Acquisitions and Business Expansion - The company reported a total purchase price of approximately $80 million for the acquisition of ComSovereign Corp. on November 27, 2019[155]. - DragonWave, acquired in April 2019, has installed microwave radios in over 330,000 locations across more than 100 countries, making it the second largest provider in North America as of December 2019[157]. - The company has engaged in multiple acquisitions over the past three years to expand its service offerings and geographic reach, including VNC and Fastback Networks[158][159]. Financial Performance - Total revenues for the three months ended March 31, 2022, were $3.2 million, an increase of 55% compared to $2.1 million for the same period in 2021[187]. - Cost of goods sold for the three months ended March 31, 2022, was $2.2 million, representing a 104% increase from $1.1 million in the same period in 2021[189]. - Gross profit for the three months ended March 31, 2022, was $1.0 million, with a gross profit margin of 32%, down from 49% in the same period in 2021[190]. - Research and development expenses increased to $1.2 million for the three months ended March 31, 2022, compared to $0.5 million in the same period in 2021[191]. - General and administrative expenses decreased to $6.2 million for the three months ended March 31, 2022, from $7.1 million in the same period in 2021[193]. - The company reported a net loss of $1.2 million for the three months ended March 31, 2022, compared to a net loss of $16.2 million for the same period in 2021[197]. - The company reported a net operating loss of $1.2 million for the three months ended March 31, 2022, compared to a net operating loss of $16.2 million for the same period in 2021[210][211]. Cash Flow and Liquidity - As of March 31, 2022, the company had $0.5 million in cash, down from $1.9 million on December 31, 2021[199]. - Working capital improved to $8.5 million as of March 31, 2022, compared to negative working capital of $3.5 million as of December 31, 2021[200]. - The company recognized a gain on the sale of assets of $8.4 million for the three months ended March 31, 2022, from the sale of the Tucson Building for $15.8 million[195]. - For the three months ended March 31, 2022, net cash used in operating activities was $8.7 million, a decrease from $14.2 million for the same period in 2021[210][211]. - Net cash provided by investing activities for the three months ended March 31, 2022, was $14.9 million, primarily from proceeds of $15.1 million from a building sale[212]. - Net cash used in financing activities for the three months ended March 31, 2022, was $7.6 million, all attributed to debt repayment[214]. Compliance and Future Outlook - The company is not in compliance with Nasdaq Listing Rule 5550(a)(2) due to the price of its common stock falling below the $1.00 minimum closing bid price requirement[169]. - The company was granted continued listing on The Nasdaq Capital Market, with conditions to regain compliance by February 2023[170]. - The company has a substantial doubt about its ability to continue as a going concern due to limited cash availability, currently only able to operate on a month-to-month basis without raising additional capital[205]. - Future capital requirements will depend on profitability and operational costs, with potential dilution of current stockholders' ownership if additional funding is needed[203]. - The company is exploring opportunities with third parties for additional capital but has not entered into any agreements yet[205]. - The company may need to delay vendor payments or initiate cost reductions if additional financing is not obtained in a timely manner, which could adversely affect its operations[206]. - The company continues to pursue actions to increase revenue and operating cash flows to meet future liquidity requirements[206]. Operational Capabilities - The company has developed the world's first fully-virtualized 5G core network on a microcomputer the size of a credit card, enabling edge-based application hosting[151]. - The company is focusing on advancing silicon photonic devices to significantly increase computing bandwidth and reduce operating costs[153]. - The company’s CORE business includes network hardware and software products, while its NONCORE business focuses on drone technology[155][166]. - The company’s engineering and management teams possess extensive experience in optical systems, digital signal processing, and network planning, enhancing its innovation capabilities[154]. - The company is positioned to rapidly increase domestic sales as one of the few U.S.-based providers of telecommunications equipment and services[147]. Asset Management - There were no off-balance sheet arrangements that could materially affect the company's financial condition[216]. - The company may need to record future impairments of long-lived assets and goodwill based on future assessments due to capital resource constraints[219].
COMSovereign (COMS) - 2022 Q1 - Quarterly Report