Item 1.01 Entry Into a Material Definitive Agreement.
On January 26, 2021 (the "Closing Date"), COMSovereign Holding Corp. (the
"Company") sold an aggregate of 3,855,422 units at a price to the public of
$4.15 per unit (the "Offering"), each unit consisting of one share of the
Company's common stock, par value $0.0001 per share (the "Common Stock"), and a
warrant to purchase one share of Common Stock at an exercise price of $4.50 per
share (the "Warrants"), pursuant to that certain Underwriting Agreement, dated
as of January 21, 2021 (the "Underwriting Agreement"), between the Company and
Kingswood Capital Markets, division of Benchmark Investments, Inc., as
representative (the "Representative") of the several underwriters named in the
Underwriting Agreement. In addition, pursuant to the Underwriting Agreement, the
Company granted the Representative a 45-day option to purchase up to 578,312
additional shares of Common Stock, and/or 578,312 additional Warrants, to cover
over-allotments in connection with the Offering, which the Representative
partially exercised to purchase 578,312 Warrants on the Closing Date.
The Common Stock and the Warrants were offered and sold to the public pursuant
to the Company's registration statement on Form S-1 (File No. 333-248490), filed
by the Company with the Securities and Exchange Commission (the "SEC") under the
Securities Act of 1933, as amended (the "Securities Act"), on August 28, 2020,
as amended, and which became effective on January 21, 2021.
On the Closing Date, the Company received gross proceeds of approximately
$16,000,000, before deducting underwriting discounts and commissions of eight
percent (8%) of the gross proceeds and estimated Offering expenses, and intends
to use the net proceeds from the Offering primarily for the repayment of
outstanding indebtedness, the acquisition of new companies or products,
inventory production and marketing, operating expenses, working capital and
general corporate purposes. The Company issued a press release announcing the
closing of the offering, which has been filed as Exhibit 99.1 to this report.
On January 27, 2021, the Representative exercised its over-allotment option to
purchase 329,815 additional shares of Common Stock, which is expected to close
on January 29, 2021. The Company will receive net proceeds of approximately
$1,256,000 from the sale of such shares, after deducting underwriting discounts
and commissions, and intends to use such net proceeds for the repayment of
outstanding indebtedness, inventory production and marketing, working capital
and general corporate purposes.
The Underwriting Agreement contains customary representations, warranties, and
covenants by the Company. It also provides for customary indemnification by each
of the Company and the underwriters for losses or damages arising out of or in
connection with the offering, including for liabilities under the Securities
Act, other obligations of the parties and termination provisions.
Pursuant to the Underwriting Agreement, the Company also agreed to issue to the
Representative warrants (the "Representative's Warrants") to purchase up to a
total of 154,216 shares of Common Stock (4% of the shares of Common Stock sold
in the Offering). The Representative's Warrants are exercisable at $5.1875 per
share of Common Stock and have a term of five years. The Representative's
Warrants are subject to a lock-up for 180 days from the commencement of sales in
the Offering, including a mandatory lock-up period in accordance with FINRA Rule
5110(e), and will be non-exercisable for six (6) months after January 21, 2021.
A copy of the form of the Representative's Warrant has been filed as Exhibit 4.1
to this report, and is incorporated herein by reference.
A copy of the Underwriting Agreement has been filed as Exhibit 1.1 to this
report, and is incorporated herein by reference. The provisions of the
Underwriting Agreement, including the representations and warranties contained
therein, are not for the benefit of any party other than the parties to such
agreement and are not intended as a document for investors or the public to
obtain factual information about the current state of affairs of the Company.
The total expenses of the Offering are estimated to be approximately $1,085,000,
which included the Representative's expenses relating to the Offering.
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On January 26, 2021, the Company also entered into a Warrant Agency Agreement
with ClearTrust LLC ("Warrant Agency Agreement"), pursuant to which ClearTrust
LLC agreed to act as transfer agent with respect to the Warrants. A copy of the
Warrant Agency Agreement has been filed as Exhibit 10.1 to this report, and is
incorporated herein by reference.
The final prospectus relating to the Offering has been filed with the SEC and is
available on the SEC's web site at http://www.sec.gov. Copies of the final
prospectus relating to the offering may be obtained from the above-mentioned SEC
website or from Kingswood Capital Markets, division of Benchmark Investments
Inc., 17 Battery Place, Suite 625, New York, NY 10004, Attention: Syndicate
Department, or via email at syndicate@kingswoodcm.com or telephone at (212)
404-7002.
The foregoing summary of the terms of the Underwriting Agreement, Warrant Agency
Agreements (including the Warrants) and the Representative's Warrant are subject
to, and qualified in their entirety by reference to, copies of the Underwriting
Agreement, Warrant Agency Agreements (including the Warrants) and the
Representative's Warrant that are filed as exhibits to this Current Report on
Form 8-K and is incorporated herein by reference.
Item 3.01 Notice of Delisting or Failure to Satisfy a Continued Listing Rule or
Standard; Transfer of Listing.
In connection with the Offering, the Common Stock and Warrants began trading on
The Nasdaq Capital Market on January 22, 2021 under the symbols "COMS" and
"COMSW," respectively. The Common Stock was previously quoted on the OTCQB
Market under the symbol "COMS."
Item 5.02 Departure of Directors or Certain Officers; Election of Directors;
Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
On the Closing Date, in connection with the closing of the Offering, Kay Kapoor
joined the Board of Directors of the Company. Ms. Kapoor will serve on the Board
until the next annual meeting of stockholders of the Company at which directors
are elected, at which time she is expected to stand for re-election.
Biographical information regarding Ms. Kapoor is set forth below:
Kay Kapoor, age 57. Since January 2018, Ms. Kapoor has been the Chief Executive
Officer of Arya Technologies, LLC, an advisory and consulting firm that provides
expertise in 5G communications, cyber, digital platforms, smart infrastructure,
IoT, secure communications and big data/analytics technologies to government,
public and private clients. From January 2013 to October 2017, Ms. Kapoor was
the Executive Vice President and President of AT&T's Global Public Sector
organization, a $15 billion segment of its business that provides technology and
communications solutions to government and education customers across federal,
state, local and international markets. From January 2011 to October 2012, Ms.
Kapoor served as chairman and Chief Executive Officer of Accenture Federal
Services (AFS), a wholly-owned subsidiary of Accenture LLC. From November 1990
to October 2010, she was employed at Lockheed Martin Corporation where she led
complex organizational units and government relations. She ultimately served as
Vice President and Chief Operating Officer of Lockheed Martin's $4 billion,
13,000-employee Information Systems & Global Solutions (IS&GS - Civil) unit. Ms.
Kapoor is the recipient of numerous industry awards, including the Stevie Award
for Woman of the Year in Business Services, the Women in Technology Leader
Award, the prestigious Janice K. Mendenhall Spirit of Leadership Award from the
American Council for Technology/Industry Advisory Council, the FCW Fed100 Award
and the Asian American Engineer of the Year Award. Ms. Kapoor has an advisory
role with Harvard's John F. Kennedy School of Government and has a seat on the
Dean's Council. She is also on the Board of the Belfer Center for Science and
International Affairs and is a member of the Dean's Council at Johns Hopkins
University. Ms. Kapoor earned a master's degree in business from Johns Hopkins
University complemented by executive programs at MIT and Harvard University and
earned her bachelor's degree in information systems from the University of
Maryland. Ms. Kapoor will bring to the Company's board of directors significant
experience across the technology, telecommunications and defense markets,
including expertise in government programs, mergers and acquisitions and telecom
technology.
There are no arrangements or understandings between Ms. Kapoor and any other
person or persons pursuant to which Ms. Kapoor was selected as a director of the
Company. There are no current or proposed transactions in which Ms. Kapoor, or
any member of the immediate family of Ms. Kapoor, has an interest that is
required to be disclosed under Item 404(a) of Regulation S-K promulgated by the
Securities Exchange Commission.
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Item 5.03 Amendments to Articles of Incorporation or Bylaws; Change in Fiscal
Year.
On January 20, 2021, the Company filed a Certificate of Amendment with the
Secretary of State of Nevada, pursuant to which, effective at 11:59 p.m. on
January 21, 2021, the Company effected a 1-for-3 reverse split of its issued and
outstanding shares of Common Stock. In connection with the reverse stock split,
the number of issued and outstanding shares of Common Stock was reduced from
148,348,601 to 49,446,350. A copy of the Certificate of Change is attached as
Exhibit 3.1.
No fractional shares were issued as a result of the reverse stock split.
Fractional shares were rounded up the nearest whole share, after aggregating all
fractional shares held by a stockholder. The CUSIP number for the Common Stock
following the reverse stock split is 205650203. Stockholders who hold physical
stock certificates representing the Common Stock prior to the reverse stock
split may, but are required to, contact our stock transfer agent, ClearTrust
LLC, regarding the procedure for surrendering certificates representing
pre-split shares in exchange for certificates representing post-split shares.
Holders of certificates will not receive a new stock certificate representing
post-split shares until the outstanding certificates representing such holder's
pre-split shares have been surrendered to the Company's transfer agent.
Stockholders who hold shares electronically in book-entry form with the transfer
agent will not need to take action to receive shares of post-reverse stock split
Common Stock. Stockholders who hold shares of Common Stock with a bank, broker,
custodian or other nominee and who have any questions in this regard are
encouraged to contact their banks, brokers, custodians or other nominees.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits.
Exhibit No. Description
1.1 Underwriting Agreement, dated January 21, 2021 by and between
COMSovereign Holding Corp. and Kingswood Capital Markets, division of
Benchmark Investments, Inc., as representative of the underwriters
named therein
3.1 Certificate of Amendment to Articles of Incorporation of COMSovereign
Holding Corp., a Nevada corporation
4.1 Representative's Warrant dated January 26, 2021 issued to Kingswood
Capital Markets, division of Benchmark Investments, Inc.
10.1 Warrant Agency Agreement dated as of January 26, 2021 between
COMSovereign Holding Corp. and ClearTrust LLC.
99.1 Press release dated January 27, 2021
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