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 October 2017

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 £  No R
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 £  No R
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.  

Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934: Yes £  No R
 
If “Yes” is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): 82-_______________.






EXPLANATORY NOTE


On October 31, 2017 , Sequans Communications S.A. issued a press release announcing its financial results for the third quarter ended Sept 30, 2017 .  A copy of the press release is attached to this Form 6-K as Exhibit 99.1 and is incorporated herein by reference. 

Effective October 30, 2017, Sequans Communications S.A. amended the terms of the convertible notes issued April 14, 2015 and April 27, 2016 to extend by one year the maturities of the notes to April 14, 2018 and April 27, 2019, respectively. In addition, the conversion price of the notes issued April 27, 2016 was changed from $2.71 to $2.25. All other terms remain the same. Copies of the amendments are attached to this Form 6-K as Exhibits 99.2, 99.3 and 99.4. In addition, the Company agreed to grant Nokomis Capital Master Fund, LP (“Nokomis”) board observer rights, and the Company’s Board of Directors (“Board”) has agreed to recommend to shareholders that they elect, at the next annual shareholders’ meeting in June 2018, a representative of Nokomis to serve as a director of the Company. Finally, the Company entered into a standstill agreement with Nokomis whereby Nokomis has agreed that it will not purchase additional securities in the Company during the next year without the prior consent of the Board. Copies of the Board Observer Rights Letter and Standstill Agreement are attached to this Form 6-K as Exhibits 99.5 and 99.6.











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: October 31, 2017
By:
/s/ Deborah Choate
 
 
 
Deborah Choate
 
 
 
Chief Financial Officer
 
 




 
EXHIBIT INDEX
 
The following exhibit is filed as part of this Form 6-K:
 
Exhibit
Description
 
 
99.1
Press release dated October 31, 2017
 
 
 
 
 
 




LOGO.JPG

NEWS


Sequans Communications Announces Third Quarter 2017
Financial Results
PARIS - October 31, 2017 - 4G chipmaker Sequans Communications S.A. (NYSE: SQNS) today announced financial results for the third quarter ended September 30, 2017 .

Third Quarter 2017 Highlights:
Revenue: Revenue was $11.3 million . Revenue for the third quarter of 2017 decreased 14.5% compared to the second quarter of 2017 and decreased 9.3% compared to the third quarter of 2016, reflecting decreases in both product and other revenue.
   
Gross margin: Gross margin was 44.3% compared to 42.1% in the second quarter of 2017 and compared to 46.8% in the third quarter of 2016, reflecting an increase in the proportion of chip sales in the product mix in the third quarter of 2017compared to the prior quarter and the impact of fixed costs on a lower product revenue base in the third quarter of 2017 compared to the same quarter in the prior year.

Operating loss: Operating loss was $5.6 million compared to an operating loss of $4.1 million in the second quarter of 2017 and an operating loss of $4.0 million in the third quarter of 2016.

Net loss: Net loss was $6.9 million , or ($0.09) per diluted share/ADS, compared to a net loss $6.0 million , or ($0.08) per diluted share/ADS, in the second quarter of 2017 and a net loss of $5.1 million , or ($0.08) per diluted share/ADS, in the third quarter of 2016.

Non-IFRS Net loss: Excluding the non-cash items of stock-based compensation and the effective interest adjustments related to the convertible debt and other financings, non-IFRS net loss was $5.9 million , or ($0.07) per diluted share/ADS, compared to a non-IFRS net loss of $4.9 million , or ($0.06) per diluted share/ADS in the second quarter of 2017, and a non-IFRS net loss of $4.3 million , or ($0.07) per diluted share/ADS, in the third quarter of 2016.

Cash: Cash, cash equivalents and short-term deposit at September 30, 2017 totaled $13.3 million compared to $19.5 million at June 30, 2017.
In millions of US$ except percentages, shares and per share amounts
Key Metrics
Q3 2017

%*

Q2 2017

%*

Q3 2016

%*

Revenue

$11.3

 

$13.2

 

$12.5

 
Gross profit
5.0

44.3
 %
5.6

42.1
 %
5.8

46.8
 %
Operating loss
(5.6
)
(49.2
)%
(4.1
)
(30.9
)%
(4.0
)
(31.7
)%
Net loss
(6.9
)
(61.2
)%
(6.0
)
(45.3
)%
(5.1
)
(41.1
)%
Diluted EPS

($0.09
)
 

($0.08
)
 

($0.08
)
 
Weighted average number of diluted shares/ADS
79,774,103

 
75,896,815

 
61,642,549

 
Cash flow from (used in) operations
(5.3
)
 
(4.4
)
 
(9.5
)
 
Cash, cash equivalents and short-term deposit at quarter-end
13.3

 
19.5

 
24.7

 
 
 
 
 
 
 
 
Additional information on non-cash items:
 
 
 
 
 
 
 - Stock-based compensation included in operating result
0.3

 
0.3

 
0.2

 
 - Change in the fair value of convertible debt embedded derivative
—

 
—

 
—

 
 - Non-cash interest on convertible debt and other financing
0.8

 
0.8

 
0.6

 
Non-IFRS diluted EPS (excludes stock-based compensation, effective interest adjustments related to the convertible and other debt and embedded derivative)

($0.07
)
 

($0.06
)
 

($0.07
)
 
 
 
 
 
 
 
 
* Percentage of revenue


Sequans reports third quarter 2017 financial results
Page 2

"Our IoT business continues to grow as expected," said Georges Karam, Sequans' CEO. "Our visibility is improving as our Cat 1 customers continue to ramp and are pursuing plans to serve more operators. We expect accelerating growth from IoT next year, based on a full year of Cat 1 revenue as well as the Cat M1/NB1 ramp from design wins already in hand. We also expect our broadband business to stabilize during Q4 and to improve during the course of 2018. 

"We also reached an agreement with the institutional holders of our convertible notes maturing in April, 2018 and in April, 2019 to extend each maturity by one year in exchange for adjustments to certain terms, as described in the filing we made today on Form 6-K. We believe this agreement is in the best interests of all our shareholders because it removes a significant near-term cash requirement and allows us to focus on the business."

Q4 2017 Outlook
The following statements are based on management’s current assumptions and expectations. These statements are forward-looking and actual results may differ materially. Sequans undertakes no obligation to update these statements.

Sequans expects revenue for the fourth quarter of 2017 to be in the range of $11 to $13 million with non-IFRS gross margin above 40%. Based on this revenue range and expected gross margin, non-IFRS net loss per diluted share/ADS is expected to be between ($0.06) and ($0.08) for the fourth quarter of 2017, based on approximately 79.8 million weighted average number of diluted shares/ADSs. Non-IFRS EPS guidance excludes the impact of stock based compensation, the non-cash fair-value and effective interest adjustments related to the convertible debt and other financings, and any other relevant non-cash or non-recurring expenses.


Conference Call and Webcast
Sequans plans to conduct a teleconference and live webcast to discuss the financial results for the third quarter of 2017 today, October 31, 2017 at 8:00 a.m. EDT /13:00 CET. To participate in the live call, analysts and investors should dial 800-230-1074 (or +1 612-234-9959 if outside the U.S.). A live and archived webcast of the call will be available from the Investors section of the Sequans website at www.sequans.com/investors/ . A replay of the conference call will be available until December 1, 2017 by dialing toll free 800-475-6701 in the U.S., or +1 320-365-3844 from outside the U.S., using the following access code: 430997.

Forward Looking Statements
This press release contains projections and other forward-looking statements regarding future events or our future financial performance. All statements other than present and historical facts and conditions contained in this release, including any statements regarding our future results of operations and financial positions, business strategy, plans and our objectives for future operations and potential strategic partnerships, 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 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: (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, including manufacturing expenses, (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 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, (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) the impact of natural disasters on our sourcing operations and supply chain, and (xi) other factors detailed in documents we file from time to time with the Securities and Exchange Commission. Forward-looking statements in this release are made pursuant to the safe harbor provisions contained in the Private Securities Litigation Reform Act of 1995.


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 non-cash charges relating to stock-based compensation and the non-cash financial expense related to the convertible debt and its embedded derivative issued in


Sequans reports third quarter 2017 financial results
Page 3

April 2015 and April 2016. 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. We are not able to provide a non-GAAP reconciliation for forward-looking IFRS estimates for gross margin and net loss per diluted share without unreasonable efforts, because certain adjustments are not known until the end of the period. The impact of these adjustments could be significant to our actual IFRS results.


About Sequans Communications
Sequans Communications S.A. (NYSE: SQNS) is a leading provider of single-mode 4G LTE wireless semiconductor solutions for Internet of Things (IoT) and a wide range of broadband data devices. Founded in 2003, Sequans has developed and delivered seven generations of 4G technology and its chips are certified and shipping in 4G networks around the world. Today, Sequans offers two LTE product lines: StreamliteLTE™, optimized for IoT and M2M devices and StreamrichLTE™, optimized for feature-rich mobile computing and home and portable router devices. The company is based in Paris, France with additional offices in the United States, United Kingdom, Sweden, Israel, Hong Kong, Singapore, Taiwan, South Korea, and China.
Visit Sequans online at   www.sequans.com ;  www.facebook.com/sequans ;  www.twitter.com/sequans

SOURCE: Sequans Communications S.A.

Media Relations: Kimberly Tassin, +1.425.736.0569, Kimberly@sequans.com
Investor Relations: Claudia Gatlin, +1 212.830.9080, Claudia@sequans.com

Condensed financial tables follow




Sequans reports third quarter 2017 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, 2017

 
June 30,
2017

 
Sept 30, 2016

 



 




 

 

 
Revenue :

 

 

 

Product revenue
$
8,869

 
$
10,159

 
$
9,523

 

Other revenue
2,430

 
3,058

 
2,934

 
Total revenue
11,299

 
13,217

 
12,457

 
Cost of revenue

 

 

 

Cost of product revenue
5,678

 
7,064

 
5,900

 

Cost of other revenue
615

 
591

 
731

 
Total cost of revenue
6,293

 
7,655

 
6,631

 
Gross profit
5,006

 
5,562

 
5,826

 
Operating expenses :

 

 

 

Research and development
6,769

 
6,254

 
6,391

 

Sales and marketing
2,014

 
2,072

 
1,926

 

General and administrative
1,786

 
1,323

 
1,459

 




 

 

 
Total operating expenses
10,569

 
9,649

 
9,776

 
Operating loss
(5,563
)
 
(4,087
)
 
(3,950
)
 
Financial income (expense):

 

 

 

Interest income (expense), net
(1,202
)
 
(1,194
)
 
(1,062
)
 

Foreign exchange gain (loss)
(90
)
 
(626
)
 
(61
)
 
Loss before income taxes
(6,855
)
 
(5,907
)
 
(5,073
)
 
Income tax expense (benefit)
65

 
83

 
53

 
Loss
$
(6,920
)
 
$
(5,990
)
 
$
(5,126
)
 
Attributable to :

 

 

 

Shareholders of the parent
(6,920
)
 
(5,990
)
 
(5,126
)
 

Minority interests
—

 
—

 
—

 
Basic loss per share

($0.09
)
 

($0.08
)
 

($0.08
)
 
Diluted loss per share

($0.09
)
 

($0.08
)
 

($0.08
)
 
Weighted average number of shares used for computing:

 

 

 
— Basic
79,774,103

 
75,896,815

 
61,642,549

 
— Diluted
79,774,103

 
75,896,815

 
61,642,549

 
 
 
 
 
 
 
 
 





Sequans reports third quarter 2017 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)
2017
 
2016




 

Revenue :

 


Product revenue
$
28,668

 
$
22,634


Other revenue
8,278

 
8,992

Total revenue
36,946

 
31,626

Cost of revenue
 
 
 

Cost of product revenue
18,731

 
14,695


Cost of other revenue
1,795

 
2,282

Total cost of revenue
20,526

 
16,977

Gross profit
16,420

 
14,649

Operating expenses :
 
 
 

Research and development
19,217

 
20,007


Sales and marketing
6,582

 
4,922


General and administrative
4,520

 
4,598




 
 
 
Total operating expenses
30,319

 
29,527

Operating loss
(13,899
)
 
(14,878
)
Financial income (expense):
 
 
 

Interest income (expense), net
(3,434
)
 
(2,606
)
 
Other financial expense
—

 
(83
)
 
Change in the fair value of convertible debt embedded derivative
—

 
(1,583
)

Foreign exchange gain (loss)
(962
)
 
(77
)
Loss before income taxes
(18,295
)
 
(19,227
)
Income tax expense (benefit)
219

 
189

Loss
$
(18,514
)
 
$
(19,416
)
Attributable to :
 
 
 

Shareholders of the parent
(18,514
)
 
(19,416
)

Minority interests
—

 
—

Basic loss per share

($0.24
)
 

($0.32
)
Diluted loss per share

($0.24
)
 

($0.32
)
Weighted average number of shares used for computing:
 
 
 
— Basic
76,918,723

 
60,049,335

— Diluted
76,918,723

 
60,049,335





Sequans reports third quarter 2017 financial results
Page 6

SEQUANS COMMUNICATIONS S.A.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
 
 
At Sept 30,

 
At December 31,
(in thousands of US$)
2017

 
2016

 
 
 
 
 
ASSETS
 
 
 
 
Non-current assets
 
 
 
 
Property, plant and equipment
$
6,567

 
$
6,659

 
Intangible assets
8,752

 
7,707

 
Deposits and other receivables
396

 
332

 
Available for sale assets
347

 
310

 
     Total non-current assets
16,062

 
15,008

 
Current assets
 
 
 
 
Inventories
8,848

 
8,693

 
Trade receivables
16,327

 
15,285

 
Prepaid expenses and other receivables
4,086

 
3,172

 
Recoverable value added tax
539

 
470

 
Research tax credit receivable
2,386

 
1,902

 
Short term deposit
345

 
345

 
Cash and cash equivalents
12,982

 
20,202

 
     Total current assets
45,513

 
50,069

Total assets
$
61,575

 
$
65,077

 
 
 
 
 
EQUITY AND LIABILITIES
 
 
 
 
Equity
 
 
 
 
Issued capital, euro 0.02 nominal value, 79,842,318 shares authorized, issued and outstanding at September 30, 2017 (75,030,078 at December 31, 2016)
$
2,030

 
$
1,923

 
Share premium
204,936

 
189,029

 
Other capital reserves
29,215

 
28,257

 
Accumulated deficit
(228,067
)
 
(209,553
)
 
Other components of equity
(634
)
 
(796
)
 
     Total equity
7,480

 
8,860

 
Non-current liabilities
 
 
 
 
Government grant advances, loans and other liabilities
6,245

 
5,144

 
Convertible debt and accrued interest
5,953

 
16,338

 
Provisions
1,687

 
1,306

 
Other Liabilities
24

 
22

 
Deferred revenue
1,405

 
1,940

 
     Total non-current liabilities
15,314

 
24,750

 
Current liabilities
 
 
 
 
Trade payables
11,587

 
18,358

 
Interest-bearing receivables financing
7,581

 
7,712

 
Government grant advances
796

 
601

 
Convertible debt and accrued interest
13,154

 
—

 
Other current liabilities
4,679

 
4,415

 
Deferred revenue
758

 
335

 
Provisions
226

 
46

 
     Total current liabilities
38,781

 
31,467

Total equity and liabilities
$
61,575

 
$
65,077

 
 
 
 
 




Sequans reports third quarter 2017 financial results
Page 7

SEQUANS COMMUNICATIONS S.A.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW
 
 
 
 
Nine months ended Sept 30
(in thousands of US$)
2017

 
2016

 
 
 
 
 
 
 
Operating activities
 
 
 
 
Loss before income taxes
$
(18,295
)
 
$
(19,227
)
 
Non-cash adjustment to reconcile income before tax to net cash from (used in) operating activities
 
 
 
 
 
Depreciation and impairment of property, plant and equipment
2,025

 
2,353

 
 
Amortization and impairment of intangible assets
1,758

 
1,532

 
 
Share-based payment expense
958

 
663

 
 
Increase in provisions
675

 
50

 
 
Financial expense (income)
3,434

 
2,616

 
 
Change in the fair value of convertible debt embedded derivative
—

 
1,583

 
 
Foreign exchange loss (gain)
567

 
181

 
Working capital adjustments
 
 
 
 
 
Decrease (Increase) in trade receivables and other receivables
(2,057
)
 
1,504

 
 
Increase in inventories
(155
)
 
(2,903
)
 
 
Decrease (Increase) in research tax credit receivable
(484
)
 
940

 
 
Increase (Decrease) in trade payables and other liabilities
(7,299
)
 
1,893

 
 
Decrease in deferred revenue
(112
)
 
(444
)
 
 
Decrease in government grant advances
(403
)
 
(559
)
 
Income tax paid
(206
)
 
(175
)
Net cash flow used in operating activities
(19,594
)
 
(9,910
)
 
 
 
 
 
 
 
Investing activities
 
 
 
 
Purchase of intangible assets and property, plant and equipment
(4,096
)
 
(3,724
)
 
Sale (purchase) of financial assets
(101
)
 
(11
)
 
Sale of short-term deposit
—

 
49

 
Interest received
47

 
10

Net cash flow used in investments activities
(4,150
)
 
(3,676
)
 
 
 
 
 
 
 
Financing activities
 
 
 
 
Proceeds from issue of warrants, exercise of stock options/warrants
906

 
267

 
Public equity offering proceeds, net of transaction costs paid
14,942

 
23,445

 
Repayment of interest-bearing receivables financing
(131
)
 
(843
)
 
Proceeds from interest-bearing research project financing
1,126

 
—

 
Proceeds from convertible debt, net of transaction cost
—

 
6,932

 
Repayment of government loans
(56
)
 
—

 
Repayment of borrowings and finance lease liabilities
—

 
(12
)
 
Interest paid
(272
)
 
(159
)
Net cash flows from financing activities
16,515

 
29,630

 
 
 
 
 
 
 
 
Net increase (decrease) in cash and cash equivalents
(7,229
)
 
16,044

 
Net foreign exchange difference
9

 
(25
)
 
Cash and cash equivalent at January 1
20,202

 
8,288

Cash and cash equivalents at end of the period
$
12,982

 
$
24,307




Sequans reports third quarter 2017 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, 2017

 
June 30,
2017

 
Sept 30, 2016

Net IFRS loss as reported
$
(6,920
)
 
$
(5,990
)
 
$
(5,126
)
Add back
 
 
 
 
 
 
Stock-based compensation expense according to IFRS 2 (1)
310

 
307

 
183

 
Non-cash interest on Convertible debt and other financing (2)
756

 
759

 
626

Non-IFRS loss adjusted
$
(5,854
)
 
$
(4,924
)
 
$
(4,317
)
IFRS basic loss per share as reported

($0.09
)
 

($0.08
)
 

($0.08
)
Add back
 
 
 
 
 
 
Stock-based compensation expense according to IFRS 2 (1)

$0.01

 

$0.01

 

$0.00

 
Non-cash interest on Convertible debt and other financing (2)

$0.01

 

$0.01

 

$0.01

Non-IFRS basic loss per share

($0.07
)
 

($0.06
)
 

($0.07
)
IFRS diluted loss per share

($0.09
)
 

($0.08
)
 

($0.08
)
Add back
 
 
 
 
 
 
Stock-based compensation expense according to IFRS 2 (1)

$0.01

 

$0.01

 

$0.00

 
Non-cash interest on Convertible debt and other financing (2)

$0.01

 

$0.01

 

$0.01

Non-IFRS diluted loss per share

($0.07
)
 

($0.06
)
 

($0.07
)
 
 
 
 
 
 
 
 
 
(1) Included in the IFRS loss as follows:
 
 
 
 
 
 
 
Cost of product revenue
$
2

 
$
2

 
$
4

 
 
Research and development
87

 
97

 
79

 
 
Sales and marketing
55

 
65

 
31

 
 
General and administrative
166

 
143

 
69

 
 
 
 
 
 
 
 
 
(2) Related to the difference between contractual and effective interests
 
 
 
 
 
 
 
 
 
 
 
 
 





Sequans reports third quarter 2017 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
2017
 
2016
Net IFRS loss as reported
$
(18,514
)
 
$
(19,416
)
Add back
 
 
 
 
Stock-based compensation expense according to IFRS 2 (1)
958

 
663

 
Change in the fair value of convertible debt embedded derivative
—

 
1,583

 
Non-cash interest on Convertible debt and other financing (2)
2,119

 
1,547

Non-IFRS loss adjusted
$
(15,437
)
 
$
(15,623
)
IFRS basic loss per share as reported

($0.24
)
 

($0.32
)
Add back
 
 
 
 
Stock-based compensation expense according to IFRS 2 (1)

$0.01

 

$0.00

 
Change in the fair value of convertible debt embedded derivative

$0.00

 

$0.03

 
Non-cash interest on Convertible debt and other financing (2)

$0.03

 

$0.03

Non-IFRS basic loss per share

($0.20
)
 

($0.26
)
IFRS diluted loss per share

($0.24
)
 

($0.32
)
Add back
 
 
 
 
Stock-based compensation expense according to IFRS 2 (1)

$0.01

 

$0.00

 
Change in the fair value of convertible debt embedded derivative

$0.00

 

$0.03

 
Non-cash interest on Convertible debt and other financing (2)

$0.03

 

$0.03

Non-IFRS diluted loss per share

($0.20
)
 

($0.26
)
 
 
 
 
 
 
 
(1) Included in the IFRS loss as follows:
 
 
 
 
 
Cost of product revenue
$
7

 
$
12

 
 
Research and development
293

 
283

 
 
Sales and marketing
199

 
105

 
 
General and administrative
459

 
263

 
 
 
 
 
 
 
(2) Related to the difference between contractual and effective interests
 
 
 
 
 
 
 
 
 







EXHIBIT 99.2



SEQUANS COMMUNICATIONS S.A.
AMENDMENT NO. 2 TO CONVERTIBLE PROMISSORY NOTE

This Amendment No. 2 to Convertible Promissory Note (the “ Amendment ”) is made as of October 30, 2017 by and between Sequans Communications S.A., a société anonyme incorporated in the French Republic (the “ Company ”) and Nokomis Capital Master Fund, LP, a Cayman Islands exempted limited partnership (the “ Purchaser ” and together with the Company, the “ Parties ”) and is made with reference to the Convertible Promissory Note issued as of April 14, 2015 (the “ Note ”), as amended on June 30, 2017, under and pursuant to that certain Convertible Note Agreement, dated as of April 14, 2015 (the “ Purchase Agreement ”), between the Parties. Unless otherwise indicated herein, capitalized terms used herein have the same meanings set forth in the Purchase Agreement.
WHEREAS, the Parties wish to amend the Note to extend the maturity to of the Note to April 14, 2019.
NOW, THEREFORE, the Parties hereby agree to amend the Note as follows:
1.
Amendment to Note .
Section 3.1 of the Note is hereby amended and restated in its entirety as follows:
“Unless converted as set forth below, the Accreted Principal Amount (including any accrued and unpaid interest) of this Note shall be due and payable on April 14, 2019.”
2.
Miscellaneous .
a.
Governing Law . The validity, interpretation and performance of this Amendment shall be governed by and construed in accordance with the internal laws of The French Republic (without regard to principles of conflicts of law). The parties agree that the competent courts within the jurisdiction of the Paris Court of Appeal ( Cour d’Appel de Paris ) shall have exclusive jurisdiction (and are deemed to be a convenient forum for each party) as to resolution of any dispute.
b.
Continuing Effect . Other than as set forth in this Amendment, all of the terms and conditions of the Note will continue in full force and effect.
c.
Amendment and Waiver . No modification of or amendment to this Amendment, nor any waiver of any rights under this Amendment, shall be effective unless in writing signed by the Company and the Purchaser. No delay or failure to require performance of any provision of this Amendment shall constitute a waiver of that provision as to that or any other instance.
d.
Successors and Assigns . The terms and conditions of this Amendment shall inure to the benefit of and be binding upon the respective successors and assigns of the Parties.

IN WITNESS WHEREOF, the Company has executed and delivered this Amendment on October30, 2017.




COMPANY:
SEQUANS COMMUNICATIONS S.A.

By:      /s/ Deborah Choate                 
Name:      Deborah Choate
Title:      Chief Financial Officer



PURCHASER:
NOKOMIS CAPITAL MASTER FUND, LP

By:      /s/ Brett Hendrickson                 
Name:      Brett Hendrickson
Title:      Portfolio Manager







EXHIBIT 99.3



SEQUANS COMMUNICATIONS S.A.
AMENDMENT NO. 2 TO CONVERTIBLE PROMISSORY NOTE

This Amendment No. 2 to Convertible Promissory Note (the “ Amendment ”) is made as of October 30, 2017 by and between Sequans Communications S.A., a société anonyme incorporated in the French Republic (the “ Company ”) and Nokomis Capital Master Fund, LP, a Cayman Islands exempted limited partnership (the “ Purchaser ” and together with the Company, the “ Parties ”) and is made with reference to the Convertible Promissory Note issued as of April 27, 2016 (the “ Note ”), as amended on June 30, 2017, under and pursuant to that certain Convertible Note Agreement, dated as of April 27, 2016 (the “ Purchase Agreement ”), between the Company and the several purchasers party thereto, including the Purchaser. Unless otherwise indicated herein, capitalized terms used herein have the same meanings set forth in the Purchase Agreement.
WHEREAS, the Parties wish to amend the Note to extend the maturity date and change the conversion price.
NOW, THEREFORE, the Parties hereby agree to amend the Note as follows:
1.
Amendments to Note .
a.
Section 3.1 of the Note is hereby amended and restated in its entirety as follows:
“Unless converted as set forth below, the Accreted Principal Amount (including any accrued and unpaid interest) of this Note shall be due and payable on April 27, 2020.”
b.
Section 5.2 of the Note is hereby amended and restated in its entirety as follows:
“The initial Conversion Rate shall be 444.4444 Ordinary Shares (subject to adjustment as provided in this Article V, the “ Conversion Rate ”) per US$1,000 Accreted Principal Amount (including any accrued and unpaid interest) of the Note. To address dilution of the conversion rights granted under the Notes, the Conversion Rate shall be subject to adjustment from time to time pursuant to Section 5.3.”
2.
Miscellaneous .
a.
Governing Law . The validity, interpretation and performance of this Amendment shall be governed by and construed in accordance with the internal laws of The French Republic (without regard to principles of conflicts of law). The parties agree that the competent courts within the jurisdiction of the Paris Court of Appeal ( Cour d’Appel de Paris ) shall have exclusive jurisdiction (and are deemed to be a convenient forum for each party) as to resolution of any dispute.
b.
Continuing Effect . Other than as set forth in this Amendment, all of the terms and conditions of the Note will continue in full force and effect.
c.
Amendment and Waiver . No modification of or amendment to this Amendment, nor any waiver of any rights under this Amendment, shall be effective unless in writing signed by the Company and the Purchaser. No delay or failure to require performance of any provision of this Amendment shall constitute a waiver of that provision as to that or any other instance.




d.
Successors and Assigns . The terms and conditions of this Amendment shall inure to the benefit of and be binding upon the respective successors and assigns of the Parties.

IN WITNESS WHEREOF, the Company has executed and delivered this Amendment on October 30, 2017.
COMPANY:
SEQUANS COMMUNICATIONS S.A.

By:      /s/ Deborah Choate                 
Name:      Deborah Choate
Title:      Chief Financial Officer



PURCHASER:
NOKOMIS CAPITAL MASTER FUND, LP

By:      /s/ Brett Hendrickson                 
Name:      Brett Hendrickson
Title:      Portfolio Manager











EXHIBIT 99.4


SEQUANS COMMUNICATIONS S.A.
AMENDMENT NO. 2 TO CONVERTIBLE PROMISSORY NOTE

This Amendment No. 2 to Convertible Promissory Note (the “ Amendment ”) is made as of October 30, 2017 by and between Sequans Communications S.A., a société anonyme incorporated in the French Republic (the “ Company ”) and Manatuck Hill Scout Fund, LP, a Delaware limited partnership (the “ Purchaser ” and together with the Company, the “ Parties ”) and is made with reference to the Convertible Promissory Note issued as of May 5, 2016 (the “ Note ”), as amended on June 30, 2017, under and pursuant to that certain Convertible Note Agreement, dated as of April 27, 2016 (the “ Purchase Agreement ”), between the Company and the several purchasers party thereto, including the Purchaser. Unless otherwise indicated herein, capitalized terms used herein have the same meanings set forth in the Purchase Agreement.
WHEREAS, the Parties wish to amend the Note to extend the maturity date and change the conversion price.
NOW, THEREFORE, the Parties hereby agree to amend the Note as follows:
1.
Amendments to Note .
a.
Section 3.1 of the Note is hereby amended and restated in its entirety as follows:
“Unless converted as set forth below, the Accreted Principal Amount (including any accrued and unpaid interest) of this Note shall be due and payable on April 27, 2020.”
b.
Section 5.2 of the Note is hereby amended and restated in its entirety as follows:
“The initial Conversion Rate shall be 444.4444 Ordinary Shares (subject to adjustment as provided in this Article V, the “ Conversion Rate ”) per US$1,000 Accreted Principal Amount (including any accrued and unpaid interest) of the Note. To address dilution of the conversion rights granted under the Notes, the Conversion Rate shall be subject to adjustment from time to time pursuant to Section 5.3.”
2.
Miscellaneous .
a.
Governing Law . The validity, interpretation and performance of this Amendment shall be governed by and construed in accordance with the internal laws of The French Republic (without regard to principles of conflicts of law). The parties agree that the competent courts within the jurisdiction of the Paris Court of Appeal ( Cour d’Appel de Paris ) shall have exclusive jurisdiction (and are deemed to be a convenient forum for each party) as to resolution of any dispute.
b.
Continuing Effect . Other than as set forth in this Amendment, all of the terms and conditions of the Note will continue in full force and effect.
c.
Amendment and Waiver . No modification of or amendment to this Amendment, nor any waiver of any rights under this Amendment, shall be effective unless in writing signed by the Company and the Purchaser. No delay or failure to require performance of any provision of this Amendment shall constitute a waiver of that provision as to that or any other instance.
d.
Successors and Assigns . The terms and conditions of this Amendment shall inure to the benefit of and be binding upon the respective successors and assigns of the Parties.





IN WITNESS WHEREOF, the Company has executed and delivered this Amendment on October 30, 2017.
COMPANY:
SEQUANS COMMUNICATIONS S.A.

By:      /s/ Deborah Choate             
Name:      Deborah Choate
Title:      Chief Financial Officer



PURCHASER:
MANATUCK HILL SCOUT FUND, LP

By:      /s/ Thomas Scalia             
Name:      Thomas Scalia
Title:      CFO/General Partner







EXHIBIT 99.5


Observer Rights LETTER
SEQUANS COMMUNICATIONS S.A.
Portes de la Défense
15-55. Boulevard Charles de Gaulle
92700 Colombes
France
October 30, 2017
Nokomis Capital Master Fund, LP
2305 Cedar Springs Road, Suite 420
Dallas, TX 75201
Re:      Observer Rights
Ladies and Gentlemen:
This letter will confirm our agreement that pursuant to and effective as of the date of this letter, Nokomis Capital Master Fund, LP, a Cayman Islands exempted limited partnership (the “ Investor ”) shall be entitled to the following contractual rights:
1. So long as Investor and its affiliates beneficially own an aggregate of at least 10% of the outstanding American Depositary Shares (“ ADSs ”) including ADS owned directly and on a fully as converted basis of Convertible Promissory Notes, regardless of any restrictions on conversion contained in the governing documents of such Convertible Promissory Notes, of Sequans Communications S.A., a société anonyme incorporated in the French Republic (the “ Company ”), Investor shall have the right to designate one (1) representative who shall be entitled to attend all meetings of the Company’s Board of Directors (the “ Board ”) in a nonvoting observer capacity, and the Company shall give such representative of Investor copies of all notices, minutes, consents and other material that the Company provides to its Board, except that the representative may be excluded from access to any material or meeting or portion thereof (a) if the Board determines in good faith, upon advice of counsel, that such exclusion is reasonably necessary to preserve the attorney-client privilege, or (b) to protect highly confidential proprietary information, the disclosure of which to the Investor would be materially detrimental to the Company. Such representative may participate in discussions of matters brought to the Board or committees thereof.
2. Investor shall, and shall cause its representatives to, hold in confidence and trust and not use or disclose any confidential information provided to or learned by it in connection with its rights under this letter.
3. The rights described herein shall terminate and be of no further force or effect upon the earlier to occur of (a) at such time as the Investor, together with its affiliates, shall beneficially own less than 10% of the outstanding American Depositary Shares (“ ADSs ”) including ADS owned directly and on a fully as converted basis of Convertible Promissory Notes, regardless of any restrictions on conversion




contained in the governing documents of such Convertible Promissory Notes, of the Company, (b) the consummation of a sale of the Company, or (c) the election of a representative of the Investor to the Company’s Board. The rights described in this letter are not assignable without prior written consent of the Company. The confidentiality obligations referenced herein will survive any such termination.
The Board has also agreed to recommend to shareholders that they elect, at the next annual shareholders’ meeting in June 2018, a representative of the Investor to serve as a director of the Company.
This letter agreement constitutes the full and entire understanding and agreement among the parties with respect to the subject matter hereof, and any other written or oral agreement relating to the subject matter hereof existing between the parties is expressly superseded. This letter agreement shall be governed and construed in accordance with the laws of France, without regard to conflicts of law principles thereof. Any term of this letter agreement may be amended and the observance of any term of this Agreement may be waived (either generally or in a particular instance and either retroactively or prospectively) only with the written consent of Investor and the Company.
The undersigned hereby execute and deliver this letter agreement as of the date first set forth above. This letter agreement may be executed in two or more counterparts, each of which shall be deemed an original but all of which together shall constitute one and the same instrument.
Sincerely,
the company:
SEQUANS COMMUNICATIONS S.A.
By: /s/ Georges Karam     
(Signature)
Name:      Georges Karam     
Title: Chairman of the Board and CEO     

Acknowledged and agreed:
The Investor:
NOKOMIS CAPITAL MASTER FUND I, LP
/s/ Brett Hendrickson     
(Signature)





EXHIBIT 99.6

STANDSTILL AGREEMENT
This Standstill Agreement (this “Agreement”) is made as of the 30 th day of October, 2017, by and among Sequans Communications S.A., having an office at Portes de la Défense, 15-55 Boulevard Charles de Gaulle, 92700 Colombes, France (the “Company”), and Nokomis Capital Master Fund, LP, having an office at 2305 Cedar Springs Road, Suite 420, Dallas, TX 75201 (the “Investor”).
WHEREAS, the Investor holds $18,000,000 aggregate principal amount of Convertible Promissory Notes (the “Notes”) of the Company and 4,503,513 American Depositary Shares (“ADSs”) of the Company as of the date hereof.
WHEREAS, in connection with an agreement to extend the maturity and certain other terms of the Notes, the Company has agreed to grant the Investor certain board observer rights and to recommend that a representative of the Investor be elected to the Company’s board of directors at the annual shareholder meeting in 2018.
NOW THEREFORE, in consideration of the foregoing recitals and the agreements contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto, intending to be legally bound, hereby agree as follows:
1. Certain Definitions . For purposes of this Agreement, the following terms shall have the following respective meanings:
(a)
“ Affiliate ” means, with respect to a Person, any Person that, directly or indirectly, through one or more intermediaries, controls, is controlled by or is under common control with such first Person. For purposes of this definition, “control” and, with correlative meanings, the terms “controlled by” and “under common control with” mean (i) the possession, directly or indirectly, of the power to direct the management or policies of a Person, whether through the ownership of voting securities, by contract relating to voting rights or corporate governance, or otherwise, or (ii) the ownership, directly or indirectly, of more than fifty percent (50%) of the voting securities or other ownership interest of a Person.
(b)
“ Board ” means the Company’s Board of Directors.
(c)
“ Person ” means an individual, sole proprietorship, partnership, limited partnership, limited liability partnership, corporation, limited liability company, business trust, joint stock company, trust, unincorporated association, joint venture or other similar entity or organization, including a government or political subdivision, department or agency of a government.
2. Standstill Agreement . During the period of time commencing on the date hereof (the “ Effective Date ”) and continuing until the first anniversary of the Effective Date, without the prior consent of the Board (as evidence by a duly adopted resolution), the Investor shall not, and shall cause their Affiliates not to:
(a)      acquire, or offer or seek or agree to acquire, directly or indirectly, by purchase or otherwise (collectively, “ Acquire ”), ownership (beneficial or otherwise) of any additional securities or assets of the Company or any of its subsidiaries (or any direct or indirect rights or options to acquire such ownership, or otherwise act in concert with respect to any such securities, rights or options with any Person);




(b)      make, or participate in, directly or indirectly, any “solicitation” of “proxies” to vote (as such terms are used in the Regulation 14A promulgated under the Securities Exchange Act of 1934, as amended (the “ Exchange Act ”)), become a “participant” in any “election contest” (as such terms are defined in Rule 14a-11 promulgated under the Exchange Act) or initiate, propose or otherwise solicit stockholders of the Company or its subsidiaries for the approval of any stockholder proposals;
(c)      make, or participate in, directly or indirectly, in any tender offer, exchange offer, merger, business combination, recapitalization, restructuring, liquidation, dissolution or extraordinary transaction involving the Company or any of its subsidiaries or their securities or assets, provided that nothing in this Section 4 shall be construed to limit the Investor’s (or its Affiliates’) ability to exercise rights that are exercisable by the holders of the class of securities held by the Investor or its Affiliates with respect to a given transaction;
(d)      form, join, participate in, or encourage the formation of, a group (within the meaning of Section 13(d)(3) of the Exchange Act) with respect to any voting securities of the Company or any of its subsidiaries;
(e)      deposit any securities of the Company or any of its subsidiaries into a voting trust, or subject any securities of the Company or any of its subsidiaries to any agreement or arrangement with respect to the voting of such securities;
(f)      make any public announcement with respect to, or submit a proposal for, or offer (with or without conditions) of any extraordinary transaction involving the Company or any of its subsidiaries or any of their securities or assets;
(g)      seek, or encourage or support any effort, to influence or control the management, board of directors, business, or policies of the Company or any of its subsidiaries, provided that this subclause (g) shall not apply to any actions taken by a representative of the Investor on the Board in his or her capacity as a director or actions taken by the Investor in accordance with agreements between it and the Company;
(h)      encourage or assist any other Person to undertake any of the foregoing actions; or
(i)      take any action that could reasonably be expected to require the Company or any of its subsidiaries to make a public announcement regarding the possibility of any of the events described in this Section 2.
3. Specific Performance . Each party to this Agreement acknowledges and agrees that any breach by either of them of this Agreement shall cause the other party irreparable harm which would not be adequately compensable by money damages. Accordingly, in the event of a breach or threatened breach by a party of any provision of this Agreement, each party shall be entitled to the remedies of specific performance, injunction or other preliminary or equitable relief, without having to prove irreparable harm or actual damages. The foregoing right shall be in addition to such other rights or remedies as may be available to any party for such breach or threatened breach, including but not limited to the recovery of money damages.
4. Amendment and Waiver . No amendment, modification, termination or cancellation of this Agreement shall be effective unless it is in writing signed by the Company and the Investor. No waiver of any of the provisions of this Agreement shall be deemed or shall constitute a waiver of any other provisions hereof (whether or not similar) nor shall such waiver constitute a continuing waiver.




5. Entire Agreement . This Agreement and the documents referenced herein set forth the entire understanding between the parties hereto and supersedes and merges all previous written and oral negotiations, commitments, understandings and agreements relating to the subject matter hereof between the Company and the Investor.
6. Assignment . This Agreement may not be transferred or assigned (whether by operation of law or otherwise) by either party without the prior written consent of the other party.
7. Severability . In case any one or more of the provisions contained in this Agreement is for any reason held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect any other provision of this Agreement, and such invalid, illegal or unenforceable provision shall be reformed and construed so that it will be valid, legal and enforceable to the maximum extent permitted by law.
8. Notices . All notices and other communications hereunder shall be in writing and shall be deemed given when delivered personally or by commercial messenger or courier service to the parties at the following addresses (or at such other address for a party as shall be specified by like notice):
(a) if to the Company, to:
Sequans Communications S.A.
Portes de la Défense, 15-55 Boulevard Charles de Gaulle
92700 Colombes, France
Attention: Georges Karam

with a copy (which shall not constitute notice) to:
Orrick, Herrington and Sutcliffe, LLP
405 Howard Street
San Francisco, California 94105
Attention: Brett Cooper

(b) if to the Investor, to:
Nokomis Capital Master Fund, LP
2305 Cedar Springs Road, Suite 420
Dallas, TX 75201
Attention: Brett Hendrickson


9. Miscellaneous . This Agreement shall be governed, construed and interpreted in accordance with the laws of France, without regard to conflict of law principles that would result in the application of any law other than the law of France. The parties (a) irrevocably and unconditionally submit to the jurisdiction of the courts located in France for the purpose of any suit, action or other proceeding arising out of or based upon this Agreement, (b) agree not to commence any suit, action or other proceeding arising out of or based upon this Agreement except in the courts located in France, and (c) hereby waive, and agree not to assert, by way of motion, as a defense, or otherwise, in any such suit, action or proceeding, any claim that it is not subject personally to the jurisdiction of the above-named courts, that its property is exempt or immune from attachment or execution, that the suit, action or proceeding is brought in an inconvenient forum, that the venue of the suit, action or proceeding is improper or that this Agreement or the subject matter hereof may not be enforced in or by such court. This Agreement may be executed in one or more counterparts, which shall together constitute one agreement.
[Remainder of page left blank]




IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed on the date first set forth above.
SEQUANS COMMUNICATIONS S.A.


By: _/s/ Georges Karam _______________
Name: Georges Karam
Title: Chairman of the Board and CEO

NOKOMIS CAPITAL MASTER FUND, LP


By: __ /s/ Brett Hendrickson ____________
Name: Brett Hendrickson
Title: Portfolio Manager