Document and Entity Information
Document and Entity Information | 9 Months Ended |
Sep. 30, 2020 | |
Document and Entity Information [Abstract] | |
Entity Registrant Name | ComSovereign Holding Corp. |
Entity Central Index Key | 0001178727 |
Amendment Flag | true |
Amendment Description | Amendment No. 5 |
Document Type | S-1/A |
Entity Filer Category | Non-accelerated Filer |
Entity Small Business | true |
Entity Emerging Growth Company | false |
Entity Incorporation State Country Code | NV |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheet - USD ($) | Sep. 30, 2020 | Dec. 31, 2019 |
Current Assets | ||
Cash | $ 505,053 | $ 812,452 |
Accounts receivable, net | 893,407 | 2,168,659 |
Receivables - related party | 1,595 | |
Inventory, net | 5,319,590 | 4,671,396 |
Prepaid expenses | 589,387 | 916,729 |
Other current assets | 96,168 | 94,538 |
Total Current Assets | 7,403,605 | 8,665,369 |
Property and equipment, net | 2,233,089 | 1,458,106 |
Operating lease right-of-use assets | 2,891,113 | 2,199,682 |
Finance lease right-of-use-assets | 73,576 | |
Intangible assets, net | 44,364,266 | 51,277,482 |
Goodwill | 75,538,127 | 56,386,796 |
Other assets - long term | 57,487 | |
Total Assets | 132,561,263 | 119,987,435 |
Current Liabilities | ||
Accounts payable | 4,776,805 | 2,245,704 |
Accrued interest | 1,129,692 | 306,445 |
Accrued liabilities | 1,803,640 | 1,383,008 |
Accrued liabilities - related party | 366,601 | 461,254 |
Accrued payroll | 2,543,006 | 1,050,703 |
Contract liabilities, current | 199,488 | 149,923 |
Accrued warranty liability | 181,797 | 195,138 |
Operating lease liabilities, current | 659,789 | 467,979 |
Finance lease liabilities, current | 55,046 | |
Line of credit | 2,000,000 | |
Notes payable - related party | 1,542,953 | 1,492,953 |
Current portion of long-term debt, net of unamortized discounts and debt issuance costs | 13,123,317 | 5,389,492 |
Total Current Liabilities | 26,382,134 | 15,142,599 |
Contract liabilities - long term | 110,970 | 152,892 |
Operating lease liabilities - long term | 2,360,575 | 1,744,569 |
Finance lease liabilities - long term | 14,296 | |
Total Liabilities | 28,867,975 | 17,040,060 |
COMMITMENTS AND CONTINGENCIES (Note 21) | ||
STOCKHOLDERS' EQUITY | ||
Preferred stock, $0.0001 par value, 100,000,000 shares authorized, no shares issued and outstanding as of September 30, 2020 and December 31, 2019, respectively | ||
Common stock, $0.0001 par value, 300,000,000 shares authorized, 143,817,614 and 128,326,243 shares issued and outstanding as of September 30, 2020 and December 31, 2019, respectively | 14,382 | 12,833 |
Additional paid-in capital | 156,196,213 | 130,553,180 |
Accumulated deficit | (52,467,307) | (27,545,255) |
Accumulated other comprehensive loss | (23,383) | |
Treasury stock, at cost, 100,000 shares as of September 30, 2020 and December 31, 2019, respectively | (50,000) | (50,000) |
Total Stockholders' Equity | 103,693,288 | 102,947,375 |
Total Liabilities and Stockholders' Equity | $ 132,561,263 | $ 119,987,435 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheet (Parenthetical) - $ / shares | Sep. 30, 2020 | Dec. 31, 2019 |
Statement of Financial Position [Abstract] | ||
Preferred stock, par value | $ 0.0001 | $ 0.0001 |
Preferred stock, shares authorized | 100,000,000 | 100,000,000 |
Preferred stock, shares issued | ||
Preferred stock, shares outstanding | ||
Common stock, par value | $ 0.0001 | $ 0.0001 |
Common stock, shares authorized | 300,000,000 | 300,000,000 |
Common stock, shares issued | 143,817,614 | 128,326,243 |
Common stock, shares outstanding | 143,817,614 | 128,326,243 |
Treasury stock, shares | 100,000 | 100,000 |
Condensed Consolidated Statemen
Condensed Consolidated Statement of Operations (Unaudited) - USD ($) | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | Dec. 31, 2019 | |||
Income Statement [Abstract] | |||||||
Revenue | $ 2,018,363 | $ 2,573,431 | $ 7,513,660 | $ 3,576,342 | $ 4,712,212 | ||
Cost of Goods Sold | 859,661 | 1,130,750 | 3,473,293 | 2,019,020 | 2,990,716 | [1] | |
Gross Profit | 1,158,702 | 1,442,681 | 4,040,367 | 1,557,322 | 1,721,496 | ||
Operating Expenses | |||||||
Research and development | [1] | 561,942 | 118,635 | 1,263,427 | 179,599 | 174,257 | |
Sales and marketing | [1] | 898 | 387 | 30,523 | 4,202 | 6,222 | |
General and administrative | [1] | 4,471,121 | 4,634,711 | 13,151,442 | 9,027,646 | 14,325,078 | |
Depreciation and amortization | 2,908,572 | 2,440,581 | 8,653,635 | 4,918,800 | 7,567,184 | ||
Gain on sale of assets | (128,749) | (663) | (325,838) | (98,410) | |||
Total Operating Expenses | 7,942,533 | 7,065,565 | 23,098,364 | 13,804,409 | 21,974,331 | ||
Net Operating Loss | (6,783,831) | (5,622,884) | (19,057,997) | (12,247,087) | (20,252,835) | ||
Other Income (Expense) | |||||||
Interest expense | (3,349,964) | (1,598,732) | (5,707,840) | (1,961,334) | (8,399,663) | ||
Other income (expense) | (128,754) | 95,266 | (128,778) | 95,266 | (147,430) | ||
Loss on extinguishment of debt | (21,882) | (21,882) | (434,774) | ||||
Foreign currency transaction gain (loss) | (46,587) | (133,893) | (6,799) | 108,333 | 191,547 | ||
Loss on investment | (24) | (24) | |||||
Interest income | 213 | 7 | 1,268 | 7 | |||
Loss on conversion of debt | (2,640,000) | ||||||
Total Other Expenses | (3,546,998) | (1,637,352) | (5,864,055) | (1,757,728) | (11,430,320) | ||
Net Loss Before Income Taxes | (10,330,829) | (7,260,236) | (24,922,052) | (14,004,815) | (31,683,155) | ||
Deferred Tax Benefit | 1,815,059 | 3,501,204 | 4,137,900 | ||||
Net Loss | $ (10,330,829) | $ (5,445,177) | $ (24,922,052) | $ (10,503,611) | $ (27,545,255) | ||
Loss per common share: | |||||||
Basic | $ (0.08) | $ (0.12) | $ (0.19) | $ (0.27) | $ (0.57) | ||
Diluted | $ (0.08) | $ (0.12) | $ (0.19) | $ (0.27) | $ (0.57) | ||
Weighted-average shares outstanding: | |||||||
Basic | 132,649,621 | 43,953,888 | 132,466,532 | 39,103,721 | 48,714,099 | ||
Diluted | 132,649,621 | 43,953,888 | 132,466,532 | 39,103,721 | 48,714,099 | ||
Loss per common share: | |||||||
Basic | $ (0.23) | $ (0.37) | $ (0.56) | $ (0.81) | $ (1.70) | ||
Diluted | $ (0.23) | $ (0.37) | $ (0.56) | $ (0.81) | $ (1.70) | ||
Weighted-average shares outstanding: | |||||||
Basic | 44,216,541 | 14,651,296 | 44,155,511 | 13,034,574 | 16,238,033 | ||
Diluted | 44,216,541 | 14,651,296 | 44,155,511 | 13,034,574 | 16,238,033 | ||
[1] | These are exclusive of depreciation and amortization |
Condensed Consolidated Statem_2
Condensed Consolidated Statement of Comprehensive Loss (Unaudited) - USD ($) | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | Dec. 31, 2019 | |
Statement of Comprehensive Income [Abstract] | |||||
Net Loss | $ (10,330,829) | $ (5,445,177) | $ (24,922,052) | $ (10,503,611) | $ (27,545,255) |
Other Comprehensive Income (Loss): | |||||
Foreign currency translation adjustment | 21,699 | 23,383 | (21,699) | (23,383) | |
Total Comprehensive Loss | $ (10,309,130) | $ (5,445,177) | $ (24,898,699) | $ (10,525,310) | $ (27,568,638) |
Condensed Consolidated Statem_3
Condensed Consolidated Statement of Stockholders' Equity - USD ($) | Preferred Stock | Common Stock | Additional Paid-In Capital | Accumulated Other Comprehensive Loss | Treasury Shares | Accumulated Deficit | Total |
Beginning balance at Jan. 09, 2019 | |||||||
Beginning balance, shares at Jan. 09, 2019 | |||||||
Issuance of founder shares at inception | $ 2,789 | 2,789 | |||||
Issuance of founder shares at inception, shares | 27,890,000 | ||||||
Issuance of preferred stock for VEO, Inc. acquisition | $ 150 | 13,214,850 | 13,215,000 | ||||
Issuance of preferred stock for VEO, Inc. acquisition, shares | 1,500,000 | ||||||
Issuance of preferred stock for InduraPower, Inc. acquisition | $ 80 | 7,047,920 | 7,048,000 | ||||
Issuance of preferred stock for InduraPower, Inc. acquisition, shares | 800,000 | ||||||
Issuance of preferred stock for Silver Bullet Technology, Inc. acquisition | $ 30 | $ 2,642,970 | $ 2,643,000 | ||||
Issuance of preferred stock for Silver Bullet Technology, Inc. acquisition, shares | 300,000 | ||||||
Common stock issued for services, shares | 8 | 351,992 | 352,000 | ||||
Share-based compensation | $ 80,000 | ||||||
Net loss | $ (770,677) | $ (770,677) | |||||
Ending balance at Mar. 31, 2019 | $ 260 | $ 2,797 | 23,257,732 | (770,677) | 22,490,112 | ||
Ending balance, shares at Mar. 31, 2019 | 2,600,000 | 27,970,000 | |||||
Beginning balance at Jan. 09, 2019 | |||||||
Beginning balance, shares at Jan. 09, 2019 | |||||||
Issuance of warrants for debt issue costs | |||||||
Net loss | (10,503,611) | ||||||
Ending balance at Sep. 30, 2019 | $ 260 | $ 4,171 | 87,482,595 | (21,699) | (12,318,670) | 75,146,657 | |
Ending balance, shares at Sep. 30, 2019 | 2,600,000 | 41,707,149 | |||||
Beginning balance at Jan. 09, 2019 | |||||||
Beginning balance, shares at Jan. 09, 2019 | |||||||
Issuance of founder shares at inception | $ 2,789 | 2,789 | |||||
Issuance of founder shares at inception, shares | 27,890,000 | ||||||
Issuance of preferred stock for VEO, Inc. acquisition | $ 150 | 13,214,850 | 13,215,000 | ||||
Issuance of preferred stock for VEO, Inc. acquisition, shares | 1,500,000 | ||||||
Issuance of preferred stock for InduraPower, Inc. acquisition | $ 80 | 7,047,920 | 7,048,000 | ||||
Issuance of preferred stock for InduraPower, Inc. acquisition, shares | 800,000 | ||||||
Issuance of preferred stock for Silver Bullet Technology, Inc. acquisition | $ 30 | 2,642,970 | 2,643,000 | ||||
Issuance of preferred stock for Silver Bullet Technology, Inc. acquisition, shares | 300,000 | ||||||
Issuance of common stock for DragonWave-X LLC and Lextrum, Inc. acquisitions | $ 1,324 | 58,242,132 | 58,243,456 | ||||
Issuance of common stock for DragonWave-X LLC and Lextrum, Inc. acquisitions, shares | 13,237,149 | ||||||
Issuance of common stock for cash | $ 50 | 4,950 | 5,000 | ||||
Issuance of common stock for cash, shares | 500,000 | ||||||
Issuance of common stock for exercise of warrants | $ 337 | 33,388 | 33,725 | ||||
Issuance of common stock for exercise of warrants, shares | 3,372,500 | ||||||
Common stock issued for conversion of senior convertible debentures | $ 110 | 3,752,388 | 3,752,498 | ||||
Common stock issued for conversion of senior convertible debentures, shares | 1,100,000 | ||||||
Common stock issued in debt conversion | $ 16 | 703,984 | 704,000 | ||||
Common stock issued in debt conversion, shares | 160,000 | ||||||
Warrants issued for services | 4,074,330 | 4,074,330 | |||||
Issuance of warrants in conjunction with debt agreements | 3,138,667 | 3,138,667 | |||||
Issuance of common stock for debt issue costs | $ 123 | 7,805,489 | 7,805,612 | ||||
Issuance of common stock for debt issue costs, shares | 1,235,140 | ||||||
Common stock issued for services | $ 12 | 525,290 | 525,302 | ||||
Common stock issued for services, shares | 120,000 | ||||||
Beneficial conversion feature | 855,549 | 855,549 | |||||
Share-based compensation | $ 5 | 258,256 | 258,261 | ||||
Share-based compensation, shares | 45,660 | ||||||
Conversion of preferred stock | $ (260) | $ 260 | |||||
Conversion of preferred stock, shares | (2,600,000) | 2,600,000 | |||||
Conversion of ComSovereign Corp. stock at 0.8902 into Drone Aviation Holding Corp. stock | $ 4,474 | (4,474) | |||||
Conversion of ComSovereign Corp. stock at 0.8902 into Drone Aviation Holding Corp. stock, shares | 44,739,551 | ||||||
Merger with Drone Aviation Holding Corp. | $ 3,333 | 28,257,491 | (50,000) | 28,210,824 | |||
Merger with Drone Aviation Holding Corp., shares | 33,326,243 | ||||||
Net loss | (27,545,255) | (27,545,255) | |||||
Other comprehensive loss | (23,383) | (23,383) | |||||
Ending balance at Dec. 31, 2019 | $ 12,833 | 130,553,180 | (23,383) | (50,000) | (27,545,255) | 102,947,375 | |
Ending balance, shares at Dec. 31, 2019 | 128,326,243 | ||||||
Beginning balance at Mar. 31, 2019 | $ 260 | $ 2,797 | 23,257,732 | (770,677) | 22,490,112 | ||
Beginning balance, shares at Mar. 31, 2019 | 2,600,000 | 27,970,000 | |||||
Issuance of common stock for DragonWave-X LLC and Lextrum, Inc. acquisitions | $ 1,324 | 58,242,131 | 58,243,455 | ||||
Issuance of common stock for DragonWave-X LLC and Lextrum, Inc. acquisitions, shares | 13,237,149 | ||||||
Foreign currency translation adjustment | (21,699) | (21,699) | |||||
Net loss | (4,287,757) | (4,287,757) | |||||
Ending balance at Jun. 30, 2019 | $ 260 | $ 4,121 | 81,499,863 | (21,699) | (5,058,434) | 76,424,111 | |
Ending balance, shares at Jun. 30, 2019 | 2,600,000 | 41,207,149 | |||||
Issuance of common stock for cash | $ 50 | 4,950 | 5,000 | ||||
Issuance of common stock for cash, shares | 500,000 | ||||||
Issuance of warrants in conjunction with debt agreements | 2,927,232 | 2,927,232 | |||||
Issuance of common stock for debt issue costs | 2,195,000 | 2,195,000 | |||||
Issuance of common stock for debt issue costs, shares | |||||||
Beneficial conversion feature | 855,550 | 855,550 | |||||
Net loss | (7,260,236) | (5,445,177) | |||||
Ending balance at Sep. 30, 2019 | $ 260 | $ 4,171 | 87,482,595 | (21,699) | (12,318,670) | 75,146,657 | |
Ending balance, shares at Sep. 30, 2019 | 2,600,000 | 41,707,149 | |||||
Beginning balance at Dec. 31, 2019 | $ 12,833 | 130,553,180 | (23,383) | (50,000) | (27,545,255) | 102,947,375 | |
Beginning balance, shares at Dec. 31, 2019 | 128,326,243 | ||||||
Issuance of common stock for settlement of accounts payable | $ 17 | 193,143 | 193,160 | ||||
Issuance of common stock for settlement of accounts payable, shares | 165,095 | ||||||
Issuance of common stock for debt issue costs | $ 5 | 56,995 | 57,000 | ||||
Issuance of common stock for debt issue costs, shares | 50,000 | ||||||
Foreign currency translation adjustment | 1,684 | 1,684 | |||||
Net loss | (7,025,538) | (7,025,538) | |||||
Ending balance at Mar. 31, 2020 | $ 12,855 | 130,803,318 | (21,699) | (50,000) | (34,570,793) | 96,173,681 | |
Ending balance, shares at Mar. 31, 2020 | 128,541,338 | ||||||
Beginning balance at Dec. 31, 2019 | $ 12,833 | 130,553,180 | (23,383) | (50,000) | (27,545,255) | 102,947,375 | |
Beginning balance, shares at Dec. 31, 2019 | 128,326,243 | ||||||
Issuance of warrants for debt issue costs | 200 | ||||||
Net loss | (24,922,052) | ||||||
Ending balance at Sep. 30, 2020 | $ 14,382 | 156,196,213 | (50,000) | (52,467,307) | 103,693,288 | ||
Ending balance, shares at Sep. 30, 2020 | 143,817,614 | ||||||
Beginning balance at Mar. 31, 2020 | $ 12,855 | 130,803,318 | (21,699) | (50,000) | (34,570,793) | 96,173,681 | |
Beginning balance, shares at Mar. 31, 2020 | 128,541,338 | ||||||
Issuance of common stock for exercise of warrants | $ 28 | 2,807 | 2,835 | ||||
Issuance of common stock for exercise of warrants, shares | 283,530 | ||||||
Issuance of common stock for payment of accrued interest | $ 2 | 38,362 | 38,364 | ||||
Issuance of common stock for payment of accrued interest, shares | 21,196 | ||||||
Issuance of warrants in conjunction with debt agreements | 44,323 | 44,323 | |||||
Beneficial conversion feature | 68,654 | 68,654 | |||||
Net loss | (7,565,685) | (7,565,685) | |||||
Ending balance at Jun. 30, 2020 | $ 12,885 | 130,957,464 | (21,699) | (50,000) | (42,136,478) | 88,762,172 | |
Ending balance, shares at Jun. 30, 2020 | 128,846,064 | ||||||
Beginning balance at May. 31, 2020 | $ 12,885 | 130,957,464 | (21,699) | (50,000) | (42,136,478) | 88,762,172 | |
Beginning balance, shares at May. 31, 2020 | 128,846,064 | ||||||
Issuance of common stock for Virtual Network Communications Inc. acquisition | $ 1,174 | 12,676,093 | 12,677,267 | ||||
Issuance of common stock for Virtual Network Communications Inc. acquisition, shares | 11,738,210 | ||||||
Issuance of options for Virtual Network Communications Inc. acquisition | 2,261,275 | 2,261,275 | |||||
Issuance of options for Virtual Network Communications Inc. acquisition, shares | |||||||
Issuance of warrants for Virtual Network Communications Inc. acquisition | 1,646,471 | 1,646,471 | |||||
Issuance of warrants for Virtual Network Communications Inc. acquisition, shares | |||||||
Issuance of warrants in conjunction with debt agreements | 149,448 | 149,448 | |||||
Issuance of common stock for debt issue costs | $ 40 | 1,339,960 | 1,340,000 | ||||
Issuance of common stock for debt issue costs, shares | 400,000 | ||||||
Issuance of warrants for debt issue costs | 103,955 | 103,955 | |||||
Beneficial conversion feature | 567,345 | 567,345 | |||||
Issuance of common stock for extinguishment of debt and interest | $ 61 | 2,539,672 | 2,539,733 | ||||
Issuance of common stock for extinguishment of debt and interest, shares | 612,406 | ||||||
Issuance of common stock for conversion of debt | $ 192 | 2,320,013 | 2,320,205 | ||||
Issuance of common stock for conversion of debt, shares | 1,921,082 | ||||||
Share-based compensation | 531,157 | 531,157 | |||||
Share-based compensation, shares | |||||||
Issuance of common stock as vendor compensation | $ 21 | 268,019 | 268,040 | ||||
Issuance of common stock as vendor compensation, shares | 208,011 | ||||||
Issuance of warrants as vendor compensation | 24,782 | 24,782 | |||||
Common stock issued for cash | $ 9 | 331,833 | 331,842 | ||||
Common stock issued for cash, shares | 91,841 | ||||||
Non-cash contribution from Chief Executive Officer | 478,726 | 478,726 | |||||
Foreign currency translation adjustment | 21,699 | 21,699 | |||||
Net loss | (10,330,829) | (10,330,829) | |||||
Ending balance at Sep. 30, 2020 | $ 14,382 | 156,196,213 | (50,000) | (52,467,307) | 103,693,288 | ||
Ending balance, shares at Sep. 30, 2020 | 143,817,614 | ||||||
Beginning balance at Jun. 30, 2020 | $ 12,885 | 130,957,464 | (21,699) | (50,000) | (42,136,478) | 88,762,172 | |
Beginning balance, shares at Jun. 30, 2020 | 128,846,064 | ||||||
Net loss | (10,330,829) | ||||||
Ending balance at Sep. 30, 2020 | $ 14,382 | $ 156,196,213 | $ (50,000) | $ (52,467,307) | $ 103,693,288 | ||
Ending balance, shares at Sep. 30, 2020 | 143,817,614 |
Condensed Consolidated Statem_4
Condensed Consolidated Statement of Stockholders' Equity (Parenthetical) | Dec. 31, 2019$ / shares |
Statement of Stockholders' Equity [Abstract] | |
Common stock at a price | $ 0.8902 |
Condensed Consolidated Statem_5
Condensed Consolidated Statement of Cash Flows - USD ($) | 9 Months Ended | 12 Months Ended | |
Sep. 30, 2020 | Sep. 30, 2019 | Dec. 31, 2019 | |
Cash flows from operating activities: | |||
Net loss | $ (24,922,052) | $ (10,503,611) | $ (27,545,255) |
Adjustments to reconcile net loss to net cash used in operating activities: | |||
Depreciation | 797,801 | 304,669 | 623,884 |
Amortization | 7,847,434 | 4,614,131 | 6,943,300 |
Share-based compensation | 531,157 | 258,256 | |
Deferred income taxes | (4,137,900) | ||
Amortization of debt discounts and debt issuance costs | 4,287,794 | 8,458,341 | |
Amortization of financing lease right-of-use asset | 8,400 | 135,542 | |
Operating lease expense | 444,436 | 76,557 | |
Bad debt expense | 647,643 | ||
Gain on the sale of assets | (663) | (325,838) | (98,410) |
Loss on conversion of debt | 2,640,000 | ||
Loss on extinguishment of debt | 21,882 | 434,774 | |
Other, net | 292,823 | 686,093 | 525,307 |
Changes in assets and liabilities: | |||
Accounts receivable | 627,609 | (654,169) | (26,992) |
Receivables - related party | (4,876,258) | ||
Inventory | (322,361) | (460,852) | (1,136,012) |
Prepaids | 354,768 | (1,708,911) | (767,355) |
Other current assets | (248,447) | (3,983,220) | (93,289) |
Accounts payable | 2,719,261 | (2,545,190) | (1,141,823) |
Accrued liabilities | 420,632 | 1,415,744 | 2,295,273 |
Accrued interest | 1,079,067 | 413,097 | 1,109,252 |
Deferred revenue | 7,643 | (109,044) | |
Operating lease liabilities | (273,903) | (77,565) | (123,534) |
(Repayments)/advances from related party | (94,653) | 1,086,316 | 9,826,112 |
Other current liabilities | 1,478,963 | 114,730 | (156,460) |
Other non-current assets | (168,100) | ||
Net cash (used in) operating activities | (4,462,866) | (11,657,063) | (6,853,247) |
Cash flows from investing activities: | |||
Cash acquired from acquisitions | 2,925,273 | ||
Acquisition of net assets | (3,146,500) | 1,629,519 | |
Purchases of property and equipment | (96,852) | (87,038) | |
Proceeds from disposal of property and equipment | 663 | ||
Net cash (used in) provided by investing activities | (3,242,689) | 1,629,519 | 2,838,235 |
Cash flows from financing activities: | |||
Principal payment on finance lease | (12,634) | ||
Proceeds from issuance of related party note | 1,950,000 | 200,000 | 485,000 |
Payment on line of credit | (2,000,000) | ||
Proceeds from sale of common stock | 331,842 | 5,000 | 5,000 |
Proceeds from issuance of debt | 8,008,026 | 11,152,733 | 6,249,170 |
Proceeds from issuance of warrant | 200 | ||
Repayment of debt | (902,661) | (646,580) | (1,808,323) |
Debt issuance costs | (80,000) | ||
Net cash provided by financing activities | 7,374,773 | 10,711,153 | 4,850,847 |
Effect of exchange rates on cash | 23,383 | (21,699) | (23,383) |
Net (decrease)/increase in cash and cash equivalents | (307,399) | 661,910 | 812,452 |
Cash and cash equivalents, beginning of period | 812,452 | ||
Cash and cash equivalents, end of period | 505,053 | 661,910 | 812,452 |
Supplemental disclosures of cash flow information: | |||
Taxes | |||
Interest | 367,321 | 13,787 | |
Non-cash operating activities: | |||
Issuance of common stock as vendor compensation | 268,040 | 352,000 | |
Issuance of common stock for interest paid-in-kind | 261,866 | ||
Issuance of common stock as settlement on accounts payable | 193,160 | ||
Issuance of warrants as vendor compensation | 24,782 | ||
Settlement of VNC notes receivable and related interest receivable pre-existing relationship | 251,247 | ||
Non-cash investing and financing activities: | |||
Issuance of common stock for Virtual Network Communications, Inc. acquisition | 12,677,267 | ||
Issuance of warrants for Virtual Network Communications Inc. acquisition | 2,261,275 | ||
Issuance of options for Virtual Network Communications Inc. acquisition | 1,646,471 | ||
Issuance of common stock for extinguishment of debt | 2,343,400 | ||
Issuance of preferred stock for VEO, Inc. acquisition | 13,215,000 | 13,215,000 | |
Issuance of preferred stock for InduraPower, Inc. acquisition | 7,048,000 | ||
Issuance of preferred stock for Silver Bullet Technology, Inc. acquisition | 2,643,000 | 2,643,000 | |
Issuance of common stock for DragonWave-X LLC acquisition | 42,081,392 | ||
Issuance of common stock for DragonWave-X LLC and Lextrum, Inc. acquisitions | 58,243,456 | ||
Recognition of right-of-use operating lease asset and liability | 2,335,224 | ||
Issuance of common stock for Lextrum, Inc. acquisition | 16,162,064 | ||
Issuance of common stock for conversion of debt | 285,714 | 704,000 | |
Issuance of common stock for conversion of related party note | 1,900,000 | ||
Issuance of common stock as payment-in-kind of default penalty | 97,322 | ||
Issuance of founder shares at inception | 2,789 | 2,789 | |
Issuance of common stock as debt issuance costs | 1,397,000 | 2,195,000 | 7,805,612 |
Issuance of warrants as debt issuance costs | 103,755 | ||
Issuance of warrants in exchange for note receivable | 2,835 | ||
Issuance of warrants in conjunction with debt agreements | 193,771 | 2,927,232 | 3,138,667 |
Beneficial conversion feature | 635,999 | 855,550 | 855,549 |
Recognition of operating right-of-use asset and liability | 517,208 | ||
Recognition of operating right-of-use asset and liability rent abatement | 151,565 | ||
Debt incurred to sellers for Fast Plastics Parts LLC and Spring Creek Manufacturing, Inc. acquisition | 575,574 | ||
Contribution from Chief Executive Officer of common stock as debt issuance costs | $ 478,726 | ||
Common stock issued for cashless exercise of warrants | 33,725 | ||
Common stock issued for conversion of senior convertible debentures | 3,725,498 | ||
Warrants issued for services | $ 4,074,330 |
Description of Business and Bas
Description of Business and Basis of Presentation | 9 Months Ended | 12 Months Ended |
Sep. 30, 2020 | Dec. 31, 2019 | |
Description of Business and Basis of Presentation [Abstract] | ||
DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION | 1. DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION Description of Business COMSovereign Holding Corp., formerly known as Drone Aviation Holding Corp. (the Company), provides technologically advanced telecom solutions to network operators, mobile device carriers, governmental units and other enterprises worldwide. The Company has assembled a portfolio of communications, power, and niche technologies, capabilities, and products that enable upgrading latent 3G networks to 4G and 4G-LTE networks and will facilitate the rapid rollout of the 5G and "next-Generation" ("nG") networks of the future. The Company focuses on special capabilities, including signal modulations, antennae, software, hardware, and firmware technologies that enable increasingly efficient data transmission across the electromagnetic spectrum. The Company's product solutions are complemented by a broad array of services including technical support, systems design and integration, and sophisticated research and development programs. Since the Company's business operations are in the early stages and the Company has a limited operating history as a consolidated company, the Company may be susceptible to numerous risks, uncertainties, expenses and difficulties associated with early-stage enterprises as outlined in "Item 1A. Risk Factors" in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2019. While the Company competes globally on the basis of its innovative technology, broad product offerings, high-quality and cost-effective customer solutions, as well as the scale of its global customer base and distribution, the Company's primary focus is on the North American telecom infrastructure and service market. The Company believes it is in a unique position to rapidly increase its near-term domestic sales as it is among the few U.S.-based providers of telecommunications equipment and services. Corporate History The Company was incorporated in Nevada on April 17, 2014. On June 3, 2014, the Company acquired Drone Aviation Corp. through a share exchange transaction, and on March 26, 2015, Drone Aviation Corp. merged with and into the Company. As a result of the share exchange and merger with Drone Aviation Corp., the Company acquired Drone Aviation Corp.'s subsidiary, Lighter Than Air Systems Corp. ("LTAS"), which does business under the name Drone Aviation. On November 27, 2019, the Company completed the acquisition (the "ComSovereign Acquisition") of ComSovereign Corp., a Delaware corporation ("ComSovereign") in a stock-for-stock transaction with a total purchase price of approximately $75 million. The ComSovereign Acquisition was treated as a reverse merger for accounting purposes under U.S. GAAP with ComSovereign as the accounting acquirer and the Company as the accounting acquiree. As a result, our Condensed Consolidated Financial Statements included in this Quarterly Report are those of ComSovereign for the three months ended September 30, 2019 and the period January 10, 2019 (Inception) to September 30, 2019 and those of the Company for the three-and nine-month periods ended September 30, 2020. The operations of our pre-acquisition business, which consisted primarily of the operations of Drone Aviation, are included in our consolidated operating results only for the three-and nine-month periods ended September 30, 2020. ComSovereign was incorporated in the state of Delaware on January 10, 2019 and commenced operations through a series of acquisitions. On January 31, 2019, ComSovereign acquired the capital stock of VEO, a San Diego, California-based research and development company innovating Silicon Photonics (SiP) technologies for use in copper-to-fiber-to-copper switching, high-speed computing, high-speed ethernet, autonomous vehicle applications, mobile devices and 5G wireless equipment. On January 31, 2019, ComSovereign acquired the capital stock of InduraPower Inc. ("InduraPower"), a Tucson, Arizona-based developer and manufacturer of intelligent batteries and back-up power supplies for network systems and telecom nodes. It also provides power designs and batteries for the aerospace, marine and automotive industries. On March 4, 2019, ComSovereign acquired the capital stock of Silver Bullet Technology, Inc. ("Silver Bullet"), a California-based engineering firm that designs and develops next generation network systems and components, including self-organizing network protocol development, software-defined radio systems, and wireless communications systems. On April 1, 2019, ComSovereign acquired the equity securities of DragonWave-X, LLC and its operating subsidiaries, DragonWave Corp. and DragonWave-X Canada, Inc. (collectively, "DragonWave"), a Dallas-based manufacturer of high-capacity microwave and millimeter point-to-point telecom backhaul radio units. DragonWave and its predecessor have been selling telecom backhaul radios since 2012 and its microwave radios have been installed in over 330,000 locations in more than 100 countries worldwide. According to a report by the U.S. Federal Communications Commission, as of December 2019, DragonWave was the second largest provider of licensed point-to-point microwave backhaul radios in North America. On April 1, 2019, ComSovereign acquired the capital stock of Lextrum Inc. ("Lextrum"), a Tucson, Arizona-based developer of in band full-duplex wireless technologies and components, including multi-reconfigurable RF antennae and software programs. Lextrum's duplexing technology enables capacity doubling in a given spectrum band by allowing simultaneous transmission and receipt of radio signals on the same frequencies. On March 6, 2020, the Company's newly-formed subsidiary, Sovereign Plastics LLC ("Sovereign Plastics"), acquired substantially all of the assets of a Colorado Springs, Colorado-based manufacturer of plastics and metal components to third-party manufacturers. The Company acquired its Sovereign Plastics business to increase its operating margins by reducing the manufacturing and production costs of its telecom products. Sovereign Plastics will also primarily operate as the material, component manufacturing and supply chain source for all of the Company's subsidiaries. The Company does not expect the revenues of Sovereign Plastics from sales to third parties to be material in the future. On July 6, 2020, the Company completed its acquisition (the "VNC Acquisition") of Virtual Network Communications Inc., a Virginia corporation ("VNC"), pursuant to an Agreement and Plan of Merger and Reorganization dated as of May 21, 2020 (the "Merger Agreement"), by and among the Company and its wholly-owned subsidiaries, CHC Merger Sub 7, Inc. and VNC Acquisition LLC, VNC and Mohan Tammisetti, solely in his capacity as the representative of the security holders of VNC. VNC is an edge centric wireless telecommunications technology developer and equipment manufacturer of both 4G LTE Advanced and 5G capable radio equipment. VNC designs, develops, manufactures, markets, and supports a line of network products for wireless network operators, mobile virtual network operators, cable TV system operators, and government and business enterprises that enable new sources of revenue, and reduce capital and operating expenses. VNC is reinventing how wireless networks service mission-critical communications for Public Safety, Homeland Security, Department of Defense and commercial Private Network users. We envision the future of virtualized micro networks blanketing the globe without expensive terrestrial based radio towers and building installation. VNC's patented technology virtualizes entire LTE Advanced and 5G core and radio solutions. Our products eliminate much of the costly backbone equipment of telecom networks. VNC also has developed rapidly deployable, tactical systems that can be combined with the tethered aerostats and drones, including from COMSovereign's Drone Aviation subsidiary, enabling operating in nearly any location in the world. Each of the Company's subsidiaries was acquired to address a different opportunity or segment within the North American telecom infrastructure and service market. Basis of Presentation and Consolidation The accompanying unaudited Condensed Consolidated Financial Statements of the Company have been prepared in accordance with generally accepted accounting principles in the United States ("U.S. GAAP") and with the rules and regulations of the Security and Exchange Commission (SEC) for interim financial information. As a result, the statements do not include all information and footnotes required by U.S. GAAP for annual consolidated financial statements. In the opinion of management, such interim financial statements reflect all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation of financial positions, results of operations and cash flows for such periods. The results for the three and nine months ended September 30, 2020 are not necessarily indicative of the Company's results of operations, financial position or cash flows that may be expected for the full fiscal year or future operating periods. The unaudited Condensed Consolidated Financial Statements included herein should be read in conjunction with the consolidated financial statements and footnotes thereto included in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2019. The unaudited consolidated financial statements as of, and for the three- and nine-month periods ended, September 30, 2020 include the accounts of the Company and its wholly-owned subsidiaries: Drone AFS Corp., Lighter Than Air Systems Corp., DragonWave, Lextrum, Silver Bullet, VEO, InduraPower, Sovereign Plastics, and VNC. All intercompany transactions and accounts have been eliminated. Reclassifications Certain immaterial December 31, 2019 amounts have been reclassified to be consistent with the current period presentation. Use of Estimates The preparation of unaudited financial statements in conformity with U.S. GAAP requires management to make estimates, assumptions and judgments that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities, and the reported amounts of revenues and expenses during the reporting period. Estimates are based on historical factors, current circumstances and the experience and judgment of management. The Company evaluates its estimates, assumptions and judgments on an ongoing basis and may employ outside experts to assist in making these evaluations. Hence, changes in such estimates, based on more accurate information or different assumptions or conditions may cause actual results to differ from those estimates. | 1. DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION Description of Business COMSovereign Holding Corp., formerly known as Drone Aviation Holding Corp. ("the "Company"), is a provider of technologically-advanced telecom solutions to network operators, mobile device carriers, governmental units and other enterprises worldwide. The Company has assembled a portfolio of communications, power and niche technologies, capabilities and products that enable the upgrading of latent 3G networks to 4G and 4G-LTE networks and will facilitate the rapid rollout of the 5G and "next-Generation" ("nG") networks of the future. The Company focuses on special capabilities, including signal modulations, antennae, software, hardware and firmware technologies that enable increasingly efficient data transmission across the radio-frequency spectrum. The Company's product solutions are complemented by a broad array of services including technical support, systems design and integration, and sophisticated research and development programs. The Company competes globally on the basis of its innovative technology, broad product offerings, high-quality and cost-effective customer solutions, as well as the scale of its global customer base and distribution. In addition, the Company believes it is in a unique position to rapidly increase its near-term domestic sales as it is among the few U.S.-based providers of telecommunications equipment and services. Acquisition of ComSovereign Corp. The Company was incorporated under the laws of the State of Nevada on April 17, 2014. On November 27, 2019, the Company entered into an Agreement and Plan of Merger dated as of November 27, 2019 (the "Merger Agreement") with ComSovereign Corp., a Delaware corporation ("ComSovereign"), and DACS Merger Sub, Inc., a Delaware corporation and a wholly-owned subsidiary of the Company ("Merger Sub"). The Merger Agreement provided for the merger of Merger Sub with and into ComSovereign (hereafter referred to as the "ComSovereign Acquisition"). As a result of the ComSovereign Acquisition, Merger Sub ceased to exist, and ComSovereign became the surviving corporation and a direct wholly-owned subsidiary of the Company. Additionally, the former stockholders of ComSovereign (the "ComSovereign Stockholders") received a direct equity ownership and controlling equity interest in the Company. For each share of ComSovereign common stock, the stockholder received 1.8902 shares of the Company's common stock. The ComSovereign Acquisition was completed on November 27, 2019. On December 10, 2019, the Company changed its name from Drone Aviation Holding Corp. to COMSovereign Holding Corp. The ComSovereign Acquisition was accounted for as a reverse merger with ComSovereign acquiring the assets of the Company, and the net assets, including other intangible assets, of the Company prior to the ComSovereign Acquisition being recorded at fair value with the excess purchase price allocated to goodwill. As a result of the completion of the ComSovereign Acquisition, these consolidated financial statements include (1) the assets and liabilities of the Company and its consolidated subsidiaries, including ComSovereign and its subsidiaries, as of December 31, 2019, (2) the historical operations of ComSovereign from inception (January 10, 2019) to the date of consummation of the ComSovereign Acquisition, and (3) and the operations of the Company and its subsidiaries from the date of completion of the ComSovereign Acquisition (November 27, 2019) to December 31, 2019. Corporate History of ComSovereign ComSovereign was incorporated in the state of Delaware on January 10, 2019. From the date of incorporation until the date of its first acquisition, as described below, ComSovereign had no business operations. On January 12, 2019, two founding members of ComSovereign each acquired 6,000,000 shares of common stock at a value of $0.0001 per share of common stock with no cash paid to ComSovereign and no services required. On January 20, 2019, the same two founding members of ComSovereign each acquired an additional 6,000,000 shares of common stock at a value of $0.0001 per share of common stock with no cash paid to ComSovereign and no services required. On January 22, 2019, an additional 11 founding members of ComSovereign acquired an aggregate of 3,290,000 shares of common stock at a value of $0.0001 per share of common stock with no cash paid to ComSovereign and no services required. On January 23, 2019, one of the additional 11 founding members acquired an additional 500,000 shares of common stock at a value of $0.0001 per share of common stock with no cash paid to ComSovereign and no services required. On January 29, 2019, an additional founding member of ComSovereign acquired 100,000 shares of common stock at a value of $0.0001 per share of common stock with no cash paid to ComSovereign and no services required. On January 31, 2019, ComSovereign acquired the capital stock of VEO, Inc. ("VEO"). VEO is a research and development company innovating silicon photonic ("SiP") technologies for use in copper-to-fiber-to-copper switching, high-speed computing, high-speed ethernet, autonomous vehicle applications, mobile devices and 5G wireless equipment. In connection with the purchase of VEO, ComSovereign issued 1,500,000 unregistered shares of Series A Redeemable Convertible Preferred stock ("Preferred Series A") to Dr. Chen K. Sun, who is also a founding member of ComSovereign. On January 31, 2019, ComSovereign acquired the capital stock of InduraPower Inc. ("InduraPower"). InduraPower is a manufacturer of intelligent batteries and back-up power supplies for network systems and telecom nodes. It also provides power designs and batteries for aerospace, marine and automotive industries. In connection with the purchase of InduraPower, ComSovereign issued an aggregate of 800,000 unregistered Preferred Series A shares. Of those 800,000 shares, 688,800 Preferred Series A shares were issued to Sergei Begliarov, who is a founding member of ComSovereign and who became the Chief Executive Officer of InduraPower, and the balance was distributed to four other shareholders. On March 4, 2019, ComSovereign acquired the capital stock of Silver Bullet Technology, Inc. ("Silver Bullet"). Silver Bullet is an engineering firm that designs and develops next generation network systems and components, including large-scale network protocol development, software-defined radio-systems and wireless network designs. In connection with the purchase of Silver Bullet, ComSovereign issued 300,000 unregistered Preferred Series A shares to Dr. Dustin McIntire, who is a founding member of ComSovereign and who became the Company's Chief Technology Officer. On April 1, 2019, ComSovereign acquired the capital stock of DragonWave-X LLC ("DragonWave") and Lextrum, Inc. ("Lextrum"). DragonWave is a manufacturer of high-capacity microwave and millimeter point-to-point telecom backhaul radio units. Lextrum is a manufacturer of full-duplex wireless technologies and components, including multi-reconfigurable radio frequency antennae and software programs. This technology enables the doubling of a given spectrum band by allowing simultaneous transmission and receipt of radio signals on the same frequencies. In connection with the purchase of DragonWave and Lextrum, ComSovereign issued an aggregate of 13,237,149 shares of common stock to the shareholders of the parent company of DragonWave and Lextrum. Included in those shareholders were Daniel L. Hodges, the Chairman of the parent company, and John E. Howell, the Director and Chief Executive Officer of the parent company. In accordance with the subsections of ASC 805-50, Business Combinations, Transactions Between Entities Under Common Control Business Combinations On November 15, 2019, the 2,600,000 outstanding shares of Preferred Series A were exchanged for an aggregate of 2,600,000 shares of ComSovereign's common stock. Basis of Presentation The accompanying financial statements of the Company were prepared in accordance with generally accepted accounting principles in the United States ("U.S. GAAP"). In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. The historical information is not necessarily indicative of the Company's future results of operations, financial position or cash flows. Principle of Consolidation The consolidated financial statements as of, and for the period from January 10, 2019 (inception) to December 31, 2019 ("fiscal 2019") include the accounts of the Company and its subsidiaries: Drone AFS Corp., Lighter Than Air Systems Corp., DragonWave, Lextrum, Silver Bullet, VEO and InduraPower. Use of Estimates The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 9 Months Ended | 12 Months Ended |
Sep. 30, 2020 | Dec. 31, 2019 | |
Accounting Policies [Abstract] | ||
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES There have been no material changes in the Company's significant accounting policies as of and for the three months ended September 30, 2020, as compared to the significant accounting policies described in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2019. Accounting Standards Not Yet Adopted In August 2020, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2020-06, Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity's Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity's Own Equity In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848 In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740) In January 2017, the FASB issued ASU No. 2017-04, Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment In June 2016, the FASB issued ASU 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments | 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Cash and Cash Equivalents Cash and cash equivalents are represented by operating accounts or money market accounts maintained with insured financial institutions, including all short-term, highly-liquid investments with maturities of three months or less when purchased to be cash equivalents. The Company had no cash equivalents as of December 31, 2019. Accounts Receivable and Credit Policies Trade accounts receivable consist of amounts due from the sale of the Company's products and services. Such accounts receivable are uncollateralized customer obligations due under normal trade terms requiring payment within 30 to 45 days of receipt of the invoice. The Company provides an allowance for doubtful accounts equal to the estimated uncollectible amounts based on historical collection experience and a review of the current status of trade accounts receivable. As of December 31, 2019, the Company characterized $690,830 as uncollectible. Concentration of Credit Risk Financial instruments that potentially subject the Company to concentrations of credit risk consist of cash and trade accounts receivables. The Company places its cash with high-credit-quality financial institutions. At times, such cash may be in excess of the Federal Deposit Insurance Corporation ("FDIC") insurance coverage limit of $250,000 per depositor. As a result, there could be a concentration of credit risk related to amounts on deposit in excess of FDIC insurance coverage. The Company has not experienced any losses due to these excess deposits and believes the risk is not significant. With respect to trade receivables, the Company routinely assesses the financial strength of its customers and, as a consequence, believes that the receivable credit risk exposure is limited. Related Parties The Company accounts for related party transactions in accordance with Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") 850, Related Party Disclosures Inventory Inventory is valued at the lower of cost and net realizable value ("NRV"). The cost of inventory is calculated on a standard cost basis, which approximates weighted average actual cost. NRV is determined as the market value for finished goods, replacement cost for raw materials and finished goods market value less cost to complete for work in progress inventory. The Company regularly reviews inventory quantities on hand and records an impairment for excess and obsolete inventory based on factors including its estimated forecast of product demand, the stage of the product life cycle and production requirements for the units in question. Indirect manufacturing costs and direct labor expenses are allocated systematically to the total production inventory. Investments An investment is considered impaired if the fair value of the investment is less than its cost. Generally, an impairment is considered other-than-temporary unless (1) the Company has the ability and intent to hold an investment for a reasonable period of time sufficient for an anticipated recovery of the fair value up to (or beyond) the cost of the investment; and (2) evidence indicating that the cost of the investment is recoverable within a reasonable period of time outweighs evidence to the contrary. If impairment is determined to be other that temporary, then an impairment loss is recognized equal to the difference between the investment's cost and fair value. Property and Equipment, net Property and equipment are stated at cost when acquired. Depreciation is calculated using the straight-line method over the estimated useful lives of the related assets as follows: Asset Type Useful Life Test equipment, research and development equipment 4-5 years Computer hardware 2 years Production fixtures 3 years Leasehold improvements 5 years Other 3-5 years Expenditures for maintenance and repairs are charged to expense as incurred, whereas expenditures for major renewals and betterments that extend the useful lives of property and equipment are capitalized. Long-Lived Assets and Goodwill The Company accounts for long-lived assets in accordance with the provisions of ASC 360-10-35, Property, Plant and Equipment, Impairment or Disposal of Long-lived Assets The Company accounts for goodwill and intangible assets in accordance with ASC 350, Intangibles – Goodwill and Other Beneficial Conversion Features and Warrants The Company evaluates the conversion feature of convertible debt instruments to determine whether the conversion feature was beneficial as described in ASC 470-30, Debt with Conversion and Other Options Under these guidelines, the Company allocates the value of the proceeds received from a convertible debt transaction between the conversion feature and any other detachable instruments (such as warrants) on a relative fair value basis. The allocated fair value of the BCF and warrants are recorded as a debt discount and is accreted over the expected term of the convertible debt as interest expense. Fair Value of Financial Instruments The Company measures its financial assets and liabilities in accordance with the requirements of ASC 820, Fair Value Measurement Level 1 Level 2 Level 3 The Company's financial instruments consist of cash, accounts receivable, accounts payable and notes payable. The Company has determined that the book value of its outstanding financial instruments as of December 31, 2019 approximated their fair value due to their short-term nature. Debt Discounts The Company records debt discounts as a deduction from the carrying amount of the related indebtedness on its Consolidated Balance Sheet with the respective debt discount amortized in interest expense on its Consolidated Statement of Operations. In connection with the issuance of certain notes payable and senior convertible debentures, the Company, or its subsidiaries, issued warrants to purchase shares of its common stock and has BCFs. See Note 10 – Debt Agreements Warrants As described above under Beneficial Conversion Features and Warrants Debt Issuance Costs The Company presents debt issuance costs as a direct deduction from the carrying amount of the related indebtedness on its Consolidated Balance Sheet and amortizes these costs over the term of the related debt liability using the straight-line method, which approximates the effective interest method. Amortization is recorded in interest expense on the Consolidated Statement of Operations. Foreign Currency Translation The Company's operations and balances denominated in foreign currencies, including those of its foreign Canadian subsidiary, DragonWave, that are primarily a direct and integral component or extension of the Company's operations, are translated into U.S. dollars ("USD") using the following: monetary assets and liabilities are translated at the period end exchange rate; non-monetary assets are translated at the historical exchange rate; and revenue and expense items are translated at the average exchange rate and records the translation adjustments in accumulated other comprehensive income (loss) on the Consolidated Balance Sheet. Foreign currency transaction gains and losses are included in foreign currency transaction gain (loss) in the Consolidated Statement of Operations. Revenue Recognition In May 2014, the FASB issued Accounting Standards Update ("ASU") 2014-09, Revenue from Contracts with Customers (Topic 606) To further assist with adoption and implementation of ASU 2014-09, the FASB issued the following ASUs: ● ASU 2016-08 (Issued March 2016) — Principal versus Agent Consideration (Reporting Revenue Gross versus Net) ● ASU 2016-10 (Issued April 2016) — Identifying Performance Obligations and Licensing ● ASU 2016-12 (Issued May 2016) — Narrow-Scope Improvements and Practical Expedients ● ASU 2016-20 (Issued December 2016) — Technical Corrections and Improvements to Topic 606, Revenue from Contracts with Customers The Company adopted these standards as of January 10, 2019 (date of incorporation). At contract inception, the Company assesses the goods and services promised in the contract with customers and identifies a performance obligation for each. To determine the performance obligation, the Company considers all products and services promised in the contract regardless of whether they are explicitly stated or implied by customary business practices. The timing of satisfaction of the performance obligation is not subject to significant judgment. The Company measures revenue as the amount of consideration expected to be received in exchange for transferring goods and services. Revenue is recognized net of any taxes collected from customers that are subsequently remitted to governmental authorities. The Company has determined that it has the following performance obligations related to its products and services: equipment, software license, extended warranty, training, installation and consulting service. Revenue from equipment, software license, training and installation are all recognized at a point in time when control of the goods is transferred to the customer, generally occurring upon shipment or delivery dependent upon the terms of the underlying contract, or services is completed. Revenue from extended warranties is recognized over time using an input method that results in a straight-line basis recognition over the warranty period, as the contract usually provides the customer equal benefit throughout the warranty period. Revenue from consulting services is recognized over time using an input method of labor hours expensed, as it directly measures the efforts toward satisfying the performance obligation. For contracts with customers that contain multiple performance obligations, the Company accounts for the promised performance obligations separately as individual performance obligations if they are distinct. In determining whether performance obligations meet the criteria for being distinct, the Company considers a number of factors, including the degree of interrelation and interdependence between obligations and whether or not the good or service significantly modifies or transforms another good or service in the contract. After identifying the separate performance obligations, the transaction price is allocated to the separate performance obligations on a relative standalone selling price basis. The Company generally determines the standalone selling prices based on the prices charged to customers. Judgment may be used to determine the standalone selling prices for items that are not sold separately, including taking into consideration either historical pricing practices or an adjusted market assessment. Unsatisfied and partially unsatisfied performance obligations as of the end of the reporting period primarily consist of products and services for which customer purchase orders have been accepted and that are in the process of being delivered. Transaction price is calculated as the selling price less any variable consideration, consisting of rebates and discounts. Discounts provided to customers are known at contract inception. Rebates are calculated on the "expected value" method where the Company (1) estimates the probability of each rebate amount which could be earned by the distributor, (2) multiplies each estimated amount by its assigned probability factor, and (3) calculates a final sum of each of the probability-weighted amounts calculated in step (2). The sum calculated in step (3) is the rebate amount, which along with discounts reduces the amount of revenue recognized. Costs incurred for shipping and handling are included in costs of goods sold on the Consolidated Statement of Operations. Amounts billed to a customer for shipping and handling are reported as revenue on the Consolidated Statement of Operations. The Company provides limited warranties for products sold to customers, typically for 13 months, covering product defects. Such limited warranties are not sold separately and do not provide customers with a service in addition to assurance of compliance with agreed-upon specifications. Accordingly, these types of limited warranties are not considered to be separate performance obligations. In accordance with applicable guidance, the expected cost of the limited warranties is recorded as accrued warranty liability on the Consolidated Balance Sheet. Optional extended warranties are sold to customers and include additional support services. The Company records contract assets when it has a right to consideration and records accounts receivable when it has an unconditional right to consideration. The Company records contract liabilities when cash payments are received (or unconditional rights to receive cash) in advance of fulfilling its performance obligations. When the services have been performed or the goods delivered, revenue will be recognized, and contract liabilities will be reduced. The Company does not disclose the value of unsatisfied performance obligations for contracts with an original expected length of one year or less. The majority of the Company's performance obligations in its contracts with customers relate to contracts with durations of less than one year. The transaction price allocated to unsatisfied performance obligations included in contracts with durations of more than 12 months is reflected in contract liabilities on the Consolidated Balance Sheet. Applying a practical expedient, the Company recognizes the incremental costs of obtaining contracts, which primarily consist of sales commissions, as expense when incurred if the amortization period of the assets that otherwise would have been recognized is one year or less. If the service period, inclusive of any anticipated renewal, is longer than a year, the incremental direct costs are capitalized and amortized over the period of benefit. As of December 31, 2019, there were no such capitalized costs. The Company also applies the practical expedient not to adjust the promised amount of consideration for the effects of a financing component if the Company expects, at contract inception, that the period between when the Company transfers a good or service to the customer and when the customer pays for the good or service will be one year or less. During fiscal 2019, there were no such financing components. Research and Development Research costs are expensed as incurred. Development costs are expensed as incurred unless they meet generally accepted accounting criteria for deferral and amortization. Development costs incurred prior to establishment of technological feasibility do not meet these criteria and are expensed as incurred. Share-Based Compensation Employees The Company accounts for share-based compensation in accordance with ASC 718, Compensation – Stock Compensation Compensation – Stock Compensation (Topic 718) – Improvements to Employee Share-Based Payment Accounting Non-Employees Effective January 10, 2019, the Company adopted ASU No. 2018-07, Compensation – Stock Based Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting Equity, Equity – Equity-Based Payments to Non-Employees Share-based compensation for employees and non-employees is recorded in the Consolidated Statement of Operations as a component of general and administrative expense with a corresponding increase to additional paid-in capital in shareholders' equity. Leases In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842) ● ASU 2018-10 (Issued July 2018) — Codification Improvements to Topic 842, Leases ● ASU 2018-11 (Issued July 2018) — Leases (Topic 842): Targeted Improvements ● ASU 2018-20 (Issued December 2018) — Leases (Topic 842): Narrow-Scope Improvements for Lessors ● ASU 2019-01 (Issued March 2019) — Leases (Topic 842): Codification Improvements ASU 2018-11 provided entities with an additional transition method to adopt the new lease standard. Under this new transition method, an entity initially applies the new lease standard at the adoption date and recognizes a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption, if any. The new lease standard was effective for fiscal years beginning after December 15, 2018. The Company adopted these standards in the first quarter of 2019 utilizing the transition method allowed under ASU 2018-11. See Note 17 — Leases Income Taxes The Company accounts for income taxes utilizing ASC 740, Income Taxes. The Company also follows the guidance for accounting for income tax uncertainties. In accounting for uncertainty in income taxes, the Company recognizes the financial statement benefit of a tax position only after determining that the relevant tax authority would more likely than not sustain the position following an audit. For tax positions meeting the more likely than not threshold, the amount recognized in the consolidated financial statements is the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement with the relevant tax authority. No liability for unrecognized tax benefits was recorded as of December 31, 2019. If the Company has to recognize any interest or penalties associated with its tax positions or returns, any interest or penalties will be recorded as income tax expense in the Consolidated Statement of Operations. Earnings or Loss per Share The Company accounts for earnings or loss per share pursuant to ASC 260, Earnings Per Share There were no adjustments to net loss, the numerator, for purposes of computing basic earnings per share. The following table sets out the computation of basic and diluted income (loss) per share: (Amounts in US$'s, except share data) January 10, 2019 (Inception) to December 31, Numerator: Net loss $ (27,545,255 ) Numerator for basic earnings per share - loss available to common shareholders $ (27,545,255 ) Denominator: Denominator for basic earnings per share - weighted average common shares outstanding 48,714,099 Dilutive effect of warrants and options — Denominator for diluted earnings per share - weighted average common shares outstanding and assumed conversions 48,714,099 Basic loss per common share $ (0.57 ) Diluted loss per common share $ (0.57 ) Potential common shares issuable to employees, non-employees and directors upon exercise or conversion of shares are excluded from the computation of diluted earnings per common share when the effect would be anti-dilutive. All potential common shares are dilutive in periods of net loss available to common shareholders. Stock options are anti-dilutive when the exercise price of these instruments is greater than the average market price of the Company's common stock for the period, regardless of whether the Company is in a period of net loss available to common shareholders. The following weighted-average potential common shares were excluded from the diluted loss per common share as their effect was anti-dilutive: stock options of 837,479, restricted stock units of 156,091 and warrants of 48,498. Reportable Segments U.S. GAAP establishes standards for reporting financial and descriptive information about a company's reportable segments. Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker, or decision-making group, in deciding how to allocate resources and in assessing performance. Our chief operating decision maker is our Chief Executive Officer, who currently reviews the financial performance and the results of operations of our operating subsidiaries on a consolidated basis when making decisions about allocating resources and assessing performance of our company. Accordingly, we currently consider ourselves to be in a single reporting segment for reporting purposes focused on the North American development, manufacturing and production of products and services for the telecom infrastructure market. As we are still in the early stages of developing our company, we have historically managed our subsidiaries within this single operating segment and do not assess the performance of our product lines or geographic regions or other measures of income or expense, such as product expense, operating income or net income. Each of our subsidiaries is operated under the same senior management of our company, and we view the operations of our subsidiaries as a whole for making business decisions. Employees of one subsidiary, particularly mechanical engineers, are often called upon to assist in the operations of another subsidiary. As the development of our company matures and we move toward full scale production with increased marketing efforts, we will continue to evaluate additional segment disclosure requirements. Recent Accounting Pronouncements Management believes there have not been any recently issued, but not effective, accounting standards which, if currently adopted, would have a material effect on the Company's financial statements. |
Going Concern
Going Concern | 9 Months Ended | 12 Months Ended |
Sep. 30, 2020 | Dec. 31, 2019 | |
Going Concern | ||
GOING CONCERN | 3. GOING CONCERN U.S. GAAP requires management to assess a company's ability to continue as a going concern within one year from the financial statement issuance and to provide related note disclosures in certain circumstances. The accompanying unaudited consolidated financial statements and notes have been prepared assuming the Company will continue as a going concern. For the nine months ended September 30, 2020, the Company generated negative cash flows from operations of $4,462,867 and had an accumulated deficit of $52,467,306 and negative working capital of $18,978,529. Management anticipates that the Company will be dependent, for the near future, on additional investment capital to fund growth initiatives. The Company intends to position itself so that it will be able to raise additional funds through the capital markets and secure lines of credit. The Company anticipates an approximate $20,000,000 offering of equity securities in the fourth quarter of 2020. The Company's fiscal operating results, accumulated deficit, and negative working capital, among other factors, raise substantial doubt about the Company's ability to continue as a going concern. Nevertheless, the Company believes the fundraising actions outlined above, and its future operating cash flows, will enable it to meet its liquidity requirements through September 2021. There can be no assurance that the Company will be successful in any capital-raising efforts that it may undertake, and the failure of the Company to raise additional capital could adversely affect its future operations and viability. | 4. GOING CONCERN On August 27, 2014, the FASB issued ASU 2014-05, Disclosure of Uncertainties about an Entity's Ability to Continue as a Going Concern The accompanying consolidated financial statements and notes have been prepared assuming the Company will continue as a going concern. For fiscal 2019, the Company generated negative cash flows from operations of $6,853,247 and had an accumulated deficit of $27,545,255 and negative working capital of $6,477,230. Management anticipates that the Company will be dependent, for the near future, on additional investment capital to fund growth initiatives. The Company intends to position itself so that it will be able to raise additional funds through the capital markets and secure lines of credit. The Company is in discussion with its investment bankers regarding the sale of approximately $13,000,000 of equity in the third quarter of 2020. The Company's fiscal operating results, accumulated deficit and negative working capital, among other factors, raise substantial doubt about the Company's ability to continue as a going concern. However, the Company believes the fundraising actions outlined above, and its future operating cash flows, will enable it to meet its liquidity requirements through June 2021. There can be no assurance that the Company will be successful in any capital-raising efforts that it may undertake, and the failure of the Company to raise additional capital could adversely affect its future operations and viability. |
Revenue
Revenue | 9 Months Ended | 12 Months Ended |
Sep. 30, 2020 | Dec. 31, 2019 | |
Revenue [Abstract] | ||
REVENUE | 4. REVENUE The following table is a summary of the Company's timing of revenue recognition for the three and nine months ended September 30, 2020 and for the three months ended September 30, 2019 and the period January 10, 2019 (Inception) to September 30, 2019: Three Months Ended Nine Months January 10, (Amounts in US$'s) 2020 2019 2020 2019 Timing of revenue recognition: Services and products transferred at a point in time $ 1,941,239 $ 1,824,924 $ 7,056,659 $ 2,289,249 Services and products transferred over time 77,124 748,507 457,001 1,287,093 Total revenue $ 2,018,363 $ 2,573,431 $ 7,513,660 $ 3,576,342 The Company disaggregates revenue by source and geographic destination to depict how the nature, amount, timing and uncertainty of revenue and cash flows are affected by economic factors. Revenue by source consisted of the following for the three and nine months ended September 30, 2020 and for the three months ended September 30, 2019 and the period January 10, 2019 (Inception) to September 30, 2019: Three Months Ended Nine Months January 10, (Amounts in US$'s) 2020 2019 2020 2019 Revenue by products and services: Products $ 1,726,425 $ 1,824,924 $ 6,298,041 $ 2,289,249 Services 291,938 748,507 1,215,619 1,287,093 Total revenue $ 2,018,363 $ 2,573,431 $ 7,513,660 $ 3,576,342 Revenue by geographic destination consisted of the following for the three and nine months ended September 30, 2020 and for the three months ended September 30, 2019 and the period January 10, 2019 (Inception) to September 30, 2019: Three Months Ended Nine months January 10, 2019 (Amounts in US$'s) 2020 2019 2020 2019 Revenue by geography: North America $ 1,830,967 $ 2,466,473 $ 6,755,717 $ 2,669,728 International 187,396 106,958 757,943 906,614 Total revenue $ 2,018,363 $ 2,573,431 $ 7,513,660 $ 3,576,342 Contract Balances The Company records contract assets when it has a right to consideration and records accounts receivable when it has an unconditional right to consideration. Contract liabilities consist of cash payments received (or unconditional rights to receive cash) in advance of fulfilling performance obligations. As of September 30, 2020, the Company did not have a contract assets balance. The following table is a summary of the Company's opening and closing balances of contract liabilities related to contracts with customers. (Amounts in US$'s) Total Balance at December 31, 2019 $ 302,815 Increase 7,643 Balance at September 30, 2020 $ 310,458 The increase in contract liabilities during the nine months ended September 30, 2020 was primarily due to invoiced amounts that did not yet meet the revenue recognition criteria, partially offset by the revenue recognition criteria being met for previously deferred revenue. The amount of revenue recognized in the nine months ended September 30, 2020 that was included in the prior period contract liability balance was $156,937. This revenue consisted of services provided to customers who had been invoiced prior to the current year. | 13. REVENUE The following table is a summary of the Company s timing of revenue recognition for fiscal 2019: (Amounts in US$'s) January 10, 2019 (Inception) to December 31, Timing of revenue recognition: Services and products transferred at a point in time $ 2,803,026 Services and products transferred over time 1,909,186 Total revenue $ 4,712,212 The Company disaggregates revenue by source and geographic destination, to depict how the nature, amount, timing and uncertainty of revenue and cash flows are affected by economic factors. Revenue by source consisted of the following for fiscal 2019: (Amounts in US$'s) January 10, 2019 (Inception) to December 31, Revenue by products and services: Products $ 2,702,410 Services 2,009,802 Total revenue $ 4,712,212 Revenue by geographic destination consisted of the following for fiscal 2019: (Amounts in US$'s) January 10, 2019 (Inception) to December 31, Revenue by geography: North America $ 3,476,977 International 1,235,235 Total revenue $ 4,712,212 See Note 2 – Summary of Significant Accounting Policies |
Earnings (Loss) Per Share
Earnings (Loss) Per Share | 9 Months Ended |
Sep. 30, 2020 | |
Earnings Loss Per Share [Abstract] | |
EARNINGS (LOSS) PER SHARE | 5. EARNINGS (LOSS) PER SHARE The Company accounts for earnings or loss per share pursuant to ASC 260, Earnings Per Share There were no adjustments to net loss, the numerator, for purposes of computing basic earnings per share. The following table sets out the computation of basic and diluted income (loss) per share: Three Months Ended Nine months January 10, (Amounts in US$'s, except share data) 2020 2019 2020 2019 Numerator: Net Loss $ (10,330,829 ) $ (7,260,236 ) $ (24,922,052 ) $ (12,318,670 ) Numerator for basic earnings per share – loss available to common shareholders $ (10,330,829 ) $ (7,260,236 ) $ (24,922,052 ) $ (12,318,670 ) Denominator: Denominator for basic earnings per share - weighted average common shares outstanding 132,649,621 43,953,888 132,466,532 39,103,271 Dilutive effect of warrants and options — — — — Denominator for diluted earnings per share - weighted average common shares outstanding and assumed conversions 132,649,621 43,953,888 132,466,532 39,103,271 Basic loss per common share $ (0.08 ) $ (0.17 ) $ (0.19 ) $ (0.32 ) Diluted loss per common share $ (0.08 ) $ (0.17 ) $ (0.19 ) $ (0.32 ) Potential common shares issuable to employees, non-employees and directors upon exercise or conversion of options, warrants, or convertible debt are excluded from the computation of diluted earnings per common share when the effect would be anti-dilutive. All potential common shares are dilutive in periods of net loss available to common shareholders. Stock options are anti-dilutive when the exercise price of these instruments is greater than the average market price of the Company's common stock for the period, regardless of whether the Company is in a period of net loss available to common shareholders. |
Cash and Cash Equivalents
Cash and Cash Equivalents | 9 Months Ended |
Sep. 30, 2020 | |
Cash and Cash Equivalents [Abstract] | |
CASH AND CASH EQUIVALENTS | 6. CASH AND CASH EQUIVALENTS Cash and cash equivalents are represented by operating accounts or money market accounts maintained with insured financial institutions, including all short-term, highly-liquid investments with maturities of three months or less when purchased to be cash equivalents. The Company had no cash equivalents as of September 30, 2020 and December 31, 2019. Cash and cash equivalents consisted of the following as of September 30, 2020 and December 31, 2019: (Amounts in US$'s) September 30, December 31, Cash and cash equivalents $ 505,053 $ 812,452 Total cash and cash equivalents in the Statement of Cash Flows $ 505,053 $ 812,452 |
Accounts Receivable, Net
Accounts Receivable, Net | 9 Months Ended |
Sep. 30, 2020 | |
Accounts Receivable, after Allowance for Credit Loss [Abstract] | |
ACCOUNTS RECEIVABLE, NET | 7. ACCOUNTS RECEIVABLE, NET Trade accounts receivable consist of amounts due from the sale of the Company's products. Such accounts receivable are uncollateralized customer obligations due under normal trade terms requiring payment within 30 to 45 days of receipt of the invoice. The Company provides an allowance for doubtful accounts equal to the estimated uncollectible amounts based on historical collection experience and a review of the current status of trade accounts receivable. Accounts receivable consisted of the following as of September 30, 2020 and December 31, 2019: (Amounts in US$'s) September 30, December 31, Account receivables $ 2,547,763 $ 2,859,489 Less: Allowance for doubtful accounts (1,654,356 ) (690,830 ) Total account receivables, net $ 893,407 $ 2,168,659 Bad debt expense totaled $647,643 for the three- and nine-months ended September 20, 2020. There was no bad debt expense for the period from inception through September 30, 2019. During 2020, LTAS entered into an accounts receivable purchase and security agreement. The Company utilizes this agreement to factor, with full recourse, certain accounts receivable of one specific customer of LTAS on an invoice-by-invoice basis at the LTAS's discretion. This agreement allows LTAS to obtain 85% of the value of each invoice factored in the form of cash in advance of payment to help finance operations. Payment on factored invoices are made directly to the counterparty, who in turn remits any funds remaining after it recovers the amount advanced to the LTAS and fees for the transaction. The transfers of financial assets do not qualify under ASC 860 as sale transactions and are accounted for as if they were secured borrowings. LTAS continues to report the transferred financial asset in its statement of financial position while recognizing any cash received as an obligation to return the cash to the transferee. LTAS's continuing involvement with all transferred financial assets relative to this agreement consists of (1) the full recourse provisions of the contract, (2) participation in additional future cashflows from the full payment of the invoice, and (3) the unconditional guarantee of ComSovereign. At September 30, 2020, the amount of accounts receivable that has been pledged as security interest under the factoring arrangement totaled $68,347 and the corresponding liability totaled $58,095. |
Inventory
Inventory | 9 Months Ended | 12 Months Ended |
Sep. 30, 2020 | Dec. 31, 2019 | |
Inventory Disclosure [Abstract] | ||
INVENTORY | 8. INVENTORY Inventory is valued at the lower of cost and net realizable value ("NRV"). The cost of inventory is calculated on a standard cost basis, which approximates weighted average actual cost. NRV is determined as the market value for finished goods, replacement cost for raw materials and finished goods market value less cost to complete for work in progress inventory. The Company regularly reviews inventory quantities on hand and records an impairment for excess and obsolete inventory based on factors including its estimated forecast of product demand, the stage of the product life cycle and production requirements for the units in question. Indirect manufacturing costs and direct labor expenses are allocated systematically to the total production inventory. Inventory consisted of the following as of September 30, 2020 and December 31, 2019: (Amounts in US$'s) September 30, December 31, Raw materials $ 1,775,498 $ 1,041,256 Work in progress 873,050 1,566,147 Finished goods 3,796,555 3,060,518 Total inventory 6,445,103 5,667,921 Reserve (1,125,513 ) (996,525 ) Total inventory, net $ 5,319,590 $ 4,671,396 | 5. INVENTORY Inventory consisted of the following as of December 31, 2019: (Amounts in US$'s) December 31, Raw materials $ 1,041,256 Work in progress 1,566,147 Finished goods 3,060,518 Total production inventory 5,667,921 Inventory held for customer service/warranty 56,409 Total inventory 5,724,330 Reserve (1,052,934 ) Total inventory, net $ 4,671,396 |
Prepaid Expenses
Prepaid Expenses | 9 Months Ended | 12 Months Ended |
Sep. 30, 2020 | Dec. 31, 2019 | |
Prepaid Expense, Current [Abstract] | ||
PREPAID EXPENSES | 9. PREPAID EXPENSES Prepaid expenses consisted of the following as of September 30, 2020 and December 31, 2019: (Amounts in US$'s) September 30, December 31, Prepaid products and services $ 420,077 $ 873,617 Prepaid rent and security deposit 169,310 43,112 $ 589,387 $ 916,729 | 6. PREPAID EXPENSES Prepaid expenses consisted of the following as of December 31, 2019: (Amounts in US$'s) December 31, Prepaid products and services $ 873,617 Prepaid rent and security deposit 43,112 $ 916,729 |
Property and Equipment, Net
Property and Equipment, Net | 9 Months Ended | 12 Months Ended |
Sep. 30, 2020 | Dec. 31, 2019 | |
Property, Plant and Equipment [Abstract] | ||
PROPERTY AND EQUIPMENT, NET | 10. PROPERTY AND EQUIPMENT, NET Property and equipment are stated at cost when acquired. Depreciation is calculated using the straight-line method over the estimated useful lives of the related assets as follows: Asset Type Useful Life Test equipment, research and development equipment 4-5 years Computer hardware 2 years Production fixtures 3 years Leasehold improvements Shorter of remaining lease term or 5 years Other 3-5 years Expenditures for maintenance and repairs are charged to expense as incurred, whereas expenditures for major renewals and betterments that extend the useful lives of property and equipment are capitalized. Property and equipment, net consisted of the following as of September 30, 2020 and December 31, 2019: (Amounts in US$'s) September 30, December 31, Shop machinery and equipment $ 9,481,183 $ 8,100,667 Computers and electronics 579,875 558,561 Office furniture and fixtures 348,911 341,214 Leasehold improvements 274,313 222,332 10,684,282 9,222,774 Less - accumulated depreciation (8,451,193 ) (7,764,668 ) $ 2,233,089 $ 1,458,106 For the nine months ended September 30, 2020, the Company invested $96,852 in capital expenditures. The Company recognized $278,857 and $197,446 of depreciation expense for the three months ended September 30, 2020 and 2019, respectively, and $797,801 and $304,669 for the nine months ended September 30, 2020 and the period January 10, 2019 (Inception) to September 30, 2019, respectively. | 7. PROPERTY AND EQUIPMENT, NET Property and equipment, net consisted of the following as of December 31, 2019: (Amounts in US$'s) December 31, Shop machinery and equipment $ 8,100,667 Computers and electronics 558,561 Office furniture and fixtures 341,214 Leasehold improvements 222,332 9,222,774 Less - accumulated depreciation (7,764,668 ) $ 1,458,106 For fiscal 2019, the Company invested $87,038 in capital expenditures. The Company recognized $623,884 of depreciation expense for fiscal 2019. |
Leases
Leases | 9 Months Ended | 12 Months Ended |
Sep. 30, 2020 | Dec. 31, 2019 | |
Leases [Abstract] | ||
LEASES | 11. LEASES Operating Leases The Company determines, at contract inception, whether or not an arrangement contains a lease. The Company has operating leases for office, manufacturing and warehouse space, along with office equipment. Amounts recognized as of September 30, 2020 and December 31, 2019 for operating leases were as follows: (Amounts in US$'s) September 30, December 31, Operating lease ROU assets $ 2,891,113 $ 2,199,682 Operating lease liability $ 3,020,364 $ 2,212,548 During the nine months ended September 30, 2020, the Company recognized three months of rent abatement and also applied a portion of a security deposit balance towards two months of future rent for its executive office located at 5000 Quorum Drive, Dallas, TX 75254, resulting in a reduction of the right-of-use asset and lease liability by $151,565. Recognition of the security deposit balance towards two months of future rent also resulted in an increase of the right-of-use asset by $54,148. As part of the acquisition of the business of Sovereign Plastics transaction on March 6, 2020, the Company assumed a lease for 23,300 square feet of flexible office space with a remaining term of approximately 62 months that will expire on May 30, 2025. A right-of-use asset and lease liability for $1,048,058 was recorded on March 6, 2020. Monthly payments range from $17,600 to $20,903 during the life of the lease. The lease did not include an implicit rate of return; therefore, the Company used an incremental borrowing rate based on other leases with similar terms. The lease agreement has no renewal option. On August 14, 2020, the Company amended its lease for 5,533 square feet of office space in Jacksonville, Florida, that originally expired on July 31, 2020, to extend the term for an additional 36-months through July 31, 2023. A right-of-use asset and lease liability for $161,328 was recorded on the commencement date of August 1, 2020. Monthly payments range from $4,786 to $5,078 over the extended lease term. The lease did not include an implicit rate of return; therefore, the Company used an incremental borrowing rate. The lease agreement has no renewal option. On September 17, 2020, the Company entered into a 63-month lease of office equipment. The lease commenced on September 29, 2020 and will expire on December 29, 2025. A right-of-use asset and lease liability for $23,898 was recorded on the commencement date of September 29, 2020. Monthly payments are $529 during the life of the lease, excluding a lease incentive of $1,750 payable at lease commencement. The lease did not include an implicit rate of return; therefore, the Company used an incremental borrowing rate. The renewal periods were not included in the analysis of the right-to-use asset and lease liability as the Company does not consider them to be reasonably certain of being exercised, as comparable equipment could generally be identified for comparable lease rates, without the Company incurring significant costs. Other information related to the Company's operating leases are as follows: (Amounts in US$'s) For the nine Operating lease ROU Asset – December 31, 2019 $ 2,199,682 Increase 1,287,432 Decrease (151,565 ) Amortization (444,436 ) Operating lease ROU Asset – September 30, 2020 $ 2,891,113 Operating lease liability – December 31, 2019 $ 2,212,548 Increase 1,233,284 Decrease (151,565 ) Amortization (273,903 ) Operating lease liability – September 30, 2020 $ 3,020,364 Operating lease liability – short term $ 659,789 Operating lease liability – long term 2,360,575 Operating lease liability – total $ 3,020,364 The following table presents the weighted-average remaining lease term and weighted average discount rates related to the Company's operating leases as of September 30, 2020 and December 31, 2019, respectively: (Amounts in US$'s) September 30, December 31, Weighted average remaining lease term 4.44 years 4.56 years Weighted average discount rate 5.99 % 6.50 % The table below reconciles the fixed component of the undiscounted cash flows for each of the first five years and the total remaining years to the lease liabilities recorded on the Condensed Consolidated Balance Sheet as of September 30, 2020: (Amounts in US$'s) Operating Remainder of 2020 $ 188,633 2021 805,765 2022 699,255 2023 713,647 2024 641,648 Thereafter 377,459 Total minimum lease payments 3,426,407 Less: effect of discounting (406,043 ) Present value of future minimum lease payments 3,020,364 Less: current obligations under leases (659,789 ) Long-term lease obligations $ 2,360,575 Finance Leases As part of the acquisition of the business of Sovereign Plastics transaction on March 6, 2020, the Company assumed a finance lease for certain equipment with a remaining term of approximately 20 months. The finance lease includes a bargain purchase option of $1 for the equipment at the end of the term on October 1, 2021. A right-of-use asset and lease liability for $18,009 was recorded on March 6, 2020. Monthly payments are $964.76 during the life of the lease, excluding the bargain purchase option. The lease did not include an implicit rate of return; therefore, the Company used an incremental borrowing rate. On June 11, 2020, the Company entered into a 24-month finance lease for certain equipment. The finance lease includes a bargain purchase option of $1 for the equipment at the end of the term on June 11, 2022. A right-of-use asset and lease liability for $35,562 was recorded on June 11, 2020. Monthly payments are $1,481.69 during the life of the lease, excluding the bargain purchase option. The lease included an implicit rate of return. On July 19, 2020, the Company entered into a 12-month finance lease for certain equipment, with a commencement date of August 6, 2020. The finance lease transfers ownership of the equipment to the Company at the end of the term on August 6, 2021. A right-of-use asset and lease liability for $28,405 was recorded on August 6, 2020. Monthly payments range from $2,473 to $2,498.66 during the life of the lease. The lease did not include an implicit rate of return; therefore, the Company used an incremental borrowing rate. Other information related to the Company's finance leases are as follows: (Amounts in US$'s) For the nine Finance lease ROU Asset – December 31, 2019 $ — Increase 81,976 Amortization (8,400 ) Finance lease ROU Asset – September 30, 2020 $ 73,576 Finance lease liability – December 31, 2019 $ — Increase 81,976 Interest accretion 1,063 Payment (13,697 ) Finance lease liability – September 30, 2020 $ 69,342 Finance lease liability – short term $ 55,046 Finance lease liability – long term 14,296 Finance lease liability – total $ 69,342 The following table presents the weighted-average remaining lease term and weighted average discount rates related to the Company's finance leases as of September 30, 2020 and December 31, 2019, respectively: (Amounts in US$'s) September 30, December 31, Weighted average remaining lease term 1.32 years — Weighted average discount rate 4.18 % — % | 17. LEASES As of December 31, 2019, the Company had six operating leases for office and manufacturing space and no financial leases. The impact of ASU 2016-02 on the Company’s Consolidated Balance Sheet beginning January 10, 2019 was from the recognition of ROU assets and lease liabilities for operating leases. Amounts recognized as of January 10, 2019 and December 31, 2019 for operating leases were as follows: (Amounts in US$’s) January 10, ROU assets $ 116,876 Lease liability $ 116,876 (Amounts in US$’s) December 31, ROU assets $ 2,199,682 Lease liability $ 2,212,548 The Company elected the practical expedient under ASU 2018-11, which allows the Company to apply the transition provision for Topic 842 at the Company’s adoption date. Therefore, the Company recognized and measured leases existing at January 10, 2019 (inception date). In addition, the Company elected the optional practical expedient permitted under the transition guidance which allows the Company to carry forward the historical accounting treatment for existing leases upon adoption. No impact was recorded to the Consolidated Statement of Operations or beginning retained earnings resulting from the adoption of Topic 842. Beginning January 10, 2019, operating ROU assets and operating lease liabilities are recognized based on the present value of lease payments, including annual rent increases, over the lease term at commencement date. Operating leases in effect prior to January 10, 2019 were recognized at the present value of the remaining payments on the remaining lease term as of January 10, 2019. As none of the Company’s leases included an implicit rate of return, the Company used its incremental secured borrowing rate based on lease term information available as of the adoption date or lease commencement date in determining the present value of lease payments. On January 10, 2019, the Company had one operating lease for office space. The Company is leasing 5,533 square feet of office space with monthly payments of $6,316 and an incremental borrowing rate of 5.90%. As of December 31, 2019, the Company had seven months remaining on the lease with a lease liability of $44,588. During fiscal 2019, the Company entered into the following leases which the Company identified as operating leases: On March 1, 2019, the Company entered into a 37-month lease for 2,390 square feet of office space. On December 31, 2019, the remaining liability under this agreement was $54,852, payable in amounts ranging from $2,091 to $2,188 per month through March 2022. The lease did not include an implicit rate of return, so the Company used an incremental borrowing rate of 5.5%. On June 1, 2018, InduraPower entered into a one-year lease on its executive office located at 1668 S. Research Loop in Tucson, Arizona. InduraPower leases 7,432 square feet of a business park. On February 1, 2019, the date InduraPower was acquired, there were five months remaining on the original lease. On June 7, 2019, InduraPower entered into a two-year lease renewal. On December 31, 2019, the remaining liability under this lease was $89,482 payable in amounts ranging from $5,351 to $5,717 per month until June 2021. The lease did not include an implicit rate of return; therefore, the Company used the average interest rate of InduraPower’s debt financings, which is 8.46%. The lease does not have a renewal option. On June 1, 2019, VEO entered into a five-year lease on its executive office located at 10509 Vista Sorrento Parkway in San Diego, California. VEO leases 3,031 square feet of a business park. On December 31, 2019, the remaining liability under this agreement was $341,200 payable in amounts from $6,800 to $7,654 per month until May 2024. The lease did not include an implicit rate of return and VEO did not have any outstanding debt financing. Therefore, the Company used the average rate of the first two outstanding leases mentioned above, which is 5.70%. The lease has a renewal option of two additional periods of five years each. On June 12, 2019, DragonWave entered into a two-year lease on office space located at 362 Terry Fox Drive, Ottawa Canada. DragonWave leases 13,541 square feet of a business park with monthly payments of $10,708, in Canadian dollars. On December 31, 2019, the remaining liability under this lease was $173,792. The lease is effective as of July 1, 2019 through June 2021. DragonWave used a 15% interest rate and there is no renewal option. On December 13, 2019, the Company entered into a 63-month lease on its executive office located at 5000 Quorum Drive, Dallas, TX 75254. The Company is leasing 15,289 square feet of a business park. The lease began on April 1, 2020 and will expire on July 31, 2025. A right-of-use asset and lease liability for $1,540,142 was recorded as of December 13, 2019. Monthly payments will range from $27,074 to $29,622 during the life of the lease. The lease did not include an implicit rate of return; therefore, the Company used the average rate of the first two outstanding leases mentioned above, which is 5.70%. The lease has a renewal option of two additional periods of five years each. The renewal periods were not included in the analysis of the right-to-use asset and lease liability as the Company does not consider them to be reasonably certain of being exercised, as comparable locations could generally be identified for comparable lease rates, without the Company incurring significant costs. Other information related to the Company’s operating leases are as follows: (Amounts in US$’s) December 31, 2019 ROU Asset – January 10, 2019 $ 116,876 Increase 2,300,580 Amortization (217,774 ) ROU Asset – December 31, 2019 $ 2,199,682 Lease liability – January 10, 2019 $ 116,876 Increase 2,300,580 Amortization (204,908 ) Lease liability – December 31, 2019 $ 2,212,548 Lease liability – short term $ 467,979 Lease liability – long term 1,744,569 Lease liability – total $ 2,212,548 As of December 31, 2019, the Company’s operating leases had a weighted-average remaining lease term of 4.56 years and a weighted average discount rate of 6.50%. The table below reconciles the fixed component of the undiscounted cash flows for each of the first five years and the total remaining years to the lease liabilities recorded on the Consolidated Balance Sheet as of December 31, 2019: (Amounts in US$’s) Operating Leases Amounts due within twelve months of December 31, 2020 $ 557,200 2021 521,067 2022 431,146 2023 434,736 2024 389,917 Thereafter 177,735 Total minimum lease payments 2,511,801 Less: effect of discounting (299,253 ) Present value of future minimum lease payments 2,212,548 Less: current obligations under leases (467,979 ) Long-term lease obligations $ 1,744,569 |
Fair Value of Financial Instrum
Fair Value of Financial Instruments | 9 Months Ended |
Sep. 30, 2020 | |
Warrants [Abstract] | |
FAIR VALUE OF FINANCIAL INSTRUMENTS | 12. FAIR VALUE OF FINANCIAL INSTRUMENTS Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in the principal market (or most advantageous market in the absence of a principal market) for the asset or liability in an orderly transaction between market participants as of the measurement date. The Company maximizes the use of observable inputs and minimizes the use of unobservable inputs in measuring fair value and has established a three-level fair value hierarchy that prioritizes the inputs used to measure fair value. The three levels of inputs used to measure fair value are as follows: ● Level 1 — Observable inputs such as quoted prices in active markets for identical assets or liabilities. ● Level 2 — Observable market-based inputs or observable inputs that are corroborated by market data; and ● Level 3 — Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. The Company's financial instruments consist of cash, accounts receivable, accounts payable and notes payable. The Company has determined that the book value of its outstanding financial instruments as of September 30, 2020 approximated their fair value due to their short-term nature. |
Business Acquisitions
Business Acquisitions | 9 Months Ended | 12 Months Ended |
Sep. 30, 2020 | Dec. 31, 2019 | |
Business Combinations [Abstract] | ||
BUSINESS ACQUISITIONS | 13. BUSINESS ACQUISITIONS VEO, Inc. On January 31, 2019, ComSovereign entered a stock-for-stock exchange with the stockholder of VEO. At the effective date of the acquisition, all of the outstanding capital stock of VEO that was issued and outstanding at such time was exchanged for 1,500,000 unregistered Preferred Series A shares of ComSovereign. Purchase consideration has been evaluated based on the business enterprise valuation of VEO. The shares of Preferred Series A issued to acquire VEO were valued at $8.81 per share (non-marketable basis). VEO Purchase Price (Amounts in US$'s, except share data) Consideration Number of Preferred Series A shares paid 1,500,000 Per share value $ 8.81 Purchase price $ 13,215,000 The allocation of the total purchase price to the tangible and intangible assets acquired and liabilities assumed by ComSovereign based on the fair values as of January 31, 2019 was as follows: (Amounts in US$'s) Fair Value Cash $ 55,261 Fixed and other long-term assets 4,000 Assumed liabilities (40,531 ) Intangible assets and goodwill: Technology 6,410,000 Goodwill 6,786,270 Total intangible assets and goodwill 13,196,270 Total Consideration $ 13,215,000 InduraPower, Inc. On January 31, 2019, ComSovereign entered a stock-for-stock exchange with the stockholders of InduraPower. At the effective date of the acquisition, all of the outstanding capital stock of InduraPower that was issued and outstanding at such time was exchanged for 800,000 unregistered shares of Preferred Series A of ComSovereign. Purchase consideration has been evaluated based on the business enterprise valuation of InduraPower. The shares of Preferred Series A issued to acquire InduraPower were valued at $8.81 per share (non-marketable basis). InduraPower Purchase Price (Amounts in US$'s, except share data) Consideration Number of Preferred Series A shares paid 800,000 Per share value $ 8.81 Purchase price $ 7,048,000 The allocation of the total purchase price to the tangible and intangible assets acquired and liabilities assumed by ComSovereign based on the fair values as of January 31, 2019 was as follows: (Amounts in US$'s) Fair Value Cash $ 18,791 Debt-free net working capital (excluding cash) 263,459 Fixed and other long-term assets 97,384 Assumed liabilities (1,240,097 ) Intangible assets and goodwill: Technology 1,000,000 Goodwill 6,908,463 Total intangible assets and goodwill 7,908,463 Total Consideration $ 7,048,000 Silver Bullet Technology, Inc. On March 4, 2019, ComSovereign entered a stock-for-stock exchange with the stockholder of Silver Bullet. At the effective date of the acquisition, all of the outstanding capital stock of Silver Bullet that was issued and outstanding at such time was exchanged for 300,000 unregistered shares of Preferred Series A of ComSovereign. Purchase consideration has been evaluated based on the business enterprise valuation of Silver Bullet. The shares of Preferred Series A issued to acquire Silver Bullet were valued at $8.81 per share (non-marketable basis). Silver Bullet Purchase Price (Amounts in US$'s, except share data) Consideration Number of Preferred Series A shares paid 300,000 Per share value $ 8.81 Purchase price $ 2,643,000 The allocation of the total purchase price to the tangible and intangible assets acquired and liabilities assumed by ComSovereign based on the fair values as of March 4, 2019 was as follows: (Amounts in US$'s) Fair Value Cash $ 273,290 Debt-free net working capital (excluding cash) 103,537 Fixed and other long-term assets 21,000 Liabilities assumed (84,382 ) Intangible assets and goodwill: Technology 210,000 Trade name 200,000 Customer relationships 400,000 Goodwill 1,519,555 Total intangible assets and goodwill 2,329,555 Total Consideration $ 2,643,000 DragonWave-X LLC and Lextrum, Inc. On April 1, 2019, ComSovereign entered into a stock-for-stock exchange with the owner of DragonWave and Lextrum. At the effective date of the acquisition, all of the equity interests of DragonWave and Lextrum were exchanged for an aggregate of 13,237,149 shares of ComSovereign's restricted common stock. Purchase consideration has been evaluated based on the business enterprise valuation of DragonWave and Lextrum. The shares of common stock issued to acquire DragonWave and Lextrum were valued at $4.40 per share (non-marketable basis). DragonWave and Lextrum Purchase Price (Amounts in US$'s, except share data) Consideration Number of common stock shares paid 13,237,149 Per share value $ 4.40 Purchase price $ 58,243,456 DragonWave $ 42,081,392 Lextrum $ 16,162,064 DragonWave The allocation of the total purchase price to the tangible and intangible assets acquired and liabilities assumed by ComSovereign based on the fair values as of April 1, 2019 was as follows: (Amounts in US$'s) Fair Value Cash $ 1,274,072 Debt-free net working capital (excluding cash) (1,099,194 ) Note payable (5,690,000 ) Fixed and other long-term assets 2,455,714 Intangible assets: Technology 13,750,000 Trade name 4,210,000 Customer relationships 13,080,000 Goodwill 14,100,800 Total intangible assets and goodwill 45,140,800 Total Consideration $ 42,081,392 Lextrum The allocation of the total purchase price to the acquired tangible and intangible assets and liabilities assumed by ComSovereign based on the fair values as of April 1, 2019 was as follows: (Amounts in US$'s) Fair Value Cash $ 8,105 Debt-free net working capital (excluding cash) (103,611 ) Fixed and other long-term assets — Intangible assets: Technology 11,430,000 Goodwill 4,827,570 Total intangible assets 16,257,570 Total Consideration $ 16,162,064 Historical Drone Aviation Holding Corp On November 27, 2019, the Company completed the ComSovereign Acquisition in a stock for stock transaction that was treated as a reverse merger for accounting purposes under U.S. GAAP with ComSovereign as the accounting acquiror and the Company as the accounting acquiree. The allocation of the total purchase price to the Company's acquired tangible and intangible assets and assumed liabilities based on the fair values as of November 27, 2019 was as follows: (Amounts in US$'s) Fair Value Working capital $ 2,399,800 Other assets 220,672 Intangible assets and goodwill: Intellectual property 3,729,537 Trade name 1,233,204 Customer relationships 1,630,792 Noncompete 937,249 Goodwill 18,106,237 Total intangible assets and goodwill 25,637,019 Total Consideration $ 28,257,491 Fast Plastic Parts, LLC and Spring Creek Manufacturing, Inc. Acquisition On March 6, 2020, Sovereign Plastics completed the acquisition of the net assets of Fast Plastic Parts, LLC and 100% of the shares of common stock of Spring Creek Manufacturing, Inc. The consideration paid was the purchase price of $829,347, representing cash paid on the closing date of $253,773 and short-term debt incurred to the sellers of $575,574. Based in Colorado Springs, Colorado, the acquired business occupies a 23,300-square-foot manufacturing facility that houses a full-production machine shop, a comprehensive line of state-of-the-art plastic injection molding machinery, as well as light-assembly fulfilment and packaging lines serving customers 24x7. To finance the cash paid on the closing date and a portion of the short-term debt incurred, the Company entered into a new promissory note with an unaffiliated lender in the principal amount of $500,000 for proceeds of $446,000 that matures on December 5, 2020 and issued 50,000 shares of common stock. See Note 15 for further discussion of the promissory note. The Company expensed acquisition-related costs of $25,714 in the nine months ended September 30, 2020, which is included in general and administrative expenses on the Company's Condensed Consolidated Statement of Operations. The Company has accounted for the purchase using the acquisition method of accounting for business combinations under ASC 805. Accordingly, the purchase price has been allocated to the underlying assets and liabilities in proportion to their respective fair values. The following table summarizes the acquired assets and assumed liabilities and the preliminary acquisition accounting for the fair value of the assets and liabilities recognized in the Condensed Consolidated Balance Sheet at September 30, 2020: (Amounts in US$'s) Fair Value Inventory $ 168,106 Prepaid expenses 66,575 Property & equipment 1,365,319 Operating lease right-of-use-assets 1,048,058 Finance lease right-of-use assets 18,009 Intangible assets: Customer relationships 500,226 Total assets 3,166,293 Current portion of long-term debt 1,270,879 Operating lease liabilities, current 166,919 Finance lease liabilities, current 6,578 Operating lease liabilities, net of current portion 881,139 Finance lease liabilities, net of current portion 11,431 Total purchase consideration $ 829,347 This purchase price allocation is preliminary and is pending the finalization of the third-party valuation analysis and working capital, as the Company has not yet completed the detailed valuation analyses as of the filing date of this Form 10-Q. Virtual Network Communications, Inc. On July 6, 2020, the Company completed its acquisition (the "VNC Acquisition") of Virtual Network Communications Inc., a Virginia corporation ("VNC"), pursuant to an Agreement and Plan of Merger and Reorganization dated as of May 21, 2020 (the "Merger Agreement"), by and among the Company and its wholly-owned subsidiaries, CHC Merger Sub 7, Inc. and VNC Acquisition LLC, VNC and Mohan Tammisetti, solely in his capacity as the representative of the security holders of VNC. VNC is an edge centric wireless telecommunications technology developer and equipment manufacturer of both 4G LTE Advanced and 5G capable radio equipment. VNC designs, develops, manufactures, markets, and supports a line of network products for wireless network operators, mobile virtual network operators, cable TV system operators, and government and business enterprises that enable new sources of revenue, and reduce capital and operating expenses. VNC is reinventing how wireless networks service mission-critical communications for Public Safety, Homeland Security, Department of Defense and commercial Private Network users. We envision the future of virtualized micro networks blanketing the globe without expensive terrestrial based radio towers and building installation. VNC's patented technology virtualizes entire LTE Advanced and 5G core and radio solutions. Our products eliminate much of the costly backbone equipment of telecom networks. VNC also has developed rapidly deployable, tactical systems that can be combined with the tethered aerostats and drones, including from COMSovereign's Drone Aviation subsidiary, enabling operating in nearly any location in the world. In connection with the VNC acquisition, the total preliminary purchase price consideration amounted to $19,728,987, representing (i) cash paid on the closing date of $2,892,727, (ii) 11,738,210 shares of the Company's common stock with a fair value of $12,677,267 or $1.08 per share, of which an aggregate of 4,000,000 shares is being held in an escrow fund for purposes of satisfying any post-closing indemnification claims of the former VNC security holders under the Merger Agreement, (iii) options to purchase an aggregate 2,525,506 shares of the Company's common stock with a fair value of $2,261,275, (iv) warrants to purchase an aggregate 1,736,284 shares of the Company's common stock with a fair value of $1,646,471, and (v) settlement of a note receivable and related interest receivable pre-existing relationship in the amount of $251,247. The Company has accounted for the purchase using the acquisition method of accounting for business combinations under ASC 805. Accordingly, the purchase price has been allocated to the underlying assets and liabilities in proportion to their respective fair values. The following table summarizes the acquired assets and assumed liabilities and the preliminary acquisition accounting for the fair value of the assets and liabilities recognized in the Condensed Consolidated Balance Sheet at September 30, 2020: (Amounts in US$'s) Fair Value Inventory $ 157,727 Prepaid expenses 15,000 Intangible assets: Goodwill 19,151,331 Technology 23,992 Licenses 410,000 Total assets 19,758,050 Accounts payable and other accrued liabilities 5,000 Interest payable 35 Note payable 24,028 Total purchase consideration $ 19,728,987 This purchase price allocation is preliminary and is pending the finalization of the third-party valuation analysis and working capital, as the Company has not yet completed the detailed valuation analyses as of the filing date of this Form 10-Q. | 3. BUSINESS ACQUISITIONS The Company's acquisitions are accounted for such that the assets acquired and liabilities assumed are recognized at their acquisition date fair values, with any excess of the consideration transferred over the estimated fair values of the identifiable net assets acquired recorded as goodwill. For fiscal 2019, the Company recorded the following acquisitions. VEO, Inc. On January 31, 2019, ComSovereign entered a stock-for-stock exchange with the stockholder of VEO. At the effective date of the acquisition, all of the outstanding capital stock of VEO that was issued and outstanding at such time was exchanged for 1,500,000 unregistered Preferred Series A shares of ComSovereign. Purchase consideration has been evaluated based on the business enterprise valuation of VEO. The shares of Preferred Series A issued to acquire VEO were valued at $8.81 per share (non-marketable basis). VEO Purchase Price (Amounts in US$'s, except share data) Consideration Number of Preferred Series A paid 1,500,000 Per share value $ 8.81 Purchase price $ 13,215,000 The allocation of the total preliminary estimated purchase price to the tangible and intangible assets acquired and liabilities assumed by ComSovereign based on the estimated fair values as of January 31, 2019 was as follows: (Amounts in US$'s) Fair Value Cash $ 55,261 Fixed and other long-term assets 4,000 Assumed liabilities (40,531 ) Intangible assets and goodwill: Technology 6,410,000 Goodwill 6,786,270 Total intangible assets and goodwill 13,196,270 Total Consideration $ 13,215,000 InduraPower, Inc. On January 31, 2019, ComSovereign entered a stock-for-stock exchange with the stockholders of InduraPower. At the effective date of the acquisition, all of the outstanding capital stock of InduraPower that was issued and outstanding at such time was exchanged for 800,000 unregistered shares of Preferred Series A of ComSovereign. Purchase consideration has been evaluated based on the business enterprise valuation of InduraPower. The shares of Preferred Series A issued to acquire InduraPower were valued at $8.81 per share (non-marketable basis). InduraPower Purchase Price (Amounts in US$'s, except share data) Consideration Number of Preferred Series A paid 800,000 Per share value $ 8.81 Purchase price $ 7,048,000 The allocation of the total preliminary estimated purchase price to the tangible and intangible assets acquired and liabilities assumed by ComSovereign based on the estimated fair values as of January 31, 2019 was as follows: (Amounts in US$'s) Fair Value Cash $ 18,791 Debt-free net working capital (excluding cash) 263,459 Fixed and other long-term assets 97,384 Assumed liabilities (1,240,097 ) Intangible assets and goodwill: Technology 1,000,000 Goodwill estimate 6,908,463 Total intangible assets and goodwill 7,908,463 Total Consideration $ 7,048,000 Silver Bullet Technology, Inc. On March 4, 2019, ComSovereign entered a stock-for-stock exchange with the stockholder of Silver Bullet. At the effective date of the acquisition, all of the outstanding capital stock of Silver Bullet that was issued and outstanding at such time was exchanged for 300,000 unregistered shares of Preferred Series A of ComSovereign. Purchase consideration has been evaluated based on the business enterprise valuation of Silver Bullet. The shares of Preferred Series A issued to acquire Silver Bullet were valued at $8.81 per share (non-marketable basis). Silver Bullet Purchase Price (Amounts in US$'s, except share data) Consideration Number of Preferred Series A paid 300,000 Per share value $ 8.81 Purchase price $ 2,643,000 The allocation of the total preliminary estimated purchase price to the tangible and intangible assets acquired and liabilities assumed by ComSovereign based on the estimated fair values as of March 4, 2019 was as follows: (Amounts in US$'s) Fair Value Cash $ 273,290 Debt-free net working capital (excluding cash) 103,537 Fixed and other long-term assets 21,000 Liabilities assumed (84,382 ) Intangible assets and goodwill: Technology 210,000 Trade name 200,000 Customer relationships 400,000 Goodwill estimate 1,519,555 Total intangible assets and goodwill 2,329,555 Total Consideration $ 2,643,000 DragonWave-X LLC and Lextrum, Inc. On April 1, 2019, ComSovereign entered into a stock-for-stock exchange with the owner of DragonWave and Lextrum. At the effective date of the acquisition, all of the equity interests of DragonWave and Lextrum were exchanged for an aggregate of 13,237,149 shares of ComSovereign's restricted common stock. Purchase consideration has been evaluated based on the business enterprise valuation of DragonWave and Lextrum. The shares of common stock issued to acquire DragonWave and Lextrum were valued at $4.40 per share (non-marketable basis). DragonWave and Lextrum Purchase Price (Amounts in US$'s, except share data) Consideration Number of common stock paid 13,237,149 Per share value $ 4.40 Purchase price $ 58,243,456 DragonWave $ 42,081,392 Lextrum $ 16,162,064 DragonWave The allocation of the total preliminary estimated purchase price to the tangible and intangible assets acquired and liabilities assumed by ComSovereign based on the estimated fair values as of April 1, 2019 was as follows: (Amounts in US$'s) Fair Value Cash $ 1,274,072 Debt-free net working capital (excluding cash) (1,099,194 ) Note payable (5,690,000 ) Fixed and other long-term assets 2,455,714 Intangible assets: Technology 13,750,000 Trade name 4,210,000 Customer relationships 13,080,000 Goodwill estimate 14,100,800 Total intangible assets and goodwill 45,140,800 Total Consideration $ 42,081,392 Lextrum The allocation of the total preliminary estimated purchase price to the acquired tangible and intangible assets and liabilities assumed by ComSovereign based on the estimated fair values as of April 1, 2019 was as follows: (Amounts in US$'s) Fair Value Cash $ 8,105 Debt-free net working capital (excluding cash) (103,611 ) Fixed and other long-term assets — Intangible assets: Technology 11,430,000 Goodwill estimate 4,827,570 Total intangible assets 16,257,570 Total Consideration $ 16,162,064 Historical Drone Aviation Holding Corp The allocation of the total preliminary estimated purchase price to Drone Aviation Holding Corp's acquired tangible and intangible assets and assumed liabilities based on the estimated fair values as of November 27, 2019 was as follows: (Amounts in US$'s) Fair Value Working capital $ 2,399,800 Other assets 220,672 Intangible assets and goodwill: Intellectual property 3,729,537 Trade name 1,233,204 Customer relationships 1,630,792 Noncompete 937,249 Goodwill estimate 18,106,237 Total intangible assets and goodwill 25,637,019 Total Consideration $ 28,257,491 |
Long-Lived Assets and Goodwill
Long-Lived Assets and Goodwill | 9 Months Ended |
Sep. 30, 2020 | |
Long Lived Assets and Goodwill [Abstract] | |
LONG-LIVED ASSETS AND GOODWILL | 14. LONG-LIVED ASSETS AND GOODWILL The Company accounts for long-lived assets in accordance with the provisions of ASC 360-10-35, Property, Plant and Equipment, Impairment or Disposal of Long-lived Assets The Company accounts for goodwill and intangible assets in accordance with ASC 350, Intangibles – Goodwill and Other The following table sets forth the changes in the carrying amount of goodwill for the nine months ended September 30, 2020: (Amounts in US$'s) Total Balance at December 31, 2019 $ 56,386,796 Balance at September 30, 2020 $ 75,538,127 The following table sets forth the gross carrying amounts and accumulated amortization of the Company's intangible assets as of September 30, 2020 and December 31, 2019: (Amounts in US$'s) Gross Accumulated Net Definite-lived intangible assets: Trade names $ 5,643,204 $ (489,222 ) $ 5,153,982 Licenses — — — Technology 32,800,000 (4,308,333 ) 28,491,667 Customer relationships 15,110,792 (2,054,894 ) 13,055,898 Intellectual property 3,729,537 (51,799 ) 3,677,738 Noncompete 937,249 (39,052 ) 898,197 Total definite-lived intangible assets at December 31, 2019 $ 58,220,782 $ (6,943,300 ) $ 51,277,482 Trade names $ 5,643,204 $ (1,093,884 ) $ 4,549,320 Licenses 410,000 — 410,000 Technology 32,823,992 (8,408,374 ) 24,415,618 Customer relationships 15,611,018 (4,379,965 ) 11,231,053 Intellectual property 3,729,537 (517,991 ) 3,211,546 Noncompete 937,249 (390,520 ) 546,729 Total definite-lived intangible assets at September 30, 2020 $ 59,155,000 $ (14,790,734 ) $ 44,364,266 Amortization expense of intangible assets was $2,621,315 and $2,243,135 for the three months ended September 30, 2020 and 2019, respectively, and $7,847,434 and $4,614,131 for the nine months ended September 30, 2020 and the period January 10, 2019 (Inception) to September 30, 2019, respectively. As of September 30, 2020, assuming no additional amortizable intangible assets, the expected amortization expense for the unamortized acquired intangible assets for the next five years and thereafter was as follows: (Amounts in US$'s) Estimated Remainder of 2020 $ 2,637,033 2021 10,508,774 2022 10,079,202 2023 10,079,202 2024 8,024,308 2025 2,621,877 2026 378,187 2027 35,683 |
Debt Agreements
Debt Agreements | 9 Months Ended | 12 Months Ended |
Sep. 30, 2020 | Dec. 31, 2019 | |
Debt Disclosure [Abstract] | ||
DEBT AGREEMENTS | 15. DEBT AGREEMENTS Beneficial Conversion Features and Warrants The Company evaluates the conversion feature of convertible debt instruments to determine whether the conversion feature was beneficial as described in ASC 470 -30 Debt with Conversion and Other Options -the-money -in -Scholes Under these guidelines, the Company allocates the value of the proceeds received from a convertible debt transaction between the conversion feature and any other detachable instruments (such as warrants) on a relative fair value basis. The allocated fair value of the BCF and warrants are recorded as a debt discount and is accreted over the expected term of the convertible debt as interest expense. Debt Discounts The Company records debt discounts as a deduction from the carrying amount of the related indebtedness on its Consolidated Balance Sheet with the respective debt discount amortized in interest expense on its Consolidated Statement of Operations. In connection with the issuance of certain notes payable and senior convertible debentures, the Company, or its subsidiaries, issued warrants to purchase shares of its common stock and has BCFs. The warrants are exercisable at various exercise prices per share. The Company evaluated the terms of these warrants at issuance and concluded that they should be treated as equity. The fair value of the warrants was determined by using the Black -Scholes Debt Issuance Costs The Company presents debt issuance costs as a direct deduction from the carrying amount of the related indebtedness on its Consolidated Balance Sheet and amortizes these costs over the term of the related debt liability using the straight -line Long -term (Amounts in US$’s) Maturity Date September 30, 2020 December 31, 2019 Amount Interest Amount Interest Secured Notes Payable Secured note payable* February 28, 2020 $ 788,709 12.5 % $ 788,709 8.5 % Secured note payable* March 1, 2022 186,709 9.0 % 224,288 9.0 % Secured note payable* September 1, 2021 18,980 7.9 % 21,571 7.9 % Secured note payable November 26, 2021 2,000,000 9.0 % 2,000,000 9.0 % Secured note payable December 26, 2020 211,667 78.99 % — — Secured note payable* September 15, 2020 855,120 36.0 % — — Secured note payable* October 15, 2020 2,007,971 5.0 % — — Total secured notes payable 6,069,156 3,034,568 Notes Payable Equipment financing loan September 15, 2020 — — 3,828 8.8 % Note payable July 9, 2019 — — 200,000 18.0 % Note payable September 1, 2019 — — 200,000 18.0 % Note payable* September 30, 2020 500,000 10.0 % 500,000 10.0 % Note payable* September 30, 2020 175,000 10.0 % 175,000 10.0 % Note payable* August 31, 2020 3,500,000 12.0 % 5,000,000 10.0 % Note payable July 9, 2019 — — 200,000 18.0 % Notes payable* December 6, 2019 66,700 18.0 % 450,100 18.0 % Note payable November 30, 2020 500,000 0.0 % — — Notes payable* June 30, 2020 379,588 0.0 % — — Notes payable* June 30, 2020 165,986 0.0 % — — Note payable* February 16, 2023 83,309 3.0 % — — Equipment financing loan* November 9, 2023 61,287 8.5 % — — Equipment financing loan* December 19, 2023 89,912 6.7 % — — Equipment financing loan* January 17, 2024 41,390 6.7 % — — Note payable* September 30, 2020 290,000 0.0 % — — Note Payable* October 13, 2020 through November 30, 2020 1,200,000 15.0 – 18.0 % — — PPP loans April 30, 2022 through May 26, 2022 455,184 1.0 % — — PPP loan May 14, 2022 24,028 1.0 % — — PPP loan August 11, 2025 103,659 1.0 % — — Total notes payable 7,636,043 6,728,928 Senior Debentures Senior debenture* December 31, 2019 84,000 15.0 % 100,000 15.0 % Total senior debentures 84,000 100,000 Convertible Notes Payable Convertible note payable* January 29, 2021 374,137 24.0 % — — Convertible note payable November 20, 2020 1,700,000 5.0 % — — Total convertible notes payable 2,074,137 — — Senior Convertible Debentures Senior convertible debenture December 31, 2019 — — 25,000 15.0 % Senior convertible debenture December 31, 2021 250,000 10.0 % 250,000 10.0 % Senior convertible debenture November 30, 2020 1,000,000 9.0 % — — Total senior convertible debentures 1,250,000 275,000 Total long-term debt 17,113,336 10,138,496 Less unamortized discounts and debt issuance costs (3,990,019 ) (4,749,004 ) Total long-term debt, less discounts and debt issuance costs 13,123,317 5,389,492 Less current portion of (13,123,317 ) (5,389,492 ) Debt classified as long-term debt $ — $ — ____________ * Note is in default. Refer to further discussion below. Secured Notes Payable In August 2016, InduraPower entered into a promissory note not to exceed the principal amount of $550,000 bearing interest at 8.5% per annum with a maturity date of August In August 2016, InduraPower entered into a promissory note in the principal amount of $450,000 that bears interest at 9.0% per annum and matures on March -only -financial In August 2016, InduraPower entered into a promissory note in the principal amount of $50,000 with an interest rate of 7.9% per annum and a maturity date of September -financial In November 2019, DragonWave entered into a secured loan agreement with an individual lender pursuant to which DragonWave received a $2,000,000 loan that bears interest at the rate of 9.0% per annum and matures on November -annually On February In connection with the acquisition of the business by Sovereign Plastics on March -financial On March Notes Payable InduraPower has a financing loan for certain of its equipment that bears interest at 8.775% per annum and was due on September In September 2017, ComSovereign entered into a promissory note in the principal amount of $137,500 that bore interest at a rate of 12% per annum and was due on October In connection with its acquisition of DragonWave and Lextrum in April 2019, ComSovereign assumed the obligations of the seller on a promissory note in the principal amount of $500,000 bearing interest at 12.0% per annum with a maturity date of October In connection with its acquisition of DragonWave and Lextrum in April 2019, ComSovereign assumed the obligations of the seller of a promissory note in the principal amount of $175,000 that bore interest at the rate of 15% per annum and was due on November In October 2017, DragonWave entered into a 90 -day -assessable On June On November On March In connection with the acquisition of the business by Sovereign Plastics on March • • • • • • Between April 30 and May -payroll On May Between July -Q In connection with the VNC acquisition on July On August Senior Debentures In connection with its acquisition of DragonWave and Lextrum in April 2019, ComSovereign assumed the obligations of the seller of $100,000 aggregate principal amount of 8% Senior Convertible Debentures of the seller that bore interest at the rate of 8% per annum and matured on December -annually Convertible Notes Payable On April, -in-kind -in-kind -demand On July -in-kind -in-kind -demand -demand -Q On August Senior Convertible Debentures In connection with its acquisition of DragonWave and Lextrum in April 2019, ComSovereign assumed the obligations of the seller of $25,000 aggregate principal amount of 8% Senior Convertible Debentures of the seller that bore interest at the rate of 8% per annum and matured on December -annually On September -annually On July -listing Certain agreements governing the secured notes payable, notes payable and senior convertible debentures contain customary covenants, such as debt service coverage ratios, limitations on liens, dispositions, mergers, entry into other lines of business, investments and the incurrence of additional indebtedness. All debt agreements are subject to customary events of default. If an event of default occurs with respect to the debt agreements and is continuing, the lenders may accelerate the applicable amounts due. The Company is in default on several debt agreements, and has accrued the proper penalties or disclosed any additional contingencies that resulted from the default. Other than for reasons of noncompliance with debt covenants as noted above, all long -term Future maturities contractually required by the Company under long -term (Amounts in US$’s) Remainder of 2020 $ 14,065,711 2021 2,344,018 2022 543,028 2023 55,944 2024 1,035 Thereafter 103,600 Total $ 17,113,336 See Note 23 — Subsequent Events | 10. DEBT AGREEMENTS Long-term debt consis December 31, 2019 (Amounts in US$'s) Maturity Date Amount Interest Secured Notes Payable Secured note payable February 28, 2020 $ 788,709 8.5 % Secured note payable March 1, 2022 224,288 9.0 % Secured note payable September 1, 2021 21,571 7.9 % Secured note payable November 26, 2021 2,000,000 9.0 % Total secured notes payable 3,034,568 Notes Payable Equipment financing loan September 15, 2020 3,828 8.8 % Note payable July 9, 2019 200,000 18.0 % Note payable September 1, 2019 200,000 18.0 % Note payable September 30, 2020 500,000 10.0 % Note payable September 30, 2020 175,000 10.0 % Note payable March 30, 2020 5,000,000 10.0 % Note payable July 9, 2019 200,000 18.0 % Notes payable December 6, 2019 450,100 18.0 % Total notes payable 6,728,928 Senior Convertible Debentures Senior convertible debenture December 31, 2019 100,000 15.0 % Senior convertible debenture December 31, 2019 25,000 15.0 % Senior convertible debenture December 31, 2021 250,000 10.0 % Total senior convertible debentures 375,000 Total long-term debt 10,138,496 Less unamortized discounts and debt issuance costs (4,749,004 ) Total long-term debt, less discounts and debt issuance costs 5,389,492 Less current portion of long-term debt (5,389,492 ) Debt classified as long-term debt $ — Secured Notes Payable In August 2016, InduraPower entered into a promissory note not to exceed the principal amount of $550,000 bearing interest at 8.5% per annum with a maturity date of August 31, 2018. InduraPower could draw funds under the note through February 28, 2017. Interest on this note was payable monthly and the full principal balance was due at maturity. On September 11, 2019, the note was amended with both parties agreeing that the outstanding balance of $813,709 would be due on February 28, 2020. As of December 31, 2019, an aggregate principal amount of $788,709 was outstanding under this note. This promissory note is currently past due. This promissory note is secured by substantially all of the assets of InduraPower. In August 2016, InduraPower entered into a promissory note in the principal amount of $450,000 that bears interest at 9.0% per annum and matures on March 1, 2022. Accrued interest only payments were due monthly beginning October 1, 2016 through March 1, 2017. Monthly payments of $9,341 for interest and principal are due on this note for the following 60 consecutive months. As of December 31, 2019, an aggregate principal amount of $224,288 was outstanding under this note. This promissory note is secured by all assets, certain real estate and cash accounts of InduraPower and is guaranteed by certain officers of InduraPower. This promissory note is subjected to clauses, whereby InduraPower is required to meet certain financial and non-financial terms. InduraPower did not fulfil the requirements to maintain a balance of at least $155,159 at J.P. Morgan while the promissory note is outstanding and maintain a debt service coverage ratio of at least 1.25. Due to this breach of clauses, the promissory note holder is contractually entitled to request immediate repayment of the outstanding promissory note, and/or increase the interest rate up to an additional 18% per annum. The outstanding balance is presented as a current liability as of December 31, 2019. The promissory note holder had not requested early repayment of the loan as of the date when these financial statements were approved by the Board of Directors. In August 2016, InduraPower entered into a promissory note in the principal amount of $50,000 with an interest rate of 7.785% per annum and a maturity date of September 1, 2021. Beginning April 1, 2017, equal monthly payments of $1,011 for interest and principal are due on the note for 60 consecutive months. As of December 31, 2019, an aggregate principal amount of $21,571 was outstanding under this note. This promissory note is secured by business equipment, certain real estate and cash accounts of InduraPower and is guaranteed by certain officers of InduraPower. This promissory note is subjected to clauses, whereby InduraPower is required to meet certain financial and non-financial terms. InduraPower did not fulfil the requirements to maintain a balance of at least $155,159 at J.P. Morgan while the promissory note is outstanding and maintain a debt service coverage ratio of at least 1.25. Due to this breach of clauses, the promissory note holder is contractually entitled to request immediate repayment of the outstanding promissory note, and/or increase the interest rate up to an additional 18% per annum. The outstanding balance is presented as a current liability as of December 31, 2019. The promissory note holder had not requested early repayment of the loan as of the date when these financial statements were approved by the Board of Directors. In November 2019, DragonWave entered into a secured loan agreement with an individual lender pursuant to which DragonWave received a $2,000,000 loan that bears interest at the rate of 9% per annum and matures on November 26, 2021. Accrued interest is calculated on a compound basis and is payable semi-annually in May and November of each year. Principal is due in full at maturity but can be prepaid in full or in part without penalty. The loan is secured by all of the assets of DragonWave and is guaranteed by ComSovereign. As of December 31, 2019, an aggregate principal amount of $2,000,000 was outstanding under this note. In connection with this loan, DragonWave incurred $20,000 of debt discounts and $4,700,000 of debt issuance costs. The debt issuance costs were the result of the issuance of 1,050,000 shares of common stock of the Company and a cash payment of $80,000. During fiscal 2019, $196,667 of these costs were amortized and recognized in interest expense in the Consolidated Statement of Operations. As of December 31, 2019, there were $19,167 of debt discounts and $4,504,167 of debt issuance costs remaining. Notes Payable InduraPower has a financing loan for certain of its equipment that bears interest at 8.775% per annum and is due on September 15, 2020. Principal and interest payments of $1,872 are due quarterly. As of December 31, 2019, the loan had an outstanding balance of $3,828. In September 2017, InduraPower entered into a promissory note in the principal amount of $137,500 that bore interest at a rate of 12% per annum and was due on October 17, 2017. The note was repaid during fiscal 2019. On June 10, 2019, InduraPower entered into a new promissory note with the same lender for $200,000 with an original issue discount of $6,000 and a maturity date of July 9, 2019. The full $200,000 balance was due at maturity. Since this note was not repaid and is currently past due, interest is being accrued at a rate of 18% per annum. Additionally, on August 14, 2019, InduraPower borrowed from the same lender an additional $200,000 promissory note that matured on September 1, 2019. As this note is currently past due, interest is being accrued at a rate of 18% per annum. As of December 31, 2019, an aggregate principal amount of $400,000 was outstanding under these notes. In connection with its acquisition of DragonWave and Lextrum in April 2019, ComSovereign assumed the obligations of the seller on a promissory note in the principal amount of $500,000 bearing interest at 12.0% per annum with a maturity date of October 17, 2017. On October 1, 2019, the maturity date was extended until September 30, 2020 and the interest rate was reduced to 10% per annum. All unpaid accrued interest from October 2017 through September 30, 2019 was converted into 150,000 shares of common stock of ComSovereign. Accrued interest and the full principal balance are due at maturity. As of December 31, 2019, an aggregate principal amount of $500,000 was outstanding under this note. On April 30, 2020, the Company also issued 14,496 shares of common stock in lieu of an aggregate cash interest payment payable by ComSovereign through December 31, 2019 on this outstanding note payable. In connection with its acquisition of DragonWave and Lextrum in April 2019, ComSovereign assumed the obligations of the seller of a promissory note in the principal amount of $175,000 that bore interest at the rate of 15% per annum and was due on November 30, 2017. The interest rate increased to 18% per annum when the note became past due. On October 1, 2019, ComSovereign amended the promissory note to extend the maturity date to September 30, 2020 and to change the interest rate to 10% per annum. Both parties to the note also agreed to convert all unpaid accrued interest into 10,000 shares of common stock of ComSovereign, valued at $44,000. Accrued interest and principal are due and payable at maturity. As of December 31, 2019, an aggregate principal amount of $175,000 was outstanding under this note. In October 2017, DragonWave entered into a 90-day promissory note in the principal amount of $4,400,000 and received proceeds of $4,000,000. In January 2018, the promissory note was amended to accrue interest at the rate of 8% per annum and to extend the maturity date another 90 days. In August 2018, the maturity date was extended to December 31, 2018 with new payment terms. In September 2018, the maturity date was extended to February 28, 2019 with new payment terms. In October 2018, DragonWave amended the promissory note to clarify the payment of interest. On September 3, 2019, the promissory note was increased to $5,000,000 as all unpaid accrued interest was added to the principal balance. Additionally, the maturity date was extended to March 30, 2020 and the interest rate was changed to 10% per annum. Under this new amendment, principal and interest payments are due and payable monthly. As of December 31, 2019, an aggregate principal amount of $5,000,000 was outstanding under this note. On April 21, 2020, the maturity date of this note was extended to August 31, 2020, and the interest rate was increased to 12% per annum. On June 10, 2019, ComSovereign entered into a promissory note in the principal amount of $200,000 with an original issue discount of $6,000 and a maturity date of July 9, 2019. The full $200,000 balance was due at maturity. Since this note was not repaid and is currently past due, interest is being accrued at a rate of 18% per annum. As of December 31, 2019, an aggregate principal amount of $200,000 was outstanding under this note. In September 2019, DragonWave entered into a $5,250,000 promissory note that was not fully funded and was guaranteed by ComSovereign. DragonWave received $3,485,000 in proceeds. As incentive to enter into the promissory note, the noteholder was issued 500,000 shares of ComSovereign's common stock for the total purchase price of $4.40 per share, or $2,200,000, of which only $5,000 was paid in cash. The noteholder was later granted detachable warrants to purchase an aggregate of 2,442,500 shares of ComSovereign's common stock at a price of $0.01 per share. As of December 31, 2019, DragonWave had repaid the principal amount in full along with all accrued interest, and the warrants had been converted into 2,442,500 shares of ComSovereign's common stock at an exercise price of $0.01 per share or noncash proceeds $24,425. On November 7, 2019, ComSovereign entered into several promissory notes in the aggregate principal amount of $450,100 that bore an effective interest rate at 133% per annum due to a single payment incentive, which matured on December 6, 2019. An aggregate principal amount of $200,100 was owed to three related parties out of the $450,100 promissory notes. Accrued interest and principal were due and payable at maturity. These notes are currently past due, and the Company is using an interest rate of 18% per annum to accrue interest on these notes. As of December 31, 2019, an aggregate principal amount of $450,100 was outstanding under these notes. Senior Convertible Debentures In connection with its acquisition of DragonWave and Lextrum in April 2019, ComSovereign assumed the obligations of the seller of $100,000 aggregate principal amount of 8% Senior Convertible Debentures of the seller that bore interest at the rate of 8% per annum and matured on December 31, 2019. Interest was payable semi-annually in cash or, at the seller's option, in shares of the seller's common stock at the conversion price that was equal to the lesser of (1) $8.00 or (2) 80% of the common stock price offered under the next equity offering. As of December 31, 2019, an aggregate principal amount of $100,000 was outstanding under these debentures. These debentures are past due and interest accrues at a rate of 15% per annum. On April 30, 2020, these debentures were modified to remove the conversion feature and only have settlement through cash. In connection with its acquisition of DragonWave and Lextrum in April 2019, ComSovereign assumed the obligations of the seller of $25,000 aggregate principal amount of 8% Senior Convertible Debentures of the seller that bore interest at the rate of 8% per annum and matured on December 31, 2019. Interest was payable semi-annually in cash or, at the seller's option, in shares of the seller's common stock at the conversion price that was equal to the lesser of (1) $8.00 or (2) 80% of the common stock price offered under the next equity offering. As of December 31, 2019, an aggregate principal amount of $25,000 was outstanding under these debentures. These debentures are past due and interest accrues at a rate of 15% per annum. On April 30, 2020, these debentures were modified to remove the conversion feature and only have settlement through cash. In July and August 2019, ComSovereign sold $1,000,000 principal amount of 9% Senior Convertible Debentures that bore interest at the rate of 9% per annum and matured on December 31, 2021. ComSovereign received $850,000 in cash. Interest was payable in arrears in June and December of each year in cash or, at ComSovereign's option, in shares of common stock at the conversion price that was equal to the lesser of (1) $8.00 or (2) 80% of the common stock price offered under the next equity offering. The noteholders were also granted detachable warrants to purchase an aggregate of 100,000 shares of ComSovereign's common stock at a price of $5.00 per share. ComSovereign allocated the note proceeds based on relative fair value and recorded the warrants as a discount to the debt in the amount of $63,880. ComSovereign also recorded a $150,000 debt discount and $786,549 for the BCF associated with the debentures. Prior to conversion, the warrants were cancelled and 132,500 warrants were issued for $1.50 per share. On November 15, 2019, ComSovereign converted the outstanding warrants into 132,500 shares of ComSovereign's common stock and the full principal amount of such debentures and accrued interest into 1,100,000 shares of ComSovereign's common stock. On September 24, 2019, ComSovereign sold $250,000 aggregate principal amount of 10% Senior Convertible Debentures that bear interest at a rate of 10% per annum and mature on December 31, 2021. Interest is paid semi-annually in arrears in June and December of each year in cash or, at ComSovereign's option, in shares of common stock at the conversion price that was equal to the lesser of (1) $2.50 or (2) a future effective price per share of any common stock sold by ComSovereign. Upon an event of default, the interest rate shall automatically increase to 15% per annum. As of December 31, 2019, an aggregate principal amount of $250,000 was outstanding under these debentures. In connection with these debentures, ComSovereign recognized a BCF of $69,000 and a debt discount of $181,000 associated with the issuance of warrants, both of which are recorded as debt discounts. During fiscal 2019, $25,000 of these costs were amortized and recognized in interest expense in the Consolidated Statement of Operations. As of December 31, 2019, there were $225,000 of debt discounts remaining. On April 30, 2020, these debentures were amended to provide for the conversion of the debentures into shares of the Company's common stock instead of ComSovereign's common stock. Additionally, the conversion price was changed from $2.50 per share to $0.756 per share. As a result, all the outstanding warrants were exercised at $0.01 per share into 283,530 shares of the Company's common stock. The Company also issued 6,700 shares of common stock on April 30, 2020 in lieu of an aggregate cash interest payment payable by ComSovereign through December 31, 2019 on these outstanding convertible debentures. The agreements governing the secured notes payable, notes payable and senior convertible debentures contain customary covenants, such as debt service coverage ratios, limitations on liens, dispositions, mergers, entry into other lines of business, investments and the incurrence of additional indebtedness. As of December 31, 2019, the various subsidiaries were in compliance with all debt covenants under the applicable agreements except as noted above. All debt agreements are subject to customary events of default. If an event of default occurs with respect to the debt agreements and is continuing, the lenders may accelerate the applicable amounts due. Future maturities contractually required by the Company under long-term debt obligations are as follows for the years ending December 31: (Amounts in US$'s) Total 2020 $ 7,888,496 2021 2,250,000 2022 — 2023 — 2024 — Thereafter — Total $ 10,138,496 See Note 20 – Subsequent Events |
Related Party Transactions
Related Party Transactions | 9 Months Ended | 12 Months Ended |
Sep. 30, 2020 | Dec. 31, 2019 | |
Related Party Transactions [Abstract] | ||
RELATED PARTY TRANSACTIONS | 16. RELATED PARTY TRANSACTIONS The Company accounts for related party transactions in accordance with ASC 850, Related Party Disclosures Accrued Liabilities — Related Party As of September 30, 2020 and December 31, 2019, the accrued liabilities — related party balance was $366,601 and $461,254, respectively, which represented amounts owed to various contractors, officers and employees of the Company as described below. In August 2016, InduraPower entered into a promissory note in the principal amount of $50,000 that bears interest at 7.785% per annum and matures on September 1, 2021. At the same time, InduraPower also entered into a promissory note in the principal amount of $450,000 with the same lender that bears interest at 9.0% per annum and matures on March 1, 2022. A requirement of the promissory notes is to maintain a balance of at least $155,159 at J.P. Morgan while the promissory notes are outstanding. Sergei Begliarov, Chief Executive Officer of InduraPower, provided cash of $153,761 to comply with the requirements of the promissory notes. The amount was recorded in accrued liabilities — related party and $153,761 was outstanding as of September 30, 2020 and December 31, 2019. During 2019 and the nine months ended September 30, 2020, Sergei Begliarov paid $71,199 and $9,401, respectively, of expenses on behalf of InduraPower. Daniel L. Hodges, Chairman and Chief Executive Officer of ComSovereign at the time, paid $6,588 of rent and on behalf of InduraPower during 2019 and an additional $6,065 of expense during the nine months ended September 30, 2020. Additionally, during 2019, TM Technologies, Inc. (“TM”), described below, paid $29,300 of expense on behalf of InduraPower and an additional $9,150 of expense for InduraPower and ComSovereign. These amounts were recorded in accrued liabilities — related party and had balances outstanding aggregating to $130,554 and $107,087 as of September 30, 2020 and December 31, 2019, respectively. Chen-Kuo Sun, Chief Executive Officer of VEO paid $4,566 of expenses on behalf of VEO. This amount was recorded in accrued liabilities — related party and was outstanding as of September 30, 2020. On November 10, 2017, the Company and Global Security Innovative Strategies, LLC (“GSIS”), a company in which David Aguilar, a member of the Company’s Board of Directors, is a principal, entered in an agreement (the “GSIS Agreement”) pursuant to which GSIS agreed to provide business development support and general consulting services for sales opportunities with U.S. government agencies and other identified prospects and consulting support services for the Company. The GSIS Agreement had an initial term of nine months beginning on November 1, 2017. On September 26, 2018, the parties amended the GSIS Agreement to extend the period of service through September 2019 with monthly automatic renewals thereafter. The Company also agreed to issue an option to purchase 100,000 shares of the Company’s common stock at a strike price of $1.00, or $100,000. This option immediately vested and terminates on September 26, 2022. Pursuant to the GSIS Agreement, GSIS is paid a fee of $10,000 per month. In addition, GSIS is paid for the expenses incurred in connection with the performance of its duties under the GSIS Agreement. Either party may terminate or renew the GSIS Agreement at any time, for any reason or no reason, upon at least 30 days’ notice to the other party. GSIS was owed $23,036 and this amount was outstanding in accrued liabilities — related party as of December 31, 2019. During 2018 and 2019, Daniel L. Hodges paid $29,120 of rent on behalf of Lextrum. This amount was recorded in accrued liabilities — related party and was outstanding as of September 30, 2020 and December 31, 2019. During 2020, Daniel L. Hodges paid $2,100 of expenses on behalf of ComSovereign. This amount was recorded in accrued liabilities — related party and was outstanding as of September 30, 2020. On March 21, 2019, concurrent with the resignation of Kevin Hess, the Company’s former Chief Technology Officer, the Company and Cognitive Carbon Corporation (“CCC”), entered into an agreement pursuant to which CCC agreed to provide Chief Technology Officer services, sales and marketing services and outsourced software and platform development services which are to be provided personally by Kevin Hess or third-party development firms of his choosing for outsourced development. CCC will receive $19,750 per month for one year for the Chief Technology Officer services and potential bonuses and an amount up to $120,000 for outsourced software and platform development. Felicia Hess, the Company’s Chief Quality Officer, who is married to Kevin Hess, is the President and a director of CCC. Amounts outstanding and payable to CCC in accrued liabilities — related party totaled $46,500 and $148,250 as of September 30, 2020 and December 31, 2019, respectively. Notes Payable — Related Party Mr. Hodges is also the founder, Chairman and Chief Executive Officer of TM Technologies, Inc. (“TM”). Mr. Hodges also controls TM by virtue of his ownership and control of a majority of the outstanding equity securities of TM. In addition, Mr. Kevin Sherlock, the Company’s General Counsel, is also a director of TM. During 2019, TM also performed engineering services on behalf of DragonWave. As of and from inception through October 2019, TM advanced amounts to the Company totaling $1,292,953 for general expenses and to simulate and test emplacement of the modulation technology within one of DragonWave’s Harmony line radios. As of October 31, 2019, this amount was formalized into a note with a stated interest payment of $54,000. Interest and principal was due at initial maturity, August 31, 2020. No payment was made as of maturity and a default penalty was accrued in other liabilities totaling $67,348 in accordance with the agreement. Effective September 30, 2020, this note was amended to extend the maturity date to December 31, 2020. As of September 30, 2020 and December 31, 2019, $1,292,953 plus accrued interest and penalty was outstanding under this loan. Subsequent to September 30, 2020, the Company and TM entered into a debt exchange agreement that exchanged all outstanding amounts owed for common shares. See Note 23 — Subsequent Events On August 5, 2019, Mr. Hodges and his wife loaned DragonWave $200,000 at an interest rate of 5.0% per annum with an original maturity date of December 31, 2019. This note was amended to extend the maturity date to December 31, 2020. Interest was payable monthly while the full principal balance was due at maturity. As of September 30, 2020 and December 31, 2019, $200,000 plus accrued interest was outstanding under the loan. On July 1, 2020, Mr. Brent Davies, who is on the Company’s Board of Directors and Audit Committee, loaned the Company $50,000 at an interest rate of 4.80% per annum with an original maturity date of August 31, 2020. This note was amended to extend the maturity date to November 30, 2020. Interest and the full principal balance are due at maturity. As of September 30, 2020, $50,000 plus accrued interest was outstanding under the loan. On July 2, 2020, the Company sold $1,900,000 aggregate principal amount of 9% Convertible Debentures to Mr. Dustin McIntire, the Company’s Chief Technology Officer, that bore interest at a rate of 9% per annum and matured on September 30, 2020. Mr. McIntire was also granted warrants to purchase an aggregate of 190,000 shares of the Company’s common stock at a price of $1.00 per share. The Company recorded the warrants as a discount to the debt in the amount of $59,806. The Company also recorded $249,806 for the BCF associated with the debentures. On August 19, 2020, Mr. McIntire converted the full principal amount of such debentures and accrued interest into 1,921,082 shares of the Company’s common stock. | 11. RELATED PARTY TRANSACTIONS Receivable – Related Party As of December 31, 2019, the receivables - related party balance was $1,595, which represented amounts owed by Dr. Dustin McIntire, the Company's Chief Technology Officer, for personal charges he incurred using his company credit card. Accrued Liabilities – Related Party As of December 31, 2019, the accrued liabilities – related party balance was $461,254, which represented amounts owed to various contractors, officers and employees of the Company as described below. In August 2016, InduraPower entered into a promissory note in the principal amount of $50,000 that bears interest at 7.785% per annum and matures on September 1, 2021. At the same time, InduraPower also entered into a promissory note in the principal amount of $450,000 with the same lender that bears interest at 9.0% per annum and matures on March 1, 2022. A requirement of the promissory notes is to maintain a balance of at least $155,159 at J.P. Morgan while the promissory notes are outstanding. Sergei Begliarov, Chief Executive Officer of InduraPower, provided cash of $153,761 to comply with the requirements of the promissory notes. The $153,761 was recorded in accrued liabilities – related party as of December 31, 2019. During 2019, Sergei Begliarov paid $71,199 worth of expense of behalf of InduraPower, and Daniel L. Hodges, Chairman and Chief Executive Officer of ComSovereign at the time, paid $6,588 of rent on behalf of InduraPower. Additionally, during 2019, TM Technologies, Inc. ("TM"), described below, paid $29,300 worth of expense of behalf of InduraPower. These amounts were recorded in accrued liabilities – related party as of December 31, 2019. During 2018 and 2019, Daniel L. Hodges paid $29,120 of rent on behalf of Lextrum. This amount was recorded in accrued liabilities – related party as of December 31, 2019. On November 10, 2017, the Company and Global Security Innovative Strategies, LLC ("GSIS"), a company in which David Aguilar, a member of the Company's Board of Directors, is a principal, entered in an agreement (the "GSIS Agreement") pursuant to which GSIS agreed to provide business development support and general consulting services for sales opportunities with U.S. government agencies and other identified prospects and consulting support services for the Company. The GSIS Agreement had an initial term of six months beginning on November 1, 2017. On September 26, 2018, the parties amended the GSIS Agreement to extend the period of service through September 2019 with monthly automatic renewals thereafter. The Company also agreed to issue an option to purchase 100,000 shares of the Company's common stock at a strike price of $1.00, or $100,000. This option immediately vested and terminates on September 26, 2022. Pursuant to the GSIS Agreement, GSIS is paid a fee of $10,000 per month. In addition, GSIS is paid for the expenses incurred in connection with the performance of its duties under the GSIS Agreement. Either party may terminate or renew the GSIS Agreement at any time, for any reason or no reason, upon at least 30 days' notice to the other party. GSIS was owed $23,036 for normal monthly retainers and expenses incurred as of December 31, 2019. This amount was recorded in accrued liabilities – related party as of December 31, 2019. On March 21, 2019, concurrent with the resignation of Kevin Hess, the Company's former Chief Technology Officer, the Company and Cognitive Carbon Corporation ("CCC"), entered into an agreement pursuant to which CCC agreed to provide Chief Technology Officer services, sales and marketing services and outsourced software and platform development services which are to be provided personally by Kevin Hess or third-party development firms of his choosing for outsourced development. CCC will receive $19,750 per month for one year for the Chief Technology Officer services and potential bonuses and an amount up to $120,000 for outsourced software and platform development. Felicia Hess, the Company's Chief Quality Officer, who is married to Kevin Hess, is the President and a director of CCC. CCC was owed $148,250 for normal monthly fees and the 2019 bonus as of December 31, 2019. This amount was recorded in accrued liabilities – related party as of December 31, 2019. Notes Payable – Related Party On August 5, 2019, Mr. Hodges and his wife, loaned DragonWave $200,000 at an interest rate of 5.0% per annum and a maturity date of December 31, 2019. Interest was payable monthly while the full principal balance was due at maturity. As of December 31, 2019, $200,000 plus accrued interest was outstanding under the loan, and the loan was past due. Mr. Hodges is also the founder, Chairman and Chief Executive Officer of TM Technologies, Inc. ("TM"). Mr. Hodges also controls TM by virtue of his ownership and control of a majority of the outstanding equity securities of TM. In October 2017, TM loaned $250,000 to DragonWave. On October 31, 2019, this loan was increased to $1,292,953 at an interest rate of 5% per annum with a maturity date of August 31, 2020. This loan was partially used to simulate and test emplacement of the modulation technology within one of DragonWave's Harmony line radios. Interest and principal are due at maturity. As of December 31, 2019, $1,292,953 plus accrued interest was outstanding under this loan. Stock Awards In January 2019, Daniel L. Hodges, Chairman and Chief Executive Officer of ComSovereign at such time, and John E. Howell, President of ComSovereign at such time, each acquired 12,000,000 shares of common stock of ComSovereign at a value of $0.0001 per share of common stock with no cash paid to ComSovereign and no services required. On January 22, 2019, three members of the Board of Directors of ComSovereign and an executive officer of ComSovereign acquired an aggregate of 2,150,000 shares of common stock of ComSovereign at a value of $0.0001 per share of common stock with no cash paid to ComSovereign and no services required. Additionally, four executive officers of InduraPower, Lextrum and VEO acquired an aggregate of 500,000 shares of common stock of ComSovereign at a value of $0.0001 per share of common stock with no cash paid to ComSovereign and no services required. On November 19, 2019, ComSovereign's Board of Directors granted an aggregate of 24,000 restricted stock awards ("RSAs") to three executives of DragonWave and Silver Bullet at a grant date fair value of $4.40 per share of common stock for a total value of $105,600. The total value was recognized during fiscal 2019 in share-based compensation expense. On December 2, 2019, the Company's Board of Directors granted an aggregate of 1,900,000 RSAs to eight officers and directors at a grant date fair value of $0.82 per share of common stock for a total value of $1,558,000. The vesting period for these RSAs is as follows: 850,000 vest on the one-year anniversary of the grant date; 850,000 vest on the two-year anniversary of the original grant date; and 200,000 vest on the three-year anniversary of the original grant date. During fiscal 2019, $54,667 was recognized in share-based compensation expense after the ComSovereign Acquisition. See Note 14 – Share-Based Compensation See Note 20 – Subsequent Events |
Shareholders' Equity
Shareholders' Equity | 9 Months Ended | 12 Months Ended |
Sep. 30, 2020 | Dec. 31, 2019 | |
Equity [Abstract] | ||
SHAREHOLDERS' EQUITY | 17. SHAREHOLDERS’ EQUITY For the nine months ended September 30, 2020 As of September 30, 2020, the Company had 100,000,000 shares of preferred stock authorized for issuance, none of which were issued and outstanding and 300,000,000 shares of common stock authorized for issuance and 143,817,614 shares of common stock issued and outstanding. Consulting Agreements and Settlements with Vendors On January 31, 2020, the Company entered into an agreement with a consultant to amend an existing consulting agreement between the consultant and the Company to allow the consultant to elect to take from 50% to 100% of its compensation in the form of common stock of the Company. Common stock to be issued to the consultant will be paid on a quarterly basis. On March 12, 2020, the Company issued 165,095 shares of its common stock in satisfaction of $106,238 that was owed by Lextrum to the consultant for services previously rendered. The fair value on the issue date of the 165,095 shares was $193,160. The Company booked the difference between the fair value of the shares issued and the amount owed by Lextrum to the consultant as general and administrative expense in the Company’s Condensed Consolidated Financial Statements. On August 8, 2020, 35,536 shares with a fair value of $81,935 were issued in conjunction with services performed in the first and second quarters of 2020. An additional 5,908 shares with a fair value of $15,222 are recorded at September 30, 2020 as unissued shares, as discussed below, for services rendered for the third quarter of 2020. On June 12, 2020, the Company entered into an agreement with a consultant that requires payment of $5,000 to be paid in stock as well as 4,000 warrants per month. Six months of warrants were issued at the inception of the contract with no performance conditions. 15,765 shares are recorded at September 30, 2020 as unissued shares, as discussed below, for services rendered for the third quarter of 2020. This consulting agreement was terminated in October of 2020. On May 15, 2020, the Company entered into an agreement with a consultant that requires the payment of 55,000 shares of the Company’s common stock at the inception of the contract with no performance condition. These shares were issued on August 26, 2020 and had a fair value of $49,500. On August 8, 2002, the Company settled outstanding accounts payable to a vendor by issuing 81,839 shares of common stock with a fair value of $102,424. Subscription Agreement On September 28, 2020, the Company entered into a stock subscription agreement to sell 100,000 shares of common stock for a total of $240,000. These shares were issued on October 9, 2020 and are recorded as shares payable as of September 30, 2020. Unissued Shares As of September 30, 2020, the Company had agreements in place for which shares of common stock were subscribed or shares were called for to settle debt or compensate vendors, although shares had not been administratively issued. These agreements have met the equity classification requirements and a corresponding increase to additional paid in capital has been recorded. Upon their issuance, the par value of these shares will be reclassified into common stock and the shares entered as outstanding. If these shares had been issued on of September 30, 2020, no change in EPS would have been noted. Unissued shares as of September 30, 2020 totaled approximately 1,665,000 shares and were issued subsequent to that date. For the period January 10, 2019 (Inception) through September 30, 2019 As of September 30, 2019, ComSovereign had 5,000,000 Preferred Series A shares authorized for issuance, 2,600,000 of which were issued and outstanding and 300,000,000 shares of common stock authorized for issuance, 41,207,149 of which were outstanding. All the Preferred Series A shares issued were for the acquisitions of VEO, InduraPower and Silver Bullet during fiscal 2019. On November 15, 2019, each Preferred Series A share was converted into one common share of ComSovereign. Dividends The Company did not pay dividends to holders of its common stock during the nine months ended September 30, 2020. The determination to pay dividends on common stock will be at the discretion of the Board of Directors and will depend on applicable laws and the Company’s financial condition, results of operations, cash requirements, prospects and such other factors as the Board of Directors may deem relevant. In addition, current or future loan agreements may restrict the Company’s ability to pay dividends. The Company does not anticipate declaring or paying any cash dividends on common stock in the foreseeable future. | 12. SHAREHOLDERS' EQUITY ComSovereign had 5,000,000 Preferred Series A shares authorized for issuance and as of March 4, 2019 had 2,600,000 Preferred Series A shares issued and outstanding. All the Preferred Series A shares issued were for the acquisitions of VEO, InduraPower and Silver Bullet during fiscal 2019. On November 15, 2019, each Preferred Series A share was converted into one common share of ComSovereign. After the conversion, the Preferred Series A shares ceased to exist and were no longer authorized for issuance. As of December 31, 2019, the Company had 100,000,000 shares of preferred stock authorized for issuance, none of which were issued and outstanding. As of December 31, 2019, the Company had 300,000,000 shares of common stock authorized for issuance and 128,326,243 shares of common stock issued and outstanding. As of December 31, 2019, the Company had outstanding warrants to purchase an aggregate of 503,523 shares of common stock. Of those 503,523 warrants, 283,523 had an exercise price of $0.01 per share; 70,000 had an exercise price of $5.00 per share; 100,000 had an exercise price of $1.00 per share; and the remaining 50,000 had an exercise price of $0.50 per share. On September 4, 2019, the Company entered into a Redemption Agreement with Robert Guerra, a former director of the Company, pursuant to which 100,000 shares of common stock were redeemed for $0.50 per share, or an aggregate of $50,000. These redeemed shares were recorded as treasury stock on the Consolidated Balance Sheet as of December 31, 2019. Dividends The Company did not pay dividends to holders of its common stock during fiscal 2019. The determination to pay dividends on common stock will be at the discretion of the Board of Directors and will depend on applicable laws and the Company's financial condition, results of operations, cash requirements, prospects and such other factors as the Board of Directors may deem relevant. In addition, current or future loan agreements may restrict the Company's ability to pay dividends. The Company does not anticipate declaring or paying any cash dividends on common stock in the foreseeable future. |
Share-Based Compensation
Share-Based Compensation | 9 Months Ended | 12 Months Ended |
Sep. 30, 2020 | Dec. 31, 2019 | |
Share-based Payment Arrangement [Abstract] | ||
SHARE-BASED COMPENSATION | 18. SHARE-BASED COMPENSATION The Company accounts for share-based compensation in accordance with ASC 718, Compensation — Stock Compensation Share-based compensation for employees and non-employees is recorded in the Consolidated Statement of Operations as a component of general and administrative expense with a corresponding increase to additional paid-in capital in shareholders’ equity. For employee awards, the Company elected to utilize the simplified method of estimating the expected life of options as allowed by SAB 107. The Company believes this to be a better estimate of the expected life given the lack of historical information. For nonemployee awards, the Company will utilize the stated term of the award. Forfeitures will be accounted for as they occur for both employee and nonemployee awards. Upon exercise or conversion of any share-based payment transaction, the company will issue shares, generally as new issuances. Stock Options On March 20, 2019, the Company granted options outside of any equity plan to two employees and one non-employee for the purchase of an aggregate of 180,000 shares of the Company’s common stock. All the options have an exercise price of $1.06 per share and expire on March 20, 2023. The fair value of the 180,000 options on the date of grant was estimated at $123,130. During the nine-months ended September, 30, 2020, and in conjunction with the acquisition of VNC, the Company issued immediately vested options to non-employees outside of any equity plan to four individuals for the purchase of an aggregate 2,525,506 shares of the Company’s common stock. These options have an exercise price ranging from $0.499 — $0.2882 per share and expire July 6, 2025. The fair value of these options on the grant date was estimated to be $2,261,275. On July 6, 2020, the Company issued replacement options for outstanding VNC options in conjunction with the acquisition of VNC and separately to two employees as stock-based compensation under the Company’s Non-Qual 2020 Long-Term Incentive Plan for the purchase of an aggregate of 2,725,506 shares of the common stock, 100,000 of which were forfeited. These options expire on July 6, 2025 and have an exercise price of $1.08 per share and the requisite service period of half of these options is six months, with the remainder at 12 months from the date of issuance. The fair value of these options on the grant date was estimated to be $59,000. Of the employee options, 100,000 options with a weighted average grant date fair value of $0.295 were forfeited during the three and nine months ended September 30, 2019 and 100,000 remained outstanding as of September 30, 2020. All options issued during the nine months ended September 30, 2020 have been valued utilizing the Black-Scholes pricing model using the assumptions listed below. The weighted average grant date fair value of all options issued during the nine months ended September 30, 2020 was $0.85 per share and during the period January 10, 2019 (inception) through September 30, 2019 was $0.68 per share. The following table summarizes the assumptions used to estimate the fair value of stock options granted during the nine months ended September 30, 2020: 2020 Expected dividend yield 0 % Expected volatility 38.17 % Risk-free interest rate 0.205 – 0.310 % Expected life of options 3.25 – 5.00 years The following tables represents stock option activity for the nine months ended September 30, 2020 and the period January 10, 2019 (Inception) to September 30, 2019: Number of Weighted- Weighted- Aggregate Outstanding – December 31, 2019 8,695,000 $ 0.63 1.34 $ 2,264,760 Exercisable – December 31, 2019 8,695,000 0.63 1.34 2,264,760 Granted 2,725,506 0.26 Exercised — — Cancelled or Expired (1,100,000 ) 0.67 Outstanding – September 30, 2020 10,320,506 $ 0.53 2.26 $ 19,338,950 Exercisable – September 30, 2020 10,220,506 $ 0.53 2.24 $ 19,206,950 Number of Weighted- Weighted- Aggregate Outstanding – January 10, 2019 13,990,000 $ 0.61 3.15 $ — Exercisable – January 10, 2019 13,610,000 0.59 2.42 — Granted 180,000 1.06 Exercised — — Cancelled or Expired (50,000 ) 0.90 Outstanding – September 30, 2019 14,120,000 $ 0.61 1.68 $ 3,796,960 Exercisable – September 30, 2019 13,745,000 $ 0.60 1.67 $ 3,796,960 The Company recognized $4,916 of share-based compensation expense related to options for the nine months ended September 30, 2020. Compensation expense related to stock options is recorded in share-based compensation expense in the Consolidated Statement of Operations. For the nine months ended September 30, 2020, the Company has $24,584 of unrecognized compensation expense related to options. For the period January 10, 2019 (Inception) to September 30, 2019, there was no unrecognized compensation expense related to stock options. Restricted Stock Awards On March 25, 2019, ComSovereign Corp.’s Board of Directors granted an aggregate of 80,000 restricted stock awards (“RSAs”) to a non-employee for consulting services, of which 60,000 RSAs immediately vested and 20,000 RSAs vested upon the change in control of ComSovereign in connection with the ComSovereign Acquisition. The grant date fair value of these RSAs was $4.40 per share of common stock for a total value of $352,000. ComSovereign recognized the full $352,000 of stock compensation expense for the RSAs during the period January 10, 2019 (inception) to September 30, 2019. On December 2, 2019, the Company issued 1,900,000 RSAs to employees and those classified as employees for share-based award purposes. These shares were not administratively issued as of September 30, 2020 and were not included in any dilutive calculation. These awards have requisite service periods ranging from 2 — 3 years and had an award date fair value of $1,558,000. These RSAs were administratively issued in October 2020. There were no RSAs that were either forfeited or vested in the nine months ended September 30, 2020. For the nine months ended September 30, 2020, the Company recognized $526,241 of compensation expense related to RSAs and had unrecognized compensation cost for RSAs totalling $977,190 as of September 30, 2020. For the period January 10, 2019 (Inception) through September 30, 2019, the Company recognized $62,500 compensation expense related to RSAs. See Note 1 — Description of Business and Basis of Presentation 2020 Long-Term Incentive Plan On April 22, 2020, the Company’s Board of Directors adopted the 2020 Long-Term Incentive Plan (the “2020 Plan”) which was approved by the stockholders on or about May 6, 2020. Employees, officers, directors and consultants that provide services to the Company or one of its subsidiaries may be selected to receive awards under the 2020 Plan. Awards under the 2020 Plan may be in the form of incentive or nonqualified stock options, stock appreciation rights, stock bonuses, restricted stock, stock units and other forms of awards including cash awards and performance-based awards. A total of 10,000,000 shares of the Company’s common stock are authorized for issuance with respect to awards granted under the 2020 Plan. Any shares subject to awards that are not paid, delivered or exercised before they expire or are cancelled or terminated, or fail to vest, as well as shares used to pay the purchase or exercise price of awards or related tax withholding obligations, will become available for other award grants under the 2020 Plan. As of September 30, 2020, 2,725,506 options have been issued under the 2020 Plan, of which 100,000 were forfeited, and 7,274,494 shares authorized under the 2020 Plan remained available for award purposes. The 2020 Plan will terminate on May 1, 2030. The maximum term of options, stock appreciation rights and other rights to acquire common stock under the 2020 Plan is ten years after the initial date of the award. | 14. SHARE-BASED COMPENSATION Stock Options The following information relates to the stock option activity of the Company prior to the ComSovereign Acquisition. During 2017, the Company granted the following options outside of any equity plan with the attributes described below to purchase the Company’s common stock (amounts in US$’s, except share data) Grant Date Underlying Shares Option Price Full Vesting Date Expiration Date January 9, 2017 100,000 $ 2.90 January 9, 2019 January 7, 2021 August 3, 2017 5,130,000 $ 0.50 August 3, 2017 August 3, 2021 November 9, 2017 2,000,000 $ 0.50 November 9, 2017 November 9, 2021 December 13, 2017 200,000 $ 1.00 November 13, 2019 December 13, 2021 During 2018, the Company granted the following options outside of any equity plan with the attributes described below to purchase the Company’s common stock (amounts in US$’s, except share data) Grant Date Underlying Shares Vesting Option Price Full Vesting Date Expiration Date March 28, 2018 100,000 50% in one year; 50% in two years from grant date $ 1.00 March 28, 2020 March 28, 2022 May 16, 2018 330,000 Immediate vesting $ 1.00 May 16, 2018 May 16, 2022 May 16, 2018 130,000 50% in one year; 50% in two years from grant date $ 1.00 May 16, 2020 May 16, 2022 September 26, 2018 6,000,000 $4,000,000 new government orders $ 0.65 December 21, 2018 September 26, 2022 All of the above options were outstanding as of January 10, 2019. On March 20, 2019, the Company granted options outside of any equity plan to two employees and one non-employee for the purchase of an aggregate of 180,000 shares of the Company’s common stock. All the options have an exercise price of $1.06 per share and expire on March 20, 2023. Under the Black-Scholes option pricing model, the fair value of the 180,000 options on the date of grant was estimated at $123,130. The following table summarizes the assumptions used to estimate the fair value of stock options granted during fiscal 2019: 2019 Expected dividend yield 0 Expected volatility 90 Risk-free interest rate 2.40-2.47 Expected life of options 4.0 years Total recognized compensation expense related to the Company’s stock options was $157,441 for fiscal 2019. All options granted by the Company vested upon the change of control resulting from the completion of the ComSovereign Acquisition on November 27, 2019. The following table represents stock option activity of ComSovereign and the Company as of and for fiscal 2019: Number of Weighted- Weighted- Aggregate Outstanding – January 10, 2019 13,990,000 $ 0.61 3.15 $ — Granted 180,000 1.06 Exercised (5,250,000 ) 0.57 Cancelled or Expired (225,000 ) 0.72 Outstanding – December 31, 2019 8,695,000 $ 0.63 1.34 $ 2,264,760 Exercisable – December 31, 2019 8,695,000 $ 0.63 1.34 $ 2,264,760 As of December 31, 2019, there were no unvested stock options. The Company did not record any compensation expense for the period from November 27, 2019, the date of the ComSovereign Acquisition, to December 31, 2019. Compensation expense related to stock options would be recorded in general and administrative expense in the Consolidated Statement of Operations. As of December 31, 2019, there was no unrecognized compensation expense related to stock options. Restricted Stock Awards On March 25, 2019, ComSovereign’s Board of Directors granted an aggregate of 80,000 RSAs to a non-employee for consulting services, of which 60,000 RSAs immediately vested and 20,000 RSAs vested upon the change in control of ComSovereign in connection with the ComSovereign Acquisition. The grant date fair value of these RSAs was $4.40 per share of common stock for a total value of $352,000. On November 12, 2019, the Company’s Board of Directors granted an aggregate of 2,300,000 RSAs to eight employees. The RSAs vested upon the change of control upon the completion of the ComSovereign Acquisition on November 27, 2019. The Company recorded $1,495,000 in share-based compensation expense related to these RSAs during fiscal 2019, prior to the ComSovereign Acquisition. No compensation expense was recognized for the period November 27, 2019, the date of the ComSovereign Acquisition, through December 31, 2019. On November 14, 2019, ComSovereign’s Board of Directors granted an aggregate of 40,000 RSAs to a non-employee for consulting services that vested immediately. The grant date fair value of these RSAs was $4.40 per share of common stock for a total value of $176,000. On November 19, 2019, ComSovereign’s Board of Directors granted an aggregate of 270,800 RSAs to noteholders, employees, non-employees and an officer with a grant date fair value of $4.40 per share of common stock that vested immediately for a total value of $1,191,520. On November 27, 2019, ComSovereign’s Board of Directors granted an aggregate of 50,000 RSAs that immediately vested to a non-employee for assistance in negotiating a secured loan agreement on ComSovereign’s behalf. The grant date fair value of these RSAs was $4.40 per share of common stock for a total value of $220,000. On December 2, 2019, the Company’s Board of Directors granted an aggregate of 1,900,000 RSAs to nine officers and directors. The vesting period for these RSAs is as follows: 850,000 vest on the one-year anniversary of the grant date; 850,000 vest on the two-year anniversary of the original grant date; and 200,000 vest on the three-year anniversary of the original grant date. The Company recognized $54,667 in share-based compensation expense for these RSAs during fiscal 2019 which was recognized after the ComSovereign Acquisition. Total recognized compensation expense related to the RSAs was $258,256 which was recorded in general and administration expense in the Consolidated Statement of Operations. See Note 1 – Description of Business and Basis of Presentation See Note 20 – Subsequent Events |
Warrants
Warrants | 9 Months Ended | 12 Months Ended |
Sep. 30, 2020 | Dec. 31, 2019 | |
Warrants [Abstract] | ||
WARRANTS | 19. WARRANTS On April 13, 2020, the Company issued warrants to purchase an aggregate of 100,000 shares of the Company’s common stock. The warrants were issued as compensation to a vendor and had no vesting requirements. The warrants have an exercise price of $1.20 per share and an expiration date of April 12, 2025. None of these warrants were exercised during the nine months ended September 20, 2020. On April 29, 2020, the Company issued a warrant to purchase 158,730 shares of the Company’s common stock. The warrant was issued in conjunction with the sale of the Company’s 12.5% OID Convertible Note and had no vesting requirements. The warrant has an exercise price of $0.99 per share and an expiration date of April 29, 2025. In connection with this transaction and as a placement fee to an unrelated third party, the Company also issued warrants to purchase an aggregate of 27,778 shares of the Company’s common stock. The warrants have an exercise price of $0.99 per share and an expiration date of April 29, 2025. None of these warrants were exercised during the nine months ended September 30, 2020. On July 7, 2020, the Company issued warrants to purchase an aggregate of 290,000 shares of the Company’s common stock. The warrants were issued as part of a convertible debenture offering with no vesting requirement, have an exercise price of $1.00 per share, and expire on December 31, 2022. None of these warrants were exercised during the nine months ended September 20, 2020. On July 7, 2020, the Company issued a warrant to purchase 158,730 shares of the Company’s common stock. The warrant was issued in conjunction with the sale of the Company’s 12.5% OID Convertible Note and had no vesting requirements. The warrant has an exercise price of $0.99 per share and an expiration date of April 29, 2025. In connection with this transaction and as a placement fee to an unrelated third party, the Company also issued warrants to purchase an aggregate of 27,778 shares of the Company’s common stock. The warrants have an exercise price of $0.99 per share and an expiration date of April 29, 2025. None of these warrants were exercised during the nine months ended September 30, 2020. On August 21, 2020, the Company issued a warrant to purchase an aggregate of 53,571 shares of the Company’s common stock in conjunction with the sale of the Company’s 13.33% OID Convertible Note. These warrants were issued as payment of a placement fee to an unrelated third party and had no vesting requirements. The warrant has an exercise price of $2.80 per share and an expiration date of August 20, 2025. None of these warrants were exercised during the nine months ended September 30, 2020. On July 6, 2020, and in conjunction with the acquisition of VNC, the Company issued replacement warrants for outstanding VNC warrants to purchase an aggregate of 1,736,284 shares of the Company’s common stock. The warrants have an exercise price of ranging from $0.0499 to $0.2404 per share and an expiration date of July 6, 2025. None of these warrants were exercised during the nine months ended September 30, 2020. On June 8, 2020, the Company issued warrants to purchase an aggregate of 24,000 shares of the Company’s common stock at an exercise price of $1.00 per share to a vendor in conjunction with a consulting agreement. These warrants expire on June 7, 2023. None of these warrants were exercised during the nine months ended September 30, 2020. The following warrants were issued by the Company prior to the ComSovereign Acquisition with the attributes described below to purchase the Company’s common stock (amounts in US$’s, except share data) Issuance Date Warrants Exercise Full Vesting Expiration November 20, 2015 70,000 $ 5.00 November 20, 2015 November 20, 2020 April 27, 2016 60,000 $ 2.91 April 27, 2016 April 27, 2019 During the third quarter of 2019, ComSovereign issued eight warrants to purchase an aggregate of 100,000 shares of ComSovereign’s common stock. The warrants were issued in conjunction with the sale of the ComSovereign’s 9% Senior Convertible Debentures and had no vesting requirements. The warrants had an exercise price of $5.00 per share and an expiration date of December 31, 2021. Prior to conversion of the related debentures, ComSovereign cancelled warrants to purchase 80,000 shares of common stock at $5.00 per share, and reissued warrants to purchase 112,500 shares of common stock at $1.50 per share. ComSovereign valued the new warrants at $250,835 using the Black -Scholes On September 24, 2019, ComSovereign issued a warrant to purchase 150,000 shares of ComSovereign’s common stock, which was converted into the ability to purchase 283,530 shares of the Company’s common stock as a result of the ComSovereign Merger. The warrant was issued in conjunction with the sale of ComSovereign’s 10% Senior Convertible Debentures and had no vesting requirements. The warrant had an exercise price of $0.01 per share and an expiration date of December 31, 2021. No warrants were exercised during fiscal 2019. On April 21, 2020, these warrants were exercised to purchase for 283,530 shares of the Company’s common stock. During September 2019, ComSovereign issued two warrants to purchase 2,000,000 shares of ComSovereign’s common stock. The warrants were issued in conjunction with the sale by ComSovereign of a promissory note and had no vesting requirements. The warrants had an exercise price of $0.01 per share and an expiration date of December 31, 2021. Warrants to purchase the full 2,000,000 shares of ComSovereign’s common stock were exercised in November 2019 prior to the ComSovereign Acquisition. All warrants are valued utilizing the Black -Scholes The following table summarizes the assumptions used to estimate the fair value of warrants granted during the nine months ended September 30, 2020: 2020 Expected dividend yield 0 % Expected volatility 36.96 – 41.55 % Risk-free interest rate 0.190 – 0.440 % Expected life of warrants 2.5 – 5.0 years The following tables represents warrant activity for the nine months ended September 30, 2020 and the period January 10, 2019 (Inception) to September 30, 2019: Number of Weighted- Weighted- Aggregate Outstanding – December 31, 2019 503,523 $ 0.95 1.96 $ 258,328 Exercisable – December 31, 2019 503,523 $ 0.95 1.96 $ 258,328 Granted 2,576,878 0.46 Exercised (283,530 ) 0.01 Forfeited or Expired — — Outstanding – September 30, 2020 2,796,871 $ 0.60 4.17 $ 5,250,630 Exercisable – September 30, 2020 2,796,871 $ 0.60 4.17 $ 5,250,647 Number of Weighted- Weighted- Aggregate Outstanding – January 10, 2019 2,280,000 $ 0.72 3.44 $ — Exercisable – January 10, 2019 2,280,000 $ 0.72 3.44 $ — Granted 2,250,000 0.23 Exercised — — Forfeited or Expired (60,000 ) 2.91 Outstanding – September 30, 2019 4,470,000 $ 0.45 2.51 $ 2,557,100 Exercisable – September 30, 2019 4,470,000 $ 0.45 2.51 $ 2,557,100 | 15. WARRANTS The following warrants were issued by the Company prior to the ComSovereign Acquisition with the attributes described below to purchase the Company’s common stock (amounts in US$’s, except share data) Issuance Date Warrants Issued Exercise Price Full Vesting Date Expiration Date November 20, 2015 70,000 $ 5.00 November 20, 2015 November 20, 2020 April 27, 2016 60,000 $ 2.91 April 27, 2016 April 27, 2019 August 3, 2017 30,000 $ 0.50 August 3, 2017 August 3, 2021 August 3, 2017 2,000,000 $ 0.50 August 3, 2017 August 3, 2022 November 9, 2017 20,000 $ 0.50 November 9, 2017 November 9, 2021 September 26, 2018 100,000 $ 1.00 September 26, 2018 September 26, 2022 During the third quarter of 2019, ComSovereign issued eight warrants to purchase an aggregate of 100,000 shares of ComSovereign’s common stock. The warrants were issued in conjunction with the sale of the ComSovereign’s 9% Senior Convertible Debentures. The warrants had an exercise price of $5.00 per share and an expiration date of December 31, 2021. Prior to conversion of the related debentures, ComSovereign cancelled warrants to purchase 80,000 shares of common stock at $5.00 per share, and reissued warrants to purchase 112,500 shares of common stock at $1.50 per share. ComSovereign valued the new warrants at $250,835 using the Black-Scholes pricing model, which is included in interest expense on the Consolidated Statement of Operations. Warrants to purchase all 132,500 shares of common stock were exercised in November 2019 prior to the ComSovereign Acquisition. On September 24, 2019, ComSovereign issued a warrant to purchase 150,000 shares of the ComSovereign’s common stock, which was converted into the ability to purchase 283,530 shares of the Company’s common stock as a result of the ComSovereign Merger. The warrant was issued in conjunction with the sale of ComSovereign’s 10% Senior Convertible Debentures. The warrant has an exercise price of $0.01 per share and an expiration date of December 31, 2021. No warrants were exercised during fiscal 2019. On April 21, 2020, these warrants were exercised and exchanged for 283,530 shares of the Company’s common stock. During September 2019, ComSovereign issued two warrants to purchase 2,000,000 shares of ComSovereign’s common stock. The warrants were issued in conjunction with the sale by ComSovereign of a promissory note. The warrants had an exercise price of $0.01 per share and an expiration date of December 31, 2021. Warrants to purchase the full 2,000,000 shares of ComSovereign’s common stock were exercised in November 2019 prior to the ComSovereign Acquisition. On October 15, 2019, ComSovereign issued a warrant to purchase 442,500 shares of ComSovereign’s common stock. The warrant was issued in conjunction with the sale by ComSovereign of a promissory note. The warrant had an exercise price of $0.01 per share and an expiration date of December 31, 2021. Warrants to purchase the full 442,500 shares of ComSovereign’s common stock were exercised in November 2019 prior to the ComSovereign Acquisition. On November 26, 2019, ComSovereign issued warrants to purchase 930,000 shares of ComSovereign’s common stock to non-employees for consulting services in connection with the ComSovereign Acquisition. The warrants had an exercise price of $0.01 per share and an expiration date of November 26, 2024. Warrants to purchase the full 930,000 shares of ComSovereign’s common stock were exercised on November 27, 2019. The following table summarizes the assumptions used to estimate the fair value of the warrants granted during fiscal 2019: Expected dividend yield 0% Expected volatility 32-33% Risk-free interest rate 1.38-1.82% Expected life of warrants 2.27-3.0 years Under the Black-Scholes option pricing model, the fair value of the warrants issued was estimated at $3,138,667 on the date of grant, which was recognized as interest expense in the Consolidated Statement of Operations. As of December 31, 2019, there was no unrecognized expense related to the warrants as all of the warrants were fully vested. The following table represents warrant activity of ComSovereign and the Company as of and for fiscal 2019: Number of Warrants Weighted-Average Exercise Weighted-Average Remaining Contractual Life in Years Aggregate Intrinsic Value Outstanding – January 10, 2019 2,280,000 $ 0.72 3.44 $ — Exercisable – January 10, 2019 2,280,000 $ 0.72 3.44 $ — Granted 3,868,523 0.18 Exercised (5,472,500 ) 0.23 Forfeited or Expired (172,500 ) 3.61 Outstanding – December 31, 2019 503,523 $ 0.95 1.96 $ 258,328 Exercisable – December 31, 2019 503,523 $ 0.95 1.96 $ 258,328 |
Income Taxes
Income Taxes | 9 Months Ended | 12 Months Ended |
Sep. 30, 2020 | Dec. 31, 2019 | |
Income Tax Disclosure [Abstract] | ||
INCOME TAXES | 20. INCOME TAXES The Company’s income tax provision differs from the amount of income tax determined by applying the U.S. federal income tax rate to loss from continuing operations before tax for the nine months ended September (Amounts in US$’s) Nine months Ended January 10, 2019 US$’s Rates US$’s Rates Income tax benefit at statutory federal income tax rate $ 5,233,600 21.00 % $ 2,941,011 21.00 % State tax expense, net of federal benefit 996,900 4.00 % 560,193 4.00 % Permanent items (400 ) (0.00 )% — — Other (6,100 ) (0.02 )% — — Valuation allowance (6,224,000 ) (24.98 )% $ — — Income tax benefit — — % $ 3,501,204 25.00 % To determine the quarterly provision for income taxes, the Company uses an estimated annual effective tax rate, which is based on expected annual income, statutory tax rates and tax planning opportunities available in various jurisdictions in which the Company is subject to tax. Certain significant or unusual items are separately recognized in the quarter in which they occur and can be a source of variability in the effective tax rate from quarter to quarter. The Company recognizes interest and penalties related to uncertain tax positions, if any, as an income tax expense. As of September The Company records valuation allowances to reduce its deferred tax asset to an amount that it believes is more likely than not to be realized. In assessing the realizability of deferred tax assets, management considered whether it is more likely than not that some portion or all of the deferred tax assets will be realized. The ultimate realization of deferred tax assets is dependent upon generation of future taxable income during the period in which those temporary differences become deductible. During the three months ended September It is the Company’s policy to establish reserves based on management’s assessment of exposure for certain tax positions taken in previously filed tax returns that may become payable upon audit by taxing authorities. The Company’s tax reserves are analyzed quarterly, and adjustments are made as events occur that the Company believes warrant adjustments to those reserves. Management has not recorded any reserves for uncertain tax positions. | 16. INCOME TAXES Deferred taxes are provided on the liability method whereby deferred tax assets and liabilities are recognized for deductible temporary differences and operating loss and tax credit carryforwards and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax bases. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax law and rates on the date of enactment. The Tax Cut and Jobs Act was enacted on December 22, 2017, which reduced the U.S. corporate statutory income tax rate from 35% to 21% beginning January 1, 2018. Net deferred tax liabilities consisted of the following as of December 31, 2019: (Amounts in US$'s) December 31, Deferred tax assets: Share-based compensation $ 13,700 Inventory reserve 137,000 Allowance for bad debt 172,700 Net operating loss carryover 11,867,800 Foreign losses 4,130,000 General business credits 256,400 Valuation allowance (3,762,800 ) Total deferred tax assets 12,814,800 Deferred tax liabilities: Depreciation (43,000 ) Amortization (12,771,800 ) Total deferred tax liabilities (12,814,800 ) Net deferred tax assets (liabilities) $ — The income tax provision differs from the amount of income tax determined by applying the U.S. federal income tax rate to income (loss) from continuing operations before tax for fiscal 2019 due to the following: December 31, 2019 US$'s Rates Income tax benefit at statutory federal income tax rate $ (6,653,400 ) 21.00 % State tax expense, net of federal benefit (1,267,300 ) 4.00 % Permanent items 20,000 (0.06 )% Valuation allowance 3,762,800 (11.88 )% Income tax benefit $ (4,137,900 ) 13.06 % As of December 31, 2019, the Company had domestic net operating loss carryforwards of approximately $47,472,000, of which approximately $13,615,000 was generated pre-2018 that may be carried forward 20 years to offset against future taxable income from the year 2019 through 2039, and approximately $33,857,000 that may offset future taxable income with no definite expiration date. Due to the change in the ownership provisions of the Tax Reform Act of 1986, net operating loss carryforwards for federal income tax reporting purposes are subject to annual limitations. Should a change in ownership occur, net operating loss carryforwards may be limited as to use in future years. The Company records uncertain tax positions in accordance with ASC 740, Income Taxes The Company records valuation allowances to reduce its deferred tax assets to an amount the its believes is more likely than not to be realized. In assessing the realizability of deferred tax assets, management considers all positive and negative evidence to determine whether future taxable income will be generated during the periods in which those temporary differences become deductible. As a result, the Company recorded a valuation allowance on the portion of the deferred tax assets, including current year losses, deemed not to have enough sources of income to utilize the future benefits. |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended | 12 Months Ended |
Sep. 30, 2020 | Dec. 31, 2019 | |
Commitments and Contingencies Disclosure [Abstract] | ||
COMMITMENTS AND CONTINGENCIES | 21. COMMITMENTS AND CONTINGENCIES From time to time, the Company may become involved in various lawsuits and legal proceedings that arise in the ordinary course of business. Management does not believe that after the final disposition any of these matters is likely to have a material adverse impact on the Company’s financial condition, results of operations or cash flows, except as follows. On January -cv-00149-NRN -X -X -X On February On May -X -X -X -X On August -owned -performance -Line -optimizing Pursuant to the FN Merger Agreement, the aggregate merger consideration the Company is obligated to pay for Fastback will consist of (i) $1,250,000 in cash, (ii) $1,500,000 aggregate principal amount of our term debentures, and (iii) $11,150,000 aggregate principal amount of the Company’s convertible debentures that are convertible into the Company’s common stock at a conversion price of $1.74 per share, subject to adjustment. The Company’s proposed acquisition of Fastback is subject to the condition that the Company raises at least $12 | 18. COMMITMENTS AND CONTINGENCIES From time to time, the Company may become involved in various lawsuits and legal proceedings that arise in the ordinary course of business. Management does not believe that after the final disposition any of these matters is likely to have a material adverse impact on the Company's financial condition, results of operations or cash flows, except as follows. On May 22, 2020, Michael Powell filed suit against DragonWave-X, LLC, DragonWave-X, Inc., Transform-X, Inc., ComSovereign Corp, and the Company in the Pima County Arizona Superior Court, Case No. C20202216. Mr. Powell has alleged that he entered into an employment agreement with DragonWave-X, Inc. in July 2018, was terminated without cause in May 2019, and is owed approximately $182,000 in wages and $50,000 in bonuses. Mr. Powell is seeking approximately $697,000 in treble damages, punitive damages, consequential damages, interest and attorneys' fees and costs. The Company disputes Mr. Powell's allegations and intends to vigorously defend the lawsuit. On February 7, 2020, DragonWave agreed to repurchase inventory held by Tessco Technologies Incorporated ("Tessco"), one of DragonWave's customers and note holders. Upon receipt of the inventory, which is valued at $121,482, DragonWave agreed to reimburse Tessco $56,766, representing the balance due after making the initial payment of $60,000. The return of inventory and payment to Tessco of $56,776 was required by February 28, 2020, but has not yet been made. On June 5, 2020, Tessco filed a complaint for confessed judgment against DragonWave in the Circuit Court for Baltimore, Maryland, Case No. 5539212, for approximately $60,000, which it claims is the reimbursement amount. The Company does not intend to oppose the entry of this judgment. |
Goodwill and Other Intangible A
Goodwill and Other Intangible Assets | 12 Months Ended |
Dec. 31, 2019 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
GOODWILL AND OTHER INTANGIBLE ASSETS | 8. GOODWILL AND OTHER INTANGIBLE ASSETS The following table sets forth the changes in the carrying amount of goodwill for fiscal 2019: (Amounts in US$'s) Total Balance at January 10, 2019 (inception) $ — Acquisitions 56,386,796 Balance at December 31, 2019 $ 56,386,796 The following table sets forth the gross carrying amounts and accumulated amortization of the Company's intangible assets as of December 31, 2019: (Amounts in US$'s) Gross Accumulated Amortization Net Definite-lived intangible assets: Trade names $ 5,643,204 $ (489,222 ) $ 5,153,982 Technology 32,800,000 (4,308,333 ) 28,491,667 Customer relationships 15,110,792 (2,054,894 ) 13,055,898 Intellectual property 3,729,537 (51,799 ) 3,677,738 Noncompete 937,249 (39,052 ) 898,197 Total definite-lived intangible assets $ 58,220,782 $ (6,943,300 ) $ 51,277,482 The following table sets forth the amortization expense (actual and estimated) for intangible assets, assuming no additional amortizable intangible assets, for fiscal 2019 and each of the following five years: Actual Estimated (Amounts in US$'s) 2019 2020 2021 2022 2023 2024 Amortization expense $ 6,943,300 $ 10,385,211 $ 10,346,159 $ 9,916,587 $ 9,916,587 $ 7,861,692 |
Revolving Line of Credit and No
Revolving Line of Credit and Note Payable | 12 Months Ended |
Dec. 31, 2019 | |
Line of Credit Facility [Abstract] | |
REVOLVING LINE OF CREDIT AND NOTE PAYABLE | 9. REVOLVING LINE OF CREDIT AND NOTE PAYABLE Revolving Line of Credit In 2017, the Company issued a promissory note (the "CNB Note") to City National Bank of Florida ("CNB") in the principal amount of $2,000,000, with a maturity date of August 2, 2018. In 2018, the maturity date of the CNB Note was extended to August 2, 2019. On August 29, 2019, the maturity date of the CNB Note was extended to August 2, 2020. The August 2019 modification was evaluated and it was determined that it did not qualify as an extinguishment of debt. The CNB Note allows for a CNB line of credit with advances that may be requested by the Company until the maturity date of August 2, 2020 so long as no event of default exists under the CNB Note or certain other events. The CNB Note bears an interest rate equal to the average of the interest rates per annum at which U.S. Dollars are offered in the London Interbank Borrowing Market ("LIBOR") for a 30-day period (the "Index") plus 2.9% over the Index. The Company will pay to CNB a late charge of 5.0% of any monthly payment not received by CNB within 10 calendar days after its due date. The Company may prepay the CNB Note at any time without penalty. In the event of a default, the interest rate will increase to the highest lawful rate. As of December 31, 2019, the interest rate on the CNB Note is 4.6% per annum. Under the terms of the CNB Note, the Company is obligated to maintain its primary operating account with CNB with a minimum average annual balance of $1,600,000. In the event the Company does not maintain this account balance, CNB may charge the Company a fee equal to 2% of the deficiency as additional interest under the CNB Note. Management believes that it was in compliance at all times during the year with this covenant and was never charged the 2% deficiency fee. The CNB Note is personally guaranteed by the Company's former Chief Executive Officer, Mr. Jay H. Nussbaum and his estate ("Guarantors"). The Company and the Guarantors are obligated to maintain aggregate unencumbered liquidity of no less than $6,000,000 in accounts with recognized financial institutions or licensed brokerage firms during the term of the CNB Note. Management believes that it was in compliance at all times during the year with this covenant. In addition, the CNB Note is secured by all of the Company's accounts, inventory and equipment, along with an assignment of a $120,000 bank account the Company maintains at CNB. The Company maintained the $120,000 bank account as of December 31, 2019. As of December 31, 2019, $2,000,000 had been drawn against the CNB line of credit. See Note 20 – Subsequent Events Indemnification Agreement On August 3, 2017, the Company entered into an Indemnification Agreement with Mr. Nussbaum in order to indemnify and defend him to the fullest extent permitted by law for any claim, expense or obligation which might arise as a result of his guarantee of the CNB Note. |
Concentrations
Concentrations | 9 Months Ended | 12 Months Ended |
Sep. 30, 2020 | Dec. 31, 2019 | |
Risks and Uncertainties [Abstract] | ||
CONCENTRATIONS | 22. CONCENTRATION Financial instruments, which potentially subject the Company to concentrations of credit risk, consist primarily of trade accounts receivable. The Company performs ongoing credit evaluations of its customers and generally does not require collateral related to its trade accounts receivable. At September | 19. CONCENTRATIONS Financial instruments, which potentially subject the Company to concentrations of credit risk, consist primarily of trade accounts receivable. The Company performs ongoing credit evaluations of its customers and generally does not require collateral related to its trade accounts receivable. At December 31, 2019, accounts receivable from one customer comprised 84% of the Company's total trade accounts receivable, and none of this balance has been characterized as uncollectible as of December 31, 2019. |
Subsequent Events
Subsequent Events | 9 Months Ended | 12 Months Ended |
Sep. 30, 2020 | Dec. 31, 2019 | |
Subsequent Events [Abstract] | ||
SUBSEQUENT EVENTS | 23. SUBSEQUENT EVENTS Share-Based Activity Subsequent to September Shareholder’s Equity In October 2020, an individual exercised warrants in a cashless purchase. In accordance with the warrant agreement, 55,714 warrants were exchanged for 50,000 On November Debt Agreements Between November In October 2020, the Company entered into an agreement with TM to exchange the aggregate principal, interest and penalties outstanding of $1,414,301 in full for 565,721 common shares of the Company with a fair value of $2.50 per share. | 20. SUBSEQUENT EVENTS Management evaluated for subsequent events requiring disclosure within the financial statements through the date of the filing of this report and noted the following items. Pending Corporate Transaction Agreement and Plan of Merger and Reorganization On May 21, 2020, the Company signed an Agreement and Plan of Merger and Reorganization to acquire Virtual Network Communications, Inc. ("VNC"), a developer of fixed and mobile broadband communications solutions for wireless networks operated by commercial, enterprise, government and defense customers. The acquisition is expected to be completed on or before July 6, 2020, subject to satisfactory completion of closing conditions. Acquisitions On March 6, 2020, the Company's subsidiary, Sovereign Plastics, LLC ("Sovereign Plastics"), entered into a Stock Purchase Agreement to acquire 100% of the shares of common stock of Spring Creek Manufacturing, Inc. for a purchase price of $500,000. The acquisition closed on March 6, 2020 with Sovereign Plastics paying the purchase price through the assumption of the obligations of the sellers under an outstanding promissory note in the principal amount of $90,000 and the delivery of short-term promissory notes in the aggregate principal amount of $410,000. Additionally, Sovereign Plastics agreed to pay certain sales commissions on all sales to two specific customers. On March 6, 2020, in a related transaction, Sovereign Plastics also entered into an Asset Purchase Agreement with Fast Plastics Parts, LLC ("Fast Plastics") to acquire certain assets, consisting primarily of machinery, equipment and furniture of Fast Plastics. The acquisition also closed on March 6, 2020 with Sovereign Plastics providing the purchase price of approximately $1,464,000 by the payment of approximately $66,000 in cash, the repayment of outstanding indebtedness of Fast Plastics in the aggregate amount of $250,000 and the assumption of an outstanding term loan of Fast Plastics in the amount of approximately $979,000. Sovereign Plastics also assumed equipment leases. The cash portions of the purchase prices were funded by the sale to unaffiliated lenders of promissory notes in the principal amount of $500,000 that mature on September 4, 2020 and 50,000 shares of common stock for an aggregate purchase price of $450,000. 2020 Long-Term Incentive Plan On April 22, 2020, the Company's Board of Directors adopted the 2020 Long-Term Incentive Plan (the "2020 Plan") which was approved by the stockholders on or about May 6, 2020. Employees, officers, directors and consultants that provide services to the Company or one of its subsidiaries may be selected to receive awards under the 2020 Plan. Awards under the 2020 Plan may be in the form of incentive or nonqualified stock options, stock appreciation rights, stock bonuses, restricted stock, stock units and other forms of awards including cash awards and performance-based awards. A total of 10,000,000 shares of the Company's common stock are authorized for issuance with respect to awards granted under the 2020 Plan. Any shares subject to awards that are not paid, delivered or exercised before they expire or are cancelled or terminated, or fail to vest, as well as shares used to pay the purchase or exercise price of awards or related tax withholding obligations, will become available for other award grants under the 2020 Plan. No stock grants have been issued under the 2020 Plan, and 10,000,000 shares authorized under the 2020 Plan remained available for award purposes. The 2020 Plan will terminate on May 1, 2030. The maximum term of options, stock appreciation rights and other rights to acquire common stock under the 2020 Plan is ten years after the initial date of the award. Debt Agreements On February 26, 2020, the Company entered into a $600,000 secured business loan bearing interest at 81.74% per annum that matures on December 26, 2020. Principal and interest payments of $19,429 are due weekly. The loan is secured by the assets of the Company. On March 19, 2020, the Company entered into a note payable with the Nussbaum estate in the amount of $2,022,722 bearing interest at 5% per annum with a maturity date of August 31, 2020. Interest payments of $8,428 are due monthly while the full principal amount is due at maturity. The proceeds of the note payable were used to repay the balance of the CNB Note. On April 29, 2020, the Company entered into a securities purchase agreement pursuant to which it issued a convertible promissory note in the principal amount of $285,714 with an original issue discount of $35,714 and warrants to purchase 158,730 shares of the Company's common stock for proceeds of $250,000. The note bears interest at a rate of 12.5% per annum and matures on January 29, 2021. Within three business days of filing the Annual Report for fiscal 2019, the investor is required to issue, and the Company is required accept, an additional convertible promissory note in the principal amount of $285,714 with an original issue discount of $35,714 along with warrants to purchase an additional 158,730 shares of the Company's common stock for proceeds of $250,000. This note will bear interest at 12.5% per annum and mature on January 29, 2021. The investor will not be required to purchase the additional securities if the Company is in default under the outstanding notes or if certain other conditions are not met. On May 29, 2020, DragonWave issued a promissory note in the principal amount of $290,000 with an original issue discount of $40,000 for proceeds of $250,000. The note matures on September 30, 2020 and will bear interest at the rate of 12% per annum on any principal balance not paid from the maturity date until paid in full. The promissory note is guaranteed by the Company and Mr. Hodges. Payroll Protection Program of the CARES Act During April and May 2020, the Company and its subsidiaries received an aggregate of $455,185 under the Paycheck Protection Program ("PPP") of the Coronavirus Aid, Relief, and Economic Security Act ("CARES Act") of 2020. These loans are to cover 24 weeks of payroll expenses and may be used for a variety of other needs such as: payroll costs, salaries or commissions, rent, utilities and interest on other outstanding debt. Management believes it is complying with the rules for forgiveness of these funds received under the PPP of the CARES Act. Consulting Agreement On January 31, 2020, the Company entered into an agreement with a consultant to its subsidiary, Lextrum, to amend a consulting agreement between the consultant and Lextrum to allow the consultant to elect to take from 50% to 100% of his compensation in the form of common stock of the Company. Common stock to be issued to the consultant will be paid on a quarterly basis. On March 12, 2020, the Company issued 165,095 shares of its common stock in satisfaction of $106,238 that was owed by Lextrum to the consultant for services previously rendered and the additional $106,238 that was owed by Lextrum was partially paid in cash of $55,000 on March 6, 2020. The remaining $51,238 is still outstanding. To date, no additional shares of common stock have been issued pursuant to this agreement. |
Unaudited Pro Forma Information
Unaudited Pro Forma Information | 9 Months Ended | 12 Months Ended |
Sep. 30, 2020 | Dec. 31, 2019 | |
Unaudited Pro Forma Information | ||
UNAUDITED PRO FORMA INFORMATION | 24. UNAUDITED PRO-FORMA INFORMATION The Company has filed a registration statement on Form S -1 -for-3 -for-3 Pro forma basic earnings (loss) per share presented as unaudited on the statement of operations is computed by dividing net income (loss) by the weighted average number of common shares outstanding for the period after the effect of the split. Diluted earnings (loss) per share presented as unaudited on the statement of operations is computed by dividing net income (loss) by the weighted average number of common shares outstanding plus common stock equivalents (if dilutive) related to stock options, restricted stock awards and warrants for each period after the effect of the split. | 21. UNAUDITED PRO FORMA INFORMATION The Company has filed a registration statement on Form S -1 -for-3 -for-3 Pro forma basic earnings (loss) per share presented as unaudited on the statement of operations is computed by dividing net income (loss) by the weighted average number of common shares outstanding for the period after the effect of the split. Diluted earnings (loss) per share presented as unaudited on the statement of operations is computed by dividing net income (loss) by the weighted average number of common shares outstanding plus common stock equivalents (if dilutive) related to stock options, restricted stock awards and warrants for each period after the effect of the split. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2020 | Dec. 31, 2019 | |
Accounting Policies [Abstract] | ||
Cash and Cash Equivalents | Cash and Cash Equivalents Cash and cash equivalents are represented by operating accounts or money market accounts maintained with insured financial institutions, including all short-term, highly-liquid investments with maturities of three months or less when purchased to be cash equivalents. The Company had no cash equivalents as of December 31, 2019. | |
Accounting Standards Not Yet Adopted | Accounting Standards Not Yet Adopted In August 2020, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2020-06, Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity's Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity's Own Equity In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848 In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740) In January 2017, the FASB issued ASU No. 2017-04, Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment In June 2016, the FASB issued ASU 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments | |
Accounts Receivable and Credit Policies | Accounts Receivable and Credit Policies Trade accounts receivable consist of amounts due from the sale of the Company's products and services. Such accounts receivable are uncollateralized customer obligations due under normal trade terms requiring payment within 30 to 45 days of receipt of the invoice. The Company provides an allowance for doubtful accounts equal to the estimated uncollectible amounts based on historical collection experience and a review of the current status of trade accounts receivable. As of December 31, 2019, the Company characterized $690,830 as uncollectible. | |
Concentration of Credit Risk | Concentration of Credit Risk Financial instruments that potentially subject the Company to concentrations of credit risk consist of cash and trade accounts receivables. The Company places its cash with high-credit-quality financial institutions. At times, such cash may be in excess of the Federal Deposit Insurance Corporation ("FDIC") insurance coverage limit of $250,000 per depositor. As a result, there could be a concentration of credit risk related to amounts on deposit in excess of FDIC insurance coverage. The Company has not experienced any losses due to these excess deposits and believes the risk is not significant. With respect to trade receivables, the Company routinely assesses the financial strength of its customers and, as a consequence, believes that the receivable credit risk exposure is limited. | |
Related Parties | Related Parties The Company accounts for related party transactions in accordance with Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") 850, Related Party Disclosures | |
Inventory | Inventory Inventory is valued at the lower of cost and net realizable value ("NRV"). The cost of inventory is calculated on a standard cost basis, which approximates weighted average actual cost. NRV is determined as the market value for finished goods, replacement cost for raw materials and finished goods market value less cost to complete for work in progress inventory. The Company regularly reviews inventory quantities on hand and records an impairment for excess and obsolete inventory based on factors including its estimated forecast of product demand, the stage of the product life cycle and production requirements for the units in question. Indirect manufacturing costs and direct labor expenses are allocated systematically to the total production inventory. | |
Investments | Investments An investment is considered impaired if the fair value of the investment is less than its cost. Generally, an impairment is considered other-than-temporary unless (1) the Company has the ability and intent to hold an investment for a reasonable period of time sufficient for an anticipated recovery of the fair value up to (or beyond) the cost of the investment; and (2) evidence indicating that the cost of the investment is recoverable within a reasonable period of time outweighs evidence to the contrary. If impairment is determined to be other that temporary, then an impairment loss is recognized equal to the difference between the investment's cost and fair value. | |
Property and Equipment, net | Property and Equipment, net Property and equipment are stated at cost when acquired. Depreciation is calculated using the straight-line method over the estimated useful lives of the related assets as follows: Asset Type Useful Life Test equipment, research and development equipment 4-5 years Computer hardware 2 years Production fixtures 3 years Leasehold improvements 5 years Other 3-5 years Expenditures for maintenance and repairs are charged to expense as incurred, whereas expenditures for major renewals and betterments that extend the useful lives of property and equipment are capitalized. | |
Long-Lived Assets and Goodwill | Long-Lived Assets and Goodwill The Company accounts for long-lived assets in accordance with the provisions of ASC 360-10-35, Property, Plant and Equipment, Impairment or Disposal of Long-lived Assets The Company accounts for goodwill and intangible assets in accordance with ASC 350, Intangibles – Goodwill and Other | |
Beneficial Conversion Features and Warrants | Beneficial Conversion Features and Warrants The Company evaluates the conversion feature of convertible debt instruments to determine whether the conversion feature was beneficial as described in ASC 470-30, Debt with Conversion and Other Options Under these guidelines, the Company allocates the value of the proceeds received from a convertible debt transaction between the conversion feature and any other detachable instruments (such as warrants) on a relative fair value basis. The allocated fair value of the BCF and warrants are recorded as a debt discount and is accreted over the expected term of the convertible debt as interest expense. | |
Fair Value of Financial Instruments | Fair Value of Financial Instruments The Company measures its financial assets and liabilities in accordance with the requirements of ASC 820, Fair Value Measurement. As defined in ASC 820, the fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price). The Company utilized the market data of similar entities in its industry or assumptions that market participants would use in pricing the asset or liability, including assumptions about risk and the risks inherent in the inputs to the valuation technique. These inputs can be readily observable, market corroborated or generally unobservable. The Company classifies fair value balances based on the observability of those inputs. ASC 820 established a fair value hierarchy that prioritizes the inputs used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (level 1 measurement) and the lowest priority to unobservable inputs (level 3 measurement) as follow Level 1 Level 2 Level 3 The Company's financial instruments consist of cash, accounts receivable, accounts payable and notes payable. The Company has determined that the book value of its outstanding financial instruments as of December 31, 2019 approximated their fair value due to their short-term nature. | |
Debt Discounts | Debt Discounts The Company records debt discounts as a deduction from the carrying amount of the related indebtedness on its Consolidated Balance Sheet with the respective debt discount amortized in interest expense on its Consolidated Statement of Operations. In connection with the issuance of certain notes payable and senior convertible debentures, the Company, or its subsidiaries, issued warrants to purchase shares of its common stock and has BCFs. See Note 10 – Debt Agreements Warrants As described above under Beneficial Conversion Features and Warrants | |
Debt Issuance Costs | Debt Issuance Costs The Company presents debt issuance costs as a direct deduction from the carrying amount of the related indebtedness on its Consolidated Balance Sheet and amortizes these costs over the term of the related debt liability using the straight-line method, which approximates the effective interest method. Amortization is recorded in interest expense on the Consolidated Statement of Operations. | |
Foreign Currency Translation | Foreign Currency Translation The Company's operations and balances denominated in foreign currencies, including those of its foreign Canadian subsidiary, DragonWave, that are primarily a direct and integral component or extension of the Company's operations, are translated into U.S. dollars ("USD") using the following: monetary assets and liabilities are translated at the period end exchange rate; non-monetary assets are translated at the historical exchange rate; and revenue and expense items are translated at the average exchange rate and records the translation adjustments in accumulated other comprehensive income (loss) on the Consolidated Balance Sheet. Foreign currency transaction gains and losses are included in foreign currency transaction gain (loss) in the Consolidated Statement of Operations. | |
Revenue Recognition | Revenue Recognition In May 2014, the FASB issued Accounting Standards Update ("ASU") 2014-09, Revenue from Contracts with Customers (Topic 606) To further assist with adoption and implementation of ASU 2014-09, the FASB issued the following ASUs: ● ASU 2016-08 (Issued March 2016) — Principal versus Agent Consideration (Reporting Revenue Gross versus Net) ● ASU 2016-10 (Issued April 2016) — Identifying Performance Obligations and Licensing ● ASU 2016-12 (Issued May 2016) — Narrow-Scope Improvements and Practical Expedients ● ASU 2016-20 (Issued December 2016) — Technical Corrections and Improvements to Topic 606, Revenue from Contracts with Customers The Company adopted these standards as of January 10, 2019 (date of incorporation). At contract inception, the Company assesses the goods and services promised in the contract with customers and identifies a performance obligation for each. To determine the performance obligation, the Company considers all products and services promised in the contract regardless of whether they are explicitly stated or implied by customary business practices. The timing of satisfaction of the performance obligation is not subject to significant judgment. The Company measures revenue as the amount of consideration expected to be received in exchange for transferring goods and services. Revenue is recognized net of any taxes collected from customers that are subsequently remitted to governmental authorities. The Company has determined that it has the following performance obligations related to its products and services: equipment, software license, extended warranty, training, installation and consulting service. Revenue from equipment, software license, training and installation are all recognized at a point in time when control of the goods is transferred to the customer, generally occurring upon shipment or delivery dependent upon the terms of the underlying contract, or services is completed. Revenue from extended warranties is recognized over time using an input method that results in a straight-line basis recognition over the warranty period, as the contract usually provides the customer equal benefit throughout the warranty period. Revenue from consulting services is recognized over time using an input method of labor hours expensed, as it directly measures the efforts toward satisfying the performance obligation. For contracts with customers that contain multiple performance obligations, the Company accounts for the promised performance obligations separately as individual performance obligations if they are distinct. In determining whether performance obligations meet the criteria for being distinct, the Company considers a number of factors, including the degree of interrelation and interdependence between obligations and whether or not the good or service significantly modifies or transforms another good or service in the contract. After identifying the separate performance obligations, the transaction price is allocated to the separate performance obligations on a relative standalone selling price basis. The Company generally determines the standalone selling prices based on the prices charged to customers. Judgment may be used to determine the standalone selling prices for items that are not sold separately, including taking into consideration either historical pricing practices or an adjusted market assessment. Unsatisfied and partially unsatisfied performance obligations as of the end of the reporting period primarily consist of products and services for which customer purchase orders have been accepted and that are in the process of being delivered. Transaction price is calculated as the selling price less any variable consideration, consisting of rebates and discounts. Discounts provided to customers are known at contract inception. Rebates are calculated on the "expected value" method where the Company (1) estimates the probability of each rebate amount which could be earned by the distributor, (2) multiplies each estimated amount by its assigned probability factor, and (3) calculates a final sum of each of the probability-weighted amounts calculated in step (2). The sum calculated in step (3) is the rebate amount, which along with discounts reduces the amount of revenue recognized. Costs incurred for shipping and handling are included in costs of goods sold on the Consolidated Statement of Operations. Amounts billed to a customer for shipping and handling are reported as revenue on the Consolidated Statement of Operations. The Company provides limited warranties for products sold to customers, typically for 13 months, covering product defects. Such limited warranties are not sold separately and do not provide customers with a service in addition to assurance of compliance with agreed-upon specifications. Accordingly, these types of limited warranties are not considered to be separate performance obligations. In accordance with applicable guidance, the expected cost of the limited warranties is recorded as accrued warranty liability on the Consolidated Balance Sheet. Optional extended warranties are sold to customers and include additional support services. The Company records contract assets when it has a right to consideration and records accounts receivable when it has an unconditional right to consideration. The Company records contract liabilities when cash payments are received (or unconditional rights to receive cash) in advance of fulfilling its performance obligations. When the services have been performed or the goods delivered, revenue will be recognized, and contract liabilities will be reduced. The Company does not disclose the value of unsatisfied performance obligations for contracts with an original expected length of one year or less. The majority of the Company's performance obligations in its contracts with customers relate to contracts with durations of less than one year. The transaction price allocated to unsatisfied performance obligations included in contracts with durations of more than 12 months is reflected in contract liabilities on the Consolidated Balance Sheet. Applying a practical expedient, the Company recognizes the incremental costs of obtaining contracts, which primarily consist of sales commissions, as expense when incurred if the amortization period of the assets that otherwise would have been recognized is one year or less. If the service period, inclusive of any anticipated renewal, is longer than a year, the incremental direct costs are capitalized and amortized over the period of benefit. As of December 31, 2019, there were no such capitalized costs. The Company also applies the practical expedient not to adjust the promised amount of consideration for the effects of a financing component if the Company expects, at contract inception, that the period between when the Company transfers a good or service to the customer and when the customer pays for the good or service will be one year or less. During fiscal 2019, there were no such financing components. | |
Research and Development | Research and Development Research costs are expensed as incurred. Development costs are expensed as incurred unless they meet generally accepted accounting criteria for deferral and amortization. Development costs incurred prior to establishment of technological feasibility do not meet these criteria and are expensed as incurred. | |
Share-Based Compensation | Share-Based Compensation Employees The Company accounts for share-based compensation in accordance with ASC 718, Compensation – Stock Compensation Compensation – Stock Compensation (Topic 718) – Improvements to Employee Share-Based Payment Accounting Non-Employees Effective January 10, 2019, the Company adopted ASU No. 2018-07, Compensation – Stock Based Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting Equity, Equity – Equity-Based Payments to Non-Employees Share-based compensation for employees and non-employees is recorded in the Consolidated Statement of Operations as a component of general and administrative expense with a corresponding increase to additional paid-in capital in shareholders' equity. | |
Leases | Leases In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842) ● ASU 2018-10 (Issued July 2018) — Codification Improvements to Topic 842, Leases ● ASU 2018-11 (Issued July 2018) — Leases (Topic 842): Targeted Improvements ● ASU 2018-20 (Issued December 2018) — Leases (Topic 842): Narrow-Scope Improvements for Lessors ● ASU 2019-01 (Issued March 2019) — Leases (Topic 842): Codification Improvements ASU 2018-11 provided entities with an additional transition method to adopt the new lease standard. Under this new transition method, an entity initially applies the new lease standard at the adoption date and recognizes a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption, if any. The new lease standard was effective for fiscal years beginning after December 15, 2018. The Company adopted these standards in the first quarter of 2019 utilizing the transition method allowed under ASU 2018-11. See Note 17 — Leases | |
Income Taxes | Income Taxes The Company accounts for income taxes utilizing ASC 740, Income Taxes. The Company also follows the guidance for accounting for income tax uncertainties. In accounting for uncertainty in income taxes, the Company recognizes the financial statement benefit of a tax position only after determining that the relevant tax authority would more likely than not sustain the position following an audit. For tax positions meeting the more likely than not threshold, the amount recognized in the consolidated financial statements is the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement with the relevant tax authority. No liability for unrecognized tax benefits was recorded as of December 31, 2019. If the Company has to recognize any interest or penalties associated with its tax positions or returns, any interest or penalties will be recorded as income tax expense in the Consolidated Statement of Operations. | |
Earnings or Loss per Share | Earnings or Loss per Share The Company accounts for earnings or loss per share pursuant to ASC 260, Earnings Per Share There were no adjustments to net loss, the numerator, for purposes of computing basic earnings per share. The following table sets out the computation of basic and diluted income (loss) per share: (Amounts in US$'s, except share data) January 10, 2019 (Inception) to December 31, Numerator: Net loss $ (27,545,255 ) Numerator for basic earnings per share - loss available to common shareholders $ (27,545,255 ) Denominator: Denominator for basic earnings per share - weighted average common shares outstanding 48,714,099 Dilutive effect of warrants and options — Denominator for diluted earnings per share - weighted average common shares outstanding and assumed conversions 48,714,099 Basic loss per common share $ (0.57 ) Diluted loss per common share $ (0.57 ) Potential common shares issuable to employees, non-employees and directors upon exercise or conversion of shares are excluded from the computation of diluted earnings per common share when the effect would be anti-dilutive. All potential common shares are dilutive in periods of net loss available to common shareholders. Stock options are anti-dilutive when the exercise price of these instruments is greater than the average market price of the Company's common stock for the period, regardless of whether the Company is in a period of net loss available to common shareholders. The following weighted-average potential common shares were excluded from the diluted loss per common share as their effect was anti-dilutive: stock options of 837,479, restricted stock units of 156,091 and warrants of 48,498. | |
Reportable Segments | Reportable Segments U.S. GAAP establishes standards for reporting financial and descriptive information about a company's reportable segments. Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker, or decision-making group, in deciding how to allocate resources and in assessing performance. Our chief operating decision maker is our Chief Executive Officer, who currently reviews the financial performance and the results of operations of our operating subsidiaries on a consolidated basis when making decisions about allocating resources and assessing performance of our company. Accordingly, we currently consider ourselves to be in a single reporting segment for reporting purposes focused on the North American development, manufacturing and production of products and services for the telecom infrastructure market. As we are still in the early stages of developing our company, we have historically managed our subsidiaries within this single operating segment and do not assess the performance of our product lines or geographic regions or other measures of income or expense, such as product expense, operating income or net income. Each of our subsidiaries is operated under the same senior management of our company, and we view the operations of our subsidiaries as a whole for making business decisions. Employees of one subsidiary, particularly mechanical engineers, are often called upon to assist in the operations of another subsidiary. As the development of our company matures and we move toward full scale production with increased marketing efforts, we will continue to evaluate additional segment disclosure requirements. | |
Recent Accounting Pronouncements | Recent Accounting Pronouncements Management believes there have not been any recently issued, but not effective, accounting standards which, if currently adopted, would have a material effect on the Company's financial statements. |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2020 | Dec. 31, 2019 | |
Accounting Policies [Abstract] | ||
Schedule of estimated useful lives | Asset Type Useful Life Test equipment, research and development equipment 4-5 years Computer hardware 2 years Production fixtures 3 years Leasehold improvements Shorter of remaining lease term or 5 years Other 3-5 years | Asset Type Useful Life Test equipment, research and development equipment 4-5 years Computer hardware 2 years Production fixtures 3 years Leasehold improvements 5 years Other 3-5 years |
Schedule of computation of basic and diluted income (loss) per share | 5. EARNINGS (LOSS) PER SHARE The Company accounts for earnings or loss per share pursuant to Accounting Standards Codification ("ASC") 260, Earnings Per Share There were no adjustments to net loss, the numerator, for purposes of computing basic earnings per share. The following table sets out the computation of basic and diluted income (loss) per share: Three Months Ended Nine months January 10, (Amounts in US$'s, except share data) 2020 2019 2020 2019 Numerator: Net Loss $ (10,330,829 ) $ (7,260,236 ) $ (24,922,052 ) $ (12,318,670 ) Numerator for basic earnings per share – loss available to common shareholders $ (10,330,829 ) $ (7,260,236 ) $ (24,922,052 ) $ (12,318,670 ) Denominator: Denominator for basic earnings per share - weighted average common shares outstanding 132,649,621 43,953,888 132,466,532 39,103,271 Dilutive effect of warrants and options — — — — Denominator for diluted earnings per share - weighted average common shares outstanding and assumed conversions 132,649,621 43,953,888 132,466,532 39,103,271 Basic loss per common share $ (0.08 ) $ (0.17 ) $ (0.19 ) $ (0.32 ) Diluted loss per common share $ (0.08 ) $ (0.17 ) $ (0.19 ) $ (0.32 ) Potential common shares issuable to employees, non-employees and directors upon exercise or conversion of options, warrants, or convertible debt are excluded from the computation of diluted earnings per common share when the effect would be anti-dilutive. All potential common shares are dilutive in periods of net loss available to common shareholders. Stock options are anti-dilutive when the exercise price of these instruments is greater than the average market price of the Company's common stock for the period, regardless of whether the Company is in a period of net loss available to common shareholders. | (Amounts in US$'s, except share data) January 10, 2019 (Inception) to December 31, Numerator: Net loss $ (27,545,255 ) Numerator for basic earnings per share - loss available to common shareholders $ (27,545,255 ) Denominator: Denominator for basic earnings per share - weighted average common shares outstanding 48,714,099 Dilutive effect of warrants and options — Denominator for diluted earnings per share - weighted average common shares outstanding and assumed conversions 48,714,099 Basic loss per common share $ (0.57 ) Diluted loss per common share $ (0.57 ) |
Revenue (Tables)
Revenue (Tables) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2020 | Dec. 31, 2019 | |
Revenue [Abstract] | ||
Schedule of timing of revenue recognition | Three Months Ended Nine Months January 10, (Amounts in US$'s) 2020 2019 2020 2019 Timing of revenue recognition: Services and products transferred at a point in time $ 1,941,239 $ 1,824,924 $ 7,056,659 $ 2,289,249 Services and products transferred over time 77,124 748,507 457,001 1,287,093 Total revenue $ 2,018,363 $ 2,573,431 $ 7,513,660 $ 3,576,342 | (Amounts in US$'s) January 10, 2019 (Inception) to December 31, Timing of revenue recognition: Services and products transferred at a point in time $ 2,803,026 Services and products transferred over time 1,909,186 Total revenue $ 4,712,212 |
Schedule of revenue by products and services | Three Months Ended Nine Months January 10, (Amounts in US$'s) 2020 2019 2020 2019 Revenue by products and services: Products $ 1,726,425 $ 1,824,924 $ 6,298,041 $ 2,289,249 Services 291,938 748,507 1,215,619 1,287,093 Total revenue $ 2,018,363 $ 2,573,431 $ 7,513,660 $ 3,576,342 | (Amounts in US$'s) January 10, 2019 (Inception) to December 31, Revenue by products and services: Products $ 2,702,410 Services 2,009,802 Total revenue $ 4,712,212 |
Schedule of revenue by geography | Three Months Ended Nine months January 10, 2019 (Amounts in US$'s) 2020 2019 2020 2019 Revenue by geography: North America $ 1,830,967 $ 2,466,473 $ 6,755,717 $ 2,669,728 International 187,396 106,958 757,943 906,614 Total revenue $ 2,018,363 $ 2,573,431 $ 7,513,660 $ 3,576,342 | (Amounts in US$'s) January 10, 2019 (Inception) to December 31, Revenue by geography: North America $ 3,476,977 International 1,235,235 Total revenue $ 4,712,212 |
Schedule of contract liabilities related to contract with customers | (Amounts in US$'s) Total Balance at December 31, 2019 $ 302,815 Increase 7,643 Balance at September 30, 2020 $ 310,458 |
Earnings (Loss) Per Share (Tabl
Earnings (Loss) Per Share (Tables) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2020 | Dec. 31, 2019 | |
Earnings Loss Per Share [Abstract] | ||
Schedule of basic and diluted income (loss) per share | 5. EARNINGS (LOSS) PER SHARE The Company accounts for earnings or loss per share pursuant to Accounting Standards Codification ("ASC") 260, Earnings Per Share There were no adjustments to net loss, the numerator, for purposes of computing basic earnings per share. The following table sets out the computation of basic and diluted income (loss) per share: Three Months Ended Nine months January 10, (Amounts in US$'s, except share data) 2020 2019 2020 2019 Numerator: Net Loss $ (10,330,829 ) $ (7,260,236 ) $ (24,922,052 ) $ (12,318,670 ) Numerator for basic earnings per share – loss available to common shareholders $ (10,330,829 ) $ (7,260,236 ) $ (24,922,052 ) $ (12,318,670 ) Denominator: Denominator for basic earnings per share - weighted average common shares outstanding 132,649,621 43,953,888 132,466,532 39,103,271 Dilutive effect of warrants and options — — — — Denominator for diluted earnings per share - weighted average common shares outstanding and assumed conversions 132,649,621 43,953,888 132,466,532 39,103,271 Basic loss per common share $ (0.08 ) $ (0.17 ) $ (0.19 ) $ (0.32 ) Diluted loss per common share $ (0.08 ) $ (0.17 ) $ (0.19 ) $ (0.32 ) Potential common shares issuable to employees, non-employees and directors upon exercise or conversion of options, warrants, or convertible debt are excluded from the computation of diluted earnings per common share when the effect would be anti-dilutive. All potential common shares are dilutive in periods of net loss available to common shareholders. Stock options are anti-dilutive when the exercise price of these instruments is greater than the average market price of the Company's common stock for the period, regardless of whether the Company is in a period of net loss available to common shareholders. | (Amounts in US$'s, except share data) January 10, 2019 (Inception) to December 31, Numerator: Net loss $ (27,545,255 ) Numerator for basic earnings per share - loss available to common shareholders $ (27,545,255 ) Denominator: Denominator for basic earnings per share - weighted average common shares outstanding 48,714,099 Dilutive effect of warrants and options — Denominator for diluted earnings per share - weighted average common shares outstanding and assumed conversions 48,714,099 Basic loss per common share $ (0.57 ) Diluted loss per common share $ (0.57 ) |
Cash and Cash Equivalents (Tabl
Cash and Cash Equivalents (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Cash and Cash Equivalents [Abstract] | |
Schedule of cash and cash equivalents | (Amounts in US$'s) September 30, December 31, Cash and cash equivalents $ 505,053 $ 812,452 Total cash and cash equivalents in the Statement of Cash Flows $ 505,053 $ 812,452 |
Accounts Receivable, Net (Table
Accounts Receivable, Net (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Accounts Receivable, after Allowance for Credit Loss [Abstract] | |
Schedule of accounts receivable | (Amounts in US$'s) September 30, December 31, Account receivables $ 2,547,763 $ 2,859,489 Less: Allowance for doubtful accounts (1,654,356 ) (690,830 ) Total account receivables, net $ 893,407 $ 2,168,659 |
Inventory (Tables)
Inventory (Tables) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2020 | Dec. 31, 2019 | |
Inventory Disclosure [Abstract] | ||
Schedule of inventory | (Amounts in US$'s) September 30, December 31, Raw materials $ 1,775,498 $ 1,041,256 Work in progress 873,050 1,566,147 Finished goods 3,796,555 3,060,518 Total inventory 6,445,103 5,667,921 Reserve (1,125,513 ) (996,525 ) Total inventory, net $ 5,319,590 $ 4,671,396 | (Amounts in US$'s) December 31, Raw materials $ 1,041,256 Work in progress 1,566,147 Finished goods 3,060,518 Total production inventory 5,667,921 Inventory held for customer service/warranty 56,409 Total inventory 5,724,330 Reserve (1,052,934 ) Total inventory, net $ 4,671,396 |
Prepaid Expenses (Tables)
Prepaid Expenses (Tables) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2020 | Dec. 31, 2019 | |
Prepaid Expense, Current [Abstract] | ||
Schedule of prepaid expenses | (Amounts in US$'s) September 30, December 31, Prepaid products and services $ 420,077 $ 873,617 Prepaid rent and security deposit 169,310 43,112 $ 589,387 $ 916,729 | (Amounts in US$'s) December 31, Prepaid products and services $ 873,617 Prepaid rent and security deposit 43,112 $ 916,729 |
Property and Equipment, Net (Ta
Property and Equipment, Net (Tables) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2020 | Dec. 31, 2019 | |
Property, Plant and Equipment [Abstract] | ||
Schedule of estimated useful lives | Asset Type Useful Life Test equipment, research and development equipment 4-5 years Computer hardware 2 years Production fixtures 3 years Leasehold improvements Shorter of remaining lease term or 5 years Other 3-5 years | Asset Type Useful Life Test equipment, research and development equipment 4-5 years Computer hardware 2 years Production fixtures 3 years Leasehold improvements 5 years Other 3-5 years |
Schedule of property and equipment, net | (Amounts in US$'s) September 30, December 31, Shop machinery and equipment $ 9,481,183 $ 8,100,667 Computers and electronics 579,875 558,561 Office furniture and fixtures 348,911 341,214 Leasehold improvements 274,313 222,332 10,684,282 9,222,774 Less - accumulated depreciation (8,451,193 ) (7,764,668 ) $ 2,233,089 $ 1,458,106 | (Amounts in US$'s) December 31, Shop machinery and equipment $ 8,100,667 Computers and electronics 558,561 Office furniture and fixtures 341,214 Leasehold improvements 222,332 9,222,774 Less - accumulated depreciation (7,764,668 ) $ 1,458,106 |
Leases (Tables)
Leases (Tables) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2020 | Dec. 31, 2019 | |
Leases [Abstract] | ||
Schedule of operating leases | (Amounts in US$'s) September 30, December 31, Operating lease ROU assets $ 2,891,113 $ 2,199,682 Operating lease liability $ 3,020,364 $ 2,212,548 | (Amounts in US$'s) January 10, ROU assets $ 116,876 Lease liability $ 116,876 (Amounts in US$'s) December 31, ROU assets $ 2,199,682 Lease liability $ 2,212,548 |
Schedule of other information related to our operating leases | (Amounts in US$'s) For the nine Operating lease ROU Asset – December 31, 2019 $ 2,199,682 Increase 1,287,432 Decrease (151,565 ) Amortization (444,436 ) Operating lease ROU Asset – September 30, 2020 $ 2,891,113 Operating lease liability – December 31, 2019 $ 2,212,548 Increase 1,233,284 Decrease (151,565 ) Amortization (273,903 ) Operating lease liability – September 30, 2020 $ 3,020,364 Operating lease liability – short term $ 659,789 Operating lease liability – long term 2,360,575 Operating lease liability – total $ 3,020,364 | (Amounts in US$'s) December 31, 2019 ROU Asset – January 10, 2019 $ 116,876 Increase 2,300,580 Amortization (217,774 ) ROU Asset – December 31, 2019 $ 2,199,682 Lease liability – January 10, 2019 $ 116,876 Increase 2,300,580 Amortization (204,908 ) Lease liability – December 31, 2019 $ 2,212,548 Lease liability – short term $ 467,979 Lease liability – long term 1,744,569 Lease liability – total $ 2,212,548 |
Schedule of weighted-average remaining lease term and weighted average discount rates of operating leases | (Amounts in US$'s) September 30, December 31, Weighted average remaining lease term 4.44 years 4.56 years Weighted average discount rate 5.99 % 6.50 % | |
Schedule of total remaining years to lease liabilities operating leases | (Amounts in US$'s) Operating Remainder of 2020 $ 188,633 2021 805,765 2022 699,255 2023 713,647 2024 641,648 Thereafter 377,459 Total minimum lease payments 3,426,407 Less: effect of discounting (406,043 ) Present value of future minimum lease payments 3,020,364 Less: current obligations under leases (659,789 ) Long-term lease obligations $ 2,360,575 | (Amounts in US$’s) Operating Leases Amounts due within twelve months of December 31, 2020 $ 557,200 2021 521,067 2022 431,146 2023 434,736 2024 389,917 Thereafter 177,735 Total minimum lease payments 2,511,801 Less: effect of discounting (299,253 ) Present value of future minimum lease payments 2,212,548 Less: current obligations under leases (467,979 ) Long-term lease obligations $ 1,744,569 |
Schedule of finance leases information | (Amounts in US$'s) For the nine Finance lease ROU Asset – December 31, 2019 $ — Increase 81,976 Amortization (8,400 ) Finance lease ROU Asset – September 30, 2020 $ 73,576 Finance lease liability – December 31, 2019 $ — Increase 81,976 Interest accretion 1,063 Payment (13,697 ) Finance lease liability – September 30, 2020 $ 69,342 Finance lease liability – short term $ 55,046 Finance lease liability – long term 14,296 Finance lease liability – total $ 69,342 | |
Schedule of weighted-average remaining lease term and weighted average discount rates of finance leases | (Amounts in US$'s) September 30, December 31, Weighted average remaining lease term 1.32 years — Weighted average discount rate 4.18 % — % |
Business Acquisitions (Tables)
Business Acquisitions (Tables) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2020 | Dec. 31, 2019 | |
Schedule of the acquired assets, assumed liabilities and preliminary acquisition accounting | (Amounts in US$'s) Fair Value Inventory $ 168,106 Prepaid expenses 66,575 Property & equipment 1,365,319 Operating lease right-of-use-assets 1,048,058 Finance lease right-of-use assets 18,009 Intangible assets: Customer relationships 500,226 Total assets 3,166,293 Current portion of long-term debt 1,270,879 Operating lease liabilities, current 166,919 Finance lease liabilities, current 6,578 Operating lease liabilities, net of current portion 881,139 Finance lease liabilities, net of current portion 11,431 Total purchase consideration $ 829,347 | |
Schedule of purchase price | (Amounts in US$'s) Fair Value Working capital $ 2,399,800 Other assets 220,672 Intangible assets and goodwill: Intellectual property 3,729,537 Trade name 1,233,204 Customer relationships 1,630,792 Noncompete 937,249 Goodwill 18,106,237 Total intangible assets and goodwill 25,637,019 Total Consideration $ 28,257,491 | |
VEO Purchase Price [Member] | ||
Schedule of purchase price | (Amounts in US$'s, except share data) Consideration Number of Preferred Series A shares paid 1,500,000 Per share value $ 8.81 Purchase price $ 13,215,000 | (Amounts in US$'s, except share data) Consideration Number of Preferred Series A paid 1,500,000 Per share value $ 8.81 Purchase price $ 13,215,000 |
Schedule of allocation of total preliminary estimated purchase price | (Amounts in US$'s) Fair Value Cash $ 55,261 Fixed and other long-term assets 4,000 Assumed liabilities (40,531 ) Intangible assets and goodwill: Technology 6,410,000 Goodwill 6,786,270 Total intangible assets and goodwill 13,196,270 Total Consideration $ 13,215,000 | (Amounts in US$'s) Fair Value Cash $ 55,261 Fixed and other long-term assets 4,000 Assumed liabilities (40,531 ) Intangible assets and goodwill: Technology 6,410,000 Goodwill 6,786,270 Total intangible assets and goodwill 13,196,270 Total Consideration $ 13,215,000 |
IPI Purchase Price [Member] | ||
Schedule of purchase price | (Amounts in US$'s, except share data) Consideration Number of Preferred Series A shares paid 800,000 Per share value $ 8.81 Purchase price $ 7,048,000 | (Amounts in US$'s, except share data) Consideration Number of Preferred Series A paid 800,000 Per share value $ 8.81 Purchase price $ 7,048,000 |
Schedule of allocation of total preliminary estimated purchase price | (Amounts in US$'s) Fair Value Cash $ 18,791 Debt-free net working capital (excluding cash) 263,459 Fixed and other long-term assets 97,384 Assumed liabilities (1,240,097 ) Intangible assets and goodwill: Technology 1,000,000 Goodwill 6,908,463 Total intangible assets and goodwill 7,908,463 Total Consideration $ 7,048,000 | (Amounts in US$'s) Fair Value Cash $ 18,791 Debt-free net working capital (excluding cash) 263,459 Fixed and other long-term assets 97,384 Assumed liabilities (1,240,097 ) Intangible assets and goodwill: Technology 1,000,000 Goodwill estimate 6,908,463 Total intangible assets and goodwill 7,908,463 Total Consideration $ 7,048,000 |
SBT Purchase Price [Member] | ||
Schedule of purchase price | (Amounts in US$'s, except share data) Consideration Number of Preferred Series A shares paid 300,000 Per share value $ 8.81 Purchase price $ 2,643,000 | (Amounts in US$'s, except share data) Consideration Number of Preferred Series A paid 300,000 Per share value $ 8.81 Purchase price $ 2,643,000 |
Schedule of allocation of total preliminary estimated purchase price | (Amounts in US$'s) Fair Value Cash $ 273,290 Debt-free net working capital (excluding cash) 103,537 Fixed and other long-term assets 21,000 Liabilities assumed (84,382 ) Intangible assets and goodwill: Technology 210,000 Trade name 200,000 Customer relationships 400,000 Goodwill 1,519,555 Total intangible assets and goodwill 2,329,555 Total Consideration $ 2,643,000 | (Amounts in US$'s) Fair Value Cash $ 273,290 Debt-free net working capital (excluding cash) 103,537 Fixed and other long-term assets 21,000 Liabilities assumed (84,382 ) Intangible assets and goodwill: Technology 210,000 Trade name 200,000 Customer relationships 400,000 Goodwill estimate 1,519,555 Total intangible assets and goodwill 2,329,555 Total Consideration $ 2,643,000 |
DragonWave [Member] | ||
Schedule of purchase price | (Amounts in US$'s, except share data) Consideration Number of common stock shares paid 13,237,149 Per share value $ 4.40 Purchase price $ 58,243,456 DragonWave $ 42,081,392 Lextrum $ 16,162,064 | (Amounts in US$'s, except share data) Consideration Number of common stock paid 13,237,149 Per share value $ 4.40 Purchase price $ 58,243,456 DragonWave $ 42,081,392 Lextrum $ 16,162,064 |
Schedule of allocation of total preliminary estimated purchase price | (Amounts in US$'s) Fair Value Cash $ 1,274,072 Debt-free net working capital (excluding cash) (1,099,194 ) Note payable (5,690,000 ) Fixed and other long-term assets 2,455,714 Intangible assets: Technology 13,750,000 Trade name 4,210,000 Customer relationships 13,080,000 Goodwill 14,100,800 Total intangible assets and goodwill 45,140,800 Total Consideration $ 42,081,392 | (Amounts in US$'s) Fair Value Cash $ 1,274,072 Debt-free net working capital (excluding cash) (1,099,194 ) Note payable (5,690,000 ) Fixed and other long-term assets 2,455,714 Intangible assets: Technology 13,750,000 Trade name 4,210,000 Customer relationships 13,080,000 Goodwill estimate 14,100,800 Total intangible assets and goodwill 45,140,800 Total Consideration $ 42,081,392 |
Lextrum [Member] | ||
Schedule of allocation of total preliminary estimated purchase price | (Amounts in US$'s) Fair Value Cash $ 8,105 Debt-free net working capital (excluding cash) (103,611 ) Fixed and other long-term assets — Intangible assets: Technology 11,430,000 Goodwill 4,827,570 Total intangible assets 16,257,570 Total Consideration $ 16,162,064 | (Amounts in US$'s) Fair Value Cash $ 8,105 Debt-free net working capital (excluding cash) (103,611 ) Fixed and other long-term assets — Intangible assets: Technology 11,430,000 Goodwill estimate 4,827,570 Total intangible assets 16,257,570 Total Consideration $ 16,162,064 |
Drone Aviation [Member] | ||
Schedule of allocation of total preliminary estimated purchase price | (Amounts in US$'s) Fair Value Working capital $ 2,399,800 Other assets 220,672 Intangible assets and goodwill: Intellectual property 3,729,537 Trade name 1,233,204 Customer relationships 1,630,792 Noncompete 937,249 Goodwill estimate 18,106,237 Total intangible assets and goodwill 25,637,019 Total Consideration $ 28,257,491 | |
Virtual Network Communications, Inc. [Member] | ||
Schedule of the acquired assets, assumed liabilities and preliminary acquisition accounting | (Amounts in US$'s) Fair Value Inventory $ 157,727 Prepaid expenses 15,000 Intangible assets: Goodwill 19,151,331 Technology 23,992 Licenses 410,000 Total assets 19,758,050 Accounts payable and other accrued liabilities 5,000 Interest payable 35 Note payable 24,028 Total purchase consideration $ 19,728,987 |
Long-Lived Assets and Goodwill
Long-Lived Assets and Goodwill (Tables) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2020 | Dec. 31, 2019 | |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Schedule of changes in carrying amount of goodwill | (Amounts in US$'s) Total Balance at December 31, 2019 $ 56,386,796 Balance at September 30, 2020 $ 75,538,127 | (Amounts in US$'s) Total Balance at January 10, 2019 (inception) $ — Acquisitions 56,386,796 Balance at December 31, 2019 $ 56,386,796 |
Schedule of gross carrying amounts and accumulated amortization | (Amounts in US$'s) Gross Accumulated Net Definite-lived intangible assets: Trade names $ 5,643,204 $ (489,222 ) $ 5,153,982 Licenses — — — Technology 32,800,000 (4,308,333 ) 28,491,667 Customer relationships 15,110,792 (2,054,894 ) 13,055,898 Intellectual property 3,729,537 (51,799 ) 3,677,738 Noncompete 937,249 (39,052 ) 898,197 Total definite-lived intangible assets at December 31, 2019 $ 58,220,782 $ (6,943,300 ) $ 51,277,482 Trade names $ 5,643,204 $ (1,093,884 ) $ 4,549,320 Licenses 410,000 — 410,000 Technology 32,823,992 (8,408,374 ) 24,415,618 Customer relationships 15,611,018 (4,379,965 ) 11,231,053 Intellectual property 3,729,537 (517,991 ) 3,211,546 Noncompete 937,249 (390,520 ) 546,729 Total definite-lived intangible assets at September 30, 2020 $ 59,155,000 $ (14,790,734 ) $ 44,364,266 | (Amounts in US$'s) Gross Accumulated Amortization Net Definite-lived intangible assets: Trade names $ 5,643,204 $ (489,222 ) $ 5,153,982 Technology 32,800,000 (4,308,333 ) 28,491,667 Customer relationships 15,110,792 (2,054,894 ) 13,055,898 Intellectual property 3,729,537 (51,799 ) 3,677,738 Noncompete 937,249 (39,052 ) 898,197 Total definite-lived intangible assets $ 58,220,782 $ (6,943,300 ) $ 51,277,482 |
Schedule of amortization expense for intangible assets | (Amounts in US$'s) Estimated Remainder of 2020 $ 2,637,033 2021 10,508,774 2022 10,079,202 2023 10,079,202 2024 8,024,308 2025 2,621,877 2026 378,187 2027 35,683 | Actual Estimated (Amounts in US$'s) 2019 2020 2021 2022 2023 2024 Amortization expense $ 6,943,300 $ 10,385,211 $ 10,346,159 $ 9,916,587 $ 9,916,587 $ 7,861,692 |
Debt Agreements (Tables)
Debt Agreements (Tables) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2020 | Dec. 31, 2019 | |
Debt Disclosure [Abstract] | ||
Schedule of long-term debt consisted | (Amounts in US$’s) Maturity Date September 30, 2020 December 31, 2019 Amount Interest Amount Interest Secured Notes Payable Secured note payable* February 28, 2020 $ 788,709 12.5 % $ 788,709 8.5 % Secured note payable* March 1, 2022 186,709 9.0 % 224,288 9.0 % Secured note payable* September 1, 2021 18,980 7.9 % 21,571 7.9 % Secured note payable November 26, 2021 2,000,000 9.0 % 2,000,000 9.0 % Secured note payable December 26, 2020 211,667 78.99 % — — Secured note payable* September 15, 2020 855,120 36.0 % — — Secured note payable* October 15, 2020 2,007,971 5.0 % — — Total secured notes payable 6,069,156 3,034,568 Notes Payable Equipment financing loan September 15, 2020 — — 3,828 8.8 % Note payable July 9, 2019 — — 200,000 18.0 % Note payable September 1, 2019 — — 200,000 18.0 % Note payable* September 30, 2020 500,000 10.0 % 500,000 10.0 % Note payable* September 30, 2020 175,000 10.0 % 175,000 10.0 % Note payable* August 31, 2020 3,500,000 12.0 % 5,000,000 10.0 % Note payable July 9, 2019 — — 200,000 18.0 % Notes payable* December 6, 2019 66,700 18.0 % 450,100 18.0 % Note payable November 30, 2020 500,000 0.0 % — — Notes payable* June 30, 2020 379,588 0.0 % — — Notes payable* June 30, 2020 165,986 0.0 % — — Note payable* February 16, 2023 83,309 3.0 % — — Equipment financing loan* November 9, 2023 61,287 8.5 % — — Equipment financing loan* December 19, 2023 89,912 6.7 % — — Equipment financing loan* January 17, 2024 41,390 6.7 % — — Note payable* September 30, 2020 290,000 0.0 % — — Note Payable* October 13, 2020 through November 30, 2020 1,200,000 15.0 – 18.0 % — — PPP loans April 30, 2022 through May 26, 2022 455,184 1.0 % — — PPP loan May 14, 2022 24,028 1.0 % — — PPP loan August 11, 2025 103,659 1.0 % — — Total notes payable 7,636,043 6,728,928 Senior Debentures Senior debenture* December 31, 2019 84,000 15.0 % 100,000 15.0 % Total senior debentures 84,000 100,000 Convertible Notes Payable Convertible note payable* January 29, 2021 374,137 24.0 % — — Convertible note payable November 20, 2020 1,700,000 5.0 % — — Total convertible notes payable 2,074,137 — — Senior Convertible Debentures Senior convertible debenture December 31, 2019 — — 25,000 15.0 % Senior convertible debenture December 31, 2021 250,000 10.0 % 250,000 10.0 % Senior convertible debenture November 30, 2020 1,000,000 9.0 % — — Total senior convertible debentures 1,250,000 275,000 Total long-term debt 17,113,336 10,138,496 Less unamortized discounts and debt issuance costs (3,990,019 ) (4,749,004 ) Total long-term debt, less discounts and debt issuance costs 13,123,317 5,389,492 Less current portion of (13,123,317 ) (5,389,492 ) Debt classified as long-term debt $ — $ — ____________ * Note is in default. Refer to further discussion below. | December 31, 2019 (Amounts in US$'s) Maturity Date Amount Interest Secured Notes Payable Secured note payable February 28, 2020 $ 788,709 8.5 % Secured note payable March 1, 2022 224,288 9.0 % Secured note payable September 1, 2021 21,571 7.9 % Secured note payable November 26, 2021 2,000,000 9.0 % Total secured notes payable 3,034,568 Notes Payable Equipment financing loan September 15, 2020 3,828 8.8 % Note payable July 9, 2019 200,000 18.0 % Note payable September 1, 2019 200,000 18.0 % Note payable September 30, 2020 500,000 10.0 % Note payable September 30, 2020 175,000 10.0 % Note payable March 30, 2020 5,000,000 10.0 % Note payable July 9, 2019 200,000 18.0 % Notes payable December 6, 2019 450,100 18.0 % Total notes payable 6,728,928 Senior Convertible Debentures Senior convertible debenture December 31, 2019 100,000 15.0 % Senior convertible debenture December 31, 2019 25,000 15.0 % Senior convertible debenture December 31, 2021 250,000 10.0 % Total senior convertible debentures 375,000 Total long-term debt 10,138,496 Less unamortized discounts and debt issuance costs (4,749,004 ) Total long-term debt, less discounts and debt issuance costs 5,389,492 Less current portion of long-term debt (5,389,492 ) Debt classified as long-term debt $ — |
Schedule of future maturities of long-term debt | (Amounts in US$’s) Remainder of 2020 $ 14,065,711 2021 2,344,018 2022 543,028 2023 55,944 2024 1,035 Thereafter 103,600 Total $ 17,113,336 | (Amounts in US$'s) Total 2020 $ 7,888,496 2021 2,250,000 2022 — 2023 — 2024 — Thereafter — Total $ 10,138,496 |
Share-Based Compensation (Table
Share-Based Compensation (Tables) - Stock Options [Member] | 9 Months Ended | 12 Months Ended |
Sep. 30, 2020 | Dec. 31, 2019 | |
Deferred Compensation Arrangement with Individual, Share-based Payments [Line Items] | ||
Schedule of equity plan to purchase the Company's common stock | During 2017, the Company granted the following options outside of any equity plan with the attributes described below to purchase the Company's common stock (amounts in US$'s, except share data) Grant Date Underlying Shares Option Price Full Vesting Date Expiration Date January 9, 2017 100,000 $ 2.90 January 9, 2019 January 7, 2021 August 3, 2017 5,130,000 $ 0.50 August 3, 2017 August 3, 2021 November 9, 2017 2,000,000 $ 0.50 November 9, 2017 November 9, 2021 December 13, 2017 200,000 $ 1.00 November 13, 2019 December 13, 2021 During 2018, the Company granted the following options outside of any equity plan with the attributes described below to purchase the Company's common stock (amounts in US$'s, except share data) Grant Date Underlying Shares Vesting Option Price Full Vesting Date Expiration Date March 28, 2018 100,000 50% in one year; 50% in two years from grant date $ 1.00 March 28, 2020 March 28, 2022 May 16, 2018 330,000 Immediate vesting $ 1.00 May 16, 2018 May 16, 2022 May 16, 2018 130,000 50% in one year; 50% in two years from grant date $ 1.00 May 16, 2020 May 16, 2022 September 26, 2018 6,000,000 $4,000,000 new government orders $ 0.65 December 21, 2018 September 26, 2022 | |
Schedule of assumptions used to estimate fair value stock options granted | 2020 Expected dividend yield 0 % Expected volatility 38.17 % Risk-free interest rate 0.205 - 0.310 % Expected life of options 3.25 - 5.00 years | 2019 Expected dividend yield 0 Expected volatility 90 Risk-free interest rate 2.40-2.47 Expected life of options 4.0 years |
Schedule of stock option activity | Number of Weighted- Weighted- Aggregate Outstanding – December 31, 2019 8,695,000 $ 0.63 1.34 $ 2,264,760 Exercisable – December 31, 2019 8,695,000 0.63 1.34 2,264,760 Granted 2,725,506 0.26 Exercised — — Cancelled or Expired (1,100,000 ) 0.67 Outstanding – September 30, 2020 10,320,506 $ 0.53 2.26 $ 19,338,950 Exercisable – September 30, 2020 10,220,506 $ 0.53 2.24 $ 19,206,950 Number of Weighted- Weighted- Aggregate Outstanding – January 10, 2019 13,990,000 $ 0.61 3.15 $ — Exercisable – January 10, 2019 13,610,000 0.59 2.42 — Granted 180,000 1.06 Exercised — — Cancelled or Expired (50,000 ) 0.90 Outstanding – September 30, 2019 14,120,000 $ 0.61 1.68 $ 3,796,960 Exercisable – September 30, 2019 13,745,000 $ 0.60 1.67 $ 3,796,960 | Number of Weighted- Weighted- Aggregate Outstanding – January 10, 2019 13,990,000 $ 0.61 3.15 $ — Granted 180,000 1.06 Exercised (5,250,000 ) 0.57 Cancelled or Expired (225,000 ) 0.72 Outstanding – December 31, 2019 8,695,000 $ 0.63 1.34 $ 2,264,760 Exercisable – December 31, 2019 8,695,000 $ 0.63 1.34 $ 2,264,760 |
Warrants (Tables)
Warrants (Tables) - Warrant [Member] | 9 Months Ended | 12 Months Ended |
Sep. 30, 2020 | Dec. 31, 2019 | |
Class of Warrant or Right [Line Items] | ||
Schedule of warrants to purchase the Company's common stock | Issuance Date Warrants Exercise Full Vesting Expiration November 20, 2015 70,000 $ 5.00 November 20, 2015 November 20, 2020 April 27, 2016 60,000 $ 2.91 April 27, 2016 April 27, 2019 | Issuance Date Warrants Issued Exercise Price Full Vesting Date Expiration Date November 20, 2015 70,000 $ 5.00 November 20, 2015 November 20, 2020 April 27, 2016 60,000 $ 2.91 April 27, 2016 April 27, 2019 August 3, 2017 30,000 $ 0.50 August 3, 2017 August 3, 2021 August 3, 2017 2,000,000 $ 0.50 August 3, 2017 August 3, 2022 November 9, 2017 20,000 $ 0.50 November 9, 2017 November 9, 2021 September 26, 2018 100,000 $ 1.00 September 26, 2018 September 26, 2022 |
Schedule of assumptions used to estimate fair value warrants granted | 2020 Expected dividend yield 0 % Expected volatility 36.96 – 41.55 % Risk-free interest rate 0.190 – 0.440 % Expected life of warrants 2.5 – 5.0 years | The following table summarizes the assumptions used to estimate the fair value of the warrants granted during fiscal 2019: Expected dividend yield 0% Expected volatility 32-33% Risk-free interest rate 1.38-1.82% Expected life of warrants 2.27-3.0 years |
Schedule of warrant activity | Number of Weighted- Weighted- Aggregate Outstanding – December 31, 2019 503,523 $ 0.95 1.96 $ 258,328 Exercisable – December 31, 2019 503,523 $ 0.95 1.96 $ 258,328 Granted 2,576,878 0.46 Exercised (283,530 ) 0.01 Forfeited or Expired — — Outstanding – September 30, 2020 2,796,871 $ 0.60 4.17 $ 5,250,630 Exercisable – September 30, 2020 2,796,871 $ 0.60 4.17 $ 5,250,647 Number of Weighted- Weighted- Aggregate Outstanding – January 10, 2019 2,280,000 $ 0.72 3.44 $ — Exercisable – January 10, 2019 2,280,000 $ 0.72 3.44 $ — Granted 2,250,000 0.23 Exercised — — Forfeited or Expired (60,000 ) 2.91 Outstanding – September 30, 2019 4,470,000 $ 0.45 2.51 $ 2,557,100 Exercisable – September 30, 2019 4,470,000 $ 0.45 2.51 $ 2,557,100 | Number of Warrants Weighted-Average Exercise Weighted-Average Remaining Contractual Life in Years Aggregate Intrinsic Value Outstanding – January 10, 2019 2,280,000 $ 0.72 3.44 $ — Exercisable – January 10, 2019 2,280,000 $ 0.72 3.44 $ — Granted 3,868,523 0.18 Exercised (5,472,500 ) 0.23 Forfeited or Expired (172,500 ) 3.61 Outstanding – December 31, 2019 503,523 $ 0.95 1.96 $ 258,328 Exercisable – December 31, 2019 503,523 $ 0.95 1.96 $ 258,328 |
Income Taxes (Tables)
Income Taxes (Tables) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2020 | Dec. 31, 2019 | |
Income Tax Disclosure [Abstract] | ||
Schedule of income tax benefit | (Amounts in US$’s) Nine months Ended January 10, 2019 US$’s Rates US$’s Rates Income tax benefit at statutory federal income tax rate $ 5,233,600 21.00 % $ 2,941,011 21.00 % State tax expense, net of federal benefit 996,900 4.00 % 560,193 4.00 % Permanent items (400 ) (0.00 )% — — Other (6,100 ) (0.02 )% — — Valuation allowance (6,224,000 ) (24.98 )% $ — — Income tax benefit — — % $ 3,501,204 25.00 % | December 31, 2019 US$’s Rates Income tax benefit at statutory federal income tax rate $ (6,653,400 ) 21.00 % State tax expense, net of federal benefit (1,267,300 ) 4.00 % Permanent items 20,000 (0.06 )% Valuation allowance 3,762,800 (11.88 )% Income tax benefit $ (4,137,900 ) 13.06 % |
Schedule of deferred tax assets | (Amounts in US$’s) December 31, Deferred tax assets: Share-based compensation $ 13,700 Inventory reserve 137,000 Allowance for bad debt 172,700 Net operating loss carryover 11,867,800 Foreign losses 4,130,000 General business credits 256,400 Valuation allowance (3,762,800 ) Total deferred tax assets 12,814,800 Deferred tax liabilities: Depreciation (43,000 ) Amortization (12,771,800 ) Total deferred tax liabilities (12,814,800 ) Net deferred tax assets (liabilities) $ — |
Goodwill and Other Intangible_2
Goodwill and Other Intangible Assets (Tables) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2020 | Dec. 31, 2019 | |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Schedule of changes in carrying amount of goodwill | (Amounts in US$'s) Total Balance at December 31, 2019 $ 56,386,796 Balance at September 30, 2020 $ 75,538,127 | (Amounts in US$'s) Total Balance at January 10, 2019 (inception) $ — Acquisitions 56,386,796 Balance at December 31, 2019 $ 56,386,796 |
Schedule of gross carrying amounts and accumulated amortization | (Amounts in US$'s) Gross Accumulated Net Definite-lived intangible assets: Trade names $ 5,643,204 $ (489,222 ) $ 5,153,982 Licenses — — — Technology 32,800,000 (4,308,333 ) 28,491,667 Customer relationships 15,110,792 (2,054,894 ) 13,055,898 Intellectual property 3,729,537 (51,799 ) 3,677,738 Noncompete 937,249 (39,052 ) 898,197 Total definite-lived intangible assets at December 31, 2019 $ 58,220,782 $ (6,943,300 ) $ 51,277,482 Trade names $ 5,643,204 $ (1,093,884 ) $ 4,549,320 Licenses 410,000 — 410,000 Technology 32,823,992 (8,408,374 ) 24,415,618 Customer relationships 15,611,018 (4,379,965 ) 11,231,053 Intellectual property 3,729,537 (517,991 ) 3,211,546 Noncompete 937,249 (390,520 ) 546,729 Total definite-lived intangible assets at September 30, 2020 $ 59,155,000 $ (14,790,734 ) $ 44,364,266 | (Amounts in US$'s) Gross Accumulated Amortization Net Definite-lived intangible assets: Trade names $ 5,643,204 $ (489,222 ) $ 5,153,982 Technology 32,800,000 (4,308,333 ) 28,491,667 Customer relationships 15,110,792 (2,054,894 ) 13,055,898 Intellectual property 3,729,537 (51,799 ) 3,677,738 Noncompete 937,249 (39,052 ) 898,197 Total definite-lived intangible assets $ 58,220,782 $ (6,943,300 ) $ 51,277,482 |
Schedule of amortization expense for intangible assets | (Amounts in US$'s) Estimated Remainder of 2020 $ 2,637,033 2021 10,508,774 2022 10,079,202 2023 10,079,202 2024 8,024,308 2025 2,621,877 2026 378,187 2027 35,683 | Actual Estimated (Amounts in US$'s) 2019 2020 2021 2022 2023 2024 Amortization expense $ 6,943,300 $ 10,385,211 $ 10,346,159 $ 9,916,587 $ 9,916,587 $ 7,861,692 |
Description of Business and B_2
Description of Business and Basis of Presentation (Details) - $ / shares | Nov. 27, 2019 | Apr. 02, 2019 | Mar. 04, 2019 | Jan. 31, 2019 | Jan. 29, 2019 | Jan. 23, 2019 | Jan. 22, 2019 | Jan. 20, 2019 | Jan. 12, 2019 | Nov. 15, 2019 | Sep. 04, 2019 |
Description of Business and Basis of Presentation (Textual) | |||||||||||
Number of common stock stockholder received after merger agreement, description | For each share of ComSovereign common stock, the stockholder received 1.8902 shares of the Company's common stock. | ||||||||||
Outstanding shares of Preferred Series A were exchanged | 2,600,000 | ||||||||||
Aggregate shares of common stock | 2,600,000 | ||||||||||
Common stock per share | $ 0.0001 | $ 0.0001 | $ 0.0001 | $ 0.0001 | $ 0.50 | ||||||
Dr. Chen K. Sun [Member] | |||||||||||
Description of Business and Basis of Presentation (Textual) | |||||||||||
Unregistered redeemable convertible preferred stock, description | In connection with the purchase of VEO, ComSovereign issued 1,500,000 unregistered shares of Series A Redeemable Convertible Preferred stock (“Preferred Series A”) to Dr. Chen K. Sun, who is also a founding member of ComSovereign. | ||||||||||
Sergei Begliarov [Member] | |||||||||||
Description of Business and Basis of Presentation (Textual) | |||||||||||
Unregistered redeemable convertible preferred stock, description | In connection with the purchase of InduraPower, ComSovereign issued an aggregate of 800,000 unregistered Preferred Series A shares. Of those 800,000 shares, 688,800 Preferred Series A shares were issued to Sergei Begliarov, who is a founding member of ComSovereign and who became the Chief Executive Officer of InduraPower, and the balance was distributed to four other shareholders. | ||||||||||
Dr. Dustin McIntire [Member] | |||||||||||
Description of Business and Basis of Presentation (Textual) | |||||||||||
Unregistered redeemable convertible preferred stock, description | In connection with the purchase of Silver Bullet, ComSovereign issued 300,000 unregistered Preferred Series A shares to Dr. Dustin McIntire, who is a founding member of ComSovereign and who became the Company’s Chief Technology Officer. | ||||||||||
DragonWave and Lextrum [Member] | |||||||||||
Description of Business and Basis of Presentation (Textual) | |||||||||||
Unregistered redeemable convertible preferred stock, description | In connection with the purchase of DragonWave and Lextrum, ComSovereign issued an aggregate of 13,237,149 shares of common stock to the shareholders of the parent company of DragonWave and Lextrum. Included in those shareholders were Daniel L. Hodges, the Chairman of the parent company, and John E. Howell, the Director and Chief Executive Officer of the parent company. | ||||||||||
Founding Member One [Member] | |||||||||||
Description of Business and Basis of Presentation (Textual) | |||||||||||
Common stock acquired | 6,000,000 | 6,000,000 | |||||||||
Founding Member Two [Member] | |||||||||||
Description of Business and Basis of Presentation (Textual) | |||||||||||
Common stock acquired | 6,000,000 | 6,000,000 | |||||||||
Addional Founding [Member] | |||||||||||
Description of Business and Basis of Presentation (Textual) | |||||||||||
Common stock acquired | 100,000 | 500,000 | |||||||||
Aggregate shares of common stock | 3,290,000 | ||||||||||
Common stock per share | $ 0.0001 |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies (Details) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2020 | Dec. 31, 2019 | |
Test equipment, research and development equipment [Member] | Minimum [Member] | ||
Property and equipment useful life | 4 years | 4 years |
Test equipment, research and development equipment [Member] | Maximum [Member] | ||
Property and equipment useful life | 5 years | 5 years |
Computer hardware [Member] | ||
Property and equipment useful life | 2 years | 2 years |
Production fixtures [Member] | ||
Property and equipment useful life | 3 years | 3 years |
Leasehold Improvements [Member] | ||
Property and equipment useful life | 5 years | |
Other [Member] | Minimum [Member] | ||
Property and equipment useful life | 3 years | 3 years |
Other [Member] | Maximum [Member] | ||
Property and equipment useful life | 5 years | 5 years |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies (Details 1) - USD ($) | 3 Months Ended | 4 Months Ended | 9 Months Ended | 12 Months Ended | ||||||
Sep. 30, 2020 | Jun. 30, 2020 | Mar. 31, 2020 | Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Sep. 30, 2020 | Sep. 30, 2020 | Sep. 30, 2019 | Dec. 31, 2019 | |
Numerator: | ||||||||||
Net loss | $ (10,330,829) | $ (7,565,685) | $ (7,025,538) | $ (5,445,177) | $ (4,287,757) | $ (770,677) | $ (10,330,829) | $ (24,922,052) | $ (10,503,611) | $ (27,545,255) |
Numerator for basic earnings per share - loss available to common shareholders | $ (10,330,829) | $ (7,260,236) | $ (24,922,052) | $ (12,318,670) | $ (27,545,255) | |||||
Denominator: | ||||||||||
Denominator for basic earnings per share - weighted average common shares outstanding | 132,649,621 | 43,953,888 | 132,466,532 | 39,103,721 | 48,714,099 | |||||
Dilutive effect of warrants and options | ||||||||||
Denominator for diluted earnings per share - weighted average common shares outstanding and assumed conversions | 132,649,621 | 43,953,888 | 132,466,532 | 39,103,721 | 48,714,099 | |||||
Basic loss per common share | $ (0.08) | $ (0.12) | $ (0.19) | $ (0.27) | $ (0.57) | |||||
Diluted loss per common share | $ (0.08) | $ (0.12) | $ (0.19) | $ (0.27) | $ (0.57) |
Summary of Significant Accoun_6
Summary of Significant Accounting Policies (Details Textual) - USD ($) | 9 Months Ended | 12 Months Ended | |
Sep. 30, 2020 | Sep. 30, 2019 | Dec. 31, 2019 | |
Summary of Significant Accounting Policies (Additional Information) | |||
Uncollectible receivables | $ 690,830 | ||
Valuation allowance against net deferred tax assets percentage | 25.00% | 13.06% | |
Description of income taxes | The amount recognized in the consolidated financial statements is the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement with the relevant tax authority. No liability for unrecognized tax benefits was recorded as of December 31, 2019. | ||
FDIC limit of depositor | $ 250,000 | ||
Warrant [Member] | |||
Summary of Significant Accounting Policies (Additional Information) | |||
Anti-dilutive shares | 48,498 | ||
Share-based Payment Arrangement [Member] | |||
Summary of Significant Accounting Policies (Additional Information) | |||
Anti-dilutive shares | 837,479 | ||
Restricted Stock [Member] | |||
Summary of Significant Accounting Policies (Additional Information) | |||
Anti-dilutive shares | 156,091 |
Going Concern (Details)
Going Concern (Details) - USD ($) | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||
Sep. 30, 2020 | Sep. 30, 2020 | Sep. 30, 2019 | Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2019 | |
Management's Liquidity Plans (Textual) | ||||||
Cash flows from operations | $ (4,462,866) | $ (11,657,063) | $ (6,853,247) | |||
Accumulated deficit | $ (52,467,307) | (52,467,307) | $ (27,545,255) | (27,545,255) | ||
Negative cash flows from operations | (4,462,867) | |||||
Negative working capital | 18,978,529 | $ 18,978,529 | ||||
Forecast [Member] | ||||||
Management's Liquidity Plans (Textual) | ||||||
Private placement | $ 20,000,000 | |||||
Management's Liquidity Plans [Member] | ||||||
Management's Liquidity Plans (Textual) | ||||||
Cash flows from operations | 6,853,247 | |||||
Accumulated deficit | (27,545,255) | (27,545,255) | ||||
Working capital | $ 6,477,230 | $ 6,477,230 | ||||
Management's Liquidity Plans [Member] | Subsequent Event [Member] | ||||||
Management's Liquidity Plans (Textual) | ||||||
Sale of equity | $ 13,000,000 |
Revenue (Details)
Revenue (Details) - USD ($) | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | Dec. 31, 2019 | |
Revenue [Abstract] | |||||
Services and products transferred at a point in time | $ 1,941,239 | $ 1,824,924 | $ 7,056,659 | $ 2,289,249 | $ 2,803,026 |
Services and products transferred over time | 77,124 | 748,507 | 457,001 | 1,287,093 | 1,909,186 |
Total revenue | $ 2,018,363 | $ 2,573,431 | $ 7,513,660 | $ 3,576,342 | $ 4,712,212 |
Revenue (Details 1)
Revenue (Details 1) - USD ($) | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | Dec. 31, 2019 | |
Total revenue | $ 2,018,363 | $ 2,573,431 | $ 7,513,660 | $ 3,576,342 | $ 4,712,212 |
Products [Member] | |||||
Total revenue | 1,726,425 | 1,824,924 | 6,298,041 | 2,289,249 | 2,702,410 |
Services [Member] | |||||
Total revenue | $ 291,938 | $ 748,507 | $ 1,215,619 | $ 1,287,093 | $ 2,009,802 |
Revenue (Details 2)
Revenue (Details 2) - USD ($) | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | Dec. 31, 2019 | |
Total revenue | $ 2,018,363 | $ 2,573,431 | $ 7,513,660 | $ 3,576,342 | $ 4,712,212 |
North America [Member] | |||||
Total revenue | 1,830,967 | 2,466,473 | 6,755,717 | 2,669,728 | 3,476,977 |
International [Member] | |||||
Total revenue | $ 187,396 | $ 106,958 | $ 757,943 | $ 906,614 | $ 1,235,235 |
Revenue (Details 3)
Revenue (Details 3) | 9 Months Ended |
Sep. 30, 2020USD ($) | |
Revenue [Abstract] | |
Balance at beginning | $ 302,815 |
Increase | 7,643 |
Balance at end | $ 310,458 |
Revenue (Details Textual)
Revenue (Details Textual) | Sep. 30, 2020USD ($) |
Revenue (Textual) | |
Contract liability | $ 156,937 |
Earnings (Loss) Per Share (Deta
Earnings (Loss) Per Share (Details) - USD ($) | 3 Months Ended | 4 Months Ended | 9 Months Ended | 12 Months Ended | ||||||
Sep. 30, 2020 | Jun. 30, 2020 | Mar. 31, 2020 | Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Sep. 30, 2020 | Sep. 30, 2020 | Sep. 30, 2019 | Dec. 31, 2019 | |
Numerator: | ||||||||||
Net loss | $ (10,330,829) | $ (7,565,685) | $ (7,025,538) | $ (5,445,177) | $ (4,287,757) | $ (770,677) | $ (10,330,829) | $ (24,922,052) | $ (10,503,611) | $ (27,545,255) |
Numerator for basic earnings per share - loss available to common shareholders | $ (10,330,829) | $ (7,260,236) | $ (24,922,052) | $ (12,318,670) | (27,545,255) | |||||
Denominator: | ||||||||||
Denominator for basic earnings per share - weighted average common shares outstanding | 132,649,621 | 43,953,888 | 132,466,532 | 39,103,271 | ||||||
Dilutive effect of warrants and options | ||||||||||
Denominator for diluted earnings per share - weighted average common shares outstanding and assumed conversions | 132,649,621 | 43,953,888 | 132,466,532 | 39,103,271 | ||||||
Basic loss per common share | $ (0.08) | $ (0.12) | $ (0.19) | $ (0.27) | $ (0.57) | |||||
Diluted loss per common share | $ (0.08) | $ (0.12) | $ (0.19) | $ (0.27) | $ (0.57) |
Cash and Cash Equivalents (Deta
Cash and Cash Equivalents (Details) - USD ($) | Sep. 30, 2020 | Dec. 31, 2019 | Sep. 30, 2019 | Jan. 09, 2019 |
Cash and Cash Equivalents [Abstract] | ||||
Cash and cash equivalents | $ 505,053 | $ 812,452 | $ 661,910 | |
Total cash and cash equivalents in the Statement of Cash Flows | $ 505,053 | $ 812,452 |
Accounts Receivable, Net (Detai
Accounts Receivable, Net (Details) - USD ($) | Sep. 30, 2020 | Dec. 31, 2019 |
Accounts Receivable, after Allowance for Credit Loss [Abstract] | ||
Account receivables | $ 2,547,763 | $ 2,859,489 |
Less: Allowance for doubtful accounts | (1,654,356) | (690,830) |
Total account receivables, net | $ 893,407 | $ 2,168,659 |
Accounts Receivable, Net (Det_2
Accounts Receivable, Net (Details Textual) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Accounts Receivable, Net (Textual) | ||||
Corresponding liability total | $ 58,095 | $ 58,095 | ||
Factoring arrangement total | $ 68,347 | |||
Invoice, percentage | 85.00% | |||
Bad debt expense | $ 647,643 | $ 647,643 |
Inventory (Details)
Inventory (Details) - USD ($) | Sep. 30, 2020 | Dec. 31, 2019 |
Inventory Disclosure [Abstract] | ||
Raw materials | $ 1,775,498 | $ 1,041,256 |
Work in progress | 873,050 | 1,566,147 |
Finished goods | 3,796,555 | 3,060,518 |
Total production inventory | 6,445,103 | 5,667,921 |
Inventory held for customer service/warranty | 56,409 | |
Total inventory | 6,445,103 | 5,724,330 |
Reserve | (1,125,513) | (1,052,934) |
Total inventory, net | $ 5,319,590 | $ 4,671,396 |
Prepaid Expenses (Details)
Prepaid Expenses (Details) - USD ($) | Sep. 30, 2020 | Dec. 31, 2019 |
Prepaid Expense, Current [Abstract] | ||
Prepaid products and services | $ 420,077 | $ 873,617 |
Prepaid rent and security deposit | 169,310 | 43,112 |
Prepaid expenses, net | $ 589,387 | $ 916,729 |
Property and Equipment, Net (De
Property and Equipment, Net (Details) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2020 | Dec. 31, 2019 | |
Test equipment, research and development equipment [Member] | Minimum [Member] | ||
Property and equipment useful life | 4 years | 4 years |
Test equipment, research and development equipment [Member] | Maximum [Member] | ||
Property and equipment useful life | 5 years | 5 years |
Computer hardware [Member] | ||
Property and equipment useful life | 2 years | 2 years |
Production fixtures [Member] | ||
Property and equipment useful life | 3 years | 3 years |
Leasehold Improvements [Member] | ||
Property and equipment useful life | 5 years | |
Property and equipment useful life, description | Shorter of remaining lease term or 5 years | |
Other [Member] | Minimum [Member] | ||
Property and equipment useful life | 3 years | 3 years |
Other [Member] | Maximum [Member] | ||
Property and equipment useful life | 5 years | 5 years |
Property and Equipment, Net (_2
Property and Equipment, Net (Details 1) - USD ($) | Sep. 30, 2020 | Dec. 31, 2019 |
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | $ 10,684,282 | $ 9,222,774 |
Less - accumulated depreciation | (8,451,193) | (7,764,668) |
Property and equipment, net | 2,233,089 | 1,458,106 |
Shop machinery and equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 9,481,183 | 8,100,667 |
Computers and electronics [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 579,875 | 558,561 |
Office furniture and fixtures [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 348,911 | 341,214 |
Leasehold improvements [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | $ 274,313 | $ 222,332 |
Property and Equipment, Net (_3
Property and Equipment, Net (Details Textual) - USD ($) | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2019 | Dec. 31, 2019 | |
Property and Equipment (Textual) | ||||||
Amount invested to capital expenditure | $ 96,852 | $ 87,038 | ||||
Depreciation expense | $ 278,857 | $ 197,446 | 797,801 | $ 304,669 | $ 304,669 | $ 623,884 |
Capital expenditures | $ 96,852 |
Leases (Details)
Leases (Details) - USD ($) | Sep. 30, 2020 | Dec. 31, 2019 | Jan. 11, 2019 |
Operating lease ROU assets | $ 2,891,113 | $ 2,199,682 | |
Operating lease liability | 2,360,575 | 1,744,569 | |
Operating Leases [Member] | |||
Operating lease ROU assets | 2,891,113 | 2,199,682 | $ 116,876 |
Operating lease liability | $ 3,020,364 | $ 2,212,548 | $ 116,876 |
Leases (Details 1)
Leases (Details 1) - USD ($) | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2020 | Dec. 31, 2019 | Sep. 30, 2020 | Dec. 31, 2019 | |
Operating lease ROU Asset - December 31, 2019 | $ 2,199,682 | |||
Operating lease ROU Asset - September 30, 2020 | 2,891,113 | $ 2,199,682 | ||
Operating lease liability - December 31, 2019 | 2,212,548 | |||
Operating lease liability - September 30, 2020 | 3,020,364 | 2,212,548 | ||
Operating lease liability - short term | $ 659,789 | $ 467,979 | ||
Operating lease liability - long term | 2,360,575 | 1,744,569 | ||
Operating lease liability - total | 3,020,364 | 2,212,548 | 3,020,364 | 2,212,548 |
Other information related [Member] | ||||
Operating lease ROU Asset - December 31, 2019 | 2,199,682 | 116,876 | ||
Increase | 1,287,432 | 2,300,580 | ||
Decrease | (151,565) | |||
Amortization | (444,436) | (217,774) | ||
Operating lease ROU Asset - September 30, 2020 | 2,891,113 | 2,199,682 | ||
Operating lease liability - December 31, 2019 | 2,212,548 | 116,876 | ||
Increase | 1,233,284 | 2,300,580 | ||
Decrease | (151,565) | |||
Amortization | (273,903) | (204,908) | ||
Operating lease liability - September 30, 2020 | 3,020,364 | 2,212,548 | ||
Operating lease liability - short term | 659,789 | |||
Operating lease liability - long term | 2,360,575 | |||
Operating lease liability - total | $ 3,020,364 | $ 116,876 | $ 3,020,364 | $ 2,212,548 |
Leases (Details 2)
Leases (Details 2) | Sep. 30, 2020 | Dec. 31, 2019 |
Commitments and Contingencies Disclosure [Abstract] | ||
Weighted average remaining lease term of operating leases | 4 years 5 months 9 days | 4 years 6 months 21 days |
Weighted average discount rate of operating leases | 5.99% | 6.50% |
Leases (Details 3)
Leases (Details 3) - USD ($) | Sep. 30, 2020 | Dec. 31, 2019 |
Commitments and Contingencies Disclosure [Abstract] | ||
Remainder of 2020 | $ 188,633 | $ 557,200 |
2021 | 805,765 | 521,067 |
2022 | 699,255 | 431,146 |
2023 | 713,647 | 434,736 |
2024 | 641,648 | 389,917 |
Thereafter | 377,459 | 177,735 |
Total minimum lease payments | 3,426,407 | 2,511,801 |
Less: effect of discounting | (406,043) | (299,253) |
Present value of future minimum lease payments | 3,020,364 | 2,212,548 |
Less: current obligations under leases | (659,789) | (467,979) |
Long-term lease obligations | $ 2,360,575 | $ 1,744,569 |
Leases (Details 4)
Leases (Details 4) - USD ($) | 9 Months Ended | |||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Dec. 31, 2019 | |
Finance lease ROU Asset - December 31, 2019 | ||||
Finance lease ROU Asset - September 30, 2020 | 73,576 | |||
Finance lease liability - December 31, 2019 | ||||
Payment | (12,634) | |||
Finance lease liability - September 30, 2020 | 14,296 | |||
Finance lease liability - short term | $ 55,046 | |||
Finance lease liability - total | 14,296 | 14,296 | ||
Other information related [Member] | ||||
Finance lease ROU Asset - December 31, 2019 | ||||
Increase | 81,976 | |||
Amortization | (8,400) | |||
Finance lease ROU Asset - September 30, 2020 | 73,576 | |||
Finance lease liability - December 31, 2019 | ||||
Increase | 81,976 | |||
Amortization | 1,063 | |||
Payment | (13,697) | |||
Finance lease liability - September 30, 2020 | 69,342 | |||
Finance lease liability - short term | 55,046 | |||
Finance lease liability - long term | 14,296 | |||
Finance lease liability - total | $ 69,342 | $ 69,342 |
Leases (Details 5)
Leases (Details 5) | Sep. 30, 2020 | Dec. 31, 2019 |
Leases [Abstract] | ||
Weighted average remaining lease term | 1 year 3 months 26 days | 4 years 6 months 21 days |
Weighted average discount rate | 4.18% | 6.50% |
Leases (Details Textual)
Leases (Details Textual) | Aug. 14, 2020USD ($)ft² | Jul. 11, 2020USD ($) | Mar. 06, 2020USD ($)ft² | Jun. 01, 2019ft² | Mar. 01, 2019USD ($)ft² | Sep. 17, 2020USD ($) | Jul. 19, 2020USD ($) | Jan. 31, 2019USD ($)ft² | Sep. 30, 2020USD ($) | Dec. 31, 2019USD ($) | Sep. 29, 2020USD ($) | Aug. 06, 2020USD ($) |
Leases (Textual) | ||||||||||||
Description of incremental borrowing rate | Incremental borrowing rate of 5.5%. | |||||||||||
Weighted average remaining operating lease term | 4 years 5 months 9 days | 4 years 6 months 21 days | ||||||||||
Weighted average discount rate | 5.99% | 6.50% | ||||||||||
Operating lease rate | 5.50% | 5.90% | 8.46% | |||||||||
Lease area square feet | ft² | 5,533 | 23,300 | 7,432 | 2,390 | 5,533 | |||||||
Right-of-use asset and operating lease liability | $ 161,328 | $ 1,048,058 | $ 2,199,682 | $ 23,898 | $ 28,405 | |||||||
Monthly payments of operating lease | $ 1,482 | $ 965 | $ 54,852 | $ 529 | $ 6,316 | 89,482 | ||||||
Lease expire date | Jul. 31, 2020 | May 30, 2025 | Dec. 29, 2025 | |||||||||
Bargain purchase option | 1 | $ 1 | ||||||||||
Reduction of the right-of-use asset and lease liability | $ 151,565 | |||||||||||
Increase of right-of-use asset | 54,148 | |||||||||||
Right-of-use asset and finance lease liability | $ 35,562 | $ 18,009 | ||||||||||
Finance lease maturity date | Jun. 11, 2022 | Oct. 1, 2021 | ||||||||||
Monthly payments of operating lease, description | Monthly payments are $529 during the life of the lease, excluding a lease incentive of $1,750 payable at lease commencement. | |||||||||||
Lease liability | $ 3,020,364 | $ 2,212,548 | ||||||||||
VEO [Member] | ||||||||||||
Leases (Textual) | ||||||||||||
Operating lease rate | 5.70% | |||||||||||
Lease area square feet | ft² | 3,031 | |||||||||||
Monthly payments of operating lease | $ 341,200 | |||||||||||
Minimum [Member] | ||||||||||||
Leases (Textual) | ||||||||||||
Monthly payments of operating lease | $ 4,786 | $ 20,903 | $ 2,473 | |||||||||
Lease liability | 2,091 | 5,351 | ||||||||||
Minimum [Member] | VEO [Member] | ||||||||||||
Leases (Textual) | ||||||||||||
Monthly payments of operating lease | 6,800 | |||||||||||
Maximum [Member] | ||||||||||||
Leases (Textual) | ||||||||||||
Monthly payments of operating lease | $ 5,078 | $ 17,600 | $ 2,499 | |||||||||
Lease liability | $ 2,188 | 5,717 | ||||||||||
Maximum [Member] | VEO [Member] | ||||||||||||
Leases (Textual) | ||||||||||||
Monthly payments of operating lease | $ 7,654 |
Business Acquisitions (Details)
Business Acquisitions (Details) - VEO Purchase Price [Member] | 1 Months Ended |
Jan. 31, 2019USD ($)$ / sharesshares | |
Number of Preferred Series A shares paid | shares | 1,500,000 |
Per share value | $ / shares | $ 8.81 |
Purchase price | $ | $ 13,215,000 |
Business Acquisitions (Details
Business Acquisitions (Details 1) - VEO Purchase Price [Member] | 1 Months Ended |
Jan. 31, 2019USD ($) | |
Cash | $ 55,261 |
Fixed and other long-term assets | 4,000 |
Assumed liabilities | (40,531) |
Intangible assets and goodwill: | |
Total intangible assets and goodwill | 13,196,270 |
Total Consideration | 13,215,000 |
Technology [Member] | |
Intangible assets and goodwill: | |
Total intangible assets and goodwill | 6,410,000 |
Goodwill [Member] | |
Intangible assets and goodwill: | |
Total intangible assets and goodwill | $ 6,786,270 |
Business Acquisitions (Detail_2
Business Acquisitions (Details 2) - IPI Purchase Price [Member] | 1 Months Ended |
Jan. 31, 2019USD ($)$ / sharesshares | |
Number of Preferred Series A shares paid | shares | 800,000 |
Per share value | $ / shares | $ 8.81 |
Purchase price | $ | $ 7,048,000 |
Business Acquisitions (Detail_3
Business Acquisitions (Details 3) - IPI Purchase Price [Member] | 1 Months Ended |
Jan. 31, 2019USD ($) | |
Cash | $ 18,791 |
Debt-free net working capital (excluding cash) | 263,459 |
Fixed and other long-term assets | 97,384 |
Assumed liabilities | (1,240,097) |
Intangible assets and goodwill: | |
Total intangible assets and goodwill | 7,908,463 |
Total Consideration | 7,048,000 |
Goodwill estimate [Member] | |
Intangible assets and goodwill: | |
Total intangible assets and goodwill | 6,908,463 |
Technology [Member] | |
Intangible assets and goodwill: | |
Total intangible assets and goodwill | $ 1,000,000 |
Business Acquisitions (Detail_4
Business Acquisitions (Details 4) - SBT Purchase Price [Member] | Mar. 04, 2019USD ($)$ / sharesshares |
Number of Preferred Series A shares paid | shares | 300,000 |
Per share value | $ / shares | $ 8.81 |
Purchase price | $ | $ 2,643,000 |
Business Acquisitions (Detail_5
Business Acquisitions (Details 5) - SBT Purchase Price [Member] | Mar. 04, 2019USD ($) |
Cash | $ 273,290 |
Debt-free net working capital (excluding cash) | 103,537 |
Fixed and other long-term assets | 21,000 |
Liabilities assumed | (84,382) |
Intangible assets and goodwill: | |
Total intangible assets and goodwill | 2,329,555 |
Total Consideration | 2,643,000 |
Goodwill [Member] | |
Intangible assets and goodwill: | |
Total intangible assets and goodwill | 1,519,555 |
Customer relationships [Member] | |
Intangible assets and goodwill: | |
Total intangible assets and goodwill | 400,000 |
Trade name [Member] | |
Intangible assets and goodwill: | |
Total intangible assets and goodwill | 200,000 |
Technology [Member] | |
Intangible assets and goodwill: | |
Total intangible assets and goodwill | $ 210,000 |
Business Acquisitions (Detail_6
Business Acquisitions (Details 6) | Apr. 02, 2019USD ($)$ / sharesshares |
DragonWave-X and Lextrum Purchase Price [Member] | |
Number of common stock paid | shares | 13,237,149 |
Per share value | $ / shares | $ 4.40 |
Purchase price | $ 58,243,456 |
DragonWave-X [Member] | |
Purchase price | 42,081,392 |
Lextrum [Member] | |
Purchase price | $ 16,162,064 |
Business Acquisitions (Detail_7
Business Acquisitions (Details 7) - DragonWave [Member] | Apr. 02, 2019USD ($) |
Cash | $ 1,274,072 |
Debt-free net working capital (excluding cash) | (1,099,194) |
Note payable | (5,690,000) |
Fixed and other long-term assets | 2,455,714 |
Intangible assets: | |
Total intangible assets and goodwill | 45,140,800 |
Total Consideration | 42,081,392 |
Customer relationships [Member] | |
Intangible assets: | |
Total intangible assets and goodwill | 13,080,000 |
Technology [Member] | |
Intangible assets: | |
Total intangible assets and goodwill | 13,750,000 |
Trade name [Member] | |
Intangible assets: | |
Total intangible assets and goodwill | 4,210,000 |
Goodwill estimate [Member] | |
Intangible assets: | |
Total intangible assets and goodwill | $ 14,100,800 |
Business Acquisitions (Detail_8
Business Acquisitions (Details 8) - Lextrum [Member] | Apr. 02, 2019USD ($) |
Cash | $ 8,105 |
Debt-free net working capital (excluding cash) | (103,611) |
Fixed and other long-term assets | |
Intangible assets: | |
Total intangible assets and goodwill | 1,657,570 |
Total Consideration | 16,162,064 |
Technology [Member] | |
Intangible assets: | |
Total intangible assets and goodwill | 11,430,000 |
Goodwill estimate [Member] | |
Intangible assets: | |
Total intangible assets and goodwill | $ 4,827,570 |
Business Acquisitions (Detail_9
Business Acquisitions (Details 9) - Historical Drone Aviation Holding Corp [Member] | 1 Months Ended |
Nov. 27, 2019USD ($) | |
Working capital | $ 2,399,800 |
Other assets | 220,672 |
Intangible assets and goodwill: | |
Total intangible assets and goodwill | 25,637,019 |
Total Consideration | 28,257,491 |
Intellectual property [Member] | |
Intangible assets and goodwill: | |
Total intangible assets and goodwill | 3,729,537 |
Trade names [Member] | |
Intangible assets and goodwill: | |
Total intangible assets and goodwill | 1,233,204 |
Customer relationships [Member] | |
Intangible assets and goodwill: | |
Total intangible assets and goodwill | 1,630,792 |
Noncompete [Member] | |
Intangible assets and goodwill: | |
Total intangible assets and goodwill | 937,249 |
Goodwill estimate [Member] | |
Intangible assets and goodwill: | |
Total intangible assets and goodwill | $ 18,106,237 |
Business Acquisitions (Detai_10
Business Acquisitions (Details 10) - Fast Plastic Parts, LLC and Spring Creek Manufacturing, Inc. Acquisition [Member] | Mar. 06, 2020USD ($) |
Inventory | $ 168,106 |
Prepaid expenses | 66,575 |
Property & equipment | 1,365,319 |
Operating lease right-of-use-assets | 1,048,058 |
Finance lease right-of-use assets | 18,009 |
Intangible assets: | |
Customer relationships | 500,226 |
Total assets | 3,166,293 |
Current portion of long-term debt | 1,270,879 |
Operating lease liabilities, current | 166,919 |
Finance lease liabilities, current | 6,578 |
Operating lease liabilities, net of current portion | 881,139 |
Finance lease liabilities, net of current portion | 11,431 |
Total purchase consideration | $ 829,347 |
Business Acquisitions (Detai_11
Business Acquisitions (Details 11) - USD ($) | Sep. 30, 2020 | Jul. 06, 2020 | Dec. 31, 2019 | Jan. 09, 2019 |
Intangible assets: | ||||
Goodwill | $ 75,538,127 | $ 56,386,796 | ||
Virtual Network Communications, Inc. [Member] | ||||
Inventory | $ 157,727 | |||
Prepaid expenses | 15,000 | |||
Intangible assets: | ||||
Goodwill | 19,151,331 | |||
Technology | 23,992 | |||
Licenses | 410,000 | |||
Total assets | 19,758,050 | |||
Accounts payable and other accrued liabilities | 5,000 | |||
Interest payable | 35 | |||
Note payable | 24,028 | |||
Total purchase consideration | $ 19,728,987 |
Business Acquisitions (Detai_12
Business Acquisitions (Details Textual) | Jul. 11, 2020USD ($) | Jul. 06, 2020USD ($)$ / sharesshares | Mar. 06, 2020USD ($)ft²shares | Mar. 06, 2020USD ($) | Apr. 02, 2019$ / sharesshares | Mar. 04, 2019$ / sharesshares | Mar. 04, 2019$ / sharesshares | Jan. 31, 2019$ / sharesshares | Sep. 30, 2020USD ($)shares | Dec. 31, 2019USD ($) | Aug. 31, 2016USD ($) |
Business Aquisitions (Textual) | |||||||||||
Principal amount | $ 500,000 | $ 50,000 | |||||||||
Purchase price consideration amount | $ 1 | $ 1 | |||||||||
Cash | $ 120,000 | ||||||||||
Purchase warrants shares | shares | 1,736,284 | ||||||||||
Fair value of warrants | $ 1,646,471 | ||||||||||
Escrow fund [Memebr] | |||||||||||
Business Aquisitions (Textual) | |||||||||||
Purchase warrants shares | shares | 4,000,000 | ||||||||||
Fast Plastics Parts, LLC And Spring Creek Manufacturing, Inc [Member] | |||||||||||
Business Aquisitions (Textual) | |||||||||||
Purchase price of consideration | $ 829,347 | ||||||||||
Short term debt incurred to the sellers | 575,574 | ||||||||||
Cash paid for acquisition | $ 253,773 | ||||||||||
Number of square feet occupied for manufacturing facility | ft² | 23,300 | ||||||||||
Principal amount | 500,000 | ||||||||||
Original issue discount of promissory note | 50,000 | ||||||||||
Maturity date | Dec. 5, 2020 | ||||||||||
Number of shares of common stock issued for promissory note | shares | 446,000 | ||||||||||
Acquisition related costs | $ 25,714 | ||||||||||
Spring Creek Manufacturing, Inc [Member] | |||||||||||
Business Aquisitions (Textual) | |||||||||||
Common stock percentage | 100.00% | ||||||||||
VEO [Member] | Preferred Class A [Member] | |||||||||||
Business Aquisitions (Textual) | |||||||||||
Acquired shares | shares | 1,500,000 | ||||||||||
Acquire per share | $ / shares | $ 8.81 | ||||||||||
VEO [Member] | Preferred Series A [Member] | |||||||||||
Business Aquisitions (Textual) | |||||||||||
Acquired shares | shares | 1,500,000 | ||||||||||
Acquire per share | $ / shares | $ 8.81 | ||||||||||
InduraPower, Inc. [Member] | Preferred Class A [Member] | |||||||||||
Business Aquisitions (Textual) | |||||||||||
Acquired shares | shares | 800,000 | ||||||||||
Acquire per share | $ / shares | $ 8.81 | ||||||||||
InduraPower, Inc. [Member] | Preferred Series A [Member] | |||||||||||
Business Aquisitions (Textual) | |||||||||||
Acquired shares | shares | 800,000 | ||||||||||
Acquire per share | $ / shares | $ 8.81 | ||||||||||
Silver Bullet Technology, Inc. [Member] | Preferred Class A [Member] | |||||||||||
Business Aquisitions (Textual) | |||||||||||
Acquired shares | shares | 300,000 | ||||||||||
Acquire per share | $ / shares | $ 8.81 | $ 8.81 | |||||||||
Silver Bullet Technology, Inc. [Member] | Preferred Series A [Member] | |||||||||||
Business Aquisitions (Textual) | |||||||||||
Acquired shares | shares | 300,000 | ||||||||||
Acquire per share | $ / shares | $ 8.81 | $ 8.81 | |||||||||
DragonWave-X LLC and Lextrum, Inc. [Member] | |||||||||||
Business Aquisitions (Textual) | |||||||||||
Acquired shares | shares | 13,237,149 | ||||||||||
Acquire per share | $ / shares | $ 4.40 | ||||||||||
VNC [Member] | |||||||||||
Business Aquisitions (Textual) | |||||||||||
Purchase price consideration amount | 19,728,987 | ||||||||||
Cash | 2,892,727 | ||||||||||
Fair value of common stock | $ 12,677,267 | ||||||||||
Fair value of common stock per share value | $ / shares | $ 1.08 | ||||||||||
Common stock shares | shares | 11,738,210 | ||||||||||
Purchase warrants shares | shares | 2,525,506 | ||||||||||
Interest receivable | $ 251,247 | ||||||||||
Fair value of warrants | $ 2,261,275 |
Long-Lived Assets and Goodwil_2
Long-Lived Assets and Goodwill (Details) - USD ($) | Sep. 30, 2020 | Dec. 31, 2019 | Jan. 09, 2019 |
Goodwill and Intangible Assets Disclosure [Abstract] | |||
Goodwill balance | $ 75,538,127 | $ 56,386,796 |
Long-Lived Assets and Goodwil_3
Long-Lived Assets and Goodwill (Details 1) - USD ($) | Sep. 30, 2020 | Dec. 31, 2019 |
Gross Carrying Amount | $ 59,155,000 | $ 58,220,782 |
Accumulated Amortization | (14,790,734) | (6,943,300) |
Net Carrying Amount | 44,364,266 | 51,277,482 |
Licenses [Member] | ||
Gross Carrying Amount | 410,000 | |
Accumulated Amortization | ||
Net Carrying Amount | 410,000 | |
Trade names [Member] | ||
Gross Carrying Amount | 5,643,204 | 5,643,204 |
Accumulated Amortization | (1,093,884) | (489,222) |
Net Carrying Amount | 4,549,320 | 5,153,982 |
Technology [Member] | ||
Gross Carrying Amount | 32,823,992 | 32,800,000 |
Accumulated Amortization | (8,408,374) | (4,308,333) |
Net Carrying Amount | 24,415,618 | 28,491,667 |
Customer relationships [Member] | ||
Gross Carrying Amount | 15,611,018 | 15,110,792 |
Accumulated Amortization | (4,379,965) | (2,054,894) |
Net Carrying Amount | 11,231,053 | 13,055,898 |
Intellectual Property [Member] | ||
Gross Carrying Amount | 3,729,537 | 3,729,537 |
Accumulated Amortization | (517,991) | (51,799) |
Net Carrying Amount | 3,211,546 | 3,677,738 |
Noncompete [Member] | ||
Gross Carrying Amount | 937,249 | 937,249 |
Accumulated Amortization | (390,520) | (39,052) |
Net Carrying Amount | $ 546,729 | $ 898,197 |
Long-Lived Assets and Goodwil_4
Long-Lived Assets and Goodwill (Details 2) - USD ($) | Sep. 30, 2020 | Dec. 31, 2019 |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
The remainder of 2020 | $ 2,637,033 | |
2021 | 10,508,774 | $ 6,943,300 |
2022 | 10,079,202 | 10,385,211 |
2023 | 10,079,202 | 10,346,159 |
2024 | 8,024,308 | 9,916,587 |
2025 | 2,621,877 | 9,916,587 |
2026 | 378,187 | $ 7,861,692 |
2027 | $ 35,683 |
Long-Lived Assets and Goodwil_5
Long-Lived Assets and Goodwill (Details Textual) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Long-Lived Assets and Goodwill (Textual) | ||||
Amortization expense of intangible assets | $ 2,621,315 | $ 2,243,135 | $ 7,847,434 | $ 4,614,131 |
Goodwill and Other Intangible_3
Goodwill and Other Intangible Assets (Details) | 12 Months Ended |
Dec. 31, 2019USD ($) | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Beginning balance | |
Acquisitions | 56,386,796 |
Ending balance | $ 56,386,796 |
Goodwill and Other Intangible_4
Goodwill and Other Intangible Assets (Details 1) - USD ($) | Sep. 30, 2020 | Dec. 31, 2019 |
Gross Carrying Amount | $ 59,155,000 | $ 58,220,782 |
Accumulated Amortization | (14,790,734) | (6,943,300) |
Net Carrying Amount | 44,364,266 | 51,277,482 |
Trade names [Member] | ||
Gross Carrying Amount | 5,643,204 | 5,643,204 |
Accumulated Amortization | (1,093,884) | (489,222) |
Net Carrying Amount | 4,549,320 | 5,153,982 |
Technology [Member] | ||
Gross Carrying Amount | 32,823,992 | 32,800,000 |
Accumulated Amortization | (8,408,374) | (4,308,333) |
Net Carrying Amount | 24,415,618 | 28,491,667 |
Customer relationships [Member] | ||
Gross Carrying Amount | 15,611,018 | 15,110,792 |
Accumulated Amortization | (4,379,965) | (2,054,894) |
Net Carrying Amount | 11,231,053 | 13,055,898 |
Intellectual Property [Member] | ||
Gross Carrying Amount | 3,729,537 | 3,729,537 |
Accumulated Amortization | (517,991) | (51,799) |
Net Carrying Amount | 3,211,546 | 3,677,738 |
Noncompete [Member] | ||
Gross Carrying Amount | 937,249 | 937,249 |
Accumulated Amortization | (390,520) | (39,052) |
Net Carrying Amount | $ 546,729 | $ 898,197 |
Goodwill and Other Intangible_5
Goodwill and Other Intangible Assets (Details 2) - USD ($) | Sep. 30, 2020 | Dec. 31, 2019 |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
2019 | $ 10,508,774 | $ 6,943,300 |
2020 | 10,079,202 | 10,385,211 |
2021 | 10,079,202 | 10,346,159 |
2022 | 8,024,308 | 9,916,587 |
2023 | 2,621,877 | 9,916,587 |
2024 | $ 378,187 | $ 7,861,692 |
Revolving Line of Credit and _2
Revolving Line of Credit and Note Payable (Details) | 12 Months Ended |
Dec. 31, 2019USD ($) | |
Revolving Line of Credit (Textual) | |
CNB Bank account | $ 120,000 |
CNB Bank account | |
Revolving Line of Credit (Textual) | |
CNB Note maturity date, description | In 2017, the Company issued a promissory note (the “CNB Note”) to City National Bank of Florida (“CNB”) in the principal amount of $2,000,000, with a maturity date of August 2, 2018. In 2018, the maturity date of the CNB Note was extended to August 2, 2019. On August 29, 2019, the maturity date of the CNB Note was extended to August 2, 2020. |
Monthly payment, description | The CNB Note bears an interest rate equal to the average of the interest rates per annum at which U.S. Dollars are offered in the London Interbank Borrowing Market ("LIBOR") for a 30-day period (the "Index") plus 2.9% over the Index. The Company will pay to CNB a late charge of 5.0% of any monthly payment not received by CNB within 10 calendar days after its due date. |
Line of credit drawn | $ 2,000,000 |
Additional interest rate on fee | 4.60% |
Minimum average annual balance | $ 1,600,000 |
CNB Bank account | 120,000 |
Aggregate unencumbered liquidity | $ 6,000,000 |
Debt Agreements (Details)
Debt Agreements (Details) - USD ($) | 1 Months Ended | 9 Months Ended | ||||||||||
Jul. 06, 2020 | Apr. 29, 2020 | Feb. 26, 2020 | Sep. 30, 2020 | Aug. 11, 2020 | Aug. 05, 2020 | Dec. 31, 2019 | Nov. 07, 2019 | Aug. 31, 2016 | ||||
Amount Outstanding | $ 500,000 | $ 50,000 | ||||||||||
Interest rate | 5.00% | 133.00% | 7.90% | |||||||||
Total long-term debt | 17,113,336 | $ 10,138,496 | $ 18,980 | |||||||||
Less unamortized discounts and debt issuance costs | (3,990,019) | (4,749,004) | ||||||||||
Total long-term debt, less discounts and debt issuance costs | 13,123,317 | 5,389,492 | ||||||||||
Less current portion of long-term debt | (13,123,317) | (5,389,492) | ||||||||||
Debt classified as long-term debt | ||||||||||||
Secured note payable One [Member] | ||||||||||||
Maturity Date | [1] | Feb. 28, 2020 | ||||||||||
Amount Outstanding | [1] | $ 788,709 | $ 788,709 | |||||||||
Interest rate | [1] | 12.50% | 8.50% | |||||||||
Secured note payable Two [Member] | ||||||||||||
Maturity Date | [1] | Mar. 1, 2022 | ||||||||||
Amount Outstanding | [1] | $ 186,709 | $ 224,288 | |||||||||
Interest rate | [1] | 9.00% | 9.00% | |||||||||
Secured note payable Three [Member] | ||||||||||||
Maturity Date | [1] | Sep. 1, 2021 | ||||||||||
Amount Outstanding | [1] | $ 18,980 | $ 21,571 | |||||||||
Interest rate | [1] | 7.90% | 7.90% | |||||||||
Secured note payable Four [Member] | ||||||||||||
Maturity Date | Nov. 26, 2021 | |||||||||||
Amount Outstanding | $ 2,000,000 | $ 2,000,000 | ||||||||||
Interest rate | 9.00% | 9.00% | ||||||||||
Secured note payable Five [Member] | ||||||||||||
Maturity Date | Dec. 26, 2020 | |||||||||||
Amount Outstanding | $ 211,667 | |||||||||||
Interest rate | 78.99% | |||||||||||
Secured note payable Six [Member] | ||||||||||||
Maturity Date | Dec. 26, 2020 | Sep. 15, 2020 | [1] | |||||||||
Amount Outstanding | $ 600,000 | $ 855,120 | [1] | [1] | ||||||||
Interest rate | 78.99% | 36.00% | [1] | [1] | ||||||||
Total long-term debt | $ 211,667 | |||||||||||
Secured Notes Payable Seven [Member] | ||||||||||||
Maturity Date | [1] | Oct. 15, 2020 | ||||||||||
Amount Outstanding | [1] | $ 2,007,971 | ||||||||||
Interest rate | [1] | 5.00% | ||||||||||
Secured Notes Payable [Member] | ||||||||||||
Amount Outstanding | $ 6,069,156 | $ 3,034,568 | ||||||||||
Equipment financing loan [Member] | ||||||||||||
Maturity Date | Sep. 15, 2020 | |||||||||||
Amount Outstanding | $ 3,828 | |||||||||||
Interest rate | 8.80% | |||||||||||
Note payable [Member] | ||||||||||||
Maturity Date | Jul. 9, 2019 | |||||||||||
Amount Outstanding | $ 200,000 | |||||||||||
Interest rate | 18.00% | |||||||||||
Note payable one [Member] | ||||||||||||
Maturity Date | Sep. 1, 2019 | |||||||||||
Amount Outstanding | $ 200,000 | |||||||||||
Interest rate | 18.00% | |||||||||||
Note payable Two [Member] | ||||||||||||
Maturity Date | [1] | Sep. 30, 2020 | ||||||||||
Amount Outstanding | [1] | $ 500,000 | $ 500,000 | |||||||||
Interest rate | [1] | 10.00% | 10.00% | |||||||||
Note payable Three [Member] | ||||||||||||
Maturity Date | [1] | Sep. 30, 2020 | ||||||||||
Amount Outstanding | [1] | $ 175,000 | $ 175,000 | |||||||||
Interest rate | [1] | 10.00% | 10.00% | |||||||||
Note payable Four [Member] | ||||||||||||
Maturity Date | [1] | Aug. 31, 2020 | ||||||||||
Amount Outstanding | [1] | $ 3,500,000 | $ 5,000,000 | |||||||||
Interest rate | [1] | 12.00% | 10.00% | |||||||||
Note payable Five [Member] | ||||||||||||
Maturity Date | Jul. 9, 2019 | |||||||||||
Amount Outstanding | $ 200,000 | |||||||||||
Interest rate | 18.00% | |||||||||||
Note payable Six [Member] | ||||||||||||
Maturity Date | [1] | Dec. 6, 2019 | ||||||||||
Amount Outstanding | [1] | $ 66,700 | $ 450,100 | |||||||||
Interest rate | [1] | 500.00% | 18.00% | |||||||||
Notes payable Seven [Member] | ||||||||||||
Maturity Date | Nov. 30, 2020 | |||||||||||
Amount Outstanding | $ 500,000 | |||||||||||
Interest rate | 0.00% | |||||||||||
Notes payable Eight [Member] | ||||||||||||
Maturity Date | [1] | Jun. 30, 2020 | ||||||||||
Amount Outstanding | [1] | $ 379,588 | ||||||||||
Interest rate | [1] | 0.00% | ||||||||||
Note payable Nine [Member] | ||||||||||||
Maturity Date | [1] | Jun. 30, 2020 | ||||||||||
Amount Outstanding | [1] | $ 165,986 | ||||||||||
Interest rate | [1] | 0.00% | ||||||||||
Note payable Ten [Member] | ||||||||||||
Maturity Date | [1] | Feb. 16, 2023 | ||||||||||
Amount Outstanding | [1] | $ 83,309 | ||||||||||
Interest rate | [1] | 3.00% | ||||||||||
Equipment financing loan One [Member] | ||||||||||||
Maturity Date | [1] | Nov. 9, 2023 | ||||||||||
Amount Outstanding | [1] | $ 61,287 | ||||||||||
Interest rate | [1] | 8.50% | ||||||||||
Equipment financing loan Two [Member] | ||||||||||||
Maturity Date | [1] | Dec. 19, 2023 | ||||||||||
Amount Outstanding | [1] | $ 89,912 | ||||||||||
Interest rate | [1] | 6.70% | ||||||||||
Equipment financing loan Three [Member] | ||||||||||||
Maturity Date | [1] | Jan. 17, 2024 | ||||||||||
Amount Outstanding | [1] | $ 41,390 | ||||||||||
Interest rate | [1] | 6.70% | ||||||||||
Total notes payable [Member] | ||||||||||||
Amount Outstanding | $ 7,636,043 | $ 6,728,928 | ||||||||||
Senior convertible debenture One [Member] | ||||||||||||
Maturity Date | Dec. 31, 2019 | |||||||||||
Amount Outstanding | $ 25,000 | |||||||||||
Interest rate | 15.00% | |||||||||||
Senior convertible debenture [Member] | ||||||||||||
Maturity Date | Dec. 31, 2019 | |||||||||||
Amount Outstanding | $ 100,000 | |||||||||||
Interest rate | 15.00% | |||||||||||
Senior convertible debenture Two [Member] | ||||||||||||
Maturity Date | Dec. 31, 2021 | |||||||||||
Amount Outstanding | $ 250,000 | $ 250,000 | ||||||||||
Interest rate | 10.00% | 10.00% | ||||||||||
Total senior convertible debenture [Member] | ||||||||||||
Amount Outstanding | $ 1,250,000 | $ 275,000 | ||||||||||
PPP loans [Member] | ||||||||||||
Maturity Date | May 14, 2022 | |||||||||||
Amount Outstanding | $ 24,028 | $ 455,184 | $ 103,659 | |||||||||
Interest rate | 1.00% | 1.00% | 1.00% | |||||||||
Total long-term debt | $ 455,184 | $ 103,659 | ||||||||||
PPP loans [Member] | Minimum [Member] | ||||||||||||
Maturity Date | Apr. 30, 2022 | |||||||||||
PPP loans [Member] | Maximum [Member] | ||||||||||||
Maturity Date | May 26, 2022 | |||||||||||
PPP Loans One [Member] | ||||||||||||
Maturity Date | May 14, 2022 | |||||||||||
Amount Outstanding | $ 24,028 | |||||||||||
Interest rate | 1.00% | |||||||||||
PPP Loans Two [Member] | ||||||||||||
Maturity Date | Aug. 11, 2025 | |||||||||||
Amount Outstanding | $ 103,659 | |||||||||||
Interest rate | 1.00% | |||||||||||
Note payable Fourteen [Member] | ||||||||||||
Maturity Date | [1] | Sep. 30, 2020 | ||||||||||
Amount Outstanding | [1] | $ 290,000 | ||||||||||
Interest rate | [1] | 0.00% | ||||||||||
Senior debenture One [Member] | ||||||||||||
Maturity Date | Dec. 31, 2019 | |||||||||||
Amount Outstanding | [1] | $ 84,000 | $ 100,000 | |||||||||
Interest rate | [1] | 15.00% | 15.00% | |||||||||
Total senior debentures [Member] | ||||||||||||
Amount Outstanding | $ 84,000 | $ 100,000 | ||||||||||
Convertible note payable [Member] | ||||||||||||
Amount Outstanding | [1] | $ 374,137 | ||||||||||
Interest rate | [1] | 24.00% | ||||||||||
Convertible note payable [Member] | ||||||||||||
Maturity Date | Jan. 29, 2021 | Jan. 29, 2021 | [1] | |||||||||
Amount Outstanding | $ 285,714 | |||||||||||
Interest rate | 12.50% | |||||||||||
Total Convertible note payable [Member] | ||||||||||||
Amount Outstanding | $ 2,074,137 | |||||||||||
Note payable Eleven [Member] | ||||||||||||
Amount Outstanding | ||||||||||||
Interest rate | ||||||||||||
Note payable Fifteen [Member] | ||||||||||||
Amount Outstanding | [1] | $ 1,200,000 | ||||||||||
Note payable Fifteen [Member] | Minimum [Member] | ||||||||||||
Maturity Date | [1] | Oct. 13, 2020 | ||||||||||
Interest rate | [1] | 15.00% | ||||||||||
Note payable Fifteen [Member] | Maximum [Member] | ||||||||||||
Maturity Date | [1] | Nov. 30, 2020 | ||||||||||
Interest rate | [1] | 18.00% | ||||||||||
Convertible note payable One [Member] | ||||||||||||
Maturity Date | Nov. 20, 2020 | |||||||||||
Amount Outstanding | $ 1,700,000 | |||||||||||
Interest rate | 5.00% | |||||||||||
Senior convertible debenture Three [Member] | ||||||||||||
Maturity Date | Nov. 30, 2020 | |||||||||||
Amount Outstanding | $ 1,000,000 | |||||||||||
Interest rate | 9.00% | |||||||||||
[1] | Note is in default. Refer to further discussion below. |
Debt Agreements (Details 1)
Debt Agreements (Details 1) - USD ($) | Sep. 30, 2020 | Dec. 31, 2019 |
Total | $ 13,123,317 | $ 5,389,492 |
Future maturities of long-term debt [Member] | ||
Remainder of 2020 | 14,065,711 | 7,888,496 |
2021 | 2,344,018 | 2,250,000 |
2022 | 543,028 | |
2023 | 55,944 | |
2024 | 1,035 | |
Thereafter | 103,600 | |
Total | $ 17,113,336 | $ 10,138,496 |
Debt Agreements (Details Textua
Debt Agreements (Details Textual) - USD ($) | Aug. 21, 2020 | Jul. 03, 2020 | Jul. 02, 2020 | Mar. 19, 2020 | Mar. 05, 2020 | Sep. 11, 2019 | Aug. 14, 2019 | Jun. 10, 2019 | Apr. 02, 2019 | Aug. 31, 2020 | Aug. 05, 2020 | Jul. 07, 2020 | Jul. 06, 2020 | May 29, 2020 | Apr. 29, 2020 | Mar. 06, 2020 | Feb. 26, 2020 | Nov. 30, 2019 | Nov. 15, 2019 | Nov. 07, 2019 | Oct. 31, 2019 | Sep. 30, 2019 | Sep. 24, 2019 | Aug. 31, 2019 | Jul. 31, 2019 | Jun. 30, 2019 | Apr. 30, 2019 | Apr. 30, 2019 | Aug. 31, 2018 | Jan. 31, 2018 | Oct. 31, 2017 | Sep. 30, 2017 | Aug. 31, 2017 | Aug. 31, 2016 | Sep. 30, 2020 | Sep. 30, 2020 | Sep. 30, 2019 | Dec. 31, 2019 | Aug. 11, 2020 | Jun. 30, 2020 | Jun. 12, 2020 | Jun. 08, 2020 | Apr. 13, 2020 | Aug. 05, 2019 | Jul. 09, 2019 | Jul. 07, 2019 | Apr. 21, 2019 | |||
Debt Agreement (Textual) | ||||||||||||||||||||||||||||||||||||||||||||||||||
Principal amount | $ 50,000 | $ 500,000 | $ 500,000 | |||||||||||||||||||||||||||||||||||||||||||||||
Aggregate principal amount outstanding | $ 18,980 | $ 17,113,336 | $ 17,113,336 | $ 10,138,496 | ||||||||||||||||||||||||||||||||||||||||||||||
Debt instrument interest rate | 5.00% | 133.00% | 7.90% | |||||||||||||||||||||||||||||||||||||||||||||||
Debt instrument maturity period, description | InduraPower did not fulfil the requirements to maintain a balance of at least $155,159 at J.P. Morgan while the promissory note is outstanding and maintain a debt service coverage ratio of at least 1.25. Due to this breach of clauses for those covenants, the promissory note holder is contractually entitled to request immediate repayment of the outstanding promissory note, and/or increase the interest rate up to an additional 18% per annum. The promissory note holder had not requested early repayment of the loan as of the date when these financial statements were approved by the Board of Directors. | |||||||||||||||||||||||||||||||||||||||||||||||||
Secured loan agreement, description | The Company assumed a secured loan with FirstBank in the principal amount of $979,381 bearing interest at 5% per annum and with a maturity date of June 1, 2020. On August 5, 2020, the maturity date of this loan was extended to September 15, 2020, with a single payment of all unpaid principal and accrued interest then due, and the interest rate was increased to 36% per annum for any principal balance remaining unpaid past the extended maturity date. The loan is secured by certain assets of Sovereign Plastics. This loan is subjected to covenants, whereby Sovereign Plastics is required to meet certain financial and non-financial covenants at the end of each fiscal year. As of September 30, 2020, an aggregate principal amount of $855,120 was outstanding and past due under this loan. | In connection with this loan, DragonWave incurred $20,000 of debt discounts and $4,700,000 of debt issuance costs. The debt issuance costs were the result of the issuance of 1,050,000 shares of common stock of the Company and a cash payment of $80,000. For the three and nine months ended September 30, 2020, $587,500 and $1,762,500 of these costs were amortized and recognized in interest expense in the Condensed Consolidated Statement of Operations, respectively. As of September 30, 2020, there were $9,167 of debt discounts and $2,741,667 of debt issuance costs remaining. | ||||||||||||||||||||||||||||||||||||||||||||||||
Interest and principal payments, description | Monthly payments of $9,341 for interest and principal were due on this note for the following 60 consecutive months. | |||||||||||||||||||||||||||||||||||||||||||||||||
Warrants to purchase an aggregate shares | 15,765 | 15,765 | 4,000 | |||||||||||||||||||||||||||||||||||||||||||||||
Common stock at a price | $ 0.8902 | |||||||||||||||||||||||||||||||||||||||||||||||||
Common stock conversion price, description | Interest is paid semi-annually in arrears in June and December of each year in cash or, at ComSovereign’s option, in shares of common stock at the conversion price that is equal to the lesser of (1) $2.50 or (2) a future effective price per share of any common stock sold by ComSovereign. Upon an event of default, the interest rate shall automatically increase to 15% per annum. In connection with these debentures, ComSovereign recognized a BCF of $69,000 and a debt discount of $181,000 associated with the issuance of warrants, both of which were recorded as debt discounts. On April 21, 2020, all unpaid accrued interest through December 31, 2019 was converted into 6,700 shares of issued common stock of the Company. Also on April 21, 2020, all the outstanding warrants were exercised at $0.01 per share into 283,530 issued shares of the Company’s common stock, resulting in full recognition in interest expense of the remaining debt discount of approximately $139,000 associated with the issuance of warrants. On April 30, 2020, these debentures were amended to provide for the conversion of the debentures into shares of the Company’s common stock instead of ComSovereign’s common stock. Additionally, the conversion price was changed from $2.50 per share to $0.756 per share. During the three and nine months ended September 30, 2020, $6,900 and $183,600 of the costs recorded as debt discounts were amortized and recognized in interest expense in the Condensed Consolidated Statement of Operations, respectively. As of September 30, 2020 and December 31, 2019, there were $41,400 and $225,000 of debt discounts remaining, respectively. As of September 30, 2020, an aggregate principal amount of $250,000 was outstanding under these debentures. | |||||||||||||||||||||||||||||||||||||||||||||||||
Debt issuance costs | $ 80,000 | |||||||||||||||||||||||||||||||||||||||||||||||||
Debt discount, description | The Company sold a convertible promissory note in the principal amount of $1,700,000 with an original issue discount of $200,000 that bears interest at a rate of 5.0% per annum and matures on November 20, 2020. Accrued interest and principal are due on the maturity date. Upon maturity, the interest rate shall automatically increase to the lesser of 18% per annum or the maximum amount permitted by applicable law on any unpaid principal and accrued interest. Following the maturity date, the note is convertible into shares of common stock at a conversion price equal to 65% of the lowest volume weighted average price of the common stock during the 20 consecutive trading days immediately preceding the conversion date, and as such a BCF has not yet been measured. As additional consideration for the loan, the Company issued to the lender 400,000 shares of common stock at a fair value of $3.35 per share. Warrants to purchase up to 53,571 shares of common stock that are exercisable for a purchase price of $2.80 per share at any time on or prior to August 20, 2025, were also issued to an unrelated third party as a placement fee for the transaction. In connection with this note, the Company recognized a debt discount of $1,340,000 associated with the issuance of shares to the note holder, and debt issuance costs of $223,649, which were all recorded as debt discounts. During the three and nine months ended September 30, 2020, $775,231 of the amounts recorded as debt discounts were amortized and recognized in interest expense in the Condensed Consolidated Statement of Operations. As of September 30, 2020, there were $988,418 of debt discounts remaining, and an aggregate principal amount of $1,700,000 was outstanding under this note. | The Company sold to the same investor as the April 29, 2020 note an additional convertible promissory note in the principal amount of $285,714 with an original issue discount of $35,714 that bears interest at a rate of 12.5% per annum, and warrants to purchase an additional 158,730 shares of common stock. Warrants to purchase up to 27,778 shares of common stock, were also issued to an unrelated third party as a placement fee for the transaction. Terms and maturities are similar to the April 29, 2020 note and warrants. In connection with this note, the Company recognized a BCF of $139,810, a debt discount of $50,128 associated with the issuance of warrants to the note holder, and debt issuance costs of $35,539, which were all recorded as debt discounts. On July 28, 2020, the Company defaulted on this note under the related Registration Rights Agreement by not filing a registration statement within 90 days of the initial April 29, 2020 note origination date. As a result, the aggregate principal balance increased by $88,423, which was composed of an $86,339 penalty payment-in-kind and a $2,084 interest payment-in-kind, representing 130% of the outstanding principal and accrued interest balance on the default date. In addition, the interest rate was increased to 24% per annum, and the note and accrued interest is due on-demand. During the three and nine months ended September 30, 2020, $261,191 of the amounts recorded as debt discounts were amortized and recognized in interest expense in the Condensed Consolidated Statement of Operations. As of September 30, 2020, there were $0 of debt discounts remaining as a result of the note now due on-demand from the default not being cured as of the filing of this Form 10-Q, and an aggregate principal amount of $374,137 was outstanding under this note. | The Company also issued warrants to purchase 158,730 shares of common stock that are exercisable for a purchase price of $0.99 per share at any time on or prior to April 29, 2025. Warrants to purchase up to 27,778 shares of common stock, at an exercise price of 110% of the initial conversion price of the notes (i.e., an exercise price of $0.99), at any time on or prior to April 29, 2025, were also issued to an unrelated third party as a placement fee for the transaction. In connection with this note, the Company recognized a BCF of $114,904, a debt discount of $44,944 associated with the issuance of warrants to the note holder, and debt issuance costs of $39,333, which were all recorded as debt discounts. On July 28, 2020, the Company defaulted on this note under the related Registration Rights Agreement by not filing a registration statement within 90 days of the note origination date. As a result, the aggregate principal balance increased by $97,322, which was composed of an $88,393 penalty payment-in-kind and an $8,929 interest payment-in-kind, representing 130% of the outstanding principal and accrued interest balance on the default date. In addition, the interest rate was increased to 24% per annum, and the note and accrued interest was due on-demand. On September 29, 2020, the note holder converted the full principal of $383,306 and all accrued interest of $16,087 into 443,470 shares of common stock of the Company. During the three and nine months ended September 30, 2020, $195,188 and $234,895, respectively, of the amounts recorded as debt discounts were amortized and recognized in interest expense in the Condensed Consolidated Statement of Operations. | |||||||||||||||||||||||||||||||||||||||||||||||
Issuance of warrants | $ 103,955 | $ 200 | ||||||||||||||||||||||||||||||||||||||||||||||||
Warrant [Member] | ||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Agreement (Textual) | ||||||||||||||||||||||||||||||||||||||||||||||||||
Debt instrument interest rate | 13.33% | 12.50% | 9.00% | 10.00% | 9.00% | |||||||||||||||||||||||||||||||||||||||||||||
Warrants to purchase an aggregate shares | 53,571 | 1,736,284 | 158,730 | 100,000 | 150,000 | 100,000 | 24,000 | 100,000 | 290,000 | 283,530 | ||||||||||||||||||||||||||||||||||||||||
Operational Finance Leases [Member] | ||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Agreement (Textual) | ||||||||||||||||||||||||||||||||||||||||||||||||||
Principal amount | $ 64,865 | 61,287 | 61,287 | |||||||||||||||||||||||||||||||||||||||||||||||
Interest and principal payments, description | Monthly principal and interest payments of approximately $1,680 are due over the term. | |||||||||||||||||||||||||||||||||||||||||||||||||
Equipment Financing Loans [Member] | ||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Agreement (Textual) | ||||||||||||||||||||||||||||||||||||||||||||||||||
Principal amount | $ 95,810 | |||||||||||||||||||||||||||||||||||||||||||||||||
Aggregate principal amount outstanding | 89,912 | 89,912 | ||||||||||||||||||||||||||||||||||||||||||||||||
Interest and principal payments, description | Monthly principal and interest payments of approximately $2,361 are due over the term. | |||||||||||||||||||||||||||||||||||||||||||||||||
Richard Berman [Member] | ||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Agreement (Textual) | ||||||||||||||||||||||||||||||||||||||||||||||||||
Principal amount | 83,309 | 83,309 | ||||||||||||||||||||||||||||||||||||||||||||||||
Fast Plastics and Strategic Equity Partners [Member] | ||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Agreement (Textual) | ||||||||||||||||||||||||||||||||||||||||||||||||||
Principal amount | $ 165,987 | |||||||||||||||||||||||||||||||||||||||||||||||||
Aggregate principal amount outstanding | 165,986 | $ 165,986 | ||||||||||||||||||||||||||||||||||||||||||||||||
Investors [Member] | ||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Agreement (Textual) | ||||||||||||||||||||||||||||||||||||||||||||||||||
Aggregate principal amount outstanding | $ 1,200,000 | |||||||||||||||||||||||||||||||||||||||||||||||||
Aggregate shares of common stock | 289,900 | |||||||||||||||||||||||||||||||||||||||||||||||||
Secured loan agreement, description | The notes have maturity dates between October 13, 2020 and November 30, 2020 and bear interest at a rate of 15% per annum, with interest accruing at an annually compounded rate of 18% per annum for any principal balance remaining unpaid past the maturity date. Daniel L. Hodges, the Company’s Chief Executive Officer, transferred a total of 289,900 shares of his personally owned, issued and outstanding common stock of the Company to the accredited investors and brokers, as part of this transaction. The shares had a total fair value of $478,726. The Company accounted for this as a contribution from Mr. Hodges, with $398,540 assigned as debt discounts for additional consideration to the accredited investors, and $80,186 assigned as debt issuance costs to the brokers. The Company incurred additional debt issuance costs to the brokers of this transaction in the amount of $21,000. During the three and nine months ended September 30, 2020, $320,514 of the amounts recorded as debt discounts were amortized and recognized in interest expense in the Condensed Consolidated Statement of Operations. As of September 30, 2020, there were $179,212 of debt discounts remaining, and an aggregate principal amount of $1,200,000 was outstanding under these notes, with $1,000,000 of this principal amount past due as of the filing date of this Form 10-Q. | |||||||||||||||||||||||||||||||||||||||||||||||||
Interest rate increased | 15.00% | |||||||||||||||||||||||||||||||||||||||||||||||||
Convertible note payable [Member] | ||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Agreement (Textual) | ||||||||||||||||||||||||||||||||||||||||||||||||||
Principal amount | $ 285,714 | |||||||||||||||||||||||||||||||||||||||||||||||||
Debt instrument interest rate | 12.50% | |||||||||||||||||||||||||||||||||||||||||||||||||
Maturity date | Jan. 29, 2021 | Jan. 29, 2021 | [1] | |||||||||||||||||||||||||||||||||||||||||||||||
Original issue discount | $ 35,714 | |||||||||||||||||||||||||||||||||||||||||||||||||
Warrants to purchase an aggregate shares | 158,730 | |||||||||||||||||||||||||||||||||||||||||||||||||
Common stock at a price | $ 0.99 | |||||||||||||||||||||||||||||||||||||||||||||||||
PPP Loans [Member] | ||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Agreement (Textual) | ||||||||||||||||||||||||||||||||||||||||||||||||||
Principal amount | $ 24,028 | 455,184 | $ 455,184 | $ 103,659 | ||||||||||||||||||||||||||||||||||||||||||||||
Aggregate principal amount outstanding | $ 455,184 | $ 455,184 | $ 103,659 | |||||||||||||||||||||||||||||||||||||||||||||||
Debt instrument interest rate | 1.00% | 1.00% | 1.00% | 1.00% | ||||||||||||||||||||||||||||||||||||||||||||||
Maturity date | May 14, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||
Paycheck protection program, description | The PPP loan has a maturity of 2 years and an interest rate of 1% per annum. The PPP, established as part of the Coronavirus Aid, Relief and Economic Security Act ("CARES Act"), provides for loans to qualifying businesses for amounts up to 2.5 times of the average monthly payroll expenses of the qualifying business. The loans and accrued interest are forgivable pursuant to section 1106 of the CARES Act, after a period of up to 24 weeks, as long as the borrower uses the loan proceeds for eligible purposes, including payroll, benefits, rent and utilities, and maintains its payroll levels. The amount of loan forgiveness shall be calculated in accordance with the requirements of the PPP, including the provisions of Section 1106 of the CARES Act, although no more than 40 percent of the amount forgiven can be attributable to non-payroll costs. Further, the amount of loan forgiveness will be reduced if the borrower terminates employees or reduces salaries during the period of up to 24 weeks. | |||||||||||||||||||||||||||||||||||||||||||||||||
Secured Notes Payable [Member] | ||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Agreement (Textual) | ||||||||||||||||||||||||||||||||||||||||||||||||||
Principal amount | $ 600,000 | $ 855,120 | [1] | $ 855,120 | [1] | [1] | ||||||||||||||||||||||||||||||||||||||||||||
Aggregate principal amount outstanding | $ 211,667 | |||||||||||||||||||||||||||||||||||||||||||||||||
Debt instrument interest rate | 78.99% | 36.00% | [1] | 36.00% | [1] | [1] | ||||||||||||||||||||||||||||||||||||||||||||
Maturity date | Dec. 26, 2020 | Sep. 15, 2020 | [1] | |||||||||||||||||||||||||||||||||||||||||||||||
Principal and interest payments | $ 19,429 | |||||||||||||||||||||||||||||||||||||||||||||||||
VNC [Member] | PPP Loans [Member] | ||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Agreement (Textual) | ||||||||||||||||||||||||||||||||||||||||||||||||||
Aggregate principal amount outstanding | $ 24,028 | $ 24,028 | ||||||||||||||||||||||||||||||||||||||||||||||||
Acquired Business [Member] | ||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Agreement (Textual) | ||||||||||||||||||||||||||||||||||||||||||||||||||
Principal amount | $ 43,957 | |||||||||||||||||||||||||||||||||||||||||||||||||
Aggregate principal amount outstanding | 41,390 | 41,390 | ||||||||||||||||||||||||||||||||||||||||||||||||
Interest and principal payments, description | Monthly principal and interest payments of approximately $1,063 are due over the term. | |||||||||||||||||||||||||||||||||||||||||||||||||
9% Senior Convertible Debentures [Member] | ||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Agreement (Textual) | ||||||||||||||||||||||||||||||||||||||||||||||||||
Principal amount | $ 1,000,000 | $ 1,000,000 | ||||||||||||||||||||||||||||||||||||||||||||||||
Debt instrument interest rate | 9.00% | 9.00% | ||||||||||||||||||||||||||||||||||||||||||||||||
Maturity date | Sep. 30, 2020 | Dec. 31, 2021 | ||||||||||||||||||||||||||||||||||||||||||||||||
Aggregate shares of common stock | 1,150,000 | |||||||||||||||||||||||||||||||||||||||||||||||||
Senior convertible debentures interest percent | 9.00% | |||||||||||||||||||||||||||||||||||||||||||||||||
Secured loan agreement, description | On September 30, 2020, the maturity date of these debentures was extended to November 30, 2020. Accrued interest and principal are due on the maturity date, with interest paid in cash or, at the Company’s option, in shares of common stock at the conversion price of $1.00 per share. Upon an event of default, the interest rate shall automatically increase to 15% per annum. The debentures are convertible into shares of the Company’s common stock at a conversion price of $1.00 per share. The Company also issued warrants to purchase 100,000 shares of common stock that are exercisable for a purchase price of $1.00 per share, at any time on or prior to the earlier of December 31, 2022 or the second anniversary of the Company’s consummation of a public offering of its common stock in connection with an up-listing of the common stock to a national securities exchange. In connection with these debentures, the Company recognized a BCF of $131,477 and a debt discount of $31,477 associated with the issuance of warrants, both of which were recorded as debt discounts. During the three and nine months ended September 30, 2020, the entire $162,954 of the costs recorded as debt discounts were fully amortized and recognized in interest expense in the Condensed Consolidated Statement of Operations. As of September 30, 2020, an aggregate principal amount of $1,000,000 was outstanding under these debentures. | ComSovereign sold $1,000,000 principal amount of 9% Senior Convertible Debentures that bore interest at the rate of 9% per annum and matured on December 31, 2021. ComSovereign received $850,000 in cash. Interest was payable in arrears in June and December of each year in cash or, at ComSovereign’s option, in shares of common stock at the conversion price that was equal to the lesser of (1) $8.00 or (2) 80% of the common stock price offered under the next equity offering. | ComSovereign sold $1,000,000 principal amount of 9% Senior Convertible Debentures that bore interest at the rate of 9% per annum and matured on December 31, 2021. ComSovereign received $850,000 in cash. Interest was payable in arrears in June and December of each year in cash or, at ComSovereign’s option, in shares of common stock at the conversion price that was equal to the lesser of (1) $8.00 or (2) 80% of the common stock price offered under the next equity offering. | |||||||||||||||||||||||||||||||||||||||||||||||
Original issue discount | $ 63,880 | |||||||||||||||||||||||||||||||||||||||||||||||||
Net proceed received from promissory note | $ 850,000 | |||||||||||||||||||||||||||||||||||||||||||||||||
Warrants to purchase an aggregate shares | 132,500 | 100,000 | ||||||||||||||||||||||||||||||||||||||||||||||||
Common stock at a price | $ 5 | |||||||||||||||||||||||||||||||||||||||||||||||||
Debt discount amount | $ 1,100,000 | |||||||||||||||||||||||||||||||||||||||||||||||||
Beneficial conversion feature amount | $ 786,549 | |||||||||||||||||||||||||||||||||||||||||||||||||
Warants cancelled, description | The warrants were cancelled and 132,500 warrants were issued for $1.50 per share. | |||||||||||||||||||||||||||||||||||||||||||||||||
9% Senior Convertible Debentures [Member] | Warrant [Member] | ||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Agreement (Textual) | ||||||||||||||||||||||||||||||||||||||||||||||||||
Warrants to purchase an aggregate shares | 20,000 | |||||||||||||||||||||||||||||||||||||||||||||||||
10% Senior Convertible Debentures [Member] | ||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Agreement (Textual) | ||||||||||||||||||||||||||||||||||||||||||||||||||
Aggregate principal amount outstanding | $ 250,000 | $ 250,000 | ||||||||||||||||||||||||||||||||||||||||||||||||
Debt instrument interest rate | 10.00% | |||||||||||||||||||||||||||||||||||||||||||||||||
Maturity date | Dec. 31, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||
Common stock conversion price, description | Interest is paid semi-annually in arrears in June and December of each year in cash or, at ComSovereign's option, in shares of common stock at the conversion price that was equal to the lesser of (1) $2.50 or (2) a future effective price per share of any common stock sold by ComSovereign. Upon an event of default, the interest rate shall automatically increase to 15% per annum. As of December 31, 2019, an aggregate principal amount of $250,000 was outstanding under these debentures. In connection with these debentures, ComSovereign recognized a BCF of $69,000 and a debt discount of $181,000 associated with the issuance of warrants, both of which are recorded as debt discounts. During fiscal 2019, $25,000 of these costs were amortized and recognized in interest expense in the Consolidated Statement of Operations. As of December 31, 2019, there were $225,000 of debt discounts remaining. On April 30, 2020, these debentures were amended to provide for the conversion of the debentures into shares of the Company's common stock instead of ComSovereign's common stock. Additionally, the conversion price was changed from $2.50 per share to $0.756 per share. As a result, all the outstanding warrants were exercised at $0.01 per share into 283,530 shares of the Company's common stock. The Company also issued 6,700 shares of common stock on April 30, 2020 in lieu of an aggregate cash interest payment payable by ComSovereign through December 31, 2019 on these outstanding convertible debentures. | |||||||||||||||||||||||||||||||||||||||||||||||||
Interest rate increased | 15.00% | |||||||||||||||||||||||||||||||||||||||||||||||||
Senior Convertible Debentures [Member] | ||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Agreement (Textual) | ||||||||||||||||||||||||||||||||||||||||||||||||||
Principal amount | $ 1,500,000 | |||||||||||||||||||||||||||||||||||||||||||||||||
Extinguished in exchange | 1,000,000 | |||||||||||||||||||||||||||||||||||||||||||||||||
Fair value per share | $ 1.51 | |||||||||||||||||||||||||||||||||||||||||||||||||
Aggregate principal amount outstanding | $ 100,000 | $ 100,000 | 3,500,000 | 3,500,000 | ||||||||||||||||||||||||||||||||||||||||||||||
Debt instrument interest rate | 8.00% | 8.00% | 8.00% | 8.00% | ||||||||||||||||||||||||||||||||||||||||||||||
Maturity date | Dec. 31, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||
Convertible debt | $ 300,000 | $ 1,000,000 | ||||||||||||||||||||||||||||||||||||||||||||||||
Senior convertible debentures interest percent | 8.00% | 8.00% | ||||||||||||||||||||||||||||||||||||||||||||||||
Secured loan agreement, description | In connection with its acquisition of DragonWave and Lextrum in April 2019, ComSovereign assumed the obligations of the seller of $100,000 aggregate principal amount of 8% Senior Convertible Debentures of the seller that bore interest at the rate of 8% per annum and matured on December 31, 2019. Interest was payable semi-annually in cash or, at the seller's option, in shares of the seller's common stock at the conversion price that was equal to the lesser of (1) $8.00 or (2) 80% of the common stock price offered under the next equity offering. On April 30, 2020, these debentures were modified to remove the conversion feature and only have settlement through cash. As of September 30, 2020, an aggregate principal amount of $84,000 was outstanding under these debentures. These debentures are past due and interest accrues at a rate of 15% per annum. | In connection with its acquisition of DragonWave and Lextrum in April 2019, ComSovereign assumed the obligations of the seller of $100,000 aggregate principal amount of 8% Senior Convertible Debentures of the seller that bore interest at the rate of 8% per annum and matured on December 31, 2019. Interest was payable semi-annually in cash or, at the seller's option, in shares of the seller's common stock at the conversion price that was equal to the lesser of (1) $8.00 or (2) 80% of the common stock price offered under the next equity offering. As of December 31, 2019, an aggregate principal amount of $100,000 was outstanding under these debentures. These debentures are past due and interest accrues at a rate of 15% per annum. | ||||||||||||||||||||||||||||||||||||||||||||||||
Senior Convertible Debentures [Member] | DragonWave-X LLC and Lextrum, Inc. [Member] | ||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Agreement (Textual) | ||||||||||||||||||||||||||||||||||||||||||||||||||
Aggregate principal amount outstanding | $ 25,000 | $ 25,000 | ||||||||||||||||||||||||||||||||||||||||||||||||
Debt instrument interest rate | 8.00% | 8.00% | ||||||||||||||||||||||||||||||||||||||||||||||||
Maturity date | Dec. 31, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||
Secured loan agreement, description | Interest was payable semi-annually in cash or, at the seller’s option, in shares of the seller’s common stock at the conversion price that was equal to the lesser of (1) $8.00 or (2) 80% of the common stock price offered under the next equity offering. These debentures were past due and interest accrued at a rate of 15% per annum. The aggregate principal amount of $25,000 under these debentures was fully repaid during the first quarter of the current fiscal year. | |||||||||||||||||||||||||||||||||||||||||||||||||
Convertible Notes Payable [Member] | ||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Agreement (Textual) | ||||||||||||||||||||||||||||||||||||||||||||||||||
Principal amount | $ 200,000 | $ 200,000 | $ 290,000 | $ 137,500 | 1,872 | 1,872 | 400,000 | |||||||||||||||||||||||||||||||||||||||||||
Extinguished in exchange | 163,448 | |||||||||||||||||||||||||||||||||||||||||||||||||
Fair value per share | $ 1.51 | |||||||||||||||||||||||||||||||||||||||||||||||||
Aggregate principal amount outstanding | $ 290,000 | $ 2,000,000 | $ 2,000,000 | $ 2,000,000 | ||||||||||||||||||||||||||||||||||||||||||||||
Debt instrument interest rate | 18.00% | 12.00% | 9.00% | 12.00% | 8.775% | 8.775% | 8.775% | 18.00% | ||||||||||||||||||||||||||||||||||||||||||
Debt instrument maturity period, description | Since this note was not repaid and is currently past due, interest is being accrued at a rate of 18% per annum. | The full $200,000 balance was due at maturity. | Due on September 15, 2020. Principal and interest payments of $1,872 are due quarterly. | |||||||||||||||||||||||||||||||||||||||||||||||
Maturity date | Sep. 1, 2019 | Jul. 9, 2019 | Nov. 26, 2021 | Oct. 17, 2017 | Sep. 15, 2020 | |||||||||||||||||||||||||||||||||||||||||||||
Accrued interest | $ 488,520 | $ 245,172 | ||||||||||||||||||||||||||||||||||||||||||||||||
Related parties agreed outstanding balance | $ 3,828 | |||||||||||||||||||||||||||||||||||||||||||||||||
Aggregate shares of common stock | 325,680 | |||||||||||||||||||||||||||||||||||||||||||||||||
Net proceeds received | $ 2,000,000 | |||||||||||||||||||||||||||||||||||||||||||||||||
Share price | $ 1.51 | |||||||||||||||||||||||||||||||||||||||||||||||||
Secured loan agreement, description | In connection with this loan, DragonWave incurred $20,000 of debt discounts and $4,700,000 of debt issuance costs. The debt issuance costs were the result of the issuance of 1,050,000 shares of common stock of the Company and a cash payment of $80,000. During fiscal 2019, $196,667 of these costs were amortized and recognized in interest expense in the Consolidated Statement of Operations. As of December 31, 2019, there were $19,167 of debt discounts and $4,504,167 of debt issuance costs remaining. | |||||||||||||||||||||||||||||||||||||||||||||||||
Original issue discount | $ 6,000 | $ 40,000 | ||||||||||||||||||||||||||||||||||||||||||||||||
Notes Payable [Member] | ||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Agreement (Textual) | ||||||||||||||||||||||||||||||||||||||||||||||||||
Aggregate principal amount outstanding | $ 2,007,971 | $ 2,007,971 | $ 2,007,971 | |||||||||||||||||||||||||||||||||||||||||||||||
Debt instrument interest rate | 5.00% | 18.00% | ||||||||||||||||||||||||||||||||||||||||||||||||
Maturity date | Aug. 31, 2020 | Oct. 15, 2020 | ||||||||||||||||||||||||||||||||||||||||||||||||
Accrued interest | $ 8,428 | |||||||||||||||||||||||||||||||||||||||||||||||||
Secured loan agreement, description | The promissory note was increased to $5,000,000 as all unpaid accrued interest was added to the principal balance. Additionally, the maturity date was extended to March 30, 2020 and the interest rate was changed to 10% per annum. Under this new amendment, interest payments are due and payable monthly. On April 21, 2020, the maturity date of this note was extended to August 31, 2020, the interest rate was increased to 12% per annum, and the Company provided to the lender 100,000 fully paid and non-assessable shares of its common stock that have been treated as debt issuance costs. | |||||||||||||||||||||||||||||||||||||||||||||||||
Notes Payable [Member] | Richard Berman [Member] | ||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Agreement (Textual) | ||||||||||||||||||||||||||||||||||||||||||||||||||
Principal amount | $ 86,866 | |||||||||||||||||||||||||||||||||||||||||||||||||
Debt instrument interest rate | 3.00% | |||||||||||||||||||||||||||||||||||||||||||||||||
Maturity date | Feb. 16, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||
Interest and principal payments, description | Monthly payments in the amount of $3,773 for principal and interest are due over the term. | |||||||||||||||||||||||||||||||||||||||||||||||||
Principal and interest payments | $ 3,773 | |||||||||||||||||||||||||||||||||||||||||||||||||
Promissory note [Member] | ||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Agreement (Textual) | ||||||||||||||||||||||||||||||||||||||||||||||||||
Principal amount | $ 500,000 | 409,586 | $ 550,000 | |||||||||||||||||||||||||||||||||||||||||||||||
Aggregate principal amount outstanding | $ 500,000 | $ 379,588 | $ 788,709 | $ 788,709 | 788,709 | |||||||||||||||||||||||||||||||||||||||||||||
Debt instrument interest rate | 8.50% | |||||||||||||||||||||||||||||||||||||||||||||||||
Debt instrument maturity period, description | This promissory note is secured by all assets, certain real estate and cash accounts of InduraPower, and is guaranteed by certain officers of InduraPower. This promissory note is subjected to clauses, whereby InduraPower is required to meet certain financial and non-financial terms. InduraPower did not fulfil the requirements to maintain a balance of at least $155,159 at J.P. Morgan while the promissory note is outstanding and maintain a debt service coverage ratio of at least 1.25. Due to this breach of clauses for those covenants, the promissory note holder is contractually entitled to request immediate repayment of the outstanding promissory note, and/or increase the interest rate up to an additional 18% per annum. The outstanding balance is presented as a current liability as of September 30, 2020. The promissory note holder had not requested early repayment of the loan as of the date when these financial statements were approved by the Board of Directors. | |||||||||||||||||||||||||||||||||||||||||||||||||
Maturity date | Nov. 30, 2020 | Aug. 31, 2018 | ||||||||||||||||||||||||||||||||||||||||||||||||
Related parties agreed outstanding balance | $ 813,709 | |||||||||||||||||||||||||||||||||||||||||||||||||
Aggregate shares of common stock | 50,000 | |||||||||||||||||||||||||||||||||||||||||||||||||
Senior convertible debentures interest percent | 12.50% | 12.50% | ||||||||||||||||||||||||||||||||||||||||||||||||
Purchase price of the share | $ 446,000 | |||||||||||||||||||||||||||||||||||||||||||||||||
Outstanding balance due date | Feb. 28, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||
Interest and principal payments, description | Beginning April 1, 2017, equal monthly payments of $1,011 for interest and principal are due on the note for 60 consecutive months. | |||||||||||||||||||||||||||||||||||||||||||||||||
Promissory note, description | InduraPower did not fulfil the requirements to maintain a balance of at least $155,159 at J.P. Morgan while the promissory note is outstanding and maintain a debt service coverage ratio of at least 1.25. Due to this breach of clauses, the promissory note holder is contractually entitled to request immediate repayment of the outstanding promissory note, and/or increase the interest rate up to an additional 18% per annum. | |||||||||||||||||||||||||||||||||||||||||||||||||
Promissory note [Member] | Warrant [Member] | ||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Agreement (Textual) | ||||||||||||||||||||||||||||||||||||||||||||||||||
Principal amount | $ 5,250,000 | $ 5,250,000 | ||||||||||||||||||||||||||||||||||||||||||||||||
Net proceeds received | $ 24,425 | |||||||||||||||||||||||||||||||||||||||||||||||||
Net proceed received from promissory note | $ 3,485,000 | |||||||||||||||||||||||||||||||||||||||||||||||||
Warrants to purchase an aggregate shares | 2,442,500 | 2,442,500 | ||||||||||||||||||||||||||||||||||||||||||||||||
Common stock at a price | $ 0.01 | $ 0.01 | $ 0.01 | |||||||||||||||||||||||||||||||||||||||||||||||
Warrants converted into shares | 2,442,500 | |||||||||||||||||||||||||||||||||||||||||||||||||
Common stock conversion price, description | As incentive to enter into the promissory note, the noteholder was issued 500,000 shares of ComSovereign's common stock for the total purchase price of $4.40 per share, or $2,200,000, of which only $5,000 was paid in cash. | |||||||||||||||||||||||||||||||||||||||||||||||||
Promissory Note Seven [Member] | ||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Agreement (Textual) | ||||||||||||||||||||||||||||||||||||||||||||||||||
Principal amount | $ 133,400 | $ 450,100 | $ 250,000 | $ 250,000 | ||||||||||||||||||||||||||||||||||||||||||||||
Extinguished in exchange | 123,278 | |||||||||||||||||||||||||||||||||||||||||||||||||
Fair value per share | $ 1.51 | |||||||||||||||||||||||||||||||||||||||||||||||||
Aggregate principal amount outstanding | $ 450,100 | $ 66,700 | $ 66,700 | $ 450,100 | ||||||||||||||||||||||||||||||||||||||||||||||
Debt instrument interest rate | 18.00% | |||||||||||||||||||||||||||||||||||||||||||||||||
Debt instrument maturity period, description | An aggregate principal amount of $200,100 was owed to three related parties out of the $450,100 promissory notes. | |||||||||||||||||||||||||||||||||||||||||||||||||
Maturity date | Dec. 6, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||
Accrued interest | $ 51,516 | |||||||||||||||||||||||||||||||||||||||||||||||||
Related parties agreed outstanding balance | $ 200,100 | |||||||||||||||||||||||||||||||||||||||||||||||||
Interest rate increased | 133.00% | |||||||||||||||||||||||||||||||||||||||||||||||||
October 2017 [Member] | ||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Agreement (Textual) | ||||||||||||||||||||||||||||||||||||||||||||||||||
Principal amount | $ 4,400,000 | |||||||||||||||||||||||||||||||||||||||||||||||||
Debt instrument interest rate | 8.00% | |||||||||||||||||||||||||||||||||||||||||||||||||
Debt instrument maturity period, description | The maturity date was extended to December 31, 2018 with new payment terms. In September 2018, the maturity date was extended to February 28, 2019 with new payment terms. | To extend the maturity date another 90 days. | ||||||||||||||||||||||||||||||||||||||||||||||||
Net proceeds received | $ 4,000,000 | |||||||||||||||||||||||||||||||||||||||||||||||||
18% Senior Convertible Debentures [Member] | ||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Agreement (Textual) | ||||||||||||||||||||||||||||||||||||||||||||||||||
Secured loan agreement, description | In connection with its acquisition of DragonWave and Lextrum in April 2019, ComSovereign assumed the obligations of the seller of $25,000 aggregate principal amount of 8% Senior Convertible Debentures of the seller that bore interest at the rate of 8% per annum and matured on December 31, 2019. Interest was payable semi-annually in cash or, at the seller's option, in shares of the seller's common stock at the conversion price that was equal to the lesser of (1) $8.00 or (2) 80% of the common stock price offered under the next equity offering. As of December 31, 2019, an aggregate principal amount of $25,000 was outstanding under these debentures. These debentures are past due and interest accrues at a rate of 15% per annum. | |||||||||||||||||||||||||||||||||||||||||||||||||
Promissory Note One [Member] | ||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Agreement (Textual) | ||||||||||||||||||||||||||||||||||||||||||||||||||
Principal amount | $ 50,000 | |||||||||||||||||||||||||||||||||||||||||||||||||
Aggregate principal amount outstanding | 21,571 | |||||||||||||||||||||||||||||||||||||||||||||||||
Debt instrument interest rate | 7.785% | |||||||||||||||||||||||||||||||||||||||||||||||||
Maturity date | Sep. 1, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||
Promissory note, description | InduraPower did not fulfil the requirements to maintain a balance of at least $155,159 at J.P. Morgan while the promissory note is outstanding and maintain a debt service coverage ratio of at least 1.25. Due to this breach of clauses, the promissory note holder is contractually entitled to request immediate repayment of the outstanding promissory note, and/or increase the interest rate up to an additional 18% per annum. | |||||||||||||||||||||||||||||||||||||||||||||||||
Promissory Note Two [Member] | ||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Agreement (Textual) | ||||||||||||||||||||||||||||||||||||||||||||||||||
Principal amount | $ 450,000 | |||||||||||||||||||||||||||||||||||||||||||||||||
Aggregate principal amount outstanding | $ 186,709 | 224,288 | ||||||||||||||||||||||||||||||||||||||||||||||||
Debt instrument interest rate | 9.00% | |||||||||||||||||||||||||||||||||||||||||||||||||
Debt instrument maturity period, description | The maturity date was extended until September 30, 2020 and the interest rate was reduced to 10% per annum. All unpaid accrued interest from October 2017 through September 30, 2019 was converted into 150,000 shares of common stock of ComSovereign. Accrued interest and the full principal balance are due at maturity. As of December 31, 2019, an aggregate principal amount of $500,000 was outstanding under this note. On April 30, 2020, the Company also issued 14,496 shares of common stock in lieu of an aggregate cash interest payment payable by ComSovereign through December 31, 2019 on this outstanding note payable. | |||||||||||||||||||||||||||||||||||||||||||||||||
Maturity date | Mar. 1, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||
Interest and principal payments, description | Accrued interest only payments were due monthly beginning October 1, 2016 through March 1, 2017. Monthly payments of $9,341 for interest and principal are due on this note for the following 60 consecutive months. | |||||||||||||||||||||||||||||||||||||||||||||||||
Promissory Note Three [Member] | ||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Agreement (Textual) | ||||||||||||||||||||||||||||||||||||||||||||||||||
Principal amount | $ 500,000 | $ 500,000 | ||||||||||||||||||||||||||||||||||||||||||||||||
Aggregate principal amount outstanding | 500,000 | |||||||||||||||||||||||||||||||||||||||||||||||||
Debt instrument interest rate | 12.00% | 12.00% | ||||||||||||||||||||||||||||||||||||||||||||||||
Debt instrument maturity period, description | On October 1, 2019, the maturity date was extended until September 30, 2020 and the interest rate was reduced to 10% per annum. All unpaid accrued interest from October 2017 through September 30, 2019 was converted into 150,000 shares of common stock of ComSovereign. Accrued interest and the full principal balance are due at maturity. As of December 31, 2019, an aggregate principal amount of $500,000 was outstanding under this note. On April 30, 2020, the Company also issued 14,496 shares of common stock in lieu of an aggregate cash interest payment payable by ComSovereign through December 31, 2019 on this outstanding note payable. | |||||||||||||||||||||||||||||||||||||||||||||||||
Maturity date | Oct. 17, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||
Aggregate shares of common stock | 150,000 | |||||||||||||||||||||||||||||||||||||||||||||||||
Promissory Note Eight [Member] | ||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Agreement (Textual) | ||||||||||||||||||||||||||||||||||||||||||||||||||
Principal amount | $ 175,000 | $ 175,000 | ||||||||||||||||||||||||||||||||||||||||||||||||
Aggregate principal amount outstanding | 175,000 | |||||||||||||||||||||||||||||||||||||||||||||||||
Debt instrument interest rate | 15.00% | 15.00% | ||||||||||||||||||||||||||||||||||||||||||||||||
Debt instrument maturity period, description | ComSovereign assumed the obligations of the seller of a promissory note in the principal amount of $175,000 that bore interest at the rate of 15% per annum and was due on November 30, 2017. The interest rate increased to 18% per annum when the note became past due. On October 1, 2019, ComSovereign amended the promissory note to extend the maturity date to September 30, 2020 and to change the interest rate to 10% per annum. Both parties to the note also agreed to convert all unpaid accrued interest into 10,000 shares of common stock of ComSovereign, valued at $44,000. Accrued interest and principal are due and payable at maturity. Upon maturity, the interest rate shall increase to 15% per annum for any balance overdue by more than 5 days. This note is currently past due. As of September 30, 2020, the aggregate principal amount of $175,000 was outstanding under this note. | ComSovereign amended the promissory note to extend the maturity date to September 30, 2020 and to change the interest rate to 10% per annum. Both parties to the note also agreed to convert all unpaid accrued interest into 10,000 shares of common stock of ComSovereign, valued at $44,000. Accrued interest and principal are due and payable at maturity. | ||||||||||||||||||||||||||||||||||||||||||||||||
Maturity date | Nov. 30, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||
Aggregate shares of common stock | 10,000 | |||||||||||||||||||||||||||||||||||||||||||||||||
Interest rate increased | 18.00% | |||||||||||||||||||||||||||||||||||||||||||||||||
Promissory Note Four [Member] | ||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Agreement (Textual) | ||||||||||||||||||||||||||||||||||||||||||||||||||
Principal amount | 200,000 | |||||||||||||||||||||||||||||||||||||||||||||||||
Aggregate principal amount outstanding | 200,000 | |||||||||||||||||||||||||||||||||||||||||||||||||
New Promissory Note [Member] | ||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Agreement (Textual) | ||||||||||||||||||||||||||||||||||||||||||||||||||
Principal amount | $ 200,000 | |||||||||||||||||||||||||||||||||||||||||||||||||
Debt instrument interest rate | 18.00% | |||||||||||||||||||||||||||||||||||||||||||||||||
Debt instrument maturity period, description | The full $200,000 balance was due at maturity. | |||||||||||||||||||||||||||||||||||||||||||||||||
Maturity date | Jul. 9, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||
Original issue discount | $ 6,000 | |||||||||||||||||||||||||||||||||||||||||||||||||
Promissory Note Five [Member] | ||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Agreement (Textual) | ||||||||||||||||||||||||||||||||||||||||||||||||||
Aggregate principal amount outstanding | 175,000 | |||||||||||||||||||||||||||||||||||||||||||||||||
Promissory Note Six [Member] | ||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Agreement (Textual) | ||||||||||||||||||||||||||||||||||||||||||||||||||
Aggregate principal amount outstanding | 5,000,000 | |||||||||||||||||||||||||||||||||||||||||||||||||
8% Senior Convertible Debentures [Member] | ||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Agreement (Textual) | ||||||||||||||||||||||||||||||||||||||||||||||||||
Aggregate principal amount outstanding | $ 25,000 | |||||||||||||||||||||||||||||||||||||||||||||||||
Debt instrument interest rate | 15.00% | |||||||||||||||||||||||||||||||||||||||||||||||||
[1] | Note is in default. Refer to further discussion below. |
Related Party Transactions (Det
Related Party Transactions (Details) - USD ($) | Jul. 02, 2020 | Mar. 05, 2020 | Aug. 05, 2019 | Dec. 02, 2019 | Nov. 19, 2019 | Oct. 31, 2019 | Mar. 21, 2019 | Jan. 31, 2019 | Jan. 22, 2019 | Sep. 26, 2018 | Oct. 31, 2017 | Aug. 31, 2016 | Sep. 30, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2020 | Aug. 05, 2020 | Nov. 07, 2019 | Sep. 30, 2019 |
Related Party Transactions (Textual) | |||||||||||||||||||
Accrued liabilities - related party | $ 366,601 | $ 461,254 | |||||||||||||||||
Share-based compensation expense | $ 4,566 | 54,667 | |||||||||||||||||
Professional services | $ 23,036 | ||||||||||||||||||
Related Party Transactions, description | Sergei Begliarov paid $71,199 and $9,401, respectively, of expenses on behalf of InduraPower. Daniel L. Hodges, Chairman and Chief Executive Officer of ComSovereign at the time, paid $6,588 of rent and on behalf of InduraPower during 2019 and an additional $6,065 of expense during the nine months ended September 30, 2020. Additionally, during 2019, TM Technologies, Inc. (“TM”), described below, paid $29,300 of expense on behalf of InduraPower and an additional $9,150 of expense for InduraPower and ComSovereign. These amounts were recorded in accrued liabilities — related party and had balances outstanding aggregating to $130,554 and $107,087 as of September 30, 2020 and December 31, 2019, respectively. | ||||||||||||||||||
Interest rate | 7.90% | 5.00% | 133.00% | ||||||||||||||||
Grant of RSAs, description | The Company's Board of Directors granted an aggregate of 1,900,000 RSAs to eight officers and directors at a grant date fair value of $0.82 per share of common stock for a total value of $1,558,000. The vesting period for these RSAs is as follows: 850,000 vest on the one-year anniversary of the grant date; 850,000 vest on the two-year anniversary of the original grant date; and 200,000 vest on the three-year anniversary of the original grant date. | ComSovereign's Board of Directors granted an aggregate of 24,000 restricted stock awards ("RSAs") to three executives of DragonWave and Silver Bullet at a grant date fair value of $4.40 per share of common stock for a total value of $105,600. | |||||||||||||||||
Grant of common stock, description | Daniel L. Hodges, Chairman and Chief Executive Officer of ComSovereign at such time, and John E. Howell, President of ComSovereign at such time, each acquired 12,000,000 shares of common stock of ComSovereign at a value of $0.0001 per share of common stock with no cash paid to ComSovereign and no services required. | Three members of the Board of Directors of ComSovereign and an executive officer of ComSovereign acquired an aggregate of 2,150,000 shares of common stock of ComSovereign at a value of $0.0001 per share of common stock with no cash paid to ComSovereign and no services required. Additionally, four executive officers of InduraPower, Lextrum and VEO acquired an aggregate of 500,000 shares of common stock of ComSovereign at a value of $0.0001 per share of common stock with no cash paid to ComSovereign and no services required. | |||||||||||||||||
Description of issue an option to purchase | The Company also agreed to issue an option to purchase 100,000 shares of the Company’s common stock at a strike price of $1.00, or $100,000. This option immediately vested and terminates on September 26, 2022. Pursuant to the GSIS Agreement, GSIS is paid a fee of $10,000 per month. In addition, GSIS is paid for the expenses incurred in connection with the performance of its duties under the GSIS Agreement. Either party may terminate or renew the GSIS Agreement at any time, for any reason or no reason, upon at least 30 days’ notice to the other party. GSIS was owed $23,036 and this amount was outstanding in accrued liabilities — related party as of December 31, 2019. | ||||||||||||||||||
Chief Executive Officer [Member] | |||||||||||||||||||
Related Party Transactions (Textual) | |||||||||||||||||||
Accrued liabilities - related party | $ 153,761 | $ 153,761 | |||||||||||||||||
Related Party Transactions, description | Sergei Begliarov paid $71,199 worth of expense of behalf of InduraPower, and Daniel L. Hodges, Chairman and Chief Executive Officer of ComSovereign at the time, paid $6,588 of rent on behalf of InduraPower. Additionally, during 2019, TM Technologies, Inc. ("TM"), described below, paid $29,300 worth of expense of behalf of InduraPower. These amounts were recorded in accrued liabilities – related party as of December 31, 2019. | ||||||||||||||||||
Daniel Hodges [Member] | |||||||||||||||||||
Related Party Transactions (Textual) | |||||||||||||||||||
Accrued liabilities - related party | $ 2,100 | ||||||||||||||||||
Rent paid | $ 29,120 | $ 29,120 | |||||||||||||||||
Promissory note [Member] | |||||||||||||||||||
Related Party Transactions (Textual) | |||||||||||||||||||
Expiration date | Nov. 30, 2020 | Aug. 31, 2018 | |||||||||||||||||
Interest rate | 8.50% | ||||||||||||||||||
Promissory note, description | InduraPower did not fulfil the requirements to maintain a balance of at least $155,159 at J.P. Morgan while the promissory note is outstanding and maintain a debt service coverage ratio of at least 1.25. Due to this breach of clauses, the promissory note holder is contractually entitled to request immediate repayment of the outstanding promissory note, and/or increase the interest rate up to an additional 18% per annum. | ||||||||||||||||||
Cognitive Carbon Corporation [Member] | |||||||||||||||||||
Related Party Transactions (Textual) | |||||||||||||||||||
Accrued liabilities - related party | $ 46,500 | $ 148,250 | |||||||||||||||||
Outsourced development | $ 19,750 | ||||||||||||||||||
Outsourced development term | 1 year | ||||||||||||||||||
Outsourced software and platform development | $ 120,000 | ||||||||||||||||||
TM [Member] | |||||||||||||||||||
Related Party Transactions (Textual) | |||||||||||||||||||
Accrued liabilities - related party | 67,348 | ||||||||||||||||||
Outstanding amount | $ 1,292,953 | $ 250,000 | 1,292,953 | 1,292,953 | |||||||||||||||
Related Party Transactions, description | This loan was increased to $1,292,953 at an interest rate of 5% per annum with a maturity date of August 31, 2020. | This loan was increased to $1,292,953 at an interest rate of 5% per annum with a maturity date of August 31, 2020. | |||||||||||||||||
Interest payment | $ 54,000 | ||||||||||||||||||
Mr. Hodges and his wife [Member] | |||||||||||||||||||
Related Party Transactions (Textual) | |||||||||||||||||||
Expiration date | Dec. 31, 2019 | ||||||||||||||||||
Aggregate principal amount | $ 200,000 | ||||||||||||||||||
Outstanding amount | 200,000 | $ 200,000 | |||||||||||||||||
Interest rate | 5.00% | ||||||||||||||||||
Indura Power [Member] | Promissory note [Member] | |||||||||||||||||||
Related Party Transactions (Textual) | |||||||||||||||||||
Accrued liabilities - related party | $ 153,761 | ||||||||||||||||||
Promissory note, description | InduraPower entered into a promissory note in the principal amount of $50,000 that bears interest at 7.785% per annum and matures on September 1, 2021. At the same time, InduraPower also entered into a promissory note in the principal amount of $450,000 with the same lender that bears interest at 9.0% per annum and matures on March 1, 2022. A requirement of the promissory notes is to maintain a balance of at least $155,159 at J.P. Morgan while the promissory notes are outstanding. Sergei Begliarov, Chief Executive Officer of InduraPower, provided cash of $153,761 to comply with the requirements of the promissory notes. | ||||||||||||||||||
Notes Payable - Related Party [Member] | |||||||||||||||||||
Related Party Transactions (Textual) | |||||||||||||||||||
Related Party Transactions, description | On July 1, 2020, Mr. Brent Davies, who is on the Company’s Board of Directors and Audit Committee, loaned the Company $50,000 at an interest rate of 4.80% per annum with an original maturity date of August 31, 2020. This note was amended to extend the maturity date to November 30, 2020. Interest and the full principal balance are due at maturity. As of September 30, 2020, $50,000 plus accrued interest was outstanding under the loan. | On July 2, 2020, the Company sold $1,900,000 aggregate principal amount of 9% Convertible Debentures to Mr. Dustin McIntire, the Company’s Chief Technology Officer, that bore interest at a rate of 9% per annum and matured on September 30, 2020. Mr. McIntire was also granted warrants to purchase an aggregate of 190,000 shares of the Company’s common stock at a price of $1.00 per share. The Company recorded the warrants as a discount to the debt in the amount of $59,806. The Company also recorded $249,806 for the BCF associated with the debentures. On August 19, 2020, Mr. McIntire converted the full principal amount of such debentures and accrued interest into 1,921,082 shares of the Company’s common stock. | |||||||||||||||||
Global Security Innovative Strategies [Member] | |||||||||||||||||||
Related Party Transactions (Textual) | |||||||||||||||||||
Options to purchase of stock | 100,000 | ||||||||||||||||||
Option price | $ 1 | ||||||||||||||||||
Expiration date | Sep. 26, 2022 | ||||||||||||||||||
Payment for management fee | $ 10,000 | ||||||||||||||||||
Kevin Hess [Member] | |||||||||||||||||||
Related Party Transactions (Textual) | |||||||||||||||||||
Professional services | $ 148,250 |
Shareholders' Equity (Details)
Shareholders' Equity (Details) - USD ($) | Jun. 12, 2020 | May 15, 2020 | Sep. 04, 2019 | Aug. 26, 2020 | Jan. 31, 2020 | Aug. 08, 2002 | Dec. 31, 2019 | Sep. 30, 2020 | Sep. 28, 2020 | Sep. 30, 2019 | Jan. 29, 2019 | Jan. 22, 2019 | Jan. 20, 2019 | Jan. 12, 2019 |
Shareholders' Equity (Textual) | ||||||||||||||
Common stock, shares authorized | 300,000,000 | 300,000,000 | 300,000,000 | |||||||||||
Common stock, shares issued | 128,326,243 | 143,817,614 | ||||||||||||
Common stock, shares outstanding | 128,326,243 | 143,817,614 | 41,207,149 | |||||||||||
Preferred shares, authorised | 100,000,000 | 100,000,000 | ||||||||||||
Preferred shares, issued | ||||||||||||||
Preferred shares, outstanding | ||||||||||||||
Shares of common stock redeemed | 100,000 | |||||||||||||
Value of common stock redeemed | $ 50,000 | |||||||||||||
Price per share | $ 0.50 | $ 0.0001 | $ 0.0001 | $ 0.0001 | $ 0.0001 | |||||||||
Description of warrants | The Company had outstanding warrants to purchase an aggregate of 503,523 shares of common stock. Of those 503,523 warrants, 283,523 had an exercise price of $0.01 per share; 70,000 had an exercise price of $5.00 per share; 100,000 had an exercise price of $1.00 per share; and the remaining 50,000 had an exercise price of $0.50 per share. | |||||||||||||
Description of consulting agreement | The Company entered into an agreement with a consultant to amend an existing consulting agreement between the consultant and the Company to allow the consultant to elect to take from 50% to 100% of its compensation in the form of common stock of the Company. Common stock to be issued to the consultant will be paid on a quarterly basis. On March 12, 2020, the Company issued 165,095 shares of its common stock in satisfaction of $106,238 that was owed by Lextrum to the consultant for services previously rendered. The fair value on the issue date of the 165,095 shares was $193,160. The Company booked the difference between the fair value of the shares issued and the amount owed by Lextrum to the consultant as general and administrative expense in the Company's Condensed Consolidated Financial Statements. On August 8, 2020, 35,536 shares with a fair value of $81,935 were issued in conjunction with services performed in the first and second quarters of 2020. An additional 5,908 shares with a fair value of $15,222 are recorded at September 30, 2020 as unissued shares, as discussed below, for services rendered for the third quarter of 2020. | |||||||||||||
Consultant payment of common stock | 5,000 | 55,000 | ||||||||||||
Warrants to purchase an aggregate | 4,000 | 15,765 | ||||||||||||
Fair value of amount | $ 49,500 | $ 102,424 | ||||||||||||
Outstanding accounts payable issuing shares | 81,839 | |||||||||||||
Subscription agreement amount | $ 240,000 | |||||||||||||
Common stock subscription agreement | 100,000 | |||||||||||||
Unissued shares | 1,665,000 | |||||||||||||
Preferred Series A [Member] | ||||||||||||||
Shareholders' Equity (Textual) | ||||||||||||||
Preferred shares, authorised | 5,000,000 | 5,000,000 | ||||||||||||
Preferred shares, issued | 2,600,000 | 2,600,000 | ||||||||||||
Preferred shares, outstanding | 2,600,000 | 2,600,000 |
Share-Based Compensation (Detai
Share-Based Compensation (Details) | 12 Months Ended |
Dec. 31, 2017$ / sharesshares | |
January 9, 2017 [Member] | |
Deferred Compensation Arrangement with Individual, Share-based Payments [Line Items] | |
Underlying Shares | shares | 100,000 |
Option Price | $ / shares | $ 2.90 |
Full Vesting Date | Jan. 9, 2019 |
Expiration Date | Jan. 7, 2021 |
August 3, 2017 [Member] | |
Deferred Compensation Arrangement with Individual, Share-based Payments [Line Items] | |
Underlying Shares | shares | 5,130,000 |
Option Price | $ / shares | $ 0.50 |
Full Vesting Date | Aug. 3, 2017 |
Expiration Date | Aug. 3, 2021 |
November 9, 2017 [Member] | |
Deferred Compensation Arrangement with Individual, Share-based Payments [Line Items] | |
Underlying Shares | shares | 2,000,000 |
Option Price | $ / shares | $ 0.50 |
Full Vesting Date | Nov. 9, 2017 |
Expiration Date | Nov. 9, 2021 |
December 13, 2017 [Member] | |
Deferred Compensation Arrangement with Individual, Share-based Payments [Line Items] | |
Underlying Shares | shares | 200,000 |
Option Price | $ / shares | $ 1 |
Full Vesting Date | Nov. 13, 2019 |
Expiration Date | Dec. 13, 2021 |
Share-Based Compensation (Det_2
Share-Based Compensation (Details 1) | 12 Months Ended |
Dec. 31, 2018$ / sharesshares | |
March 28, 2018 [Member] | |
Deferred Compensation Arrangement with Individual, Share-based Payments [Line Items] | |
Underlying Shares | shares | 100,000 |
Vesting | 50% in one year; 50% in two years from grant date |
Option Price | $ / shares | $ 1 |
Full Vesting Date | Mar. 28, 2020 |
Expiration Date | Mar. 28, 2022 |
May 16, 2018 [Member] | |
Deferred Compensation Arrangement with Individual, Share-based Payments [Line Items] | |
Underlying Shares | shares | 330,000 |
Vesting | Immediate vesting |
Option Price | $ / shares | $ 1 |
Full Vesting Date | May 16, 2018 |
Expiration Date | May 16, 2022 |
May 16, 2018 [Member] | |
Deferred Compensation Arrangement with Individual, Share-based Payments [Line Items] | |
Underlying Shares | shares | 130,000 |
Vesting | 50% in one year; 50% in two years from grant date |
Option Price | $ / shares | $ 1 |
Full Vesting Date | May 16, 2020 |
Expiration Date | May 16, 2022 |
September 26, 2018 [Member] | |
Deferred Compensation Arrangement with Individual, Share-based Payments [Line Items] | |
Underlying Shares | shares | 6,000,000 |
Vesting | $4,000,000 new government orders |
Option Price | $ / shares | $ 0.65 |
Full Vesting Date | Dec. 21, 2018 |
Expiration Date | Sep. 26, 2022 |
Share-Based Compensation (Det_3
Share-Based Compensation (Details 2) - Employee Stock Option [Member] | 9 Months Ended | 12 Months Ended |
Sep. 30, 2020 | Dec. 31, 2019 | |
Summary of assumptions used to estimate fair value of stock options granted | ||
Expected dividend yield | 0.00% | 0.00% |
Expected volatility | 38.17% | 90.00% |
Expected life of options | 4 years | |
Minimum [Member] | ||
Summary of assumptions used to estimate fair value of stock options granted | ||
Risk-free interest rate | 0.205% | 2.40% |
Expected life of options | 3 years 2 months 30 days | |
Maximum [Member] | ||
Summary of assumptions used to estimate fair value of stock options granted | ||
Risk-free interest rate | 0.31% | 2.47% |
Expected life of options | 5 years |
Share-Based Compensation (Det_4
Share-Based Compensation (Details 3) - USD ($) | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2019 | Dec. 31, 2019 | |
Weighted Average Exercise Price per Share | ||||
Granted | $ 0.85 | $ 0.68 | ||
Employee Stock Option [Member] | ||||
Number of Options | ||||
Outstanding - Beginning Balance | 8,695,000 | 14,120,000 | 13,990,000 | 13,990,000 |
Exercisable - Beginning Balance | 8,695,000 | 13,610,000 | 13,610,000 | |
Granted | 2,725,506 | 180,000 | 180,000 | |
Exercised | (5,250,000) | |||
Cancelled or Expired | (1,100,000) | (50,000) | (225,000) | |
Outstanding - Ending Balance | 10,320,506 | 14,120,000 | 14,120,000 | 8,695,000 |
Exercisable - Ending Balance | 10,220,506 | 13,745,000 | 13,745,000 | 8,695,000 |
Weighted Average Exercise Price per Share | ||||
Outstanding - Beginning Balance | $ 0.63 | $ 0.61 | $ 0.61 | |
Exercisable - Beginning Balance | 0.63 | $ 0.59 | 0.59 | |
Granted | 0.26 | 1.06 | 1.06 | |
Exerccised | 0.57 | |||
Cancelled or Expired | 0.67 | 0.90 | 0.72 | |
Outstanding - Ending Balance | 0.53 | 0.61 | 0.61 | 0.63 |
Exercisable - Ending Balance | $ 0.53 | $ 0.60 | $ 0.60 | $ 0.63 |
Weighted Average Contractual Life in Years | ||||
Outstanding - Beginning Balance | 1 year 4 months 2 days | 3 years 1 month 24 days | 3 years 1 month 24 days | |
Exercisable - Beginning Balance | 1 year 4 months 2 days | 2 years 5 months 1 day | ||
Outstanding - Ending Balance | 2 years 3 months 4 days | 1 year 8 months 5 days | 1 year 4 months 2 days | |
Exercisable - Ending Balance | 2 years 2 months 27 days | 1 year 8 months 2 days | 1 year 4 months 2 days | |
Aggregate Intrinsic Value | ||||
Outstanding - Beginning Balance | $ 2,264,760 | |||
Exercisable - Beginning Balance | 2,264,760 | $ 2,264,760 | ||
Outstanding - Ending Balance | 19,338,950 | 3,796,960 | 3,796,960 | $ 2,264,760 |
Exercisable - Ending Balance | $ 19,206,950 | $ 3,796,960 | $ 3,796,960 |
Share-Based Compensation (Det_5
Share-Based Compensation (Details Textual) - USD ($) | Dec. 02, 2019 | Dec. 02, 2019 | Dec. 02, 2019 | Nov. 27, 2019 | Nov. 19, 2019 | Nov. 14, 2019 | Nov. 12, 2019 | Mar. 25, 2019 | Jul. 06, 2020 | Apr. 22, 2020 | Mar. 20, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | Mar. 31, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2019 | Dec. 31, 2019 | |
Share-Based Compensation (Textual) | |||||||||||||||||||
Restricted stock vested | 270,800 | 80,000 | |||||||||||||||||
Exercise price | $ 0.85 | $ 0.68 | |||||||||||||||||
Grant date fair value | $ 1,191,520 | ||||||||||||||||||
General and administrative | [1] | $ 4,471,121 | $ 4,634,711 | $ 13,151,442 | $ 9,027,646 | $ 14,325,078 | |||||||||||||
Consulting services | 352,000 | ||||||||||||||||||
Grant date fair value per share | $ 4.40 | ||||||||||||||||||
Description of commonstock authorized | The Company issued immediately vested options to non-employees outside of any equity plan to four individuals for the purchase of an aggregate 2,525,506 shares of the Company’s common stock. These options have an exercise price ranging from $0.499 — $0.2882 per share and expire July 6, 2025. The fair value of these options on the grant date was estimated to be $2,261,275. | ||||||||||||||||||
Share-based compensation expense | $ 4,916 | ||||||||||||||||||
Restricted stock vested, value | 352,000 | ||||||||||||||||||
Unrecognized compensation expense | 24,584 | ||||||||||||||||||
Non-Qual 2020 [Member] | |||||||||||||||||||
Share-Based Compensation (Textual) | |||||||||||||||||||
Description of commonstock authorized | The Company issued replacement options for outstanding VNC options in conjunction with the acquisition of VNC and separately to two employees as stock-based compensation under the Company's Non-Qual 2020 Long-Term Incentive Plan for the purchase of an aggregate of 2,725,506 shares of the common stock, 100,000 of which were forfeited. These options expire on July 6, 2025 and have an exercise price of $1.08 per share and the requisite service period of half of these options is six months, with the remainder at 12 months from the date of issuance. The fair value of these options on the grant date was estimated to be $59,000. Of the employee options, 100,000 options with a weighted average grant date fair value of $0.295 were forfeited during the three and nine months ended September 30, 2019 and 100,000 remained outstanding as of September 30, 2020. | ||||||||||||||||||
2020 Long-Term Incentive Plan [Member] | |||||||||||||||||||
Share-Based Compensation (Textual) | |||||||||||||||||||
Description of commonstock authorized | A total of 10,000,000 shares of the Company's common stock are authorized for issuance with respect to awards granted under the 2020 Plan. Any shares subject to awards that are not paid, delivered or exercised before they expire or are cancelled or terminated, or fail to vest, as well as shares used to pay the purchase or exercise price of awards or related tax withholding obligations, will become available for other award grants under the 2020 Plan. As of September 30, 2020, 2,725,506 options have been issued under the 2020 Plan, of which 100,000 were forfeited, and 7,274,494 shares authorized under the 2020 Plan remained available for award purposes. | ||||||||||||||||||
Non-employee [Member] | |||||||||||||||||||
Share-Based Compensation (Textual) | |||||||||||||||||||
Restricted stock vested | 50,000 | 40,000 | 20,000 | ||||||||||||||||
Grant date fair value | $ 220,000 | $ 176,000 | $ 352,000 | ||||||||||||||||
Consulting services | 60,000 | ||||||||||||||||||
Grant date fair value per share | $ 4.40 | $ 4.40 | $ 4.40 | ||||||||||||||||
Restricted Stock Awards [Member] | |||||||||||||||||||
Share-Based Compensation (Textual) | |||||||||||||||||||
Restricted stock vested | 1,900,000 | ||||||||||||||||||
Compensation expense | $ 526,241 | $ 62,500 | |||||||||||||||||
Description of commonstock authorized | The Company issued 1,900,000 RSAs to employees and those classified as employees for share-based award purposes. These shares were not administratively issued as of September 30, 2020 and were not included in any dilutive calculation. These awards have requisite service periods ranging from 2 — 3 years and had an award date fair value of $1,558,000. These RSAs were administratively issued in October 2020. | ||||||||||||||||||
Unrecognized compensation expense | $ 977,190 | ||||||||||||||||||
Vesting One [Member] | |||||||||||||||||||
Share-Based Compensation (Textual) | |||||||||||||||||||
Restricted stock vested | 850,000 | ||||||||||||||||||
Vesting Two [Member] | |||||||||||||||||||
Share-Based Compensation (Textual) | |||||||||||||||||||
Restricted stock vested | 850,000 | ||||||||||||||||||
Vesting Three [Member] | |||||||||||||||||||
Share-Based Compensation (Textual) | |||||||||||||||||||
Restricted stock vested | 200,000 | ||||||||||||||||||
Officers and Directors [Member] | |||||||||||||||||||
Share-Based Compensation (Textual) | |||||||||||||||||||
Restricted stock award | 1,900,000 | ||||||||||||||||||
Employee Stock Option [Member] | |||||||||||||||||||
Share-Based Compensation (Textual) | |||||||||||||||||||
Purchase of common stock | 180,000 | ||||||||||||||||||
Exercise price | $ 1.06 | ||||||||||||||||||
Expiration date | Mar. 20, 2023 | ||||||||||||||||||
Compensation expense | $ 1,495,000 | ||||||||||||||||||
Restricted stock award | 2,300,000 | ||||||||||||||||||
General and administrative | 258,256 | ||||||||||||||||||
Black Scholes Option [Member] | |||||||||||||||||||
Share-Based Compensation (Textual) | |||||||||||||||||||
Grant date fair value | $ 123,130 | ||||||||||||||||||
Restricted stock award | 180,000 | ||||||||||||||||||
Employee Stock Option One [Member] | |||||||||||||||||||
Share-Based Compensation (Textual) | |||||||||||||||||||
Compensation expense | 157,441 | ||||||||||||||||||
Restricted Stock Awards [Member] | |||||||||||||||||||
Share-Based Compensation (Textual) | |||||||||||||||||||
Compensation expense | $ 54,667 | ||||||||||||||||||
[1] | These are exclusive of depreciation and amortization |
Warrants (Details)
Warrants (Details) - $ / shares | 9 Months Ended | 12 Months Ended |
Sep. 30, 2020 | Dec. 31, 2019 | |
November 20, 2015 [Memeber] | ||
Class of Warrant or Right [Line Items] | ||
Issuance Date | Nov. 20, 2015 | Nov. 20, 2015 |
Warrants Issued | 70,000 | 70,000 |
Exercise Price | $ 5 | $ 5 |
Full Vesting Date | Nov. 20, 2015 | Nov. 20, 2015 |
Expiration Date | Nov. 20, 2020 | Nov. 20, 2020 |
April 27, 2016 [Member] | ||
Class of Warrant or Right [Line Items] | ||
Issuance Date | Apr. 27, 2016 | Apr. 27, 2016 |
Warrants Issued | 60,000 | 60,000 |
Exercise Price | $ 2.91 | $ 2.91 |
Full Vesting Date | Apr. 27, 2016 | Apr. 27, 2016 |
Expiration Date | Apr. 27, 2019 | Apr. 27, 2019 |
August 3, 2017 [Member] | ||
Class of Warrant or Right [Line Items] | ||
Issuance Date | Aug. 3, 2017 | |
Warrants Issued | 30,000 | |
Exercise Price | $ 0.50 | |
Full Vesting Date | Aug. 3, 2017 | |
Expiration Date | Aug. 3, 2021 | |
August 3, 2017 [Member] | ||
Class of Warrant or Right [Line Items] | ||
Issuance Date | Aug. 3, 2017 | |
Warrants Issued | 2,000,000 | |
Exercise Price | $ 0.50 | |
Full Vesting Date | Aug. 3, 2017 | |
Expiration Date | Aug. 3, 2022 | |
November 9, 2017 [Member] | ||
Class of Warrant or Right [Line Items] | ||
Issuance Date | Nov. 9, 2017 | |
Warrants Issued | 20,000 | |
Exercise Price | $ 0.50 | |
Full Vesting Date | Nov. 9, 2017 | |
Expiration Date | Nov. 9, 2021 | |
September 26, 2018 [Member] | ||
Class of Warrant or Right [Line Items] | ||
Issuance Date | Sep. 26, 2018 | |
Warrants Issued | 100,000 | |
Exercise Price | $ 1 | |
Full Vesting Date | Sep. 26, 2018 | |
Expiration Date | Sep. 26, 2022 |
Warrants (Details 1)
Warrants (Details 1) - Warrant [Member] | 9 Months Ended | 12 Months Ended |
Sep. 30, 2020 | Dec. 31, 2019 | |
Summary of assumptions used to estimate fair value of stock warrants granted | ||
Expected dividend yield | 0.00% | 0.00% |
Minimum [Member] | ||
Summary of assumptions used to estimate fair value of stock warrants granted | ||
Expected volatility | 36.96% | 32.00% |
Risk-free interest rate | 19.00% | 1.38% |
Expected life of warrants | 2 years 6 months | 2 years 3 months 8 days |
Maximum [Member] | ||
Summary of assumptions used to estimate fair value of stock warrants granted | ||
Expected volatility | 41.55% | 33.00% |
Risk-free interest rate | 44.00% | 1.82% |
Expected life of warrants | 5 years | 3 years |
Warrants (Details 2)
Warrants (Details 2) - USD ($) | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2019 | Dec. 31, 2019 | |
Weighted Average Exercise Price per Share | ||||
Granted | $ 0.85 | $ 0.68 | ||
Warrant [Member] | ||||
Number of Warrants | ||||
Outstanding - Beginning Balance | 503,523 | 2,280,000 | 2,280,000 | |
Exercisable - Beginning Balance | 503,523 | 2,280,000 | 2,280,000 | |
Granted | 2,576,878 | 2,250,000 | 3,868,523 | |
Exercised | (283,530) | (5,472,500) | ||
Forfeited or Expired | (60,000) | (172,500) | ||
Outstanding - Ending Balance | 2,796,871 | 4,470,000 | 4,470,000 | 503,523 |
Exercisable - Ending Balance | 2,796,871 | 4,470,000 | 4,470,000 | 503,523 |
Weighted Average Exercise Price per Share | ||||
Outstanding - Beginning Balance | $ 0.95 | $ 0.72 | $ 0.72 | |
Exercisable - Beginning Balance | 0.95 | 0.72 | 0.72 | |
Granted | 0.46 | 0.23 | 0.18 | |
Exercised | 0.01 | 0.23 | ||
Forfeited or Expired | 2.91 | 3.61 | ||
Outstanding - Ending Balance | 0.60 | $ 0.45 | 0.45 | 0.95 |
Exercisable - Ending Balance | $ 0.60 | $ 0.45 | $ 0.45 | $ 0.95 |
Weighted Average Contractual Life in Years | ||||
Outstanding, Beginning Balance | 1 year 11 months 15 days | 3 years 5 months 9 days | 3 years 5 months 9 days | |
Exercisable, Beginning Balance | 1 year 11 months 15 days | 3 years 5 months 9 days | 3 years 5 months 9 days | |
Outstanding, Ending Balance | 4 years 2 months 1 day | 2 years 6 months 3 days | 1 year 11 months 12 days | |
Exercisable, Ending Balance | 4 years 2 months 1 day | 2 years 6 months 3 days | 1 year 11 months 12 days | |
Aggregate Intrinsic Value | ||||
Outstanding | $ 5,250,630 | $ 2,557,100 | $ 2,557,100 | $ 258,328 |
Exercisable | $ 5,250,647 | $ 2,557,100 | $ 2,557,100 | $ 258,328 |
Warrants (Details Textual)
Warrants (Details Textual) - USD ($) | Jul. 07, 2020 | Jul. 06, 2020 | Jun. 08, 2020 | Apr. 13, 2020 | Oct. 15, 2019 | Jul. 07, 2019 | Aug. 21, 2020 | Apr. 29, 2020 | Sep. 30, 2019 | Sep. 30, 2019 | Sep. 24, 2019 | Sep. 24, 2019 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2019 | Dec. 31, 2019 | Aug. 05, 2020 | Jun. 12, 2020 | Apr. 21, 2020 | Nov. 30, 2019 | Nov. 07, 2019 | Apr. 21, 2019 | Jan. 30, 2019 | Aug. 31, 2016 |
Warrants (Textual) | |||||||||||||||||||||||||
Warrant to purchase | 15,765 | 4,000 | |||||||||||||||||||||||
Convertible debt, percentage | 5.00% | 133.00% | 7.90% | ||||||||||||||||||||||
Interest expense | $ 1,549,667 | ||||||||||||||||||||||||
Warrants exercised | 2,000,000 | ||||||||||||||||||||||||
Warrant [Member] | |||||||||||||||||||||||||
Warrants (Textual) | |||||||||||||||||||||||||
Warrant to purchase | 1,736,284 | 24,000 | 100,000 | 290,000 | 53,571 | 158,730 | 100,000 | 100,000 | 150,000 | 150,000 | 100,000 | 100,000 | 100,000 | 283,530 | |||||||||||
Exercise price | $ 1 | $ 1.20 | $ 1 | $ 2.80 | $ 0.99 | $ 5 | $ 5 | $ 0.01 | $ 0.01 | $ 5 | $ 5 | $ 5 | |||||||||||||
Warrants expiration date | Jul. 6, 2025 | Jun. 7, 2023 | Apr. 12, 2025 | Dec. 31, 2022 | Aug. 20, 2025 | Apr. 29, 2025 | Dec. 31, 2021 | Dec. 31, 2021 | |||||||||||||||||
Convertible debt, percentage | 13.33% | 12.50% | 9.00% | 9.00% | 10.00% | 10.00% | 9.00% | 9.00% | 9.00% | ||||||||||||||||
Warrants granted | 2,576,878 | 2,250,000 | 3,868,523 | ||||||||||||||||||||||
Description of warrants | Prior to conversion of the related debentures, ComSovereign cancelled warrants to purchase 80,000 shares of common stock at $5.00 per share, and reissued warrants to purchase 112,500 shares of common stock at $1.50 per share. ComSovereign valued the new warrants at $250,835 using the Black-Scholes pricing model, which is included in interest expense on the Consolidated Statement of Operations. Warrants to purchase all 132,500 shares of common stock were exercised in November 2019 prior to the ComSovereign Acquisition. | ||||||||||||||||||||||||
Warrants to purchase shares | 283,530 | ||||||||||||||||||||||||
Shares issued per share | $ 0.80 | $ 4.23 | |||||||||||||||||||||||
Proceeds from stock exercised | |||||||||||||||||||||||||
Warrant [Member] | Maximum [Member] | |||||||||||||||||||||||||
Warrants (Textual) | |||||||||||||||||||||||||
Exercise price | $ 0.2404 | ||||||||||||||||||||||||
Warrant [Member] | Minimum [Member] | |||||||||||||||||||||||||
Warrants (Textual) | |||||||||||||||||||||||||
Exercise price | $ 0.0499 | ||||||||||||||||||||||||
Warrant One [Member] | |||||||||||||||||||||||||
Warrants (Textual) | |||||||||||||||||||||||||
Warrant to purchase | 158,730 | 27,778 | 2,000,000 | 2,000,000 | |||||||||||||||||||||
Exercise price | $ 0.99 | $ 0.99 | $ 0.01 | ||||||||||||||||||||||
Warrants expiration date | Apr. 29, 2025 | Apr. 29, 2025 | Dec. 31, 2021 | ||||||||||||||||||||||
Convertible debt, percentage | 12.50% | ||||||||||||||||||||||||
Warrant Two [Member] | |||||||||||||||||||||||||
Warrants (Textual) | |||||||||||||||||||||||||
Warrant to purchase | 27,778 | ||||||||||||||||||||||||
Exercise price | $ 0.99 | ||||||||||||||||||||||||
Warrants expiration date | Apr. 29, 2025 | ||||||||||||||||||||||||
Warrant [Member] | |||||||||||||||||||||||||
Warrants (Textual) | |||||||||||||||||||||||||
Warrant to purchase | 442,500 | 2,000,000 | 2,000,000 | 150,000 | 150,000 | 2,000,000 | 2,000,000 | 2,000,000 | |||||||||||||||||
Exercise price | $ 0.01 | $ 0.01 | $ 0.01 | $ 0.01 | $ 0.01 | $ 0.01 | $ 0.01 | $ 0.01 | |||||||||||||||||
Warrants expiration date | Dec. 31, 2021 | Dec. 31, 2021 | Dec. 31, 2021 | ||||||||||||||||||||||
Convertible debt, percentage | 10.00% | 10.00% | |||||||||||||||||||||||
Description of warrants | Prior to conversion of the related debentures, ComSovereign cancelled warrants to purchase 80,000 shares of common stock at $5.00 per share, and reissued warrants to purchase 112,500 shares of common stock at $1.50 per share. ComSovereign valued the new warrants at $250,835 using the Black-Scholes pricing model, which is included in interest expense on the Consolidated Statement of Operations. Warrants to purchase all 132,500 shares of common stock were exercised in November 2019 prior to the ComSovereign Acquisition. | ||||||||||||||||||||||||
Interest expense | $ 3,138,667 | ||||||||||||||||||||||||
Warrants to purchase shares | 442,500 | 283,530 | 930,000 | ||||||||||||||||||||||
Warrants exercised | 132,500 | ||||||||||||||||||||||||
Warrant [Member] | Subsequent Event [Member] | |||||||||||||||||||||||||
Warrants (Textual) | |||||||||||||||||||||||||
Warrant to purchase | 283,530 | ||||||||||||||||||||||||
Eight Warrant [Member] | |||||||||||||||||||||||||
Warrants (Textual) | |||||||||||||||||||||||||
Warrant to purchase | 100,000 | 100,000 | 100,000 | 100,000 | 100,000 | ||||||||||||||||||||
Exercise price | $ 5 | $ 5 | $ 5 | $ 5 | $ 5 | ||||||||||||||||||||
Warrants expiration date | Dec. 31, 2021 | ||||||||||||||||||||||||
Convertible debt, percentage | 9.00% | 9.00% | 9.00% | 9.00% | 9.00% |
Income Taxes (Details)
Income Taxes (Details) - USD ($) | 3 Months Ended | 9 Months Ended | 12 Months Ended | |
Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | Dec. 31, 2019 | |
Income Tax Disclosure [Abstract] | ||||
Income tax benefit at statutory federal income tax rate | $ 5,233,600 | $ 2,941,011 | $ (6,653,400) | |
State tax expense, net of federal benefit | 996,900 | 560,193 | (1,267,300) | |
Permanent items | (400) | 20,000 | ||
Other | (6,100) | |||
Valuation allowance | (6,224,000) | 3,762,800 | ||
Income tax expense (benefit) | $ (1,815,059) | $ (3,501,204) | $ (4,137,900) | |
Income tax benefit at statutory federal income tax rate | 21.00% | 21.00% | 21.00% | |
State tax expense, net of federal benefit | 4.00% | 4.00% | 4.00% | |
Permanent items | 0.00% | (0.06%) | ||
Other | (0.02%) | |||
Valuation allowance | (24.98%) | (11.88%) | ||
Income tax benefit | 25.00% | 13.06% |
Income Taxes (Details 1)
Income Taxes (Details 1) | Dec. 31, 2019USD ($) |
Deferred tax assets: | |
Share-based compensation | $ 13,700 |
Inventory reserve | 137,000 |
Allowance for bad debt | 172,700 |
Net operating loss carryover | 11,867,800 |
Foreign losses | 4,130,000 |
General business credits | 256,400 |
Valuation allowance | (3,762,800) |
Total deferred tax assets | 12,814,800 |
Deferred tax liabilities: | |
Depreciation | (43,000) |
Amortization | (12,771,800) |
Total deferred tax liabilities | (12,814,800) |
Net deferred tax assets (liabilities) |
Income Taxes (Details Textual)
Income Taxes (Details Textual) - USD ($) | 3 Months Ended | 12 Months Ended | |
Sep. 30, 2020 | Sep. 30, 2019 | Dec. 31, 2019 | |
Income Taxes (Textual) | |||
Net operating loss carry-forward | $ 47,472,000 | ||
Operating loss carryforwards, Limitations on use | The Company had domestic net operating loss carryforwards of approximately $47,472,000, of which approximately $13,615,000 was generated pre-2018 that may be carried forward 20 years to offset against future taxable income from the year 2019 through 2039, and approximately $33,857,000 that may offset future taxable income with no definite expiration date. | ||
Tax Cut and Jobs Act, description | The Tax Cut and Jobs Act was enacted on December 22, 2017, which reduced the U.S. corporate statutory income tax rate from 35% to 21% beginning January 1, 2018. | ||
Uncertain tax positions, description | (1) the Company determines whether it is more likely than not that the tax positions will be sustained on the basis of the technical merits of the position and (2) for those tax positions that meet the more-likely-than-not recognition threshold, the Company recognizes the largest amount of tax benefit that is more than 50% likely to be realized upon the ultimate settlement with the related tax authority. The Company did not record any liabilities related to uncertain tax positions as of December 31, 2019. | ||
Allowance valuation change amount | $ 2,648,200 | $ 0 |
Commitments and Contingencies (
Commitments and Contingencies (Details) - USD ($) | Feb. 07, 2020 | Jan. 17, 2020 | Aug. 24, 2020 | May 22, 2020 |
Commitments and Contingencies (Textual) | ||||
Arrow merchandise value | $ 124,000 | |||
Ordered additional merchandise | 520,000 | |||
Forbearance agreement indebtedness | 124,000 | |||
Dragonwave's obligation plus accrued interest | 733,000 | |||
Connection with the forbearance | $ 183,000 | |||
Inventory, description | DragonWave agreed to repurchase inventory held by Tessco Technologies Incorporated (“Tessco”), one of DragonWave’s customers and note holders. Upon receipt of the inventory, which is valued at $121,482, DragonWave agreed to reimburse Tessco $56,766, representing the balance due after making the initial payment of $60,000. The return of inventory and payment to Tessco of $56,776 was required by February 28, 2020 but has not yet been made. On June 5, 2020, Tessco filed a complaint for confessed judgment against DragonWave in the Circuit Court for Baltimore, Maryland, Case No. 5539212, for approximately $60,000, which it claims is the reimbursement amount. | On June 15, 2020 the Company was dismissed from the case. On August 14, 2020, Arrow and DragonWave entered into an amendment to the June 12, 2020 settlement agreement whereby DragonWave was obligated to pay Arrow $200,000 on or before August 17, 2020 and $313,000 on or before September 18, 2020. As of August 18, 2020, the $200,000 was paid to Arrow. On September 28, 2020, Arrow and DragonWave entered into an amendment to the June 12, 2020, settlement agreement whereby DragonWave was obligated to pay Arrow a remaining balance of $323,500 on or before November 6, 2020, which remains unpaid. | On August 24, 2020, we entered into an Agreement and Plan of Merger and Reorganization dated as of August 24, 2020 (the “FN Merger Agreement”) among the Company and its wholly-owned subsidiary, CHC Merger Sub 8, LLC, Skyline Partners Technology LLC, a Colorado limited liability company that does business under the name Fastback Networks (“Fastback”), and John Helson, solely in his capacity as the representative of the security holders of Fastback, pursuant to which, subject to the terms and conditions of the FN Merger Agreement, the Company has agreed to acquire Fastback. The Company believes Fastback has been a leader in the development and commercialization of innovative intelligent backhaul radio (IBR) systems that deliver high-performance wireless connectivity to virtually any location including those challenged by Non-Line of Sight (NLOS) limitations. Fastback’s advanced IBR products allow operators to economically add capacity and density to their macrocells and expand service coverage density with small cells. These solutions also allow operators to both provide temporary cellular and data service utilizing mobile/portable radio systems and provide wireless Ethernet connectivity. Fastback has a U.S. patent portfolio comprised of 65 granted and 12 pending patents. Collectively the patent portfolio covers key technologies including antenna arrays, signal processing, adaptive antennas, beamforming/steering, self-optimizing networks, spectrum sharing and hybrid band operations. | Michael Powell filed suit against DragonWave-X, LLC, DragonWave-X, Inc., Transform-X, Inc., ComSovereign Corp, and the Company in the Pima County Arizona Superior Court, Case No. C20202216. Mr. Powell has alleged that he entered into an employment agreement with DragonWave-X, Inc. in July 2018, was terminated without cause in May 2019, and is owed approximately $182,000 in wages and $50,000 in bonuses. Mr. Powell is seeking approximately $697,000 in treble damages, punitive damages, consequential damages, interest and attorneys’ fees and costs. The Company disputes Mr. Powell’s allegations and it intends to vigorously defend the lawsuit. |
Inventory purchase | $ 520,000 | |||
Certain installments fee | $ 10,000 | |||
Merger agreement, description | The FN Merger Agreement, the aggregate merger consideration the Company is obligated to pay for Fastback will consist of (i) $1,250,000 in cash, (ii) $1,500,000 aggregate principal amount of our term debentures, and (iii) $11,150,000 aggregate principal amount of the Company’s convertible debentures that are convertible into the Company’s common stock at a conversion price of $1.74 per share, subject to adjustment. The Company’s proposed acquisition of Fastback is subject to the condition that the Company raises at least $12 million of gross proceeds from the sale of its equity or debt securities and certain other customary closing conditions. |
Concentrations (Details)
Concentrations (Details) | Sep. 30, 2020 | Dec. 31, 2019 |
Concentrations (Textual) | ||
Trade accounts receivable | 27.00% | 84.00% |
Subsequent Events (Details)
Subsequent Events (Details) | Nov. 04, 2020USD ($) | Jun. 12, 2020shares | May 15, 2020shares | Mar. 12, 2020USD ($)shares | Mar. 06, 2020USD ($)shares | Feb. 07, 2020USD ($) | Nov. 30, 2020 | Oct. 31, 2020$ / sharesshares | May 29, 2020USD ($) | Apr. 29, 2020USD ($)shares | Mar. 19, 2020USD ($) | Feb. 26, 2020USD ($) | Nov. 15, 2019shares | Aug. 08, 2002shares | Sep. 30, 2020USD ($)shares | Sep. 30, 2019USD ($) | Dec. 31, 2019USD ($)shares | Dec. 31, 2019USD ($)shares | Nov. 13, 2020USD ($) | Nov. 09, 2020shares | Aug. 05, 2020 | May 31, 2020USD ($) | Apr. 30, 2020USD ($)shares | Nov. 07, 2019 | Aug. 31, 2016USD ($) |
Subsequent Events (Textual) | |||||||||||||||||||||||||
Principal amount | $ 500,000 | $ 50,000 | |||||||||||||||||||||||
Stock grants of aggregate shares | shares | 5,000 | 55,000 | |||||||||||||||||||||||
Interest rate | 5.00% | 133.00% | 7.90% | ||||||||||||||||||||||
Proceeds from common stock | 331,842 | $ 5,000 | $ 5,000 | ||||||||||||||||||||||
Subsequent event, description | January 29, 2021. Within three business days of filing the Annual Report for fiscal 2019, the investor is required to purchase, and the Company is required to issue and sell to the investor, an additional convertible promissory note in the principal amount of $285,714 with an original issue discount of $35,714 along with warrants to purchase an additional 158,730 shares of the Company's common stock for proceeds of $250,000. This note will bear interest at 12.5% per annum and mature on January 29, 2021. The investor will not be required to purchase the additional securities if the Company is in default under the outstanding notes or if certain other conditions are not met. | ||||||||||||||||||||||||
Inventory | $ 5,319,590 | $ 4,671,396 | $ 4,671,396 | ||||||||||||||||||||||
Inventory reimburse | $ 56,766 | ||||||||||||||||||||||||
Stock issued | shares | 81,839 | ||||||||||||||||||||||||
Aggregate shares of common stock | shares | 2,600,000 | ||||||||||||||||||||||||
Common stock shares issued | shares | 143,817,614 | 128,326,243 | 128,326,243 | ||||||||||||||||||||||
Warrant [Member] | |||||||||||||||||||||||||
Subsequent Events (Textual) | |||||||||||||||||||||||||
Warrants to purchase shares | shares | 158,730 | ||||||||||||||||||||||||
Proceeds from common stock | $ 250,000 | ||||||||||||||||||||||||
Subsequent Event [Member] | |||||||||||||||||||||||||
Subsequent Events (Textual) | |||||||||||||||||||||||||
Common stock authorized awards to granted | shares | 10,000,000 | ||||||||||||||||||||||||
Subsequent Event [Member] | Restricted Stock [Member] | |||||||||||||||||||||||||
Subsequent Events (Textual) | |||||||||||||||||||||||||
Common stock shares issued | shares | 300,000 | ||||||||||||||||||||||||
Consulting Agreement [Member] | |||||||||||||||||||||||||
Subsequent Events (Textual) | |||||||||||||||||||||||||
Stock issued | shares | 165,095 | ||||||||||||||||||||||||
Stock issued value | $ 106,238 | ||||||||||||||||||||||||
Consulting agreement, description | Additional $106,238 that was owed by Lextrum was partially paid in cash of $55,000 on March 6, 2020. The remaining $51,238 is still outstanding. | ||||||||||||||||||||||||
Consulting Agreement [Member] | Minimum [Member] | |||||||||||||||||||||||||
Subsequent Events (Textual) | |||||||||||||||||||||||||
Percentage of compensation | 50 | ||||||||||||||||||||||||
Consulting Agreement [Member] | Maximum [Member] | |||||||||||||||||||||||||
Subsequent Events (Textual) | |||||||||||||||||||||||||
Percentage of compensation | 100 | ||||||||||||||||||||||||
Stock Purchase Agreement [Member] | |||||||||||||||||||||||||
Subsequent Events (Textual) | |||||||||||||||||||||||||
Spring creek, description | Acquire 100% of the shares of common stock of Spring Creek Manufacturing, Inc. for a purchase price of $500,000. The acquisition closed on March 6, 2020 with Sovereign Plastics paying the purchase price through the assumption of the obligations of the sellers under an outstanding promissory note in the principal amount of $90,000 and the delivery of short-term promissory notes in the aggregate principal amount of $410,000. Additionally, Sovereign Plastics agreed to pay certain sales commissions on all sales to two specific customers. | ||||||||||||||||||||||||
Asset Purchase Agreement [Member] | |||||||||||||||||||||||||
Subsequent Events (Textual) | |||||||||||||||||||||||||
Fast plastics, description | The acquisition also closed on March 6, 2020 with Sovereign Plastics providing the purchase price of approximately $1,464,000 by the payment of approximately $66,000 in cash, the repayment of outstanding indebtedness of Fast Plastics in the aggregate amount of $250,000 and the assumption of an outstanding term loan of Fast Plastics in the amount of approximately $979,000. Sovereign Plastics also assumed equipment leases. | ||||||||||||||||||||||||
Maturity date | Sep. 4, 2020 | ||||||||||||||||||||||||
Promissory note [Member] | |||||||||||||||||||||||||
Subsequent Events (Textual) | |||||||||||||||||||||||||
Principal amount | $ 500,000 | ||||||||||||||||||||||||
Stock grants of aggregate shares | shares | 50,000 | ||||||||||||||||||||||||
Purchase price | $ 450,000 | ||||||||||||||||||||||||
2020 Long-Term Incentive Plan [Member] | |||||||||||||||||||||||||
Subsequent Events (Textual) | |||||||||||||||||||||||||
Common stock authorized awards to granted | shares | 10,000,000 | ||||||||||||||||||||||||
Debt Agreements [Member] | |||||||||||||||||||||||||
Subsequent Events (Textual) | |||||||||||||||||||||||||
Principal amount | $ 290,000 | $ 285,714 | $ 2,022,722 | ||||||||||||||||||||||
Maturity date | Sep. 30, 2020 | Dec. 26, 2020 | |||||||||||||||||||||||
Secured business loan | $ 600,000 | ||||||||||||||||||||||||
Interest rate | 12.00% | 12.50% | 5.00% | 81.74% | |||||||||||||||||||||
Principal and interest payments | $ 8,428 | $ 19,429 | |||||||||||||||||||||||
Original issue discount, amount | $ 40,000 | $ 35,714 | |||||||||||||||||||||||
Proceeds from common stock | $ 250,000 | ||||||||||||||||||||||||
Aggregate shares of common stock | shares | 90,000 | ||||||||||||||||||||||||
Debt Agreements [Member] | Subsequent Event [Member] | |||||||||||||||||||||||||
Subsequent Events (Textual) | |||||||||||||||||||||||||
Principal amount | $ 50,000 | $ 100,000 | |||||||||||||||||||||||
Maturity date | Jan. 1, 2021 | Feb. 28, 2021 | |||||||||||||||||||||||
Loans bear interest rate | 15.00% | 15.00% | |||||||||||||||||||||||
Share-Based Activity [Member] | Subsequent Event [Member] | |||||||||||||||||||||||||
Subsequent Events (Textual) | |||||||||||||||||||||||||
Stock warrant of aggregate shares | shares | 55,714 | ||||||||||||||||||||||||
Aggregate shares of common stock | shares | 50,000 | ||||||||||||||||||||||||
Exercise price | $ / shares | $ 0.24 | ||||||||||||||||||||||||
Share price | $ / shares | $ 0.27 | ||||||||||||||||||||||||
Agreement amount description | In October 2020, the Company entered into an agreement with TM to exchange the aggregate principal, interest and penalties outstanding of $1,414,301 in full for 565,721 common shares of the Company with a fair value of $2.50 per share. | ||||||||||||||||||||||||
Paycheck Protection Program [Member] | |||||||||||||||||||||||||
Subsequent Events (Textual) | |||||||||||||||||||||||||
Principal amount | $ 455,185 | $ 455,185 |