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SAN DIEGO, CA – Sonim Technologies Inc . (NASDAQ:SONM), a manufacturer of rugged mobile phones with a market capitalization of $12.81 million, announced today it has entered into a financing agreement with Streeterville Capital, LLC, securing a $3.3 million promissory note. According to InvestingPro data, while the company maintains more cash than debt on its balance sheet, it has been quickly burning through its cash reserves.
Under the terms of the agreement, Sonim Technologies will adhere to certain covenants. These include maintaining compliance with SEC filing requirements, keeping its stock listed on a national securities exchange, and not issuing any restricted securities without the lender’s consent. The agreement also contains a "most favored nation" clause, ensuring that if Sonim issues debt with more favorable terms in the future, those terms will be offered to Streeterville Capital as well. The financing comes at a crucial time, as the company’s revenue of $56.74 million in the last twelve months has been accompanied by challenging gross margins of 21.16%.
The note carries an original issue discount of $270,000, and Sonim has paid $30,000 to cover various transaction costs, resulting in net proceeds of $3 million. The note, which accrues interest at 9% per annum, is due 18 months from the date of issuance. Sonim may prepay the note, in whole or in part, subject to a premium.
Starting six months after issuance, Streeterville Capital has the right to redeem up to $330,000 of the note per calendar month. Sonim may defer redemptions on three occasions, with each deferral increasing the note’s outstanding balance by 1%.
The note includes provisions for increases in the outstanding balance, by 15% for each Major Trigger Event and 5% for each Minor Trigger Event, with limitations on the number of times these increases can be applied. An Event of Default, which can occur if a Trigger Event is not cured within five trading days, would make the outstanding balance immediately payable with an increased interest rate.
Ascendiant Capital Markets, LLC acted as the placement agent for the transaction, receiving a fee of $180,000.
The financing comes at a time when Sonim Technologies has 5,872,548 shares of common stock issued and outstanding. Trading at $2.63 per share, InvestingPro analysis suggests the stock is currently undervalued, though investors should note the stock’s significant volatility and 61% decline over the past year. This capital infusion is expected to support the company’s ongoing operations and strategic initiatives. For deeper insights into Sonim’s financial health and 14 additional key ProTips, consider exploring InvestingPro’s comprehensive analysis tools.
The details of the note and the purchase agreement were outlined in the exhibits attached to the SEC filing, which provides the basis for this press release statement.
In other recent news, Sonim Technologies has announced changes to its executive compensation structure. The company granted restricted stock units (RSUs) to key employees, including executive officers, as part of an effort to retain talent and incentivize performance. Notably, Chief Commercial Officer Charles Becher received 70,671 RSUs, CEO Peter Liu was awarded 63,604 RSUs, and CFO Clay Crolius was granted 33,922 RSUs. These RSUs will vest in two equal installments, contingent upon continued employment with Sonim Technologies. The awards are part of the Sonim Technologies, Inc. 2019 Equity Incentive Plan, which aims to align employee interests with those of shareholders. This development follows a press release filed with the SEC, highlighting the company’s strategy for employee retention and motivation. Investors are likely to monitor how these changes might influence Sonim Technologies’ performance.
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