Sequans Communications 6-K, filed Sep 30, 2021

Sequans Communications (SQNS)

6-K 2021-09-30 For: 2021-06-30

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Added on April 10, 2026

About this 6-K

Sequans Communications filed this 6-K on September 30, 2021.

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FINANCIAL INFORMATION

Item 1. Unaudited Condensed Consolidated Financial Statements at June 30, 2021 and for the six months ended June 30, 2020 and 2021

a) Unaudited Condensed Consolidated Statements of Operations for the six months ended June 30, 2020 and 2021						4

b) Unaudited Condensed Consolidated Statements of Comprehensive Loss for the six months ended June 30, 2020 and 2021						5

c) Unaudited Condensed Consolidated Statements of Financial Position at December 31, 2020 and at June 30, 2021						6

d) Unaudited Condensed Consolidated Statements of Changes in Equity (Deficit) for the six months ended June 30, 2020 and 2021						7

e) Unaudited Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2020 and 2021						9

f) Notes to the Unaudited Condensed Consolidated Financial Statements						11

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations						26


		Six months ended June 30,
	Note	2020		2021
		(in thousands, except ADS and per ADS amounts)
Revenue:
Product revenue		$	14,275	$	15,941
Other revenue		6,728		9,237
Total revenue	3	21,003		25,178
Cost of revenue:
Cost of product revenue		9,781		10,824
Cost of other revenue		813		901
Total cost of revenue		10,594		11,725
Gross profit		10,409		13,453
Operating expenses:
Research and development	4	14,933		13,102
Sales and marketing		4,135		4,591
General and administrative		4,687		4,967
Total operating expenses		23,755		22,660
Operating loss		(13,346)		(9,207)

Interest expense	5	(7,228)		(6,146)
Interest income		20		24
Change in fair value of convertible debt derivative	15	(14,762)		(2,682)
Impact of debt reimbursement	14-15	1,399		5,177
Foreign exchange gain (loss), net		170		394
Loss before income taxes		(33,747)		(12,440)
Income tax expense (benefit)	6	477		297
Loss		$	(34,224)	$	(12,737)
Attributable to:
Shareholders of the parent		$	(34,224)	$	(12,737)
Non-controlling interests		—		—
Basic earnings (loss) per ADS		$	(1.34)	$	(0.35)
Diluted earnings (loss) per ADS		$	(1.34)	$	(0.35)
Weighted average number of ADS used for computing:
Basic per ADS		25,502,105		35,894,642
Diluted per ADS		25,502,105		35,894,642


	Six months ended June 30,
	2020		2021
	(in thousands)
Loss for the period	$	(34,224)	$	(12,737)
Other comprehensive income (loss)
Other comprehensive income (loss) to be reclassified to profit or loss in subsequent periods :
Net gain (loss) on cash flow hedge	(58)		(92)
Exchange differences on translation of foreign operations	(125)		125
Net other comprehensive income (loss) to be reclassified to profit or loss in subsequent periods	(183)		33
Other comprehensive income (loss) not to be reclassified to profit or loss in subsequent periods :
Re-measurement gains (losses) on defined benefit plans	(24)		(24)
Net other comprehensive income (loss) not to be reclassified to profit or loss in subsequent periods	(24)		(24)
Total other comprehensive income (loss)	(207)		9
Total comprehensive loss	$	(34,431)	$	(12,728)
Attributable to:
Shareholders of the parent	$	(34,431)	$	(12,728)
Non-controlling interests	—		—


		Note	At December 31, 2020		At June 30, 2021
			(in thousands)
ASSETS
Non-current assets:
	Property, plant and equipment		$	9,187	$	8,103
	Intangible assets	7	25,312		31,535
	Deposits and other receivables		588		3,414
	Other non-current financial assets		386		374
	Total non-current assets		35,473		43,426
Current assets:
	Inventories	8	6,225		5,206
	Trade receivables	9	17,277		7,433
	Contract assets	9	371		806
	Prepaid expenses	20	962		2,712
	Other receivables		3,264		6,609
	Research tax credit receivable	4	5,110		6,724
	Short-term deposits	10	10,900		26,500
	Cash and cash equivalents	10	7,574		3,783
	Total current assets		51,683		59,773
	Total assets		$	87,156	$	103,199
EQUITY AND LIABILITIES
Equity:
	Issued capital euro 0.02 nominal value, 149,475,334 ordinary shares, issued and outstanding at June 30, 2021 (133,934,090 at December 31, 2020)	11	$	3,269	$	3,642
	Share premium	11	276,560		298,434
	Other capital reserves	12 -14	46,677		54,315
	Accumulated deficit		(363,209)		(375,946)
	Other components of equity		(423)		(414)
	Total equity		(37,126)		(19,969)
Non-current liabilities:
	Government grant advances and loans	13	11,203		11,364
	Venture debt	14	2,172		—
	Convertible debt	15	26,074		32,912
	Convertible debt embedded derivative	15	12,395		16,611
	Lease liabilities	17	4,762		3,852
	Trade payables	19	851		890
	Provisions	18	1,874		2,241
	Deferred tax liabilities	6-19	19		20
	Contract liabilities	19	2,397		254
	Total non-current liabilities		61,747		68,144
Current liabilities:
	Trade payables		15,701		16,205
	Interest-bearing receivables financing	16	14,228		10,755
	Venture debt	14	6,104		—
	Lease liabilities	17	1,014		1,213
	Government grant advances and loans	13	3,867		6,658
	Contract liabilities	19	13,145		9,266
	Other current liabilities and provisions	18	8,476		10,927
	Total current liabilities		62,535		55,024
	Total equity and liabilities		$	87,156	$	103,199


		Attributable to the shareholders of the parent
		Ordinary shares			Share premium		Other capital reserves		Accumulated deficit		Cumulative translation adjustments		Accumulated other comprehensive income (loss)		Total equity
		Shares	Amount
		(Note 11)	(Note 11)		(Note 11)		(Notes 11, 12 and 15)
		(in thousands, except share and per share amounts)
At January 1, 2020		95,587,146	$	2,403	$	233,720	$	43,656	$	(308,733)	$	(319)	$	(288)	$	(29,561)
	Loss for the period								(34,224)						(34,224)
	Re-measurement gains (losses) on defined benefit plans												(24)		(24)
	Foreign currency translation										(125)				(125)
	Net gain on cash flow hedge												(58)		(58)
	Total comprehensive income (loss)								(34,224)		(125)		(82)		(34,431)
	Issue of shares in connection with the exercise of options and warrants, and vesting of restricted shares awards	474,840	10		22										32
	Issue of shares in connection with the public offering of May 2020 (Note 11)	22,330,096	487		28,263										28,750
	Issue of shares in connection with the ATM program (Note 11)	970,584	21		1,592										1,613
	Conversion of loan (Note 11)	1,715,476	37		2,209										2,246
	Transaction costs (Note 11)				(2,971)										(2,971)
	Convertible note amendments (Note 15)						(5,266)								(5,266)
	Deferred tax effect of debt instruments with equity components (Note 6)						809								809
	Other movement						(41)								(41)
	Share-based payments						1,292								1,292
At June 30, 2020		121,078,142	$	2,958	$	262,835	$	40,450	$	(342,957)	$	(444)	$	(370)	$	(37,528)


The information in this Report on Form 6-K is being filed to furnish the registrant’s Unaudited Condensed Consolidated Financial Statements at June 30, 2021 and for the six months ended June 30, 2021 and 2020 and the related Management’s Discussion and Analysis. The information in this report 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. 333-177919, 333-180487, 333-187611, 333-194903, 333-203539, 333-211011, 333-214444, 333-215911, 333-219430, 333-226458, 333-233473 and 333-239968) and Form F-3 (File Nos. 333-250122 and 333-255865).


Customer Customer Location	% of total revenues for the six months ended June 30,			Trade receivables at
	2020		2021	June 30, 2021
A Taiwan	24	%	31%	$3,836,951
B United States of America	26	%	22%	$1,800,000
C South Korea	35	%	Less than 10%	$648,248


	Six months June 30,
	2020		2021
	(In thousands)
Interest on loans	$	4,839	$	4,107
Interest on lease contract	327		383
Interest on financing component of long-term development services agreements	1,809		1,415
Interest on supplier payable with extended payment terms	53		81
Other bank fees and financial charges	200		160
Total interest expenses	$	7,228	$	6,146


	Six months ended June 30,
	2020		2021
	(in thousands)
Condensed Consolidated Statement of Operations
Current income tax expense	$	79	$	297
Deferred income tax expense (benefit)	398		—
Income tax expense (benefit) reported in the Condensed Consolidated Statement of Operations	$	477	$	297


	Capitalized development costs		Licenses		Total
	(in thousands)
Cost:
At December 31, 2020	$	16,798	$	29,391	$	46,189
Additions	8,804		1,074		9,878
Exchange difference	—		96		96
At June 30, 2021	$	25,602	$	30,561	$	56,163
Amortization and impairment:
At December 31, 2020	3,250		17,627		20,877
Amortization	1,187		2,534		3,721
Exchange difference	—		30		30
At June 30, 2021	$	4,437	$	20,191	$	24,628
Net book value:
At January 1, 2021	$	13,548	$	11,764	$	25,312
At June 30, 2021	$	21,165	$	10,370	$	31,535


	Year ended December 31, 2020		Six months ended June 30, 20201
	(in thousands)
At January 1,	$	2,719	$	2,724
Charge for the period	47		—
Utilized amounts	—		—
Unutilized amounts	(42)		—
At period end	$	2,724	$	2,724


	Total		Neither past due nor Impaired		Past due but not impaired
					<30 days		30-60 days		60-120 days		>120 days
	(in thousands)
At December 31, 2020	$	17,648	$	14,232	$	2,879	$	53	$	—	$	484
At June 30, 2021	$	8,239	$	6,874	$	327	$	26	$	1,012	$	—


	Real-estate		IT and office equipment		Total
	(In thousands)
As at January 1, 2021	$	4,184	$	472	$	4,656
Additions	—		—		—
Disposals	—		(546)		(546)
Depreciation expenses	(554)		(41)		(595)
Amortization disposals	—		152		152
As at June 30, 2021	$	3,630	$	37	$	3,667


	Lease liabilities		Current		Non-current
	(In thousands)
As at January 1, 2021	$	5,776	$	1,014	$	4,762
Disposals	(422)
Interest expense	383
Foreign exchange loss (gain)	(122)
Payments	(550)
As at June 30, 2021	$	5,065	$	1,213	$	3,852


	Post- employment benefits		Others		Total		Current		Non-current
	(in thousands)
At December 31, 2020	$	1,155	$	809	$	1,964	$	90	$	1,874
Arising during the period	85		451		536
Released (used) during the period	—		(90)		(90)
Released (unused) during the period	—		(122)		(122)

At June 30, 2021	$	1,240	$	1,048	$	2,288	$	47	$	2,241


				Six months ended June 30,
			Note	2020		2021
				(in thousands)
Operating activities:
	Loss before income taxes			$	(33,747)	$	(12,440)
	Non-cash adjustment to reconcile loss before tax to net cash used in operating activities:
		Amortization and impairment of property, plant and equipment		1,934		1,963
		Amortization and impairment of intangible assets	7	2,624		3,721
		Share-based payment expense	12	1,292		2,252
		Increase (Decrease) in provisions		(40)		253
		Interest expense, net		7,274		6,122
		Change in fair value of convertible debt embedded derivative	15	14,762		2,682
		Convertible debt amendment	15	(1,399)		—
		Impact of debt reimbursement	15	—		(5,177)
		Foreign exchange loss (gain)		127		(441)
		Loss on disposal of property, plant and equipment		—		7
		Bad debt expense		18		—
	Working capital adjustments:
		Decrease (Increase) in trade receivables and other receivables		(3,709)		7,432
		Decrease in inventories		802		1,019
		Decrease (Increase) in research tax credit receivable		1,680		(635)
		Increase in trade payables and other liabilities		4,310		6,891
		Decrease in contract liabilities		(5,835)		(7,437)
		Increase in government grant advances (1)		919		561
	Income tax paid			(180)		(270)
Net cash flow used in operating activities				$	(9,168)	$	6,503
Investing activities:
	Purchase of intangible assets and property, plant and equipment			(2,845)		(6,242)
	Capitalized development expenditures			(3,048)		(9,535)
	Purchase of financial assets			(27)		(2,814)
	Increase of short-term deposit			(17,900)		(15,600)
	Interest received			20		24
Net cash flow used in investing activities				$	(23,800)	$	(34,167)
Financing activities:
	Proceeds from issue of warrants, exercise of stock options/warrants granted under share-based payment plans, net of transaction costs			32		96
	Public equity offering proceeds, net of transaction costs paid		11	27,453		9,894
	Proceeds from (repayment of) interest-bearing receivables financing		16	5,572		(3,341)
	Proceeds from governments loans, net of transaction costs		13	5,392		—
	Proceeds from interest-bearing research project financing			405		—


	At December 31, 2020		At June 30, 2021
	(in thousands)
Components	$	2,138	$	2,223
Finished goods	4,996		3,911
Total inventories at cost	$	7,134	$	6,134
Depreciation of components	$	2	$	2
Depreciation of finished goods	907		926
Total depreciation	$	909	$	928
Components, net	$	2,136	$	2,221
Finished goods, at the lower of cost and net realizable value	4,089		2,985
Total net inventories	$	6,225	$	5,206



	At December 31, 2020		At June 30, 2021
	(in thousands)
U.S. dollar denominated accounts	$	18,135	$	28,752
Euro denominated accounts	154		1,300
GBP denominated accounts	76		13
SGP denominated accounts	44		14
NIS denominated accounts	14		139
RMB denominated accounts	29		51
Other currencies denominated accounts	22		14
Cash, cash equivalents and deposits	$	18,474	$	30,283


	At December 31, 2020
	Notional Amount		Fair value
	(in thousands)
Forward contracts (buy euros, sell U.S. dollars)	€	2,250	$	84
Total	€	2,250	$	84


	At December 31, 2020		At June 30, 2021
	(in thousands)
Trade payables	$	851	$	890
Deferred tax liabilities	19		20
Contract liabilities:
License and development services agreement	2,343		254
Deferred revenue	54		—
Total contract liabilities	$	2,397	$	254


	Six months ended June 30,				Change
	2020		2021	%
	(Unaudited)
	(in thousands)
Revenue:
Product revenue	$	14,275	15,941	12		%
Other revenue	6,728		9,237	37
Total revenue	21,003		25,178	20
Cost of revenue:
Cost of product revenue	9,781		10,824	11
Cost of other revenue	813		901	11
Total cost of revenue	10,594		11,725	11
Gross profit	10,409		13,453	29
Operating expenses:
Research and development	14,933		13,102	(12)
Sales and marketing	4,135		4,591	11
General and administrative	4,687		4,967	6
Total operating expenses	23,755		22,660	(5)
Operating loss	(13,346)		(9,207)	(31)
Financial income (expense):
Interest income	20		24	20
Interest expense	(7,228)		(6,146)	(15)
Change in fair value of convertible debt derivative	(14,762)		(2,682)		(82)
Impact of debt reimbursement	1,399		5,177		270
Foreign exchange gain (loss)	170		394	132
Loss before income taxes	(33,747)		(12,440)	(63)
Income tax expense (benefit)	477		297	(38)
Loss	$	(34,224)	(12,737)


Exhibit number			Description
3.1			By-laws (statuts) of Sequans Communications S.A.(English translation), as amended on June 25, 2021