Sequans Communications-Form 20-F 2019
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UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 20-F REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934 OR ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2019 OR TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to OR SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of event requiring this shell company report Commission file number 001-35135 SEQUANS COMMUNICATIONS S.A. (Exact name of Registrant as specified in its charter) Not Applicable (Translation of Registrant’s name into English) French Republic (Jurisdiction of incorporation or organization) 15-55 Boulevard Charles de Gaulle 92700 Colombes, France (Address of principal executive offices) Georges Karam Chairman and Chief Executive Officer Sequans Communications S.A. 15-55 Boulevard Charles de Gaulle 92700 Colombes, France Telephone: +33 1 70 72 16 00 Facsimile: +33 1 70 72 16 09 (Name, telephone, e-mail and/or facsimile number and address of company contact person) Securities registered or to be registered pursuant to Section 12(b) of the Act. Title of each class Symbol Name of each exchange on which registered American Depositary Shares, each representing four ordinary shares, nominal value €0.02 per share SQNS New York Stock Exchange Ordinary shares, nominal value €0.02 per share New York Stock Exchange* * Not for trading, but only in connection with the registration of American Depositary Shares. Securities registered or to be registered pursuant to Section 12(g) of the Act. Not Applicable (Title of Class) Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act. Not Applicable (Title of Class) Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the annual report. Ordinary shares, nominal value €0.02 per share: 95,587,146 as of December 31, 2019 Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes No If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934. Yes No Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes No Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 229.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes No Indicate by check mark whether the registrant is a large accelerated filer, an accelerated file, a non-accelerated filer, or an emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer”, and "emerging growth company" in Rule 12b-2 of the Exchange Act.: Large accelerated filer Accelerated filer Non-accelerated filer Emerging growth company If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards† provided pursuant to Section 13(a) of the Exchange Act. † The term “new or revised financial accounting standard” refers to any update issued by the Financial Accounting Standards Board to its Accounting Standards Codification after April 5, 2012. Indicate by check mark which basis for accounting the registrant has used to prepare the financing statements included in this filing: U.S. GAAP International Financial Reporting Standards as issued Other by the International Accounting Standards Board If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow. Item 17 Item 18 If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No SEQUANS COMMUNICATIONS S.A. ________________________________________________ FORM 20-F ANNUAL REPORT FOR THE FISCAL YEAR ENDED DECEMBER 31, 2019 _________________________________________________ TABLE OF CONTENTS Introduction 1 Special Note Regarding Forward-Looking Statements and Industry Data 1 PART I Item 1. Identity of Directors, Senior Management and Advisers 3 Item 2. Offer Statistics and Expected Timetable 3 Item 3. Key Information 3 Item 4. Information on the Company 28 Item 4A. Unresolved Staff Comments 43 Item 5. Operating and Financial Review and Prospects 43 Item 6. Directors, Senior Management and Employees 68 Item 7. Major Shareholders and Related Party Transactions 77 Item 8. Financial Information 82 Item 9. The Offer and Listing 83 Item 10. Additional Information 84 Item 11. Quantitative and Qualitative Disclosures About Market Risk 90 Item 12. Description of Securities Other than Equity Securities 90 PART II Item 13. Defaults, Dividend Arrearages and Delinquencies 93 Item 14. Material Modifications to the Rights of Security Holders and Use of Proceeds 93 Item 15. Controls and Procedures 93 Item 16A. Audit Committee Financial Expert 95 Item 16B. Code of Ethics 95 Item 16C. Principal Accountant Fees and Services 96 Item 16D. Exemptions from the Listing Standards for Audit Committees 96 Item 16E. Purchases of Equity Securities by the Issuer and Affiliated Purchasers 96 Item 16F. Change in Registrant’s Certifying Accountant 96 Item 16G. Corporate Governance 96 Item 16H. Mine Safety Disclosure 97 PART III Item 17. Financial Statements 98 Item 18. Financial Statements 98 Item 19. Exhibits 98 Signatures Index to Consolidated Financial Statements i INTRODUCTION Unless otherwise indicated, “Sequans Communications S.A.”, “Sequans Communications”, “the Company”, “we”, “us” and “our” refer to Sequans Communications S.A. and its consolidated subsidiaries. In this annual report, references to the “euro” or “€” are to the euro currency of the European Union and references to “U.S. dollars” or “$” are to United States dollars. Reference to “the Shares” are references to Sequans Communications’ Ordinary Shares, nominal value €0.02 per share, and references to “the ADSs” are to Sequans Communications’ American Depositary Shares (each representing four Ordinary Shares), which are evidenced by American Depositary Receipts (ADRs). SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS This annual report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, or the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act, that are based on our management’s beliefs and assumptions and on information currently available to our management. All statements other than present and historical facts and conditions contained in this annual report on Form 20-F, including statements regarding our future results of operations and financial positions, business strategy, plans and our objectives for future operations, are forward looking statements. 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 operate in a very competitive and rapidly changing environment. New risks emerge from time to time. Given these risks and uncertainties, you should not 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. Some of the factors that could cause actual results to differ materially from the forward-looking statements contained herein include, without limitation: • the contraction or lack of growth of markets in which we compete and in which our products are sold; • unexpected increases in our expenses, including manufacturing expenses; • our inability to adjust spending quickly enough to offset any unexpected revenue shortfall; • delays or cancellations in spending by our customers; • unexpected average selling price reductions; • the significant fluctuation to which our quarterly revenue and operating results are subject due to cyclicality in the wireless communications industry and transitions to new process technologies; • our inability to anticipate the future market demands and future needs of our customers; • 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; • our inability to enter into and execute on strategic alliances; • our ability to meet performance milestones and financing obligations under strategic license and development services agreements; • the impact of natural disasters or pandemics on our sourcing operations and supply chain; • our ability to remediate material weaknesses in our internal controls relating to the accounting for certain