Borqs Technologies, Inc. Files 8-K With June 30, 2017 Financial Results and Announces Stock Buy-Back
25 August 2017 - 9:05AM
Borqs Technologies, Inc. (the “Company”), a global leader in
software, products and cloud solutions for the Internet of Things
(IoT), announced its mid-year June 30, 2017 operational results
today via a Form 8-K filed with the U.S. Securities and Exchange
Commission, four business days after BORQS International Holding
Corp completed its merger on August 18, 2017 with Pacific Special
Acquisition Corp, which changed its name to Borqs Technologies,
Inc. The Company’s ordinary shares and warrants trade on the Nasdaq
stock market under the symbols (NASDAQ:BRQS) and (NASDAQ:BRQSW),
respectively.
Results of Operations for January
through June of 2017
As details of the Company’s results of
operations for the first six months of 2017 are described in the
Form 8-K, this release serves to provide a summary of such results.
Net revenue on a consolidated basis for the six months ended June
30, 2017 was $54.05 million as compared to $50.59 million for the
same period last year. Gross profit was $11.90 million for the
first half of 2017 and $12.89 million in 2016. Gross margin for the
first six months of 2017 was 22.01% as compared to 25.47% a year
ago. The decline in gross profitability was attributed to a larger
component in hardware sales in 2017. Operating expenses for the
first half of 2017 declined to $10.83 million from $11.33 million
for the same period a year ago, resulting in $1.06 million of
operating income for January through June of 2017 as compared to
$1.56 million in 2016. The financials outlined above reflect the
results of operations of BORQS International Holding Corp for the
first half of 2017, prior to its merger with Pacific Special
Acquisition Corp.
In the first six months of 2017, the Company
incurred non-cash G&A expenses of $0.16 million due to a change
in the fair value of warrants issued to commercial lenders and
$0.32 million of non-cash stock based compensation for executives.
Excluding these two items, the first half 2017 non-US-GAAP adjusted
operating income was $1.55 million as compared to $1.56 million in
the first half of 2016.
In the first six months of 2017, the Company
incurred much higher interest expense of $1.14 million as compared
to only $0.16 million for the same period a year ago. This was
attributed to a non-cash amortization of the fair value of the
warrants in the amount of $0.52 million that was charged to
interest expenses, and there was no such charge in the same period
of 2016.
This resulted in a loss before income taxes of
$0.06 million for the first six months of 2017 as compared to an
income before income taxes of $2.69 million a year ago. Despite the
slight net loss for this 2017 period, there was still a tax payable
incurred in the amount of $0.89 million. Our taxes payable
historically had been significantly higher than the statutory tax
rates because some of the losses in our subsidiaries cannot be used
to offset gains in other subsidiaries, even within the same
jurisdiction. This resulted in a net loss after taxes in the first
half of 2017 of $0.95 million as compared to a net income after
taxes in the first half of 2016 of $1.42 million.
Non-US GAAP adjustments: In another presentation
format where adjustments are made for the non-cash charges for
amortization and changes in fair value of the warrants, and
non-cash stock based compensation, we resulted in non-US-GAAP
adjusted net income of $0.06 million for the first half of 2017;
there were no such charges for the first half of 2016 so the
adjusted net income for the same period in 2016 remained the same
as the unadjusted figure at $1.42 million. EBITDA, an often-used
measure of earnings before interest, taxes, depreciation and
amortization, for the first six months of 2017 was $3.44 million
while that for 2016 was $4.56 million. Further, when other
non-operational factors such as exchange rate (loss)/gain and
non-recurring government grants were removed, adjusted EBITDA for
the first six months of 2017 was $3.5 million versus that of 2016
was $3.3 million.
|
|
2017 |
|
2016 |
Reconciliation of non-US GAAP adjustments |
|
1st half |
|
1st half |
|
|
|
|
|
Operating income |
|
$ |
1,064,242 |
|
|
$ |
1,556,000 |
|
Change in fair value of warrants |
|
$ |
160,852 |
|
|
$ |
- |
|
Stock based compensation |
|
$ |
324,000 |
|
|
$ |
- |
|
Adjusted non-US GAAP operating income |
|
$ |
1,549,094 |
|
|
$ |
1,556,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) after income taxes |
|
$ |
(947,131 |
) |
|
$ |
1,418,000 |
|
Interest expense from amortization of warrants |
|
$ |
518,301 |
|
|
$ |
- |
|
Change in fair value of warrants |
|
$ |
160,852 |
|
|
$ |
- |
|
Stock based compensation |
|
$ |
324,000 |
|
|
$ |
- |
|
Adjusted non-US GAAP income after income taxes |
|
$ |
56,022 |
|
|
$ |
1,418,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) after income taxes |
|
$ |
(947,131 |
) |
|
$ |
1,418,000 |
|
Interest |
|
$ |
1,133,000 |
|
|
$ |
117,000 |
|
Provisions for income taxes |
|
$ |
890,134 |
|
|
$ |
1,276,000 |
|
Depreciation and amortization |
|
$ |
2,360,000 |
|
|
$ |
1,747,000 |
|
EBITDA |
|
$ |
3,436,002 |
|
|
$ |
4,558,000 |
|
|
|
|
|
|
|
|
|
|
Exchange rate (loss) gain |
|
$ |
(333,013 |
) |
|
$ |
342,000 |
|
Non-recurring government grants |
|
$ |
266,872 |
|
|
$ |
910,000 |
|
Adjusted EBITDA |
|
$ |
3,502,143 |
|
|
$ |
3,306,000 |
|
|
|
|
|
|
|
|
|
|
Board Approved Buy-back of
Shares
The Board of Directors of the Borqs
Technologies, Inc. believes that the current market price of the
Company’s ordinary shares does not reflect the Company’s inherent
long-term value and has approved a share buy-back program. The
management of the Company is authorized to conduct open market
repurchases of its ordinary shares from today forward until
December 31, 2017, in accordance with circumstances, volume and
time window allowable under securities laws and regulations, at a
price not higher than $10.40 per share, up to an aggregate
repurchase price of $6 million. The buy-back program does not
obligate the Company to repurchase a minimum number of shares, and
the program may be modified, suspended, or discontinued without
prior notice.
Pat Chan, Chairman and CEO of Borqs commented:
“We look forward to delivering our projected results going forward
as a Nasdaq listed company. We also deem the undue market stress on
our share price as a new public company justifies our re-purchase
of some of our outstanding shares as we firmly believe in the value
of our Company and the collective effort of our team. We believe
that the funds used for such stock buy-back will not negatively
impact our ongoing operational cash needs.”
About BORQS
Borqs Technologies, Inc., which is headquartered
in Beijing, China with R&D centers in Bangalore,
India and Beijing, was founded in 2007 by respected
veterans in the communication technologies industry
from Canada, China, India and the United
States. Borqs has world renowned investors including Intel Capital,
Qualcomm Ventures, Norwest Venture Partners, SK Telecom China Fund,
Keytone Ventures and GSR Ventures.
Borqs is a global leader in software and
products for IoT providing customizable, differentiated and
scalable Android-based smart connected devices and cloud service
solutions. Deloitte named BORQS as one of the fastest growing
technology companies in China & Asia
Pacific in 2011, 2012 and 2013. In 2013, 2014, 2015 and 2016,
BORQS was awarded Company of the Year for Innovation &
Leadership in Mobile Technology for Asia Pacific from the
International Alternative Investment Review. Recently BORQS
received the "50 Most Promising IoT Solution Providers 2016"
recognition from CIO Review magazine. For more info,
visit: http://www.borqs.com/
Forward-Looking Statements
This press release includes “forward-looking
statements” regarding the Company’s planned capital return,
including statements regarding the anticipated size, timing and
price of its stock buy-back program. These statements involve risks
and uncertainties that could cause actual results to differ
materially from what is expected or implied. Words such as
“expects”, “believes”, “anticipates”, “intends”, “estimates”,
“seeks”, “may”, “might”, “plan”, “possible”, “should” and
variations and similar words and expressions are intended to
identify such forward-looking statements, but the absence of these
words does not mean that a statement is not forward-looking. Such
forward-looking statements relate to future events or future
results, based on currently available information and reflect
management's current beliefs. A number of factors could cause
actual events or results to differ materially from the events and
results discussed in the forward-looking statements. Such factors
include, among other things: the future financial performance of
the Company; the ability of the Company to meet the NASDAQ Capital
Market’s listing standards; unexpected costs, liabilities or delays
in the buy-back program; and general economic conditions. In
addition, please refer to the Risk Factors section of the Company’s
proxy statement and its Forms 10-K and 10-Q for additional
information identifying important factors that could cause actual
results to differ materially from those anticipated in the
forward-looking statements. Except as expressly required by
applicable securities law, the Company disclaims any intention or
obligation to update or revise any forward-looking statements
whether as a result of new information, future events or
otherwise.
Contacts:
The Ruth Group
Lee Roth
(646) 536-7012
lroth@theruthgroup.com