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.
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.