Stockholders’ Equity

12 Months Ended

Dec. 31, 2022

Stockholders’ Equity [Abstract]

STOCKHOLDERS’ EQUITY

NOTE 15 STOCKHOLDERS’ (DEFICIENCY) EQUITY

Reverse Stock Splits

Effective January 21, 2021, the Company enacted a 1-for-3 reverse stock split (the “Split”) of the Company’s common stock. These consolidated financial statements and accompanying notes give effect to the reverse stock split as if it occurred at the beginning of the first period presented.

Effective February 10, 2023, the Company enacted a 1-for-100 reverse stock split (the “2023 Split”) of the Company’s common stock. These consolidated financial statements and accompanying notes give effect to the reverse stock split as if it occurred at the beginning of the first period presented.

Authorized Shares

As of December 31, 2022 and 2021, the Company had 300,000,000 shares of common stock authorized for issuance and 2,381,136 and 819,851 shares of common stock issued and 2,380,803 and 819,518 shares of common stock outstanding as of December 31, 2022 and 2021, respectively.

As of December 31, 2022 and 2021, the Company had 100,000,000 shares of preferred stock authorized for issuance, 690,000 shares of preferred stock designated as Series A Preferred Stock, and 320,000 shares of Series A Preferred Stock issued and outstanding as of December 31, 2022 and 2021, respectively.

Public Offerings

On January 26, 2021, the Company sold an aggregate of 41,852 shares of the Company’s common stock at a price to the public of $415 per share (the “First Offering”), and a warrant to purchase one share of common stock at an exercise price of $450 per share (the “First Offering Warrants”), pursuant to an underwriting agreement dated as of January 21, 2021, between the Company and the representative (the “Representative”) of the several underwriters named in the underwriting agreement. Pursuant to the First Offering, the Company received gross proceeds of approximately $17.4 million and had total expenses of approximately $2.7 million, which included the underwriting discounts and commissions of approximately 8% and the Representative’s reimbursable expenses relating to the First Offering. See Warrants within this footnote for additional information on warrants issued.

On February 10, 2021, the Company sold an aggregate of 64,942 shares of the Company’s common stock at a price to the public of $425 per share (the “Second Offering”), pursuant to an underwriting agreement dated as of February 10, 2021 between the Company and the Representative of the several underwriters named in the underwriting agreement. Pursuant to the Second Offering, the Company received gross proceeds of approximately $27.6 million and had total expenses of approximately $2.6 million, which included the underwriting discounts and commissions of approximately 8% and the Representative’s reimbursable expenses relating to the First Offering. See Warrants within this footnote for additional information on warrants issued.

Acquisitions

During the year ended December 31, 2021, the Company issued an aggregate of 151,354 shares of common stock upon completed acquisitions of RF Engineering & Energy Resource, Saguna Networks, Innovation Digital, RVision, and Sky Sapience with an aggregate fair value of $33.9 million. See Note 20 – Business Acquisitions for additional information.

Sale of 9.25% Series A Cumulative Redeemable Perpetual Preferred Stock

On October 26, 2021, the Company filed a Certificate of Designations of 9.25% Series A Cumulative Redeemable Perpetual Preferred Stock (the “Certificate of Designations”) with the Secretary of State of the State of Nevada, which classified and designated 690,000 shares of the Company’s authorized preferred stock, par value $0.0001 per share, as 9.25% Series A Cumulative Redeemable Perpetual Preferred Stock (the “Series A Preferred Stock”).

On October 29, 2021, the Company sold in a public offering 320,000 shares of the Company’s Series A Preferred Stock at a public offering price of $25.00 per share which is the initial liquidation preference of the Series A Preferred Stock.

The Series A Preferred Stock has been listed on The Nasdaq Capital Market under the symbol “COMSP”.

The net proceeds to the Company from this Offering were approximately $7.2 million after deducting underwriting discounts and commissions and expenses payable by the Company. 

Preferred Stock – Liquidation Preference

Upon any voluntary or involuntary liquidation, dissolution or winding up of our affairs, before any distribution or payment shall be made to holders of shares of our common stock or any other class or series of our capital stock ranking, as to rights upon any voluntary or involuntary liquidation, dissolution or winding up of our affairs, junior to the Series A Cumulative Redeemable Perpetual Preferred Stock (the “Series A Preferred Stock”), holders of shares of Series A Preferred Stock will be entitled to be paid out of our assets legally available for distribution to our stockholders, after payment of or provision for our debts and other liabilities and any class or series of our capital stock ranking, as to rights upon any voluntary or involuntary liquidation, dissolution or winding up of our affairs, senior to the Series A Preferred Stock, a liquidation preference of $25.00 per share of the Series A Preferred Stock (approximately $8.0 million), plus an amount equal to any accrued and unpaid dividends (whether or not authorized or declared) up to, but excluding, the date of payment. If, upon our voluntary or involuntary liquidation, dissolution or winding up, our available assets are insufficient to pay the full amount of the liquidating distributions on all outstanding shares of Series A Preferred Stock and the corresponding amounts payable on all shares of each other class or series of capital stock ranking, as to rights upon liquidation, dissolution or winding up, on parity with the Series A Preferred Stock in the distribution of assets, then holders of shares of Series A Preferred Stock and each such other class or series of capital stock ranking, as to rights upon any voluntary or involuntary liquidation, dissolution or winding up, on parity with the Series A Preferred Stock will share ratably in any distribution of assets in proportion to the full liquidating distributions to which they would otherwise be respectively entitled.

The Series A Preferred Stock generally is not redeemable by the Company before April 29, 2024, except as described below upon the occurrence of a change of control (as defined in the Certificate of Designations). On and after April 29, 2024, the Company may, at its option, redeem the Series A Preferred Stock, in whole or in part, at any time or from time to time, for cash at a redemption price of $25.00 per share, plus any accrued and unpaid dividends (whether or not authorized or declared) up to, but excluding, the date of redemption. The Series A Preferred Stock has no stated maturity date and is not subject to any sinking fund or mandatory redemption provisions and will remain outstanding indefinitely unless redeemed or otherwise repurchased by the Company as described below.

Upon the occurrence of a Change of Control, the Company may, at its option, redeem the Series A Preferred Stock, in whole or in part within 120 days after the first date on which such Change of Control occurred, by paying $25.00 per share, plus any accrued and unpaid dividends up to, but excluding, the date of redemption.

Holders of the Series A Preferred Stock generally have no voting rights, except in the event that the Company fails to pay dividends on the Series A Preferred Stock for 18 or more monthly periods (whether or not consecutive), which occurred on November 20, 2023, in which case the preferred stock holders are entitled to elect up to an aggregate of two new Board directors until the past due dividends are fully paid.

Dividends

During the years ended December 31, 2022 and 2021, the Company recorded $678,304 and $168,131, respectively, of dividends paid or payable to the holders of the 9.25% Series A Preferred Stock.

On or about May 25, 2022, the Company announced that it had suspended the payment of dividends on the Series A Preferred Stock to preserve cash. Since June 20, 2022, dividends on the Series A Preferred Stock are accruing at the rate of approximately $61,664 per month. The total arrearage on the date of filing for the accrued dividends is $1,109,952.

Common Stock

During the year ended December 31, 2021, the Company issued an aggregate of 633 shares of common stock upon the exercise of options for gross proceeds of $17,000 and issued an aggregate of 63,609 shares of common stock with a fair value of $17.2 million for conversions of debt and interest.

During the year ended December 31, 2022, the Company issued an aggregate of 1,557,438 shares of common stock with a fair value of $16.1 million for conversions of debt and interest (see Note 14 – Debt for additional information) and issued 2,098 shares of common stock for gross proceeds of $31,000 upon the exercise of options.

Warrants

On January 26, 2021, the Company issued warrants to purchase an aggregate of 27,527 shares of the Company’s common stock as partial consideration for debt extinguishments. The warrants have an exercise price of $450 per share and an expiration date of January 26, 2026. The grant date fair value of these warrants was estimated to be $4.4 million. Upon the issuance of these warrants, certain debts and accrued interest were fully extinguished (see Note 14 – Debt – Note E for additional information).

On January 26, 2021, the Company issued warrants to purchase an aggregate of 44,701 shares of the Company’s common stock as portion of the units offered in the Company’s First offering. The warrants have an exercise price of $450 per share and an expiration date of January 26, 2026. The fair value of these warrants was estimated to be $7.1 million.

On January 26, 2021, the Company issued additional warrants to purchase an aggregate of 1,544 shares of the Company’s common stock pursuant to the underwriting agreement for 4% of the shares of common stock sold in the First Offering. The warrants have an exercise price of $519 per share and an expiration date of January 21, 2026. The grant fair date value of these warrants was estimated to be $0.2 million.

On January 26, 2021, the Company issued warrants to purchase an aggregate of 1,003 shares of the Company’s common stock as consideration to the underwriter for certain costs related to the First Offering. The warrants have an exercise price of $415 per share and an expiration date of January 21, 2026. The grant date fair value of these warrants was estimated to be $0.2 million.

On February 12, 2021, pursuant to the Second Offering underwriting agreement, the Company issued to the Representative warrants to purchase up to a total of 2,262 shares of common stock for 4% of the shares of common stock sold in the Second Offering. The warrants have an exercise price of $531 per share and an expiration date of February 10, 2026. The grant date fair value of these warrants was estimated to be $0.4 million.

On May 27, 2021, the Company issued warrants to purchase an aggregate of 18,200 shares of the Company’s common stock in conjunction with a debt agreement (see Note 14 – Debt – Note A). These warrants have an exercise price of $450 a grant date fair value of $0.9 million and expire on May 27, 2026.

On August 25, 2021, the Company issued warrants to purchase an aggregate of 13,158 shares of the Company’s common stock in conjunction with a debt agreement (see Note 14 – Debt – Note B). These warrants have an exercise price of $300 a fair value of $1.1 million and expire on August 25, 2026.

All warrants are valued utilizing the Black-Scholes pricing model using the assumptions listed below. No warrants were issued during the year ended December 31, 2022. The weighted average fair value of all warrants issued during the year ended December 31, 2021 was $127 per share.

The following table summarizes the assumptions used to estimate the fair value of the warrants granted during the years ended December 31, 2022 and 2021:

	For the Years Ended
	December 31,
	2022	2021
Expected dividend yield	N/A	0%
Expected volatility	N/A	39.94-64.04%
Risk-free interest rate	N/A	0.42-0.95%
Contractual life of warrants	N/A	4.0-5.0 years

The following tables represents warrant activity for the year ended December 31, 2022:

				Weighted-		Weighted-
				Average		Average
	Number of			Exercise Price		Contractual
	Warrants			Per Share		Life in Years
Outstanding - December 31, 2021		128,771		$	371
Forfeited or Expired		(12,872	)		217
Outstanding - December 31, 2022		115,899		$	388		3.15
Exercisable - December 31, 2022		115,899		$	388		3.15

The following table presents information related to warrants as of December 31, 2022:

Warrants Outstanding			Warrants Exercisable
			Weighted
	Outstanding		Average		Exercisable
	Number of		Remaining Life		Number of
Exercise Price Per Share	Warrants		In Years		Warrants
$0.01 - $100.00		5,604		2.51		5,604
$100.01 - $200.00		-		-		-
$200.01 - $300.00		32,914		3.45		32,914
$300.01 - $400.00		344		2.28		344
$400.01 - $500.00		73,231		3.07		73,231
$500.01 - $600.00		3,806		3.09		3,806
		115,899		3.15		115,899