Financial Performance - Total revenues for the three months ended March 31, 2023, were $0.5 million, a decrease of $1.6 million, or 76%, compared to $2.1 million for the same period in 2022[243]. - Cost of goods sold for the three months ended March 31, 2023, was $0.3 million, down $1.2 million, or 80%, from $1.5 million for the same period in 2022[244]. - Gross profit for the three months ended March 31, 2023, was $0.2 million, compared to $0.6 million for the same period in 2022, reflecting a decrease in gross profit margin of $0.4 million, or 68%[221]. - Research and development expense for the three months ended March 31, 2023, was $0.1 million, a decrease of $1.1 million from $1.2 million for the same period in 2022, primarily due to liquidity challenges[222]. - General and administrative expense for the three months ended March 31, 2023, was $2.2 million, down $3.6 million from $5.8 million for the same period in 2022, due to cost reductions[224]. - The company reported a net loss from continuing operations of $4.9 million for the three months ended March 31, 2023, compared to a net income of $0.2 million for the same period in 2022[229]. - The company recognized an impairment expense of $0.9 million related to goodwill and intangible assets for the three months ended March 31, 2023[249]. - The company reported a decrease in depreciation and amortization from $0.7 million in Q1 2022 to $0.1 million in Q1 2023, primarily due to the sale of the Tucson Building[248]. Compliance and Regulatory Issues - The company regained compliance with Nasdaq's minimum closing bid price requirement of $1.00 on February 27, 2023, after implementing a 1-for-100 reverse stock split on February 10, 2023[182]. - The company reported stockholders' equity of less than $2,500,000 in its Annual Report for the fiscal year ended December 31, 2022, which does not meet Nasdaq's minimum requirement[185]. - The company has been provided a compliance period until December 18, 2023, to regain compliance with Nasdaq's Minimum Market Value of Publicly Held Shares Requirement[184]. - The company intends to present its plan to regain compliance with Nasdaq listing criteria following a notice of non-compliance due to the failure to file its Quarterly Report on Form 10-Q for the quarter ended September 30, 2023[211]. - The company's stockholders' equity was reported at ($15,001,000) as of December 31, 2022, failing to meet Nasdaq's minimum requirement of $2,500,000, which subjects the company's securities to potential delisting[262]. Cash Flow and Liquidity - As of March 31, 2023, the company had $3.1 million in cash, an increase of $1.2 million from $1.9 million on December 31, 2022[231]. - For the three months ended March 31, 2023, the company recorded cash flows provided by operating activities of $589,000, a significant improvement compared to cash used in operating activities of $8.5 million for the same period in 2022[253]. - The company reported a net increase in cash of $1.2 million for the three months ended March 31, 2023, compared to a net decrease of $1.5 million in the same period of 2022[253]. - The company has an accumulated deficit of $302.5 million and a working capital deficit of $16.3 million as of March 31, 2023, raising substantial doubt about its ability to continue as a going concern[233]. - The company indicated ongoing substantial doubt about its ability to continue as a going concern without additional financing[252]. - As of March 31, 2023, the company had undiscounted obligations related to the payment of indebtedness, indicating potential liquidity challenges[251]. - The company accrued a default judgment of $145,917 as of March 31, 2023, with post-judgment interest at 7%[260]. Business Strategy and Operations - The company is focusing on expanding its worldwide customer base and international operations through agreements with third-party resellers and distributors[187]. - The company is primarily focused on the North American telecom infrastructure and service market, positioning itself as a key U.S. provider of telecommunications equipment and services[200]. - The company expects sales and marketing expenses to continue to increase in absolute dollars as it expands its sales, marketing, service, and product management organization[189]. - The company expects sales and marketing expenses to increase modestly as liquidity improves and resources are expanded to focus on revenue enhancement[223]. - The company has installed its microwave radios in over 330,000 locations across more than 100 countries worldwide since 2012[204]. - The company acquired Virtual NetCom, LLC in July 2020, which focuses on edge compute wireless telecommunications technology[178]. - The company is developing processes to advance silicon photonic devices, aiming to increase computing bandwidth and reduce operating costs[203]. Internal Controls and Governance - The company has not effectively segregated certain accounting duties and lacks documented internal controls, which raises concerns about its financial reporting[257].
COMSovereign (COMS) - 2023 Q1 - Quarterly Report