Rugged Device Manufacturer Sonim Technologies Proposes IPO
Tuesday, April 16, 2019 | Comments

Sonim Technologies filed a registration statement with the U.S. Securities and Exchange Commission (SEC) for a proposed initial public offering (IPO) of its common stock that could raise up to $58 million. Motorola Solutions and JVCKENWOOD each own more than 5 percent of the company before the offering.

In addition, former First Responder Network Authority (FirstNet) Chairwoman Sue Swenson and Vice Chairman Jeff Johnson are listed as directors in the company, both having joined the company’s board of directors in March. John Kneuer, former administrator of the National Telecommunications and Information Administration (NTIA), is also a director on Sonim's board.

The number of shares to be offered and the price range for the proposed offering have not yet been determined. Sonim applied to list its stock on the Nasdaq Stock Market under the symbol "SONM."

The company plans to use the IPO proceeds for general corporate purposes, including working capital, expanded sales and marketing activities, increased research and development (R&D) expenditures and funding growth strategies, such as subscription-based services and international activities. The company may use a portion of the net proceeds to acquire or invest in complementary businesses.

Sonim may also use a portion of the net proceeds to prepay principal amounts outstanding and deferred accrued interest under a B. Riley convertible note. The note has an interest rate of 10% per year, matures Sept. 1, 2022, and had an outstanding principal balance, including deferred accrued interest, of $13 million as of Dec. 31.

As of Dec. 31, 2018, the company had an accumulated deficit of $143.5 million, and generated $135.6 million in sales during 2018. Sonim said in its SEC filing that it has incurred significant net losses since 2013, including a net loss of $8.5 million in 2017.

In August 2016, Sonim entered into a supply and distribution agreement with Motorola Solutions, which holds 8.3% of the company. Sonim supplies hardware and software to Motorola and certain of its affiliates. The agreement has an initial term of three years, after which time the agreement remains in effect until terminated by either party. Since August 2016, Sonim has received about $2.2 million in total payments under the Motorola agreement.

In April 2017, Sonim licensed Motorola’s WAVE 7000 workgroup communications platform, including related proprietary interfaces, in North America. The WAVE license has an initial term of three years, plus a one-year extension at MSI’s election. At the same time, Sonim licensed the iDEN radio application link protocol from Motorola for the development of products to interface with Motorola’s products. The iDEN license has a term of three years. The WAVE and iDEN licenses were entered into with Motorola in connection with its master services agreement with Southern Communications Services.

The company’s ruggedized devices are distributed through AT&T, including FirstNet; Verizon; and Sprint, along with Canadian wireless carriers. Sonim relies on channel partners to generate a substantial majority of its revenues. In 2017 and 2018, about 76% and 80%, respectively, of Sonim’s revenues were derived from its top five channel partners.

Sonim manufactures its mobile phones at its facility in Shenzhen, China. Most of the company’s employee base and operations are located outside the United States, primarily in China and India. Most software development, third-party contract manufacturing and product assembly operations are conducted outside the United States.

JVCKENWOOD holds 7.8% of the company’s shares before the IPO. Oppenheimer & Co. Inc. is acting as lead book-running manager, and Lake Street Capital Markets is acting as joint book-running manager for the proposed offering.

Sonim executives declined to comment on the IPO.

The full SEC registration statement is here.

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