UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C.  20549

 

FORM 6-K

 

REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13A-16 OR 15D-16
OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the month of September 2021

 

Commission File Number 001-37593

 

BORQS TECHNOLOGIES, INC.

 

(Translation of registrant’s name into English)

  

Suite 309, 3/F
Dongfeng KASO
Dongfengbeiqiao, Chaoyang District
Beijing 100016, China

 

(Address of principal executive offices)

 

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.

 

Form 20-F           Form 40-F

 

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): .

 

Note: Regulation S-T Rule 101(b)(1) only permits the submission in paper of a Form 6-K if submitted solely to provide an attached annual report to security holders.

 

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): .

 

Note: Regulation S-T Rule 101(b)(7) only permits the submission in paper of a Form 6-K if submitted to furnish a report or other document that the registrant foreign private issuer must furnish and make public under the laws of the jurisdiction in which the registrant is incorporated, domiciled or legally organized (the registrant’s “home country”), or under the rules of the home country exchange on which the registrant’s securities are traded, as long as the report or other document is not a press release, is not required to be and has not been distributed to the registrant’s security holders, and, if discussing a material event, has already been the subject of a Form 6-K submission or other Commission filing on EDGAR.

 

This Report on Form 6-K is hereby incorporated by reference into the registrant’s Registration Statement on Form S-8 (File No. 333-257470), to be a part thereof from the date on which this report is submitted, to the extent not superseded by documents or reports subsequently filed or furnished.

 

 

 

 

 

 

INFORMATION CONTAINED IN THIS FORM 6-K REPORT 

 

As required by Nasdaq Rule 5250(c)(2), Borqs Technologies Inc. (the “Company”) hereby submits its interim balance sheet and income statement for its second quarter ended on June 30, 2021, and this submission is made within six months following the end of the said quarterly period. The consolidated financial statements contained herein are unaudited and prepared by management of the Company.

 

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BORQS TECHNOLOGIES, INC.

UNAUDITED CONSOLIDATED BALANCE SHEETS

(Amounts in thousands of US dollar (“US$”), unless otherwise stated)

 

    As of June 30,  
    2020     2021  
    US$     US$  
ASSESTS            
Current assets:            
Cash and cash equivalents     1,199       8,792  
Accounts receivable     3,289       3,258  
Inventories - net     4,209       12,787  
Prepaid expenses and other current assets, net     20,728       12,603  
Current assets held for sale     5,852       -  
Total current assets     35,277       37,440  
Non-current assets:                
Property and equipment, net     158       255  
Intangible assets, net     7,859       2,830  
Right of Use Asset     632       681  
Deferred tax assets     969       974  
Non-current assets held for sale     10,876       -  
Total non-current assets     20,494       4,740  
Total assets     55,771       42,180  
LIABILITIES AND SHAREHOLDERS’ EQUITY                
Current liabilities:                
Accounts payable     22,171       7,157  
Accrued expenses and other payables     30,674       15,242  
Advances from customers     5,314       4,534  
Lease Liabilities- current     818       681  
Amount due to related parties-current     3,484       3,133  
Income tax payable     1,410       266  
Long-term institution borrowings - current portion     11,750       -  
Current liabilities held for sale     17,117       -  
Total current liabilities     92,738       31,013  
Non-current liabilities:                
Unrecognized tax benefits     1,987       2,146  
Deferred tax liability     1,832       950  
Deferred revenues    
-
     
-
 
Other non-current liabilities    
-
     
-
 
Long-term payable     119       217  
Deferred government grants     -       247  
Non-current liabilities held for sale     1,724       -  
Total non-current liabilities     5,662       3,560  
Total liabilities     98,400       34,573  
Commitments and contingencies    
 
     
 
 
Shareholders’ equity                
Ordinary shares                
Additional paid-in capital     174,941       232,932  
Subscription receivables     (15,287 )     (19,367 )
Statutory reserve     2,097       1,872  
Accumulated deficit     (199,358 )     (207,717 )
Accumulated other comprehensive loss     (1,407 )     -  
Total Borqs Technologies, Inc. shareholders’ equity     (39,014 )     7,720  
Noncontrolling interest     (3,615 )     (113 )
Total shareholders’ equity     (42,629 )     7,607  
Total liabilities and shareholders’ equity     55,771       42,180  

 

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BORQS TECHNOLOGIES, INC.

UNAUDITED CONSOLIDATED STATEMENT OF OPERATIONS

(Amounts in thousands of US$, unless otherwise stated)

 

    For the six months ended
June 30,
 
    2020     2021  
    US$     US$  
Net revenues:            
Software     4,804       5,490  
Hardware     6,212       7,007  
                 
Total net revenues     11,016       12,497  
                 
Cost of revenues                
Software     (3,568 )     (4,216 )
Hardware     (5,964 )     (6,501 )
Total cost of revenues     (9,532 )     (10,717 )
                 
Total gross (loss) profit     1,484       1,780  
                 
Operating expenses:                
Sales and marketing expenses     (375 )     (218 )
General and administrative expenses     (14,086 )     (24,743 )
Research and development expenses     (3,471 )     (3,285 )
                 
                 
Total operating expenses     (17,932 )     (28,246 )
                 
Other operating income    
-
     
-
 
                 
Operating income (loss)     (16,448 )     (26,466 )
                 
Interest income     14       3  
Interest expense     (1,473 )     (2,694 )
Other income     4       31  
Other expense     (12 )     (219 )
Foreign exchange income (loss)     207       (222 )
                 
Income (loss) from continuing operations, before income taxes     (17,708 )     (29,567 )
                 
Income tax (expense) benefit     6      
-
 
                 
Net income (loss) from continuing operations     (17,702 )     (29,567 )
Discontinued operation                
(Loss) income from operations of discontinued entities     (3,031 )    
-
 
Income tax benefit (expense)    
-
         
Net (Loss) income on discontinued operations     (3,031 )    
-
 
                 
Net income (loss)     (20,733 )     (29,567 )
                 
Less: Net income (loss) attributable to noncontrolling interest     (1,047 )     1  
                 
Net income (loss) attributable to Borqs Technologies, Inc.     (19,686 )     (29,568 )

 

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Summary discussions on the results of the first half of 2021.

 

Due to the completion of the sale of our Mobile Virtual Network Operator (“MVNO”) Business Unit on October 29, 2020, the Company no longer has a variable interest equity (“VIE”) in its operations as of December 31, 2020 and also there were no assets or liabilities held for sale for the interim period ended June 30, 2021.

 

Our revenue for the six months ended June 30, 2021 was $12.5 million as compared to $11.0 million for the same period of 2020. The increase in general and administrative expenses in the first half of 2021 was due to stock-based compensation that the Company incurred in lieu of cash payments; and the low levels of sales in 2021, and also in 2020, were due to the negative effects of the COVID-19 global pandemic which directly impacted our business activities and hampered our working capital, when some of our customers significant reduced order from the pre-pandemic levels while some factories and suppliers in China that we worked with were closed during this period of time.

 

Geographically, our sales were mainly from the U.S., India and Europe. For the interim period ended June 30, 2021, our customers in the U.S., India, Europe and China accounted for 30.9%, 30.4%, 27.3% and 11.4% respectively.

 

The below table shows the reconciliation of EBITDA and Adjusted EBITDA from the US-GAAP net losses for the interim periods ended June 30, 2021.

 

    For the six months ended  
    June 30  
    2020     2021  
             
Net income (loss) from continuing operations     (17,702 )     (29,567 )
                 
Income tax (expense) benefit     6      
-
 
Interest expense     (1,459 )     (2,691 )
Depreciation and amortization     (1,615 )     (706 )
Other expense     (8 )     (188 )
Foreign exchange gain (loss)     207       (222 )
                 
EBITDA     (14,833 )     (25,760 )

 

Impairment of intangible assets     (1,375 )    
-
 
Non-recurring project costs    
-
      (76 )
Stock based compensation     (10,699 )     (19,326 )
Stock based financial expenses    
-
      (3,556 )
                 
Adjusted EBITDA     (2,760 )     (2,802 )

 

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SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

  BORQS TECHNOLOGIES INC.
  (registrant)
   
Dated: September 28, 2021 By: /s/ Anthony K. Chan
    Anthony K. Chan
    Chief Financial Officer

 

 

 

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