Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jun. 30, 2018 | Aug. 14, 2018 | |
Document and Entity Information [Abstract] | ||
Entity Registrant Name | Borqs Technologies, Inc. | |
Entity Central Index Key | 1,650,575 | |
Trading Symbol | BRQS | |
Amendment Flag | false | |
Document Type | 10-Q | |
Document Period End Date | Jun. 30, 2018 | |
Document Fiscal Period Focus | Q2 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2,018 | |
Entity Filer Category | Smaller Reporting Company | |
Entity Common Stock, Shares Outstanding | 31,303,350 |
Unaudited Condensed Consolidate
Unaudited Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Jun. 30, 2018 | Dec. 31, 2017 |
Current assets: | ||
Cash and cash equivalents | $ 1,305 | $ 13,060 |
Restricted cash | 766 | 3,459 |
Accounts receivable | 33,279 | 65,720 |
Receivable from Mobile Virtual Network Operator ("MVNO") franchisees | 3,437 | 3,514 |
Inventories | 14,119 | 17,031 |
Deferred cost of revenues | 730 | 507 |
Prepaid and other current assets | 35,161 | 16,240 |
Total current assets | 88,797 | 119,531 |
Non-current assets: | ||
Property and equipment, net | 1,167 | 1,362 |
Intangible assets, net | 20,542 | 20,004 |
Goodwill | 727 | 736 |
Long-term investment | 11,662 | |
Deferred tax assets | 1,201 | 1,463 |
Deferred cost of revenues | 3,875 | 2,642 |
Other non-current assets | 5,656 | 2,994 |
Total non-current assets | 44,830 | 29,201 |
Total assets | 133,627 | 148,732 |
Current liabilities: | ||
Accounts payable (including accounts payable of the Consolidated VIEs without recourse to the primary beneficiaries of US$4,143 and US$2,986 as of December 31, 2017 and June 30, 2018, respectively) | 11,658 | 49,690 |
Accrued expenses and other payables (including accrued expenses and other payables of the Consolidated VIEs without recourse to the primary beneficiaries of US$4,038 and US$5,053 as of December 31, 2017 and June 30, 2018, respectively) | 19,007 | 12,163 |
Advances from customers (including advances from customers of the Consolidated VIEs without recourse to the primary beneficiary of nil and nil as of December 31, 2017 and June 30, 2018, respectively) | 6,307 | 3,623 |
Deferred revenues (including deferred revenues of the Consolidated VIEs without recourse to the primary beneficiaries of US$5,904 and US$4,009 as of December 31, 2017 and June 30, 2018, respectively) | 6,717 | 7,960 |
Income tax payable (including income tax payable of the Consolidated VIEs without recourse to the primary beneficiary of nil and nil as of December 31, 2017 and June 30, 2018, respectively) | 361 | 1,232 |
Short-term bank borrowings (including short-term bank borrowings of the Consolidated VIEs without recourse to the primary beneficiaries of nil and US$38 as of December 31, 2017 and June 30, 2018, respectively) | 11,653 | 12,648 |
Long-term bank borrowings - current portion (including long-term bank borrowings - current portion of the Consolidated VIEs without recourse to the primary beneficiary of nil and nil as of December 31, 2017 and June 30, 2018, respectively) | 6,532 | 5,432 |
Total current liabilities | 62,235 | 92,748 |
Non-current liabilities: | ||
Unrecognized tax benefits (including unrecognized tax benefits of the Consolidated VIEs without recourse to the primary beneficiary of nil and nil as of December 31, 2017 and June 30, 2018, respectively) | 3,091 | 2,121 |
Deferred tax liabilities (including deferred tax liabilities of the Consolidated VIEs without recourse to the primary beneficiaries of US$1,500 and US$1,415 as of December 31, 2017 and June 30, 2018, respectively) | 4,050 | 3,555 |
Deferred revenues (including deferred revenues of the Consolidated VIEs without recourse to the primary beneficiary of nil and nil as of December 31, 2017 and June 30, 2018, respectively) | 4,277 | 1,346 |
Long-term bank payable (including long-term payable of the Consolidated VIEs without recourse to the primary beneficiary of nil and nil as of December 31, 2017 and June 30, 2018, respectively) | 5,563 | |
Deferred government grants (including deferred government grants of the Consolidated VIEs without recourse to the primary beneficiary of nil and nil as of December 31, 2017 and June 30, 2018, respectively) | 1,933 | 1,957 |
Total non-current liabilities | 18,603 | 8,979 |
Total liabilities | 80,838 | 101,727 |
Commitments and contingencies | ||
Shareholders' equity: | ||
Ordinary shares (no par value; unlimited shares authorized; 30,804,635 and 31,307,522 shares issued; 30,804,634 and 31,303,350 shares outstanding as of December 31, 2017 and June 30, 2018, respectively) | ||
Additional paid-in capital | 124,058 | 120,642 |
Statutory reserve | 2,156 | 1,898 |
Accumulated deficit | (71,482) | (74,231) |
Accumulated other comprehensive (loss) income | (1,494) | (507) |
Total Borqs Technologies, Inc. shareholder's equity | 53,238 | 47,802 |
Noncontrolling interest | (449) | (797) |
Total shareholders' equity | 52,789 | 47,005 |
Total liabilities and shareholders' equity | $ 133,627 | $ 148,732 |
Unaudited Condensed Consolidat3
Unaudited Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands | 6 Months Ended | 12 Months Ended |
Jun. 30, 2018 | Dec. 31, 2017 | |
Accounts payable, consolidated VIEs without recourse to primary beneficiaries | $ 2,986 | $ 4,143 |
Accrued expenses and other payables, consolidated VIEs without recourse to primary beneficiaries | 5,053 | 4,038 |
Advances from customer ,including advances from customers of the Consolidated VIEs without recourse to the primary beneficiary | ||
Deferred revenue, consolidated VIEs without recourse to primary beneficiaries | 4,009 | 5,904 |
Short-term bank borrowings, consolidated VIEs without recourse to primary beneficiaries | 38 | |
Deferred tax liabilities of the consolidated VIEs | $ 1,415 | $ 1,500 |
Common stock, par value | ||
Common stock, shares authorized | Unlimited | Unlimited |
Common stock, shares issued | 31,307,522 | 30,804,635 |
Common stock, shares outstanding | 31,303,350 | 30,804,634 |
Variable Interest Entity [Member] | ||
Accounts payable, consolidated VIEs without recourse to primary beneficiaries | $ 2,986 | $ 4,143 |
Accrued expenses and other payables, consolidated VIEs without recourse to primary beneficiaries | 5,053 | 4,038 |
Advances from customer ,including advances from customers of the Consolidated VIEs without recourse to the primary beneficiary | ||
Deferred revenue, consolidated VIEs without recourse to primary beneficiaries | 4,009 | 5,904 |
Short-term bank borrowings, consolidated VIEs without recourse to primary beneficiaries | 38 | |
Deferred tax liabilities of the consolidated VIEs | $ 1,415 | $ 1,500 |
Unaudited Condensed Consolidat4
Unaudited Condensed Consolidated Statement of Operations - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Net Revenues: | ||||
Software | $ 1,624 | $ 3,499 | $ 3,880 | $ 6,583 |
Hardware | 47,018 | 11,122 | 95,136 | 32,801 |
MVNO | 7,220 | 6,987 | 14,729 | 12,919 |
Others | 477 | 521 | 850 | 1,036 |
Total net revenues | 56,339 | 22,129 | 114,595 | 53,339 |
Software | (668) | (1,612) | (1,437) | (3,942) |
Hardware | (42,535) | (10,008) | (85,934) | (29,246) |
MVNO | (5,247) | (4,533) | (10,308) | (9,820) |
Others | (180) | (288) | (351) | (488) |
Total cost of revenues | (48,630) | (16,441) | (98,030) | (43,496) |
Total gross profit | 7,709 | 5,688 | 16,565 | 9,843 |
Operating expenses: | ||||
Sales and marketing expenses | (1,665) | (1,646) | (3,347) | (2,985) |
General and administrative expenses | (2,260) | (2,599) | (5,356) | (4,157) |
Research and development expenses | (1,452) | (1,184) | (2,341) | (1,476) |
Changes in the fair value of warrant liabilities | (161) | |||
Total operating expenses | (5,377) | (5,429) | (11,044) | (8,779) |
Other operating income | 1 | 267 | ||
Operating income | 2,332 | 260 | 5,521 | 1,331 |
Interest income | 2 | 8 | 8 | 10 |
Interest expense | (1,117) | (524) | (1,362) | (1,143) |
Other income | 14 | 51 | 53 | 354 |
Other expense | (2) | (158) | (47) | (276) |
Foreign exchange (loss) gain | 633 | (156) | 259 | (333) |
(Loss) profit before income taxes | 1,862 | (519) | 4,432 | (57) |
Income tax (expenses) benefit | 146 | (446) | (1,037) | (890) |
Net (loss) income | 2,008 | (965) | 3,395 | (947) |
Less: net income attributable to noncontrolling interests | 178 | 197 | 366 | 119 |
Net (loss) income attributable to Borqs Technologies, Inc. | 1,830 | (1,162) | 3,029 | (1,066) |
Add: Accretion to redemption value of convertible redeemable preferred shares | (150) | (448) | ||
Net (loss) income attributable to ordinary shareholders | $ 1,830 | $ (1,312) | $ 3,029 | $ (1,514) |
(Loss) earnings per share: | ||||
Basic | $ 0.07 | $ (0.31) | $ 0.11 | $ (0.36) |
Diluted | $ 0.07 | $ (0.31) | $ 0.11 | $ (0.36) |
Number of ordinary shares used in (loss) earnings per share computation: | ||||
Basic | 26,830,514 | 4,259,898 | 26,613,800 | 4,243,964 |
Diluted | 27,675,005 | 4,259,898 | 27,585,851 | 4,243,964 |
Unaudited Condensed Consolidat5
Unaudited Condensed Consolidated Interim Statements of Comprehensive Income - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Statement of Comprehensive Income [Abstract] | ||||
Net (loss) income | $ 2,008 | $ (965) | $ 3,395 | $ (947) |
Other comprehensive income, net of tax of nil: | ||||
Foreign currency translation adjustments, net of tax of Nil | (2,397) | 546 | (1,005) | 851 |
Other comprehensive income (loss), net of tax of nil | (2,397) | 546 | (1,005) | 851 |
Comprehensive (loss) income | (389) | (419) | 2,390 | (96) |
Less: comprehensive income attributable to noncontrolling interest | 100 | 197 | 348 | 119 |
Comprehensive (loss) income attributable to Borqs Technologies, Inc. | $ (489) | $ (616) | $ 2,042 | $ (215) |
Unaudited Condensed Consolidat6
Unaudited Condensed Consolidated Interim Statements of Cash Flows - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2018 | Jun. 30, 2017 | |
CASH FLOWS FROM OPERATING ACTIVITIES | ||
Net cash (used in) generated from operating activities | $ 1,552 | $ (3,853) |
CASH FLOWS FROM INVESTING ACTIVITIES | ||
Purchases of property and equipment | (148) | (186) |
Purchases of intangible assets | (3,874) | (3,998) |
Repayments of a loan to a third party | 1,469 | 244 |
Net cash used in investing activities | (2,553) | (3,940) |
CASH FLOWS FROM FINANCING ACTIVITIES | ||
Prepayment for repurchase of ordinary shares | (10,070) | |
Proceeds from ordinary shares | 62 | |
Proceeds from Series E Convertible Redeemable Preferred Shares | 9,000 | |
Proceeds from Series E-1 Convertible Preferred Shares | 8 | |
Payment of Series E Convertible Redeemable Preferred Shares' issuance costs | (312) | |
Proceeds from short-term bank borrowings | 1,124 | |
Repayments of short-term bank borrowings | (2,086) | |
Proceeds from long-term bank borrowings | 2,955 | 2,000 |
Repayments of long-term bank borrowings | (2,000) | (286) |
Net cash generated from (used in) financing activities | (10,077) | 10,472 |
Effect of foreign exchange rate changes on cash and cash equivalents | (677) | 171 |
Net increase (decrease) in cash and cash equivalents | (11,755) | 2,850 |
Cash and cash equivalents at beginning of period | 13,060 | 3,610 |
Cash and cash equivalents at end of period | $ 1,305 | $ 6,460 |
Organization
Organization | 6 Months Ended |
Jun. 30, 2018 | |
Organization [Abstract] | |
ORGANIZATION | 1. ORGANIZATION Borqs Technologies, Inc. (formerly known as “Pacific Special Acquisition Corp.”, the “Company” or “Borqs Technologies”) was incorporated in the British Virgin Islands on July 1, 2015. The Company was formed for the purpose of acquiring, engaging in a share exchange, share reconstruction and amalgamation, purchasing all or substantially all of the assets of, entering into contractual arrangements, or engaging in any other similar business combination with one or more businesses or entities. On August 18, 2017, the Company acquired 100% equity interest of BORQS International Holding Corp. (“Borqs International”) and its subsidiaries, variable interest entities (the “VIE”) and the VIE’s subsidiaries (collectively referred to as “Borqs Group” hereinafter) (the Company and Borqs Group collectively referred to as the “Group”) in an all-stock transaction (the “Merger”). Concurrent with the completion of the acquisition of Borqs International, the Company changed its name from Pacific Special Acquisition Corp. to Borqs Technologies, Inc. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 6 Months Ended |
Jun. 30, 2018 | |
Summary of Significant Accounting Policies [Abstract] | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (a) Basis of presentation The accompanying unaudited condensed consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“US GAAP”) and applicable rules and regulations of the Securities and Exchange Commission, regarding financial reporting, and include all normal and recurring adjustments that management of the Group considers necessary for a fair presentation of its financial position and operation results. Certain information and footnote disclosures normally included in financial statements prepared in conformity with US GAAP have been condensed or omitted pursuant to such rules and regulations. Accordingly, these statements should be read in conjunction with the Group’s unaudited consolidated financial statements as of and for the three years in the periods ended December 31, 2017. (b) Liquidity As of December 31, 2017 and June 30, 2018, the Group had cash and cash equivalents of US$13.1 million and $1.3 million, respectively. As of June 30, 2018, the Group has accumulated deficit of US$71.5 million and net cash outflows of US$11.8 million for the six months then ended. These conditions raise substantial doubt about the Group’s ability to continue as a going concern and therefore, the Group is exposed to liquidity risk as it may not have sufficient working capital to meet its commitments and business needs. The Group’s ability to fund its operations is based on its ability to generate cash, its ability to attract investors and its ability to borrow funds on reasonable economic terms. The Group’s ability to continue as a going concern is dependent on management’s ability to successfully execute its business plan and generate positive cash inflows. The Group is now in the process of completing a public offering to secure funding. Therefore, the management is of the opinion that it will be able to meet its payment obligations for the next twelve months from the date of issuance of the unaudited condensed consolidated financial statements. Based on the above considerations, the Group’s unaudited condensed consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and liquidation of liabilities in the normal course of business. (c) Long-term investment The Group’s long-term investment represents cost method investment purchased during the six months period ended June 30, 2018. In accordance with ASC 325-20 (“ASC 325-20”), Investments-Other: Cost Method Investments, for investments in investees over which the Group does not have significant influence, the Group carries the investments at cost and only adjusts for other-than-temporary declines in fair value and distributions of earnings. The Group’s management regularly evaluates the impairment of its cost method investments based on the performance and financial position of the investees as well as other evidence of estimated market values. Such evaluation includes, but is not limited to, reviewing the investees’ cash position, recent financing, projected and historical financial performance, cash flow forecasts and current and future financing needs. An impairment loss is recognized in the consolidated statements of comprehensive income equal to the excess of the investment’s cost over its fair value at the balance sheet date of the reporting period for which the assessment is made. The fair value would then become the new cost basis of investment. (d) Recent accounting pronouncements The Group is an emerging growth company (’‘EGC’’) as defined by the Jumpstart Our Business Startups Act (’‘JOBS Act’’). The JOBS Act provides that an EGC can take advantage of an extended transition period for complying with new or revised accounting standards. This allows an EGC to delay adoption of certain accounting standards until those standards would otherwise apply to private companies. The Group elected to take advantage of the extended transition period. However, this election will not apply should the company cease to be classified as an EGC. In May 2014, the Financial Accounting Standards Board (’‘FASB’’) issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606). ASU 2014-09 supersedes the revenue recognition requirements in ASC 605, and requires entities to recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled to in exchange for those goods or services. In August 2015, the FASB issued ASU 2015-14, Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date, which defers the effective date of ASU 2014-09 by one year. As a result, ASU 2014-09 is effective for the Group for annual reporting periods beginning January 1, 2019 and interim periods within annual periods beginning January 1, 2020. In March 2016, the FASB issued ASU 2016-08, Revenue from Contracts with Customers—Principal versus Agent Considerations, which clarifies the implementation guidance on principal versus agent considerations. In April 2016, the FASB issued ASU 2016-10, Revenue from Contracts with Customers—Identifying Performance Obligations and Licensing, which clarify guidance related to identifying performance obligations and licensing implementation guidance contained in ASU 2014-09. In May 2016, the FASB issued ASU 2016-12, Revenue from Contracts with Customers— Narrow-Scope Improvements and Practical Expedients, which addresses narrow-scope improvements to the guidance on collectability, non-cash consideration, and completed contracts at transition and provides practical expedients for contract modifications at transition and an accounting policy election related to the presentation of sales taxes and other similar taxes collected from customers. The effective dates for these amendments are the same as the effective date of ASU No 2014-09. Early adoption is permitted, and the standard permits the use of either the retrospective or cumulative effect transition method. The Group does not plan to early adopt the standard and amendments and it is in the process of developing a plan for evaluating the impact of adoption of these guidance on its unaudited consolidated financial statements, including the selection of the adoption method, the identification of differences, if any, from the application of the guidance, and the impact of such differences, if any, on its unaudited consolidated financial statements. In January 2016, the FASB issued ASU 2016-01, Financial Instruments. ASU 2016-01 requires equity investments (except those accounted for under the equity method of accounting or those that result in consolidation of the investee) to be measured at fair value with changes in fair value recognized in net income. An entity may choose to measure equity investments that do not have readily determinable fair values at cost minus impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for the identical or a similar investment of the same issuer. ASU 2016-01 also simplifies the impairment assessment of equity investments without readily determinable fair values by requiring a qualitative assessment to identify impairment. When a qualitative assessment indicates that impairment exists, an entity is required to measure the investment at fair value. ASU 2016-01 is effective for the Group beginning January 1, 2019 with interim periods within annual periods beginning January 1, 2020. Early adoption is permitted no earlier than the fiscal year beginning January 1, 2018 including interim periods within that year. The Group does not plan to early adopt ASU 2016-01 and it is currently evaluating the impact of adopting this standard on its unaudited consolidated financial statements. In February 2016, the FASB issued ASU 2016-02, Leases, which specifies the accounting for leases. For operating leases, ASU 2016-02 requires a lessee to recognize a right-of-use asset and a lease liability, initially measured at the present value of the lease payments, in its balance sheet. The standard also requires a lessee to recognize a single lease cost, calculated so that the cost of the lease is allocated over the lease term, on a generally straight-line basis. ASU 2016-02 is effective for the Group for annual reporting periods beginning January 1, 2020 and interim periods within annual periods beginning January 1, 2021. Early adoption is permitted. The Group does not plan to early adopt ASU 2016-02 and it is currently evaluating the impact of adopting the standard on its unaudited consolidated financial statements. In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments — Credit Losses (Topic 326), Measurement of Credit Losses on Financial Instruments. ASU 2016-13 changes the impairment model for most financial assets and certain other instruments. The standard will replace “incurred loss” approach with an “expected loss” model for instruments measured at amortized cost. For available-for-sale debt securities, entities will be required to record allowances rather than reduce the carrying amount, as they do today under the other-than-temporary impairment model. The standard is effective for public business entities for annual periods beginning after December 15, 2019, and interim periods therein, and annual reporting periods beginning after December 15, 2020, and interim periods within annual periods beginning after December 15, 2021 for all other entities. Early adoption is permitted. The Group does not plan to early adopt ASU No. 2016-13 and it is evaluating the effect that this guidance will have on its unaudited consolidated financial statements. In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments, which addresses eight specific cash flow issues: Debt prepayment or debt extinguishment costs; settlement of zero-coupon debt instruments or other debt instruments with coupon interest rates that are insignificant in relation to the effective interest rate of the borrowing; contingent consideration payments made after a business combination; proceeds from the settlement of insurance claims; proceeds from the settlement of corporate-owned life insurance policies (COLIs) (including bank-owned life insurance policies (BOLIs)); distributions received from equity method investees; beneficial interests in securitization transactions; and separately identifiable cash flows and application of the predominance principle. In November 2016, the FASB issued ASU 2016-18, Statements of Cash Flow (Topic 230): Restricted Cash, which requires that a statement of cash flows explain the change during the period in the total cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. Therefore, amounts generally described as restricted cash and restricted cash equivalents should be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amount shown on the statement of cash flows. ASU 2016-15 and ASU 2016-18 are effective for the Group for annual reporting periods beginning January 1, 2019 and interim periods within annual periods beginning January 1, 2020. Early adoption is permitted. The Group does not plan to early adopt ASU 2016-15 and ASU 2016-18 and it is evaluating the impacts that these standards will have on its unaudited consolidated financial statements. In January 2017, the FASB issued ASU 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business. ASU 2017-01 clarifies the framework for determining whether an integrated set of assets and activities meets the definition of a business. The revised framework establishes a screen for determining whether an integrated set of assets and activities is a business and narrows the definition of a business, which is expected to result in fewer transactions being accounted for as business combinations. Acquisitions of integrated sets of assets and activities that do not meet the definition of a business are accounted for as asset acquisitions. ASU 2017-01 is effective for the Group for annual reporting periods beginning January 1, 2020 and interim periods within annual periods beginning January 1, 2021, with early adoption permitted for transactions that have not been reported in previously issued (or available to be issued) financial statements. The Group does not plan to early adopt ASU 2017-01 and does not expect the impact that this standard will have a material impact on its unaudited consolidated financial statements. In January 2017, the FASB issued Accounting Standards Update No. 2017-04, Intangibles — Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment. ASU 2017-04 eliminates the requirement to calculate the implied fair value of goodwill to measure a goodwill impairment charge. Instead, entities will record an impairment charge based on the excess of a reporting unit’s carrying amount over its fair value. This standard is effective for public business entities for its annual or any interim goodwill impairment tests in fiscal years beginning after December 15, 2020. Early adoption is permitted. The Group does not plan to early adopt ASU 2017-04 and it is currently evaluating the impact of adopting this standard on its unaudited consolidated financial statements. |
Prepaid Expenses and Other Curr
Prepaid Expenses and Other Current Assets | 6 Months Ended |
Jun. 30, 2018 | |
Prepaid Expenses and Other Current Assets [Abstract] | |
PREPAID EXPENSES AND OTHER CURRENT ASSETS | 3. PREPAID EXPENSES AND OTHER CURRENT ASSETS Prepaid expenses and other current assets consist of the following: As of As of 2017 2018 US$ US$ Staff advances 312 327 Prepayment for share repurchase (i) - 10,100 Prepayment for products 1,008 5,347 Advance to OEM 3,662 11,718 Rental and other deposits 1,203 990 VAT recoverable 2,189 3,157 Loan to third parties 1,469 - Receivable from an agent 6,318 3,392 Others 79 129 16,240 35,160 (i) On January 10, 2018, the Company entered into a stock repurchase agreement (“Stock Repurchase Agreement”) with Zhengqi International Holding Limited (“Zhengqi”), an existing shareholder, pursuant to which the Company agreed to repurchase 966,136 ordinary shares from Zhengqi at an aggregate purchase price of $10 million. The $10 million share repurchase consideration was transferred to Zhengqi in January 2018 and recorded as a prepayment as of June 30, 2018. The repurchase is expected to be completed in the second half of 2018. |
Property and Equipment, Net
Property and Equipment, Net | 6 Months Ended |
Jun. 30, 2018 | |
Property and Equipment, Net [Abstract] | |
PROPERTY AND EQUIPMENT, NET | 4. PROPERTY AND EQUIPMENT, NET Property and equipment consist of the following: As of As of 2017 2018 US$ US$ At cost: Leasehold improvements 933 921 Computer and network equipment 6,458 6,408 Office equipment 918 939 Motor vehicles 233 257 8,542 8,525 Less: accumulated depreciation (7,180 ) (7,358 ) 1,362 1,167 Depreciation expense was US$455 and US$232 for the six months ended June 30, 2017 and 2018, respectively, were included in the following captions: Six Months Ended 2017 2018 US$ US$ Cost of revenues 156 82 Sales and marketing expenses 14 7 General and administrative expenses 117 34 Research and development expenses 168 109 455 232 |
Intangible Assets, Net
Intangible Assets, Net | 6 Months Ended |
Jun. 30, 2018 | |
Intangible Assets, Net/Goodwill [Abstract] | |
INTANGIBLE ASSETS, NET | 5. INTANGIBLE ASSETS, NET The following table presents the Group’s intangible assets as of the respective balance sheet dates: Software Capitalized License Total US$ US$ US$ US$ Balance as of January 1, 2017 2,294 6,874 6,330 15,498 Additions 74 3,924 - 3,998 Amortization expense (117 ) (1,356 ) (432 ) (1,905 ) Foreign currency translation difference 54 102 152 308 Balance as of June 30, 2017 2,305 9,544 6,050 17,899 Balance as of January 1, 2018 2,529 11,600 5,875 20,004 Additions 274 3,600 - 3,874 Amortization expense (94 ) (2,612 ) (448 ) (3,154 ) Foreign currency translation difference (32 ) (77 ) (73 ) (182 ) Balance as of June 30, 2018 2,677 12,511 5,354 20,542 The intangible assets are amortized using the straight-line method, which is the Group’s best estimate of how these assets will be economically consumed over their respective estimated useful lives of 3-10 years. Amortization expense was US$1,905 and US$3,154 for the six months ended June 30, 2017 and 2018, respectively. |
Goodwill
Goodwill | 6 Months Ended |
Jun. 30, 2018 | |
Intangible Assets, Net/Goodwill [Abstract] | |
GOODWILL | 6. GOODWILL The changes in the carrying amount of goodwill were as follows: As of As of 2017 2018 US$ US$ Balance at beginning of the period 693 736 Foreign currency translation difference 43 (9 ) Balance at end of the period 736 727 No impairment charge was recorded in any of the six months ended June 30, 2017 and 2018, respectively. |
Long-Term Investment
Long-Term Investment | 6 Months Ended |
Jun. 30, 2018 | |
Long-Term Investment/Bank and Other Borrowings [Abstract] | |
LONG-TERM INVESTMENT | 7. LONG-TERM INVESTMENT On January 18, 2018, the Company entered into an agreement with Colmei Technology International Ltd (“Colmei”) and its affiliate Shenzhen Crave Communication Co., Ltd (“Crave”), along with the shareholders of Crave and Colmei (“Selling Shareholders”), pursuant to which the Selling Shareholders sold to the Company 13.8% of the outstanding shares of Crave and 13.8% of the outstanding shares of Colmei. Under the agreement, the Company paid purchase consideration consisting of the Company’s 473,717 ordinary shares issued and cash in the amount of US$10,000 to be paid to the Selling Shareholders over a period of 36 months from the date of agreement. If approved by the Company’s board of directors, the Company will also issue additional shares to the Selling Shareholders if the aggregate value of the Company shares initially issued to the Selling Shareholders under this agreement is less than US$3,000 on August 18, 2018. This transaction was completed on March 22, 2018. The Company does not have significant influence over the investees and therefore the investment was accounted for under the cost method. Cost of the long-term investment consisted of the fair value of the ordinary shares on the date of issuance and the present value of the cash consideration determined based on management’s estimated payment schedule. |
Bank and Other Borrowings
Bank and Other Borrowings | 6 Months Ended |
Jun. 30, 2018 | |
Long-Term Investment/Bank and Other Borrowings [Abstract] | |
BANK AND OTHER BORROWINGS | 8. BANK AND OTHER BORROWINGS Bank and other borrowings are as follows as of the respective balance sheet dates: As of As of 2017 2018 US$ US$ Short-term bank and other borrowings 12,648 11,653 Long-term bank borrowings, current portion 5,432 6,532 Total borrowings 18,080 18,185 The short-term bank borrowings outstanding as of December 31, 2017 and June 30, 2018 bore a weighted average interest rate of 6.89% and 6.27% per annum, respectively, and were denominated in RMB and US$. These borrowings were obtained from financial institutions and have terms of one year. In addition, on November 20, 2017, the Company entered into a three month short-term loan agreement with HHMC Microelectronic Co., Limited (“HHMC’) for US$5,000 with an interest rate of 0.04% per day, for working capital and has term of three months. If the loan is not fully repaid within three months, the interest rate will increase to 0.1% per day. The initial term of the agreement was subsequently extended to May 28, 2018. The Company is currently in discussion with HHMC for another extension. The short-term loan outstanding as of June 30, 2018 was US$2,914. The long-term bank borrowings, current portion outstanding as of June 30, 2018 bore a weighted average interest rate of 8% and were denominated in US$. These borrowings were obtained from financial institutions located in the United States, and have terms of three years. As of June 30, 2018, the Company was in breach of two of the financial covenants under long-term bank borrowing with an outstanding balance of US$3,032. The breach would result in acceleration of the repayments of the borrowings according to the contractual terms. Therefore, the outstanding balances were reclassified as current liabilities as of June 30, 2018. Certain bank borrowings as of June 30, 2018 were pledged by account receivable amounted to US$33,279. |
Accrued Expenses and Other Paya
Accrued Expenses and Other Payables | 6 Months Ended |
Jun. 30, 2018 | |
Accrued Expenses and Other Payables [Abstract] | |
ACCRUED EXPENSES AND OTHER PAYABLES | 9. ACCRUED EXPENSES AND OTHER PAYABLES The components of accrued expenses and other payables are as follows: As of As of 2017 2018 US$ US$ Payroll and welfare payable 2,030 2,869 Payable for long-term investment (Note 7) - 3,263 VAT, and other taxes payable 2,473 3,291 Payables for office supply and utilities 711 958 Payables for purchase of property and equipment 52 51 Professional service fees 3,161 3,764 Deposits from agents 3,509 4,577 Others 227 234 12,163 19,007 |
Deferred Government Grants
Deferred Government Grants | 6 Months Ended |
Jun. 30, 2018 | |
Deferred Government Grants [Abstract] | |
DEFERRED GOVERNMENT GRANTS | 10. DEFERRED GOVERNMENT GRANTS The government grants received are required to be used in construction of property and equipment. These grants are initially deferred and subsequently recognized in the statement of operations over the life of the related assets as other operating income. Six Months Ended 2017 2018 US$ US$ Balance at beginning of the period 2,108 1,957 Recognized as other operating income (271 ) - Foreign currency translation difference 51 (24 ) Balance at ending of the period 1,888 1,933 |
Accumulated Other Comprehensive
Accumulated Other Comprehensive Loss | 6 Months Ended |
Jun. 30, 2018 | |
Accumulated Other Comprehensive Loss [Abstract] | |
ACCUMULATED OTHER COMPREHENSIVE LOSS | 11. ACCUMULATED OTHER COMPREHENSIVE LOSS The changes in accumulated other comprehensive loss, net of tax of nil, are as follows: Foreign currency Total US$ US$ Balance as of December 31, 2016 (2,626 ) (2,626 ) Current year other comprehensive income 2,119 2,119 Balance as of December 31, 2017 (507 ) (507 ) Current period other comprehensive loss (987 ) (987 ) Balance as of June 30, 2018 (1,494 ) (1,494 ) |
Mainland China Employee Contrib
Mainland China Employee Contribution Plan | 6 Months Ended |
Jun. 30, 2018 | |
Mainland China Employee Contribution Plan [Abstract] | |
MAINLAND CHINA EMPLOYEE CONTRIBUTION PLAN | 12. MAINLAND CHINA EMPLOYEE CONTRIBUTION PLAN As stipulated by the regulations of the PRC, full-time employees of the Company in the PRC participate in a government-mandated multiemployer defined contribution plan organized by municipal and provincial governments. Under the plan, certain pension benefits, medical care, unemployment insurance, employee housing fund and other welfare benefits are provided to employees. The Company is required to make contributions to the plan based on certain percentages of employees’ salaries. The total expenses for the plan were US$1,139K and US$635K respectively, for the six months ended June 30, 2017 and 2018. |
Taxation
Taxation | 6 Months Ended |
Jun. 30, 2018 | |
Taxation [Abstract] | |
TAXATION | 13. TAXATION (Loss) profit before income taxes consists of: Six Months Ended 2017 2018 US$ US$ Non-PRC 1,384 1,942 PRC (1,441 ) 2,490 (57 ) 4,432 Income tax expenses comprise of: Six Months Ended 2017 2018 US$ US$ Current (943 ) (187 ) Deferred 53 (850 ) (890 ) (1,037 ) The reconciliation of tax computed by applying the statutory income tax rate of 25% for the six months ended June 30, 2017 and 2018 applicable to the PRC operations to income tax expenses is as follows: Six Months Ended 2017 2018 US$ US$ (Loss) profit before income taxes (57 ) 4,432 Income tax benefit (expenses) computed at the statutory income tax rate at 25% 14 (1,108 ) Non-deductible expenses (304 ) 272 Non-taxation income 67 - Preferential rate (102 ) 464 Current and deferred tax rate differences (120 ) (225 ) Foreign rate differences (266 ) (222 ) Change of valuation allowance (116 ) 811 Prior year provision to return true up - (848 ) Interest expenses (63 ) (181 ) Income tax expenses (890 ) (1,037 ) Deferred Taxes The significant components of deferred taxes are as follows: As of As of 2017 2018 US$ US$ Deferred tax assets Inventories provision 229 227 AR provision - 69 Accrued salary and welfare payable 165 316 Property and equipment 14 14 Tax losses 14,769 13,478 Valuation allowance (13,714 ) (12,903 ) Total deferred tax assets 1,463 1,201 Deferred tax liabilities Intangible assets 2,004 1,790 Deferred cost of revenues 1,551 2,260 Total deferred tax liabilities 3,555 4,050 As of June 30, 2018, the Group had net tax operating losses from its PRC subsidiaries and its Consolidated VIEs, as per filed tax returns, of US$32,015, which will expire from 2018 to 2022. The Group has net tax operating loss from its HK subsidiary of US$14,276, which will not expire. As of June 30, 2018, the Group intends to permanently reinvest the undistributed earnings from its foreign subsidiaries and the Consolidated VIEs to fund future operations. The amount of unrecognized deferred tax liabilities for temporary differences related to investments in foreign subsidiaries and the Consolidated VIEs is not determined because such a determination is not practicable. Unrecognized Tax Benefits As of December 31, 2017 and June 30, 2018, the Group recorded unrecognized tax benefits of US$4,547 and US$5,133, respectively, of which, US$2,764 and US$3,531, respectively, are presented on a net basis against the deferred tax assets related to tax loss carry forwards on the consolidated balance sheets. The unrecognized tax benefits and its related interests are primarily related to under-reported intercompany profit. The amount of unrecognized tax benefits will change in the next 12 months, pending clarification of current tax law or audit by the tax authorities, however, an estimate of the range of the possible change cannot be made at this time. As of December 31, 2017 and June 30, 2018, unrecognized tax benefits of US$2,043 and US$2,702, if ultimately recognized, will impact the effective tax rate. A roll-forward of unrecognized tax benefits is as follows: Six Months Ended 2017 2018 US$ US$ Balance at beginning of period 4,053 4,547 Additions based on tax positions related to the current year 170 644 Foreign currency translation difference (353 ) (58 ) Balance at end of period 3,870 5,133 In the six months ended June 30, 2017 and 2018, the Group recorded interest expenses accrued in relation to the unrecognized tax benefits of US$63 and US$181 in income tax expenses, respectively. Accumulated interest expenses recorded by the Group was US$151 and US$519 as of June 30, 2017 and 2018, respectively. As of June 30, 2018, the tax years ended December 31, 2013 through 2018 for the PRC subsidiaries and the VIE remain open for statutory examination by the PRC tax authorities. |
Related Party Transactions
Related Party Transactions | 6 Months Ended |
Jun. 30, 2018 | |
Related Party Transactions [Abstract] | |
RELATED PARTY TRANSACTIONS | 14. RELATED PARTY TRANSACTIONS (a) Related parties Names of related parties Relationship with the Group Intel Capital Corporation (“Intel”) and its affiliates A substantial shareholder of the Group but exited from the mobile chipset activities. Qualcomm Global Trading PTE, Ltd (“Qualcomm”) and its affiliates A substantial shareholder of the Group. * * Upon the consummation of the Merger, the entity ceased to be a substantial shareholder of the Group. (b) Other than disclosed elsewhere, the Group had the following significant related party transactions for the six months ended June 30, 2017 and 2018: Six Months Ended 2017 2018 US$ US$ Software services provided to: Intel (China) Co., Ltd. 9 - Intel Asia-Pacific Research and Development Ltd. 65 - Intel (China) Research Center Co., Ltd. 8 - Qualcomm India Private Limited 3,967 * Hardware sold to: Qualcomm India Private Ltd 12 * Purchased from: Qualcomm Incorporated 398 * Qualcomm CDMA Technologies Asia Pacific PTE Ltd. 1,732 * Qualcomm Technologies, Inc. 75 * |
(Loss) Earnings Per Share
(Loss) Earnings Per Share | 6 Months Ended |
Jun. 30, 2018 | |
(Loss) Earnings Per Share [Abstract] | |
(LOSS) EARNINGS PER SHARE | 15. (LOSS) EARNINGS PER SHARE Basic and diluted (loss) earnings per share for each of the six months presented are calculated as follows: Three Months Ended Six Months Ended June 30, 2017 2018 2017 2018 US$ US$ US$ US$ Numerator: Net (loss) income (965 ) 2,008 (947 ) 3,395 Less: net income attributable to noncontrolling interests 197 178 119 366 Net (loss) income attributable to Borqs Technologies, Inc. (1,162 ) 1,830 (1,066 ) 3,029 Accretion to redemption value of Convertible Redeemable Preferred Shares (150 ) - (448 ) - Net (loss) income attributable to Borqs Technologies, Inc.’s ordinary shareholders (1,312 ) 1,830 (1,514 ) 3,029 Denominator: Weighted-average number of ordinary shares outstanding—basic 4,259,898 26,830,514 4,243,964 26,613,800 Weighted-average number of ordinary shares outstanding—diluted 4,259,898 27,675,005 4,243,964 27,585,851 (Loss) earnings per share—Basic: (0.31 ) 0.07 (0.36 ) 0.11 (Loss) earnings per share—Diluted: (0.31 ) 0.07 (0.36 ) 0.11 For the three months and six months ended June 30, 2017, Convertible Redeemable Preferred Shares share options and replacement warrants to purchase ordinary shares were anti-dilutive and excluded from the calculation of diluted net loss per share. |
Commitments and Contingencies
Commitments and Contingencies | 6 Months Ended |
Jun. 30, 2018 | |
Commitments and Contingencies [Abstract] | |
COMMITMENTS AND CONTINGENCIES | 16. COMMITMENTS AND CONTINGENCIES Operating lease commitments The Group leases buildings in the PRC and India under non-cancelable operating leases expiring on different dates. For the six months ended June 30, 2017 and June 30, 2018, total rental expenses for all operating leases amounted to US$709 and US$812, respectively. As of June 30, 2018, the Group has future minimum lease payments under non-cancelable operating leases with initial terms in excess of one year in relation to office buildings consisting of the following: US$ 2019 496 2020 1,191 2021 788 2022 514 2022 and thereafter 414 3,403 Payments under operating leases are expensed on a straight-line basis over the periods of their respective leases. Income Taxes As of June 30, 2018, the Group recognized an accrual of US$2,780 for unrecognized tax benefits and its interest (Note 13). The final outcome of the tax uncertainty is dependent upon various matters including tax examinations, interpretation of tax laws or expiration of statutes of limitation. However, due to the uncertainties associated with the status of examinations, including the protocols of finalizing audits by the relevant tax authorities, there is a high degree of uncertainty regarding the future cash outflows associated with these tax uncertainties. As of June 30, 2018, the Group classified the accrual for unrecognized tax benefits as a non-current liability. Arbitration with Samsung Electronics Co., Ltd. (“Samsung”) The Company is currently in arbitration with Samsung to resolve a dispute regarding royalties payable to the Company under a software license agreement the Company had with Samsung. Samsung alleges that, for the period starting the fourth quarter of 2010 through mid of 2012, the Company was overpaid royalties in the amount of approximately US$1.67 million due to a clerical error in their accounting department that enabled the Company to receive royalties on sales of Samsung handsets that did not contain the Company’s software. Samsung is seeking repayment of the US$1.67 million plus accrued interest of 12% per annum and as well as reimbursements of reasonable fees including attorney fees and arbitration costs. After arbitration hearings that were held in May 2018, the parties are awaiting a ruling from the arbitrator on Samsung’s claim and the result is unpredictable. As of June 30, 2018, neither the Company or management nor the legal counsel can reasonably estimate the result and potential financial impact of this pending claim. |
Segment Reporting
Segment Reporting | 6 Months Ended |
Jun. 30, 2018 | |
Segment Reporting [Abstract] | |
SEGMENT REPORTING | 17. SEGMENT REPORTING The operations of the Group are organized into two segments, consisting of Yuantel and Connected Solution. The CODM measures the performance of each segment based on metrics of revenue and earnings from operations and uses these results to evaluate the performance of, and to allocate resources to each of the segments. CODM does not evaluate operating segments using asset information. The CODM evaluates performance based on each reporting segment’s net revenue and operating income. The table below provides a summary of the Group’s operating segment results for the three months and the six months period ended June 30, 2017 and 2018: Six Months Ended Yuantel Connected Solution Total Segments Eliminations Consolidated Net revenue -External customers 13,955 39,384 53,339 - 53,339 -Inter-segment - 921 921 (921 ) - Total net revenue 13,955 40,305 54,260 (921 ) 53,339 Operating income 221 1,110 1,331 - 1,331 Six Months Ended Yuantel Connected Solution Total segments Eliminations Consolidated Net revenue -External customers 15,579 99,016 114,595 - 114,595 -Inter-segment - 415 415 (415 ) - Total net revenue 15,579 99,431 115,010 (415 ) 114,595 Operating income 1,289 4,232 5,521 - 5,521 Three Months Ended June 30, 2017 Yuantel Connected Solution Total segments Eliminations Consolidated Net revenue -External customers 7,508 14,621 22,129 - 22,129 -Inter-segment - 472 472 (472 ) - Total net revenue 7,508 15,093 22,601 (472 ) 22,129 Operating income 1,343 (1,083 ) 260 - 260 Three Months Ended Yuantel Connected Total Eliminations Consolidated Net revenue -External customers 7,697 48,642 56,339 - 56,339 -Inter-segment - 111 111 (111 ) - Total net revenue 7,697 48,753 56,450 (111 ) 56,339 Operating income 605 1,727 2,332 - 2,332 Three Months Ended Six Months Ended 2017 2018 2017 2018 US$ US$ US$ US$ PRC 14,270 7,146 27,029 18,325 Outside PRC: United States 1,869 3,100 3,422 7,296 India 1,932 42,738 4,020 84,812 Rest of the world 4,058 3,355 18,868 4,162 Total net revenue 22,129 56,339 53,339 114,595 |
Summary of Significant Accoun24
Summary of Significant Accounting Policies (Policies) | 6 Months Ended |
Jun. 30, 2018 | |
Summary of Significant Accounting Policies [Abstract] | |
Basis of presentation | (a) Basis of presentation The accompanying unaudited condensed consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“US GAAP”) and applicable rules and regulations of the Securities and Exchange Commission, regarding financial reporting, and include all normal and recurring adjustments that management of the Group considers necessary for a fair presentation of its financial position and operation results. Certain information and footnote disclosures normally included in financial statements prepared in conformity with US GAAP have been condensed or omitted pursuant to such rules and regulations. Accordingly, these statements should be read in conjunction with the Group’s unaudited consolidated financial statements as of and for the three years in the periods ended December 31, 2017. |
Liquidity | (b) Liquidity As of December 31, 2017 and June 30, 2018, the Group had cash and cash equivalents of US$13.1 million and $1.3 million, respectively. As of June 30, 2018, the Group has accumulated deficit of US$71.5 million and net cash outflows of US$11.8 million for the six months then ended. These conditions raise substantial doubt about the Group’s ability to continue as a going concern and therefore, the Group is exposed to liquidity risk as it may not have sufficient working capital to meet its commitments and business needs. The Group’s ability to fund its operations is based on its ability to generate cash, its ability to attract investors and its ability to borrow funds on reasonable economic terms. The Group’s ability to continue as a going concern is dependent on management’s ability to successfully execute its business plan and generate positive cash inflows. The Group is now in the process of completing a public offering to secure funding. Therefore, the management is of the opinion that it will be able to meet its payment obligations for the next twelve months from the date of issuance of the unaudited condensed consolidated financial statements. Based on the above considerations, the Group’s unaudited condensed consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and liquidation of liabilities in the normal course of business. |
Long-term investment | (c) Long-term investment The Group’s long-term investment represents cost method investment purchased during the six months period ended June 30, 2018. In accordance with ASC 325-20 (“ASC 325-20”), Investments-Other: Cost Method Investments, for investments in investees over which the Group does not have significant influence, the Group carries the investments at cost and only adjusts for other-than-temporary declines in fair value and distributions of earnings. The Group’s management regularly evaluates the impairment of its cost method investments based on the performance and financial position of the investees as well as other evidence of estimated market values. Such evaluation includes, but is not limited to, reviewing the investees’ cash position, recent financing, projected and historical financial performance, cash flow forecasts and current and future financing needs. An impairment loss is recognized in the consolidated statements of comprehensive income equal to the excess of the investment’s cost over its fair value at the balance sheet date of the reporting period for which the assessment is made. The fair value would then become the new cost basis of investment. |
Recent accounting pronouncements | (d) Recent accounting pronouncements The Group is an emerging growth company (’‘EGC’’) as defined by the Jumpstart Our Business Startups Act (’‘JOBS Act’’). The JOBS Act provides that an EGC can take advantage of an extended transition period for complying with new or revised accounting standards. This allows an EGC to delay adoption of certain accounting standards until those standards would otherwise apply to private companies. The Group elected to take advantage of the extended transition period. However, this election will not apply should the company cease to be classified as an EGC. In May 2014, the Financial Accounting Standards Board (’‘FASB’’) issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606). ASU 2014-09 supersedes the revenue recognition requirements in ASC 605, and requires entities to recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled to in exchange for those goods or services. In August 2015, the FASB issued ASU 2015-14, Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date, which defers the effective date of ASU 2014-09 by one year. As a result, ASU 2014-09 is effective for the Group for annual reporting periods beginning January 1, 2019 and interim periods within annual periods beginning January 1, 2020. In March 2016, the FASB issued ASU 2016-08, Revenue from Contracts with Customers—Principal versus Agent Considerations, which clarifies the implementation guidance on principal versus agent considerations. In April 2016, the FASB issued ASU 2016-10, Revenue from Contracts with Customers—Identifying Performance Obligations and Licensing, which clarify guidance related to identifying performance obligations and licensing implementation guidance contained in ASU 2014-09. In May 2016, the FASB issued ASU 2016-12, Revenue from Contracts with Customers— Narrow-Scope Improvements and Practical Expedients, which addresses narrow-scope improvements to the guidance on collectability, non-cash consideration, and completed contracts at transition and provides practical expedients for contract modifications at transition and an accounting policy election related to the presentation of sales taxes and other similar taxes collected from customers. The effective dates for these amendments are the same as the effective date of ASU No 2014-09. Early adoption is permitted, and the standard permits the use of either the retrospective or cumulative effect transition method. The Group does not plan to early adopt the standard and amendments and it is in the process of developing a plan for evaluating the impact of adoption of these guidance on its unaudited consolidated financial statements, including the selection of the adoption method, the identification of differences, if any, from the application of the guidance, and the impact of such differences, if any, on its unaudited consolidated financial statements. In January 2016, the FASB issued ASU 2016-01, Financial Instruments. ASU 2016-01 requires equity investments (except those accounted for under the equity method of accounting or those that result in consolidation of the investee) to be measured at fair value with changes in fair value recognized in net income. An entity may choose to measure equity investments that do not have readily determinable fair values at cost minus impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for the identical or a similar investment of the same issuer. ASU 2016-01 also simplifies the impairment assessment of equity investments without readily determinable fair values by requiring a qualitative assessment to identify impairment. When a qualitative assessment indicates that impairment exists, an entity is required to measure the investment at fair value. ASU 2016-01 is effective for the Group beginning January 1, 2019 with interim periods within annual periods beginning January 1, 2020. Early adoption is permitted no earlier than the fiscal year beginning January 1, 2018 including interim periods within that year. The Group does not plan to early adopt ASU 2016-01 and it is currently evaluating the impact of adopting this standard on its unaudited consolidated financial statements. In February 2016, the FASB issued ASU 2016-02, Leases, which specifies the accounting for leases. For operating leases, ASU 2016-02 requires a lessee to recognize a right-of-use asset and a lease liability, initially measured at the present value of the lease payments, in its balance sheet. The standard also requires a lessee to recognize a single lease cost, calculated so that the cost of the lease is allocated over the lease term, on a generally straight-line basis. ASU 2016-02 is effective for the Group for annual reporting periods beginning January 1, 2020 and interim periods within annual periods beginning January 1, 2021. Early adoption is permitted. The Group does not plan to early adopt ASU 2016-02 and it is currently evaluating the impact of adopting the standard on its unaudited consolidated financial statements. In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments — Credit Losses (Topic 326), Measurement of Credit Losses on Financial Instruments. ASU 2016-13 changes the impairment model for most financial assets and certain other instruments. The standard will replace “incurred loss” approach with an “expected loss” model for instruments measured at amortized cost. For available-for-sale debt securities, entities will be required to record allowances rather than reduce the carrying amount, as they do today under the other-than-temporary impairment model. The standard is effective for public business entities for annual periods beginning after December 15, 2019, and interim periods therein, and annual reporting periods beginning after December 15, 2020, and interim periods within annual periods beginning after December 15, 2021 for all other entities. Early adoption is permitted. The Group does not plan to early adopt ASU No. 2016-13 and it is evaluating the effect that this guidance will have on its unaudited consolidated financial statements. In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments, which addresses eight specific cash flow issues: Debt prepayment or debt extinguishment costs; settlement of zero-coupon debt instruments or other debt instruments with coupon interest rates that are insignificant in relation to the effective interest rate of the borrowing; contingent consideration payments made after a business combination; proceeds from the settlement of insurance claims; proceeds from the settlement of corporate-owned life insurance policies (COLIs) (including bank-owned life insurance policies (BOLIs)); distributions received from equity method investees; beneficial interests in securitization transactions; and separately identifiable cash flows and application of the predominance principle. In November 2016, the FASB issued ASU 2016-18, Statements of Cash Flow (Topic 230): Restricted Cash, which requires that a statement of cash flows explain the change during the period in the total cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. Therefore, amounts generally described as restricted cash and restricted cash equivalents should be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amount shown on the statement of cash flows. ASU 2016-15 and ASU 2016-18 are effective for the Group for annual reporting periods beginning January 1, 2019 and interim periods within annual periods beginning January 1, 2020. Early adoption is permitted. The Group does not plan to early adopt ASU 2016-15 and ASU 2016-18 and it is evaluating the impacts that these standards will have on its unaudited consolidated financial statements. In January 2017, the FASB issued ASU 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business. ASU 2017-01 clarifies the framework for determining whether an integrated set of assets and activities meets the definition of a business. The revised framework establishes a screen for determining whether an integrated set of assets and activities is a business and narrows the definition of a business, which is expected to result in fewer transactions being accounted for as business combinations. Acquisitions of integrated sets of assets and activities that do not meet the definition of a business are accounted for as asset acquisitions. ASU 2017-01 is effective for the Group for annual reporting periods beginning January 1, 2020 and interim periods within annual periods beginning January 1, 2021, with early adoption permitted for transactions that have not been reported in previously issued (or available to be issued) financial statements. The Group does not plan to early adopt ASU 2017-01 and does not expect the impact that this standard will have a material impact on its unaudited consolidated financial statements. In January 2017, the FASB issued Accounting Standards Update No. 2017-04, Intangibles — Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment. ASU 2017-04 eliminates the requirement to calculate the implied fair value of goodwill to measure a goodwill impairment charge. Instead, entities will record an impairment charge based on the excess of a reporting unit’s carrying amount over its fair value. This standard is effective for public business entities for its annual or any interim goodwill impairment tests in fiscal years beginning after December 15, 2020. Early adoption is permitted. The Group does not plan to early adopt ASU 2017-04 and it is currently evaluating the impact of adopting this standard on its unaudited consolidated financial statements. |
Prepaid Expenses and Other Cu25
Prepaid Expenses and Other Current Assets (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Prepaid Expenses and Other Current Assets [Abstract] | |
Schedule of prepaid expenses and other current assets | As of As of 2017 2018 US$ US$ Staff advances 312 327 Prepayment for share repurchase (i) - 10,100 Prepayment for products 1,008 5,347 Advance to OEM 3,662 11,718 Rental and other deposits 1,203 990 VAT recoverable 2,189 3,157 Loan to third parties 1,469 - Receivable from an agent 6,318 3,392 Others 79 129 16,240 35,160 (i) On January 10, 2018, the Company entered into a stock repurchase agreement (“Stock Repurchase Agreement”) with Zhengqi International Holding Limited (“Zhengqi”), an existing shareholder, pursuant to which the Company agreed to repurchase 966,136 ordinary shares from Zhengqi at an aggregate purchase price of $10 million. The $10 million share repurchase consideration was transferred to Zhengqi in January 2018 and recorded as a prepayment as of June 30, 2018. The repurchase is expected to be completed in the second half of 2018. |
Property and Equipment, Net (Ta
Property and Equipment, Net (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Property and Equipment, Net [Abstract] | |
Schedule of property and equipment | As of As of 2017 2018 US$ US$ At cost: Leasehold improvements 933 921 Computer and network equipment 6,458 6,408 Office equipment 918 939 Motor vehicles 233 257 8,542 8,525 Less: accumulated depreciation (7,180 ) (7,358 ) 1,362 1,167 |
Summary of depreciation expense on property and equipment | Six Months Ended 2017 2018 US$ US$ Cost of revenues 156 82 Sales and marketing expenses 14 7 General and administrative expenses 117 34 Research and development expenses 168 109 455 232 |
Intangible Assets, Net (Tables)
Intangible Assets, Net (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Intangible Assets, Net/Goodwill [Abstract] | |
Summry of presents the Group's intangible assets as of the respective balance sheet dates | Software Capitalized License Total US$ US$ US$ US$ Balance as of January 1, 2017 2,294 6,874 6,330 15,498 Additions 74 3,924 - 3,998 Amortization expense (117 ) (1,356 ) (432 ) (1,905 ) Foreign currency translation difference 54 102 152 308 Balance as of June 30, 2017 2,305 9,544 6,050 17,899 Balance as of January 1, 2018 2,529 11,600 5,875 20,004 Additions 274 3,600 - 3,874 Amortization expense (94 ) (2,612 ) (448 ) (3,154 ) Foreign currency translation difference (32 ) (77 ) (73 ) (182 ) Balance as of June 30, 2018 2,677 12,511 5,354 20,542 |
Goodwill (Tables)
Goodwill (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Intangible Assets, Net/Goodwill [Abstract] | |
Schedule of changes in carrying amount of goodwill | As of As of 2017 2018 US$ US$ Balance at beginning of the period 693 736 Foreign currency translation difference 43 (9 ) Balance at end of the period 736 727 |
Bank and Other Borrowings (Tabl
Bank and Other Borrowings (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Long-Term Investment/Bank and Other Borrowings [Abstract] | |
Schedule of bank borrowings of the balance sheet | As of As of 2017 2018 US$ US$ Short-term bank and other borrowings 12,648 11,653 Long-term bank borrowings, current portion 5,432 6,532 Total borrowings 18,080 18,185 |
Accrued Expenses and Other Pa30
Accrued Expenses and Other Payables (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Accrued Expenses and Other Payables [Abstract] | |
Schedule of accrued expenses and other payables | As of As of 2017 2018 US$ US$ Payroll and welfare payable 2,030 2,869 Payable for long-term investment (Note 7) - 3,263 VAT, and other taxes payable 2,473 3,291 Payables for office supply and utilities 711 958 Payables for purchase of property and equipment 52 51 Professional service fees 3,161 3,764 Deposits from agents 3,509 4,577 Others 227 234 12,163 19,007 |
Deferred Government Grants (Tab
Deferred Government Grants (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Deferred Government Grants [Abstract] | |
Summary of defferred government grants | Six Months Ended 2017 2018 US$ US$ Balance at beginning of the period 2,108 1,957 Recognized as other operating income (271 ) - Foreign currency translation difference 51 (24 ) Balance at ending of the period 1,888 1,933 |
Accumulated Other Comprehensi32
Accumulated Other Comprehensive Loss (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Accumulated Other Comprehensive Loss [Abstract] | |
Schedule of accumulated other comprehensive loss, net of tax | Foreign currency Total US$ US$ Balance as of December 31, 2016 (2,626 ) (2,626 ) Current year other comprehensive income 2,119 2,119 Balance as of December 31, 2017 (507 ) (507 ) Current period other comprehensive loss (987 ) (987 ) Balance as of June 30, 2018 (1,494 ) (1,494 ) |
Taxation (Tables)
Taxation (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Taxation [Abstract] | |
Schedule of profit before income taxes | Six Months Ended 2017 2018 US$ US$ Non-PRC 1,384 1,942 PRC (1,441 ) 2,490 (57 ) 4,432 |
Schedule of income tax expense | Six Months Ended 2017 2018 US$ US$ Current (943 ) (187 ) Deferred 53 (850 ) (890 ) (1,037 ) |
Schedule of reconciliation of tax computed by applying the statutory income tax rate | Six Months Ended 2017 2018 US$ US$ (Loss) profit before income taxes (57 ) 4,432 Income tax benefit (expenses) computed at the statutory income tax rate at 25% 14 (1,108 ) Non-deductible expenses (304 ) 272 Non-taxation income 67 - Preferential rate (102 ) 464 Current and deferred tax rate differences (120 ) (225 ) Foreign rate differences (266 ) (222 ) Change of valuation allowance (116 ) 811 Prior year provision to return true up - (848 ) Interest expenses (63 ) (181 ) Income tax expenses (890 ) (1,037 ) |
Schedule of significant components of deferred taxes | As of As of 2017 2018 US$ US$ Deferred tax assets Inventories provision 229 227 AR provision - 69 Accrued salary and welfare payable 165 316 Property and equipment 14 14 Tax losses 14,769 13,478 Valuation allowance (13,714 ) (12,903 ) Total deferred tax assets 1,463 1,201 Deferred tax liabilities Intangible assets 2,004 1,790 Deferred cost of revenues 1,551 2,260 Total deferred tax liabilities 3,555 4,050 |
Schedule of roll-forward of unrecognized tax benefits | Six Months Ended 2017 2018 US$ US$ Balance at beginning of period 4,053 4,547 Additions based on tax positions related to the current year 170 644 Foreign currency translation difference (353 ) (58 ) Balance at end of period 3,870 5,133 |
Related Party Transactions (Tab
Related Party Transactions (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Related Party Transactions [Abstract] | |
Schedule of names of related parties and relationship with group | Names of related parties Relationship with the Group Intel Capital Corporation (“Intel”) and its affiliates A substantial shareholder of the Group but exited from the mobile chipset activities. Qualcomm Global Trading PTE, Ltd (“Qualcomm”) and its affiliates A substantial shareholder of the Group. * * Upon the consummation of the Merger, the entity ceased to be a substantial shareholder of the Group. |
Schedule of significant related party transactions | Six Months Ended 2017 2018 US$ US$ Software services provided to: Intel (China) Co., Ltd. 9 - Intel Asia-Pacific Research and Development Ltd. 65 - Intel (China) Research Center Co., Ltd. 8 - Qualcomm India Private Limited 3,967 * Hardware sold to: Qualcomm India Private Ltd 12 * Purchased from: Qualcomm Incorporated 398 * Qualcomm CDMA Technologies Asia Pacific PTE Ltd. 1,732 * Qualcomm Technologies, Inc. 75 * |
(Loss) Earnings Per Share (Tabl
(Loss) Earnings Per Share (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
(Loss) Earnings Per Share [Abstract] | |
Schedule of basic and diluted loss per share | Three Months Ended Six Months Ended June 30, 2017 2018 2017 2018 US$ US$ US$ US$ Numerator: Net (loss) income (965 ) 2,008 (947 ) 3,395 Less: net income attributable to noncontrolling interests 197 178 119 366 Net (loss) income attributable to Borqs Technologies, Inc. (1,162 ) 1,830 (1,066 ) 3,029 Accretion to redemption value of Convertible Redeemable Preferred Shares (150 ) - (448 ) - Net (loss) income attributable to Borqs Technologies, Inc.’s ordinary shareholders (1,312 ) 1,830 (1,514 ) 3,029 Denominator: Weighted-average number of ordinary shares outstanding—basic 4,259,898 26,830,514 4,243,964 26,613,800 Weighted-average number of ordinary shares outstanding—diluted 4,259,898 27,675,005 4,243,964 27,585,851 (Loss) earnings per share—Basic: (0.31 ) 0.07 (0.36 ) 0.11 (Loss) earnings per share—Diluted: (0.31 ) 0.07 (0.36 ) 0.11 |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Commitments and Contingencies [Abstract] | |
Schedule of future minimum lease payments under non-cancelable operating leases | US$ 2019 496 2020 1,191 2021 788 2022 514 2022 and thereafter 414 3,403 |
Segment Reporting (Tables)
Segment Reporting (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Segment Reporting [Abstract] | |
Schedule of group's operating segment | Six Months Ended Yuantel Connected Solution Total Segments Eliminations Consolidated Net revenue -External customers 13,955 39,384 53,339 - 53,339 -Inter-segment - 921 921 (921 ) - Total net revenue 13,955 40,305 54,260 (921 ) 53,339 Operating income 221 1,110 1,331 - 1,331 Six Months Ended Yuantel Connected Solution Total segments Eliminations Consolidated Net revenue -External customers 15,579 99,016 114,595 - 114,595 -Inter-segment - 415 415 (415 ) - Total net revenue 15,579 99,431 115,010 (415 ) 114,595 Operating income 1,289 4,232 5,521 - 5,521 Three Months Ended June 30, 2017 Yuantel Connected Solution Total segments Eliminations Consolidated Net revenue -External customers 7,508 14,621 22,129 - 22,129 -Inter-segment - 472 472 (472 ) - Total net revenue 7,508 15,093 22,601 (472 ) 22,129 Operating income 1,343 (1,083 ) 260 - 260 Three Months Ended Yuantel Connected Total Eliminations Consolidated Net revenue -External customers 7,697 48,642 56,339 - 56,339 -Inter-segment - 111 111 (111 ) - Total net revenue 7,697 48,753 56,450 (111 ) 56,339 Operating income 605 1,727 2,332 - 2,332 Three Months Ended Six Months Ended 2017 2018 2017 2018 US$ US$ US$ US$ PRC 14,270 7,146 27,029 18,325 Outside PRC: United States 1,869 3,100 3,422 7,296 India 1,932 42,738 4,020 84,812 Rest of the world 4,058 3,355 18,868 4,162 Total net revenue 22,129 56,339 53,339 114,595 |
Organization (Details Textual)
Organization (Details Textual) | 1 Months Ended |
Aug. 18, 2018 | |
BORQS International Holding Corp. [Member] | |
Organization (Textual) | |
Equity interest, percentage | 100.00% |
Summary of Significant Accoun39
Summary of Significant Accounting Policies (Details) - USD ($) $ in Thousands | 6 Months Ended | |||
Jun. 30, 2018 | Dec. 31, 2017 | Jun. 30, 2017 | Dec. 31, 2016 | |
Summary of Significant Accounting Policies (Textual) | ||||
Accumulated deficit | $ (71,482) | $ (74,231) | ||
Negative cash flow | 11,800 | |||
Cash and cash equivalents | $ 1,305 | $ 13,060 | $ 6,460 | $ 3,610 |
Prepaid Expenses and Other Cu40
Prepaid Expenses and Other Current Assets (Details) - USD ($) $ in Thousands | Jun. 30, 2018 | Dec. 31, 2017 | |
Prepaid Expenses and Other Current Assets [Abstract] | |||
Staff advances | $ 327 | $ 312 | |
Prepayment for share repurchase | [1] | 10,100 | |
Prepayment for products | 5,347 | 1,008 | |
Advance to OEM | 11,718 | 3,662 | |
Rental and other deposits | 990 | 1,203 | |
VAT recoverable | 3,157 | 2,189 | |
Loan to third parties | 1,469 | ||
Receivable from an agent | 3,392 | 6,318 | |
Others | 129 | 79 | |
Prepaid expenses and other current assets | $ 35,161 | $ 16,240 | |
[1] | On January 10, 2018, the Company entered into a stock repurchase agreement ("Stock Repurchase Agreement") with Zhengqi International Holding Limited ("Zhengqi"), an existing shareholder, pursuant to which the Company agreed to repurchase 966,136 ordinary shares from Zhengqi at an aggregate purchase price of $10 million. The $10 million share repurchase consideration was transferred to Zhengqi in January 2018 and recorded as a prepayment as of June 30, 2018. The repurchase is expected to be completed in the second half of 2018. |
Prepaid Expenses and Other Cu41
Prepaid Expenses and Other Current Assets (Details Textual) - Zhengqi International Holding Limited [Member] $ in Millions | 1 Months Ended |
Jan. 10, 2018USD ($)shares | |
Prepaid Expenses And Other Current Assets (Textual) | |
Agreed to repurchase of ordinary shares | shares | 966,136 |
Aggregate purchase price | $ | $ 10 |
Property and Equipment, Net (De
Property and Equipment, Net (Details) - USD ($) $ in Thousands | Jun. 30, 2018 | Dec. 31, 2017 |
At cost: | ||
Property and equipment, gross | $ 8,525 | $ 8,542 |
Less: accumulated depreciation | (7,358) | (7,180) |
Property and equipment, net | 1,167 | 1,362 |
Leasehold improvements [Member] | ||
At cost: | ||
Property and equipment, gross | 921 | 933 |
Computer and network equipment [Member] | ||
At cost: | ||
Property and equipment, gross | 6,408 | 6,458 |
Office equipment [Member] | ||
At cost: | ||
Property and equipment, gross | 939 | 918 |
Motor vehicles [Member] | ||
At cost: | ||
Property and equipment, gross | $ 257 | $ 233 |
Property and Equipment, Net (43
Property and Equipment, Net (Details 1) - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2018 | Jun. 30, 2017 | |
Property, Plant and Equipment [Line Items] | ||
Depreciation expense, Total | $ 232 | $ 455 |
Cost of revenues [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Depreciation expense, Total | 82 | 156 |
Sales and marketing expenses [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Depreciation expense, Total | 7 | 14 |
General and administrative expenses [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Depreciation expense, Total | 34 | 117 |
Research and development expenses [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Depreciation expense, Total | $ 109 | $ 168 |
Property and Equipment, Net (44
Property and Equipment, Net (Details Textual) - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2018 | Jun. 30, 2017 | |
Property and Equipment, Net (Textual) | ||
Depreciation expense | $ 232 | $ 455 |
Intangible Assets, Net (Details
Intangible Assets, Net (Details) - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2018 | Jun. 30, 2017 | |
Finite-Lived Intangible Assets [Line Items] | ||
Beginning Balance | $ 20,004 | $ 15,498 |
Additions | 3,874 | 3,998 |
Amortization expense | (3,154) | (1,905) |
Foreign currency translation difference | (182) | 308 |
Ending Balance | 20,542 | 17,899 |
Software [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Beginning Balance | 2,529 | 2,294 |
Additions | 274 | 74 |
Amortization expense | (94) | (117) |
Foreign currency translation difference | (32) | 54 |
Ending Balance | 2,677 | 2,305 |
Capitalized software development costs [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Beginning Balance | 11,600 | 6,874 |
Additions | 3,600 | 3,924 |
Amortization expense | (2,612) | (1,356) |
Foreign currency translation difference | (77) | 102 |
Ending Balance | 12,511 | 9,544 |
License [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Beginning Balance | 5,875 | 6,330 |
Additions | ||
Amortization expense | (448) | (432) |
Foreign currency translation difference | (73) | 152 |
Ending Balance | $ 5,354 | $ 6,050 |
Intangible Assets, Net (Detai46
Intangible Assets, Net (Details Textual) - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2018 | Jun. 30, 2017 | |
Finite-Lived Intangible Assets [Line Items] | ||
Amortization of intangible assets | $ 3,154 | $ 1,905 |
Maximum [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Estimated useful lives | 10 years | |
Minimum [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Estimated useful lives | 3 years |
Goodwill (Details)
Goodwill (Details) - USD ($) $ in Thousands | 6 Months Ended | 12 Months Ended |
Jun. 30, 2018 | Dec. 31, 2017 | |
Intangible Assets, Net/Goodwill [Abstract] | ||
Balance at beginning of the period | $ 736 | $ 693 |
Foreign currency translation difference | (9) | 43 |
Balance at end of the period | $ 727 | $ 736 |
Long-Term Investment (Details)
Long-Term Investment (Details) - USD ($) $ in Thousands | 1 Months Ended | 6 Months Ended |
Jan. 18, 2018 | Jun. 30, 2018 | |
Long-Term Investment (Textual) | ||
Long-term debt, description | The long-term bank borrowings, current portion outstanding as of June 30, 2018 bore a weighted average interest rate of 8% and were denominated in US$. These borrowings were obtained from financial institutions located in the United States, and have terms of three years. | |
Colmei Technology International Ltd [Member] | ||
Long-Term Investment (Textual) | ||
Agreed to acquire equity percentage | 13.80% | |
Ordinary shares issued to selling shareholders | 473,717 | |
Ordinary shares to selling shareholders value | $ 10,000 | |
Long-term debt, description | If approved by the Company's board of directors, the Company will also issue additional shares to the Selling Shareholders if the aggregate value of the Company shares initially issued to the Selling Shareholders under this agreement is less than US$3,000 on August 18, 2018. |
Bank and Other Borrowings (Deta
Bank and Other Borrowings (Details) - USD ($) $ in Thousands | Jun. 30, 2018 | Dec. 31, 2017 |
Long-Term Investment/Bank and Other Borrowings [Abstract] | ||
Short-term bank and other borrowings | $ 11,653 | $ 12,648 |
Long-term bank borrowings, current portion | 6,532 | 5,432 |
Total borrowings | $ 18,185 | $ 18,080 |
Bank and Other Borrowings (De50
Bank and Other Borrowings (Details Textual) - USD ($) $ in Thousands | 1 Months Ended | 6 Months Ended | |
Nov. 20, 2017 | Jun. 30, 2018 | Dec. 31, 2017 | |
Bank Borrowings (Textual) | |||
Weighted average interest rate | 6.27% | 6.89% | |
Short term bank term | These borrowings were obtained from financial institutions and have terms of one year. | ||
Short term loan | $ 11,653 | $ 12,648 | |
Long-term debt, description | The long-term bank borrowings, current portion outstanding as of June 30, 2018 bore a weighted average interest rate of 8% and were denominated in US$. These borrowings were obtained from financial institutions located in the United States, and have terms of three years. | ||
Accounts receivable | $ 33,279 | ||
Long-term bank borrowing | 3,032 | ||
HHMC Microelectronic Co., Limited [Member] | |||
Bank Borrowings (Textual) | |||
Short term bank term | Three months | ||
Short term loan | $ 5,000 | ||
Short-term loan outstanding | $ 2,914 | ||
Interest rate | 0.04% | ||
Interest rate will increase | 0.10% |
Accrued Expenses and Other Pa51
Accrued Expenses and Other Payables (Details) - USD ($) $ in Thousands | Jun. 30, 2018 | Dec. 31, 2017 |
Accrued Expenses and Other Payables [Abstract] | ||
Payroll and welfare payable | $ 2,869 | $ 2,030 |
Payable for long-term investment (Note 7) | 3,263 | |
VAT, and other taxes payable | 3,291 | 2,473 |
Payables for office supply and utilities | 958 | 711 |
Payables for purchase of property and equipment | 51 | 52 |
Professional service fees | 3,764 | 3,161 |
Deposits from agents | 4,577 | 3,509 |
Others | 234 | 227 |
Accrued expenses and other payabes | $ 19,007 | $ 12,163 |
Deferred Government Grants (Det
Deferred Government Grants (Details) - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2018 | Jun. 30, 2017 | |
Deferred Government Grants [Abstract] | ||
Balance at beginning of the period | $ 1,957 | $ 2,108 |
Recognized as other operating income | (271) | |
Foreign currency translation difference | (24) | 51 |
Balance at ending of the period | $ 1,933 | $ 1,888 |
Accumulated Other Comprehensi53
Accumulated Other Comprehensive Loss (Details) - USD ($) $ in Thousands | 6 Months Ended | 12 Months Ended |
Jun. 30, 2018 | Dec. 31, 2017 | |
Class of Stock [Line Items] | ||
Beginning balance | $ (507) | $ (2,626) |
Current year other comprehensive income | (987) | 2,119 |
Ending balance | (1,494) | (507) |
Foreign currency translation [Member] | ||
Class of Stock [Line Items] | ||
Beginning balance | (507) | (2,626) |
Current year other comprehensive income | 987 | 2,119 |
Ending balance | $ (1,494) | $ (507) |
Mainland China Employee Contr54
Mainland China Employee Contribution Plan (Details) - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2018 | Jun. 30, 2017 | |
Mainland China Employee Contribution Plan (Textual) | ||
Total expenses for employee contribution plan | $ 635 | $ 1,139 |
Taxation (Details)
Taxation (Details) - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2018 | Jun. 30, 2017 | |
Components of profit before income taxes | ||
Non-PRC | $ 1,942 | $ 1,384 |
PRC | 2,490 | (1,441) |
Profit before income taxes | $ 4,432 | $ (57) |
Taxation (Details 1)
Taxation (Details 1) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Components of income tax expense | ||||
Current | $ (187) | $ (943) | ||
Deferred | (850) | 53 | ||
Income tax (expenses) benefit | $ 146 | $ (446) | $ (1,037) | $ (890) |
Taxation (Details 2)
Taxation (Details 2) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Taxation [Abstract] | ||||
(Loss) profit before income taxes | $ 1,862 | $ (519) | $ 4,432 | $ (57) |
Income tax benefit (expenses) computed at the statutory income tax rate at 25% | (1,108) | 14 | ||
Non-deductible expenses | 272 | (304) | ||
Non-taxation income | 67 | |||
Preferential rate | 464 | (102) | ||
Current and deferred tax rate differences | (225) | (120) | ||
Foreign rate differences | (222) | (266) | ||
Change of valuation allowance | 811 | (166) | ||
Prior year provision to return true up | (848) | |||
Interest expenses | (181) | (63) | ||
Income tax expenses | $ 146 | $ (446) | $ (1,037) | $ (890) |
Taxation (Details 3)
Taxation (Details 3) - USD ($) $ in Thousands | Jun. 30, 2018 | Dec. 31, 2017 |
Deferred tax assets | ||
Inventories provision | $ 227 | $ 229 |
AR provision | 69 | |
Accrued salary and welfare payable | 316 | 165 |
Property and equipment | 14 | 14 |
Tax losses | 13,478 | 14,769 |
Valuation allowance | (12,903) | (13,714) |
Total deferred tax assets | 1,201 | 1,463 |
Deferred tax liabilities | ||
Intangible assets | 1,790 | 2,004 |
Deferred cost of revenues | 2,260 | 1,551 |
Total deferred tax liabilities | $ 4,050 | $ 3,555 |
Taxation (Details 4)
Taxation (Details 4) - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2018 | Jun. 30, 2017 | |
A roll-forward of unrecognized tax benefits is as follows: | ||
Balance at beginning of period | $ 2,121 | |
Balance at end of period | 3,091 | |
Unrecognized tax benefits [Member] | ||
A roll-forward of unrecognized tax benefits is as follows: | ||
Balance at beginning of period | 4,547 | $ 4,053 |
Additions based on tax positions related to the current year | 644 | 170 |
Foreign currency translation difference | (58) | (353) |
Balance at end of period | $ 5,133 | $ 3,870 |
Taxation (Details Textual)
Taxation (Details Textual) - USD ($) $ in Thousands | 6 Months Ended | 12 Months Ended | |
Jun. 30, 2018 | Jun. 30, 2017 | Dec. 31, 2017 | |
Taxation (Textual) | |||
Unrecognized tax benefits | $ 5,133 | $ 4,547 | |
Deferred tax assets related to tax loss carry forwards | 3,531 | 2,764 | |
Unrecognized tax benefits of ultimately recognized, will impact the effective tax rate | 2,702 | $ 2,043 | |
Interest expenses accrued in relation to the unrecognized tax benefit | 181 | $ 63 | |
Accumulated interest expenses | $ 519 | $ 151 | |
PRC [Member] | |||
Taxation (Textual) | |||
Income tax expense computed at the statutory income tax rate | 25.00% | 25.00% | |
Net tax operating loss from subsidiaries | $ 32,015 | ||
Net tax operating loss expiration term | Expire from 2018 to 2022 | ||
Borqs HK [Member] | |||
Taxation (Textual) | |||
Net tax operating loss from subsidiaries | $ 14,276 | ||
Net tax operating loss expiration term | Will not expire. |
Related Party Transactions (Det
Related Party Transactions (Details) | 6 Months Ended | |
Jun. 30, 2018 | ||
Intel Capital Corporation (''Intel'') and its affiliates [Member] | ||
Related Party Transaction [Line Items] | ||
Relationship with the Group | A substantial shareholder of the Group but exited from the mobile chipset activities. | |
Qualcomm Global Trading PTE, Ltd ("Qualcomm") and its affiliates [Member] | ||
Related Party Transaction [Line Items] | ||
Relationship with the Group | A substantial shareholder of the Group. | [1] |
[1] | Upon the consummation of the Merger, the entity ceased to be a substantial shareholder of the Group. |
Related Party Transactions (D62
Related Party Transactions (Details 1) - USD ($) $ in Thousands | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | ||
Intel (China) Co., Ltd. [Member] | |||
Related Party Transaction [Line Items] | |||
Software services provided to | $ 9 | ||
Intel Asia-Pacific Research and Development Ltd [Member] | |||
Related Party Transaction [Line Items] | |||
Software services provided to | 65 | ||
Intel (China) Research Center Co., Ltd [Member] | |||
Related Party Transaction [Line Items] | |||
Software services provided to | 8 | ||
Qualcomm India Private Limited [Member] | |||
Related Party Transaction [Line Items] | |||
Software services provided to | [1] | 3,967 | |
Qualcomm India Private Ltd [Member] | |||
Related Party Transaction [Line Items] | |||
Hardware sold to | [1] | 12 | |
Qualcomm Incorporated [Member] | |||
Related Party Transaction [Line Items] | |||
Purchased from | [1] | 398 | |
Qualcomm CDMA Technologies Asia Pacific PTE Ltd. [Member] | |||
Related Party Transaction [Line Items] | |||
Purchased from | [1] | 1,732 | |
Qualcomm Technologies, Inc. [Member] | |||
Related Party Transaction [Line Items] | |||
Purchased from | [1] | $ 75 | |
[1] | Upon the consummation of the Merger, the entity ceased to be a substantial shareholder of the Group. |
(Loss) Earnings Per Share (Deta
(Loss) Earnings Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Numerator: | ||||
Net (loss) income | $ 2,008 | $ (965) | $ 3,395 | $ (947) |
Less: net income attributable to noncontrolling interests | 178 | 197 | 366 | 119 |
Net (loss) income attributable to Borqs Technologies, Inc. | 1,830 | (1,162) | 3,029 | (1,066) |
Accretion to redemption value of Convertible Redeemable Preferred Shares | (150) | (448) | ||
Net (loss) income attributable to Borqs Technologies, Inc.'s ordinary shareholders | $ 1,830 | $ (1,312) | $ 3,029 | $ (1,514) |
Denominator: | ||||
Weighted-average number of ordinary shares outstanding-basic | 26,830,514 | 4,259,898 | 26,613,800 | 4,243,964 |
Weighted-average number of ordinary shares outstanding-diluted | 27,675,005 | 4,259,898 | 27,585,851 | 4,243,964 |
(Loss) earnings per share-Basic: | $ 0.07 | $ (0.31) | $ 0.11 | $ (0.36) |
(Loss) earnings per share-Diluted: | $ 0.07 | $ (0.31) | $ 0.11 | $ (0.36) |
Fair Value Measurements (Detail
Fair Value Measurements (Details) $ in Thousands | 12 Months Ended |
Dec. 31, 2016USD ($) | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |
Liabilities | $ 1,344 |
Warrant liabilities | 1,344 |
Level 1 [Member] | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |
Liabilities | |
Warrant liabilities | |
Level 2 [Member] | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |
Liabilities | |
Warrant liabilities | |
Level 3 [Member] | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |
Liabilities | 1,344 |
Warrant liabilities | $ 1,344 |
Commitments and Contingencies65
Commitments and Contingencies (Details) $ in Thousands | Jun. 30, 2018USD ($) |
Commitments and Contingencies [Abstract] | |
2,019 | $ 496 |
2,020 | 1,191 |
2,021 | 788 |
2,022 | 514 |
2022 and thereafter | 414 |
Total | $ 3,403 |
Commitments and Contingencies66
Commitments and Contingencies (Details Textual) - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2018 | Jun. 30, 2017 | |
Commitments and Contingencies (Textual) | ||
Total rental expenses for all operating leases | $ 812 | $ 709 |
Unrecognized tax benefits and interest | 2,780 | |
Overpaid royalty expense | 1,670 | |
Repayment of royalty expense | $ 1,670 | |
Accrued interest | 12.00% |
Segment Reporting (Details)
Segment Reporting (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Schedule of group's operating segment | ||||
Total net revenue | $ 56,339 | $ 22,129 | $ 114,595 | $ 53,339 |
Operating income | 2,332 | 260 | 5,521 | 1,331 |
PRC [Member] | ||||
Schedule of group's operating segment | ||||
Total net revenue | 7,146 | 14,270 | 18,325 | 27,029 |
United States [Member] | ||||
Schedule of group's operating segment | ||||
Total net revenue | 3,100 | 1,869 | 7,296 | 3,422 |
India [Member] | ||||
Schedule of group's operating segment | ||||
Total net revenue | 42,738 | 1,932 | 84,812 | 4,020 |
Rest of the world [Member] | ||||
Schedule of group's operating segment | ||||
Total net revenue | 3,355 | 4,058 | 4,162 | 18,868 |
Consolidated [Member] | ||||
Schedule of group's operating segment | ||||
Total net revenue | 56,339 | 22,129 | 114,595 | 53,339 |
Operating income | 2,332 | 260 | 5,521 | 1,331 |
Consolidated [Member] | External customers [Member] | ||||
Schedule of group's operating segment | ||||
Total net revenue | 56,339 | 22,129 | 114,595 | 53,339 |
Consolidated [Member] | Inter-segment [Member] | ||||
Schedule of group's operating segment | ||||
Total net revenue | 53,339 | |||
Eliminations [Member] | ||||
Schedule of group's operating segment | ||||
Total net revenue | (111) | (472) | (415) | (921) |
Operating income | ||||
Eliminations [Member] | External customers [Member] | ||||
Schedule of group's operating segment | ||||
Total net revenue | ||||
Eliminations [Member] | Inter-segment [Member] | ||||
Schedule of group's operating segment | ||||
Total net revenue | (111) | (415) | (415) | (921) |
Total segments [Member] | ||||
Schedule of group's operating segment | ||||
Total net revenue | 56,450 | 22,601 | 115,010 | 54,260 |
Operating income | 2,332 | 260 | 5,521 | 1,331 |
Total segments [Member] | External customers [Member] | ||||
Schedule of group's operating segment | ||||
Total net revenue | 56,339 | 22,129 | 114,595 | 53,339 |
Total segments [Member] | Inter-segment [Member] | ||||
Schedule of group's operating segment | ||||
Total net revenue | 111 | 415 | 415 | 921 |
Yuantel [Member] | ||||
Schedule of group's operating segment | ||||
Total net revenue | 7,697 | 7,508 | 15,579 | 13,955 |
Operating income | 605 | 1,343 | 1,289 | 221 |
Yuantel [Member] | External customers [Member] | ||||
Schedule of group's operating segment | ||||
Total net revenue | 7,697 | 7,508 | 15,579 | 13,955 |
Yuantel [Member] | Inter-segment [Member] | ||||
Schedule of group's operating segment | ||||
Total net revenue | ||||
Connected Solution [Member] | ||||
Schedule of group's operating segment | ||||
Total net revenue | 48,753 | 15,093 | 99,431 | 40,305 |
Operating income | 1,727 | (1,083) | 4,232 | 1,110 |
Connected Solution [Member] | External customers [Member] | ||||
Schedule of group's operating segment | ||||
Total net revenue | 48,642 | 14,621 | 99,016 | 39,384 |
Connected Solution [Member] | Inter-segment [Member] | ||||
Schedule of group's operating segment | ||||
Total net revenue | $ 111 | $ 415 | $ 415 | $ 921 |
Segment Reporting (Details Text
Segment Reporting (Details Textual) | 6 Months Ended |
Jun. 30, 2018Segments | |
Segment Reporting (Textual) | |
Number of segments reports | 2 |