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COMS - ComSovereign Holding Corp
$1.69
-0.09(-5.34%)8:00:00 PM 5/26/2023
COMSovereign Holding Corp. (Nasdaq: COMS) has assembled a portfolio of communications technology companies that enhance connectivity across the entire data transmission spectrum. Through strategic acquisitions and organic research and development efforts, COMSovereign has become a U.S.-based communications provider able to provide 4G LTE Advanced and 5G-NR telecom solutions to network operators and enterprises.

Financials

Quarterly financials
(USD)Sep 2022Q/Q
Revenue3.8MM+82%
Gross Profit2MM-324%
Cost Of Revenue--
Operating Income-689K-
Operating Expenses2.7MM-93%
Net Income-2MM-95%
R&D74K-86%
G&A2.7MM-50%
Marketing27K-
Amortization200K-85%

Highlights of Management Discussion and Risk Factors in 10-K/10-Q filling

Positive
1.
We believe we are in a unique position to rapidly increase our near-term domestic sales as we are among the few U.S. based providers of telecommunications equipment and services.  
2.
We believe this broad expertise in a wide range of advanced technologies, methodologies, and processes enhances our innovation, design and development capabilities, and has enabled us, and we believe will continue to enable us, to develop and introduce future-generation communications and computing technologies.
3.
We believe our novel approach will allow us to overcome the limitations of current SiP optical modulators, dramatically increase computing bandwidth, and reduce drive power while offering lower operating costs.  
4.
SKS’s flagship HoverMast line of quadrotor-tethered drones feature uninterruptible ground-based power, fiber optic communications for cyber immunity, and the ability to operate in GPS-denied environments while delivering dramatically improved situational awareness and communications capabilities to users.
5.
Its innovative technologies include fiber optic tethers that enable secure, high-capacity communications, including support for commercial 4G and 5G wireless networks.
6.
By providing one of the industry’s lowest cost of ownership, RF Engineering has continued to innovate and expand, and it recently announced the industry’s first Universal Licensed Microwave Antenna.
7.
Our recently-acquired HoverMast line of quadrotor-tethered drones feature uninterruptible ground-based power, fiber optic communications for cyber immunity, and the ability to operate in GPS-denied environments while delivering dramatically-improved situational awareness and communications capabilities to users.  
8.
Fastback’s advanced IBR products allow operators to economically add capacity and density to their existing cellular networks and expand service coverage density with small cells.
9.
Supporting frequencies from (6-42 GHz), customers can now reduce sparing costs and safely future-proof their networks by leveraging this new Universal plug and play architecture.
10.
We have assembled a portfolio of communications and portable infrastructure technologies, capabilities and products that enable the upgrading of latent 3G networks to 4G and 4G-LTE networks and will facilitate the rapid roll out of the 5G and 6G networks of the future.
11.
While we compete globally on the basis of our innovative technology, the breadth of our product offerings, our high-quality cost-effective customer solutions, and the scale of our global customer base and distribution, our primary focus is on the North American telecom infrastructure and service market.
12.
The increase of $1.1 million, or 16%, primarily consisted of increased sales of mobile network backhaul products, the sale of our aerostat products and accessories and one-time sales of inventory.  
13.
Our solutions enable service providers, government agencies, enterprises and other organizations to meet their increasing bandwidth requirements rapidly and affordably.
14.
33     We will continue to pursue the actions outlined above, as well as work towards increasing revenue and operating cash flows to meet our future liquidity requirements.
15.
While costs have recently been reduced due to the Company’s liquidity challenges, management expects that these costs will increase modestly as liquidity improves and the Company expands resources somewhat in order to focus on revenue enhancement.  
16.
While costs have recently been reduced due to the Company’s liquidity challenges, management expects that these costs will increase modestly as liquidity improves and the Company expands resources somewhat in order to focus on revenue enhancement.
17.
While costs have recently been reduced due to the Company’s liquidity challenges, management expects that these costs will increase modestly as liquidity improves and the Company expands resources somewhat in order to focus on revenue enhancement.  
18.
We are also developing processes that we believe will significantly advance the state-of-the-art in silicon photonic (“SiP”) devices for use in advanced data interconnects, communication networks and computing systems.
Negative
1.
The decrease in gross profit margin of $2.1 million, or 58%, was driven primarily by the one-time sale of DragonWave inventory of approximately $1.8 million at a loss of $1.6 million due to the challenges related to the Company’s liquidity.
2.
Loss on Sales of Innovation Digital and DragonWave-X Canada Assets  
3.
The decrease in gross profit margin of $0.2 million, or 10%, was driven primarily by products that were lower margin during the current quarter as compared to the corresponding period in fiscal year 2021 and increases in purchase price variances due to increased prices from manufacturing and logistical suppliers, resulting from current macro supply chain constraints.  
4.
As of June 30, 2022, due to a sustained decline in the Company’s market capitalization, the Company recognized $11.6 million of impairment expense.
5.
Our fiscal operating results, accumulated deficit and working capital, among other factors, raise substantial doubt about our ability to continue as a going concern.
6.
In addition, it was impacted by products that were lower margin during the nine months as compared to the corresponding period in fiscal year 2021, and increases in purchase price variances due to increased prices from manufacturing and logistical suppliers resulting from current macro supply chain constraints.  
7.
In order to conserve cash, SKS idled the employees in June 2022.
8.
Loss from Continuing Operations  
9.
In order to conserve cash, VEO idled the employees in June 2022.  
10.
The decrease of $0.3 million primarily consisted of decreases in sales costs and cutbacks due to the Company’s liquidity challenges.  
11.
The decrease of $0.3 million primarily consisted of decreases in sales costs and cutbacks due to the Company’s liquidity challenges.  
12.
If we are not able to obtain additional financing on a timely basis, we may have to delay vendor payments and/or initiate cost reductions, which would have a material adverse effect on our business, financial condition and results of operations, and ultimately, we could be forced to discontinue operations, liquidate assets and/or seek reorganization under the U.S. bankruptcy code.  
13.
In order to conserve cash, SAGUNA idled the employees in June 2022.  
14.
●$7.5 million impairment of intangibles from re-calendarization of revenue into later periods; and ●$7.2 million impairment of goodwill from a decrease in the Company’s market capitalization.  
The management discussion contents above are extracted from this specific SEC Edgar 10-Q filling, with report date as 2022-09-30 and filed on 2023-02-24. The process is fully automated and without human validation. Although we make every effort getting the relevant information, please be advised that We make no representation or warranties of any kind about completeness, accuracy, reliability, suitability or availability of the information exacted from Edgar 10-K/10-Q filings.
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