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 December 2019

 

Commission File Number 001-37593

 

  BORQS TECHNOLOGIES, INC.  
  (Translation of registrant’s name into English)  

 

 

Building B23-A,

Universal Business Park

No. 10 Jiuxianqiao Road

Chaoyang District, Beijing, China

 
  (Address of principal executive offices)  

 

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

 

Form 20-F ☒       Form 40-F ☐

 

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

 

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

 

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

 

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

 

 

 

 

 

   

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 as of and income statement for six months ended on June 30, 2019. The consolidated financial statements contained herein are unaudited and prepared by management of the Company.

 

BORQS TECHNOLOGIES, INC.

UNAUDITED CONSOLIDATED BALANCE SHEETS

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

 

    As of June 30,  
    2018     2019  
    US$     US$  
ASSETS            
Current assets:            
Cash and cash equivalents     747       8,153  
Accounts receivable     32,699       28,055  
Inventories, net     13,901       5,969  
Deferred cost of revenues     730       1,784  
Prepaid expenses and other current assets, net     33,439       28,712  
Amounts due from discontinued operations     13,800       3,428  
Current assets held for sale     19,753       21,341  
                 
Total current assets     115,069       97,442  
                 
Non-current assets:                
Property and equipment, net     414       229  
Intangible assets, net     12,565       11,235  
Long-term investments     11,662       11,662  
Deferred tax assets     273       373  
Deferred cost of revenues     3,889       3,806  
Other non-current assets     3,555       555  
Non-current assets held for sale     -       -  
                 
Total non-current assets     32,358       27,860  
                 
Total assets     147,427       125,302  

 

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LIABILITIES AND SHAREHOLDERS’ EQUITY            
Current liabilities:            
Accounts payable     8,672       13,709  
Accrued expenses and other payables     13,921       21,337  
Advances from customers     6,307       4,922  
Deferred revenues     2,708       3,365  
Income tax payable     677       700  
Short-term bank and other borrowings     11,615       7,402  
Long-term bank borrowings - current portion     6,532       2,000  
Current liabilities held for sale     27,018       27,155  
                 
Total current liabilities     77,450       80,589  
                 
Non-current liabilities:                
Unrecognized tax benefits     2,780       2,386  
Deferred tax liabilities     2,635       2,341  
Deferred revenues     4,277       5,413  
Other non-current liabilities     -       11,765  
Long-term payables     5,563       3,401  
Deferred government grants     1,933       1,860  
Non-current liabilities held for sale     -       -  
                 
Total non-current liabilities     17,188       27,166  
                 
Total liabilities     94,638       107,755  
                 
Commitments and contingencies                
                 
Shareholders’ equity:                
Ordinary shares     -       -  
Additional paid-in capital     124,058       134,462  
Statutory reserve     2,156       2,143  
Accumulated deficit     (71,482 )     (116,811 )
Accumulated other comprehensive loss     (1,494 )     (2,279 )
                 
Total Borqs Technologies, Inc. shareholders’ equity     53,238       17,515  
                 
Noncontrolling interest     (449 )     31  
                 
Total shareholders’ equity     52,789       17,546  
                 
Total liabilities, noncontrolling interest and shareholders’ equity     147,427       125,302  

 

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BORQS TECHNOLOGIES, INC.

UNAUDITED CONSOLIDATED STATEMENT OF OPERATIONS

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

 

    For the half years ended
June 30,
 
    2018     2019  
    US$     US$  
Net Revenues:            
Software     3,880       6,692  
Hardware     95,136       20,497  
                 
Total net revenues     99,017       27,189  
                 
Software     (1,437 )     (4,983 )
Hardware     (85,934 )     (9,726 )
                 
Total cost of revenues     (87,371 )     (14,709 )
                 
Total gross profit (loss)     11,646       12,480  
                 
Operating expenses:                
Sales and marketing expenses     (1,198 )     (510 )
General and administrative expenses     (5,036 )     (9,061 )
Research and development expenses     (1,709 )     (2,648 )
Changes in the fair value of warrant liabilities             -  
                 
Total operating expenses     (7,943 )     (12,219 )
                 
Other operating income     -       -  
                 
Operating income (loss)     3,703       261  
                 
Interest income     1       1  
Interest expense     (1,361 )     (1,231 )
Other income     12       8  
Other expense     (4 )     (804 )
Foreign exchange gain (loss)     259       38  
                 
Income (loss) from continuing operations, before income taxes     2,610       (1,727 )
                 
Income tax expense     (1,106 )     (407 )
                 
Net income (loss) from continuing operations     1,504       (2,134 )

 

Discontinued operations

           
(Loss) income from operations of discontinued entities     1,822       (2,329 )
Income tax benefit (expense)     69       (178 )
                 
Net (loss) income on discontinued operations     1,891       (2,507 )
                 
Net income (loss)     3,395       (4,641 )
                 
Less: net income (loss) attributable to noncontrolling interest     366       87  
                 
Net income (loss) attributable to Borqs Technologies, Inc.     3,029       (4,728 )

  

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Summary discussions on the results of the first half of 2019.

 

Due to the pending sale of our MVNO Business Unit (the “MVNO BU”), intended to be completed approximately between October and December 2020, the historical unaudited interim financial statements presented above, for the periods ended June 30, 2019 and 2018, are prepared with the assets and liabilities of the MVNO BU classified as assets and liabilities held for sale and the activities of the MVNO BU as discontinued operations.

 

For the six months ended June 30, 2019, our revenues included $9.2 million of sales activities that were not recognized in 2018 while its corresponding costs of goods were recorded in the 4th quarter of 2018; as such, the gross margin in the first half of 2019 was significantly higher than that in the same period of 2018. General and administrative expenses in the first half of 2019 included $5.0 million of bad debt write-off. Other expenses of $0.8 million incurred in the first half of 2019 were expenses we paid due to our arbitration loss to Samsung (as disclosed on our Current Report on Form 8-K filed on December 6, 2018).

 

Our revenues for the first half of 2019 was only $27.2 million as compared to $99.0 million for the same period of 2018. However, based on the management’s preliminary numbers, the Company captured significantly more sales in the third quarter of 2019 bringing $100.2 million in revenues for the first nine months of 2019 and recorded $81.6 million in costs of goods; for the same nine months of 2018, the Company captured $121.3 million in revenues and recorded $108.4 million in costs of goods.

 

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SIGNATURES

 

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

 

  BORQS TECHNOLOGIES INC.
  (registrant)
   
Dated: December 30, 2019 By: /s/ Anthony K. Chan
    Anthony K. Chan
    Chief Financial Officer

  

 

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