8-K
DNA X, Inc. (SONM)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENTREPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): August 12, 2020
Sonim Technologies, Inc.
(Exact name of Registrant as Specified in Its Charter)
| Delaware | 001-38907 | 94-3336783 |
|---|---|---|
| (State or Other Jurisdiction<br><br><br>of Incorporation) | (Commission<br><br><br>File Number) | (IRS Employer<br><br><br>Identification No.) |
6836 Bee Cave Road
Building 1, Suite 279
Austin, TX
78746
(Address of Principal Executive Offices and Zip Code)
(650) 378-8100
(Registrant’s Telephone Number, Including Area Code)
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 (see General Instructions A.2. below):
| ☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
|---|---|
| ☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17<br>CFR 240.14a-12) |
| --- | --- |
| ☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| --- | --- |
| ☐ | Pre-commencement 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<br><br><br>Symbol(s) | Name of each exchange<br><br><br>on which registered |
|---|---|---|
| Common Shares, par value<br><br><br>$0.001 per share | SONM | The Nasdaq Stock Market LLC |
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 August 12, 2020, Sonim Technologies, Inc. (the “Company”) announced its financial results for the three and six months ended June 30, 2020. A copy of the press release is attached hereto as Exhibit 99.1.
The information in this Item 2.02, including the attached Exhibit 99.1, is being furnished and shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that Section, nor shall it be deemed incorporated by reference in any filing made by the Company under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.
Item 9.01 Financial Statements and Exhibits.
Exhibits
| Exhibit<br><br><br>Number | Description |
|---|---|
| 99.1 | Press Release issued by Sonim Technologies, Inc. dated August 12, 2020 |
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 Technologies, Inc. | ||
|---|---|---|
| (Registrant) | ||
| Date: August 12, 2020 | By: | /s/ Robert Tirva |
| Robert Tirva | ||
| Chief Financial Officer |
EX-99.1
Exhibit 99.1
Sonim Reports 66% Sequential Revenue Increase in Second Quarter
Net Revenues $21.1 Million, Gross Margin Increases to 23.4%
Austin, Texas – August 12, 2020 – Sonim Technologies, Inc. (Nasdaq: SONM), **** a leading U.S. provider of ultra-rugged mobility solutions designed specifically for task workers physically engaged in their work environments, reported financial results for the second quarter ended June 30, 2020.
Sequential Second Quarter 2020 and Recent Highlights
| • | Net revenues of $21.1 million, an increase of 65.7% from the first quarter |
|---|---|
| • | Gross margin increased to 23.4%, compared with 17.0% in the first quarter |
| --- | --- |
| • | GAAP net loss declined to $7.1 million, from $10.0 million in the first quarter |
| --- | --- |
| • | Raised $27.6 million in gross proceeds from a public offering |
| --- | --- |
| • | Eliminated $10.2 million in debt and accrued interest through repayment and conversion<br> |
| --- | --- |
| • | Ended the quarter with cash and equivalents of $38.1 million. |
| --- | --- |
Year-Over-Year Second Quarter 2020 Highlights
| • | Net revenues of $21.1 million, a decrease of 51.9% from the 2019 second quarter |
|---|---|
| • | Gross margin decreased to 23.4%, compared with 33.0% in the prior year second quarter |
| --- | --- |
| • | GAAP net loss increased to $7.1 million, from $5.6 million in the 2019 second quarter<br> |
| --- | --- |
Said Tom Wilkinson, Chief Executive Officer: “Our improved carrier relationships and increased marketing drove a 65.7% sequential increase in revenue compared to our first quarter of 2020 as we execute on our turnaround plan. We also improved gross margin sequentially to more than 23% in spite of the ongoing effects of the COVID-19 pandemic on our supply chain.”
Wilkinson added: “We continued to expand our relationships with both carrier and enterprise customers and evaluated opportunities to deploy capital into organic and strategic opportunities. In addition to a 39% decrease in operating expense from the prior year, we have drastically improved our balance sheet, resulting in a well-capitalized company with a solid foundation for future innovation and growth.”
Second Quarter 2020 Financial Results
Net revenues for the second quarter of 2020 increased 65.7% to $21.1 million from $12.7 million in the first quarter of 2020. The increase in net revenues was primarily attributable to expanded carrier relationships and enterprise distribution capabilities.
Gross profit for the second quarter of 2020 increased sequentially to $4.9 million (23.4% of net revenues) from $2.2 million (17.0% of net revenues) in the first quarter of 2020. The sequential increase in gross profit was primarily attributable to increased sales activity over which to spread production
costs as well as the absence of the temporary shutdown that affected the Shenzhen manufacturing facility in the first quarter of 2020, an event which increased cost of goods in the preceding quarter.
Operating expenses for the second quarter were approximately $0.3 million higher than in the first quarter, but down 39% year-over-year. Second quarter GAAP operating expenses included a one-time charge of $2 million for the proposed settlement of prior shareholder suits and associated legal expenses of approximately $0.4 million, which settlement is subject to court approval. Both Research and Development and Sales and Marketing expenses declined sequentially as Sonim seeks to maximize efficiency of its operating costs, consistent with its goal to lean out operations under its new business model.
Net loss for the second quarter of 2020 totaled $7.1 million or $(0.22) per basic and diluted share (based on 31.6 million shares), compared to net loss of $10.0 million, or $(0.48) per basic and diluted share (based on 20.6 million shares), in the first quarter of 2020.
Balance Sheet
Sonim ended the quarter with $38.1 million in cash and equivalents, and no long-term debt. Net cash provided by operating activities was $5.7 million through the first six months of 2020. Inventory was $15.2 million at quarter end, and accounts receivable $5.3 million. Working capital totaled $36.2 million, up from $19.7 million at December 31, 2019.
Conference Call
Sonim Technologies will hold a conference call today, Wednesday August 12, at 1:30 p.m. Pacific Time (4:30 p.m. Eastern Time) to discuss these results and provide an update on business conditions. To join the call, please dial +1-412-317-6060. To listen to a live webcast of the call, please visit https://www.sonimtech.com/ and select About, then Investor Relations. The webcast will be available as a replay on Sonim’s website following completion of the call. A telephonic replay will be available for 14 days approximately 3 hours after the call concludes by dialing +1-412-317-0088 and entering access code 10146839.
About Sonim Technologies, Inc.
Sonim Technologies is a leading U.S. provider of ultra-rugged mobility solutions designed specifically for task workers physically engaged in their work environments, often in mission-critical roles. The Sonim solution includes ultra-rugged mobile phones, a suite of industrial-grade accessories, and data and workflow applications which are collectively designed to increase worker productivity, communication and safety on the job site. For more information, visit www.sonimtech.com.
Important Cautions Regarding Forward-Looking Statements
This release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements relate to, among other things, future growth, profitability, continued market acceptance of the Company’s products. These forward-looking statements are based on Sonim’s current expectations, estimates and projections about its business and industry,
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management’s beliefs and certain assumptions made by the Company, 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 Sonim’s ability to continue to generate positive cash flow, and ability to be profitable; anticipated trends, such as the use of and demand for its products; its ability to attract and retain customers to purchase and use its products; its ability to attract wireless carriers as customers for its products; the evolution of technology affecting its products and markets; its ability to successfully address the technical issues identified with respect to its products; its ability to introduce new products and enhance existing products, as well as the other potential factors described under “Risk Factors” included in Sonim’s Quarterly Report on Form 10-Q for the three months ended March 31, 2020, the Form 10-Q for the three months ended June 30, 2020 expected to be filed not later than August 14, 2020, and other documents on file with the Securities and Exchange Commission (available at www.sec.gov). Sonim cautions you not to place undue reliance on forward-looking statements, which reflect an analysis only and 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.
Sonim Technologies Contacts
Robert Tirva, Chief Financial Officer
Sonim Technologies, Inc.
Matt Kreps, Managing Director
Darrow Associates Investor Relations
(214) 597-8200
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SONIM TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
JUNE 30, 2020 (UNAUDITED) and DECEMBER 31, 2019
(IN THOUSANDS OF U.S. DOLLARS EXCEPT SHARE AND
PER SHARE AMOUNTS)
| December 31,2019 | |||||
|---|---|---|---|---|---|
| Assets | |||||
| Cash and cash equivalents | 38,062 | $ | 11,298 | ||
| Accounts receivable, net | 5,268 | 10,082 | |||
| Inventory | 15,225 | 19,531 | |||
| Prepaid expenses and other current assets | 6,342 | 6,430 | |||
| Total current assets | 64,894 | 47,341 | |||
| Property and equipment, net | 1,291 | 1,442 | |||
| Other assets | 5,264 | 6,676 | |||
| Total assets | 71,452 | $ | 55,459 | ||
| Liabilities and stockholders’ equity | |||||
| Current portion of long-term debt | 147 | $ | 9,821 | ||
| Accounts payable | 10,104 | 7,234 | |||
| Accrued expenses | 16,895 | 10,265 | |||
| Insurance premiums due | 1,240 | — | |||
| Deferred revenue | 346 | 291 | |||
| Total current liabilities | 28,732 | 27,611 | |||
| Income tax payable | 2,140 | 1,961 | |||
| Long-term debt, less current portion | 325 | 362 | |||
| Total liabilities | 31,197 | 29,934 | |||
| Stockholders’ equity | |||||
| Common stock, 0.001 par value per share; 100,000,000 shares authorized: and 65,927,316 and<br>20,437,235 shares issued and outstanding at June 30, 2020 and December 31, 2019, respectively. | 66 | 20 | |||
| Preferred Stock, 0.001 par value per share, 5,000,000 shares authorized | — | — | |||
| Additional paid-in capital | 223,495 | 191,751 | |||
| Accumulated deficit | (183,306 | ) | (166,246 | ) | |
| Total stockholders’ equity | 40,255 | 25,525 | |||
| Total liabilities and stockholders’ equity | 71,452 | $ | 55,459 |
All values are in US Dollars.
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SONIM TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
THREE MONTHS ENDED JUNE 30, 2020 and 2019 (UNAUDITED)
(IN THOUSANDS OF U.S. DOLLARS EXCEPT SHARE AND PER SHARE AMOUNTS)
| Three Months Ended | Six Months Ended | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| June 30 | June 30 | |||||||||||
| 2020 | 2019 | 2020 | 2019 | |||||||||
| Net revenues | $ | 21,058 | $ | 43,747 | $ | 33,764 | $ | 70,231 | ||||
| Cost of revenues | 16,140 | 29,302 | 26,681 | 46,765 | ||||||||
| Gross profit | 4,918 | 14,445 | 7,083 | 23,466 | ||||||||
| Operating expenses: | ||||||||||||
| Research and development | 3,256 | 7,384 | 7,192 | 14,345 | ||||||||
| Sales and marketing | 2,596 | 4,218 | 5,727 | 7,944 | ||||||||
| General and administrative | 5,686 | 7,424 | 8,758 | 9,900 | ||||||||
| Restructuring costs | — | — | 1,087 | — | ||||||||
| Total operating expenses | 11,538 | 19,026 | 22,764 | 32,189 | ||||||||
| Income (loss) from operations | (6,620 | ) | (4,581 | ) | (15,681 | ) | (8,723 | ) | ||||
| Interest expense | (302 | ) | (555 | ) | (621 | ) | (977 | ) | ||||
| Other expense, net | 6 | (6 | ) | (395 | ) | (271 | ) | |||||
| Income (loss) before income taxes | (6,916 | ) | (5,142 | ) | (16,697 | ) | (9,971 | ) | ||||
| Income tax expense | (180 | ) | (457 | ) | (363 | ) | (752 | ) | ||||
| Net loss attributable to common stockholders | $ | (7,096 | ) | $ | (5,599 | ) | $ | (17,060 | ) | $ | (10,723 | ) |
| Net loss per share attributable to common stockholders, basic and diluted | $ | (0.22 | ) | $ | (0.31 | ) | $ | (0.65 | ) | $ | (0.63 | ) |
| Weighted–average shares used in computing net loss per share attributable to common<br>stockholders, basic and diluted | 31,638,250 | 18,120,143 | 26,126,037 | 16,950,375 |
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