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 2020

 

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.

 

 

 

 

 

 

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, 2020, 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,  
    2019     2020  
    US$     US$  
ASSESTS            
Current assets:            
Cash and cash equivalents     8,153       1,199  
Accounts receivable     6,501       3,289  
Inventories - net     5,060       4,209  
Deferred cost of revenue     1,784       -  
Prepaid expenses and other current assets, net     28,614       20,728  
Amounts due from discontinued operations     3,428       -  
Current assets held for sale     8,678       5,852  
Total current assets     62,218       35,277  
Non-current assets:                
Property and equipment, net     229       158  
Intangible assets, net     11,235       7,859  
Right of Use Asset     -       632  
Deferred tax assets     373       969  
Deferred cost of revenues     3,806       -  
Other non-current assets     555       -  
Non-current assets held for sale     11,790       10,876  
Total non-current assets     27,988       20,494  
Total assets     90,206       55,771  
LIABILITIES AND SHAREHOLDERS’ EQUITY                
Current liabilities:                
Accounts payable     13,479       22,171  
Accrued expenses and other payables     18,908       30,674  
Advances from customers     3,557       5,314  
Lease Liabilities- current     -       818  
Amount due to related parties-current     1,071       3,484  
Deferred revenues     3,364       -  
Income tax payable     700       1,410  
Short-term institution and other borrowings     6,343       -  
Long-term institution borrowings - current portion     2,000       11,750  
Current liabilities held for sale     25,244       17,117  
Total current liabilities     74,666       92,738  
Non-current liabilities:                
Unrecognized tax benefits     2,072       1,987  
Deferred tax liability     2,348       1,832  
Deferred revenues     4,462       -  
Other non-current liabilities     11,765       -  
Long-term payable     6,663       119  
Deferred government grants     1,860       -  
Non-current liabilities held for sale     1,951       1,724  
Total non-current liabilities     31,121       5,662  
Total liabilities     105,787       98,400  
Commitments and contingencies                
Shareholders’ equity                
Ordinary shares     -          
Additional paid-in capital     134,462       174,941  
Subscription receivables     -       (15,287 )
Statutory reserve     2,143       2,097  
Accumulated deficit     (149,808 )     (199,358 )
Accumulated other comprehensive loss     (2,223 )     (1,407 )
Total Borqs Technologies, Inc. shareholders’ equity     (15,426 )     (39,014 )
Noncontrolling interest     (155 )     (3,615 )
Total shareholders’ equity     (15,581 )     (42,629 )
Total liabilities and shareholders’ equity     90,206       55,771  

 

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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,
 
    2019     2020  
    US$     US$  
Net revenues:            
Software     6,692       4,804  
Hardware     20,497       6,212  
                 
Total net revenues     27,189       11,016  
                 
Cost of revenues                
Software     (4,983 )     (3,568 )
Hardware     (11,800 )     (5,964 )
Total cost of revenues     (16,783 )     (9,532 )
                 
Total gross (loss) profit     10,406       1,484  
                 
Operating expenses:                
Sales and marketing expenses     (510 )     (375 )
General and administrative expenses     (6,061 )     (14,086 )
Research and development expenses     (2,648 )     (3,471 )
Changes in the fair value of warrant liabilities     --       -  
                 
Total operating expenses     (9,219 )     (17,932 )
                 
Other operating income     --       --  
                 
Operating income (loss)     1,187       (16,448 )
                 
Interest income     1       14  
Interest expense     (1,231 )     (1,473 )
Other income     8       4  
Other expense     (804 )     (12 )
Foreign exchange income (loss)     38       207  
                 
Income (loss) from continuing operations, before income taxes     (801 )     (17,708 )
                 
Income tax expense     (407 )     6  
                 
Net income (loss) from continuing operations     (1,208 )     (17,702 )
Discontinued operation                
(Loss) income from operations of discontinued entities     (2,329 )     (3,031 )
Income tax benefit (expense)     (178 )     --  
Net (Loss) income on discontinued operations     (2,507 )     (3,031 )
                 
Net income (loss)     (3,715 )     (20,733 )
                 
Less: Net income (loss) attributable to noncontrolling interest     (99 )     (1,047 )
                 
Net income(loss)attributable to Borqs Technologies, Inc.     (3,616 )     (19,686 )

 

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Summary discussions on the results of the first half of 2020.

 

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, 2020 and 2019, 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.

 

Our revenue for the six months ended June 30, 2020 was only $11.0 million as compared to $27.20 million for the same period of 2019. The increase in general and administrative expenses in the first half of 2020 was due to stock-based compensation that the Company incurred in lieu of cash payments; as the negative effects of the COVID-19 global pandemic directly impacted our business activities and hampered our working capital, when some of the 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. Customers in the U.S. accounted for more than 60% of our sales in the first half of 2020 whereas in 2019 the bulk of our sales were generated from India.

 

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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, 2020 By: /s/ Anthony K. Chan
    Anthony K. Chan
    Chief Financial Officer

 

 

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