{"url_path":"/sec/brqsf/10-k/2026/item-15","section_key":"item-15","section_title":"Item 15 CONTROLS AND PROCEDURES**","topic":"sec","document":{"doc_type":"20-F","doc_date":"2026-05-15","source_url":"https://www.sec.gov/Archives/edgar/data/1650575/0001213900-26-057706-index.html","accession_number":"0001213900-26-057706","cik":"0001650575","ticker":"BRQSF","issuer_name":"Borqs Technologies, Inc.","edgar_url":"https://www.sec.gov/Archives/edgar/data/1650575/0001213900-26-057706-index.html","primary_entity_key":"0001650575","primary_entity_name":"Borqs Technologies, Inc."},"word_count":1095,"has_tables":true,"body_markdown":"**ITEM 15. CONTROLS AND PROCEDURES**\n\n \n\n**(a)**\n**Disclosure Controls and Procedures**\n\n \n\nOur Chief Executive Officer\nand our Chief Financial Officer, after evaluating the effectiveness of our “disclosure controls and procedures” (as defined\nin the Securities Exchange Act of 1934 (“Exchange Act”) Rules 13a-15(e) or 15d-15(e)) as of December 31, 2025, as required\nby paragraph (b) of Exchange Act Rules 13a-15 or 15d-15, have concluded that, due to the outstanding material weakness described below,\nour disclosure controls and procedures are ineffective in ensuring that the information required to be disclosed by us in the reports\nthat we file and furnish under the Exchange Act was recorded, processed, summarized and reported, within the periods specified in the\nSEC’s rules and forms, and that the information required to be disclosed by us in the reports that we file or submit under the Exchange\nAct is accumulated and communicated to our management, including our chief executive officer and chief financial officer, to allow timely\ndecisions regarding required disclosure.\n\n \n\n**(b)**\n**Management’s Annual Report on Internal Control over Financial Reporting**\n\n \n\nOur management is responsible\nfor establishing and maintaining adequate internal control over financial reporting. Our internal control over financial reporting is\na process designed under the supervision of our Chief Executive Officer and Chief Financial Officer to provide reasonable assurance regarding\nthe reliability of financial reporting and the preparation of our consolidated financial statements for external reporting purposes in\naccordance with U.S. generally accepted accounting principles.\n\n \n\nManagement assessed the effectiveness\nof our internal control over financial reporting as of December 31, 2025. In making this assessment, management used the framework set\nforth in the report Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway\nCommission, or COSO. The COSO framework summarizes each of the components of a company’s internal control system, including (i)\nthe control environment, (ii) risk assessment, (iii) control activities, (iv) information and communication and (v) monitoring.\n\n \n\nBased on that evaluation,\nour management concluded that these controls were ineffective as of December 31, 2025. In the years ended December 31, 2025 and 2024,\nwe did not maintain sufficient controls over financial reporting processes due to an insufficient number of financial reporting personnel\nwith an appropriate level of knowledge and experience in U.S. GAAP and SEC reporting requirements and financial reporting programs to\nproperly address complex U.S. GAAP accounting issues and to prepare and review our consolidated financial statements and related disclosures\nto fulfill U.S. GAAP and SEC financial reporting requirements. This deficiency constitutes as a material weakness of our internal control\nover financial reporting.\n\n \n\n70 \n\n \n\n \n\n**(c)**\n**Changes in Internal Control over Financial Reporting**\n\n \n\nWe identified one material\nweakness in internal control over financial reporting during our preparation of the financial statements for the fiscal year ended December\n31, 2025 which was due to an insufficient number of accounting and financial reporting personnel with the requisite knowledge and experience\nin the application of U.S. GAAP and SEC requirements for financial reporting programs. The Company sought professionals to join our accounting\nteam for U.S. GAAP and SEC financial reporting related matters. We have taken multiple steps to implement measures designed to improve\nour internal control over financial reporting to remediate the material weakness including hiring of a financial manager with US GAAP\nand SEC reporting experiences to help set up workflows for the strengthening of internal controls and preserving accuracy in preparing\nconsolidated financial statements, and also since December 2018 to May 2024, our Chairperson of the Audit Committee, a member of the Washington\nState board of Accountancy since the year 1989, has been regularly providing the Company with advice on procedures and interpretation\nof US GAAP rules and regulations.\n\n \n\nWe plan to take measures to\nfurther strengthen our internal control over financial reporting, including (i) continuing to hire additional qualified professionals\nwith experience in U.S. GAAP accounting and SEC reporting to lead accounting and financial reporting matters; (ii) organizing regular\ntraining for our accounting staffs, especially the trainings related to U.S. GAAP and SEC reporting requirements; and (iii) establishing\neffective oversight and clarifying reporting requirements for non-recurring and complex transactions to ensure consolidated financial\nstatements and related disclosures are accurate, complete and in compliance with U.S. GAAP and SEC reporting requirements. We have adopted\nthe following guidelines and established the following committees of the Board to implement measures to remediate our internal control\ndeficiencies in order to meet the requirements imposed by Section 404 of the Sarbanes Oxley Act.\n\n \n\n \n●\nAdopted an Anti-corruption Policy Supplement - The Company has adopted its Foreign Corrupt Practices Charter (the “FCPA Charter”) on August 18, 2017, and in December 2019 adopted a Global Anti-Corruption Policy Supplement to augment the FCPA Charter for addressing how Company personnel are to conduct themselves when in direct or indirect contact with government officials, as well as provide additional specific information about the anti-corruption laws in the U.S. and general guidance to compliance with anti-corruption laws.\n\n \n\n \n●\nAdopted an Anti-Money Laundering and Identity Verification Policy (the “AML Policy”) - It is the Audit Committee’s responsibility to ensure that the Company has appropriate procedures for the receipt, retention, and treatment regarding the Company’s Anti-Money Laundering Policies and Identity Verification Process matters. The AML Policy is intended to fulfill these responsibilities and to ensure that any such AML concerns are promptly and effectively addressed.\n\n \n\n \n●\nAdopted a Related Party Transaction Policy - The Related Party Transaction Policy is to be used by the Company and all of its subsidiaries to ensure that all related person transactions shall be subject to review and oversight in accordance with the procedures as set forth in the policy.\n\n \n\n \n●\nEstablished the Enterprise Risk Oversight Committee of the Board (the “Risk & Oversight Committee”) - for carrying out the responsibility of overseeing the effectiveness of risk management policies, procedures and practices implemented by management of the Corporation with respect to strategic, operational, environmental, health and safety, human resources, legal and compliance and other risks faced by the Company.\n\n \n\n \n●\nEstablished the Risk and Information Security Committee of the Board (the “Risk & Security Committee”) - to assist the Board in fulfilling its oversight responsibilities by overseeing and reviewing: the Company’s internal controls to protect the Company’s information and proprietary assets, and the Company’s risk governance structure, including the Enterprise Risk Management framework, risk policies and risk tolerances.\n\n \n\nOther than as described above,\nthere were no changes in our internal controls over financial reporting that occurred during the year ended December 31, 2025, that have\nmaterially affected, or are reasonably likely to materially affect, our internal control over financial reporting.\n\n \n\n71"}