Unless the context requires otherwise, references in this Quarterly Report to
“Company, “we”, “us” and “our” refer to the
subsidiaries.
Forward-Looking Statements
This Quarterly Report on Form 10-Q, including “Item 2. Management’s Discussion
and Analysis (“MD&A”) of Financial Condition and Results of Operations,”
contains “forward-looking statements” that represent our beliefs, projections
and predictions about future events. From time to time in the future, we may
make additional forward-looking statements in presentations, at conferences, in
press releases, in other reports and filings and otherwise. Forward-looking
statements are all statements other than statements of historical fact,
including statements that refer to plans, intentions, objectives, goals,
targets, strategies, hopes, beliefs, projections, prospects, expectations or
other characterizations of future events or performance, and assumptions
underlying the foregoing. The words “may,” “could,” “should,” “would,” “will,”
“project,” “intend,” “continue,” “believe,” “anticipate,” “estimate,”
“forecast,” “expect,” “plan,” “potential,” “opportunity,” “scheduled,” “goal,”
“target,” and “future,” variations of such words, and other comparable
terminology and similar expressions and references to future periods are often,
but not always, used to identify forward-looking statements.
Forward-looking statements should not be read as a guarantee of future
performance or results and will not necessarily be accurate indications of
whether, or the times by which, our performance or results may be achieved.
Forward-looking statements are based on information available at the time those
statements are made and management’s belief as of that time with respect to
future events and are subject to risks and uncertainties that could cause actual
performance or results to differ materially from those expressed in or suggested
by the forward-looking statements. Readers should carefully review the risk
factors included under “Item 1A. Risk Factors” that are included in Part II of
this Quarterly Report as well as our fiscal 2021 Annual Report on Form 10-K
filed with the
16, 2022
Overview of Business; Operating Environment and Key Factors Impacting Our
Operating Results
The following MD&A is intended to help readers understand the results of our
operations and financial condition and is provided as a supplement to, and
should be read in conjunction with our unaudited condensed consolidated
financial statements and the related notes (“Notes”) in Part 1 of this Quarterly
Report on Form 10-Q.
Growth and percentage comparisons made herein generally refer to the three
months ended
unless otherwise indicated.
Business Overview
We are a provider of solutions to network operators, mobile device carriers,
governmental units and other enterprises worldwide. We have assembled a
portfolio of communications and portable infrastructure technologies,
capabilities and products that enable the upgrading of latent 3G networks to 4G
and 4G-LTE networks and will facilitate the rapid roll out of the 5G and 6G
networks of the future. We focus on novel capabilities, including signal
modulations, antennae, software, hardware and firmware technologies that enable
increasingly efficient data transmission across the electromagnetic spectrum.
Our product solutions are complemented by a broad array of services, including
technical support, systems design and integration, and sophisticated research
and development programs. While we compete globally on the basis of our
innovative technology, the breadth of our product offerings, our high-quality
cost-effective customer solutions, and the scale of our global customer base and
distribution, our primary focus is on the North American telecom infrastructure
and service market. We believe we are in a unique position to rapidly increase
our near-term domestic sales as we are among the few
telecommunications equipment and services.
We provide the following categories of product offerings and solutions to our
customers:
? Telecom and Network Products and Solutions. We design, develop, market and sell
products for telecom network operators, mobile device carriers and other
enterprises, including the following:
23
? Wireless Transport Solutions. We offer a line of high-capacity packet
microwave solutions that drive next-generation intellectual property (“IP”)
networks. Our carrier-grade point-to-point packet microwave systems transmit
broadband voice, video and data. Our solutions enable service providers,
government agencies, enterprises and other organizations to meet their
increasing bandwidth requirements rapidly and affordably. The principal
application of our product portfolio is wireless network transport, including
a range of products ideally suited to support the emergence of underlying
small cell networks. Additional solutions include leased-line replacement,
last mile fiber extension and enterprise networks.
? In-Band Full-Duplex Technologies. We have developed proprietary wireless
transmission technologies that alleviate the performance limitations of the
principal transmission technologies used by most networks today. Time Division
Duplex (“TDD”) transmission technology used by many communications systems
utilizes a single channel for transmission of data alternating between
downlink or uplink, which limits capacity/throughput. Frequency Division
Duplex (“FDD”) technologies in the marketplace today use two independent
channels for downlink and uplink but require twice the spectrum. Neither TDD
nor FDD can simultaneously transmit and receive on a single channel – a
limitation that network advancements and 5G will require for optimal
performance.
? Edge Compute Capable Small Cell 4G LTE and 5G Access Radios. We offer both
4G/LTE and 5G New Radio (“NR”) based small cell radios that are designed to
connect to other access radios or to connect directly to mobile devices such
as mobile phones and other Internet-of-things devices. Recently, we developed
we believe the world’s first fully-virtualized 5G core network on a
microcomputer the size of a credit card, enabling, for the first time, the
ability to have the 5G network collocated on the network edge with the small
cell communicating with the devices themselves. The small cells support
edge-based application hosting and enable third-party service integration.
? Tethered Drones and Aerostats. We design, manufacture, sell and provide
logistical services for specialized tethered aerial monitoring and
communications platforms serving national defense and security customers for
use in applications such as intelligence, surveillance, and reconnaissance
(“ISR”) and tactical communications. We focus primarily on a suite of tethered
aerostats known as the Winch Aerostat Small Platform, which are principally
designed for military and security applications and provide secure and
reliable aerial monitoring for extended durations while being tethered to the
ground via a high-strength armored tether. Our recently-acquired 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.
We are also developing processes that we believe will significantly advance the
state-of-the-art in silicon photonic (“SiP”) devices for use in advanced data
interconnects, communication networks and computing systems. We believe our
novel approach will allow us to overcome the limitations of current SiP optical
modulators, dramatically increase computing bandwidth, and reduce drive power
while offering lower operating costs.
Our engineering and management teams have extensive experience in optical
systems and networking, digital signal processing, large-scale
application-specific integrated circuit design and verification, SiP design and
integration, system software development, hardware design, high-speed
electronics design and network planning, installation, maintenance, and
servicing. We believe this broad expertise in a wide range of advanced
technologies, methodologies, and processes enhances our innovation, design and
development capabilities, and has enabled us, and we believe will continue to
enable us, to develop and introduce future-generation communications and
computing technologies. In the course of our product development cycles, we
engage with our customers as they design their current and next-generation
network equipment in order to gauge current and future market needs.
Our Business
Through a series of acquisitions, we have expanded our service offerings and
geographic reach over the past three years. On
the acquisition of
transaction with a total purchase price of approximately
“ComSovereign Acquisition”).
prior to its acquisition by our company, had completed five acquisitions of
companies with unique products in development for, or then being marketed to,
the telecommunications market. As a result of our acquisitions, our company is
comprised of the following principal businesses, each of which was acquired to
address a different opportunity or sector of the telecom infrastructure and
service market. These acquired entities are designated as CORE and Noncore
businesses. Our CORE business is comprised of our network hardware and software
products and services solutions, and our Noncore business is comprised the Drone
and related products. Our Power division has been idled.
24
Our CORE business is comprised of the following acquisitions:
?DragonWave-X LLC .DragonWave-X, LLC and its operating subsidiaries,DragonWave Corp. andDragonWave-X Canada, Inc. (collectively, "DragonWave"), are aDallas -based manufacturer of high-capacity microwave and millimeter wave point-to-point telecom backhaul radio units. DragonWave and its predecessor have been selling telecom backhaul radios since 2012 and its microwave radios have been installed in over 330,000 locations in more than 100 countries worldwide. According to a report of theU.S. Federal Communications Commission , as ofDecember 2019 , DragonWave was the second largest provider of licensed point-to-point microwave backhaul radios inNorth America . DragonWave was acquired byComSovereign inApril 2019 prior to theComSovereign Acquisition. OnMay 23, 2022 , the Company sold the assets, transferred the employees and assigned the Canadian lease of DragonWave's Canadian subsidiary, to a third party. ?Virtual NetCom, LLC .Virtual NetCom, LLC ("VNC") is an edge compute focused wireless telecommunications technology developer and equipment manufacturer of both 4G LTE Advanced and 5G NR capable radio equipment. VNC designs, develops, manufactures, markets, and supports a line of network products for wireless network operators, mobile virtual network operators, cable TV system operators, and government and business enterprises that enable new sources of revenue, and reduce capital and operating expenses. We acquired VNC inJuly 2020 . ? Fastback.Skyline Partners Technology LLC , which conducted business under the name Fastback Networks ("Fastback"), is a manufacturer of intelligent backhaul radio ("IBR") systems that deliver high-performance wireless connectivity to virtually any location, including those challenged by Non-Line of Sight limitations. Fastback's advanced IBR products allow operators to economically add capacity and density to their existing cellular networks and expand service coverage density with small cells. These solutions also allow operators to both provide temporary cellular and data service utilizing mobile/portable radio systems and provide wireless Ethernet connectivity. We acquired Fastback inJanuary 2021 . ?Silver Bullet Technology, Inc. Silver Bullet Technology, Inc. ("Silver Bullet") is aCalifornia -based engineering firm that designs and develops next generation network systems and components, including large-scale network protocol development, software-defined radio systems and wireless network designs.ComSovereign acquired Silver Bullet inMarch 2019 prior to the ComSovereign Acquisition. ?Lextrum, Inc. Lextrum, Inc. ("Lextrum") is aTucson, Arizona -based developer of full-duplex wireless technologies and components, including multi-reconfigurable radio frequency ("RF") antennae and software programs. This technology enables the doubling of a given spectrum band by allowing simultaneous transmission and receipt of radio signals on the same frequencies.ComSovereign acquired Lextrum inApril 2019 prior to the ComSovereign Acquisition. ?VEO Photonics, Inc. VEO Photonics, Inc. ("VEO"), based inSan Diego, California , is a research and development company innovating SiP technologies for use in copper-to-fiber-to-copper switching, high-speed computing, high-speed ethernet, autonomous vehicle applications, mobile devices and 5G wireless equipment.ComSovereign acquired VEO inJanuary 2019 prior to the ComSovereign Acquisition. In order to conserve cash, VEO was idled inJune 2022 . ?RF Engineering & Energy Resource, LLC .RF Engineering & Energy Resource, LLC ("RF Engineering") is aMichigan -based provider of high-quality microwave antennas and accessories. By providing one of the industry's lowest cost of ownership, RF Engineering has continued to innovate and expand, and it recently announced the industry's first Universal Licensed Microwave Antenna. Supporting frequencies from (6-42 GHz), customers can now reduce sparing costs and safely future-proof their networks by leveraging this new Universal plug and play architecture. We acquired RF Engineering inJuly 2021 . ?SAGUNA Networks Ltd. SAGUNA Networks Ltd. ("SAGUNA") based in Yokneam,Israel , is the software developer behind the award-winning SAGUNA Edge Cloud, which transforms communication networks into powerful cloud-computing infrastructures for applications and services, including augmented and virtual reality, Internet of Things ("IoT"), edge analytics, high-definition video, connected cars, autonomous drones and more. SAGUNA allows these next-generation applications to run closer to the user in a wireless network, dramatically cutting down on latency, which is a fundamental and critical requirement of 5G networks. SAGUNA'sEdge Cloud operates on general purpose computing hardware but can be optimized to support the latest artificial intelligence and machine learning features through dedicated accelerators. We acquired SAGUNA inOctober 2021 . In order to conserve cash, SAGUNA was idled inJune 2022 . 25
Our NONCORE business is comprised of the following:
?Drone Aviation .Lighter Than Air Systems Corp. , which does business under the nameDrone Aviation ("Drone Aviation "), is based inJacksonville, Florida and develops and manufactures cost-effective, compact and enhanced tethered unmanned aerial vehicles, including Lighter-Than-Air aerostats and drones that support surveillance sensors and communications networks. We acquiredDrone Aviation inJune 2014 . ?Sky Sapience Ltd. Sky Sapience Ltd. ("SKS") is an Israeli-based manufacturer of drones with a patented tethered hovering technology that provides long-duration, mobile and all-weather 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. We acquired SKS inMarch 2021 . In order to conserve cash, SKS was idled inJune 2022 . ?RVision, Inc. RVision, Inc. ("RVision") is aCalifornia -based developer of technologically advanced video and communications products and physical security solutions designed for government and private sector commercial industries. It has been serving governments and the military for nearly two decades with sophisticated, environmentally rugged optical and infrared cameras, hardened processors, custom tactical video hardware, software solutions, and related communications technologies. It also has developed nano-defractive optics with integrated, artificial intelligence-driven electro-optical sensors and communication network connectivity products for smart city/smart campus applications. We acquiredRVision inApril 2021 .
Nasdaq Compliance Developments
As previously disclosed in our Form 10-K filed on
subsequent Form 8-K filings, we are not in compliance with Nasdaq Listing Rule
5550(a)(2), the
price”) due to the price of our common stock. Additionally, because we were late
with filing our Quarterly Reports on Form10-Q for the quarters ended
2022
Reports”), we are not in compliance with Nasdaq Listing Rule 5250(c)(1), which
requires listed companies to timely file all required periodic financial reports
(“filing requirements”) with the
On
“Panel”) regarding our request for continued listing on The Nasdaq Capital
Market of our common stock and additional time to regain compliance with Nasdaq
Listing Rules. On
granting our request for the continued listing of our common stock, subject to
evidencing compliance with Nasdaq’s minimum bid price requirement by
2023
remaining Delinquent Reports filed with the
certain other conditions.
We are working to file our Delinquent Reports with the
practicable and are otherwise taking definitive steps to evidence compliance
with all other applicable criteria for continued listing on Nasdaq. We have put
forth a reverse split proposal to our stockholders to be voted on at our Annual
Stockholders meeting on
compliance with the minimum bid price requirement. There can be no assurances,
however, that we will be able to gain compliance with the Nasdaq Listing Rules.
Significant Components of Our Results of Operations
Revenues
Our revenues are generated primarily from the sale of our products, which
consist primarily of telcom hardware, repairs, support & maintenance, drones,
injection moulding, tooling, consulting, warranties and other. At contract
inception, we assess the goods and services promised in the contract with
customers and identify a performance obligation for each. To determine the
performance obligation, we consider all products and services promised in the
contract regardless of whether they are explicitly stated or implied by
customary business practices. The timing of satisfaction of the performance
obligation is not subject to significant judgment. We measure revenue as the
amount of consideration expected to be received in exchange for transferring
goods and services. We generally recognize product revenues at the time of
shipment, provided that all other revenue recognition criteria have been met.
26
During the three months ended
16% and 17%, respectively, of our revenues were derived from sales outside of
infrastructure and service market, a key element of our growth strategy is to
expand our worldwide customer base and our international operations, initially
through agreements with third-party resellers, distributors and other partners
that can market and sell our products in foreign jurisdictions. We expect that
over the short term our percentage of sales outside
increase as we build up our domestic sales and service teams. Notwithstanding
such percentage increase, we expect the sales of tethered aerostats and drones
will primarily be to the domestic market customers, primarily to the
government and its agencies, even if such systems are for integration into
foreign locations.
Cost of Goods Sold and Gross Profit
Our cost of goods sold is comprised primarily of the costs of manufacturing
products, procuring finished goods from our third-party manufacturers,
third-party logistics and warehousing provider costs, shipping and handling
costs and warranty costs. We presently outsource the manufacturing of our
Fastback and DragonWave products to SMC for Fastback products and Benchmark for
DragonWave products. Cost of goods sold also includes costs associated with
supply operations, including personnel-related costs, provision for excess and
obsolete inventory, third-party license costs and third-party costs related to
the services we provide. Additionally, cost of goods sold does not include any
depreciation and amortization expenses as we separate depreciation and
amortization expense into its own category within operating expenses.
Gross profit has been and will continue to be affected by various factors,
including changes in our supply chain and evolving product mix. The margin
profile of our current products and future products will vary depending on
operating performance, features, materials, manufacturer, and supply chain.
Gross margin will vary as a function of changes in pricing due to competitive
pressure, our third-party manufacturing, our production costs, costs of shipping
and logistics, provision for excess and obsolete inventory and other factors. We
expect our gross margins will fluctuate from period to period depending on the
interplay of these various factors.
Operating Expenses
We classify our operating expense as research and development, sales, and
marketing, and general and administrative. Personnel costs are the primary
component of each of these operating expense categories, which consist of
cash-based personnel costs, such as salaries, sales commissions, benefits, and
bonuses. Additionally, we separate depreciation and amortization expense into
its own category.
Research and Development
In addition to personnel-related costs, research and development expense
consists of costs associated with the design, development, and certification of
our products. We generally recognize research and development expense as
incurred. Development costs incurred prior to establishment of technological
feasibility are expensed as incurred. We expect our research and development
costs to continue to increase as we develop new products and modify existing
products to meet the changes within the telecom landscape.
Sales and Marketing
In addition to personnel costs for sales, marketing, service and product
management personnel, sales and marketing expense consists of the expenses
associated with our training programs, trade shows, marketing programs,
promotional materials, demonstration equipment, national and local regulatory
approvals of our products, travel, entertainment and recruiting. We expect sales
and marketing expense to continue to increase in absolute dollars as we increase
the size of our sales, marketing, service, and product management organization
in support of our investment in our growth opportunities, whether through the
development and rollout of new or modified products or through acquisitions.
General and Administrative
In addition to personnel costs, general and administrative expense consists of
professional fees, such as legal, audit, accounting, information technology and
consulting fees; share-based compensation; and facilities and other supporting
overhead costs.
Depreciation and Amortization
Depreciation and amortization expense consists of depreciation related to fixed
assets such as test equipment, research and development equipment, computer
hardware, production fixtures and leasehold improvements, as well as
amortization related to definite-lived intangibles.
27
Interest Expense
Interest expense is comprised of interest expense associated with our secured
notes payable, notes payable and senior convertible debentures. The amortization
of debt discounts is also recorded as part of interest expense.
Share-Based Compensation
Share-based compensation consists of expense related to the issuance of equity
instruments, which can be in many forms, such as incentive or nonqualified stock
options, stock appreciation rights, stock bonuses, restricted stock, stock units
and other forms of awards including performance-based awards under our long-term
incentive plans or outside of such plans. The expense related to any share-based
compensation grant is allocated to specific groupings in the condensed
consolidated statement of operations in the same manner as the grantee’s normal
compensation expense and will vary depending upon the number of underlying
shares of common stock, the fair value of the common stock on the date of grant
and the vesting period.
Restatement for Correction of an Error
The Company has determined that it was necessary to amend the
Form 10-Q in order to restate the financial statements to correct the previously
misstated amortization of intangible assets. See Note 18 – Restatement of
Financial Statements included in the financial statements herein for additional
details.
In addition to the restatement of the financial statements, certain information
within the following notes to the condensed consolidated financial statements
have been restated to reflect the correction of the misstatement discussed above
as well as to add disclosure language as appropriate to the following footnotes:
? Note 1. Description of Organization and Business and Restatement (as restated)
? Note 3. Going Concern (as restated)
? Note 18. Restatement of Financial Statements (as restated)
Results of Operations (As Restated)
For the Three Months Ended
March 31,
(Amounts in thousands, except share and per share data) 2022 2021
(as restated)
Revenue $ 3,229 $ 2,086
Cost of goods sold 2,196 1,074
Gross profit 1,033 1,012
Operating income (expense)
Research and development (1) 1,172 547
Sales and marketing (1) 66 48
General and administrative (1) 6,157 7,135
Depreciation and amortization 890 3,661
Gain on the sale of assets (8,441 ) (83 )
Total operating income (expenses), net (156 ) 11,308
Income (loss) from operations 1,189 (10,296 )
Other expense
Interest expense (880 ) (469 )
Other expense - (13 )
Loss on extinguishment of debt (173 ) (5,348 )
Gain on sale of building - -
Foreign currency transaction loss - (80 )
Total other expense (1,053 ) (5,910 )
Net income (loss) $ 136 $ (16,206 )
(1) These are exclusive of depreciation and amortization
28
Three Months Ended
Total Revenues
For the three months ended
compared to
of
backhaul products, outside sales from Sovereign Plastics, and the sale of our
aerostat products and accessories. The increase was driven primarily from
revenue from companies acquired in 2021 and from large orders fulfilled by
Sovereign Plastics.
Cost of Goods Sold and Gross Profit
For the three months ended
compared to
of
to our contract manufacturer for the production of our mobile network backhaul
products and the materials, parts and labor associated with our other
manufacturing activities.
Gross profit for the three months ended
to
margin for the three months ended
three months ended
driven primarily by the sale of older DragonWave products that were lower margin
during the current quarter as compared to the corresponding period in the fiscal
year 2021 and an increase in purchase price variances due to increased prices
from manufacturing and logistical suppliers, resulting from current macro supply
chain constraints.
Research and Development Expense
For the three months ended
an increase of
primarily of contract labor and payroll related costs. This increase was
primarily for development of DragonWave radio software features, VNC 5G ORAN
system product development, VEO photonics chip development. The expenses are
mostly contractor labor and our own engineering teams.
Sales and Marketing Expense
For the three months ended
increase of
related costs performed primarily by our newly acquired subsidiary.
General and Administrative Expenses
For the three months ended
was
2021
professional expenses of
in certain public relations services, accounting services, and other
professional services. This was partially offset by increased payroll and
related costs of
plus rent increased by
our
about
Depreciation and Amortization (As Restated)
For the three months ended
a decrease of
(see below) and the 2021 year-end impairment of intangible assets.
Gain on the Sale of Assets
For the three months ended
million
increase of
The Company recognized an
Other Income and Expenses
For the three months ended
compared to other expense of
2021
in the loss on extinguishment of debt of
ended
expense.
Net income (loss) (As Restated)
For the three months ended
compared to a net loss of
2021
29
Liquidity and Capital Resources
Liquidity is the ability of an enterprise to generate adequate amounts of cash
to meet its cash requirements. As of
compared to
resulting primarily from
proceeds from the sale of the
Note 10 – Property and Equipment, Net in the notes to the condensed consolidated
financial statements for more information related to the sale of the
Building
As of
negative working capital of
in working capital of
of proceeds from the sale of the
the subsequent conversion of such debt into equity, partially offset by the
million
As of
indebtedness as follows:
?
?
?
and
?
Subsequent to
? of the
was converted into common stock and
? of the
million entered technical default and the holders sent us a letter indicating
that they were reserving their rights, but to date that haven’t declared a
default;
? additional promissory notes with a face value of
Our future capital requirements for our operations will depend on many factors,
including the profitability of our businesses, and the costs of our operations.
We cannot be sure that any additional funding, if needed, will be available. Any
additional capital raised through the sale of equity or equity-linked securities
may dilute our current stockholders’ ownership and could also result in a
decrease in the market price of our common stock. Debt financing, if available,
may subject us to restrictive covenants and significant interest costs.
Going Concern
The accompanying unaudited condensed consolidated financial statements and notes
have been prepared assuming that we will continue as a going concern. For the
three months ended
capital of
Our fiscal operating results, accumulated deficit and working capital, among
other factors, raise substantial doubt about our ability to continue as a going
concern. Based on our current cash on hand and subsequent activity as described
herein, we presently only have enough cash on hand to operate on a
month-to-month basis, without raising additional capital or selling assets.
Because of our limited cash availability, our operations have been scaled back
to the extent possible. We continue to explore opportunities with third parties
and related parties to provide additional capital; however, we have not entered
into any agreement to provide the necessary capital. In the near term, there
will be limited opportunities to raise capital of significance due to our Nasdaq
compliance issues, as discussed in Nasdaq Compliance Developments herein.
We will continue to pursue the actions outlined above, as well as work towards
increasing revenue and operating cash flows to meet our future liquidity
requirements. However, there can be no assurance that we will be successful in
any capital-raising efforts that we may undertake. If we are not able to obtain
additional financing on a timely basis, we may have to delay vendor payments
and/or initiate cost reductions, which would have a material adverse effect on
our business, financial condition and results of operations, and ultimately, we
could be forced to discontinue operations, liquidate assets and/or seek
reorganization under the
30
Lines of Credit and Debt
Summary information with respect to our debt or other credit facilities is set
forth in Note 12 – Debt of the notes to the unaudited condensed consolidated
financial statements set forth in Part I, Item 1 of this Quarterly Report.
Sources and Uses of Cash (As Restated)
For the Three Months Ended
March 31,
(Amounts in thousands) 2022 2021
Cash flows used in operating activities $ (8,719 ) $ (14,207 )
Cash flows provided by (used in) investing activities 14,909 (7,837 )
Cash flows (used in) provided by financing activities (7,587 ) 32,285
Net (decrease) increase in cash and cash equivalents $ (1,397 ) $ 10,241
Operating Activities (As Restated)
For the three months ended
was
the net income of
non-cash gains of
of operating assets and liabilities of
For the three months ended
was
the net operating loss of
adjustments for non-cash expenses of
changes in the levels of operating assets and liabilities of
Investing Activities
For the three months ended
activities was
proceeds from the building sale of
the acquisition of property and equipment of
For the three months ended
was
(a) fund business acquisitions of
equipment of
Financing Activities
For the three months ended
was
of
For the three months ended
sale of common stock from the public offerings of
offset by the repayment of debt of
notes of
Off-Balance Sheet Arrangements
We did not have any off-balance sheet arrangements that have had or are
reasonably likely to have a current or future material effect on our financial
condition, changes in financial condition, revenues, expenses, results of
operations, liquidity, capital expenditures or capital resources.
31
Critical Accounting Policies and Estimates
There have been no material changes to the Company’s significant accounting
policies as set forth in the Company’s audited consolidated financial statements
included in the Annual Report on Form 10-K for the year ended
However, it should be noted that business developments commencing in the second
quarter of 2022 (see Note 19 – Subsequent Events – Business Developments) in the
footnotes to the unaudited consolidated financial statements herein, included
discussions of exiting or idling of certain businesses and/or assets, in periods
subsequent to
that it was not more likely than not that any reporting unit’s fair value was
below that reporting unit’s carrying amount. Accordingly, it wasn’t necessary to
perform interim impairment testing as of
constraints of capital resources that manifested themselves subsequent to
31, 2022
economy, we may need to record future impairments of our long-lived assets and
or goodwill, based on our assessment in future periods.
Consequently, for the purpose of emphasis, we are again disclosing below our
accounting policy related to long-lived assets and goodwill.
Long-Lived Assets and
The Company accounts for long-lived assets in accordance with the provisions of
ASC 360-10-35, Property, Plant and Equipment, Impairment or Disposal of
Long-lived Assets. This accounting standard requires that long-lived assets be
reviewed for impairment whenever events or changes in circumstances indicate
that the carrying amount may not be recoverable. Recoverability of assets to be
held and used is measured by a comparison of the carrying amount of an asset to
future undiscounted net cash flows expected to be generated by the asset. If the
carrying amount of an asset exceeds its estimated future cash flows, an
impairment charge is recognized by the amount by which the carrying amount of
the asset exceeds the fair value of the asset.
The Company accounts for goodwill and intangible assets in accordance with ASC
350, Intangibles –
purchase price of an entity over the estimated fair value of the assets acquired
and liabilities assumed. ASC 350 requires that goodwill and other intangibles
with indefinite lives be tested for impairment annually or on an interim basis
if events or circumstances indicate that the fair value of an asset has
decreased below its carrying value.
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