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Sonim(SONM) - 2025 Q2 - Quarterly Report
SonimSonim(US:SONM)2025-08-08 21:18

PART I. FINANCIAL INFORMATION Item 1. Financial Statements (Unaudited) This section presents the unaudited condensed consolidated financial statements for the quarter ended June 30, 2025 Condensed Consolidated Balance Sheets Total assets decreased to $36.1 million while the stockholders' deficit improved to $(1.3) million as of June 30, 2025 Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | $2,006 | $5,343 | | Total current assets | $27,123 | $32,165 | | Total assets | $36,078 | $39,739 | | Total current liabilities | $35,662 | $43,740 | | Total liabilities | $37,412 | $45,439 | | Total stockholders' equity (deficit) | $(1,334) | $(5,700) | Condensed Consolidated Statements of Operations The company reported a Q2 net loss of $7.5 million, while the H1 net loss narrowed to $7.0 million from the prior year Statement of Operations Summary (in thousands, except per share data) | Metric | Q2 2025 | Q2 2024 | H1 2025 | H1 2024 | | :--- | :--- | :--- | :--- | :--- | | Total net revenues | $11,190 | $11,516 | $27,911 | $28,292 | | Gross profit | $845 | $2,969 | $9,201 | $5,871 | | Loss from operations | $(6,732) | $(6,470) | $(6,087) | $(9,159) | | Net loss | $(7,475) | $(6,616) | $(7,017) | $(9,522) | | Net loss per share (basic & diluted) | $(0.79) | $(1.41) | $(0.91) | $(2.09) | Condensed Consolidated Statements of Stockholders' Equity The stockholders' deficit improved significantly due to capital raising activities offsetting the period's net loss - For the six months ended June 30, 2025, the company's stockholders' deficit decreased from $(5,700) thousand to $(1,334) thousand21 - Key drivers were $8,952 thousand in net proceeds from common stock issuance and $2,431 thousand in stock-based compensation, partially offset by a $7,017 thousand net loss21 Condensed Consolidated Statements of Cash Flows Net cash used in operations increased to $14.5 million, funded by $11.2 million from financing activities Cash Flow Summary (in thousands) | Activity | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net cash used in operating activities | $(14,488) | $(3,560) | | Net cash used in investing activities | $0 | $(69) | | Net cash provided by financing activities | $11,151 | $3,832 | | Net decrease in cash | $(3,337) | $203 | | Cash at end of period | $2,006 | $9,600 | Notes to Unaudited Condensed Consolidated Financial Statements Notes detail the pending asset sale to Social Mobile, a planned RTO, and significant revenue recognition items - On July 17, 2025, the Company entered into an Asset Purchase Agreement to sell substantially all assets to Social Mobile for $15 million in cash plus a potential $5 million earn-out30113114 - The company is pursuing a potential reverse takeover (RTO) transaction in conjunction with the asset sale to maximize stockholder value31116 - Management believes it has sufficient liquidity to continue as a going concern for the next twelve months based on current and subsequent funding36 - For H1 2025, the Company recognized $5.49 million in revenue from the release of previously accrued customer allowances51 - Subsequent to quarter end, the company raised $4.8 million from a public offering and $2.5 million from a promissory note121125126 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses financial performance, the pending asset sale, and liquidity for the reporting period Company Overview and Strategic Initiatives The company is focused on rugged 5G solutions and is pursuing a sale of its core business to Social Mobile - The company launched new products including the Sonim H500 hotspot, XP Pro 5G smartphone, and XP3plus 5G flip phone141144 - Sonim entered an agreement to sell substantially all assets for $15 million in cash plus a potential $5 million earn-out149150 - In parallel with the asset sale, the company is pursuing a reverse merger (RTO) to allow the public entity to continue with a new business152 Results of Operations H1 2025 gross profit improved significantly due to a large customer allowance release, despite a slight revenue dip Comparison of Results of Operations (in thousands) | Metric | H1 2025 | H1 2024 | Change (%) | | :--- | :--- | :--- | :--- | | Total net revenues | $27,911 | $28,292 | (1)% | | Gross profit | $9,201 | $5,871 | 57% | | Loss from operations | $(6,087) | $(9,159) | (34)% | | Net loss | $(7,017) | $(9,522) | (26)% | - H1 2025 gross profit increased by $3.3 million, primarily due to a $5.5 million revenue recognition from expired customer allowance agreements177 - Q2 2025 gross profit decreased by $2.1 million, impacted by a $1.1 million impairment of contract fulfillment assets and tariff costs175 - R&D expenses for H1 2025 increased by $1.5 million YoY due to new product development179 Liquidity and Capital Resources Recent financing activities provide sufficient capital to fund operations for at least the next twelve months - As of June 30, 2025, the company had $2.0 million in cash and cash equivalents184 - Subsequent to the quarter end, the company raised net proceeds of approximately $4.8 million from a public offering and $2.3 million from a promissory note184 - The company has access to a domestic receivables financing facility of up to $2.5 million and an international facility of up to €3.0 million184 - Management expects existing cash and subsequent funding to be sufficient to meet all obligations for at least one year from the report's release date184 Item 3. Quantitative and Qualitative Disclosures About Market Risk As a smaller reporting company, Sonim is not required to provide information regarding market risk - The company is a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and is not required to provide this information194 Item 4. Controls and Procedures Management concluded that the company's disclosure controls and procedures were effective as of June 30, 2025 - Management concluded that the company's disclosure controls and procedures were effective as of the end of the reporting period195 - There were no material changes in the company's internal control over financial reporting during the quarter197 PART II. OTHER INFORMATION Item 1. Legal Proceedings A complaint filed by AJP Holding Company and Orbic North America in April 2025 was dismissed in June 2025 - A complaint filed by AJP Holding Company, LLC and Orbic North America, LLC on April 24, 2025, was dismissed without prejudice on June 2, 202598101199 Item 1A. Risk Factors This section adds new risks related to the proposed asset sale and RTO initiative and updates existing risk factors - A new group of risk factors, "Risks Related to the Proposed Asset Purchase Agreement and Announced Strategic Initiatives," has been added217 - Key new risks include potential failure to close the asset sale, business disruptions, and the risk of becoming a 'shell company' if an RTO is not completed217219223 - The U.S. trade policy risk was updated to note the imposition of a 145% tariff on imports from China, though an exemption exists for smartphones202 - The stockholder activism risk was amended to mention the recent campaign by Orbic North America to acquire Sonim206 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds The company reported no unregistered sales of equity securities during the reporting period - None230 Item 3. Defaults Upon Senior Securities The company reported no defaults upon its senior securities during the period - None231 Item 4. Mine Safety Disclosures This item is not applicable to the company's business operations - Not applicable232 Item 5. Other Information No directors or officers adopted or terminated a Rule 10b5-1 trading arrangement during the quarter - No directors or officers adopted or terminated a Rule 10b5-1 trading arrangement during the quarter233 Item 6. Exhibits This section lists all exhibits filed with the report, including the Asset Purchase Agreement and financing documents - Exhibit 2.1 is the Asset Purchase Agreement dated July 17, 2025235 - Exhibits include various financing and corporate governance documents, such as a promissory note (4.1), a Rights Agreement (4.2), and officer certifications (31.1, 31.2, 32.1, 32.2)235237