8-K
DNA X, Inc. (SONM)
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
8-K
CURRENT
REPORT
Pursuant
to Section 13 OR 15(d)
of
The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): May 9, 2023
SonimTechnologies, Inc.
(Exact name of registrant as specified in its charter)
| Delaware | 001-38907 | 94-3336783 |
|---|---|---|
| (State<br> or other jurisdiction<br><br> <br>of<br> incorporation) | (Commission<br><br> <br>File<br> Number) | (IRS<br> Employer<br><br> <br>Identification<br> No.) |
4445Eastgate Mall, Suite 200,
SanDiego, CA 92121
(Address of principal executive offices, including Zip Code)
(650)378-8100
(Registrant’s telephone number, including area code)
Notapplicable.
(Former name or former address, if changed since last report.)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| ☐ | Written<br> communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
|---|---|
| ☐ | Soliciting<br> material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ☐ | Pre-commencement<br> communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ☐ | Pre-commencement<br> communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Securities registered pursuant to Section 12(b) of the Act:
| Title of each Class | Trading Symbol(s) | Name of each exchange on which registered |
|---|---|---|
| Common<br> Stock, par value $0.001 per share | SONM | The<br> Nasdaq Stock Market LLC<br><br> <br>(Nasdaq<br> Capital Market) |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☒
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
| Item 2.02 | Results of Operations and Financial Condition. |
|---|
On May 8, 2023, after filing its Current Report on Form 10-Q for the fiscal quarter ended March 31, 2023 with the Securities and Exchange Commission (the “First Quarter 10-Q”), Sonim Technologies, Inc. (the “Company”) issued a press release (the “Original Press Release”) announcing its financial results for the fiscal quarter ended March 31, 2023. The Original Press Release contained certain inadvertent typographical errors in the description of the periods of the presented financial results disclosed in the Original Press Release. These typographical errors do not change the Company’s actual results as reported in the Original Press Release and in the First Quarter 10-Q.
On May 9, 2023, the Company issued a press release (the “Corrected Press Release”) announcing its financial results for the first quarter ended March 31, 2023 to avoid potential confusion and correct the aforementioned typographical errors. A copy of the Corrected Press Release is furnished as Exhibit 99.1 to this Current Report on Form 8-K.
Neither the Original Press Release nor the Corrected Press Release contained any information about the Company’s results of operations or financial condition other than the information already disclosed in the First Quarter 10-Q. This Current Report on Form 8-K is furnished voluntarily solely to avoid any potential confusion in connection with the aforementioned press releases.
| Item 9.01 | Financial Statements and Exhibits. |
|---|
(d) Exhibits.
| Exhibit<br><br> <br>Number | Description |
|---|---|
| 99.1 | Corrected Press Release. |
| 104 | Cover<br> Page Interactive Data file (embedded within the Inline XBRL document). |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| SONIM<br> TECHNOLOGIES, INC. | ||
|---|---|---|
| Date:<br> May 9, 2023 | By: | /s/ Clay Crolius |
| Name: | Clay<br> Crolius | |
| Title: | Chief<br> Financial Officer |
Exhibit99.1
CORRECTIONFROM SOURCE: Sonim Reports 95% Sales Increase, Profitability in First Quarter 2023
AchievesPositive GAAP Net Income on Continued Sales Growth
TargetingAdjacent Markets to Continue Revenue Growth
This press release corrects a press release distributed on May 8, 2023 under the same headline which contained two misstated dates.
SanDiego, California – May 8, 2023 – Sonim Technologies, Inc. (Nasdaq: SONM), a leading provider of ultra-rugged, rugged and consumer durable mobile devices including phones, tablets and accessories designed to provide extra protection for users that demand more durability in their work and everyday lives, reported financial results for the first quarter ended March 31, 2023.
FirstQuarter 2023 and Recent Highlights
| ● | Net<br> revenues increased 95% year-over-year to $25.8 million, from $13.3 million in the first quarter<br> 2022, and 7% sequentially from $24.1 million in the fourth quarter 2022 |
|---|---|
| ● | Achieved<br> positive GAAP net income of $227 thousand, compared to a net loss of $7.2 million in the<br> first quarter of 2022, and a net loss of $1.0 million in the fourth quarter 2022 |
| ● | Expanded<br> availability of Sonim’s first ultra-rugged 5G smartphone, the best-in-class Sonim XP10,<br> sold at tier-1 North American carriers in the U.S. and Canada |
| ● | Launched<br> a First Net ready XP3plus in addition to the First Net ready XP10 5G ultra rugged smartphone<br> for public safety customers |
| ● | Launched<br>the XP3plus flip phone featuring NextNav Pinnacle Vertical Location Capabilities, available to Verizon and Verizon Frontline customers |
| ● | Ended<br> the quarter with cash and cash equivalents of $9.0 million, accounts receivable of $25.0<br> million and inventory of $4.5 million, demonstrating Sonim’s ability to self-fund its<br> organic growth strategy and working capital needs |
Peter Liu, Sonim’s Chief Executive Officer, said: “We are excited to report positive net income on a GAAP basis, a capstone achievement just 8 months following the new management team’s appointment in July 2022. We reported 95% year-over-year revenue growth in the first quarter, confirming the success of our refreshed core business in rugged mobile devices available at Tier-1 carriers in North America and our strategy to expand into large, profitable adjacent markets.
“The first quarter results signal completion of the first phase our strategy, achieving both growth and profitability through a diversified, sustainable rugged mobility and ODM devices business. We are now moving into the second phase of our growth strategy at Sonim, targeting continued revenue growth rates of 50% or more annually for the next three years. In order to achieve this goal, we intend to sustain and grow our core rugged mobile devices business, as well as leverage our rugged expertise to expand into exciting enterprise data and consumer durable device opportunities, tapping a larger addressable market estimated at more than $70 billion in size.”
FirstQuarter 2023 Financial Results
Revenue for the first quarter 2023 was $25.8 million, increased 7% from $24.1 million in the fourth quarter 2022 and increased 95% from $13.3 million in the first quarter 2022. Revenue reflected the launch of Sonim’s new fully refreshed rugged mobile device line, including the XP10 Android smartphone, XP5plus and XP3plus devices, plus continued fulfillment of Android tablet customer purchases exemplifying Sonim’s new capabilities to win business in large adjacent markets leveraging its rugged heritage and ODM relationship capabilities.
Gross profit for the quarter ended March 31, 2022, was $4.2 million, or 16% of revenues, compared with fourth quarter 2022 gross profit of $3.9 million, or 16% of revenues, and $1.5 million, or 12% of revenues in the prior year quarter. The increase in gross profit margin was attributable to product sales mix, including increased sales of the newly refreshed rugged products line, offset by lower margin but higher volume non-Sonim branded ODM tablet shipments. Increased sales of Sonim’s updated rugged cell phones, including the updated XP10 rugged smartphone, are expected to increase unit sales of Sonim’s higher margin devices in 2023.
Operating expenses for the first quarter 2023 were $3.8 million, compared to $5.0 million in the fourth quarter 2022, and declining from $8.6 million in the 2022 first quarter. Operating expenses were lower due to lower R&D and legal expenses. Net profit in the first quarter was $227 thousand, compared with net loss of $1.0 million in the fourth quarter 2022 and net loss of $7.2 million in the prior year quarter.
“We are excited to achieve positive net income on a GAAP basis, reflecting both strong revenue growth over the past year as well as diligent expense control through our operating cost light business model.,” said Clay Crolius, Chief Financial Officer. “We will now focus on further scaling sales and operating metrics while expanding our addressable markets with new devices that build upon our unparalleled rugged products heritage. Our balance sheet is well funded to support these goals as we continue to fund our working capital needs and grow the business.”
Additionally, in May 2023 the Company was notified that it had regained compliance with the Nasdaq minimum bid price rule for continued listing on the Nasdaq Stock Exchange. in March 2023 Sonim was informed that the Securities and Exchange Commission concluded its investigation without enforcement action. Conclusion of the matter is further expected to reduce operating costs through the savings in legal expenses, which amounted to $1.1 million in 2022.
BalanceSheet and Working Capital
Sonim ended the first quarter with $9.0 million in cash and equivalents and remained essentially debt free. Accounts receivable increased sequentially to $25.0 million on increased sales, and inventory increased to $4.5 million.
ImportantCautions Regarding Forward-Looking Statements
This release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, as amended. These statements relate to, among other things, the projected revenue growth, and the anticipated effect of various events on Sonim’s financial condition. These forward-looking statements are based on Sonim’s current expectations, estimates and projections about its business and industry, management’s beliefs and certain assumptions made by Sonim, all of which are subject to change. Forward-looking statements generally can be identified by the use of forward-looking terminology such as, “future”, “believe,” “expect,” “may,” “will,” “intend,” “estimate,” “continue,” or similar expressions or the negative of those terms or expressions. Such statements involve risks and uncertainties, which could cause actual results to vary materially from those expressed in or indicated by the forward-looking statements. Factors that may cause actual results to differ materially include, but are not limited to, the following: Sonim’s ability to continue as a going concern and improve its liquidity and financial position; Sonim’s exploration of strategic or financial alternatives may not result in any transaction or alternative that enhances value; risks related to Sonim’s ability to comply with the continued listing standards of the Nasdaq Stock Market and the potential delisting of Sonim’s common stock; Sonim’s ability to continue to develop solutions to address user needs effectively, including its next generation products; anticipated sales levels of both new and legacy products; Sonim’s reliance on its channel partners to generate a substantial majority of its revenues; the limited operating history in Sonim’s markets; Sonim’s ongoing restructuring and transformation of its business; the variation of Sonim’s quarterly results; the lengthy customization and certification processes for Sonim’s wireless carries customers; the impact of global macroeconomic events, inflation, and the COVID-19 pandemic, as well as the other risk factors described under “Risk Factors” included in Sonim’s most recent Annual Report on Form 10-K and any subsequent quarterly filings on Form 10-Q filed with the Securities and Exchange Commission (available at www.sec.gov). Sonim cautions you not to place undue reliance on forward-looking statements, which speak only as of the date hereof. Sonim assumes no obligation to update any forward-looking statements in order to reflect events or circumstances that may arise after the date of this release, except as required by law.
SonimTechnologies Contacts
Matt Kreps, Managing Director
Darrow Associates Investor Relations
mkreps@darrowir.com
(214) 597-8200
| 2 |
| --- |
SONIMTECHNOLOGIES, INC.
CONDENSEDCONSOLIDATED BALANCE SHEETS
MARCH31, 2023 AND DECEMBER 31, 2022 (UNAUDITED)
(INTHOUSANDS OF U.S. DOLLARS EXCEPT SHARE AND
PERSHARE AMOUNTS)
| December 31,<br> <br>2022 | |||||
|---|---|---|---|---|---|
| Assets | |||||
| Cash and cash equivalents | 8,959 | $ | 13,213 | ||
| Accounts receivable, net | 25,038 | 22,433 | |||
| Non-trade receivable | 1,249 | 2,269 | |||
| Inventory | 4,508 | 3,910 | |||
| Prepaid expenses and other current assets | 1,697 | 1,807 | |||
| Total current assets | 41,451 | 43,632 | |||
| Property and equipment, net | 69 | 168 | |||
| Right-of-use assets | 258 | 66 | |||
| Contract fulfillment assets | 7,079 | 6,848 | |||
| Other assets | 2,944 | 2,972 | |||
| Total assets | 51,801 | $ | 53,686 | ||
| Liabilities and stockholders’ equity | |||||
| Current portion of long-term debt | 110 | $ | 147 | ||
| Accounts payable | 20,602 | 21,126 | |||
| Accrued expenses | 8,706 | 10,692 | |||
| Current portion of lease liability | 258 | 66 | |||
| Deferred revenue | 3 | 31 | |||
| Total current liabilities | 29,679 | 32,062 | |||
| Income tax payable | 1,431 | 1,429 | |||
| Accrued severance | — | 150 | |||
| Total liabilities | 31,110 | 33,641 | |||
| Commitments and contingencies (Note 9) | |||||
| Stockholders’ equity | |||||
| Common stock, 0.001 par value per share; 100,000,000 shares authorized: and 40,995,430 and 40,774,687 shares issued and outstanding at March 31, 2023, and December 31, 2022, respectively. | 41 | 41 | |||
| Preferred stock, 0.001 par value per share, 5,000,000 shares authorized, and no shares issued and outstanding at March 31, 2023, and December 31, 2022, respectively. | — | — | |||
| Additional paid-in capital | 270,293 | 269,874 | |||
| Accumulated deficit | (249,613 | ) | (249,870 | ) | |
| Total stockholders’ equity | 20,691 | 20,045 | |||
| Total liabilities and stockholders’ equity | 51,801 | $ | 53,686 |
All values are in US Dollars.
| 3 |
| --- |
SONIMTECHNOLOGIES, INC.
CONDENSEDCONSOLIDATED STATEMENTS OF OPERATIONS
THREEMONTHS ENDED MARCH 31, 2023 AND 2022 (UNAUDITED)
(INTHOUSANDS OF U.S. DOLLARS EXCEPT SHARE AND PER SHARE AMOUNTS)
| Three Months Ended | ||||||
|---|---|---|---|---|---|---|
| March 31, | ||||||
| 2023 | 2022 | |||||
| Net revenues | $ | 25,801 | $ | 13,258 | ||
| Cost of revenues | 21,626 | 11,730 | ||||
| Gross profit | 4,175 | 1,528 | ||||
| Operating expenses: | ||||||
| Research and development | 105 | 4,168 | ||||
| Sales and marketing | 1,757 | 2,170 | ||||
| General and administrative | 1,980 | 2,272 | ||||
| Total operating expenses | 3,842 | 8,610 | ||||
| Net income (loss) from operations | 333 | (7,082 | ) | |||
| Interest expense | — | (39 | ) | |||
| Other income (expense), net | 7 | (23 | ) | |||
| Net income (loss) before income taxes | 340 | (7,144 | ) | |||
| Income tax expense | (113 | ) | (68 | ) | ||
| Net income (loss) | $ | 227 | $ | (7,212 | ) | |
| Net income (loss) per share | ||||||
| Basic | $ | 0.01 | $ | (0.38 | ) | |
| Diluted | $ | 0.01 | $ | (0.38 | ) | |
| Weighted–average shares used in computing net income (loss) per share | ||||||
| Basic | 40,907,047 | 19,111,379 | ||||
| Diluted | 41,095,901 | 19,111,379 |
| 4 |
| --- |