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 under the Securities Exchange Act of 1934

For the month of June 2024

Commission File Number: 001-35135

Sequans Communications S.A.
(Translation of Registrant’s name into English)

15-55 boulevard Charles de Gaulle
92700 Colombes, France
Telephone : +33 1 70 72 16 00
(Address of Principal Executive Office)

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 R 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): Yes £ NoR
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): Yes £ NoR
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.  

The information in this report, furnished on Form 6-K shall be incorporated by reference into each of the following Registration Statements under the Securities Act of 1933, as amended, of the registrant: Form S-8 (File Nos. 333-187611, 333-194903, 333-203539, 333-211011, 333-214444, 333-215911, 333-219430, 333-226458, 333-233473, 333-239968, 333-259914 and 333-266481) and Form F-3 (File Nos. 333-250122, 333-255865 and 333-271884).




EXPLANATORY NOTE


On June 18, 2024, Sequans Communications S.A. issued a press release announcing advances on key business initiatives and its financial results for the first quarter ended March 31, 2024. A copy of the press release is attached to this Form 6-K as Exhibit 99.1 and is incorporated herein by reference.





EXHIBIT INDEX

The following exhibit is filed as part of this Form 6-K:
ExhibitDescription
99.1Press release dated June 18, 2024



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.
     
 
SEQUANS COMMUNICATIONS S.A.
(Registrant)
 
 
Date: June 18, 2024By:   /s/ Deborah Choate 
  Deborah Choate  
  Chief Financial Officer 
 
 




sequanslogo071318colorweba.jpg

NEWS





Sequans Provides Key Business Updates

Advances on Key Business Initiatives.
Reports First Quarter 2024 Summary Financial Results.


PARIS - June 18, 2024 - Sequans Communications S.A. (NYSE: SQNS) (“Sequans” or the “Company”), a leading developer and provider of 5G/4G semiconductors and IoT modules, today provided updates on several key business initiatives and an overview of the first quarter financial results ended March 31, 2024.

Georges Karam, Sequans CEO, stated, “We have made significant progress on multiple fronts, beginning with the extension of our standstill agreements with our debt holders until the end of August and the signature of a $15 million licensing agreement for our Monarch2 platform with a new partner. Additionally, we are optimizing our R&D expenses by suspending the development of our 5G fixed wireless product to focus on low-power 5G for massive IoT applications, specifically RedCap and eRedCap. Furthermore, we are making progress in discussions for a strategic transaction that would dramatically improve our balance sheet.”

Extension of Standstill Agreements with Debt Holders

Having met the milestones set forth in the initial standstill agreement announced in April 2024, in May Sequans secured an extension of the maturities of its debt obligations held by its three largest debt holders Lynrock Lake, Nokomis and Renesas, until August 26, 2024. Extending the debt maturities grants the Company additional time to secure a long-term solution and negotiate a strategic transaction that serves the interests of all its stakeholders.

New Licensing Deal

Sequans announced today a manufacturing licensing agreement for its Monarch2 LTE platform with a leading technology company, demonstrating the Company’s ability to enhance and expand its licensing business strategy. The deal includes an initial payment of $15 million, with the opportunity for additional revenue in subsequent years.

Focus on Massive IoT and Opex Optimization

To enhance its long-term financial health while strengthening its focus on the Massive IoT business, Sequans has suspended the development of its 5G Taurus product for Fixed Wireless Access applications and reoriented its product roadmap towards low-power 5G variants for Massive IoT, specifically RedCap and eRedCap. This shift is expected to significantly reduce R&D expenses as part of the Company’s plan to achieve break-even in 2025. While this decision is expected to reduce revenue recognition from the license agreement with Sequans’ Chinese strategic partner by $10 million in 2024, this should be offset by revenue from the new Monarch2 manufacturing license announced today.

Advances in Strategic Discussions

Sequans confirms that it continues to be in active discussions for a long-term strategic transaction that would address its debt maturities and significantly strengthen its balance sheet.


First Quarter 2024 Financial Summary:

Revenue: Revenue was $6.0 million, a increase of 26.3% compared to the fourth quarter of 2023 and a decrease of 49.3% compared to the first quarter of 2023. Product revenue was $2.5 million, a decrease of 37.8% compared to the fourth quarter of 2023 and an increase of 5.5% compared to the first quarter of 2023. Service revenue was $3.6 million reflecting the revenue recognition profile of our agreement with our major 5G licensing partner.

Gross margin: Gross margin was 63.9% compared to 12.2% in the fourth quarter of 2023 and compared to 78.5% in the first quarter of 2023.

Operating loss: Operating loss was $8.5 million compared to operating loss of $12.8 million in the fourth quarter of 2023 and operating loss of $4.0 million in the first quarter of 2023.

Net loss: Net loss was $11.8 million, or ($0.19) per diluted ADS, compared to a net loss of $17.3 million, or ($0.28) per diluted ADS, in the fourth quarter of 2023 and a net loss of $5.0 million, or ($0.10) per diluted ADS, in the first quarter of 2023. Net loss in the first quarter of 2024 includes a loss of $36,000 on the change in fair value of the convertible debt


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derivative compared to a gain of $0.1 million in the fourth quarter of 2023 and a gain of $2.3 million in the first quarter of 2023.

Non-IFRS loss and diluted loss per ADS: Excluding the non-cash stock-based compensation, the non-cash impact of the fair-value, the amendment and effective interest adjustments related to the convertible debt with embedded derivatives and other financings, non-IFRS net loss was $8.8 million, or ($0.14) per diluted ADS, compared to non-IFRS net loss of $13.8 million, or ($0.23) per diluted ADS in the fourth quarter of 2023, and a non-IFRS net loss of $4.2 million, or ($0.09) per diluted ADS, in the first quarter of 2023. The non-IFRS net loss includes a foreign exchange gain of $0.3 million, or $0.0 per diluted ADS, in the first quarter of 2024, compared to a foreign exchange loss of $0.8 million, or ($0.01) per diluted ADS in the fourth quarter of 2023 and a foreign exchange loss of $0.2 million, or ($0.00) per diluted ADS, in the first quarter of 2023.

Cash: Cash and cash equivalents at March 31, 2024 totaled $0.5 million compared to $5.7 million at December 31, 2023. This amount excludes the $5 million from issuance of an unsecured promissory note in April 2024 and the $15 million upfront payment from the licensing agreement just signed.



Note Regarding Forward Looking Statements

This press release contains projections and other forward-looking statements regarding future events and our future financial performance. All statements other than present and historical facts and conditions contained in this release, including any statements regarding potential strategic options, cost optimization and our objectives for future operations and achieving break-even, are forward-looking statements (within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended). These statements are only predictions and reflect our current beliefs and expectations with respect to future events and are based on assumptions and subject to risk and uncertainties and subject to change at any time. We undertake no obligation to update the information made in this release in the event facts or circumstances subsequently change after the date of this press release. We operate in a very competitive and rapidly changing environment. New risks emerge from time to time. Given these risks and uncertainties, you should not rely on or place undue reliance on these forward-looking statements. Actual events or results may differ materially from those contained in the projections or forward-looking statements. In addition to the risk factors contained in our Form 20-F for the fiscal year ended December 31, 2023, some of the factors that could cause actual results to differ materially from the forward-looking statements contained herein include, without limitation: (i) the contraction or lack of growth of markets in which we compete and in which our products are sold, (ii) unexpected increases in our expenses resulting from inflationary pressures and rising interest rates, including manufacturing and operating expenses and interest expense, (iii) our inability to adjust spending quickly enough to offset any unexpected revenue shortfall, (iv) delays or cancellations in spending by our customers, (v) unexpected average selling price reductions, (vi) the significant fluctuations to which our quarterly revenue and operating results are subject due to cyclicality in the wireless communications industry and transitions to new process technologies, (vii) our inability to anticipate the future market demands and future needs of our customers, (viii) our inability to achieve new design wins or for design wins to result in shipments of our products at levels and in the timeframes we currently expect, (ix) our inability to enter into and execute on strategic alliances, (x) our ability to meet performance milestones under strategic license agreements, (xi) the impact of natural disasters on our sourcing operations and supply chain, (xii) the impact of the Ukraine-Russia and Israeli-Hamas conflicts on our independent contractors located in Ukraine and operations in Israel, (xiii) our ability to raise debt and equity financing, and (xiv) other factors detailed in documents we file from time to time with the Securities and Exchange Commission.

Use of Non-IFRS/non-GAAP Financial Measures
To supplement our unaudited consolidated financial statements prepared in accordance with IFRS, we disclose certain non-IFRS, or non-GAAP, financial measures. These measures exclude the non-cash stock-based compensation and the non-cash impacts of convertible debt amendments, conversions and repayments, effective interest adjustments related to the convertible debt with embedded derivatives and other financings; deferred tax benefit or expense related to the convertible debt and other financings. We believe that these measures can be useful to facilitate comparisons among different companies. These non-GAAP measures have limitations in that the non-GAAP measures we use may not be directly comparable to those reported by other companies. We seek to compensate for this limitation by providing a reconciliation of the non-GAAP financial measures to the most directly comparable IFRS measures in the table attached to this press release.


About Sequans Communications
Sequans Communications S.A. (NYSE: SQNS) is a leading developer and supplier of cellular IoT connectivity solutions, providing chips and modules for 5G/4G massive and broadband IoT. For 5G/4G massive IoT applications, Sequans provides a comprehensive product portfolio based on its flagship Monarch LTE-M/NB-IoT and Calliope Cat 1 chip platforms, featuring industry-leading low power consumption, a large set of integrated functionalities, and global deployment capability. For 5G/4G broadband IoT applications, Sequans offers a product portfolio based on its Cassiopeia Cat 4/Cat 6 4G and high-end Taurus 5G chip platforms, optimized for low-cost residential, enterprise, and


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industrial applications. Founded in 2003, Sequans is based in Paris, France with additional offices in the United States, United Kingdom, Israel, Hong Kong, Singapore, Finland, Taiwan, and China.

Visit Sequans online at www.sequans.com; www.facebook.com/sequans; www.twitter.com/sequans


Media Relations: Kimberly Tassin, +1.425.736.0569, Kimberly@sequans.com
Investor Relations: Kimberly Rogers, +1 385.831-7337, krogers@sequans.com

Condensed financial tables follow


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SEQUANS COMMUNICATIONS S.A.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
Three months ended
(in thousands of US$, except share and per share amounts)March 31,
2024		Dec 31, 2023March 31,
2023
Revenue :
Product revenue$2,468 $3,971 $2,340 
License and services revenue3,559 802 9,559 
Total revenue6,027 4,773 11,899 
Cost of revenue2,173 4,190 2,556 
Gross profit3,854 583 9,343 
Operating expenses :
Research and development 6,613 6,336 7,488 
Sales and marketing 2,872 3,054 3,033 
General and administrative 2,902 3,976 2,818 
Total operating expenses12,387 13,366 13,339 
Operating profit (loss)(8,533)(12,783)(3,996)
Financial income (expense):
Interest income (expense), net(3,318)(3,175)(2,515)
Change in fair value of convertible debt derivative(36)134 2,302 
Foreign exchange gain (loss)264 (829)(165)
Profit (Loss) before income taxes(11,623)(16,653)(4,374)
Income tax expense167 681 666 
Profit (Loss)$(11,790)$(17,334)$(5,040)
Attributable to :
Shareholders of the parent(11,790)(17,334)(5,040)
Minority interests— — — 
Basic loss per ADS($0.19)($0.28)($0.10)
Diluted loss per ADS($0.19)($0.28)($0.10)
Weighted average number of ADS used for computing:
— Basic61,613,761 60,933,327 48,382,629 
— Diluted61,613,761 60,933,327 48,382,629 


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SEQUANS COMMUNICATIONS S.A.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
At March 31,At Dec 31,
(in thousands of US$)20242023
ASSETS
Non-current assets
Property, plant and equipment$6,185 $6,815 
Intangible assets71,595 64,300 
Deposits and other receivables6,792 801 
Other non-current financial assets353 360 
     Total non-current assets84,925 72,276 
Current assets
Inventories5,246 6,335 
Trade receivables6,862 8,115 
Contract assets550 497 
Prepaid expenses1,936 1,422 
Other receivables6,662 4,839 
Research tax credit receivable6,789 9,983 
Cash and cash equivalents 474 5,705 
     Total current assets28,519 36,896 
Total assets$113,444 $109,172 
EQUITY AND LIABILITIES
Equity
Issued capital, euro 0.01 nominal value, 247,417,520 shares authorized, issued and outstanding at March 31, 2024 (246,262,004 shares at December 31, 2023)$2,891 $2,878 
Share premium14,556 14,568 
Other capital reserves71,531 70,431 
Accumulated deficit(105,152)(93,416)
Other components of equity(616)(416)
     Total equity(16,790)(5,955)
Non-current liabilities
Government grant advances, loans and other liabilities10,765 3,789 
Lease liabilities1,357 1,645 
Provisions2,142 2,222 
Deferred tax liabilities263 264 
     Total non-current liabilities14,527 7,920 
Current liabilities
Trade payables18,485 16,281 
Interest-bearing receivables financing6,335 9,428 
Lease liabilities1,349 1,471 
Convertible debt54,685 52,278 
Convertible debt embedded derivative39 3 
Unsecured related party loan18,257 8,922 
Government grant advances and loans4,118 4,073 
Contract liabilities3,238 5,852 
Other current liabilities and provisions9,201 8,899 
     Total current liabilities115,707 107,207 
Total equity and liabilities$113,444 $109,172 


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SEQUANS COMMUNICATIONS S.A.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW
Three months ended March 31,
(in thousands of US$)20242023
Operating activities
Profit (Loss) before income taxes$(11,623)$(4,374)
Non-cash adjustment to reconcile income before tax to net cash from (used in) operating activities
Depreciation and impairment of property, plant and equipment830 1,028 
Amortization and impairment of intangible assets1,487 2,727 
Share-based payment expense1,117 1,781 
Decrease in provisions(82)(20)
Interest expense, net3,318 2,515 
Change in the fair value of convertible debt embedded derivative36 (2,302)
Foreign exchange loss (gain)(111)182 
Working capital adjustments
Decrease (Increase) in trade receivables and other receivables932 3,170 
Decrease (increase) in inventories1,089 835 
Increase in research tax credit receivable(423)(829)
Increase (Decrease) in trade payables and other liabilities3,027 2,351 
Decrease in contract liabilities(2,614)(2,858)
Decrease in government grant advances(199)(239)
Income tax paid(34)(475)
Net cash flow used in operating activities(3,250)3,492 
Investing activities
Purchase of intangible assets and property, plant and equipment(1,576)(858)
Capitalized development expenditures(9,124)(5,731)
Sale (Purchase) of financial assets58 (18)
Decrease of short-term deposit— 5,000 
Interest received21 36 
Net cash flow used in investments activities(10,621)(1,571)
Financing activities
Proceeds (Repayment of) from interest-bearing receivables financing960 (1,232)
Proceeds from loans9,000 — 
Proceeds from interest-bearing research project financing— 545 
Payment of lease liabilities(359)(321)
Repayment of government loans(682)(439)
Repayment of interest-bearing research project financing(16)(437)
Interest paid(259)(368)
Net cash flows from financing activities8,644 (2,252)
Net increase (decrease) in cash and cash equivalents(5,227)(331)
Net foreign exchange difference(4)4 
Cash and cash equivalents at January 15,705 5,671 
Cash and cash equivalents at end of the period474 5,344 









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SEQUANS COMMUNICATIONS S.A.

UNAUDITED RECONCILIATION OF NON-IFRS FINANCIAL RESULTS
(in thousands of US$, except share and per share amounts)Three months ended
March 31,
2024		December 31, 2023March 31,
2023
Net IFRS gain (loss) as reported$(11,790)$(17,334)$(5,040)
Add back
Non-cash stock-based compensation expense according to IFRS 2 (1)
1,117 1,958 1,781 
Non-cash change in the fair value of convertible debt embedded derivative36 (134)(2,302)
Non-cash interest on convertible debt and other financing (2)
1,833 1,707 1,408 
Non-IFRS gain (loss) adjusted$(8,804)$(13,803)$(4,153)
IFRS basic gain (loss) per ADS as reported($0.19)($0.28)($0.10)
Add back
Non-cash stock-based compensation expense according to IFRS 2 (1)
$0.02 $0.03 $0.04 
Non-cash change in the fair value of convertible debt embedded derivative$0.00 ($0.01)($0.05)
Non-cash interest on convertible debt and other financing (2)
$0.02 $0.03 $0.03 
Non-IFRS basic gain (loss) per ADS ($0.14)($0.23)($0.09)
IFRS diluted gain (loss) per ADS($0.19)($0.28)($0.10)
Add back
Non-cash stock-based compensation expense according to IFRS 2 (1)
$0.02 $0.03 $0.04 
Non-cash change in the fair value of convertible debt embedded derivative$0.00 ($0.01)($0.05)
Non-cash interest on convertible debt and other financing (2)
$0.02 $0.03 $0.04 
Non-IFRS diluted gain (loss) per ADS($0.14)($0.23)($0.09)
(1) Included in the IFRS loss as follows:
Cost of product revenue$17 $48 $32 
Research and development318 600 470 
Sales and marketing243 439 347 
General and administrative539 871 932 
(2) Related to the difference between contractual and effective interest rates

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