Business Acquisitions

12 Months Ended

Dec. 31, 2019

Business Combinations [Abstract]

BUSINESS ACQUISITIONS

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