Sonim(US:SONM)2022-03-21 21:29Revenue and Sales Performance - For the year ended December 31, 2021, approximately 90% of the company's revenues came from large wireless carriers, with 68% from the top three customers[217]. - Net revenues for the year ended December 31, 2021, decreased by $9.4 million, or 14.7%, to $54.6 million compared to $64.0 million for the year ended December 31, 2020[251]. - The total units sold decreased by 10.2% from 255,000 in 2020 to 229,000 in 2021, with smartphone units sold decreasing by 43%[231][229]. - Gross profit for the year ended December 31, 2021, decreased by $8.8 million, or 57.8%, to $6.4 million, representing 11.8% of revenues, down from 23.8% in 2020[253]. Financial Losses and Concerns - The company reported a net loss of $38.6 million for the year ended December 31, 2021, compared to a net loss of $29.9 million in 2020[233]. - The net loss for December 31, 2021, was $38.6 million compared to a net loss of $29.9 million for December 31, 2020, driven by decreased revenues and gross profit margin[261]. - Adjusted EBITDA for 2021 was $(34.7 million), a decline from $(24.3 million) in 2020[231]. - Adjusted EBITDA was negative $34.7 million for the year ended December 31, 2021, compared to negative $24.3 million for the year ended December 31, 2020, reflecting lower revenues and decreased gross profit margin[262]. - The company has substantial doubt regarding its ability to continue as a going concern for at least one year from the issuance date of the audited financial statements[264]. Cash and Financing Activities - The company had cash and cash equivalents totaling $11.2 million as of December 31, 2021, raising concerns about its ability to continue as a going concern[218]. - Cash used in operating activities for the year ended December 31, 2021, was $38.5 million, primarily due to a net loss of $38.6 million[269]. - Cash provided by financing activities for the year ended December 31, 2021, was $27.6 million, mainly from the issuance of common stock through the ATM Program[272]. - The company issued and sold 10,280,906 shares of common stock at a weighted average price of $1.89, generating net proceeds of approximately $19.4 million during the quarter ended December 31, 2021[266]. - The company had approximately $21.6 million available for future issuances under the New ATM Program as of December 31, 2021[266]. Operational Changes and Future Plans - The company plans to launch next-generation phones in Q3 2022, including the XP5plus and XP10 models[219]. - The company executed a 1-for-10 reverse stock split on September 15, 2021, to regain compliance with Nasdaq listing requirements[222]. - The company has outsourced substantially all manufacturing functions, resulting in a reduction of headcount from 263 employees and 54 contractors in 2020 to 77 employees and 25 contractors in 2021[221]. - The company expects to continue investing in sales and marketing to drive new customer acquisition, leading to increased costs in these areas[237]. - The company anticipates approximately $3.7 million in contractual obligations for the next generation of phones and $2.5 million for other products as of December 31, 2021[274]. Expenses and Legal Matters - Research and development expenses increased by $1.5 million, or 9.1%, to $17.7 million for the year ended December 31, 2021, primarily due to investment in new product development[254]. - Sales and marketing expenses decreased by $0.8 million, or 8.1%, to $9.6 million for the year ended December 31, 2021, attributed to a reduction in personnel costs[255]. - General and administrative expenses increased by $0.5 million, or 4.6%, to $10.3 million for the year ended December 31, 2021, mainly due to an increase in bad debt expense[256]. - Legal expenses rose by $0.4 million to $6.9 million for the year ended December 31, 2021, primarily due to increased costs related to an SEC investigation[257]. - Legal expenses related to the ongoing SEC investigation have significantly impacted liquidity and may continue to do so in the foreseeable future[264]. Warranty and Liability - The warranty liability balance would increase by $84 if the estimated cost to repair each unit increased by 10%[286]. - An increase of 10% in the lifetime return rate would result in a $146 higher warranty liability balance[286]. - The cost of revenue for the year ended December 31, 2021, would increase by the same amount as the warranty liability[286].