c) Ordinary shares issued in 2017 On March 17, 2017, the Group issued 450,000 ordinary shares to certain employees and a non-employee for a total proceed of $62 recorded as general and administrative expenses. The fair value of the ordinary shares in excess of the proceeds received by the Group was immediately recognized as compensation expense which amounted to $324. The 450,000 ordinary shares were fully vested as of December 31, 2017. |
Taxation
Taxation | 12 Months Ended |
Dec. 31, 2019 | |
Income Tax Disclosure [Abstract] | |
TAXATION | 17. TAXATION Enterprise income tax (“EIT”) British Virgin Islands The Company is incorporated in the British Virgin Islands and conducts its primary business operations through the subsidiaries and VIEs in the PRC, India and Hong Kong. Under the current laws of the British Virgin Islands, the Company is not subject to tax on income or capital gains. Additionally, upon payments of dividends by the Company to its shareholders, no BVI withholding tax will be imposed. Cayman Islands Borqs International is incorporated in the Cayman Islands and conducts its primary business operations through the subsidiaries and VIEs in the PRC, India and Hong Kong. Under the current laws of the Cayman Islands, Borqs International is not subject to tax on income or capital gains. Additionally, upon payments of dividends by the Company to its shareholders, no Cayman Islands withholding tax will be imposed. Hong Kong Borqs HK is subject to Hong Kong profits tax rate of 16.5% for the years ended December 31, 2017, 2018 and 2019. No provision for Borqs HK profits tax has been made in the consolidated financial statements as the entity had losses in the years ended December 31, 2017, 2018 and 2019. Additionally, upon payments of dividends by the Company to its shareholders, no HK withholding tax will be imposed. India Borqs India is subject to income tax rate of 32.45% for the year ended December 31, 2017 and 29.12% for the years ended December 31, 2018 and 2019. Amounts of $2,342, $331 and $173 are included as income tax expense for the years ended December 31, 2017, 2018 and 2019, respectively. The PRC The Company’s subsidiaries and VIE in the PRC are subject to the statutory rate of 25%, in accordance with the Enterprise Income Tax law (the “EIT Law”), which was effective since January 1, 2008, except for certain entities eligible for preferential tax rates. Dividends, interests, rent or royalties payable by the Company’s PRC subsidiaries, to non-PRC resident enterprises, and proceeds from any such non-resident enterprise investor’s disposition of assets (after deducting the net value of such assets) shall be subject to 10% withholding tax, unless the respective non-PRC resident enterprise’s jurisdiction of incorporation has a tax treaty or arrangements with China that provides for a reduced withholding tax rate or an exemption from withholding tax. BORQS Beijing was qualified for a High and New Technology Enterprises (“HNTE”) since 2012 and was eligible for a 15% preferential tax rate from 2012 to 2014. In July 2015, BORQS Beijing obtained a new HNTE certificate, which will expire in July 2018. BORQS Beijing has successfully renewed the HNTE certificate in September 2018 with effective term of three years until 2020. In accordance with the PRC Income Tax Laws, an enterprise awarded with the HNTE status may enjoy a reduced EIT rate of 15%. For the years ended December 31, 2017, 2018 and 2019, BORQS Beijing enjoyed a preferential tax rate of 15%. Yuantel Telecom was qualified for a High and New Technology Enterprises (“HNTE”) since 2011 and is eligible for a 15% preferential tax rate from 2011 to 2013. In October 2014, Yuantel Telecom obtained a new HNTE certificate, which expired in October 2017. Yuantel Telecom has successfully renewed the HNTE certificate in December 2017 with effective term of three years until 2019. In accordance with the PRC Income Tax Laws, an enterprise awarded with the HNTE status may enjoy a reduced EIT rate of 15%. For the years ended December 31, 2017, 2018 and 2019, Yuantel Telecom enjoyed a preferential tax rate of 15%. Enterprise income tax (“EIT”) (continued) The New EIT Law also provides that enterprises established under the laws of foreign countries or regions and whose “place of effective management” is located within the PRC are considered PRC tax resident enterprises and subject to PRC income tax at the rate of 25% on worldwide income. The definition of “place of effective management” refers to an establishment that exercises, in substance, overall management and control over the production and business, personnel, accounting, properties, etc. of an enterprise. As of December 31, 2019, no detailed interpretation or guidance has been issued to define “place of effective management”. Furthermore, as of December 31, 2019, the administrative practice associated with interpreting and applying the concept of “place of effective management” is unclear. If the Group is deemed as a PRC tax resident, it would be subject to PRC tax under the New CIT Law. The Group will continue to monitor changes in the interpretation or guidance of this law. Profit (loss) from continuing operations before income taxes consisted of: For the years ended December 31, 2017 2018 2019 $ $ $ Non-PRC (7,138 ) (43,630 ) (31,895 ) PRC (3,310 ) (25,097 ) (637 ) (10,448 ) (68,727 ) (32,532 ) Income tax expense comprised of: For the years ended December 31, 2017 2018 2019 $ $ $ Current (1,382 ) (52 ) - Deferred (960 ) (279 ) 949 (2,342 ) (331 ) 949 The reconciliation of tax computed by applying the statutory income tax rate of 25% for the years ended December 31, 2017, 2018 and 2019 applicable to the PRC operations to income tax expense was as follows: For the years ended December 31, 2017 2018 2019 $ $ $ Profit (loss) before income taxes (10,448 ) (68,727 ) (32,532 ) Income tax (expense) income computed at the statutory income tax rate at 25% 2,612 17,182 7,356 Non-deductible expenses (2,654 ) (7,393 ) 955 Non-taxation income 68 - 753 Preferential rate (237 ) (790 ) (286 ) Current and deferred tax rate differences 55 238 (971 ) Foreign rate differences (427 ) (5,670 ) 137 Change of valuation allowance (1,294 ) (4,202 ) (7,834 ) Statutory income (215 ) (1,471 ) - R&D super deduction - 305 839 Interest expense (250 ) - Income tax (expense) benefit (2,342 ) (331 ) 949 Deferred Taxes The significant components of deferred taxes were as follows: As of December 31, 2018 2019 $ $ Deferred tax assets Inventories provision 100 58 Accrued salary and welfare payable 201 217 Property and equipment 3 - Tax losses 317 419 Valuation allowance 18 275 Total deferred tax assets 639 969 Deferred tax liabilities Intangible assets 1,688 1,815 Deferred cost of revenue 765 17 Total deferred tax liabilities 2,453 1,832 The Group operates through several subsidiaries and its Consolidated VIEs. Valuation allowance is considered for each of the entities where it was determined it was more likely than not that the benefits of the deferred tax assets will not be realized. Realization of the net deferred tax assets is dependent on factors including future reversals of existing taxable temporary differences and adequate future taxable income, exclusive of reversing deductible temporary differences and tax loss or credit carry forwards. As of December 31, 2019, the Group had net tax losses from its PRC subsidiaries, as per filed tax returns, of $23,029, which can be carried forward per tax regulation to offset future taxable income. The PRC taxable losses will expire from 2020 to 2029 if not utilized. The Group has net tax losses from its HK subsidiary of $38,946, which will not expire. Unrecognized Tax Benefits As of December 31, 2018 and 2019, the Group recorded an unrecognized tax benefits of $2,020 and $1,987, respectively, of which, $273 and $559, respectively, are presented on a net basis against the deferred tax assets related to tax loss carry forwards on the consolidated balance sheets. The unrecognized tax benefits and its related interest are primarily related to under-reported intercompany profit. The amount of unrecognized tax benefits will change in the next 12 months, pending clarification of current tax law or audit by the tax authorities, however, an estimate of the range of the possible change cannot be made at this time. As of December 31, 2018 and 2019, unrecognized tax benefits of $1,747 and $1,428, respectively, if ultimately recognized, will impact the effective tax rate. A roll-forward of unrecognized tax benefits is as follows: For the years ended December 31, 2017 2018 2019 $ $ $ Balance at beginning of year 1,873 2,016 2,020 Reversal based on tax positions related to prior years - - - Additions based on tax positions related to the current year 28 - - Foreign currency translation difference 115 4 (33 ) Balance at end of year 2,016 2,020 1,987 In the years ended December 31, 2018 and 2019, the Group recorded interest expense accrued in relation to the unrecognized tax benefit of nil and nil in income tax expense, respectively. Accumulated interest expense recorded by the Group was $298 and $298 as of December 31, 2018 and 2019, respectively. As of December 31, 2019, the tax years ended December 31, 2013 through 2018 for the PRC subsidiaries remain open for statutory examination by the PRC tax authorities. |
Related Party Transactions
Related Party Transactions | 12 Months Ended |
Dec. 31, 2019 | |
Related Party Transactions [Abstract] | |
RELATED PARTY TRANSACTIONS | 18. RELATED PARTY TRANSACTIONS (a) Related parties Names of related parties Relationship with the Group Intel Capital Corporation (“Intel”) and its affiliates A substantial shareholder of the Group Bluecap A company controlled by a key management of the Group Hareesh Ramanna Executive Vice President and Co-General Manager of Connected Solutions Business Unit Cloudminds (Hong Kong) Ltd. (“Cloudminds”) A company controlled by a director of the Company * * On December 18, 2018, the entity ceased to be a related party of the Company due to the resignation of this director. (b) Other than disclosed elsewhere, the Group had the following significant related party transactions for the years ended December 31, 2017, 2018 and 2019: For the years ended December 31, 2017 2018 2019 $ $ $ Software services provided to: Intel (China) Co., Ltd. 9 - - Intel Asia-Pacific Research and Development Ltd. 79 - - Intel (China) Research Center Co., Ltd. 8 - - Cloudminds - 1,373 - Loan from: Hareesh Ramanna 22 - (c) Other than disclosed elsewhere, the Group had the following significant related party balances for the years ended December 31, 2017, 2018 and 2019: For the years ended December 31, 2017 2018 2019 $ $ $ Loan from: Bluecap - 1,059 3,273 Interest expense on loan from: Bluecap - 12 211 All balances with related parties as of December 31, 2019 were unsecured, and had no fixed terms of repayment. On July 31, 2018, the Group entered into a $1,325 short-term loan agreement with Bluecap Mobile Private Limited (“Bluecap”), a company controlled by a key management of the Group (Note 18), bearing an interest rate of 8% per annum to fund the Company’s working capital. The loan does not carry a maturity date and the outstanding principal balance as of December 31, 2019 was $3,273 which is payable on demand. The accrued interests of $12 in 2018 and $211 in 2019 were recorded in accrued expenses and other payables. |
Restricted Net Assets
Restricted Net Assets | 12 Months Ended |
Dec. 31, 2019 | |
Restricted Net Assets [Abstract] | |
RESTRICTED NET ASSETS | 19. RESTRICTED NET ASSETS The Company’s ability to pay dividends is primarily dependent on the Company receiving distributions of funds from its subsidiaries and VIE. Relevant PRC statutory laws and regulations permit payments of dividends by the Company’s PRC subsidiaries only out of their retained earnings, if any, as determined in accordance with PRC accounting standards and regulations. The results of operations reflected in the consolidated financial statements prepared in accordance with U.S. GAAP differ from those reflected in the statutory financial statements of the Company’s PRC subsidiaries and VIE. In accordance with the PRC Regulations on Enterprises with Foreign Investment and the articles of association of the Company’s PRC subsidiaries, a foreign-invested enterprise established in the PRC is required to provide certain statutory reserves, namely the general reserve fund, the enterprise expansion fund and the staff welfare and bonus fund which are appropriated from net profit as reported in the enterprise’s PRC statutory accounts. A foreign-invested enterprise is required to allocate at least 10% of its annual net profit to the general reserve until such reserve has reached 50% of its respective registered capital based on the enterprise’s PRC statutory accounts. Appropriations to the enterprise expansion fund and the staff welfare and bonus fund are at the discretion of the board of directors for all foreign-invested enterprises. The aforementioned reserves can only be used for specific purposes and are not distributable as cash dividends. The PRC subsidiaries were established as foreign-invested enterprises and therefore, are subject to the above mandated restrictions on distributable profits. As of December 31, 2018 and 2019, the Group’s PRC subsidiaries had appropriated $2,097 and $2, 097, respectively, in its statutory reserves. Foreign exchange and other regulations in the PRC may further restrict the Company’s VIE from transferring funds to the Company in the form of dividends, loans and advances. Amounts restricted include paid-in capital and statutory reserves of the Company’s PRC subsidiaries and the equity of the Consolidated VIEs, as determined pursuant to PRC generally accepted accounting principles. As of December 31, 2019, restricted net assets of the Company’s PRC subsidiaries and the Consolidated VIEs were $84,138. |
Equity
Equity | 12 Months Ended |
Dec. 31, 2019 | |
Equity [Abstract] | |
EQUITY | 20. Equity (a) Disposal of MVNO BU (Note 1(c)) See Note 1(c) for details for equity transactions related to disposal of Yuantel. (b) Investment with KADI On December 15, 2018, the Group entered into a Share Purchase Agreement ("Purchase Agreement") with Shanghai KADI Machinery Technology Co., Ltd. ("KADI SH"), KADI Technologies Limited ("KADI HK") (collectively, "KADI") and Lin Hu and Shou Huajun, the sole shareholders of KADI SH and KADI HK (the "KADI's Selling Shareholders"), for the purchase of 60% of the issued and outstanding ordinary shares of KADI SH ("KADI SH Shares") and 60% of the issued and outstanding ordinary shares of KADI HK ("KADI HK Shares", together with the KADI SH Shares, the "KADI Shares"). The transaction with KADI consists of total cash consideration of $4,600 in installments and share consideration equivalent to $9,750 in installments upon achievement of earn-outs by KADI SH from 2018 to 2021. As of December 31, 2018, $600 was prepaid to KADI SH. The transaction did not close as of December 31, 2019 due to KADI not able to present audited financial statements as required by the earn-out provisions of the agreement and that KADI has not performed the ownership change registration at the local jurisdiction. Although KADI was not able to present audited financial statements as required by the earn-out provisions of the agreement and has not performed the ownership change registration, 1,632,555 of Borqs' ordinary shares were issued to KADI on January 9, 2019, for which the Group recorded the fair value of these shares in an aggregate of $5,217 in additional paid-in capital, with a corresponding amount included in subscription receivable. As a result, future capital commitments for KADI has been voided due to KADI's breach of provisions of the agreements. As of the filing of this annual report, the Group has cancelled all the ordinary shares of 589,005 shares, which were issued into escrow account with KADI. Also, the Group is in negotiation with KADI for a reduced ownership of KADI or a recission of the acquisition. (c) Equity financing from Chongqing City Youtong Equity Investment Fund ("Chongqing Youtong") On April 18, 2019, the Group entered into an equity financing agreement with Chongqing Youtong owned by the Chongqing Government in the PRC. According to the agreement, Chongqing Youtong purchased 9.9 % equity interest of the Company equivalent to 3,734,283 ordinary shares with a total purchase consideration of $13,865 on May 16, 2019, for which 75% of the total purchase consideration amounting to $10,399 in cash was received. The remaining 25% of the total purchase consideration amounting to $3,466 will be contributed in the form of real property and equipment (the "Property Investment") by Chongqing Youtong within six months from May 16, 2019 the date that the cash investment portion was completed. However, as of the filing of this annual report, the Property Investment has not yet been completed; and the Company is in the process of negotiating the acceptable value of the real property and equipment from Chongqing Youtong. The shares are unregistered and are subject to lock up provisions for one year. (d) Repurchase of Shares from Zhengqi International Holding Limited ("Zhengqi") On January 10, 2018, we entered into a stock repurchase agreement ("Stock Repurchase Agreement") with Zhengqi International Holding Limited ("Zhengqi"), pursuant to which we agreed to repurchase 966,136 of our ordinary shares that were originally issued and sold to Zhengqi on August 18, 2017, at an aggregate purchase price of approximately $10,070 or $10.40 per share. The $10,048 was paid on February 28, 2018 and recorded as prepayment. On May 20, 2019, the 966,136 repurchased shares were cancelled. (Note 6) (e) Settlement of arbitration with Claimant Samsung Electronics Co., Ltd. ("Samsung") On November 27, 2018, the Secretariat of the International Court of Arbitration for the International Chamber of Commerce issued a final award to Samsung Electronics Co., Ltd. ("Samsung") that constituted the final decision on the Group's dispute with Samsung over a sales contract. The court order required the Group to pay to Samsung total payments of $4,650 including: i) $4,280 as the "Principal Amount", plus (ii) accrued interest of $370 computed from March 31, 2019 on the outstanding balance of the Principal Amount at a simple interest rate of 9% per annum (together with the Principal Amount, collectively referred to as the "Settlement Payment"). On April 26, 2019, the Group entered into a settlement agreement with Samsung according to which, the Group shall pay the full and total amount of the Settlement Payment in equal monthly installments over a period of twenty-four months beginning on March 31, 2019. In addition, a total of 2,209,728 ordinary shares were issued to Samsung as escrow shares in the year 2019 as security for the payments. The Group recorded the fair value of the shares issued in an aggregate of $6,401 in additional paid-in capital, with a corresponding amount included in subscription receivable. Due to cash constraints, particularly due to the COVID-19 pandemic, the Group has not made monthly installments to Samsung since the fourth quarter of 2019, and Samsung has not pursued alternative means of repayment from the Group as of the filing of this annual report. (f) Investment in Shenzhen Crave Communication Co., Ltd. ("Crave") and Refer to Note 10 for 183,342 shares on January 10, 2019 related to long-term investments. (g) Ordinary shares issued for advisory services On January 9, 2019, the Group issued an aggregate of 780,000 ordinary shares to certain advisors, in exchange for their services related to investors relations during the year ended December 31, 2019. The 780,000 shares were fully vested as of December 31, 2019. The Group recorded the fair value of the shares in an amount of $2,493 in compensation expenses which was included in general and administrative expenses. |
Convertible Redeemable Preferre
Convertible Redeemable Preferred Shares | 12 Months Ended |
Dec. 31, 2019 | |
Equity [Abstract] | |
CONVERTIBLE REDEEMABLE PREFERRED SHARES | 21. CONVERTIBLE REDEEMABLE PREFERRED SHARES On December 27, 2007, March 17, 2008, September 26, 2008 and October 8, 2008, the Group issued 19,800,000, 3,100,000, 12,000,000 and 5,000,000 Series A convertible redeemable preferred shares (the "Series A Preferred Shares"), respectively, to certain external investors at a price of $0.20 per share for a total cash consideration of $7,980. The cash proceeds received was $7,889, net of issuance costs of $91. On June 26, 2009, August 19, 2009 and October 12, 2009, the Group issued 64,285,715,15,000,000 and 3,571,428 Series B convertible redeemable preferred shares (the "Series B Preferred Shares"), respectively, to certain external investors at a price of $0.21 per share for a total consideration of $17,400 (includes cash proceeds of $14,400 and $3,000 upon conversion of convertible notes). The cash proceeds received was $14,242, net of issuance costs of $158. On February 14, 2011 and May 24, 2012, the Group issued 38,181,817 and 5,454,545 Series C convertible redeemable preferred shares (the "Series C Preferred Shares"), to certain external investors at the price of $0.275 per share for a total cash consideration of $12,000. The cash proceeds received was $11,817, net of issuance costs of $183. On August 20, 2014, the Group issued 23,721,443 Series D convertible redeemable preferred shares (the "Series D Preferred Shares"), to certain external investors at the price of $0.33725 per share for a total cash consideration of $8,000. The cash proceeds received was $7,874, net of issuance costs of $126. On February 8, 2017 and March 2, 2017, the Group closed the issuances of 10,325,126 and 2,950,036 Series E convertible redeemable preferred shares (the "Series E Preferred Shares"), respectively, for a purchase price of $0.678 per share. Concurrently, Series E-1 Warrants to purchase up to an aggregate of 7,094,164 Series E-1 convertible preferred shares (the "Series E-1 Preferred Shares") were issued and immediately exercised, at $0.001 per share. The total cash proceeds received was $9,008, net of issuance costs of $312. Net proceeds were allocated to the Series E Preferred Shares and Series E-1 Preferred Shares based on their relative fair value on closing dates. Series E-1 Preferred Shares shall vote with Series E Preferred Shares as a single class. Series E-1 Preferred Shares have neither redemption rights nor any other rights preferential to the ordinary shares and therefore Series E-1 Preferred Shares are classified as permanent equity. The significant terms of the Series A, Series B, Series C, Series D, and Series E convertible redeemable preferred shares (together "Convertible Redeemable Preferred Shares") are summarized as follows. Conversion Convertible Redeemable Preferred Shares can be converted into ordinary shares at the option of the holder at any time by dividing the applicable original purchase price by the applicable conversion price which is initially equal to the original purchase price and as such, the initial conversion ratio for each Convertible Redeemable Preferred Shares into each ordinary share shall be one-for-one. Convertible Redeemable Preferred Shares shall automatically be converted into ordinary shares at the then-effective conversion rate applicable to the relevant series of Preferred Shares: (a) in the event of the closing of a Qualified IPO; or (b) in relation only to Series A and Series B Preferred Shares, upon the approval and written consent of a majority of the outstanding Series A and Series B Preferred Shares holders to convert their respective Preferred Shares into ordinary shares. The conversion price is subject to additional adjustments if the Group makes certain dilutive issuances of shares. Dividends Series D and Series E Preferred Shares shall receive dividends at an annual rate of six percent (6%) of the original purchase price in preference and priority to any dividends on the Series A, Series B, Series C Preferred Shares and ordinary shares. Dividends on Series D and Series E Preferred Shares shall be cumulative whether declared by the Board of Directors or not. Each holder of Series A, Series B and Series C Preferred Shares is entitled to receive non-cumulative dividends when and if declared by the Board of Directors of the Group in preference and priority to any dividends on ordinary shares, after all accumulated dividends on the Series D and Series E Preferred shares have been paid or set aside for payment to the holders of Series D and Series E Preferred Shares in a calendar year. Any additional dividends declared, after all accumulated dividends and declared dividends on the Preferred Shares have been paid or set aside for payment to the holders of Preferred Shares in a calendar year, shall be distributed among all holders of ordinary shares and Preferred Shares. Redemption All outstanding Convertible Redeemable Preferred Shares can be redeemed at the election of the majority holders at any time after the fifth anniversary of the first issuance date of Series E Preferred Shares. Prior to the fifth anniversary of the first issuance date of Series E Preferred Shares, all outstanding Series C Preferred Shares held by Intel can be redeemed at any time of the holder's election to redeem for investigation or for breach as defined in the Memorandum of Association and Articles of Association. Prior to the fifth anniversary of the first issuance date of Series E Preferred Shares, all outstanding Series D and Series E Preferred Shares can be redeemed at any time of a holder of Series D and a holder of Series E Preferred Shares' election to redeem for breach event or to redeem for investigation and failure to obtain MVNO license event as defined in the Memorandum of Association and Articles of Association. Convertible Redeemable Preferred Shares are redeemed at a price equal to 150% the original purchase price plus any unpaid declared dividends. The redemption price for Preferred Shares under the event of the election of Intel, a holder of Series D Preferred Shares or a holder of Series E Preferred Shares to redeem for investigation is set to be 100% of the original purchase price. The redemption price for Convertible Redeemable Preferred Shares under the event of the election of Intel, a holder of Series D Preferred Shares or a holder of Series E Preferred Shares to redeem for breach is set to be 150% of the original purchase price. Winding up / Liquidation In the event of any liquidation, dissolution, or winding up of the Group, either voluntary or involuntary, distributions to the shareholders of the Group shall be made as stated below. The holders of Series E Preferred Shares then outstanding are entitled to be paid first out of the assets of the Group available for distribution a liquidation preference in an amount per Preferred Share equal to the sum of (i) 150% of the original purchase price as adjusted and (ii) all unpaid accumulated dividends, in priority to any other holders of Preferred Shares or ordinary shares. Upon full payment of the Series E Preferred Shares liquidation preference, the holders of Series D Preferred Shares are entitled to be paid first out of the assets of the Group available for distribution a liquidation preference in an amount per Preferred Share equal to the sum of (i) 150% of the original purchase price as adjusted and (ii) all unpaid accumulated dividends, in priority to any other holders of Preferred Shares or ordinary shares. Upon full payment of the Series D and Series E Preferred Shares liquidation preference Series A, Series B and Series C Preferred Shares then outstanding shall be entitled to be paid first out of the assets of the Group available for distribution (and prior and in preference to any payment on the ordinary shares) a liquidation preference in an amount per Series A, Series B and Series C Preferred Shares equal to the sum of (i) the original purchase price applicable to such Preferred Share as adjusted and (ii) all unpaid declared dividends. The holders of Series C Preferred Shares shall receive their liquidation preference amount in preference to holders of Series A and Series B Preferred Shares. Subject to the prior payment of all amounts due to the holders of Preferred Shares, the balance of all remaining assets available for distribution are made with equal priority and pro rata amongst the holders of ordinary shares and the holders of Preferred Shares on an as–converted basis. Voting Each share of Convertible Redeemable Preferred Shares has voting rights equal to an equivalent number of shares of ordinary shares into which it is convertible and votes together as one class with the ordinary shares. All directors of the Group's board of directors are elected by the holders of the outstanding ordinary shares and the Preferred Shares, voting together as a single class on an as-converted basis. Accounting for Convertible Redeemable Preferred Shares The Convertible Redeemable Preferred Shares have been classified as mezzanine equity as they can be redeemed at the option of the holders. The initial carrying values of the Preferred Shares are the total consideration received at their respective dates of issuance net of issuance costs. There were no embedded features except for Series E Preferred Shares that qualified for bifurcation and separate accounting in accordance with ASC Subtopic 815-10, Derivatives and Hedging At the respective closing dates of the Series E Preferred Shares, beneficiary conversion feature was identified and recorded as a reduction of Series E Preferred Shares with an offsetting credit to additional paid-in capital. Convertible Redeemable Preferred Shares were accreted to redemption value based on the terms stipulated in the Memorandum of Association ("MOA"). Changes in the redemption value are recorded against retained earnings. Upon the consummation of the Merger, all Convertible Redeemable Preferred Shares and Series E-1 Preferred Shares were converted to ordinary shares. Upon conversion, all unamortized discounts, including any original issue discounts and discounts from allocation of proceeds for beneficiary conversion feature, are recognized immediately as deemed dividend and deducted from income available to ordinary shareholders. The following is the roll-forward of the carrying amounts of Convertible Redeemable Preferred Shares for the year ended December 31, 2017: For the year ended 2017 Balance at beginning of the year 68,862 Issuance of Series E Preferred Shares 6,300 Beneficiary conversion feature of Series E Preferred Shares (3,258 ) Change in redemption value 6,956 Conversion to ordinary shares (78,860 ) Balance at end of the year - Series E-1 Preferred Shares of $2,708 were converted to ordinary shares as of December 31, 2017 and there were none as of December 31, 2018 and 2019. |
Earnings (Loss) Per Share
Earnings (Loss) Per Share | 12 Months Ended |
Dec. 31, 2019 | |
Earnings (Loss) Per Share [Abstract] | |
EARNINGS (LOSS) PER SHARE | 22. EARNINGS (LOSS) PER SHARE Basic and diluted earnings (loss) per share for each of the years presented are calculated as follows: For the years ended December 31, 2017 2018 2019 $ $ $ Numerator: Net income (loss) from continuing operations (12,790 ) (69,058 ) (31,583 ) Less: Net income (loss) attributable to noncontrolling interest from continuing operation (82 ) (104 ) 5 Net income (loss) from continuing operations attributable to Borqs Technologies, Inc. (12,708 ) (68,954 ) (31,588 ) Accretion to redemption value of preferred shares for continuing operations (6,956 ) - - Net (loss) income from continuing operations attributable to Borqs Technologies, Inc.’s ordinary shareholders (19,664 ) (68,954 ) (31,588 ) Net (loss) income from discontinued operations 431 (2,941 ) (4,151 ) Less: Net (loss) income attributable to noncontrolling interest from discontinued operation 292 (131 ) (1,329 ) Net (loss) income from discontinued operations attributable to Borqs Technologies, Inc. 139 (2,810 ) (2,822 ) Net loss attributable to Borqs Technologies, Inc.’s ordinary shareholders (19,525 ) (71,764 ) (34,409 ) Denominator: Weighted-average number of ordinary shares—basic 12,842,671 31,200,056 35,919,014 Weighted-average number of ordinary shares—diluted 12,842,671 31,200,056 35,919,014 Weighted-average number of shares outstanding from discontinued operations—basic 12,842,671 31,200,056 35,919,014 Weighted-average number of shares outstanding from discontinued operations—diluted 12,842,671 31,200,056 35,919,014 Net earnings (loss) per share from continuing operations attributable to Borqs Technologies, Inc. Earnings (loss) per share—Basic: (1.53 ) (2.21 ) (0.88 ) Earnings (loss) per share—Diluted: (1.53 ) (2.21 ) (0.88 ) Net (loss) earnings per share from discontinued operations attributable to Borqs Technologies, Inc. (Loss) earnings per share—Basic: 0.01 (0.09 ) (0.08 ) (Loss) earnings per share—Diluted: 0.01 (0.09 ) (0.08 ) Net loss per share attributable to Borqs Technologies, Inc. Loss per share—Basic: (1.52 ) (2.30 ) (0.96 ) Loss per share—Diluted: (1.52 ) (2.30 ) (0.96 ) For the years ended December 31, 2018 and 2019, share options and Replacement Warrants to purchase ordinary shares, Unit Purchase Option, public warrants and private warrants were anti-dilutive and excluded from the calculation of diluted net loss per share. |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Dec. 31, 2019 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | 23. COMMITMENTS AND CONTINGENCIES (a) Capital commitments and contingencies Refer to Note 20 (b) for details related to investments with KADI. As of the filing of this annual report, the Group is in negotiation with KADI for a reduced ownership of KADI or a rescission of the acquisition. (b) Income taxes As of December 31, 2018 and 2019, the Group recognized an accrual of $1,920 and $1,987, respectively, in unrecognized tax benefits and its interest (Note 17). The final outcome of the tax uncertainty is dependent upon various matters including tax examinations, interpretation of tax laws or expiration of statutes of limitation. However, due to the uncertainties associated with the status of examinations, including the protocols of finalizing audits by the relevant tax authorities, there is a high degree of uncertainty regarding the future cash outflows associated with these tax uncertainties. As of December 31, 2018 and 2019, the Group classified the accrual for unrecognized tax benefits as a non-current liability. (c) Settlement of arbitration with Claimant Samsung Electronics Co., Ltd. (“Samsung”) On November 27, 2018, the Secretariat of the International Court of Arbitration for the International Chamber of Commerce issued a final award to Samsung Electronics Co., Ltd. (“Samsung”) that constituted the final decision on the Group’s dispute with Samsung over a sales contract. The court order required the Group to pay to Samsung total payments of $4,650 including: i) $4,280 as the “Principal Amount”, plus (ii) accrued interest of $370 computed from March 31, 2019 on the outstanding balance of the Principal Amount at a simple interest rate of 9% per annum (together with the Principal Amount, collectively referred to as the “Settlement Payment”). On April 26, 2019, the Group entered into a settlement agreement with Samsung according to which, the Group shall pay the full and total amount of the Settlement Payment in equal monthly installments over a period of twenty-four months beginning on March 31, 2019. In addition, a total of 2,209,728 ordinary shares were issued to Samsung as escrow shares in the year 2019 as security for the payments. Due to cash constraints, particularly due to the COVID-19 pandemic, the Group has not made monthly installments to Samsung since the fourth quarter of 2019, and Samsung has not pursued alternative means of repayment from the Group as of the filing of this annual report. |
Segment Reporting
Segment Reporting | 12 Months Ended |
Dec. 31, 2019 | |
Segment Reporting [Abstract] | |
SEGMENT REPORTING | 24. SEGMENT REPORTING The Company has identified the continuing operations as a single reportable segment as of December 31, 2019 and the table below provides a summary of the Group's geographic information of revenues based on the customers' headquarters for the years ended December 31, 2017, 2018 and 2019: For the years ended December 31, 2017 2018 2019 $ $ $ PRC 17,687 4,282 1,701 Outside PRC: United States 23,312 15,663 21,746 India 70,421 96,550 69,646 Rest of the world 10,813 11,925 5,865 Total net revenue 122,233 128,420 98,958 As the Group's long-lived assets are substantially all located in the PRC, no geographical segments for long-lived assets are presented. |
Subsequent Events
Subsequent Events | 12 Months Ended |
Dec. 31, 2019 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | 25. SUBSEQUENT EVENTS (a) NASDAQ Compliance Due to the non-filing of the Group’s annual report for the year ended December 31, 2018, Nasdaq has given notice that the Group’s shares will be delisted from the Nasdaq Capital Market. The Group attended a hearing with a Nasdaq panel (“Panel”) on December 19, 2019 to appeal the delisting. On January 9, 2020, the Panel issued its decision (“Decision”) to grant the Group’s request for continued listing on Nasdaq, subject to the conditions that: (i) on or before January 23, 2020, the Group shall have informed the Panel that the Group’s independent auditor has completed its audit of the Group’s audited financials for fiscal year 2018; and (ii) on or before March 1, 2020, the Group shall have filed with the Securities and Exchange Commission (“SEC”) the Form 20-F and regained compliance with Nasdaq Listing Rule 5250(c)(1). The Group filed its 2018 annual report on Form 20-F on February 4, 2020 and held its annual general meeting of shareholders on March 9, 2020. As a result, the Group received a letter from Nasdaq on March 10, 2020 that the Group has regained compliance. Due to the non-filing of the Group’s annual report for the year ended December 31, 2019, Nasdaq has given notice that the Group’s shares will be delisted from the Nasdaq Capital Market. The Group attended a Nasdaq hearing on August 27, 2020 to appeal Nasdaq’s decision to delist. On September 14, 2020, the Group received a letter from Nasdaq informing us the Panel has decided to grant the Group’s request to remain listed on Nasdaq on the condition that we shall file the 2019 annual report on form 20-F by September 30, 2020. The Panel has the right to reconsider the terms of this decision based on any event, condition or circumstance that exists or develops that would, in the opinion of the Panel, make continued listing of the Group’s securities on the Nasdaq Stock Market inadvisable or unwarranted. In addition, the Form 20-F will be subject to review by the Panel, which may, in its discretion, request additional information before determining that the Group has complied with the terms of its decision. (b) COVID-19 Pandemic Since February 2020, the Group has experienced reductions and cancellations of orders due to effects of the COVID-19 pandemic has on the demand from certain of the Group’s customers. The Group expects this negative effect on global business activities will continue to have pressure on the Group’s sales as the pandemic environment persists and perhaps even post the pandemic. In addition, since the Group’s operations span over the countries of the United States, India, China and South Korea, international and intra-country travel restrictions will continue to hamper our operations and have negative effects including delays and uncertainties on the Group’s supply chain delivery schedules and the Group’s abilities to secure financing for the Group’s working capital needs. The Group expects the impacts of COVID-19 to have an adverse effect on the business, financial condition and results of operations. As the assessable risks due to COVID-19 change in the countries of India and China, our operations can be affected, including the restrictions from accessing office facilities and limitations on domestic travels which can hamper the Group’s ability to efficiently manage the manufacturing of products since the Group’s contracted factories are located over various cities in China. As the Group’s sales have been negatively impacted by the pandemic in 2020, the Group cut back the operational costs by reduction of approximately 20% of the workforce in India and 40% of headcount in China. The Group constantly evaluates the financial position according to changes in the international business environment and depending on forecast of orders from customers in the near future, the Group may further reduce staffing as necessary. Also as a result of stringent cash flows as of the filing of this annual report and given that the pandemic situation is foreseeable to last through the remainder of the year 2020, the Group will postpone further investment into the acquisition target of KADI and the Group is in negotiation with the owners of KADI to decrease our potential ownership percentage of their company. For the acquisition of Colmei and Crave, since both of these companies are insolvent, the Group has ceased to make additional payments for ownership and have written off the value of the equity the Group has paid to the owners previously. (c) Potential Debt Restructure of loans from PFG The Group is in the process of negotiating a partial settlement of the debt owed to the Group’s primary lender, PFG, by converting approximately $3.5 million of debt into our ordinary shares. Such transaction requires the Group to be in compliance of the rules and regulations of the SEC and NASDAQ. The Group intends to actively pursue at least a partial debt settlement with PFG immediately after the filing of this annual report. (d) Disposal of Yuantel For the intended sale of the MVNO Business Unit, due to the investigation into several individuals employed by the MVNO business unit that was initiated in September 2019, only partial sales proceeds was received in 2019 resulting in the Group’s ownership of Yuantel reduced to 45% as of December 31, 2019. The Group still maintained control of the operations of Yuantel through influence on the board and operational management. The Group executed a new agreement with the buyers of the MVNO Business Unit as of September 1, 2020 for approximately RMB 30 million. The agreement is filed as an exhibit with this annual report. If the balance of the sales proceeds is received by September 30, 2020 as stipulated in the agreement which was later postponed to October 2020 by both parties, the sale will be deemed completed. |
Fair Value Measurements
Fair Value Measurements | 12 Months Ended |
Dec. 31, 2019 | |
Taxation Textual [Abstract] | |
FAIR VALUE MEASUREMENTS | 26. FAIR VALUE MEASUREMENTS The Group applies ASC 820, Fair Value Measurements and Disclosures. ASC 820 defines fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements. ASC 820 requires disclosures to be provided on fair value measurement. ASC 820 establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows: Level 1 — Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets. Level 2 — Include other inputs that are directly or indirectly observable in the marketplace. Level 3 — Unobservable inputs which are supported by little or no market activity. ASC 820 describes three main approaches to measuring the fair value of assets and liabilities: (1) market approach; (2) income approach; and (3) cost approach. The market approach uses prices and other relevant information generated from market transactions involving identical or comparable assets or liabilities. The income approach uses valuation techniques to convert future amounts to a single present value amount. The measurement is based on the value indicated by current market expectations about those future amounts. The cost approach is based on the amount that would currently be required to replace an asset. 2016 Warrants are classified within Level 3. We estimated the fair value of these warrants as of December 31, 2016 and August 18,2017 using the binomial-lattice option valuation model, based on the remaining contractual term of the warrants, risk-free interest rates and expected volatility of the price of the underlying Series D convertible redeemable preferred shares. The 2016 Warrants are then reclassified to equity following the Merger (Note 4). The assumptions used, including the market value of the underlying Series D convertible redeemable preferred shares and the expected volatility, were subjective unobservable inputs. Liabilities measured at fair value on a recurring basis are summarized below: Fair value measurement using: Quoted prices in active markets for identical assets (Level 1) Significant other observable inputs (Level 2) Unobservable inputs (Level 3) Fair value at December 31, 2016 $ $ $ $ Warrant liabilities - 1,344 1,344 Liabilities 1,344 1,344 There are no assets and liabilities measured at fair value on a recurring basis as of December 31, 2017. Warrant liabilities $ Fair value at January 1, 2016 - Increase in liability 1,332 Changes in the fair value 12 Fair value at December 31, 2016 1,344 Changes in the fair value 200 Fair value at August 18, 2017 1,544 Transfer to permanent equity (1,544 ) Fair value at December 31, 2017 - |
Parent Company Only Condensed F
Parent Company Only Condensed Financial Information | 12 Months Ended |
Dec. 31, 2019 | |
Condensed Financial Information Disclosure [Abstract] | |
PARENT COMPANY ONLY CONDENSED FINANCIAL INFORMATION | 27. PARENT COMPANY ONLY CONDENSED FINANCIAL INFORMATION Condensed balance sheets As of December 31, Note 2018 2019 $ $ ASSETS Current assets Cash and cash equivalents - - Prepaid expenses and other current assets 10,076 59 Amount due from related parties 6,893 4,575 Total current assets 16,969 4,634 Non-current assets Investments in subsidiaries and Consolidated VIEs (32,236 ) (35,378 ) Total non-current assets (32,236 ) (35,378 ) Total assets (15,267 ) (30,744 ) LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities Accrued expenses and other payables 6,911 10,738 Short-term bank and other borrowings - - Total current liabilities 6,911 10,738 Total liabilities 6,911 10,738 Shareholders' equity Additional paid-in capital 124,062 141,377 Accumulated deficit (144,097 ) (181,081 ) Accumulated other comprehensive loss (2,143 ) (1,778 ) Total shareholders' equity (deficit) (22,178 ) (41,482 ) Total liabilities and shareholders' equity (deficit) (15,267 ) (30,744 ) Condensed statements of operations For the years ended December 31, 2017 2018 2019 $ $ $ Operating Expenses General and administrative expenses (856 ) (15,018 ) (1,949 ) Operating loss (856 ) (15,018 ) (1,949 ) Interest expense (68 ) - - Share of profits (losses) of subsidiaries and Consolidated VIEs (18,601 ) (56,981 ) (24,010 ) Loss before income taxes (19,525 ) (71,999 ) (25,959 ) Income tax expense - - - Net loss (19,525 ) (71,999 ) (25,959 ) Condensed statements of comprehensive income (loss) For the years ended December 31, 2017 2018 2019 $ $ $ Net profit (loss) (12,569) (71,999) (25,959) Other comprehensive (loss) income, net of tax of nil: Foreign currency translation adjustments, net of tax of nil 2,119 (1,709 ) (121 ) Other comprehensive income (loss), net of tax of nil: Comprehensive income (loss) (10,450 ) (73,708 ) (26,080 ) Comprehensive income (loss) attributable to the Company's ordinary shareholders (10,450 ) (73,400 ) (26,584 ) Condensed statements of cash flows For the years ended December 31, 2017 2018 2019 $ $ $ Net cash generated from operating activities 4,118 - - Net cash used in investing activities (17,117 ) (10,048 ) - Net cash generated from (used in) financing activities 12,986 - - Net increase (decrease) in cash and cash equivalent and restricted cash (13 ) (10,048 ) - Cash and cash equivalent and restricted cash at beginning of the year 15 10,048 - Cash and cash equivalent and restricted cash at end of the year 2 - - Reconciliation of cash and cash equivalents and restricted cash Cash and cash equivalents at end of the year 2 - - Restricted cash at the end of the year - - - Total cash and cash equivalents and restricted cash at the end of year 2 - - (a) Basis of presentation In the Company-only financial statements, the Company's investment in subsidiaries is stated at cost plus equity in undistributed earnings of subsidiaries since inception. The Company records its investment in its subsidiary under the equity method of accounting as prescribed in ASC Subtopic 323-10, Investment-Equity Method and Joint Ventures The subsidiaries did not pay any dividends to the Company for the years presented. Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted and as such, these Company-only financial statements should be read in conjunction with the Company's consolidated financial statements. (b) Intercompany transactions The Company had the following related party balances as of December 31, 2018 and 2019: As of December 31, 2018 2019 $ $ Amount due from (to) related parties - Borqs HK (1,018 ) (3,286 ) - Borqs Beijing 7,911 7,862 |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2019 | |
Accounting Policies [Abstract] | |
Basis of presentation | (a) Basis of presentation The accompanying consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles ("U.S. GAAP"). |
Liquidity and going concern | (b) Liquidity and going concern The Group's consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and liquidation of liabilities during the normal course of operations. As of December 31, 2019, the Group had cash and cash equivalents of $1.0 million and restricted cash of $5.0 million and has generated a net loss from continuing operations of $31.6 million and cash inflows for continuing operations of $4.1 million for the year then ended. In addition, as disclosed in Note 11, the Group has certain bank and other borrowings in default or past due. The Group's funding secured during 2019 from the equity investment by Chongqing City Youtong Equity Investment Fund, LLP was sufficient to meet its normal operational needs for working capital and capital expenditures in the year 2019. The cash level at December 31, 2019 was not adequate for operations in the 2020 fiscal year and financing was needed; and the due to the COVID-19 pandemic, negative effects from slow collection from receivables and significant cancellation of otherwise signed purchase orders from customers were felt as early as January 2020. The Group's operations in the first six months of 2020 was reduced to minimal levels due to lock down of cities in India and in China, and our contracted manufacturing with third parties was also reduced to about one third of the previous year's volume. We had to rely on customer advances and short-term supply chain related load to sustain such minimal operation during the months affected most severely affected by the COVID-19 pandemic. Except for one significant customer in the U.S., all other purchase order from different countries of the world have been reduced or cancelled. The Group is in default with the terms of our loans and revolving credit lines Partners For Growth ("PFG") which is the prime lender. The Group is in negotiations with PFG5 to seek alternatives to either converting some of the loans into equities of the Group, and/or restructuring the borrowings; however, as of the filing of this annual report, definitive agreements with PFG have not been reached. The Group also has plans to raise funds based on equity and/or debt immediately after the filing of this annual report which will allow the Group to be back in compliance with rules and regulations of the SEC and Nasdaq. However, there is no assurance that the Group will be able to raise adequate funds at acceptable terms to fund its operations going forward. These conditions raise substantial doubt about the Group's ability to continue as a going concern. The consolidated financial statements have been prepared assuming that the Group will continue as a going concern and, accordingly, do not include any adjustments that might result from the outcome of this uncertainty. |
Principles of consolidation | (c) Principles of consolidation The consolidated financial statements include the financial statements of the Company, its subsidiaries and Consolidated VIEs, for which, the Company is the primary beneficiary. All significant inter-company transactions and balances between the Company, its subsidiaries and the Consolidated VIEs are eliminated upon consolidation. Results of its subsidiaries and its Consolidated VIEs are consolidated from the date on which control is transferred to the Company. |
Discontinued operations | (d) Discontinued operations A component of a reporting entity or a group of components of a reporting entity that are disposed or meet the criteria to be classified as held for sale, such as the management, having the authority to approve the action, commits to a plan to sell the disposal group, should be reported in discontinued operations if the disposal represents a strategic shift that has (or will have) a major effect on an entity's operations and financial results. Discontinued operations are reported when a component of an entity comprising operations and cash flows that can be clearly distinguished, operationally and for financial reporting purposes, from the rest of the entity is classified as held for disposal or has been disposed of, if the component either (1) represents a strategic shift or (2) have a major impact on an entity's financial results and operations. In the consolidated statement of operations, result from discontinued operations is reported separately from the income and expenses from continuing operations and prior periods are presented on a comparative basis. Cash flows for discontinued operations are presented separately in Note 1 (c). Assets and liabilities of the discontinued operations are classified as held for sale when the carrying amounts will be recovered principally through a sale transaction. |
Use of estimates | (e) Use of estimates The preparation of the consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the year. Areas where management uses subjective judgment include, but are not limited to, estimating the useful lives of long-lived assets and intangible assets and the subsequent impairment assessment of long-lived assets, intangible assets and goodwill, determining the provisions for accounts receivable, prepaid expenses and other current assets and inventories, determining the valuation allowance for deferred tax assets and accounting for deferred income taxes, uncertain tax benefits, determining the valuation for share-based compensation arrangements, warrants for Series D convertible redeemable preferred shares and beneficiary conversion feature on the Series E Preferred Shares. Changes in facts and circumstances may result in revised estimates. Actual results could differ from those estimates, and as such, differences may be material to the consolidated financial statements. |
Foreign currency | (f) Foreign currency The functional currency of the Group and its non-PRC subsidiaries, excluding Borqs India, is the United States dollar (“$”). The functional currency of Borqs India is Rupee (“INR”), whereas the functional currency of the Group’s PRC subsidiaries and its Consolidated VIEs is the Chinese Renminbi (“RMB”) as determined based on the criteria of ASC Topic 830, Foreign Currency Matters Assets and liabilities of the Group’s PRC subsidiaries are translated into $ at fiscal year-end exchange rates. Equity amounts are translated at historical exchange rates. Income and expense items are translated at average exchange rates prevailing during the fiscal year. Translation adjustments arising from translation of foreign currency financial statements are reported as cumulative translation adjustments and are shown as a separate component of other comprehensive income (loss) in the consolidated statements of comprehensive income (loss). |
Cash and cash equivalents | (g) Cash and cash equivalents Cash and cash equivalents consist of cash on hand and demand bank deposits which are unrestricted as to withdrawal and use have original maturities less than three months. All highly liquid investments with a stated maturity of 90 days or less from the date of purchase are classified as cash equivalents. |
Restricted cash | (h) Restricted cash Restricted cash mainly represents the deposits for a short-term loan with HSBC, and also short-term deposits with China United Network Communications Group Co., Ltd. ("China Unicom") as guarantee for minimum purchase requirements, which are not available for the Group's use until the end of contract period with China Unicom. The Company adopted Accounting Standards Update ("ASU") No. 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash, ("ASU 2016-18"), effective January 1, 2018 using the retrospective transition method and included all restricted cash with cash and cash equivalent when reconciling beginning-of-period and end-of-period total amounts presented in the consolidated statements of cash flows. |
Accounts receivable | (i) Accounts receivable Accounts receivable are carried at net realizable value. An allowance of doubtful accounts is recorded in the period when the collection of full amount is no longer probable. The Group reviews the accounts receivable on a periodic basis and makes specific allowances when there is doubt as to the collectability of individual balances. In evaluating the collectability of individual receivable balances, the Group considers many factors, including the age of the balance, the customer's payment history, its current credit-worthiness and current economic trends. As of December 31, 2019, the Group evaluated and created provision for doubtful debt for the accounts that were unlikely to be collected. As a result, such provisions of $21.9 million and $11.4 million were created for the 2018 and 2019 fiscal years, respectively. |
Inventories | (j) Inventories Inventories are stated at the lower of cost or market. Cost is determined using the first-in, first-out method. Adjustments to reduce the cost of inventories to its net market value are made, if required, for decreases in sales prices, obsolescence or similar reductions in the estimated net realizable value. Inventories provision of $1,782 and $1,513 were recorded as of December 31, 2018 and 2019, respectively. |
Property and equipment | (k) Property and equipment Property and equipment are stated at cost and are depreciated using the straight-line method over the estimated useful lives of the assets, as follows: Category Estimated useful life Computer and network equipment 3-5 years Office equipment 5 years Motor vehicles 5 years Leasehold improvements Over the shorter of lease term or the estimated useful lives of the assets Repair and maintenance costs are charged to expense as incurred, whereas the costs of betterments that extend the useful life of property and equipment are capitalized as additions to the related assets. Retirements, sale and disposals of assets are recorded by removing the cost and accumulated depreciation with any resulting gain or loss reflected in the consolidated statements of operations. |
Intangible assets | (l) Intangible assets Intangible assets are carried at cost less accumulated amortization and any recorded impairment. Intangible assets acquired in a business combination are recognized initially at fair value at the date of acquisition. Intangible assets with finite useful lives are amortized using the straight-line method. These amortization methods reflect the estimated pattern in which the economic benefits of the respective intangible assets are to be consumed. Development costs of software to be sold, leased, or otherwise marketed are subject to capitalization beginning when technological feasibility is reached and ending when the software is available for general release to customers, in accordance with ASC 350-20, Costs of Software to be Sold, Leased, or Marketed Intangible assets have weighted average useful lives from the date of purchase as follows: Purchased software 4.5 years MVNO license 10 years Capitalized software development costs 3 years Internal-use software 5 years |
Goodwill | (m) Goodwill Goodwill represents the excess of the purchase price over the amounts assigned to the fair value of the assets acquired and the liabilities assumed of an acquired business. The Group's goodwill as of December 31, 2018 and 2019 was related to its acquisition of Yuantel. In accordance with ASC Topic 350, Goodwill and Other Intangible Assets The performance of the impairment test in accordance to ASC 350 involves a two-step process. The first step of the impairment test involves comparing the fair value of the reporting unit with its carrying amount, including goodwill. Fair value is primarily determined by computing the future discounted cash flows expected to be generated by the reporting unit. If the reporting unit's carrying value exceeds its fair value, goodwill may be impaired. If this occurs, the Group performs the second step of the goodwill impairment test to determine the amount of impairment loss. The fair value of the reporting unit is allocated to its assets and liabilities in a manner similar to a purchase price allocation in order to determine the implied fair value of the reporting unit's goodwill. If the implied goodwill fair value is less than its carrying value, the difference is recognized an impairment loss. In accordance with ASC 350, the Group assigned and assessed goodwill for impairment at the reporting unit level. A reporting unit is an operating segment or one level below the operating segment. The Group has determined that it has two operating segments as its reporting units, namely Yuantel and Connected Solution. Goodwill is recorded at the Yuantel reporting unit. The Group evaluated all relevant factors including, but not limited to, macroeconomic conditions, industry and market conditions, financial performance, and the share price of the Company. The Group weighed all factors in their entirety and concluded that it was not more-likely-than-not the fair value was less than the carrying amount of the reporting unit, and further impairment testing on goodwill was unnecessary. No impairment loss of goodwill in Yuantel reporting unit were recognized during the years ended December 31, 2017, 2018 and 2019, respectively. |
Long-term investments | (n) Long-term investments The Group's long-term investments consist of cost method investment. In accordance with ASC Subtopic 325-20, Investments-Other: Cost Method Investments |
Impairment of long-lived assets | (o) Impairment of long-lived assets The Group evaluates its long-lived assets or asset group, including intangible assets with indefinite and finite lives, for impairment. Intangible assets with indefinite lives that are not subject to amortization are tested for impairment at least annually or more frequently if events or changes in circumstances indicate that the assets might be impaired in accordance with ASC 350. Such impairment test compares the fair values of assets with their carrying values with an impairment loss recognized when the carrying values exceed fair values. For long-lived assets and intangible assets with finite lives that are subject to depreciation and amortization are tested for impairment whenever events or changes in circumstances (such as a significant adverse change to market conditions that will impact the future use of the assets) indicate that the carrying amount of an asset or a Group of long-lived assets may not be recoverable. When these events occur, the Group evaluates impairment by comparing the carrying amount of the assets to future undiscounted net cash flows expected to result from the use of the assets and their eventual disposition. If the sum of the expected undiscounted cash flows is less than the carrying amount of the assets, the Group would recognize an impairment loss based on the excess of the carrying amount of the asset group over its fair value. The impairment loss of long-lived assets was nil, $13,000 and nil for the years ended December 31, 2017, 2018 and 2019, respectively, based on the impairment test performed. |
Fair value of financial instruments | (p) Fair value of financial instruments The Group's financial instruments include cash and cash equivalents, restricted cash, accounts receivable and payable, accounts receivable from related parties, receivable from MVNO franchisees, short-term bank and other borrowings and long-term bank borrowings. Other than the long-term bank borrowings, the carrying values of these financial instruments approximate their fair values due to their short-term maturities. The carrying amounts of long-term bank borrowings approximated their fair values since they bear interest rates which approximate market interest rates. The Group applies ASC Topic 820, Fair Value Measurements and Disclosures ASC 820 establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows: Level 1 — Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets. Level 2 — Other inputs that are directly or indirectly observable in the marketplace. Level 3 — Unobservable inputs which are supported by little or no market activity. ASC 820 describes three main approaches to measuring the fair value of assets and liabilities: (1) market approach; (2) income approach; and (3) cost approach. The market approach uses prices and other relevant information generated from market transactions involving identical or comparable assets or liabilities. The income approach uses valuation techniques to convert future amounts to a single present value amount. The measurement is based on the value indicated by current market expectations about those future amounts. The cost approach is based on the amount that would currently be required to replace an asset. During the years ended December 31, 2018 and 2019, there were no financial instrument measured at fair value. |
Revenue recognition | (q) Revenue recognition The Group is mainly engaged in the business of providing 1) Android+ platform solutions and services, 2) hardware product sales, and 3) MVNO services. The Group adopted the new revenue recognition standards, or ASC 606, effective January 1, 2019 using the modified retrospective method for contracts which were not completed at the date of initial adoption. In accordance with ASC Topic 606, revenues are recognized when control of the promised goods or services is transferred to the Group's customers, in an amount that reflects the consideration the Group expects to be entitled to in exchange for those goods or services. In determining when and how much revenue is recognized from contracts with customers, the Group performs the following five-step analysis: (1) identify the contract(s) with a customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to the performance obligations in the contract; (5) recognize revenue when (or as) the entity satisfies a performance obligation. When either party to a contract has performed, the Group presents the contract in the consolidated balance sheet as a contract asset or a contract liability, depending on the relationship between the entity's performance and the customer's payment. A contract asset is the Group's right to consideration in exchange for goods and services that the Group has transferred to a customer. A receivable is recorded when the Group has an unconditional right to consideration, and it is probable that substantially all of the consideration will be collected. If a customer pays consideration or the Group has a right to an amount of consideration that is unconditional, before the Group transfers a good or service to the customer, the Group presents the contract liability when the payment is made or a receivable is recorded (whichever is earlier). A contract liability is the Group's obligation to transfer goods or services to a customer for which the Group has received consideration (or an amount of consideration is due) from the customer. The Group's contract with customers do not include significant financing component and material variable consideration. Generally, the Group recognizes revenue under ASC Topic 606 for each type of its major revenue streams as follows: 1. Android+ platform solutions and services Android+ platform solutions The Group provides customized Android+ software platform solutions that are developed to maximize the commercial grade quality or performance of open source Android+ software for integration with particular chipsets. The Group also provides customized Android+ service platform solutions that are end-to-end software developed for mobile operators to allow data synchronization between their platform and mobile devices. The Group charges its customers, mainly including mobile device manufacturers and mobile operators, fixed fees for project-based software contracts, as well as per chip or per mobile device royalty fees. There are executed contracts and purchase orders between the Group and each customer, and each party's rights regarding the service to be rendered are written on the contracts. For this type of customers, the Group enters contract with them, which has the commercial substance to identify each party's rights and obligations. There are two major performance obligations in the contracts with this type of customers: the delivery of the software product and the completion of the post-contract-service ("PCS "). The allocation of the transaction price between the two major performance obligations is based on the estimated standalone selling prices. The selling price for the performance obligation of PCS is estimated as the reasonable cost budget plus a margin or industrial standard. The rest of the transaction price other than the reasonable cost budget plus a margin for PCS will be allocated to the performance obligation of the delivery of the software product. For the sales derived from software development project in which the customer's contract specifies the technical requirements of the software product, the Group recognizes revenue in accordance with the satisfaction of each performance obligation. For the performance obligation of the delivery of the software product, the Group recognizes the revenue at the point of time, upon the customers sign off the final acceptance. For the performance obligation of the completion of PCS Period, the Group recognizes the revenue over the period of the PCS Period. Service contracts The Group provides research and development services to certain customers for their mobile-computing related development projects where fees are charged on a time and material basis and the Group is not responsible for the outcome of such development projects. The revenue is recognized proportionately over the time. The Group elects right to invoice expedient as the measure of progress. The revenue arising from contracts related to Android+ platform solutions and services is included as "Software Revenues" on the Group's consolidated statement of operations. 2. Hardware product sales The Group provides total solutions on original design manufacturer ("ODM") basis to customers of mobile devices. The Group recognizes revenue at the point of time, upon the delivery of products to customers, which is when the goods delivered to the designated address and it is probable that substantially all of the consideration will be collected. Warranty is provided to all customers, which is not considered an additional service; rather, an integral part of the product sales. ASC Topic 450, Contingencies, specifically addresses the accounting for standard warranties. The Group believes that accounting for its standard warranty pursuant to ASC 450 does not impact revenue recognition because the cost of honoring the warranty can be reliably estimated. The Group has determined the likelihood of claims arising from warranties to be remote based on strong quality control procedures in the production process and historical experience with regard to claims being made by customers. The basis for the warranty accrual will be reviewed periodically based on actual experience. The Group does not sell extended warranty coverage. The revenue arising from contracts related to hardware product sales is included as "Hardware Revenues" on the Group's consolidated statement of operations. 3. MVNO On July 11, 2014, the Group, through the VIE, acquired and obtained control of Yuantel, which mainly operates the MVNO business. The license to operate such MVNO business is issued by the Chinese Ministry of Industry and Information Technology and the core mobile network is provided by the PRC government owned China Unicom. Yuantel receives wholesale rates for mobile voice and data services from China Unicom and repackages the voice and data services into competitive bundles for Chinese consumers. In accordance with ASC Subtopic 606-10-55, the Group is the principal in providing the bundled voice and data services to Chinese consumers, thus revenue is recognized on a gross basis. As sales of bundled services are mostly pre-paid by the consumers, cash received in advance of voice and data consumption are recognized as advances from customers. Revenue is recognized over the time by measuring the consumption of the time of voice and the amount of data. Pre-paid bundled services do not expire. The revenue arising from contracts related to MVNO business is included in the line of "(Loss) income from operations of discontinued entities" on the Group's consolidated statement of operations. Impact of initial adoption As result of the adoption of ASC Subtopic 606, we made an adjustment to increase the opening balance of retained earnings as of January 1, 2019 by US$ 930. In accordance with Topic 606, the disclosure of the impact of adoption on the consolidated statements of balance sheets and operations was as follows: Year Ended December 31, 2019 As Reported Amounts without adoption of Topic 606 Effect of Change Higher/(Lower) (US$ in thousands) Revenue: Software* 14,975 9,648 5,327 Hardware 83,983 83,983 - Total net revenues 98,958 93,631 5,327 Cost of revenue: Software (17,822 ) (12,092 ) (5,730 ) Hardware (80,567 ) (80,567 ) - Total cost of revenue (98,389 ) (92,659 ) (5,730 ) Total gross profit (loss) 569 972 (403 ) Operating expense: Sales and marketing expenses (1,524 ) (1,524 ) - General and administrative expenses (24,776 ) (24,776 ) - Research and development expenses (5,277 ) (4,082 ) (1,195 ) Total operating expense (31,578 ) (30,382 ) (1,195 ) Net income (loss) from continuing operations (31,583 ) (29,984 ) (1,599 ) Basic income (loss) per share (0.88 ) (0.84 ) (0.04 ) Diluted income (loss) per share (0.88 ) (0.84 ) (0.04 ) December 31, 2019 As Reported Balances without adoption of Topic 606 Effect of Change Higher/(Lower) (US$ in thousands) Deferred cost of revenues - current - 2,308 (2,308 ) Deferred cost of revenues - non-current - 4,617 (4,617 ) Advances from customers - 6,538 (6,538 ) Contract liabilities 6,538 - 6,538 Deferred revenues – current * 84 5,411 (5,327 ) Accumulated deficit (179,672 ) (178,073 ) (1,599 ) * For the contracts related to Android+ platform solutions, the Group initially defers and then recognizes the entire revenue from the contracts through the PCS period under ASC 605, and recognizes the revenue derived from the performance obligation of the delivery of software at a point in time when the customers sign off the acceptance in accordance with ASC 606. Practical expedients and exemptions Besides the right to invoice expedients, the Group generally expenses sales commissions if any incurred because the amortization period would have been one year or less. Remaining performance obligations The following table includes estimated revenue expected to be recognized in the future related to performance obligations that are unsatisfied or partially unsatisified at the end of the reporting period. 2020 2021 2022 (US$ in thousands) Software development service 2,019 524 165 Hardware product sales 2,589 452 789 |
Contract Costs | (r) Contract Costs Costs of fulfilling a contract are recognized as an asset if those costs meet all the following criteria: (1) the costs relate directly to a contract that the Group can specifically identify; (2) the costs generate or enhance resources of the Group that will be used in satisfying performance obligations in the future; (b) the costs are expected to be recovered. The Group chooses to use consistent method to amortize such contract costs, with the timing of the transfer of goods and services to customers. Over time, the carrying amount of the contract costs may become impaired. |
Contract Liabilities | (s) Contract Liabilities Contract liabilities primarily relate to multiple element arrangements for which billing has occurred but transfer of control of all elements to the customer has either partially or not occurred at the balance sheet date. This includes cash received from customers for services or products in advance of the transfer of control. For the year ended December 31, 2019, the Group recognized revenue of $7,227 that was included in the advances from customers and deferred revenue at January 1, 2019. |
Cost of revenues | (t) Cost of revenues Cost of revenues consists primarily of telecommunication costs, depreciation of long-lived assets, amortization of acquired intangible asset, payroll and other related costs of operations. Deferred cost of revenues was $6,931 and $nil for the years ended December 31, 2018 and 2019, respectively. |
Advertising expenditures | (u) Advertising expenditures Advertising expenditures are expensed as incurred and are included in sales and marketing expenses, which amounted to $20, $29 and nil for the years ended December 31, 2017, 2018 and 2019, respectively. |
Research and development expenses | (v) Research and development expenses Research and development expenses include payroll, employee benefits, and other headcount-related expenses associated with research and platform development. Research and development expenses also include rent, depreciation and other related expenses. Research and development expenses are expensed as incurred. |
Government grants | (w) Government grants Government grants are provided by the relevant PRC municipal government authorities to subsidize the cost of certain technology development projects. The amount of such government grants are determined solely at the discretion of the relevant government authorities and there is no assurance that the Group will continue to receive these government grants in the future. Government grants are recognized when it is probable that the Group will comply with the conditions attached to them, and the grants are received. When the grant relates to an expense item, it is recognized in the consolidated statement of operations over the period necessary to match the grant on a systematic basis to the costs that it is intended to compensate, as a reduction of the related operating expense. When the grant relates to an asset, it is recognized as deferred government grants and released to the consolidated statement of operations in equal amounts over the expected useful life of the related asset, when operational, as a reduction of the related depreciation expense. |
Leases | (x) Leases On January 1, 2019, the Group adopted ASU No. 2016-02, Leases (Topic 842), as amended, which supersedes the lease accounting guidance under Topic 840, and generally requires lessees to recognize operating and financing lease liabilities and corresponding right-of-use assets on the balance sheet and to provide enhanced disclosures surrounding the amount, timing and uncertainty of cash flows arising from leasing arrangements. The Group elected to apply practical expedients permitted under the transition method that allow the Group to use the beginning of the period of adoption as the date of initial application, to not recognize lease assets and lease liabilities for leases with a term of twelve months or less, to not separate non-lease components from lease components, and to not reassess lease classification, treatment of initial direct costs, or whether an existing or expired contract contains a lease. The Group used modified retrospective method and did not adjust the prior comparative periods. Under the new lease standard, the Group determines if an arrangement is or contains a lease at inception. Right-of-use assets and liabilities are recognized at lease commencement date based on the present value of remaining lease payments over the lease terms. The Group considers only payments that are fixed and determinable at the time of lease commencement. ASC 842 requires a lessee to discount its unpaid lease payments using the interest rate implicit in the lease or, if that rate cannot be readily determined, its incremental borrowing rate. As most of the Group's leases do not provide an implicit rate, the Group uses its incremental borrowing rate as the discount rate for the lease. The Group's incremental borrowing rate is estimated to approximate the interest rate on a collateralized basis with similar terms and payments. The right-of-use asset is initially measured at cost, which comprises the initial amount of the lease liability adjusted for lease payments made at or before the lease commencement date, plus any initial direct costs incurred less any lease incentives received. The Group's lease terms may include options to extend or terminate the lease. Renewal options are considered within the right-of-use assets and lease liability when it is reasonably certain that the Group will exercise that option. Lease expense for lease payments is recognized on a straight-line basis over the lease term. As a result of the adoption, the Group recognized approximately $2,201 of right-of-use assets and operating lease liabilities of $2,193 on the consolidated balance sheet as of January 1, 2019. The adoption had no material impact on the Group's consolidated statements of operations and comprehensive loss for the year ended December 31, 2019 or the opening balances of retained earnings as of January 1, 2019. |
Income taxes | (y) Income taxes The Group accounts for income taxes using the liability method. Current income taxes are provided for in accordance with the laws of the relevant tax authorities. Under this method, deferred tax assets and liabilities are determined based on the difference between the financial reporting and tax bases of assets and liabilities using enacted tax rates that will be in effect in the period in which the differences are expected to reverse. The Group records a valuation allowance against deferred tax assets if, based on the weight of available evidence, it is more-likely-than-not that some portion, or all, of the deferred tax assets will not be realized. The effect on deferred taxes of a change in tax rates is recognized in income in the period that includes the enactment date. The Group applies ASC Topic 740, Accounting for Income Taxes |
Subscriptions receivable | (z) Subscriptions receivable Subscriptions receivable included investment amounts in the form of (i) real property to be provided by Chongqing Youtong to the Group in exchange for shares of the Company, (ii) ownership of KADI that has been contemplated to be sold to the Group in exchange for shares of the Group, and (iii) escrow shares to Samsung in the year 2019 as security for arbitration compensation. Since the shares in all these cases have already been issued, the amounts of the real property from Chongqing Youtong and ownership of KADI were recorded as subscriptions receivable on the equity section of the Group's consolidated balance sheet as of December 31, 2019. |
Share-based compensation | (aa) Share-based compensation The Group accounts for share-based compensation in accordance with ASC Topic 718, Compensation-Stock Compensation: Overall In accordance with ASC 718, the Group determines whether an award should be classified and accounted for as a liability award or equity award. All grants of share-based awards to employees classified as equity awards are measured based on their grant date fair values and recognized as compensation expense over the requisite service period and/or performance period in the consolidated statements of operations. The Group recognizes compensation expense using the accelerated method for share-based awards granted with service and performance conditions. According to ASC 718, the amount of compensation cost recognized (or attributed) when achievement of a performance condition is probable depends on the relative satisfaction of the performance condition based on performance to date. According to ASC 718, probable means the future event or events are likely to occur and the Group interprets "probable" to be generally in excess of a 70% likelihood of occurrence. The Group elected to account for forfeitures as they occur. |
Comprehensive income (loss) | (bb) Comprehensive income (loss) Comprehensive income (loss) is defined as the increase (decrease) in equity of the Group during a period from transactions and other events and circumstances excluding transactions resulting from investments by owners and distributions to owners. Accumulated other comprehensive loss of the Group includes foreign currency translation adjustments related to the Group and its PRC subsidiaries, whose functional currency is RMB. |
Segment reporting | (cc) Segment reporting In accordance with ASC Topic 280, Segment Reporting As discussed in Note 1(c), in November 2018, assets and liabilities related to Yuantel were reclassified as held for sale and revenues and expenses related to Yuantel segment were reclassified in the accompanying consolidated financial statements as discontinued operations for all periods presented. The continuing operations, Connected Solution remains as the single operating segment and the reportable segment. |
Employee benefits | (dd) Employee benefits The full-time employees of the Group's PRC subsidiaries are entitled to staff welfare benefits including medical care, housing fund, pension benefits and unemployment insurance, which are governmental mandated defined contribution plans. These entities are required to accrue for these benefits based on certain percentages of the employees' respective salaries, subject to certain ceilings, in accordance with the relevant PRC regulations, and make cash contributions to the state-sponsored plans out of the amounts accrued. |
(Loss) earnings per share | (ee) (Loss) earnings per share (Loss) earnings per share is computed by dividing net (loss) income attributable to ordinary shareholders by the weighted average number of ordinary shares outstanding during the period using the two-class method. Under the two-class method, net income is allocated between ordinary shares and other participating securities based on their participating rights. The Group's Convertible Redeemable Preferred Shares (Note 21) were participating securities. As the participating securities do not share the losses of the Group, the computation of basic earnings per share using two-class method is not applicable when the Group is at a net loss position. Diluted (loss) earnings per share is calculated by dividing net (loss) income attributable to ordinary shareholders by the weighted average number of ordinary and dilutive ordinary equivalent shares outstanding during the period. Ordinary equivalent shares consist of shares issuable upon the exercise of share options using the treasury stock method and shares issuable upon the exercise of the Group's warrant using the if-converted method. Ordinary equivalent shares are not included in the denominator of the diluted (loss) earnings per share calculation when inclusion of such shares would be anti-dilutive. |
Recent accounting pronouncements | (ff) Recent accounting pronouncements In December 2019, the FASB issued ASU No. 2019-12, Simplifying the Accounting for Income Taxes, as part of its initiative to reduce complexity in accounting standards. The amendments in the ASU are effective for fiscal years beginning after December 15, 2020, including interim periods therein. Early adoption of the standard is permitted, including adoption in interim or annual periods for which financial statements have not yet been issued. The Group plans to adopt the ASU prospectively on January 1, 2021. The ASU is currently not expected to have a material impact on the consolidated financial statements. In January 2020, the FASB issued ASU No. 2020-01, Investments—Equity Securities (Topic 321), Investments—Equity Method and Joint Ventures (Topic 323), and Derivatives and Hedging (Topic 815)—Clarifying the Interactions between Topic 321, Topic 323, and Topic 815 (a consensus of the Emerging Issues Task Force). The amendments in this update clarify the interaction of the accounting for equity securities under Topic 321 and investments accounted for under the equity method of accounting in Topic 323 and the accounting for certain forward contracts and purchased options accounted for under Topic 815. For public business entities, the amendments in this Update are effective for fiscal years beginning after December 15, 2020, and interim periods within those fiscal years. For all other entities, the amendments are effective for fiscal years beginning after December 15, 2021, and interim periods within those fiscal years. Early adoption is permitted. The ASU is currently not expected to have a material impact on the consolidated financial statements. In March 2020, the FASB issued ASU No. 2020-03, Codification Improvements to Financial Instruments. The amendments in this Update are effective for all entities as of March 12, 2020 through December 31, 2022. The amendments related to Issue 1 ("Fair Value Option Disclosures"), Issue 2 ("Applicability of Portfolio Exception in Topic 820 to Nonfinancial Items"), Issue 4("Cross-Reference to Line of-Credit or Revolving-Debt Arrangements Guidance in Subtopic 470-50"), and Issue 5 ("Cross-Reference to Net Asset Value Practical Expedient in Subtopic 820-10") are conforming amendments. For public business entities, the amendments are effective upon issuance of this final Update. For all other entities, the amendments are effective for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years beginning after December 15, 2020. Early application is permitted. The amendment related to Issue 3 ("Disclosures for Depository and Lending Institutions") is a conforming amendment that affects the guidance in the amendments in Accounting Standards Update 2019-04, Codification Improvements to Topic 326, Financial Instruments—Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments. That guidance relates to the amendments in 2016-01, Financial Instruments—Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities. The effective date of Update 2019-04 for the amendments to Update 2016-01 is for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. The amendments of Issues 6 ("Interaction of Topic 842 and Topic 326") clarify that the contractual term of a net investment in a lease determined in accordance with Topic 842 should be the contractual term used to measure expected credit losses under Topic 326. The amendments of Issues 6 clarify that when an entity regains control of financial assets sold, an allowance for credit losses should be recorded in accordance with Topic 326. For entities that have not yet adopted the amendments related to Update 2016-13, the effective dates and the transition requirements for amendments of Issue 6 and Issue 7 ("Interaction of Topic 326 and Subtopic 860-20") are the same as the effective date and transition requirements in Update 2016-13. For entities that have adopted the guidance in Update 2016-13, the amendments of Issue 6 and Issue 7 are effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. For those entities, the amendments should be applied on a modified-retrospective basis by means of a cumulative-effect adjustment to opening retained earnings in the statement of financial position as of the date that an entity adopted the amendments in Update 2016-13. The ASU is currently not expected to have a material impact on the consolidated financial statements. Other accounting pronouncements that have been issued or proposed by the FASB or other standards-setting bodies that do not require adoption until a future date are not expected to have a material impact on the Group's consolidated financial position and results of operations upon adoption. In August 2018, the FASB issued ASU No. 2018-13, Fair Value Measurement |
Organization (Tables)
Organization (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Schedule of variable interest entities | Entity Date of Acquisition Place of Percentage of Principal Direct Subsidiaries: BORQS International July 27, 2007 Cayman 100 % Holding company BORQS Hong Kong Limited ("Borqs HK") July 19, 2007 Hong Kong 100 % Provision of software and service solutions and hardware products sales BORQS Beijing Ltd. ("Borqs Beijing") (1) September 4, 2007 PRC 100 % Provision of software and service solutions and hardware products sales BORQS Software Solutions Private Limited ("Borqs India") July 17, 2009 India 100 % Provision of software and service solutions VIE (discontinued): Beijing Big Cloud Network Technology Co., Ltd. ("Big Cloud Network") (1) / (2) April 18, 2014 PRC Nil Holding company Subsidiaries of the VIE: Yuantel (Beijing) Investment Management Co., Ltd. ("Yuantel") (2) / (3) / (4) July 11, 2014 PRC 45 % Holding company Yuantel (Beijing) Telecommunications Technology Co., Ltd. ("Yuantel Telecom") (2) / (3) / (4) July 11, 2014 PRC 45 % Provision of MVNO and other services (1) Collectively, the "PRC Subsidiaries". (2) Collectively, the "Consolidated VIEs". (3) On July 11, 2014, Borqs International through Big Cloud Network acquired the controlling interest in Yuantel and its subsidiary. (4) We are in the process of selling Yuantel Telecom. In the process of this sales, the Group owned 45% of Yuantel (Beijing) Investment Management which owned 100% of Yuantel Telecom and therefore we effectively owned 45% of Yuantel Telecom as of December 31, 2019. |
Schedule of wholly owned consolidated VIEs and the subsidiaries | As of December 31, 2018 2019 $ $ Carrying amounts of major classes of assets included as part of the assets held for sale Cash and cash equivalents 336 1,528 Restricted cash 708 768 Accounts receivable 97 1,614 Receivable from MVNO franchisees 377 374 Inventories 154 210 Prepaid expenses and other current assets 883 1,503 Current assets held for sale 2,555 5,997 Property and equipment, net 637 719 Intangible assets, net 7,175 7,786 Goodwill 701 689 Deferred tax assets - - Other non-current assets 1,908 1,111 Non-current assets held for sale 10,421 10,305 Total assets of the Consolidated VIEs classified as held for sale in the Consolidated Balance Sheets 12,976 16,302 Carrying amounts of major classes of liabilities included as part of liabilities held for sale Accounts payable 1,739 6,317 Accrued expenses and other payables 4,055 9,715 Amounts due to continuing operations 9,354 933 Advances from customers 50 4,018 Deferred revenues 3,491 - Short-term bank borrowings 36 - Current liabilities held for sale 18,725 20,983 Deferred tax liabilities 1,779 1,750 Non-current liabilities held for sale 1,779 1,750 Total liabilities of the Consolidated VIEs classified as held for sale in the Consolidated Balance Sheets 20,504 22,733 For the years ended December 31, 2017 2018 2019 $ $ $ Net revenues 32,074 27,359 39,836 Cost of revenues (23,647 ) (18,587 ) (24,748 ) Total gross profit 8,427 8,772 15,088 Operating expenses: Sales and marketing expenses (4,979 ) (5,067 ) (13,213 ) General and administrative expenses (2,702 ) (3,691 ) (4,907 ) Research and development expenses (249 ) (1,320 ) (1,147 ) Asset impairment loss - - Total operating expenses (7,930 ) (10,078 ) (19,267 ) Other operating income - - - Operating (loss) income 497 (1,306 ) (4,179 ) Interest income (expense), net (35 ) 10 28 Other (expense) income, net (54 ) (4 ) - (Loss) income from discontinued operation, before income taxes 408 (1,300 ) (4,151 ) Income tax benefit (expense) 23 (1,641 ) - (Loss) income from discontinued operations 431 (2,941 ) (4,151 ) Less: net income (loss) attributable to noncontrolling interest 292 (131 ) (1,330 ) Net income (loss) attributable to Borqs Technologies, Inc. 139 (2,810 ) (2,821 ) For the Years Ended December 31, 2017 2018 2019 $ $ $ CASH FLOWS FROM OPERATING ACTIVITIES Net (loss) income 431 (2,941 ) (4,151 ) Adjustments to reconcile net (loss) income to net cash used in operating activities: Impairment of doubtful debt - - 2,241 MNVO BU management compensation - - 1,497 Provision on prepaid expenses and other current assets - 2,617 - Depreciation of property and equipment 232 269 - Amortization of intangible assets 1,108 975 - Deferred income tax benefits (23 ) 1,641 (29 ) Changes in operating assets and liabilities 1,241 (3,972 ) (1,321 ) Net cash (used in) generated from operating activities 2,989 (1,411 ) (1,763 ) CASH FLOWS FROM INVESTING ACTIVITIES Purchases of property and equipment (204 ) (80 ) (92 ) Purchases of intangible assets (77 ) (1,011 ) (706 ) Proceeds from disposal of non-controlling interest - - 5,296 Payments to acquiring non-controlling interest - - (1,497 ) Net cash used in investing activities (281 ) (1,091 ) 3,001 CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from short-term bank and other borrowings - 36 - Repayments of short-term bank and other borrowings (765 ) - (36 ) Net cash generated from (used in) financing activities (765 ) 36 (36 ) Effect of foreign exchange rate changes on cash and short-term investment - - 50 Net change in cash and cash equivalents and restricted cash 1,943 (2,466 ) 1,252 Cash and cash equivalents and restricted cash at beginning of year 1,567 3,510 1,044 Cash and cash equivalents and restricted cash at end of year 3,510 1,044 2,296 |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Accounting Policies [Abstract] | |
Schedule of property and equipment estimated useful lives | Category Estimated useful life Computer and network equipment 3-5 years Office equipment 5 years Motor vehicles 5 years Leasehold improvements Over the shorter of lease term or the estimated useful lives of the assets |
Schedule of intangible assets weighted average useful lives | Purchased software 4.5 years MVNO license 10 years Capitalized software development costs 3 years Internal-use software 5 years |
Schedule of impact of adoption consolidated balance sheets | Year Ended December 31, 2019 As Reported Amounts without adoption of Topic 606 Effect of Change Higher/(Lower) (US$ in thousands) Revenue: Software* 14,975 9,648 5,327 Hardware 83,983 83,983 - Total net revenues 98,958 93,631 5,327 Cost of revenue: Software (17,822 ) (12,092 ) (5,730 ) Hardware (80,567 ) (80,567 ) - Total cost of revenue (98,389 ) (92,659 ) (5,730 ) Total gross profit (loss) 569 972 (403 ) Operating expense: Sales and marketing expenses (1,524 ) (1,524 ) - General and administrative expenses (24,776 ) (24,776 ) - Research and development expenses (5,277 ) (4,082 ) (1,195 ) Total operating expense (31,578 ) (30,382 ) (1,195 ) Net income (loss) from continuing operations (31,583 ) (29,984 ) (1,599 ) Basic income (loss) per share (0.88 ) (0.84 ) (0.04 ) Diluted income (loss) per share (0.88 ) (0.84 ) (0.04 ) December 31, 2019 As Reported Balances without adoption of Topic 606 Effect of Change Higher/(Lower) (US$ in thousands) Deferred cost of revenues - current - 2,308 (2,308 ) Deferred cost of revenues - non-current - 4,617 (4,617 ) Advances from customers - 6,538 (6,538 ) Contract liabilities 6,538 - 6,538 Deferred revenues – current * 84 5,411 (5,327 ) Accumulated deficit (179,672 ) (178,073 ) (1,599 ) * For the contracts related to Android+ platform solutions, the Group initially defers and then recognizes the entire revenue from the contracts through the PCS period under ASC 605, and recognizes the revenue derived from the performance obligation of the delivery of software at a point in time when the customers sign off the acceptance in accordance with ASC 606. 2020 2021 2022 (US$ in thousands) Software development service 2,019 524 165 Hardware product sales 2,589 452 789 |
Inventories, Net (Tables)
Inventories, Net (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Inventory Disclosure [Abstract] | |
Schedule of inventories | As of December 31, 2018 2019 $ $ Raw materials 6,056 4,107 Goods in transit 1,443 - Work in process 155 908 Finished goods 917 1,041 8,570 6,056 Less: provision (1,782 ) (1,513 ) Inventories, net 6,788 4,543 |
Prepaid Expenses and Other Cu_2
Prepaid Expenses and Other Current Assets, Net (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |
Schedule of prepaid expenses and other current assets | As of December 31, 2018 2019 $ $ Staff advances 303 301 Prepayment for products 812 1,539 Advance to OEMs 11,479 15,897 Rental and other deposits 591 718 VAT recoverable 2,610 2,400 Receivable from an agent 1,545 6,410 Prepayment for share repurchase 10,048 - Rebate receivable - 1,448 Others 198 124 27,586 28,837 Less: provision (570 ) (12,871 ) 27,016 15,966 |
Right of Use Assets (Tables)
Right of Use Assets (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Right of Use Assets [Abstract] | |
Schedule of future lease payments under operating leases | As of 2019 $ 2020 827 Total lease payments 827 Less: imputed interest 13 Present value of lease liabilities 814 |
Schedule of future minimum lease payments under non-cancelable operating lease agreements | Year Ended December 31 Amount $ 2019 1,528 2020 827 Total 2,355 |
Property and Equipment, Net (Ta
Property and Equipment, Net (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Property, Plant and Equipment [Abstract] | |
Schedule of property and equipment | As of December 31, 2018 2019 $ $ At cost: Leasehold improvements 846 833 Computer and network equipment 4,367 4,305 Office equipment 900 925 Motor vehicles 218 184 6,331 6,247 Less: accumulated depreciation (6,026 ) (6,006 ) 305 241 |
Schedule of depreciation expense on property and equipment | For the years ended December 31, 2017 2018 2019 $ $ $ Cost of revenues 266 104 46 Sales and marketing expenses 25 3 1 General and administrative expenses 63 47 53 Research and development expenses 158 110 75 512 264 175 |
Intangible Assets, Net (Tables)
Intangible Assets, Net (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of presents the Group's intangible assets as of the respective balance sheet dates | Software Capitalized software Total $ $ $ Balance as of January 1, 2018 74 11,600 11,674 Additions - 5,347 5,347 Amortization expense (28 ) (5,250 ) (5,278 ) Foreign currency translation difference (3 ) (298 ) (301 ) Balance as of December 31, 2018 43 11,399 11,442 Additions 1 4,030 4,031 Amortization expense (20 ) (5,965 ) (5,985 ) Foreign currency translation difference - (58 ) (58 ) Balance as of December 31, 2019 24 9,406 9,430 |
Schedule of estimated amortization expenses for the intangible assets | $ 2020 5,251 2021 2,988 2022 1,191 9,430 |
Bank and Other Borrowings (Tabl
Bank and Other Borrowings (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Debt Disclosure [Abstract] | |
Schedule of bank and other borrowings | As of December 31, 2018 2019 $ $ Short-term bank and other borrowings (i) 11,010 5,000 Long-term bank borrowings, current portion (ii) 5,770 12,975 16,780 17,975 Long-term bank borrowings, non-current portion (ii) - - Total borrowings 16,780 17,975 (i) The short-term bank and other borrowings outstanding as of December 31, 2018 and December 31, 2019 bore a weighted average interest rate of 13.92% and 13.76% per annum, respectively, and were denominated in RMB, INR and US$. These borrowings were obtained from financial institutions, a third-party entity and a related party (Note 18). The outstanding balances as of December 31, 2018 and 2019 were comprised of the following loans: a) The Group entered into a line of credit facility amounted to $8,623 with SPD Silicon Valley Bank Co., Ltd, a PRC banking institution (“SSVB”) in 2015, which had an original maturity date of August 31, 2018. The outstanding principal balance as of December 31, 2017 was $7,648 and an additional $956 was drawn during 2018. The outstanding principal balance as of December 31, 2018 was $8,604. The loan was payable on demand as of December 31, 2017 and 2018 due to the Group having breached a financial covenant under the loan. The loan bore an interest rate of 8% per annum based on the LIBOR rate. The Company paid interest of $521 and $168 during the years ended December 31, 2018 and 2019. The principal balance of $8,604 remaining as of December 31, 2018 was fully repaid in March 2019. b) On November 28, 2017, the Group entered into a short-term loan agreement with HHMC Microelectronic Co., Limited (“HHMC’) for $5,000 bearing an interest rate of 0.04% per day, to fund the Company’s working capital purposes. The loan had an original term of three months. According to the agreement, the interest rate increased to 0.1% per day from February 28, 2018 prospectively when the loan became overdue. The outstanding principal balance as of December 31, 2017 was $5,000 of which $2,595 was repaid during 2018. The accrued interest of $68 as of December 31, 2017 was fully paid in 2018. The outstanding principal balance as of December 31, 2018 was $2,405. The accrued interest of $1,080 as of December 31, 2018 was fully repaid in 2018 and the remaining principal is fully repaid in June 2019. The accrued interest of US$456 as of December 31, 2019 was fully paid in 2019. (ii) The long-term bank borrowings as of December 31, 2018 and 2019 were loans from Partners For Growth IV, L.P. (“PFG4”) and Partners For Growth V, L.P (“PFG5”) that are financial institutions located in the United States, bearing weighted average interest rates of 8.40% and 10.07% per annum, respectively. The loans were denominated in US$. The outstanding loans as of December 31, 2018 and 2019 were comprised of the following loans and prior loans: a) On April 30, 2018, the Group entered into a long-term loan agreement with PFG5 for $3,000, bearing an interest rate of 8% per annum from May 1, 2018 to October 31, 2018 and an interest rate of 12% per annum from November 1, 2018 to April 30, 2021, which is the maturity date. The outstanding principal balance as of December 31, 2018 was $3,146 and accrued interests of $185 was fully repaid in 2018. The accrued interest of US$420 as of December 31, 2019 was fully paid in 2019. b) On December 17, 2018, the Group entered into a convertible term loan agreement (the “PFG note”) with PFG5, bearing an interest rate of 12% per annum. The principal of this loan is $1,000 which matures in full on December 17, 2023. The outstanding principal balance of $1,000 as of December 31, 2018 and accrued interest of $5 was fully repaid in December 2018. At any time while the PFG note was outstanding, upon notice only, PFG may elect to convert the PFG note into 208,768 ordinary shares of the Company at the conversion price of $4.79 per share. The accrued interest of US$159 as of December 31, 2019 was fully paid in 2019. c) On March 8, 2019, the Group entered into a new revolving line of credit facility (the “RLOC”) with PFG5 for $12,500. Under the agreement: (i) $9,500 may be drawn upon request at any time on or after the closing date and (ii) so long as there is no uncured default at the time of drawdown and if the Company has received at least $10,000 in cash proceeds from the sale of its equity securities to investors, then an additional $3,000 may be drawn. Any outstanding amounts under the RLOC will accrue interest at a rate of 11% per annum with a maturity date of March 8, 2021 (the “Maturity Date”). The Group shall pay interest only on principal outstanding on the RLOC until the Maturity Date, on which date the entire unpaid principal balance on the RLOC plus any and all accrued and unpaid interest shall be repaid. In March 2019, the Company drew down $9,500 from the RLOC. The Group accrued interest of $1,201 as of December 31, 2019 with $212 unpaid in 2019. The outstanding principal balances as of December 31, 2019 included a term loan due to PFG4 in the amount of $100, outstanding principal balances due to PFG5 of a term loan in the amount of $2,375, a convertible term loan in the amount of $1000 and a revolving line of credit in the amount of $9,500. The breach of the financial covenant beginning in September 2019 resulted in the acceleration of the repayments of the PFG borrowings and increased rate of interest. Therefore, certain outstanding balances of the PFG loans became payable on demand and was reclassified as a current liability as of December 31, 2019. Interests and penalties payable of about $2 million have been accrued. Borrowings from PFG4 and PFG5 as of December 31, 2019 were pledged by all accounts receivable and assets of the Company. As of the filing of this annual report, the Company is in negotiation with PFG on converting a portion of the principal amounts into equities of the Company. (iii) Warrants In August 2016, the Group issued 2,515,123 and 1,900,800 warrants (“2016 Warrants”) to two banks in connection with a short term loan facility of $2,000,000 and a long term loan facility of $6,000,000 respectively, for working capital purpose. The 2016 Warrants entitled the banks to subscribe for Series D convertible redeemable preferred shares at the exercise price of $0.5059. The 2016 Warrants shall lapse and expire after 5 and 7 years from their issuance dates, respectively. The 2016 Warrants were replaced by Replacement Warrants to acquire an aggregate of 417,166 the Group’s ordinary shares at the consummation date of the Merger. As the 2016 Warrants were granted to the banks for loan facilities, their fair value on the issuance date were recognized as deferred borrowing costs presented as deductions of the carrying value of the term loans. The deferred borrowing costs were recognized over the lives of the term loans as financing cost, using the effective interest rate method. Given the 2016 Warrants were convertible into Series D convertible redeemable preferred shares classified as mezzanine equity, the 2016 Warrants were financial liabilities in accordance with ASC 480, Distinguishing Liabilities from Equity As part of the Merger, the 2016 Warrants were replaced by Replacement Warrants to acquire an aggregate of 417,166 the Group’s ordinary shares classified as permanent equity. As the modification of the 2016 Warrants term resulted in the reclassification of the 2016 Warrants from liability to equity, the 2016 Warrants amounted to US$1,544 were re-measured at fair value upon Merger and reclassified to additional paid in capital as of December 31, 2017. |
Accrued Expenses and Other Pa_2
Accrued Expenses and Other Payables (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Payables and Accruals [Abstract] | |
Schedule of accrued expenses and other payables | As of December 31, 2018 2019 $ $ Payroll and welfare payable 3,606 4,918 VAT, and other taxes payable 2,551 489 Payables for office supply and utilities 547 437 Payables for purchase of property and equipment 50 49 Professional service fees 3,347 1,414 Payables for share purchase consideration 5,821 10,000 Payables for Samsung arbitration compensation 2,767 4,356 Interest and penalty payable - 3,178 Advance from customers - 4,076 Payables to an agent - 3,571 Others 308 41 18,997 32,529 |
Deferred Government Grants (Tab
Deferred Government Grants (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Revenue Recognition and Deferred Revenue [Abstract] | |
Schedule of deferred government grants | For the years ended December 31, 2017 2018 2019 $ $ $ Balance at beginning of the year 2,108 1,957 1,864 Recognized as other operating income (281 ) - (1,854 ) Foreign currency translation difference 130 (93 ) (10 ) Balance at ending of the year 1,957 1,864 - |
Accumulated Other Comprehensi_2
Accumulated Other Comprehensive Loss (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Stockholders' Equity Note [Abstract] | |
Schedule of accumulated other comprehensive loss, net of tax | Foreign currency Total $ $ Balance as of January 1, 2017 (2,626 ) (2,626 ) Current year other comprehensive loss 2,119 2,119 Balance as of December 31, 2017 (507 ) (507 ) Current year other comprehensive income (1,636 ) (1,636 ) Balance as of December 31, 2018 (2,143 ) (2,143 ) Current year other comprehensive loss (income) (163 ) 239 Balance as of December 31, 2019 (2,306 ) (1,904 ) |
Share Based Compensation (Table
Share Based Compensation (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Share-based Payment Arrangement [Abstract] | |
Schedule of the Group's option activities under the 2007 Plan | Number of Weighted exercise price Weighted Aggregate ($) (Years) ($) Outstanding, January 1, 2016 32,037,240 0.30 4.97 308 Granted 610,000 0.56 Forfeited (5,190,297 ) 0.34 Outstanding, December 31, 2016 27,456,943 0.30 5.26 308 Vested and expected to vest at December 31, 2016 27,456,943 0.30 5.26 308 Outstanding, January 1, 2017 27,456,943 0.30 5.26 308 Granted 9,085,000 0.70 Forfeited (8,007,606 ) 0.04 Outstanding, August 18, 2017 28,534,337 0.48 6.99 - Vested and expected to vest at August 18, 2017 28,534,337 0.48 6.99 - |
Schedule of share based compensation on the original grant-date fair value of the award | Number of Weighted exercise price Weighted average Aggregate ($) (Years) ($) Converted under Assumed Options: Outstanding, August 18, 2017 2,695,194 5.08 6.99 6,561 Granted 180,000 5.30 Forfeited (49,804 ) 6.58 Outstanding, December 31, 2017 2,825,390 5.38 6.43 6,860 Outstanding, January 1, 2018 2,825,390 5.38 6.43 6,860 Granted - - Forfeited (316,585 ) 3.09 Outstanding, December 31, 2018 2,508,805 5.29 6.01 312 Outstanding, January 1, 2019 2,508,805 5.29 6.01 312 Granted 280,000 3.65 Forfeited (272,580 ) 2.26 Outstanding, December 31, 2019 2,516,225 5.29 5.52 5,653 |
Schedule of estimated fair value of options | Year 2017 Year 2018 Year 2019 Risk-free interest rates 1.06%-2.32 % * 1.64%-2.72% Expected life (years) 10 years * 10 years Expected volatility 31.9%-43.9% * 44.1%-45.0% Expected dividend yield 0% * 0% Exercise multiple 2.20 * 2.2 Post-vesting forfeit rate 10% * 12% Fair value of underlying ordinary shares $7.45 * $1.80 Fair value of share option $2.34-$7.45 * $1.8-$4.19 |
Schedule of compensation expense relating to share options granted to employees | For the years ended 2018 2019 Sales and marketing expenses 359 103 General and administrative expenses 254 232 Research and development expenses 363 159 976 494 |
Taxation (Tables)
Taxation (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Income Tax Disclosure [Abstract] | |
Schedule of (Loss) profit before income taxes | For the years ended December 31, 2017 2018 2019 $ $ $ Non-PRC (7,138 ) (43,630 ) (31,895 ) PRC (3,310 ) (25,097 ) (637 ) (10,448 ) (68,727 ) (32,532 ) |
Schedule of income tax expense | For the years ended December 31, 2017 2018 2019 $ $ $ Current (1,382 ) (52 ) - Deferred (960 ) (279 ) 949 (2,342 ) (331 ) 949 |
Schedule of reconciliation of tax computed by applying the statutory income tax rate | For the years ended December 31, 2017 2018 2019 $ $ $ Profit (loss) before income taxes (10,448 ) (68,727 ) (32,532 ) Income tax (expense) income computed at the statutory income tax rate at 25% 2,612 17,182 7,356 Non-deductible expenses (2,654 ) (7,393 ) 955 Non-taxation income 68 - 753 Preferential rate (237 ) (790 ) (286 ) Current and deferred tax rate differences 55 238 (971 ) Foreign rate differences (427 ) (5,670 ) 137 Change of valuation allowance (1,294 ) (4,202 ) (7,834 ) Statutory income (215 ) (1,471 ) - R&D super deduction - 305 839 Interest expense (250 ) - Income tax (expense) benefit (2,342 ) (331 ) 949 |
Schedule of significant components of deferred taxes | As of December 31, 2018 2019 $ $ Deferred tax assets Inventories provision 100 58 Accrued salary and welfare payable 201 217 Property and equipment 3 - Tax losses 317 419 Valuation allowance 18 275 Total deferred tax assets 639 969 Deferred tax liabilities Intangible assets 1,688 1,815 Deferred cost of revenue 765 17 Total deferred tax liabilities 2,453 1,832 |
Schedule of roll-forward of unrecognized tax benefits | For the years ended December 31, 2017 2018 2019 $ $ $ Balance at beginning of year 1,873 2,016 2,020 Reversal based on tax positions related to prior years - - - Additions based on tax positions related to the current year 28 - - Foreign currency translation difference 115 4 (33 ) Balance at end of year 2,016 2,020 1,987 |
Related Party Transactions (Tab
Related Party Transactions (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Related Party Transactions [Abstract] | |
Schedule of names of related parties and relationship with group | Names of related parties Relationship with the Group Intel Capital Corporation (“Intel”) and its affiliates A substantial shareholder of the Group Bluecap A company controlled by a key management of the Group Hareesh Ramanna Executive Vice President and Co-General Manager of Connected Solutions Business Unit Cloudminds (Hong Kong) Ltd. (“Cloudminds”) A company controlled by a director of the Company * * On December 18, 2018, the entity ceased to be a related party of the Company due to the resignation of this director. |
Schedule of significant related party transactions | For the years ended December 31, 2017 2018 2019 $ $ $ Software services provided to: Intel (China) Co., Ltd. 9 - - Intel Asia-Pacific Research and Development Ltd. 79 - - Intel (China) Research Center Co., Ltd. 8 - - Cloudminds - 1,373 - Loan from: Hareesh Ramanna 22 - For the years ended December 31, 2017 2018 2019 $ $ $ Loan from: Bluecap - 1,059 3,273 Interest expense on loan from: Bluecap - 12 211 |
Convertible Redeemable Prefer_2
Convertible Redeemable Preferred Shares (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Equity [Abstract] | |
Schedule of carrying amounts of convertible redeemable preferred shares | For the year ended 2017 Balance at beginning of the year 68,862 Issuance of Series E Preferred Shares 6,300 Beneficiary conversion feature of Series E Preferred Shares (3,258 ) Change in redemption value 6,956 Conversion to ordinary shares (78,860 ) Balance at end of the year - |
Earnings (Loss) Per Share (Tabl
Earnings (Loss) Per Share (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Earnings (Loss) Per Share [Abstract] | |
Schedule of basic and diluted earnings (loss) per share | For the years ended December 31, 2017 2018 2019 $ $ $ Numerator: Net income (loss) from continuing operations (12,790 ) (69,058 ) (31,583 ) Less: Net income (loss) attributable to noncontrolling interest from continuing operation (82 ) (104 ) 5 Net income (loss) from continuing operations attributable to Borqs Technologies, Inc. (12,708 ) (68,954 ) (31,588 ) Accretion to redemption value of preferred shares for continuing operations (6,956 ) - - Net (loss) income from continuing operations attributable to Borqs Technologies, Inc.’s ordinary shareholders (19,664 ) (68,954 ) (31,588 ) Net (loss) income from discontinued operations 431 (2,941 ) (4,151 ) Less: Net (loss) income attributable to noncontrolling interest from discontinued operation 292 (131 ) (1,329 ) Net (loss) income from discontinued operations attributable to Borqs Technologies, Inc. 139 (2,810 ) (2,822 ) Net loss attributable to Borqs Technologies, Inc.’s ordinary shareholders (19,525 ) (71,764 ) (34,409 ) Denominator: Weighted-average number of ordinary shares—basic 12,842,671 31,200,056 35,919,014 Weighted-average number of ordinary shares—diluted 12,842,671 31,200,056 35,919,014 Weighted-average number of shares outstanding from discontinued operations—basic 12,842,671 31,200,056 35,919,014 Weighted-average number of shares outstanding from discontinued operations—diluted 12,842,671 31,200,056 35,919,014 Net earnings (loss) per share from continuing operations attributable to Borqs Technologies, Inc. Earnings (loss) per share—Basic: (1.53 ) (2.21 ) (0.88 ) Earnings (loss) per share—Diluted: (1.53 ) (2.21 ) (0.88 ) Net (loss) earnings per share from discontinued operations attributable to Borqs Technologies, Inc. (Loss) earnings per share—Basic: 0.01 (0.09 ) (0.08 ) (Loss) earnings per share—Diluted: 0.01 (0.09 ) (0.08 ) Net loss per share attributable to Borqs Technologies, Inc. Loss per share—Basic: (1.52 ) (2.30 ) (0.96 ) Loss per share—Diluted: (1.52 ) (2.30 ) (0.96 ) |
Segment Reporting (Tables)
Segment Reporting (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Segment Reporting [Abstract] | |
Schedule of group's operating segment | For the years ended December 31, 2017 2018 2019 $ $ $ PRC 17,687 4,282 1,701 Outside PRC: United States 23,312 15,663 21,746 India 70,421 96,550 69,646 Rest of the world 10,813 11,925 5,865 Total net revenue 122,233 128,420 98,958 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Taxation Textual [Abstract] | |
Schedule of liabilities measured at fair value on a recurring basis | Fair value measurement using: Quoted prices in active markets for identical assets (Level 1) Significant other observable inputs (Level 2) Unobservable inputs (Level 3) Fair value at December 31, 2016 $ $ $ $ Warrant liabilities - 1,344 1,344 Liabilities 1,344 1,344 |
Schedule of no assets and liabilities measured at fair value on a recurring basis | Warrant liabilities $ Fair value at January 1, 2016 - Increase in liability 1,332 Changes in the fair value 12 Fair value at December 31, 2016 1,344 Changes in the fair value 200 Fair value at August 18, 2017 1,544 Transfer to permanent equity (1,544 ) Fair value at December 31, 2017 - |
Parent Company Only condensed_2
Parent Company Only condensed Financial Information (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Condensed Financial Information Disclosure [Abstract] | |
Schedule of condensed balance sheets | As of December 31, Note 2018 2019 $ $ ASSETS Current assets Cash and cash equivalents - - Prepaid expenses and other current assets 10,076 59 Amount due from related parties 6,893 4,575 Total current assets 16,969 4,634 Non-current assets Investments in subsidiaries and Consolidated VIEs (32,236 ) (35,378 ) Total non-current assets (32,236 ) (35,378 ) Total assets (15,267 ) (30,744 ) LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities Accrued expenses and other payables 6,911 10,738 Short-term bank and other borrowings - - Total current liabilities 6,911 10,738 Total liabilities 6,911 10,738 Shareholders' equity Additional paid-in capital 124,062 141,377 Accumulated deficit (144,097 ) (181,081 ) Accumulated other comprehensive loss (2,143 ) (1,778 ) Total shareholders' equity (deficit) (22,178 ) (41,482 ) Total liabilities and shareholders' equity (deficit) (15,267 ) (30,744 ) |
Schedule of condensed statements of operations | For the years ended December 31, 2017 2018 2019 $ $ $ Operating Expenses General and administrative expenses (856 ) (15,018 ) (1,949 ) Operating loss (856 ) (15,018 ) (1,949 ) Interest expense (68 ) - - Share of profits (losses) of subsidiaries and Consolidated VIEs (18,601 ) (56,981 ) (24,010 ) Loss before income taxes (19,525 ) (71,999 ) (25,959 ) Income tax expense - - - Net loss (19,525 ) (71,999 ) (25,959 ) |
Schedule of condensed statements of comprehensive loss | For the years ended December 31, 2017 2018 2019 $ $ $ Net profit (loss) (12,569) (71,999) (25,959) Other comprehensive (loss) income, net of tax of nil: Foreign currency translation adjustments, net of tax of nil 2,119 (1,709 ) (121 ) Other comprehensive income (loss), net of tax of nil: Comprehensive income (loss) (10,450 ) (73,708 ) (26,080 ) Comprehensive income (loss) attributable to the Company's ordinary shareholders (10,450 ) (73,400 ) (26,584) |
Schedule of condensed cash flow statement | For the years ended December 31, 2017 2018 2019 $ $ $ Net cash generated from operating activities 4,118 - - Net cash used in investing activities (17,117 ) (10,048 ) - Net cash generated from (used in) financing activities 12,986 - - Net increase (decrease) in cash and cash equivalent and restricted cash (13 ) (10,048 ) - Cash and cash equivalent and restricted cash at beginning of the year 15 10,048 - Cash and cash equivalent and restricted cash at end of the year 2 - - Reconciliation of cash and cash equivalents and restricted cash Cash and cash equivalents at end of the year 2 - - Restricted cash at the end of the year - - - Total cash and cash equivalents and restricted cash at the end of year 2 - - |
Schedule of related party balances | As of December 31, 2018 2019 $ $ Amount due from (to) related parties - Borqs HK (1,018 ) (3,286 ) - Borqs Beijing 7,911 7,862 |
Organization (Details)
Organization (Details) | 12 Months Ended | |
Dec. 31, 2019 | ||
BORQS International [Member] | ||
Date of incorporation/Acquisition | Jul. 27, 2007 | |
Place of incorporation | Cayman | |
Percentage of direct or indirect ownership by the Company Direct | 100.00% | |
Principal activities | Holding company | |
BORQS Hong Kong Limited ("Borqs HK") [Member] | ||
Date of incorporation/Acquisition | Jul. 19, 2007 | |
Place of incorporation | Hong Kong | |
Percentage of direct or indirect ownership by the Company Direct | 100.00% | |
Principal activities | Provision of software and service solutions and hardware products sales | |
BORQS Beijing Ltd. ("Borqs Beijing") [Member] | ||
Date of incorporation/Acquisition | Sep. 4, 2007 | [1] |
Place of incorporation | PRC | [1] |
Percentage of direct or indirect ownership by the Company Direct | 100.00% | [1] |
Principal activities | Provision of software and service solutions and hardware products sales | [1] |
BORQS Software Solutions Private Limited ("Borqs India") [Member] | ||
Date of incorporation/Acquisition | Jul. 17, 2009 | |
Place of incorporation | India | |
Percentage of direct or indirect ownership by the Company Direct | 100.00% | |
Principal activities | Provision of software and service solutions | |
Beijing Big Cloud Network Technology Co., Ltd. ("Big Cloud Network") [Member] | ||
Date of incorporation/Acquisition | Apr. 18, 2014 | [1],[2] |
Place of incorporation | PRC | [1],[2] |
Percentage of direct or indirect ownership by the Company Direct | [1],[2] | |
Principal activities | Holding company | [1],[2] |
Yuantel (Beijing) Investment Management Co., Ltd. ("Yuantel") [Member] | ||
Date of incorporation/Acquisition | Jul. 11, 2014 | [2],[3],[4] |
Place of incorporation | PRC | [2],[3],[4] |
Percentage of direct or indirect ownership by the Company Direct | 45.00% | [2],[3],[4] |
Principal activities | Holding company | [2],[3],[4] |
Yuantel (Beijing) Telecommunications Technology Co., Ltd. ("Yuantel Telecom") [Member] | ||
Date of incorporation/Acquisition | Jul. 11, 2014 | [2],[3],[4] |
Place of incorporation | PRC | [2],[3],[4] |
Percentage of direct or indirect ownership by the Company Direct | 45.00% | [2],[3],[4] |
Principal activities | Provision of MVNO and other services | [2],[3],[4] |
[1] | Collectively, the "PRC Subsidiaries". | |
[2] | Collectively, the "Consolidated VIEs". | |
[3] | On July 11, 2014, Borqs International through Big Cloud Network acquired the controlling interest in Yuantel and its subsidiary. | |
[4] | We are in the process of selling Yuantel Telecom. In the process of this sales, the Group owned 45% of Yuantel (Beijing) Investment Management which owned 100% of Yuantel Telecom and therefore we effectively owned 45% of Yuantel Telecom as of December 31, 2019. |
Organization (Details 1)
Organization (Details 1) - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 |
Carrying amounts of major classes of assets included as part of the assets held for sale | ||
Total assets of the Consolidated VIEs classified as held for sale in the Consolidated Balance Sheets | $ 933 | $ 9,354 |
VIE [Member] | ||
Carrying amounts of major classes of assets included as part of the assets held for sale | ||
Cash and cash equivalents | 1,528 | 336 |
Restricted cash | 768 | 708 |
Accounts receivable | 1,614 | 97 |
Receivable from MVNO franchisees | 374 | 377 |
Inventories | 210 | 154 |
Prepaid expenses and other current assets | 1,503 | 883 |
Current assets held for sale | 5,997 | 2,555 |
Property and equipment, net | 719 | 637 |
Intangible assets, net | 7,786 | 7,175 |
Goodwill | 689 | 701 |
Deferred tax assets | ||
Other non-current assets | 1,111 | 1,908 |
Non-current assets held for sale | 10,305 | 10,421 |
Total assets of the Consolidated VIEs classified as held for sale in the Consolidated Balance Sheets | 16,302 | 12,976 |
Carrying amounts of major classes of liabilities included as part of liabilities held for sale | ||
Accounts payable | 6,317 | 1,739 |
Accrued expenses and other payables | 9,715 | 4,055 |
Amounts due to continuing operations | 933 | 9,354 |
Advances from customers | 4,018 | 50 |
Deferred revenues | 3,491 | |
Short-term bank borrowings | 36 | |
Current liabilities held for sale | 20,983 | 18,725 |
Deferred tax liabilities | 1,750 | 1,779 |
Non-current liabilities held for sale | 1,750 | 1,779 |
Total liabilities of the Consolidated VIEs classified as held for sale in the Consolidated Balance Sheets | $ 22,733 | $ 20,504 |
Organization (Details 2)
Organization (Details 2) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Net revenues | $ 98,958 | $ 128,420 | $ 122,233 |
Cost of revenues | (98,389) | (134,443) | (103,494) |
Total gross profit | 569 | (6,023) | 18,739 |
Operating expenses: | |||
Sales and marketing expenses | (1,524) | (2,456) | (4,252) |
General and administrative expenses | (24,776) | (52,031) | (18,616) |
Research and development expenses | (5,278) | (6,338) | (6,194) |
Total operating expenses | (31,578) | (60,825) | (29,262) |
Operating (loss) income | (29,155) | (66,668) | (8,407) |
(Loss) income from discontinued operation, before income taxes | (4,151) | (1,300) | 408 |
Income tax benefit (expense) | (949) | 331 | 2,342 |
(Loss) income from discontinued operations | (2,822) | (2,810) | 139 |
Less: net income (loss) attributable to noncontrolling interest | (1,330) | (131) | 292 |
VIE [Member] | |||
Net revenues | 39,836 | 27,359 | 32,074 |
Cost of revenues | (24,748) | (18,587) | (23,647) |
Total gross profit | 15,088 | 8,772 | 8,427 |
Operating expenses: | |||
Sales and marketing expenses | (13,213) | (5,067) | (4,979) |
General and administrative expenses | (4,907) | (3,691) | (2,702) |
Research and development expenses | (1,147) | (1,320) | (249) |
Asset impairment loss | |||
Total operating expenses | (19,267) | (10,078) | (7,930) |
Other operating income | |||
Operating (loss) income | (4,179) | (1,306) | 497 |
Interest income (expense), net | 28 | 10 | (35) |
Other (expense) income, net | (4) | (54) | |
(Loss) income from discontinued operation, before income taxes | (4,151) | (1,300) | 408 |
Income tax benefit (expense) | (1,641) | 23 | |
(Loss) income from discontinued operations | (4,151) | (2,941) | 431 |
Less: net income (loss) attributable to noncontrolling interest | (1,330) | (131) | 292 |
Net income (loss) attributable to Borqs Technologies, Inc. | $ (2,821) | $ (2,810) | $ 139 |
Organization (Details 3)
Organization (Details 3) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
CASH FLOWS FROM OPERATING ACTIVITIES | |||
Net (loss) income | $ (34,409) | $ (71,764) | $ (12,569) |
Adjustments to reconcile net (loss) income to net cash used in operating activities: | |||
MNVO BU management compensation | 1,497 | ||
Depreciation of property and equipment | 93 | 395 | 744 |
Amortization of intangible assets | 5,984 | 6,088 | 3,935 |
Deferred income tax benefits | (978) | 1,572 | 937 |
Net cash (used in) generated from operating activities | (7,373) | 2,581 | (12,633) |
CASH FLOWS FROM INVESTING ACTIVITIES | |||
Purchases of property and equipment | (117) | (155) | (842) |
Purchases of intangible assets | (4,417) | (5,575) | (7,649) |
Net cash used in investing activities | (735) | (4,261) | (8,120) |
CASH FLOWS FROM FINANCING ACTIVITIES | |||
Proceeds from short-term bank and other borrowings | 5,000 | 1,124 | 10,456 |
Repayments of short-term bank and other borrowings | (11,003) | (2,594) | (4,756) |
Net cash generated from (used in) financing activities | 11,601 | (11,540) | 31,861 |
VIE [Member] | |||
CASH FLOWS FROM OPERATING ACTIVITIES | |||
Net (loss) income | (4,151) | (2,941) | 431 |
Adjustments to reconcile net (loss) income to net cash used in operating activities: | |||
Impairment of doubtful debt | 2,241 | ||
MNVO BU management compensation | 1,497 | ||
Provision on prepaid expenses and other current assets | 2,617 | ||
Depreciation of property and equipment | 269 | 232 | |
Amortization of intangible assets | 975 | 1,108 | |
Deferred income tax benefits | (29) | 1,641 | (23) |
Changes in operating assets and liabilities | (1,321) | (3,972) | 1,241 |
Net cash (used in) generated from operating activities | (1,763) | (1,411) | 2,989 |
CASH FLOWS FROM INVESTING ACTIVITIES | |||
Purchases of property and equipment | (92) | (80) | (204) |
Purchases of intangible assets | (706) | (1,011) | (77) |
Proceeds from disposal of non-controlling interest | 5,296 | ||
Payments to acquiring non-controlling interest | (1,497) | ||
Net cash used in investing activities | 3,001 | (1,091) | (281) |
CASH FLOWS FROM FINANCING ACTIVITIES | |||
Proceeds from short-term bank and other borrowings | 36 | ||
Repayments of short-term bank and other borrowings | (36) | (765) | |
Net cash generated from (used in) financing activities | (36) | 36 | (765) |
Effect of foreign exchange rate changes on cash and short-term investment | 50 | ||
Net change in cash and cash equivalents and restricted cash | 1,252 | (2,466) | 1,943 |
Cash and cash equivalents and restricted cash at beginning of year | 1,044 | 3,510 | 1,567 |
Cash and cash equivalents and restricted cash at end of year | $ 2,296 | $ 1,044 | $ 3,510 |
Organization (Details Textual)
Organization (Details Textual) - USD ($) $ in Thousands | Aug. 18, 2018 | Feb. 28, 2019 | Nov. 30, 2018 | Dec. 31, 2019 | Apr. 30, 2019 |
Organization (Textual) | |||||
Equity interest, percentage | 45.00% | ||||
Variable interest entity percentage, description | The Company’s board of director approved the plan to dispose all of its tangible and intangibles assets related to the Consolidated VIEs through a series of agreements with Jinan Yuantel Communication Technology LLP (“Jinan Yuantel”), a Company controlled by a non-controlling interest shareholder individual, to dispose to Jinan Yuantel 20% of equity interest in Yuantel at a consideration of RMB25 million. The Company also authorized Jinan Yuantel to actively seek for investors on behalf of the Company to sell 45% of the equity interest in Yuantel held by Big Cloud Network at a consideration which is based on the expected share valuation no less than RMB180 million by June 30, 2019, for which, Jinan Yuantel will be granted the option to purchase the remaining 10% of the equity interest in Yuantel held by Big Cloud Network at a consideration of RMB10 upon achievement of the sale. Since the sale has not yet been completed as of the filing of this annual report, the Company has the right to not grant the option for the remaining 10% of equity interest. | The Consolidated VIEs contributed 21%, 18% and 29% of the Group's consolidated revenues for the years ended December 31, 2017, 2018 and 2019, respectively. As of December 31, 2018 and 2019, the Consolidated VIEs accounted for an aggregate of 16% and 22%, respectively, of the consolidated total assets, and 22% and 18%, respectively, of the consolidated total liabilities. | |||
Power of attorney agreement, description | The Nominee Shareholders of Big Cloud Network entered into the power of attorney agreement whereby they authorized Borqs Beijing or its designated party to act on behalf of the Nominee Shareholders as exclusive agent and attorney with all respect to all matters concerning the shareholding including but not limited to (1) attend shareholders’ meetings of Big Cloud Network; (2) exercise all the shareholders’ rights, including voting rights; and (3) designate and appoint on behalf of each shareholder the senior management members of Big Cloud Network. The power of attorney remains irrevocable and continuously valid from the date of execution so long as each Nominee Shareholder remains as a shareholder of Big Cloud Network. The power of attorney agreement was subsequently reassigned to Borqs International. | ||||
Exclusive option agreement, description | Pursuant to the exclusive option agreement entered into between the Nominee Shareholders and Borqs Beijing or its designated party, the Nominee Shareholders granted Borqs Beijing or its designated party, an irrevocable and exclusive right to purchase all or part of the equity interests held by the Nominee Shareholders in Big Cloud Network, to the extent permitted under the PRC laws, at an amount equal to RMB10 or the minimum consideration permitted under the applicable PRC law. The purchase consideration in excess of RMB10 shall be refunded by the Nominee Shareholders to Borqs Beijing or Borqs Beijing may deduct the excess amount upon payment of consideration. The Nominee Shareholders shall not declare dividend or any form of distribution or grant loans in any form without the prior consent of Borqs Beijing or its designated party. The term of the agreement is 10 years, expiring on June 22, 2024 which will be automatically renewed every three-year thereafter if Borqs Beijing or its designated party does not provide notice of termination to the Nominee Shareholders fifteen days prior to expiration. | ||||
Exclusive technical & support agreement, description | Pursuant to the agreement entered into between Borqs Beijing and Big Cloud Network, Big Cloud Network engaged Borqs Beijing or its designated party as its exclusive provider of technical, consulting and other services in relation to its major business during the contractual period in return for service fees which will be determined at the sole discretion of Borqs Beijing or its designated party. The term of the agreement is 10 years, expiring on June 22, 2024, which will be automatically renewed every three-year thereafter if Borqs Beijing or its designated party does not provide notice of termination to the Nominee Shareholders fifteen days prior to expiration. | ||||
Ownership interest rate, percentage | 45.00% | ||||
BORQS International Holding Corp [Member] | |||||
Organization (Textual) | |||||
Equity interest, percentage | 100.00% | ||||
RMB [Member] | |||||
Organization (Textual) | |||||
Interest free loans | $ 50,000 | ||||
Yuantel Investment [Member] | |||||
Organization (Textual) | |||||
Equity interest, percentage | 21.00% | 79.00% | |||
Ownership interest rate, percentage | 100.00% | ||||
Yuantel Investment [Member] | RMB [Member] | |||||
Organization (Textual) | |||||
Interest free loans | $ 20,500 | $ 22,000 | $ 25,000 | ||
Yuantel Telecom [Member] | |||||
Organization (Textual) | |||||
Equity interest, percentage | 95.00% | ||||
Ownership interest rate, percentage | 45.00% | ||||
Big Cloud Network [Member] | |||||
Organization (Textual) | |||||
Equity interest, percentage | 75.05% | ||||
Yuantel Investment [Member] | |||||
Organization (Textual) | |||||
Equity interest, percentage | 79.00% | ||||
Yuantel Telecom [Member] | |||||
Organization (Textual) | |||||
Equity interest, percentage | 95.00% | ||||
Big Cloud Network [Member] | |||||
Organization (Textual) | |||||
Equity interest, percentage | 75.00% | ||||
Yuantel Investment [Member] | |||||
Organization (Textual) | |||||
Equity interest, percentage | 25.00% |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies (Details) | 12 Months Ended |
Dec. 31, 2019 | |
Office equipment [Member] | |
Property, Plant and Equipment [Line Items] | |
Property and equipment, estimated useful life | 5 years |
Motor vehicles [Member] | |
Property, Plant and Equipment [Line Items] | |
Property and equipment, estimated useful life | 5 years |
Leasehold improvements [Member] | |
Property, Plant and Equipment [Line Items] | |
Property and equipment, estimated useful life description | Over the shorter of lease term or the estimated useful lives of the assets |
Minimum [Member] | Computer and network equipment [Member] | |
Property, Plant and Equipment [Line Items] | |
Property and equipment, estimated useful life | 3 years |
Maximum [Member] | Computer and network equipment [Member] | |
Property, Plant and Equipment [Line Items] | |
Property and equipment, estimated useful life | 5 years |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies (Details 1) | 12 Months Ended |
Dec. 31, 2019 | |
Purchased software [Member] | |
Finite-Lived Intangible Assets [Line Items] | |
Intangible assets have weighted average useful lives | 4 years 6 months |
MVNO License [Member] | |
Finite-Lived Intangible Assets [Line Items] | |
Intangible assets have weighted average useful lives | 10 years |
Capitalized software development costs [Member] | |
Finite-Lived Intangible Assets [Line Items] | |
Intangible assets have weighted average useful lives | 3 years |
Internal-use software [Member] | |
Finite-Lived Intangible Assets [Line Items] | |
Intangible assets have weighted average useful lives | 5 years |
Summary of Significant Accoun_6
Summary of Significant Accounting Policies (Details 2) - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | |||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | ||
Software | $ 14,975 | $ 8,131 | $ 11,116 | |
Hardware | 83,983 | 118,917 | 111,021 | |
Total net revenues | 98,958 | 128,420 | 122,233 | |
Cost of revenue: | ||||
Total gross profit (loss) | 569 | (6,023) | 18,739 | |
Operating expense: | ||||
Net income (loss) from continuing operations | $ (31,583) | $ (69,058) | $ (12,790) | |
Basic income(loss)per share | $ (0.88) | $ (2.21) | $ (1.53) | |
Diluted income(loss)per share | $ (0.88) | $ (2.21) | $ (1.53) | |
As Reported [Member] | ||||
Software | [1] | $ 14,975 | ||
Hardware | 83,983 | |||
Total net revenues | 98,958 | |||
Cost of revenue: | ||||
Software | (17,822) | |||
Hardware | (80,567) | |||
Total cost of revenue | (98,389) | |||
Total gross profit (loss) | 569 | |||
Operating expense: | ||||
Sales and marketing expenses | (1,524) | |||
General and administrative expenses | (24,776) | |||
Research and development expenses | (5,277) | |||
Total operating expense | (31,578) | |||
Net income (loss) from continuing operations | $ (31,583) | |||
Basic income(loss)per share | $ (0.88) | |||
Diluted income(loss)per share | $ (0.88) | |||
Ajustment [Member] | ||||
Software | [1] | $ 9,648 | ||
Hardware | 83,983 | |||
Total net revenues | 93,631 | |||
Cost of revenue: | ||||
Software | (12,092) | |||
Hardware | (80,567) | |||
Total cost of revenue | (92,659) | |||
Total gross profit (loss) | 972 | |||
Operating expense: | ||||
Sales and marketing expenses | (1,524) | |||
General and administrative expenses | (24,776) | |||
Research and development expenses | (4,082) | |||
Total operating expense | (30,382) | |||
Net income (loss) from continuing operations | $ (29,984) | |||
Basic income(loss)per share | $ (0.84) | |||
Diluted income(loss)per share | $ (0.84) | |||
Restatement [Member] | ||||
Software | [1] | $ 5,327 | ||
Hardware | ||||
Total net revenues | 5,327 | |||
Cost of revenue: | ||||
Software | (5,730) | |||
Hardware | ||||
Total cost of revenue | (5,730) | |||
Total gross profit (loss) | (403) | |||
Operating expense: | ||||
Sales and marketing expenses | ||||
General and administrative expenses | ||||
Research and development expenses | (1,195) | |||
Total operating expense | (1,195) | |||
Net income (loss) from continuing operations | $ (1,599) | |||
Basic income(loss)per share | $ (0.04) | |||
Diluted income(loss)per share | $ (0.04) | |||
[1] | For the contracts related to Android+ platform solutions, the Group initially defers and then recognizes the entire revenue from the contracts through the PCS period under ASC 605, and recognizes the revenue derived from the performance obligation of the delivery of software at a point in time when the customers sign off the acceptance in accordance with ASC 606. |
Summary of Significant Accoun_7
Summary of Significant Accounting Policies (Details 3) - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 | |
Advances from customers | $ 5,446 | ||
Contract liabilities | 7,227 | ||
As Reported [Member] | |||
Deferred cost of revenues - current | |||
Deferred cost of revenues - non-current | |||
Advances from customers | |||
Contract liabilities | 6,538 | ||
Deferred revenues - current | [1] | 84 | |
Accumulated deficit | (179,672) | ||
Ajustment [Member] | |||
Deferred cost of revenues - current | 2,308 | ||
Deferred cost of revenues - non-current | 4,617 | ||
Advances from customers | 6,538 | ||
Contract liabilities | |||
Deferred revenues - current | [1] | 5,411 | |
Accumulated deficit | (178,073) | ||
Restatement [Member] | |||
Deferred cost of revenues - current | (2,308) | ||
Deferred cost of revenues - non-current | (4,617) | ||
Advances from customers | (6,538) | ||
Contract liabilities | 6,538 | ||
Deferred revenues - current | [1] | (5,327) | |
Accumulated deficit | $ (1,599) | ||
[1] | For the contracts related to Android+ platform solutions, the Group initially defers and then recognizes the entire revenue from the contracts through the PCS period under ASC 605, and recognizes the revenue derived from the performance obligation of the delivery of software at a point in time when the customers sign off the acceptance in accordance with ASC 606. |
Summary of Significant Accoun_8
Summary of Significant Accounting Policies (Details 4) - Forecast [Member] - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Software development service | $ 165 | $ 524 | $ 2,019 |
Hardware product sales | $ 789 | $ 452 | $ 2,589 |
Summary of Significant Accoun_9
Summary of Significant Accounting Policies (Details Textual) - USD ($) $ in Thousands | 12 Months Ended | |||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | Jan. 02, 2019 | |
Summary of Significant Accounting Policies (Textual) | ||||
Cash inflows for continuing operations | $ 4,100 | |||
Provision for doubtful debt | 11,400 | $ 21,900 | ||
Net loss from continuing operations | 31,600 | 2,581 | $ (12,633) | |
Cash and cash equivalents | 1,001 | 1,931 | 13,009 | |
Restricted cash | 5,000 | 1,931 | ||
Inventories provision | 1,513 | 1,782 | ||
Deferred cost of revenues | 6,931 | |||
Advertising expenditures included in sales and marketing expenses | 29 | 20 | ||
Share-based compensation, percentage | 70.00% | |||
Impairment loss of long-lived assets | 13,000 | |||
Impairment loss of goodwill | ||||
Right-of-use assets | $ 2,201 | |||
Operating lease liabilities | $ 2,193 | |||
Agreements, description | The Group accounts for profit sharing with franchisees as selling expenses in the consolidated statements of operations. Pursuant to the Group's policy, the amount of discounts that may be provided by the franchisees to consumers is capped at 5%, based on which, the Group recognized the maximum amount of discounts that may be provided by the franchisees as reductions of revenue in accordance with ASC 606-10. | |||
Deferred revenue recognized | $ 7,227 | |||
Retained earnings | $ 930 |
Concentration of Risks (Details
Concentration of Risks (Details) - USD ($) $ in Thousands | 1 Months Ended | 12 Months Ended | ||
Jul. 21, 2005 | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Concentration of Risks (Textual) | ||||
Cash and cash equivalents and restricted cash | $ 5,000 | $ 1,931 | ||
Cash and cash equivalents and restricted cash from discontinued operations | 2,296 | 1,044 | ||
Aggregate amount of cash and cash equivalents and restricted cash | 2,512 | 1,336 | ||
Financial institutions deposit | $ 5,796 | $ 1,639 | ||
Concentration risk, percentage | 63.80% | |||
Foreign currency exchange rate risk, description | The appreciation / (depreciation) of the United States $ against RMB was approximately (5.7%), 4.9% and 1.4% in the years ended December 31, 2017, 2018 and 2019, respectively. The appreciation / (depreciation) of the United States $ against Rupee was approximately (4.7%). 0.5% and 9.5% in the years ended December 31, 2017, 2018 and 2019, respectively. | |||
Economic risk, discription | Although the PRC government has been pursuing economic reform policies for more than 40 years, no assurance can be given that the PRC government will continue to pursue such policies or that such policies may not be significantly altered, especially in the event of a change in leadership, social or political disruption or unforeseen circumstances affecting the PRC political, economic and social conditions. | |||
Five suppliers [Member] | ||||
Concentration of Risks (Textual) | ||||
Concentration risk, percentage | 73.80% | 71.00% | ||
Net revenues [Member] | ||||
Concentration of Risks (Textual) | ||||
Concentration risk, percentage | 87.20% | 74.80% | 66.90% | |
Accounts receivable [Member] | ||||
Concentration of Risks (Textual) | ||||
Concentration risk, percentage | 4.00% | 55.00% | ||
Customer [Member] | Net revenues [Member] | ||||
Concentration of Risks (Textual) | ||||
Concentration risk, percentage | 69.50% |
Acquisitions (Details)
Acquisitions (Details) - USD ($) $ in Thousands | 8 Months Ended | 12 Months Ended |
Aug. 18, 2017 | Dec. 31, 2017 | |
Acquisitions (Textual) | ||
Warrants to acquire an aggregate shares | 417,166 | |
Business combination, description | The Merger Consideration Shares, a total of 25,913,950 ordinary shares were issued to Borqs International’s shareholders at closing, with 942,467 of such shares deposited into escrow for indemnification obligations (“Indemnity Shares”), 2,352,285 of such shares deposited in escrow subject to Borqs Technologies meeting certain earn-out requirements, (“Earnout Shares” and together with the Indemnity Shares, the “Escrow Shares”) in the event certain net income earnout conditions are met during the period from July 1, 2017 to June 30, 2018 and 1,178,084 ordinary shares were issued to a financial advisor engaged by Borqs International in connection with the Merger. | |
Directly related transaction total | $ 15,300 | |
Net assets acquired | $ 18,059 | |
Purchase consideration transferred | $ 45,734 | |
Warrant purchase agreement, description | Equity classified instruments including (i) an option to purchase up to 400,000 units at $10.00 per unit (“Unit Purchase Option”), (ii) 5,750,000 public warrants and (iii) 531,875 private warrants issued by the Company prior to the Merger remain outstanding. Each unit consists of one ordinary share of the Company, one right (convertible into one tenth of an ordinary share) and one warrant to purchase one half of one ordinary share at $12. Each public and private warrant also entitles the holder to purchase one half of one ordinary share at $12.00 per whole share. | |
Financial Advisors [Member] | ||
Acquisitions (Textual) | ||
Share based payments cost | $ 8,800 | |
Merger Consideration Shares [Member] | ||
Acquisitions (Textual) | ||
Ordinary shares issued | 25,913,950 | |
Percentage of equity interest | 100.00% |
Inventories, Net (Details)
Inventories, Net (Details) - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 |
Inventory Disclosure [Abstract] | ||
Raw materials | $ 4,107 | $ 6,056 |
Goods in transit | 1,443 | |
Work in process | 908 | 155 |
Finished goods | 1,041 | 917 |
Inventories, gross | 6,056 | 8,570 |
Less: provision | (1,513) | (1,782) |
Inventories, net | $ 4,543 | $ 6,788 |
Inventories, Net (Details Textu
Inventories, Net (Details Textual) - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 |
Inventories, Net (Textual) | ||
Provisions increased due to obsolescence | $ 1,513 | $ 1,782 |
Prepaid Expenses and Other Cu_3
Prepaid Expenses and Other Current Assets, Net (Details) - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | ||
Staff advances | $ 301 | $ 303 |
Prepayment for products | 1,539 | 812 |
Advance to OEMs | 15,897 | 11,479 |
Rental and other deposits | 718 | 591 |
VAT recoverable | 2,400 | 2,610 |
Receivable from an agent | 6,410 | 1,545 |
Prepayment for share repurchase | 10,048 | |
Rebate receivable | 1,448 | |
Others | 124 | 198 |
Prepaid expenses and other current assets | 28,837 | 27,586 |
Less: provision | (12,871) | (570) |
Total | $ 15,966 | $ 27,016 |
Prepaid Expenses and Other Cu_4
Prepaid Expenses and Other Current Assets, Net (Details Textual) - USD ($) $ in Thousands | 1 Months Ended | ||
May 20, 2019 | Dec. 31, 2019 | Dec. 31, 2018 | |
Prepaid Expenses and Other Current Assets Net (Textual) | |||
Prepayment for share repurchase | $ 10,048 | ||
Cancelled ordinary shares | 966,136 |
Right of Use Assets (Details)
Right of Use Assets (Details) $ in Thousands | Dec. 31, 2019USD ($) |
Right Of Use Assets | |
2020 | $ 827 |
Total lease payments | 827 |
Less: imputed interest | 13 |
Present value of lease liabilities | $ 814 |
Right of Use Assets (Details 1)
Right of Use Assets (Details 1) $ in Thousands | Dec. 31, 2019USD ($) |
Right Of Use Assets Details 1Abstract | |
2019 | $ 1,528 |
2020 | 827 |
Total | $ 2,355 |
Right of Use Assets (Details Te
Right of Use Assets (Details Textual) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Right of Use Assets (Textual) | |||
Rent expense | $ 1,489 | $ 1,129 | |
Operating lease cost | $ 1,647 | ||
Short-term lease cost | 45 | ||
Operating lease liabilities | 1,547 | ||
Acquisition of right-of-use assets | $ 1,517 | ||
Right-of-use assets expire date | Dec. 31, 2020 | ||
weighted average discount rate | 11.30% |
Property and Equipment, Net (De
Property and Equipment, Net (Details) - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 |
At cost: | ||
Property and equipment, gross | $ 6,247 | $ 6,331 |
Less: accumulated depreciation | (6,006) | (6,026) |
Property and equipment, net | 241 | 305 |
Leasehold improvements [Member] | ||
At cost: | ||
Property and equipment, gross | 833 | 846 |
Computer and network equipment [Member] | ||
At cost: | ||
Property and equipment, gross | 4,305 | 4,367 |
Office equipment [Member] | ||
At cost: | ||
Property and equipment, gross | 925 | 900 |
Motor vehicles [Member] | ||
At cost: | ||
Property and equipment, gross | $ 184 | $ 218 |
Property and Equipment, Net (_2
Property and Equipment, Net (Details 1) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Property, Plant and Equipment [Line Items] | |||
Depreciation expense, Total | $ 93 | $ 395 | $ 744 |
Cost of revenues [Member] | |||
Property, Plant and Equipment [Line Items] | |||
Depreciation expense, Total | 46 | 104 | 266 |
Sales and marketing expenses [Member] | |||
Property, Plant and Equipment [Line Items] | |||
Depreciation expense, Total | 1 | 3 | 25 |
General and administrative expenses [Member] | |||
Property, Plant and Equipment [Line Items] | |||
Depreciation expense, Total | 53 | 47 | 63 |
Research and development expenses [Member] | |||
Property, Plant and Equipment [Line Items] | |||
Depreciation expense, Total | $ 75 | $ 110 | $ 158 |
Property and Equipment, Net (_3
Property and Equipment, Net (Details Textual) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Property and Equipment, Net (Textual) | |||
Depreciation expense | $ 93 | $ 395 | $ 744 |
Intangible Assets, Net (Details
Intangible Assets, Net (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Finite-Lived Intangible Assets [Line Items] | |||
Beginning Balance | $ 11,442 | $ 11,674 | |
Additions | 4,031 | 5,347 | |
Amortization expense | (5,984) | (6,088) | $ (3,935) |
Foreign currency translation difference | (58) | (301) | |
Ending Balance | 9,430 | 11,442 | 11,674 |
Software [Member] | |||
Finite-Lived Intangible Assets [Line Items] | |||
Beginning Balance | 43 | 74 | |
Additions | 1 | ||
Amortization expense | (20) | (28) | |
Foreign currency translation difference | (3) | ||
Ending Balance | 24 | 43 | 74 |
Capitalized software development costs [Member] | |||
Finite-Lived Intangible Assets [Line Items] | |||
Beginning Balance | 11,399 | 11,600 | |
Additions | 4,030 | 5,347 | |
Amortization expense | (5,965) | (5,250) | |
Foreign currency translation difference | (58) | (298) | |
Ending Balance | $ 9,406 | $ 11,399 | $ 11,600 |
Intangible Assets, Net (Detai_2
Intangible Assets, Net (Details 1) - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 |
Goodwill and Intangible Assets Disclosure [Abstract] | |||
2020 | $ 5,251 | ||
2021 | 2,988 | ||
2022 | 1,191 | ||
Total | $ 9,430 | $ 11,442 | $ 11,674 |
Intangible Assets, Net (Detai_3
Intangible Assets, Net (Details Textual) | 12 Months Ended |
Dec. 31, 2019 | |
Minimum [Member] | |
Intangible Assets, Net (Textual) | |
Estimated useful lives | 3 years |
Maximum [Member] | |
Intangible Assets, Net (Textual) | |
Estimated useful lives | 10 years |
Long-Term Investments (Details)
Long-Term Investments (Details) - USD ($) $ in Thousands | 1 Months Ended | 8 Months Ended | 12 Months Ended | |
Jan. 18, 2019 | Aug. 18, 2017 | Dec. 31, 2019 | Dec. 31, 2018 | |
Long-Term Investment (Textual) | ||||
Ordinary shares issued to selling shareholders | 417,166 | |||
Long-term debt, description | The Company agreed to issue 183,342 additional shares to the Selling Shareholders if the aggregate value of the ordinary shares initially issued at the closing to the Selling Shareholders was less than $3,000 in fair value as of August 18, 2018. The board of directors approved and 183,342 shares that were issued on January 10, 2019. | |||
Impairment loss | $ 13,000 | |||
Colmei Technology International Ltd [Member] | ||||
Long-Term Investment (Textual) | ||||
Agreed to acquire equity percentage | 13.80% | |||
Ordinary shares issued to selling shareholders | 473,717 | |||
Ordinary fair value | $ 3,000 | |||
Ordinary shares to selling shareholders value | $ 10,000 | |||
Crave Communication Co., Ltd [Member] | ||||
Long-Term Investment (Textual) | ||||
Agreed to acquire equity percentage | 13.80% |
Bank and Other Borrowings (Deta
Bank and Other Borrowings (Details) - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 |
Debt Disclosure [Abstract] | ||
Short-term bank and other borrowings | $ 5,000 | $ 11,010 |
Long-term bank borrowings, current portion | 12,975 | 5,770 |
Bank borrowings, current | 17,975 | 16,780 |
Long-term bank borrowings, non-current portion | ||
Total borrowings | $ 17,975 | $ 16,780 |
Bank and Other Borrowings (De_2
Bank and Other Borrowings (Details Textual) - USD ($) $ in Thousands | 1 Months Ended | 12 Months Ended | |||||
Apr. 30, 2019 | Dec. 17, 2018 | Nov. 28, 2018 | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | Nov. 28, 2017 | |
Bank Borrowings (Textual) | |||||||
Weighted average interest rate | 13.76% | 13.92% | |||||
Short term loan | $ 5,000 | $ 11,010 | |||||
Short-term bank borrowing with an outstanding balance | $ 8,604 | ||||||
Short term debt, description | The 2016 Warrants were replaced by Replacement Warrants to acquire an aggregate of 417,166 the Group's ordinary shares classified as permanent equity. As the modification of the 2016 Warrants term resulted in the reclassification of the 2016 Warrants from liability to equity, the 2016 Warrants amounted to US$1,544 were re-measured at fair value upon Merger and reclassified to additional paid in capital as of December 31, 2017. | ||||||
Interests and penalties payable | $ 2,000 | ||||||
Warrant [Member] | |||||||
Bank Borrowings (Textual) | |||||||
Short term debt, description | In August 2016, the Group issued 2,515,123 and 1,900,800 warrants ("2016 Warrants") to two banks in connection with a short term loan facility of $2,000,000 and a long term loan facility of $6,000,000 respectively, for working capital purpose. The 2016 Warrants entitled the banks to subscribe for Series D convertible redeemable preferred shares at the exercise price of $0.5059. The 2016 Warrants shall lapse and expire after 5 and 7 years from their issuance dates, respectively. The 2016 Warrants were replaced by Replacement Warrants to acquire an aggregate of 417,166 the Group's ordinary shares at the consummation date of the Merger. | ||||||
PFG5 [Member] | |||||||
Bank Borrowings (Textual) | |||||||
Weighted average interest rate | 10.07% | 8.40% | |||||
Short-term bank borrowing with an outstanding balance | $ 3,000 | $ 2,375 | $ 3,146 | ||||
Long-term bank borrowing, description | Bearing an interest rate of 8% per annum from May 1, 2018 to October 31, 2018 and an interest rate of 12% per annum from November 1, 2018 to April 30, 2021, which is the maturity date. | The Group entered into a convertible term loan agreement (the "PFG note") with PFG5, bearing an interest rate of 12% per annum. The principal of this loan is $1,000 which matures in full on December 17, 2023. The outstanding principal balance of $1,000 as of December 31, 2018 and accrued interest of $5 was fully repaid in December 2018. At any time while the PFG note was outstanding, upon notice only, PFG may elect to convert the PFG note into 208,768 ordinary shares of the Company at the conversion price of $4.79 per share. | |||||
Accrued interest | $ 159 | 185 | |||||
Additional accrued interest | $ 420 | ||||||
Convertible term loan | 1,000 | ||||||
Revolving line of credit | 9,500 | ||||||
PFG5 [Member] | Revolving Credit Facility [Member] | |||||||
Bank Borrowings (Textual) | |||||||
Accrued interest | $ 1,201 | ||||||
Revolving line of credit, description | On March 8, 2019, the Group entered into a new revolving line of credit facility (the “RLOC”) with PFG5 for $12,500. Under the agreement: (i) $9,500 may be drawn upon request at any time on or after the closing date and (ii) so long as there is no uncured default at the time of drawdown and if the Company has received at least $10,000 in cash proceeds from the sale of its equity securities to investors, then an additional $3,000 may be drawn. Any outstanding amounts under the RLOC will accrue interest at a rate of 11% per annum with a maturity date of March 8, 2021 (the “Maturity Date”). The Group shall pay interest only on principal outstanding on the RLOC until the Maturity Date, on which date the entire unpaid principal balance on the RLOC plus any and all accrued and unpaid interest shall be repaid. In March 2019, the Company drew down $9,500 from the RLOC. | ||||||
Accrued interest unpaid | $ 212 | ||||||
PFG4 [Member] | |||||||
Bank Borrowings (Textual) | |||||||
Weighted average interest rate | 10.07% | 8.40% | |||||
Short-term bank borrowing with an outstanding balance | $ 100 | ||||||
HHMC Microelectronic Co., Limited [Member] | |||||||
Bank Borrowings (Textual) | |||||||
Short term bank term | Three months | ||||||
Short term loan | $ 5,000 | ||||||
Interest rate | 0.04% | ||||||
Interest rate will increase | 0.10% | ||||||
Short-term bank borrowing with an outstanding balance | $ 2,405 | $ 5,000 | |||||
Repaid balance | $ 2,595 | ||||||
Maturity date | Jun. 30, 2019 | ||||||
Accrued interest | $ 1,080 | 68 | |||||
Additional accrued interest | 456 | ||||||
SPD Silicon Valley Bank Co., Ltd [Member] | |||||||
Bank Borrowings (Textual) | |||||||
Short-term bank borrowing with an outstanding balance | 8,604 | $ 7,648 | |||||
Maturity date | Aug. 31, 2018 | ||||||
Additional borrowing | 956 | ||||||
Long-term bank borrowing, description | The loan bore an interest rate of 8% per annum based on the LIBOR rate. | ||||||
Interest paid | $ 168 | $ 521 |
Accrued Expenses and Other Pa_3
Accrued Expenses and Other Payables (Details) - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 |
Payables and Accruals [Abstract] | ||
Payroll and welfare payable | $ 4,918 | $ 3,606 |
VAT, and other taxes payable | 489 | 2,551 |
Payables for office supply and utilities | 437 | 547 |
Payables for purchase of property and equipment | 49 | 50 |
Professional service fees | 1,414 | 3,347 |
Payables for share purchase consideration | 10,000 | 5,821 |
Payables for Samsung arbitration compensation | 4,356 | 2,767 |
Interest and penalty payable | 3,178 | |
Advance from customers | 4,076 | |
Payables to an agent | 3,571 | |
Others | 41 | 308 |
Accrued expenses and other payables | $ 32,529 | $ 18,997 |
Deferred Government Grants (Det
Deferred Government Grants (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Revenue Recognition and Deferred Revenue [Abstract] | |||
Balance at beginning of the year | $ 1,864 | $ 1,957 | $ 2,108 |
Recognized as other operating income | (1,854) | (281) | |
Foreign currency translation difference | (10) | (93) | 130 |
Balance at ending of the year | $ 1,864 | $ 1,957 |
Accumulated Other Comprehensi_3
Accumulated Other Comprehensive Loss (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Class of Stock [Line Items] | |||
Beginning balance | $ (2,143) | $ (507) | $ (2,626) |
Current year other comprehensive income loss (income) | 239 | (1,636) | 2,119 |
Ending balance | (1,904) | (2,143) | (507) |
Foreign currency translation [Member] | |||
Class of Stock [Line Items] | |||
Beginning balance | (2,143) | (507) | (2,626) |
Current year other comprehensive income loss (income) | (163) | (1,636) | 2,119 |
Ending balance | $ (2,306) | $ (2,143) | $ (507) |
Goodwill (Details)
Goodwill (Details) - USD ($) $ in Thousands | 9 Months Ended | 12 Months Ended |
Sep. 30, 2019 | Dec. 31, 2018 | |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Balance at beginning of the period | $ 736 | |
Foreign currency translation difference | $ (37) | $ 43 |
Balance at end of the period | $ 736 |
Mainland China Employee Contr_2
Mainland China Employee Contribution Plan (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Mainland China Employee Contribution Plan (Textual) | |||
Total expenses for employee contribution plan | $ 1,600 | $ 2,029 | $ 2,103 |
Discontinued operations expense | $ 538 | $ 517 | $ 424 |
Share Based Compensation (Detai
Share Based Compensation (Details) - 2007 Plan [Member] - USD ($) $ / shares in Units, $ in Thousands | 8 Months Ended | 12 Months Ended |
Aug. 18, 2017 | Dec. 31, 2016 | |
Number of options, Outstanding, Beginning | 27,456,943 | 32,037,240 |
Number of options, Granted | 9,085,000 | 610,000 |
Number of options, Forfeited | (8,007,606) | (5,190,297) |
Number of options, Outstanding, Ending | 28,534,337 | 27,456,943 |
Number of options, Vested and expected to vest | 28,534,337 | 27,456,943 |
Weighted average exercise price, Outstanding, Beginning | $ 0.30 | $ 0.30 |
Weighted average exercise price, Granted | 0.70 | 0.56 |
Weighted average exercise price, Forfeited | 0.04 | 0.34 |
Weighted average exercise price, Outstanding, Ending | 0.48 | 0.30 |
Weighted average exercise price, Vested and expected to vest | $ 0.48 | $ 0.30 |
Weighted average remaining contractual term (Years), Outstanding, Beginning | 5 years 3 months 4 days | 4 years 11 months 19 days |
Weighted average remaining contractual term (Years), Outstanding, Ending | 6 years 11 months 26 days | 5 years 3 months 4 days |
Weighted average remaining contractual term (Years), Vested and expected to vest | 6 years 11 months 26 days | 5 years 3 months 4 days |
Aggregate intrinsic value, Outstanding, Beginning | $ 308 | $ 308 |
Aggregate intrinsic value, Outstanding, Ending | 308 | |
Aggregate intrinsic value, Vested and expected to vest | $ 308 |
Share Based Compensation (Det_2
Share Based Compensation (Details 1) - Stock Options [Member] - USD ($) $ / shares in Units, $ in Thousands | 5 Months Ended | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2019 | Dec. 31, 2018 | |
Converted under Assumed Options: | |||
Number of options, Outstanding, Beginning | 2,695,194 | 2,508,805 | 2,825,390 |
Number of options, Granted | 180,000 | 280,000 | |
Number of options, Forfeited | (49,804) | (272,580) | (316,585) |
Number of options, Outstanding, Ending | 2,825,390 | 2,516,225 | 2,508,805 |
Weighted average exercise price, Outstanding, Beginning | $ 5.29 | $ 5.38 | |
Weighted average exercise price, Granted | $ 5.30 | 3.65 | |
Weighted average exercise price, Forfeited | 6.58 | 2.26 | 3.09 |
Weighted average exercise price, Outstanding, Ending | $ 5.38 | $ 5.29 | $ 5.29 |
Weighted average remaining contractual term (Years), Outstanding, Beginning | 6 years 11 months 26 days | 6 years 4 days | 6 years 5 months 5 days |
Weighted average remaining contractual term (Years), Outstanding, Ending | 6 years 5 months 5 days | 5 years 6 months 7 days | 6 years 4 days |
Aggregate intrinsic value, Outstanding, Beginning | $ 312 | $ 6,860 | |
Aggregate intrinsic value, Outstanding, Ending | $ 6,860 | $ 5,653 | $ 312 |
Share Based Compensation (Det_3
Share Based Compensation (Details 2) - $ / shares | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2017 | |
Expected life (years) | 10 years | 10 years |
Expected dividend yield | 0.00% | 0.00% |
Exercise multiple | $ 2.2 | $ 2.20 |
Post-vesting forfeit rate | 180.00% | 10.00% |
Fair value of underlying ordinary shares | $ 7.45 | |
Minimum [Member] | ||
Risk-free interest rates | 1.64% | 1.06% |
Expected volatility | 44.10% | 31.90% |
Fair value of underlying ordinary shares | $ 1.8 | |
Fair value of share option | $ 2.34 | |
Maximum [Member] | ||
Risk-free interest rates | 2.72% | 2.32% |
Expected volatility | 45.00% | 43.90% |
Fair value of underlying ordinary shares | $ 4.19 | |
Fair value of share option | $ 7.45 |
Share Based Compensation (Det_4
Share Based Compensation (Details 3) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Share-based Payment Arrangement [Abstract] | ||
Sales and marketing expenses | $ 103 | $ 359 |
General and administrative expenses | 232 | 254 |
Research and development expenses | 159 | 363 |
Total compensation expense | $ 494 | $ 976 |
Share Based Compensation (Det_5
Share Based Compensation (Details Textual) - USD ($) $ / shares in Units, $ in Thousands | Mar. 04, 2019 | Jun. 17, 2019 | Mar. 17, 2017 | Aug. 18, 2018 | Aug. 18, 2017 | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2016 | Dec. 31, 2017 | Dec. 31, 2015 |
Employee Stock [Member] | ||||||||||
Share Based Compensation (Textual) | ||||||||||
Options granted | 100,000 | |||||||||
Exercise price | $ 2.92 | |||||||||
Parent Company [Member] | ||||||||||
Share Based Compensation (Textual) | ||||||||||
Ordinary shares issued | 2,695,194 | |||||||||
Director [Member] | ||||||||||
Share Based Compensation (Textual) | ||||||||||
Options granted | 180,000 | 180,000 | ||||||||
Exercise price | $ 4.06 | $ 5.30 | ||||||||
2007 Plan [Member] | ||||||||||
Share Based Compensation (Textual) | ||||||||||
Aggregate intrinsic value | $ 308 | |||||||||
2007 Plan [Member] | Employees, Officers, And Directors [Member] | ||||||||||
Share Based Compensation (Textual) | ||||||||||
Exercise price | $ 0.56 | |||||||||
2007 Plan [Member] | Employees, Officers, And Directors [Member] | Minimum [Member] | ||||||||||
Share Based Compensation (Textual) | ||||||||||
Exercise price | $ 0.678 | |||||||||
2007 Plan [Member] | Employees, Officers, And Directors [Member] | Maximum [Member] | ||||||||||
Share Based Compensation (Textual) | ||||||||||
Exercise price | $ 0.859 | |||||||||
2007 Plan [Member] | ||||||||||
Share Based Compensation (Textual) | ||||||||||
Maximum aggregate number of shares | 38,700,000 | |||||||||
Terms of options, description | The terms of the options shall not exceed ten years from the date of grant. | |||||||||
Stock option vesting related description | 25% of the shares subject to the options shall vest on the first anniversary of the vesting commencement date, and 1/48 of the shares subject to the options shall vest each month thereafter over the next three years, provided the optionee continues to be a service provider to the Group. Thus, there is an explicit service condition of 4 years. In addition, the options contain a performance condition whereby vesting will commence upon the earlier to occur of an initial public offering or a change in control as defined in the 2007 Plan, provided there is continued employment of the optionees on such date. | |||||||||
Options granted | 9,085,000 | 610,000 | ||||||||
Purchase of aggregate shares | 5,500,000 | |||||||||
Aggregate intrinsic value | $ 308 | $ 308 | ||||||||
Ordinary shares were fully vested | 28,534,337 | 27,456,943 | ||||||||
Reverse acquisition - 2017 [Member] | ||||||||||
Share Based Compensation (Textual) | ||||||||||
Terms of options, description | At the IPO of the predecessor company of Pacific Special Acquisition Corp (“PSAC”) in October 2015, an option was issued to the underwriter of the IPO, EarlyBird Capital, Inc., to purchase up to 400,000 units at $10.00 per unit (“Unit Purchase Option”), where each unit of the option consists of one ordinary share of the Company, one right (convertible into one tenth of an ordinary share) and one warrant to purchase one half of one ordinary share at $12 per whole share. The option is fully vested at the merger of PSAC with Borqs International Holding Corp, and expires five years from the IPO, which is October 2020. | |||||||||
Purchase of aggregate shares | 2,516,225 | 2,508,805 | ||||||||
Aggregate intrinsic value | $ 5,653 | $ 312 | ||||||||
Share based compensation expense | $ 5,658 | |||||||||
Ordinary shares issued - 2017 Plan [Member] | ||||||||||
Share Based Compensation (Textual) | ||||||||||
Ordinary shares issued | 450,000 | |||||||||
Share based compensation expense | $ 324 | |||||||||
Total proceeds | $ 62 | |||||||||
Ordinary shares were fully vested | 450,000 |
Taxation (Details)
Taxation (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Components of profit before income taxes | |||
Non-PRC | $ (31,895) | $ (43,630) | $ (7,138) |
PRC | (637) | (25,097) | (3,310) |
Profit before income taxes | $ (32,532) | $ (68,727) | $ (10,448) |
Taxation (Details 1)
Taxation (Details 1) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Components of income tax expense | |||
Current | $ (52) | $ (1,382) | |
Deferred | 949 | (279) | (960) |
Income tax expense | $ 949 | $ (331) | $ (2,342) |
Taxation (Details 2)
Taxation (Details 2) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Income Tax Disclosure [Abstract] | |||
Profit (loss) before income taxes | $ (32,532) | $ (68,727) | $ (10,448) |
Income tax (expense) income computed at the statutory income tax rate at 25% | 7,356 | 17,182 | 2,612 |
Non-deductible expenses | 955 | (7,393) | (2,654) |
Non-taxation income | 753 | 68 | |
Preferential rate | (286) | (790) | (237) |
Current and deferred tax rate differences | (971) | 238 | 55 |
Foreign rate differences | 137 | (5,670) | (427) |
Change of valuation allowance | (7,834) | (4,202) | (1,294) |
Statutory income | (1,471) | (215) | |
R&D super deduction | 839 | 305 | |
Interest expenses | (250) | ||
Income tax (expense) benefit | $ 949 | $ (331) | $ (2,342) |
Taxation (Details 3)
Taxation (Details 3) - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 |
Deferred tax assets | ||
Inventories provision | $ 58 | $ 100 |
Accrued salary and welfare payable | 217 | 201 |
Property and equipment | 3 | |
Tax losses | 419 | 317 |
Valuation allowance | 275 | 18 |
Total deferred tax assets | 969 | 639 |
Deferred tax liabilities | ||
Intangible assets | 1,815 | 1,688 |
Deferred cost of revenue | 17 | 765 |
Total deferred tax liabilities | $ 1,832 | $ 2,453 |
Taxation (Details 4)
Taxation (Details 4) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
A roll-forward of unrecognized tax benefits is as follows: | |||
Balance at beginning of year | $ 2,020 | ||
Balance at end of year | 1,987 | $ 2,020 | |
Unrecognized Tax Benefits [Member] | |||
A roll-forward of unrecognized tax benefits is as follows: | |||
Balance at beginning of year | 2,020 | 2,016 | $ 1,873 |
Reversal based on tax positions related to prior years | |||
Additions based on tax positions related to the current year | 28 | ||
Foreign currency translation difference | (33) | 4 | 115 |
Balance at end of year | $ 1,987 | $ 2,020 | $ 2,016 |
Taxation (Details Textual)
Taxation (Details Textual) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Taxation (Textual) | |||
Statutory income tax rate | 25.00% | 25.00% | 25.00% |
Unrecognized tax benefits | $ 1,428 | $ 1,747 | |
Deferred tax assets related to tax loss carry forwards | 559 | 273 | |
Unrecognized tax benefits of ultimately recognized, will impact the effective tax rate | 1,987 | 1,747 | |
Interest expenses accrued in relation to the unrecognized tax benefit | |||
Accumulated interest expenses | 298 | $ 298 | |
Income tax rate | 29.12% | ||
Borqs HK [Member] | |||
Taxation (Textual) | |||
Net tax operating loss from subsidiaries | $ 38,946 | ||
Net tax operating loss expiration term, description | Will not expire. | ||
Profits tax rate | 16.50% | 16.50% | 16.50% |
Borqs India [Member] | |||
Taxation (Textual) | |||
Income tax expense | $ 124 | $ 331 | $ 2,342 |
Income tax rate | 29.12% | 29.12% | 32.45% |
Borqs Beijing [Member] | |||
Taxation (Textual) | |||
Income tax preferential rate, description | BORQS Beijing was qualified for a High and New Technology Enterprises (“HNTE”) since 2012 and was eligible for a 15% preferential tax rate from 2012 to 2014. In July 2015, BORQS Beijing obtained a new HNTE certificate, which will expire in July 2018. BORQS Beijing has successfully renewed the HNTE certificate in September 2018 with effective term of three years until 2020. In accordance with the PRC Income Tax Laws, an enterprise awarded with the HNTE status may enjoy a reduced EIT rate of 15%. For the years ended December 31, 2017, 2018 and 2019, BORQS Beijing enjoyed a preferential tax rate of 15%. | ||
Yuantel Telecom [Member] | |||
Taxation (Textual) | |||
Income tax preferential rate, description | Yuantel Telecom was qualified for a High and New Technology Enterprises (“HNTE”) since 2011 and is eligible for a 15% preferential tax rate from 2011 to 2013. In October 2014, Yuantel Telecom obtained a new HNTE certificate, which expired in October 2017. Yuantel Telecom has successfully renewed the HNTE certificate in December 2017 with effective term of three years until 2019. In accordance with the PRC Income Tax Laws, an enterprise awarded with the HNTE status may enjoy a reduced EIT rate of 15%. For the years ended December 31, 2017, 2018 and 2019, Yuantel Telecom enjoyed a preferential tax rate of 15%. | ||
EIT [Member] | |||
Taxation (Textual) | |||
Statutory income tax rate | 25.00% | ||
PRC [Member] | |||
Taxation (Textual) | |||
Statutory income tax rate | 25.00% | ||
Net tax operating loss from subsidiaries | $ 23,029 | ||
Net tax operating loss expiration term, description | Expire from 2020 to 2029. | ||
Withholding tax rate | 10.00% |
Related Party Transactions (Det
Related Party Transactions (Details) | 12 Months Ended | |
Dec. 31, 2019 | ||
Intel Capital Corporation ("Intel") and its affiliates [Member] | ||
Related Party Transaction [Line Items] | ||
Relationship with the Group | A substantial shareholder of the Group | |
Bluecap [Member] | ||
Related Party Transaction [Line Items] | ||
Relationship with the Group | A company controlled by a key management of the Group | |
Hareesh Ramanna [Member] | ||
Related Party Transaction [Line Items] | ||
Relationship with the Group | Executive Vice President and Co-General Manager of Connected Solutions Business Unit | |
Cloudminds (Hong Kong) Ltd. ("Cloudminds") [Member] | ||
Related Party Transaction [Line Items] | ||
Relationship with the Group | A company controlled by a director of the Company | [1] |
[1] | On December 18, 2018, the entity ceased to be a related party of the Company due to the resignation of this director. |
Related Party Transactions (D_2
Related Party Transactions (Details 1) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Intel (China) Co., Ltd. [Member] | |||
Related Party Transaction [Line Items] | |||
Software services provided to | $ 9 | ||
Intel Asia-Pacific Research and Development Ltd. [Member] | |||
Related Party Transaction [Line Items] | |||
Software services provided to | 79 | ||
Intel (China) Research Center Co., Ltd. [Member] | |||
Related Party Transaction [Line Items] | |||
Software services provided to | 8 | ||
Cloudminds [Member] | |||
Related Party Transaction [Line Items] | |||
Software services provided to | 1,373 | ||
Bluecap [Member] | |||
Related Party Transaction [Line Items] | |||
Loan from | 3,273 | 1,059 | |
Interest expense from loan from | 211 | 12 | |
Hareesh Ramanna [Member] | |||
Related Party Transaction [Line Items] | |||
Loan from | $ 22 |
Related Party Transactions (D_3
Related Party Transactions (Details Textual) - USD ($) $ in Thousands | Dec. 31, 2019 | Jul. 31, 2019 | Dec. 31, 2018 |
Related Party Transactions (Textual) | |||
Short-term loan | $ 5,000 | $ 11,010 | |
Bluecap Mobile Private Limited [Member] | |||
Related Party Transactions (Textual) | |||
Short-term loan | $ 1,325 | ||
Interest rate | 8.00% | ||
Outstanding principal balance | $ 3,273 | ||
Accrued interests | $ 211 | $ 12 |
Restricted Net Assets (Details)
Restricted Net Assets (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Restricted Net Assets (Textual) | ||
Statutory reserves | $ 2,097 | $ 2,097 |
Income tax, description | A foreign-invested enterprise is required to allocate at least 10% of its annual net profit to the general reserve until such reserve has reached 50% of its respective registered capital based on the enterprise's PRC statutory accounts. | |
Consolidated amount of VIEs | $ 84,138 | |
Subsidiaries [Member] | ||
Restricted Net Assets (Textual) | ||
Statutory reserves | $ 2,097 | $ 2,097 |
Equity (Details)
Equity (Details) - USD ($) $ in Thousands | Jan. 10, 2019 | Jan. 09, 2019 | Dec. 15, 2018 | Jan. 10, 2018 | May 20, 2019 | Apr. 18, 2019 | Nov. 30, 2018 | Nov. 27, 2018 | Dec. 31, 2019 | Dec. 31, 2018 | Feb. 28, 2018 |
Equity (Textual) | |||||||||||
Equity interest, percentage | 45.00% | ||||||||||
Variable interest entity percentage, description | The Company’s board of director approved the plan to dispose all of its tangible and intangibles assets related to the Consolidated VIEs through a series of agreements with Jinan Yuantel Communication Technology LLP (“Jinan Yuantel”), a Company controlled by a non-controlling interest shareholder individual, to dispose to Jinan Yuantel 20% of equity interest in Yuantel at a consideration of RMB25 million. The Company also authorized Jinan Yuantel to actively seek for investors on behalf of the Company to sell 45% of the equity interest in Yuantel held by Big Cloud Network at a consideration which is based on the expected share valuation no less than RMB180 million by June 30, 2019, for which, Jinan Yuantel will be granted the option to purchase the remaining 10% of the equity interest in Yuantel held by Big Cloud Network at a consideration of RMB10 upon achievement of the sale. Since the sale has not yet been completed as of the filing of this annual report, the Company has the right to not grant the option for the remaining 10% of equity interest. | The Consolidated VIEs contributed 21%, 18% and 29% of the Group's consolidated revenues for the years ended December 31, 2017, 2018 and 2019, respectively. As of December 31, 2018 and 2019, the Consolidated VIEs accounted for an aggregate of 16% and 22%, respectively, of the consolidated total assets, and 22% and 18%, respectively, of the consolidated total liabilities. | |||||||||
Ownership interest rate, percentage | 45.00% | ||||||||||
Investment agreement, description | Refer to Note 10 for 183,342 shares on January 10, 2019 related to long-term investments. | The Group recognized an accrual of $1,920 and $1,987, respectively, in unrecognized tax benefits and its interest (Note 17). The final outcome of the tax uncertainty is dependent upon various matters including tax examinations, interpretation of tax laws or expiration of statutes of limitation. However, due to the uncertainties associated with the status of examinations, including the protocols of finalizing audits by the relevant tax authorities, there is a high degree of uncertainty regarding the future cash outflows associated with these tax uncertainties. As of December 31, 2018 and 2019, the Group classified the accrual for unrecognized tax benefits as a non-current liability. | The Group recognized an accrual of $1,920 and $1,987, respectively, in unrecognized tax benefits and its interest (Note 17). The final outcome of the tax uncertainty is dependent upon various matters including tax examinations, interpretation of tax laws or expiration of statutes of limitation. However, due to the uncertainties associated with the status of examinations, including the protocols of finalizing audits by the relevant tax authorities, there is a high degree of uncertainty regarding the future cash outflows associated with these tax uncertainties. As of December 31, 2018 and 2019, the Group classified the accrual for unrecognized tax benefits as a non-current liability. | ||||||||
Ordinary shares issuance related, description | The Group issued an aggregate of 780,000 ordinary shares to certain advisors, in exchange for their services related to investors relations during the year ended December 31, 2019. The 780,000 shares were fully vested as of December 31, 2019. The Group recorded the fair value of the shares in an amount of $2,493 in compensation expenses which was included in general and administrative expenses. | ||||||||||
Cancelled ordinary shares | 966,136 | ||||||||||
Settlement of arbitration related, description | The Secretariat of the International Court of Arbitration for the International Chamber of Commerce issued a final award to Samsung Electronics Co., Ltd. ("Samsung") that constituted the final decision on the Group's dispute with Samsung over a sales contract. The court order required the Group to pay to Samsung total payments of $4,650 including: i) $4,280 as the "Principal Amount", plus (ii) accrued interest of $370 computed from March 31, 2019 on the outstanding balance of the Principal Amount at a simple interest rate of 9% per annum (together with the Principal Amount, collectively referred to as the "Settlement Payment"). On April 26, 2019, the Group entered into a settlement agreement with Samsung according to which, the Group shall pay the full and total amount of the Settlement Payment in equal monthly installments over a period of twenty-four months beginning on March 31, 2019. In addition, a total of 2,209,728 ordinary shares were issued to Samsung as escrow shares in the year 2019 as security for the payments. The Group recorded the fair value of the shares issued in an aggregate of $6,401 in additional paid-in capital, with a corresponding amount included in subscription receivable. Due to cash constraints, particularly due to the COVID-19 pandemic, the Group has not made monthly installments to Samsung since the fourth quarter of 2019, and Samsung has not pursued alternative means of repayment from the Group as of the filing of this annual report. | ||||||||||
Prepayment for value | $ 10,048 | ||||||||||
Share Purchase Agreement [Member] | |||||||||||
Equity (Textual) | |||||||||||
Investment agreement, description | The Group entered into a Share Purchase Agreement ("Purchase Agreement") with Shanghai KADI Machinery Technology Co., Ltd. ("KADI SH"), KADI Technologies Limited ("KADI HK") (collectively, "KADI") and Lin Hu and Shou Huajun, the sole shareholders of KADI SH and KADI HK (the "KADI's Selling Shareholders"), for the purchase of 60% of the issued and outstanding ordinary shares of KADI SH ("KADI SH Shares") and 60% of the issued and outstanding ordinary shares of KADI HK ("KADI HK Shares", together with the KADI SH Shares, the "KADI Shares"). The transaction with KADI consists of total cash consideration of $4,600 in installments and share consideration equivalent to $9,750 in installments upon achievement of earn-outs by KADI SH from 2018 to 2021. As of December 31, 2018, $600 was prepaid to KADI SH. The transaction did not close as of December 31, 2019 due to KADI not able to present audited financial statements as required by the earn-out provisions of the agreement and that KADI has not performed the ownership change registration at the local jurisdiction. Although KADI was not able to present audited financial statements as required by the earn-out provisions of the agreement and has not performed the ownership change registration, 1,632,555 of Borqs' ordinary shares were issued to KADI on January 9, 2019, for which the Group recorded the fair value of these shares in an aggregate of $5,217 in additional paid-in capital, with a corresponding amount included in subscription receivable. As a result, future capital commitments for KADI has been voided due to KADI's breach of provisions of the agreements. As of the filing of this annual report, the Group has cancelled all the ordinary shares of 589,005 shares, which were issued into escrow account with KADI. Also, the Group is in negotiation with KADI for a reduced ownership of KADI or a recission of the acquisition. | ||||||||||
Equity Financing Agreement [Member] | |||||||||||
Equity (Textual) | |||||||||||
Equity financing agreement, description | The Group entered into an equity financing agreement with Chongqing Youtong owned by the Chongqing Government in the PRC. According to the agreement, Chongqing Youtong purchased 9.9 % equity interest of the Company equivalent to 3,734,283 ordinary shares with a total purchase consideration of $13,865 on May 16, 2019, for which 75% of the total purchase consideration amounting to $10,399 in cash was received. The remaining 25% of the total purchase consideration amounting to $3,466 will be contributed in the form of real property and equipment (the "Property Investment") by Chongqing Youtong within six months from May 16, 2019 the date that the cash investment portion was completed. However, as of the filing of this annual report, the Property Investment has not yet been completed; and the Company is in the process of negotiating the acceptable value of the real property and equipment from Chongqing Youtong. The shares are unregistered and are subject to lock up provisions for one year. | ||||||||||
Stock Repurchase Agreement [Member] | |||||||||||
Equity (Textual) | |||||||||||
Stock repurchase agreement, description | On January 10, 2018, we entered into a stock repurchase agreement ("Stock Repurchase Agreement") with Zhengqi International Holding Limited ("Zhengqi"), pursuant to which we agreed to repurchase 966,136 of our ordinary shares that were originally issued and sold to Zhengqi on August 18, 2017, at an aggregate purchase price of approximately $10,070 or $10.40 per share. |
Convertible Redeemable Prefer_3
Convertible Redeemable Preferred Shares (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Issuance of Series E Preferred Shares | $ 9,000 | ||
Convertible Redeemable Preferred Shares [Member] | |||
Balance at beginning of the year | 68,862 | ||
Issuance of Series E Preferred Shares | 6,300 | ||
Beneficiary conversion feature of Series E Preferred Shares | (3,258) | ||
Change in redemption value | 6,956 | ||
Conversion to ordinary shares | (78,860) | ||
Balance at end of the year |
Convertible Redeemable Prefer_4
Convertible Redeemable Preferred Shares (Details Textual) - USD ($) $ / shares in Units, $ in Thousands | Mar. 02, 2017 | Feb. 08, 2017 | Oct. 12, 2009 | Oct. 08, 2008 | Aug. 20, 2014 | May 24, 2012 | Feb. 14, 2011 | Aug. 19, 2009 | Jun. 26, 2009 | Sep. 26, 2008 | Mar. 17, 2008 | Dec. 27, 2007 | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 |
Convertible Redeemable Preferred Shares (Textual) | |||||||||||||||
Purchase price | $ 7.45 | ||||||||||||||
Net cash proceeds | $ 9,000 | ||||||||||||||
Dividends annual rate | 6.00% | ||||||||||||||
Percentage of original purchase price | 100.00% | ||||||||||||||
Redemption, description | Convertible Redeemable Preferred Shares are redeemed at a price equal to 150% the original purchase price plus any unpaid declared dividends. | ||||||||||||||
Series B Preferred Stock [Member] | |||||||||||||||
Convertible Redeemable Preferred Shares (Textual) | |||||||||||||||
Convertible preferred stock shares | 3,571,428 | 15,000,000 | 64,285,715 | ||||||||||||
Purchase price | $ 0.21 | $ 0.21 | $ 0.21 | ||||||||||||
Issuance costs | $ 158 | ||||||||||||||
Net cash proceeds | $ 14,242 | ||||||||||||||
Total cash consideration | $ 17,400 | $ 17,400 | $ 17,400 | ||||||||||||
Consideration, description | Includes cash proceeds of $14,400 and $3,000 upon conversion of convertible notes. | ||||||||||||||
Series C Preferred Stock [Member] | |||||||||||||||
Convertible Redeemable Preferred Shares (Textual) | |||||||||||||||
Convertible preferred stock shares | 5,454,545 | 38,181,817 | |||||||||||||
Purchase price | $ 0.275 | $ 0.275 | |||||||||||||
Issuance costs | $ 183 | ||||||||||||||
Net cash proceeds | 11,817 | ||||||||||||||
Total cash consideration | $ 12,000 | $ 12,000 | |||||||||||||
Series D Preferred Stock [Member] | |||||||||||||||
Convertible Redeemable Preferred Shares (Textual) | |||||||||||||||
Convertible preferred stock shares | 23,721,443 | ||||||||||||||
Purchase price | $ 0.33725 | ||||||||||||||
Issuance costs | 126 | ||||||||||||||
Net cash proceeds | 7,874 | ||||||||||||||
Total cash consideration | $ 8,000 | ||||||||||||||
Series A Preferred Stock [Member] | |||||||||||||||
Convertible Redeemable Preferred Shares (Textual) | |||||||||||||||
Convertible preferred stock shares | 5,000,000 | 12,000,000 | 3,100,000 | 19,800,000 | |||||||||||
Purchase price | $ 0.20 | $ 0.20 | $ 0.20 | $ 0.20 | |||||||||||
Issuance costs | 91 | ||||||||||||||
Net cash proceeds | $ 7,889 | ||||||||||||||
Total cash consideration | $ 7,980 | $ 7,980 | $ 7,980 | $ 7,980 | |||||||||||
Series E One Preferred Shares [Member] | |||||||||||||||
Convertible Redeemable Preferred Shares (Textual) | |||||||||||||||
Convertible preferred stock shares | 7,094,164 | 7,094,164 | |||||||||||||
Purchase price | $ 0.678 | $ 0.678 | |||||||||||||
Warrants, exercise price | $ 0.001 | $ 0.001 | |||||||||||||
Issuance costs | $ 312 | $ 312 | |||||||||||||
Net cash proceeds | $ 9,008 | $ 9,008 | |||||||||||||
Converted to ordinary shares amount | $ 2,708 | ||||||||||||||
Issuances of convertible redeemable preferred shares | 2,950,036 | 10,325,126 | |||||||||||||
Series E Preferred Stock [Member] | |||||||||||||||
Convertible Redeemable Preferred Shares (Textual) | |||||||||||||||
Original purchase price percentage | 150.00% | ||||||||||||||
Series E Preferred Stock One [Member] | |||||||||||||||
Convertible Redeemable Preferred Shares (Textual) | |||||||||||||||
Original purchase price percentage | 150.00% | ||||||||||||||
Series E Preferred Stock Two [Member] | |||||||||||||||
Convertible Redeemable Preferred Shares (Textual) | |||||||||||||||
Original purchase price percentage | 150.00% |
Earnings (Loss) Per Share (Deta
Earnings (Loss) Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Numerator: | |||
Net income (loss) from continuing operations | $ (31,583) | $ (69,058) | $ (12,790) |
Less: Net income (loss) attributable to noncontrolling interest from continuing operation | 5 | (104) | (82) |
Net income (loss) from continuing operations attributable to Borqs Technologies, Inc. | (31,588) | (68,954) | (12,569) |
Accretion to redemption value of preferred shares for continuing operations | (6,956) | ||
Net (loss) income from continuing operations attributable to Borqs Technologies, Inc.'s ordinary shareholders | (31,588) | (68,954) | (19,664) |
Net (loss) income from discontinued operations | (4,151) | (2,941) | 431 |
Less: Net (loss) income attributable to noncontrolling interest from discontinued operation | (1,330) | (131) | 292 |
Net (loss) income from discontinued operations attributable to Borqs Technologies, Inc. | (2,822) | (2,810) | 139 |
Net loss attributable to Borqs Technologies, Inc.'s ordinary shareholders | $ (34,409) | $ (71,764) | $ (19,525) |
Denominator: | |||
Weighted-average number of ordinary shares - basic | 35,919,014 | 31,200,056 | 12,842,671 |
Weighted-average number of ordinary shares - diluted | 35,919,014 | 31,200,056 | 12,842,671 |
Weighted-average number of shares outstanding from discontinued operations - basic | 33,114,303 | 31,200,056 | 12,842,671 |
Weighted-average number of shares outstanding from discontinued operations - diluted | 33,114,303 | 31,200,056 | 12,842,671 |
Net earnings (loss) per share from continuing operations attributable to Borqs Technologies, Inc. | |||
Earnings (loss) per share - Basic: | $ (0.88) | $ (2.21) | $ (1.53) |
Earnings (loss) per share - Diluted: | (0.88) | (2.21) | (1.53) |
Net (loss) earnings per share from discontinued operations attributable to Borqs Technologies, Inc. | |||
(Loss) earnings per share - Basic: | (0.08) | (0.09) | 0.01 |
(Loss) earnings per share - Diluted: | (0.08) | (0.09) | 0.01 |
Net loss per share attributable to Borqs Technologies, Inc. | |||
Loss per share - Basic: | (0.96) | (2.30) | (1.52) |
Loss per share - Diluted: | $ (0.96) | $ (2.30) | $ (1.52) |
Commitments and Contingencies (
Commitments and Contingencies (Details) | Jan. 10, 2019 | Nov. 27, 2018 | Dec. 31, 2019 | Dec. 31, 2018 |
Commitments and Contingencies (Textual) | ||||
Capital commitments and contingencies agreement, description | Refer to Note 10 for 183,342 shares on January 10, 2019 related to long-term investments. | The Group recognized an accrual of $1,920 and $1,987, respectively, in unrecognized tax benefits and its interest (Note 17). The final outcome of the tax uncertainty is dependent upon various matters including tax examinations, interpretation of tax laws or expiration of statutes of limitation. However, due to the uncertainties associated with the status of examinations, including the protocols of finalizing audits by the relevant tax authorities, there is a high degree of uncertainty regarding the future cash outflows associated with these tax uncertainties. As of December 31, 2018 and 2019, the Group classified the accrual for unrecognized tax benefits as a non-current liability. | The Group recognized an accrual of $1,920 and $1,987, respectively, in unrecognized tax benefits and its interest (Note 17). The final outcome of the tax uncertainty is dependent upon various matters including tax examinations, interpretation of tax laws or expiration of statutes of limitation. However, due to the uncertainties associated with the status of examinations, including the protocols of finalizing audits by the relevant tax authorities, there is a high degree of uncertainty regarding the future cash outflows associated with these tax uncertainties. As of December 31, 2018 and 2019, the Group classified the accrual for unrecognized tax benefits as a non-current liability. | |
Settlement of arbitration related, description | The Secretariat of the International Court of Arbitration for the International Chamber of Commerce issued a final award to Samsung Electronics Co., Ltd. ("Samsung") that constituted the final decision on the Group's dispute with Samsung over a sales contract. The court order required the Group to pay to Samsung total payments of $4,650 including: i) $4,280 as the "Principal Amount", plus (ii) accrued interest of $370 computed from March 31, 2019 on the outstanding balance of the Principal Amount at a simple interest rate of 9% per annum (together with the Principal Amount, collectively referred to as the "Settlement Payment"). On April 26, 2019, the Group entered into a settlement agreement with Samsung according to which, the Group shall pay the full and total amount of the Settlement Payment in equal monthly installments over a period of twenty-four months beginning on March 31, 2019. In addition, a total of 2,209,728 ordinary shares were issued to Samsung as escrow shares in the year 2019 as security for the payments. Due to cash constraints, particularly due to the COVID-19 pandemic, the Group has not made monthly installments to Samsung since the fourth quarter of 2019, and Samsung has not pursued alternative means of repayment from the Group as of the filing of this annual report. |
Segment Reporting (Details)
Segment Reporting (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Schedule of group's operating segment | |||
Total net revenue | $ 98,958 | $ 128,420 | $ 122,233 |
Consolidated [Member] | |||
Schedule of group's operating segment | |||
Total net revenue | 98,958 | 128,420 | 122,233 |
PRC [Member] | |||
Schedule of group's operating segment | |||
Total net revenue | 1,701 | 4,282 | 17,687 |
United States [Member] | |||
Schedule of group's operating segment | |||
Total net revenue | 21,746 | 15,663 | 23,312 |
India [Member] | |||
Schedule of group's operating segment | |||
Total net revenue | 69,646 | 96,550 | 70,421 |
Rest of the world [Member] | |||
Schedule of group's operating segment | |||
Total net revenue | $ 5,865 | $ 11,925 | $ 10,813 |
Segment Reporting (Details Text
Segment Reporting (Details Textual) | 12 Months Ended |
Dec. 31, 2019Segment | |
Segment Reporting (Textual) | |
Number of reportable segments | 1 |
Subsequent Events (Details)
Subsequent Events (Details) $ in Thousands | 12 Months Ended |
Dec. 31, 2019USD ($) | |
Subsequent Events (Textual) | |
Description of disposal | For the intended sale of the MVNO Business Unit, due to the investigation into several individuals employed by the MVNO business unit that was initiated in September 2019, only partial sales proceeds was received in 2019 resulting in the Group’s ownership of Yuantel reduced to 45% as of December 31, 2019. The Group still maintained control of the operations of Yuantel through influence on the board and operational management. The Group executed a new agreement with the buyers of the MVNO Business Unit as of September 1, 2020 for approximately RMB 30 million. The agreement is filed as an exhibit with this annual report. If the balance of the sales proceeds is received by September 30, 2020 as stipulated in the agreement which was later postponed to October 2020 by both parties, the sale will be deemed completed. |
Fair value of debt conversion | $ 3,500 |
Workforce In India [Meember] | |
Subsequent Events (Textual) | |
Operational costs reduction, percentage | 20.00% |
Headcount In China [Member] | |
Subsequent Events (Textual) | |
Operational costs reduction, percentage | 40.00% |
Fair Value Measurements (Detail
Fair Value Measurements (Details) $ in Thousands | 12 Months Ended |
Dec. 31, 2019USD ($) | |
Warrant liabilities | $ 1,344 |
Liabilities | 1,344 |
Quoted prices in active markets for identical assets (Level 1) [Member] | |
Warrant liabilities | |
Liabilities | |
Significant other observable inputs (Level 2) [Member] | |
Warrant liabilities | |
Liabilities | |
Unobservable inputs (Level 3) [Member] | |
Warrant liabilities | 1,344 |
Liabilities | $ 1,344 |
Fair Value Measurements (Deta_2
Fair Value Measurements (Details 1) - Warrant liabilities [Member] - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Fair value | $ 1,344 | |
Increase in liability | 1,332 | |
Changes in the fair value | 200 | 12 |
Fair value | 1,544 | 1,344 |
Transfer to permanent equity | (1,544) | |
Fair value | $ 1,344 |
Parent Company Only condensed_3
Parent Company Only condensed Financial Information (Details) - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 |
Current assets | |||
Cash and cash equivalents | $ 1,001 | $ 1,931 | $ 13,009 |
Prepaid expenses and other current assets | 28,837 | 27,586 | |
Total current assets | 35,150 | 53,834 | |
Non-current assets | |||
Total non-current assets | 21,648 | 26,558 | |
Total assets | 56,798 | 80,392 | |
Current liabilities | |||
Accrued expenses and other payables | 32,529 | 18,997 | |
Short-term bank and other borrowings | 5,000 | 11,010 | |
Total current liabilities | 99,573 | 83,147 | |
Total liabilities | 105,503 | 102,866 | |
Shareholders' equity | |||
Additional paid-in capital | 150,455 | 124,062 | |
Accumulated deficit | (179,672) | (146,194) | |
Accumulated other comprehensive loss | (1,904) | (2,143) | |
Total shareholders’ equity (deficit) | (44,311) | (22,178) | |
Total liabilities and shareholders’ equity (deficit) | 56,798 | 80,392 | |
Borqs International [Member] | |||
Current assets | |||
Cash and cash equivalents | |||
Prepaid expenses and other current assets | 59 | 10,076 | |
Amount due from related parties | 4,575 | 6,893 | |
Total current assets | 4,634 | 16,969 | |
Non-current assets | |||
Investments in subsidiaries and Consolidated VIEs | (35,378) | (32,236) | |
Total non-current assets | (35,378) | (32,236) | |
Total assets | (30,744) | (15,267) | |
Current liabilities | |||
Accrued expenses and other payables | 10,738 | 6,911 | |
Short-term bank and other borrowings | |||
Total current liabilities | 10,738 | 6,911 | |
Total liabilities | 10,738 | 6,911 | |
Shareholders' equity | |||
Additional paid-in capital | 141,377 | 124,062 | |
Accumulated deficit | (181,081) | (144,097) | |
Accumulated other comprehensive loss | (1,778) | (2,143) | |
Total shareholders’ equity (deficit) | (41,482) | (22,178) | |
Total liabilities and shareholders’ equity (deficit) | $ (30,744) | $ (15,267) |
Parent Company Only condensed_4
Parent Company Only condensed Financial Information (Details 1) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Operating Expenses | |||
General and administrative expenses | $ 24,776 | $ 52,031 | $ 18,616 |
Operating loss | (29,155) | (66,668) | (8,407) |
Interest expense | (4,972) | (2,578) | (1,832) |
Loss before income taxes | (32,532) | (68,727) | (10,448) |
Income tax expense | 949 | (331) | (2,342) |
Net loss | (35,734) | (71,999) | (12,359) |
Parent Company [Member] | |||
Operating Expenses | |||
General and administrative expenses | (1,949) | (15,018) | (856) |
Operating loss | (1,949) | (15,018) | (856) |
Interest expense | (68) | ||
Share of profits (losses) of subsidiaries and Consolidated VIEs | (24,010) | (56,981) | (18,601) |
Loss before income taxes | (25,959) | (71,999) | (19,525) |
Income tax expense | |||
Net loss | $ (25,959) | $ (71,999) | $ (19,525) |
Parent Company Only condensed_5
Parent Company Only condensed Financial Information (Details 2) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Condensed Financial Statements, Captions [Line Items] | |||
Net profit (loss) | $ (34,409) | $ (71,764) | $ (12,569) |
Other comprehensive (loss) income, net of tax of nil: | |||
Foreign currency translation adjustments, net of tax of nil | (62) | (1,709) | 2,207 |
Other comprehensive income (loss), net of tax of nil: | |||
Comprehensive income (loss) | (35,796) | (73,708) | (10,152) |
Comprehensive income (loss) attributable to the Company's ordinary shareholders | (36,300) | (73,400) | (10,450) |
Parent Company [Member] | |||
Condensed Financial Statements, Captions [Line Items] | |||
Net profit (loss) | (25,959) | (71,999) | (12,569) |
Other comprehensive (loss) income, net of tax of nil: | |||
Foreign currency translation adjustments, net of tax of nil | (121) | (1,709) | 2,119 |
Other comprehensive income (loss), net of tax of nil: | |||
Comprehensive income (loss) | (26,080) | (73,708) | (10,450) |
Comprehensive income (loss) attributable to the Company's ordinary shareholders | $ (26,584) | $ (73,400) | $ (10,450) |
Parent Company Only condensed_6
Parent Company Only condensed Financial Information (Details 3) - USD ($) $ in Thousands | 12 Months Ended | |||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Condensed Financial Statements, Captions [Line Items] | ||||
Net cash generated from operating activities | $ (7,373) | $ 2,581 | $ (12,633) | |
Net cash used in investing activities | (735) | (4,261) | (8,120) | |
Net cash generated from (used in) financing activities | 11,601 | (11,540) | 31,861 | |
Net increase (decrease) in cash and cash equivalent and restricted cash | 5,333 | (13,544) | 11,756 | |
Cash and cash equivalents and restricted cash at the beginning of year | 8,308 | 2,975 | 16,519 | $ 4,763 |
Cash and cash equivalents and restricted cash at end of year | 8,308 | 2,975 | 16,519 | 4,763 |
Parent Company [Member] | ||||
Condensed Financial Statements, Captions [Line Items] | ||||
Net cash generated from operating activities | 4,118 | |||
Net cash used in investing activities | (10,048) | (17,117) | ||
Net cash generated from (used in) financing activities | 12,986 | |||
Net increase (decrease) in cash and cash equivalent and restricted cash | (10,048) | (13) | ||
Cash and cash equivalents and restricted cash at the beginning of year | 10,048 | 15 | ||
Cash and cash equivalents and restricted cash at end of year | 10,048 | $ 15 | ||
Reconciliation of cash and cash equivalents and restricted cash | ||||
Cash and cash equivalents at end of the year | 2 | |||
Restricted cash at the end of the year | ||||
Total cash and cash equivalents and restricted cash at the end of year | $ 2 |
Parent Company Only condensed_7
Parent Company Only condensed Financial Information (Details 4) - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 |
Borqs HK [Member] | ||
Condensed Financial Statements, Captions [Line Items] | ||
Amount due from related parties | $ (3,286) | $ (1,018) |
Borqs Beijing [Member] | ||
Condensed Financial Statements, Captions [Line Items] | ||
Amount due from related parties | $ 7,862 | $ 7,911 |