UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 6-K
Report of Foreign Private Issuer Pursuant to Rule 13a-16 or 15d-16 under the Securities Exchange Act of 1934
For the month of November 2023
Commission File Number: 001-35135
Sequans Communications S.A.
(Translation of Registrant’s name into English)
15-55 boulevard Charles de Gaulle
92700 Colombes, France
Telephone : +33 1 70 72 16 00
(Address of Principal Executive Office)
Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F: Form 20-F R Form 40-F £
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): Yes £ NoR
Note: Regulation S-T Rule 101(b)(1) only permits the submission in paper of a Form 6-K if submitted solely to provide an attached annual report to security holders.
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): Yes £ NoR
Note: Regulation S-T Rule 101(b)(7) only permits the submission in paper of a Form 6-K if submitted to furnish a report or other document that the registrant foreign private issuer must furnish and make public under the laws of the jurisdiction in which the registrant is incorporated, domiciled or legally organized (the registrant’s “home country”), or under the rules of the home country exchange on which the registrant’s securities are traded, as long as the report or other document is not a press release, is not required to be and has not been distributed to the registrant’s security holders, and, if discussing a material event, has already been the subject of a Form 6-K submission or other Commission filing on EDGAR.
The information in this report, furnished on Form 6-K shall be incorporated by reference into each of the following Registration Statements under the Securities Act of 1933, as amended, of the registrant: Form S-8 (File Nos. 333-187611, 333-194903, 333-203539, 333-211011, 333-214444, 333-215911, 333-219430, 333-226458, 333-233473, 333-239968, 333-259914 and 333-266481) and Form F-3 (File Nos. 333-250122, 333-255865 and 333-271884).
EXPLANATORY NOTE
On November 2, 2023, Sequans Communications S.A. issued a press release announcing its financial results for the quarter ended September 30, 2023. A copy of the press release is attached to this Form 6-K as Exhibit 99.1 and is incorporated herein by reference.
EXHIBIT INDEX
The following exhibit is filed as part of this Form 6-K:
| | | | | |
| Exhibit | Description |
| |
| 99.1 | Press release dated November 2, 2023 |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| | | | | | | | | | | | | | |
| | | | | |
| | SEQUANS COMMUNICATIONS S.A. (Registrant) | |
| Date: November 2, 2023 | By: | /s/ Deborah Choate | |
| | | Deborah Choate | |
| | | Chief Financial Officer | |
| |
Sequans Communications Announces
Third Quarter 2023 Financial Results
PARIS - November 2, 2023 - Sequans Communications S.A. (NYSE: SQNS), a leading developer and provider of 5G/4G solutions for IoT devices, today announced financial results for the third quarter ended September 30, 2023
Third Quarter 2023 Summary Results Table:
| | | | | | | | | | | | | |
| (in US$ millions, except share and per share data) | Q3 2023 | Q2 2023 | Q3 2022 | | |
| Revenue | $7.8 | | $9.2 | | $16.5 | | | |
| Gross profit | 6.7 | | 7.5 | | 12.8 | | | |
| Gross margin (%) | 85.8 | % | 82.3 | % | 77.6 | % | | |
| Operating profit (loss) | (7.8) | | (5.4) | | 1.2 | | | |
| Net profit (loss) | (9.6) | | (9.1) | | (2.9) | | | |
| Diluted earnings (loss) per ADS | ($0.16) | | ($0.16) | | ($0.06) | | | |
| Non-IFRS diluted earnings (loss) per ADS * | ($0.12) | | ($0.10) | | $0.01 | | | |
| Weighted average number of diluted ADS (IFRS) | 58,586,324 | | 57,119,468 | | 47,802,526 | | | |
| Weighted average number of diluted ADS (Non-IFRS) | 58,586,324 | | 57,119,468 | | 47,802,526 | | | |
* See Use of Non-IFRS/non-GAAP Financial Measures disclosure on page 3. IFRS Net Profit (Loss) includes significant non-cash interest expense, debt amendment and change in value of embedded derivative that are excluded from Non-IFRS measures | | |
"Our third quarter continues to be impacted by the delay of revenue product ramps shifting now to year end, as client inventory drawdowns are taking longer than expected to clear, " said Georges Karam, CEO of Sequans. "However, we continue to experience strong momentum in building our revenue pipeline and securing design wins. During the third quarter, we successfully secured our first alpha customer for the 5G Taurus platform and around a dozen new designs with LTE-M/NB-IoT Monarch 2 and Cat 1 Calliope 2. These successes underscore the growth potential of Sequans’ wireless IoT connectivity solutions."
Third Quarter 2023 Financial Summary:
Revenue: Revenue was $7.8 million, a decrease of 15.0% compared to the second quarter of 2023 and a decrease of 52.9% compared to the third quarter of 2022.
Gross margin: Gross margin was 85.8% compared to 82.3% in the second quarter of 2023 and compared to 77.6% in the third quarter of 2022.
Operating loss: Operating loss was $7.8 million compared to operating loss of $5.4 million in the second quarter of 2023 and operating profit of $1.2 million in the third quarter of 2022. The third quarter of 2023 operating loss reflected $2.4 million in higher general and administrative expenses from legal fees related to the Renesas tender offer, compared with $0.3 million in the second quarter of 2023 and none in the third quarter of 2022.
Net loss: Net loss was $9.6 million, or ($0.16) per diluted ADS, compared to a net loss of $9.1 million, or ($0.16) per diluted ADS, in the second quarter of 2023 and a net loss of $2.9 million, or ($0.06) per diluted ADS, in the third quarter of 2022. Net loss in the third quarter of 2023 includes a $0.4 million gain on the change in fair value of the convertible debt derivative compared to a gain of $0.3 million in the second quarter of 2023 and a loss of $1.2 million in the third quarter of 2022.
Non-IFRS loss and diluted loss per ADS: Excluding the non-cash stock-based compensation, the non-cash impact of the fair-value, the amendment and effective interest adjustments related to the convertible debt with embedded derivatives and other financings, non-IFRS net loss was $6.8 million, or ($0.12) per diluted ADS, compared to non-IFRS net loss of $6.0 million, or ($0.10) per diluted ADS in the second quarter of 2023, and a non-IFRS net profit of $0.4 million, or $0.01 per diluted ADS, in the third quarter of 2022. The non-IFRS net loss includes foreign exchange gain of $0.5 million, or $0.01 per diluted ADS, in the third quarter of 2023, compared to foreign exchange loss of $40,000, or ($0.00) per diluted ADS in the second quarter of 2023 and foreign exchange gain of $1.0 million, or $0.02 per diluted ADS, in the third quarter of 2022.
Cash: Cash and cash equivalents and short-term deposits at September 30, 2023 totaled $6.7 million compared to $7.9 million at June 30, 2023.
Sequans reports third quarter 2023 financial results
Page 2
Conference Call
Note: Sequans will not host an earnings conference due to the tender offer by Renesas Electronics Corporation launched September 11, 2023.
Forward Looking Statements
This press release contains projections and other forward-looking statements regarding future events and our future financial performance. All statements other than present and historical facts and conditions contained in this release, including any statements regarding the growth potential of Sequans’ wireless IoT connectivity solutions, our future results of operations and financial positions, business strategy, plans, including our ability to convert our pipeline to revenue, and our objectives for future operations, are forward-looking statements (within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended). These statements are only predictions and reflect our current beliefs and expectations with respect to future events and are based on assumptions and subject to risk and uncertainties and subject to change at any time. We undertake no obligation to update the information made in this release in the event facts or circumstances subsequently change after the date of this press release. We operate in a very competitive and rapidly changing environment. New risks emerge from time to time. Given these risks and uncertainties, you should not rely on or place undue reliance on these forward-looking statements. Actual events or results may differ materially from those contained in the projections or forward-looking statements. In addition to the risk factors contained in our Form 20-F for the fiscal year ended December 31, 2022, some of the factors that could cause actual results to differ materially from the forward-looking statements contained herein include, without limitation: (i) the contraction or lack of growth of markets in which we compete and in which our products are sold, (ii) unexpected increases in our expenses resulting from inflationary pressures and rising interest rates, including manufacturing and operating expenses and interest expense, (iii) our inability to adjust spending quickly enough to offset any unexpected revenue shortfall, (iv) delays or cancellations in spending by our customers, (v) unexpected average selling price reductions, (vi) the significant fluctuations to which our quarterly revenue and operating results are subject due to cyclicality in the wireless communications industry and transitions to new process technologies, (vii) our inability to anticipate the future market demands and future needs of our customers, (viii) our inability to achieve new design wins or for design wins to result in shipments of our products at levels and in the timeframes we currently expect, (ix) our inability to enter into and execute on strategic alliances, (x) our ability to meet performance milestones under strategic license agreements, (xi) the impact of natural disasters on our sourcing operations and supply chain, (xii) the impact of the Ukraine-Russia conflict on our independent contractors located in Ukraine, (xiii) our ability to raise debt and equity financing, (xiv) the potential failure to satisfy conditions to the completion of the proposed Renesas transaction due to the failure to receive a sufficient number of tendered shares in the tender offer, (xv) the failure to obtain necessary regulatory or other approvals, (xvi) the outcome of legal proceedings that may be instituted against Sequans and/or others relating to the transaction, (xvii) the possibility that competing offers will be made, (xviii) potential adverse reactions or changes to business relationships resulting from the announcement or completion of the proposed transaction, (xix) significant or unexpected costs, charges or expenses resulting from the proposed transaction, (xx) negative effects of this announcement or the consummation of the proposed acquisition on the market price of our ADS and ordinary shares, (xxi) other risks associated with the proposed transaction, such as the risk that the transaction may be more difficult, time-consuming or costly than expected or that the expected benefits of the transaction will not occur, and (xxii) other factors detailed in documents we file from time to time with the Securities and Exchange Commission.
Use of Non-IFRS/non-GAAP Financial Measures
To supplement our unaudited consolidated financial statements prepared in accordance with IFRS, we disclose certain non-IFRS, or non-GAAP, financial measures. These measures exclude the non-cash stock-based compensation and the non-cash impacts of convertible debt amendments, conversions and repayments, effective interest adjustments related to the convertible debt with embedded derivatives and other financings; deferred tax benefit or expense related to the convertible debt and other financings. We believe that these measures can be useful to facilitate comparisons among different companies. These non-GAAP measures have limitations in that the non-GAAP measures we use may not be directly comparable to those reported by other companies. We seek to compensate for this limitation by providing a reconciliation of the non-GAAP financial measures to the most directly comparable IFRS measures in the table attached to this press release.
Important Additional Information and Where to Find It
In connection with the proposed acquisition of Sequans Communications S.A. (“Sequans”) by Renesas Electronics Corporation, a Japanese corporation (“Parent” or “Renesas”), Parent commenced a tender offer for all of the outstanding ordinary shares, including American Depositary Shares of Sequans, on September 11, 2023. This communication is for informational purposes only and is neither an offer to purchase nor a solicitation of an offer to sell securities of Sequans. It is also not a substitute for the tender offer materials that Parent and Renesas Electronics Europe GmbH, a direct wholly owned subsidiary of Parent (“Purchaser”) filed with the Securities and Exchange Commission (the “SEC”) or the solicitation/recommendation statement that Sequans filed on Schedule 14D-9 with the SEC upon commencement of the tender offer. Purchaser filed tender offer materials on Schedule TO with the SEC, and Sequans filed a Solicitation/Recommendation Statement on Schedule 14D-9 and a Schedule 13E-3 transaction statement with respect to the tender offer with the SEC with respect to the tender offer. THE TENDER OFFER
Sequans reports third quarter 2023 financial results
Page 3
MATERIALS (INCLUDING AN OFFER TO PURCHASE, A RELATED LETTER OF TRANSMITTAL AND CERTAIN OTHER TENDER OFFER DOCUMENTS), THE SOLICITATION/RECOMMENDATION STATEMENT AND TRANSACTION STATEMENT CONTAIN IMPORTANT INFORMATION THAT SHOULD BE READ CAREFULLY AND BE CONSIDERED BY SEQUANS’ SECURITYHOLDERS BEFORE ANY DECISION IS MADE WITH RESPECT TO THE TENDER OFFER. Both the tender offer materials and the solicitation/recommendation statement and transaction statement will be made available to Sequans’ investors and security holders free of charge. A free copy of the tender offer materials and the solicitation/recommendation statement and transaction statement will also be made available to all of Sequans’ investors and security holders by contacting Sequans at ir@sequans.com, or by visiting Sequans’ website (www.sequans.com). In addition, the tender offer materials and the solicitation/recommendation statement (and all other documents filed by Sequans with the SEC) will be available at no charge on the SEC’s website (www.sec.gov) upon filing with the SEC. SEQUANS’ INVESTORS AND SECURITY HOLDERS ARE ADVISED TO READ THE TENDER OFFER MATERIALS, THE SOLICITATION/RECOMMENDATION STATEMENT AND THE TRANSACTION STATEMENT, AS EACH MAY BE AMENDED OR SUPPLEMENTED FROM TIME TO TIME, AND ANY OTHER RELEVANT DOCUMENTS FILED BY PARENT OR SEQUANS WITH THE SEC WHEN THEY BECOME AVAILABLE BEFORE THEY MAKE ANY DECISION WITH RESPECT TO THE TENDER OFFER. THESE MATERIALS CONTAIN IMPORTANT INFORMATION ABOUT THE TENDER OFFER, PARENT AND SEQUANS.
About Sequans Communications
Sequans Communications S.A. (NYSE: SQNS) is a leading developer and provider of 5G and 4G chips and modules for IoT devices. For 5G/4G massive IoT applications, Sequans provides a comprehensive product portfolio based on its flagship Monarch LTE-M/NB-IoT and Calliope Cat 1 chip platforms, featuring industry-leading low power consumption, a large set of integrated functionalities, and global deployment capability. For 5G/4G broadband and critical IoT applications, Sequans offers a product portfolio based on its Cassiopeia 4G Cat 4/Cat 6 and planned high-end Taurus 5G chip platforms, optimized for low-cost residential, enterprise, and industrial applications. Founded in 2003, Sequans is based in Paris, France with additional offices in the United States, United Kingdom, Israel, Hong Kong, Singapore, Finland, Taiwan, South Korea, and China.
Visit Sequans online at www.sequans.com; www.facebook.com/sequans; www.twitter.com/sequans
Media Relations: Kimberly Tassin, +1.425.736.0569, Kimberly@sequans.com
Investor Relations: Kimberly Rogers, +1 385.831-7337, krogers@sequans.com
Condensed financial tables follow
Sequans reports third quarter 2023 financial results
Page 4
SEQUANS COMMUNICATIONS S.A.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | Three months ended |
| (in thousands of US$, except share and per share amounts) | Sept 30,
2023 | | June 30, 2023 | | Sept 30,
2022 |
| | | |
| | | | | | | | |
| Revenue : | | | | | |
| | Product revenue | $ | 753 | | | $ | 996 | | | $ | 4,385 | |
| | License and services revenue | 7,033 | | | 8,162 | | | 12,143 | |
| Total revenue | 7,786 | | | 9,158 | | | 16,528 | |
| Cost of revenue | 1,105 | | | 1,625 | | | 3,708 | |
| Gross profit | 6,681 | | | 7,533 | | | 12,820 | |
| Operating expenses : | | | | | |
| | Research and development | 5,974 | | | 6,346 | | | 6,924 | |
| | Sales and marketing | 2,935 | | | 2,982 | | | 2,438 | |
| | General and administrative | 5,618 | | | 3,588 | | | 2,243 | |
| | | | | | | | |
| Total operating expenses | 14,527 | | | 12,916 | | | 11,605 | |
| Operating profit (loss) | (7,846) | | | (5,383) | | | 1,215 | |
| Financial income (expense): | | | | | |
| | Interest income (expense), net | (2,802) | | | (2,796) | | | (2,784) | |
| | Change in fair value of convertible debt derivative | 439 | | | 325 | | | (1,193) | |
| | Impact of debt amendment and reimbursement | 247 | | | — | | | 476 | |
| | Foreign exchange gain (loss) | 513 | | | (40) | | | 1,030 | |
| Profit (Loss) before income taxes | (9,449) | | | (7,894) | | | (1,256) | |
| Income tax expense | 104 | | | 1,223 | | | 1,617 | |
| Profit (Loss) | $ | (9,553) | | | $ | (9,117) | | | $ | (2,873) | |
| Attributable to : | | | | | |
| | Shareholders of the parent | (9,553) | | | (9,117) | | | (2,873) | |
| | Minority interests | — | | | — | | | — | |
| Basic loss per ADS | ($0.16) | | | ($0.16) | | | ($0.06) | |
| Diluted loss per ADS | ($0.16) | | | ($0.16) | | | ($0.06) | |
| Weighted average number of ADS used for computing: | | | | | |
| — Basic | 58,586,324 | | | 57,119,468 | | | 47,802,526 | |
| — Diluted | 58,586,324 | | | 57,119,468 | | | 47,802,526 | |
Sequans reports third quarter 2023 financial results
Page 5
SEQUANS COMMUNICATIONS S.A.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
| | | | | | | | | | | | | | | | | |
| | | Nine months ended Sept 30, |
| (in thousands of US$, except share and per share amounts) | 2023 | | 2022 |
| | | | | |
| Revenue : | | | |
| Product revenue | $ | 4,089 | | | $ | 17,984 | |
| License and services revenue | 24,754 | | | 26,656 | |
| Total revenue | 28,843 | | | 44,640 | |
| Cost of revenue | 5,286 | | | 13,736 | |
| Gross profit | 23,557 | | | 30,904 | |
| Operating expenses : | | | |
| Research and development | 19,808 | | | 19,249 | |
| Sales and marketing | 8,950 | | | 7,466 | |
| General and administrative | 12,024 | | | 7,042 | |
| | | | | |
| Total operating expenses | 40,782 | | | 33,757 | |
| Operating profit (loss) | (17,225) | | | (2,853) | |
| Financial income (expense): | | | |
| Interest income (expense), net | (8,113) | | | (8,314) | |
| Change in fair value of convertible debt derivative | 3,066 | | | 5,867 | |
| Impact of debt amendment and reimbursement | 247 | | | 476 | |
| Foreign exchange gain (loss) | 308 | | | 2,618 | |
| Profit (Loss) before income taxes | (21,717) | | | (2,206) | |
| Income tax expense | 1,993 | | | 1,841 | |
| Profit (Loss) | $ | (23,710) | | | $ | (4,047) | |
| Attributable to : | | | |
| Shareholders of the parent | (23,710) | | | (4,047) | |
| Minority interests | — | | | — | |
| Basic loss per ADS | ($0.43) | | | ($0.09) | |
| Diluted loss per ADS | ($0.43) | | | ($0.09) | |
| Weighted average number of ADS used for computing: | | | |
| — Basic | 54,732,917 | | | 45,538,645 | |
| — Diluted | 54,732,917 | | | 45,538,645 | |
Sequans reports third quarter 2023 financial results
Page 6
SEQUANS COMMUNICATIONS S.A.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
| | | | | | | | | | | | | | |
| | At Sept 30, | | At Dec 31, |
| (in thousands of US$) | 2023 | | 2022 |
| ASSETS | | | |
| Non-current assets | | | |
| Property, plant and equipment | $ | 7,098 | | | $ | 8,489 | |
| Intangible assets | 59,102 | | | 48,705 | |
| Deposits and other receivables | 760 | | | 783 | |
| Other non-current financial assets | 334 | | | 337 | |
| Total non-current assets | 67,294 | | | 58,314 | |
| Current assets | | | |
| Inventories | 8,548 | | | 9,387 | |
| Trade receivables | 4,976 | | | 8,494 | |
| Contract assets | 2,694 | | | 176 | |
| Prepaid expenses | 2,000 | | | 1,399 | |
| Other receivables | 4,448 | | | 5,799 | |
| Research tax credit receivable | 7,779 | | | 4,515 | |
| Short-term deposits | — | | | 5,000 | |
| Cash and cash equivalents | 6,740 | | | 5,671 | |
| Total current assets | 37,185 | | | 40,441 | |
| Total assets | $ | 104,479 | | | $ | 98,755 | |
| EQUITY AND LIABILITIES | | | |
| Equity | | | |
| Issued capital, euro 0.01 nominal value, 243,239,926 shares authorized, issued and outstanding at September 30, 2023 (193,426,478 shares at December 31, 2022) | $ | 2,846 | | | $ | 2,306 | |
| Share premium | 14,617 | | | 2,418 | |
| Other capital reserves | 68,268 | | | 62,870 | |
| Accumulated deficit | (76,082) | | | (65,099) | |
| Other components of equity | (812) | | | (391) | |
| Total equity | 8,837 | | | 2,104 | |
| Non-current liabilities | | | |
| Government grant advances, loans and other liabilities | 3,830 | | | 6,235 | |
| Convertible debt | — | | | 43,455 | |
| Convertible debt embedded derivative | — | | | 3,203 | |
| Lease liabilities | 1,854 | | | 2,278 | |
| Trade payables | — | | | 1,788 | |
| Provisions | 2,140 | | | 2,196 | |
| Deferred tax liabilities | 263 | | | 258 | |
| Contract liabilities | 9 | | | 404 | |
| Total non-current liabilities | 8,096 | | | 59,817 | |
| Current liabilities | | | |
| Trade payables | 15,432 | | | 9,342 | |
| Interest-bearing receivables financing | 6,572 | | | 7,723 | |
| Lease liabilities | 1,255 | | | 1,291 | |
| Convertible debt | 49,871 | | | — | |
| Convertible debt embedded derivative | 137 | | | — | |
| Government grant advances and loans | 4,479 | | | 4,159 | |
| Contract liabilities | 1,088 | | | 5,964 | |
| Other current liabilities and provisions | 8,712 | | | 8,355 | |
| Total current liabilities | 87,546 | | | 36,834 | |
| Total equity and liabilities | $ | 104,479 | | | $ | 98,755 | |
| |
Sequans reports third quarter 2023 financial results
Page 7
SEQUANS COMMUNICATIONS S.A.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW
| | | | | | | | | | | | | | | | | | | | |
| | | | Nine months ended Sept 30, |
| (in thousands of US$) | 2023 | | 2022 |
| Operating activities | | | |
| Profit (Loss) before income taxes | $ | (21,717) | | | $ | (2,206) | |
| Non-cash adjustment to reconcile income before tax to net cash from (used in) operating activities | | | |
| | Depreciation and impairment of property, plant and equipment | 2,783 | | | 2,901 | |
| | Amortization and impairment of intangible assets | 6,125 | | | 5,574 | |
| | Share-based payment expense | 5,316 | | | 3,667 | |
| | Increase in provisions | 79 | | | 298 | |
| | Interest expense, net | 8,113 | | | 8,314 | |
| | Change in the fair value of convertible debt embedded derivative | (3,066) | | | (5,867) | |
| | Impact of debt reimbursement | (247) | | | (476) | |
| | Foreign exchange loss (gain) | 173 | | | (897) | |
| | | | | |
| | | | | |
| Working capital adjustments | | | |
| | Decrease (Increase) in trade receivables and other receivables | 1,009 | | | (3,412) | |
| | Decrease (increase) in inventories | 839 | | | (3,669) | |
| | Increase in research tax credit receivable | (1,727) | | | (636) | |
| | Increase (Decrease) in trade payables and other liabilities | 5,198 | | | (7,499) | |
| | Decrease in contract liabilities | (5,356) | | | (3,703) | |
| | Decrease in government grant advances | (364) | | | (2,292) | |
| Income tax paid | (1,561) | | | (683) | |
| Net cash flow used in operating activities | (4,403) | | | (10,586) | |
| Investing activities | | | |
| Purchase of intangible assets and property, plant and equipment | (3,401) | | | (5,892) | |
| Capitalized development expenditures | (17,382) | | | (11,308) | |
| Sale (Purchase) of financial assets | 26 | | | 1,741 | |
| Decrease of short-term deposit | 5,000 | | | — | |
| Interest received | 174 | | | 47 | |
| Net cash flow used in investments activities | (15,583) | | | (15,412) | |
| Financing activities | | | |
| | | | |
| Public and private equity offering proceeds, net of transaction costs paid | 25,466 | | | 30,125 | |
| Proceeds (Repayment of) from interest-bearing receivables financing | (1,069) | | | 342 | |
| | | | |
| Proceeds from interest-bearing research project financing | 545 | | | — | |
| Payment of lease liabilities | (998) | | | (929) | |
| | | | |
| Repayment of government loans | (1,126) | | | (633) | |
| | | | |
| Repayment of interest-bearing research project financing | (693) | | | (812) | |
| Interest paid | (1,052) | | | (1,096) | |
| Net cash flows from financing activities | 21,073 | | | 26,997 | |
| Net increase (decrease) in cash and cash equivalents | 1,087 | | | 999 | |
| Net foreign exchange difference | (18) | | | (3) | |
| Cash and cash equivalents at January 1 | 5,671 | | | 4,835 | |
| Cash and cash equivalents at end of the period | 6,740 | | | 5,831 | |
Sequans reports third quarter 2023 financial results
Page 8
SEQUANS COMMUNICATIONS S.A.
UNAUDITED RECONCILIATION OF NON-IFRS FINANCIAL RESULTS
| | | | | | | | | | | | | | | | | | | | | | | |
| (in thousands of US$, except share and per share amounts) | Three months ended |
Sept 30,
2023 | | June 30, 2023 | | Sept 30,
2022 |
| Net IFRS gain (loss) as reported | $ | (9,553) | | | $ | (9,117) | | | $ | (2,873) | |
| Add back | | | | | |
| Non-cash stock-based compensation expense according to IFRS 2 (1) | 1,757 | | | 1,778 | | | 1,133 | |
| Non-cash change in the fair value of convertible debt embedded derivative | (439) | | | (325) | | | 1,193 | |
| Non-cash interest on convertible debt and other financing (2) | 1,709 | | | 1,706 | | | 1,447 | |
| Non-cash impact of convertible debt amendment | (247) | | | — | | | (476) | |
| Non-IFRS gain (loss) adjusted | $ | (6,773) | | | $ | (5,958) | | | $ | 424 | |
| IFRS basic gain (loss) per ADS as reported | ($0.16) | | | ($0.16) | | | ($0.06) | |
| Add back | | | | | |
| Non-cash stock-based compensation expense according to IFRS 2 (1) | $0.03 | | | $0.04 | | | $0.02 | |
| Non-cash change in the fair value of convertible debt embedded derivative | ($0.01) | | | ($0.01) | | | $0.03 | |
| Non-cash interest on convertible debt and other financing (2) | $0.03 | | | $0.03 | | | $0.03 | |
| Non-cash impact of convertible debt amendment | ($0.01) | | | $0.00 | | | ($0.01) | |
| Non-IFRS basic gain (loss) per ADS | ($0.12) | | | ($0.10) | | | $0.01 | |
| IFRS diluted gain (loss) per ADS | ($0.16) | | | ($0.16) | | | ($0.06) | |
| Add back | | | | | |
| Non-cash stock-based compensation expense according to IFRS 2 (1) | $0.03 | | | $0.04 | | | $0.02 | |
| Non-cash change in the fair value of convertible debt embedded derivative | ($0.01) | | | ($0.01) | | | $0.03 | |
| Non-cash interest on convertible debt and other financing (2) | $0.03 | | | $0.03 | | | $0.03 | |
| Non-cash impact of convertible debt amendment | ($0.01) | | | $0.00 | | | ($0.01) | |
| Non-IFRS diluted gain (loss) per ADS | ($0.12) | | | ($0.10) | | | $0.01 | |
| | | | | | | |
| (1) Included in the IFRS loss as follows: | | | | | |
| | Cost of product revenue | $ | 24 | | | $ | 27 | | | $ | 41 | |
| | Research and development | 481 | | | 488 | | | 370 | |
| | Sales and marketing | 393 | | | 361 | | | 268 | |
| | General and administrative | 859 | | | 902 | | | 454 | |
| (2) Related to the difference between contractual and effective interest rates |
Sequans reports third quarter 2023 financial results
Page 9
SEQUANS COMMUNICATIONS S.A.
UNAUDITED RECONCILIATION OF NON-IFRS FINANCIAL RESULTS
| | | | | | | | | | | | | | | | | |
| (in thousands of US$, except share and per share amounts) | Nine months ended Sept 30, |
| 2023 | | 2022 |
| Net IFRS gain (loss) as reported | $ | (23,710) | | | $ | (4,047) | |
| Add back | | | |
| Non-cash stock-based compensation expense according to IFRS 2 (1) | 5,316 | | | 3,667 | |
| Non-cash change in the fair value of convertible debt embedded derivative | (3,066) | | | (5,867) | |
| Non-cash interest on convertible debt and other financing (2) | 4,823 | | | 4,117 | |
| | | | |
| | | | |
| Non-cash impact of convertible debt amendment | (247) | | | (476) | |
| Non-IFRS gain (loss) adjusted | $ | (16,884) | | | $ | (2,606) | |
| IFRS basic gain (loss) per ADS as reported | ($0.43) | | | ($0.09) | |
| Add back | | | |
| Non-cash stock-based compensation expense according to IFRS 2 (1) | $0.10 | | | $0.08 | |
| Non-cash change in the fair value of convertible debt embedded derivative | ($0.06) | | | ($0.13) | |
| Non-cash interest on convertible debt and other financing (2) | $0.09 | | | $0.09 | |
| | | | |
| | | | |
| Non-cash impact of convertible debt amendment | ($0.01) | | | ($0.01) | |
| Non-IFRS basic gain (loss) per ADS | ($0.31) | | | ($0.06) | |
| IFRS diluted gain (loss) per ADS | ($0.43) | | | ($0.09) | |
| Add back | | | |
| Non-cash stock-based compensation expense according to IFRS 2 (1) | $0.10 | | | $0.08 | |
| Non-cash change in the fair value of convertible debt embedded derivative | ($0.06) | | | ($0.13) | |
| Non-cash interest on convertible debt and other financing (2) | $0.09 | | | $0.09 | |
| | | | |
| | | | |
| Non-cash impact of convertible debt amendment | ($0.01) | | | ($0.01) | |
| Non-IFRS diluted gain (loss) per ADS | ($0.31) | | | ($0.06) | |
| | | | | |
| (1) Included in the IFRS loss as follows: | | | |
| | Cost of product revenue | $ | 83 | | | $ | 114 | |
| | Research and development | 1,439 | | | 1,157 | |
| | Sales and marketing | 1,101 | | | 846 | |
| | General and administrative | 2,693 | | | 1,550 | |
| (2) Related to the difference between contractual and effective interest rates | | |
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