Item 1.01 Entry
into a Material Definitive Agreement.
On February 25, 2021 (the “Closing
Date”), ComSovereign Holding Corp. (the “Company,” “we,” “us,”
or “our company”) entered into an Share Purchase Agreement dated as of February 25, 2021 (the “Purchase
Agreement”) by and among our company, Sky Sapience Ltd., a company organized under the laws of the State of Israel (“SKS”),
certain of the shareholders of SKS, and Neuberger, Quinn, Gielen, Rubin & Gibber P.A., solely in its capacity as the Shareholders’
Representative (as defined therein), pursuant to which, subject to the terms and conditions of the Purchase Agreement, we purchased
or agreed to purchase all of the issued and outstanding capital stock of SKS and SKS will become a wholly-owned subsidiary of our
company.
Since
its founding in 2010, SKS’s tethered hovering technology has provided long-duration, mobile and all-weather Intelligence,
Surveillance and Reconnaissance (“ISR”) capabilities to customers worldwide for both land and marine based applications.
Its innovative technologies include fiber optic tethers that enable secure, high-capacity communications, including support for
commercial 4G and 5G wireless networks. SKS’s flagship HoverMast line of quadrotor-tethered drones feature uninterruptible
ground-based power, fiber optic communications for cyber immunity, and the ability to operate in GPS-denied environments while
delivering dramatically-improved situational awareness and communications capabilities to users. HoverMast is utilized by the Israeli
government for border patrol and coastal applications and is also deployed in several international markets.
Pursuant to the Purchase Agreement, on the
Closing Date, we paid approximately $2.7 million to repay in full an outstanding third-party secured loan to SKS. In addition,
we agreed to issue to the shareholders of SKS, the holders of outstanding options or warrants of SKS and certain other entities
with which SKS had contractual obligations an aggregate of 2,555,209 shares of our common stock, par value $0.001 per share, in
consideration of the purchase of all outstanding shares of SKS and the cancellation of such outstanding options, warrants and contractual
obligations.
The Purchase Agreement contains customary
representations, warranties and covenants of our company, on the one hand, and SKS and its shareholders, on the other hand. The
Purchase Agreement also provides that we and the former shareholders of SKS will indemnify each other for breaches of the warranties
and covenants of such party, as well as certain other matters, subject to certain specified limitations, including, among other
things, limitations on the period during which a party may make certain claims for indemnification and limitations on the amounts
for which a party may be liable.
The foregoing description of the Purchase
Agreement does not purport to be complete and is subject to, and qualified in its entirety by reference to, the full text of the
Purchase Agreement, a copy of which is attached hereto as Exhibit 10.1, which is incorporated herein by reference thereto.
The Purchase Agreement has been filed as
an exhibit hereto to provide our investors and security holders with information regarding its terms and is not intended to provide
any factual information about our company or SKS. The representations, warranties and covenants set forth in the Purchase Agreement
were made solely between the parties to the Purchase Agreement and may be subject to important qualifications and limitations agreed
to by the parties in connection with negotiating its terms, including being qualified by confidential disclosures exchanged between
the parties in connection with the execution of the Purchase Agreement. Moreover, the representations and warranties may be subject
to a contractual standard of materiality that may be different from what may be viewed as material to investors or security holders,
or may have been used for the purpose of allocating risk between the parties to the Purchase Agreement rather than establishing
matters as facts. Information concerning the subject matter of the representations and warranties may change after the date of
the Purchase Agreement, which subsequent information may or may not be fully reflected in our public disclosures. For the foregoing
reasons, no person should rely on the representations and warranties as statements of factual information at the time they were
made or otherwise.