UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
10-K/A
Amendment No. 1
(Mark One)
☒ | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the fiscal year ended December 31, 2021
OR
☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
FOR THE TRANSITION PERIOD FROM TO
Commission File
Number 001-38907
Sonim Technologies, Inc.
(Exact name of Registrant as specified in its Charter)
Delaware | 94-3336783 | |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | |
6500 River Place Boulevard, Bldg. 7, S#250 Austin, TX | 78730 | |
(Address of principal executive offices) | (Zip Code) |
Registrant’s telephone number, including area code:
(650) 378-8100
Securities registered pursuant to Section 12(b) of the Act:
Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
Common Stock, par value $0.001 per share | SONM | The Nasdaq Capital Market |
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark if the Registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. YES ☐ NO ☒
Indicate by check mark if the Registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act. YES ☐ NO ☒
Indicate by check mark whether the Registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES ☒ NO ☐
Indicate by check mark whether the Registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of
Regulation S-T
(§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to submit such files). YES ☒ NO ☐Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a
non-accelerated
filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule12b-2
of the Exchange Act.Large accelerated filer | ☐ | Accelerated filer | ☐ | |||
Non-accelerated filer | ☒ | Smaller reporting company | ☒ | |||
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. ☐
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting fi rm that prepared or issued its audit report. ☐
Indicate by check mark whether the Registrant is a shell company (as defined in
Rule 12b-2
of the Exchange Act). YES ☐ NO ☒The aggregate market value of the voting and
non-voting
common equity held bynon-affiliates
of the Registrant, based on the closing price of the shares of common stock on The Nasdaq Capital Market on June 30, 2021 was approximately $37,359,618.At April 26, 2022, 19,269,338 shares of Common Stock, par value $0.001, of the registrant were outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
None.
EXPLANATORY NOTE
This Amendment No. 1 on Form
10-K/A
(“Amendment No. 1”) amends our Annual Report on Form10-K
for the fiscal year ended December 31, 2021 (“Original Filing”), filed with the U.S. Securities and Exchange Commission (“SEC”) on March 21, 2022 (“Original Filing Date”). The sole purpose of this Amendment No. 1 is to include the information required by Items 10 through 14 of Part III of Form10-K
(the “Part III Information”) and to delete the disclosures regarding incorporation by reference on the front cover page of the Original Filing. The Part III Information was previously omitted from the Original Filing in reliance on General Instruction G(3) to Form10-K,
which permits the information in the above referenced items to be incorporated in the Form10-K
by reference from our definitive proxy statement if such statement is filed no later than 120 days after our fiscalyear-end.
We are filing this Amendment No. 1 to include Part III information in our Form10-K
because we will not file a definitive proxy statement containing such information within 120 days after the end of the fiscal year covered by the Original Filing.In accordance with Rule
12b-15
under the Securities Exchange Act of 1934, as amended (“Exchange Act”), the Cover Page, Part III, Items 10 through 14 and Part IV, Item 15 of the Original Filing are hereby amended and restated in their entirety. This Amendment No. 1 does not amend, modify, or otherwise update any other information in the Original Filing. Accordingly, this Amendment No. 1 should be read in conjunction with the Original Filing. In addition, this Amendment No. 1 does not reflect events that may have occurred subsequent to the Original Filing Date.Throughout this Amendment No. 1, references to the “Company,” “Sonim,” “we,” “our,” and “us” refer to Sonim Technologies, Inc. and its wholly owned and consolidated subsidiaries.
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PART III
Item 10. | Directors, Executive Officers and Corporate Governance. |
Executive Officers and Directors
The following table sets forth information concerning our executive officers and directors, including their ages as of April 26, 2022.
Name | Age | Position | ||
Executive Officers | ||||
Peter Liu | 54 | Chief Executive Officer | ||
Robert Tirva | 56 | President, Chief Financial Officer and Chief Operating Officer | ||
Directors | ||||
John Kneuer (1)(2) | 53 | Chairman of the Board of Directors | ||
Alan Howe (1)(3) | 60 | Director | ||
Susan G. Swenson (1)(2) | 73 | Director | ||
Mike Mulica (1)(3) | 59 | Director |
(1) | Member of the Audit Committee. |
(2) | Member of the Compensation Committee. |
(3) | Member of the Nominating and Corporate Governance Committee. |
Executive Officers
Peter Liu
has served as our Chief Executive Officer since April 2022. Mr. Liu previously served as our Executive Vice President for Global Operations from September 2010 to April 2022. From 2007 to 2010, Mr. Liu served as Global Quality Director for LOM/Perlos, an international VI supplier of mobile phones. From 2005 to 2007, Mr. Liu was the Head of Quality for the Strategic Growth Engine business at Motorola Solutions, Inc., a multinational telecommunications company. Mr. Liu received a M.B.A. from Lawrence Technological University and a Bachelor’s in Engineering from Tianjin University.
Robert Tirva
Non-Employee Directors
John Kneuer
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served first as the Deputary Assistant Secretary, and then as U.S. Assistant Secretary, of Commerce for Communications and Information. As Assistant Secretary, Mr. Kneuer served as Administrator of the National Telecommunications and Information Administration. Mr. Kneuer received a B.A. and J.D. from Catholic University of America. The Board of Directors believes that Mr. Kneuer’s extensive business consulting experience and leadership experience at various strategic consulting and communications companies as well as federal telecommunications authorities qualifies him to serve on our Board of Directors.
Alan Howe
co-founder
and Managing Partner of Broadband Initiatives, LLC, a boutique corporate development and strategic consulting firm since 2001. Previously, Mr. Howe held various executive management positions at Covad Communications, Inc., a provider of broadband voice and data communications, Teletrac, Inc., a location-tracking software company, Sprint Corporation, a telecommunications company, and Manufacturers Hanover Trust Company, a commercial bank. Mr. Howe currently serves on the boards of Babcock and Wilcox, a company providing environmental technologies for the power industry, Orion Energy Systems, Inc., a LED lighting and intelligent controls company, and NextNav, a developer of 3D geolocation services. Mr. Howe previously served on the board of directors for Data I/O Corporation, magicJack, VocalTec, Ltd., a cloud communications company, CafePress, an online retailer of usercustomized products, Urban Communications, a provider of fiber optic services, Qualstar Corporation, a data storage products manufacturer, Determine. Inc., a provider of life cycle management solutions software, Widepoint Corporation, a provider of technology products and services, and Resonant Inc., a hardware development company for mobile devices. The Board of Directors believes that Mr. Howe’s extensive financial, executive and board experience with multiple private and public companies qualifies him to serve on our Board of Directors.Susan G. Swenson
T-Mobile
US, Inc., a wireless network operator. From 1999 to 2004, Ms. Swenson served as President of Leap Wireless International, Inc., a telecommunications operator, and Chief Executive Officer of Cricket Communications, Inc., a prepaid wireless service provider and subsidiary of Leap. Ms. Swenson also served as Chief Executive Officer of Sage North America from 2008 to 2011. Since March 2012, Ms. Swenson has served on the board of directors of Harmonic, Inc., a video delivery, and media company. Since October 2018, Ms. Swenson has served as chairman of the board of directors of Vislink Technologies, Inc., a video capture and broadcasting company. Ms. Swenson previously served on the board of directors of Wells Fargo from November 1994 to December 2017. Ms. Swenson received a B.A. in French from San Diego State University. The Board of Directors believes that Ms. Swenson’s extensive leadership experience at various media and communications companies and at FirstNet qualifies her to serve on our Board of Directors.Mike Mulica
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There are no family relationships among our directors or executive officers. There is no arrangement or understanding between or among our officers and directors pursuant to which any director or officer was or is to be selected as a director or officer.
Code of Business Conduct and Ethics for Employees, Executive Officers and Directors
We have adopted a Code of Business Conduct and Ethics, or the Code of Conduct, applicable to all of our employees, executive officers, and directors. The Code of Conduct is available on our website at www.sonimtech.com. The Nominating and Corporate Governance Committee of our Board of Directors is responsible for overseeing the Code of Conduct and must approve any waivers of the Code of Conduct for employees, executive officers, and directors. We expect that any amendments to the Code of Conduct, or any waivers of its requirements, will be disclosed on our website to the extent required by the applicable rules of the SEC and The Nasdaq Stock Market LLC (“Nasdaq”).
Audit Committee and Audit Committee Financial Expert
We have a standing Audit Committee of the Board of Directors. Mr. Howe, Mr. Mulica, Ms. Swenson and Mr. Kneuer currently serve as members of the Audit Committee of our Board of Directors, with Mr. Howe serving as the chairperson of the Audit Committee. Our Board of Directors has determined that Mr. Howe is an audit committee financial expert, as defined by SEC rules and regulations.
Our Board of Directors has determined that each of Mr. Howe, Ms. Swenson, Mr. Mulica and Mr. Kneuer is an independent director in accordance with Nasdaq listing rules and the applicable requirements of
Rule 10A-3 of
the Securities Exchange Act of 1934, as amended. Our Board of Directors has further determined that each of the members of the Audit Committee satisfy the financial literacy and sophistication requirements of the Nasdaq listing rules.Item 11. | Executive Compensation. |
Our named executive officers for the year ended December 31, 2021, consisting of one individual who served as an executive officer at
year-end
and one former executive officer for whom disclosure would have been provided but for the fact that such individual was not serving as an executive officer as of December 31, 2021, are: Robert Tirva, our President, Chief Financial Officer and Chief Operating Officer, and Thomas W. Wilkinson, our former Chief Executive Officer. Mr. Liu is not considered a named executive officer for the year ended December 31, 2021 because he was not an executive officer of the Company during 2021.Summary Compensation Table
The following table sets forth information regarding compensation earned during the years ended December 31, 2021 and December 31, 2020 by our named executive officers, or NEOs.
Name and Principal Position | Year | Salary ($) | Bonus ($) | Stock Awards ($) (1) | Option Awards ($) (1) | Non-Equity Incentive Plan Compensation ($) | All Other Compensation ($) | Total ($) | ||||||||||||||||||||||||
Robert Tirva | 2021 | $ | 325,000 | $ | 400,000 | (2) | $ | 199,999 | $ | — | $ | — | $ | — | $ | 924,999 | ||||||||||||||||
President, Chief Financial Officer and Chief Operating Officer | 2020 | $ | 300,000 | $ | 90,000 | $ | 531,252 | $ | — | $ | — | $ | — | $ | 921,252 | |||||||||||||||||
Thomas W. Wilkinson | 2021 | $ | 166,667 | $ | — | $ | — | $ | — | $ | — | $ | 440,364 | (3) | $ | 607,031 | ||||||||||||||||
Former Chief Executive Officer | 2020 | $ | 400,000 | $ | 160,000 | $ | 475,050 | $ | — | $ | — | $ | 8,650 | (4) | $ | 1,043,700 |
(1) | This column reflects the full grant date fair value for stock awards or options, respectively, granted during the fiscal year as measured pursuant to ASC Topic 718 as stock-based compensation in our consolidated financial statements. The grant date fair value of stock awards were based on the closing price per share of our common stock on the applicable grant date. These amounts do not necessarily correspond to the actual value that may be recognized from the stock options and stock awards by the NEOs. |
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(2) | 50% of Mr. Tirva’s net (after applicable withholding taxes) bonus for 2021 was paid in fully-vested shares of our common stock awarded under our 2019 Equity Incentive Plan (233,638 shares of our common stock granted on January 27, 2022). |
(3) | Represents (a) severance benefits (including estimated cost of reimbursement of premiums to continue health insurance under COBRA for one year) of $430,714 payable to Mr. Wilkinson pursuant to his Separation and Release Agreement with the Company, and (b) $9,650 for World Presidents Organization activities to which Mr. Wilkinson was entitled pursuant to his employment agreement. |
(4) | Represents $8,650 for World Presidents Organization activities to which Mr. Wilkinson was entitled pursuant to his employment agreement. |
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Outstanding Equity Awards at December 31, 2021
The following tables provide information about outstanding equity awards held by each of our named executive officers at December 31, 2021. Awards for the named executive officers were granted under our 2019 Equity Incentive Plan.
Option Awards
Name | Grant Date | Exercisable | Number of Securities Underlying Unexercised Options (#) | Option Exercise Price | Option Expiration Date | |||||||||||
Robert Tirva | 11/1/2019 | 9,510 | (1) | 16,899 | $ | 22.60 | 10/31/2029 |
(1) | 25% of the shares of common stock underlying the option, or 4,225 shares, vested in September 2020, the first anniversary of the vesting commencement date, and the remainder will vest in 36 equal monthly installments thereafter, subject to Mr. Tirva’s continuous service through the relevant vesting dates. During the 13 months following a change in control, if we terminate Mr. Tirva’s employment without cause or if Mr. Tirva resigns for good reason, vesting of this option will accelerate in full. |
Stock Awards
Name | Grant Date | Number of Shares or Units of Stock that Have Not Vested (#) | Market Value of Shares or Units of Stock That Have Not Vested ($) (4) | |||||||
Robert Tirva | 11/1/2019 | 4,224 | (1) | $ | 3,894 | |||||
6/9/2020 | 34,350 | (2) | $ | 31,664 | ||||||
9/29/2020 | 7,500 | (2) | $ | 6,914 | ||||||
06/18/2021 | 33,495 | (3) | $ | 30,876 |
(1) | 25% of the shares, or 2,113 shares, vested in September 2020, the first anniversary of the vesting commencement date, and the remainder will vest in 3 equal annual installments thereafter, subject to Mr. Tirva’s continuous service through the relevant vesting dates. During the 13 months following a change in control, if we terminate Mr. Tirva’s employment without cause or if Mr. Tirva’s resigns for good reason, vesting of this award will accelerate in full. |
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(2) | 25% of the shares, or 13,950 shares, vested in June 2021, the first anniversary of the vesting commencement date, and the remainder will vest in 3 equal annual installments thereafter, subject to Mr. Tirva’s continuous service through the relevant vesting dates. During the 13 months following a change in control, if we terminate employment without cause or individual resigns for good reason, vesting of these awards will accelerate in full. |
(3) | 100% of the shares are scheduled to vest on June 18, 2022, subject to continuous employment thru the relevant vest date. During the 13 months following a change in control, if we terminate employment without cause or individual resigns for good reason, vesting of these awards will accelerate in full. |
(4) | Based on closing price of our common stock as reported on the Nasdaq Global Market on December 31, 2021 ($0.9218). |
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Agreements with Our Named Executive Officers
Set forth below are descriptions of our employment agreements with our named executive officers. For a discussion of the severance pay and other benefits to be provided in connection with a termination of employment and/or a change in control under the arrangements with our named executive officers that were providing services to the Company as of December 31, 2021, see “—Potential Payments upon Termination or Change in Control.”
Mr.
Wilkinson.
Mr.
Tirva.
On October 14, 2021, we entered into an amended employment agreement with Mr. Tirva. The amended employment agreement reflects Mr. Tirva’s position as the Company’s President, Chief Financial Officer and Chief Operating Officer and provides that Mr. Tirva will receive an annual base salary of $400,000. The amended employment agreement also provides that Mr. Tirva’s target annual bonus opportunity is 100% of his base salary, with the actual annual bonus amount to be determined each year based on performance against performance targets determined by the Board of Directors. Mr. Tirva is also eligible to participate in the employee benefit plans generally available to our employees.
Potential Payments upon Termination or Change in Control
Each of our named executive officers that were providing services to the Company as of December 31, 2021 is eligible to receive certain benefits pursuant to his employment agreement with us, as described below. “Cause,” “good reason,” “enterprise value,” “financial investors” and “change in control” are defined in the applicable employment agreements with each of our named executive officers.
Mr.
Wilkinson.
In connection with his separation with the Company, on May 31, 2021 we entered into a Separation and Release Agreement with Mr. Wilkinson (the “Separation Agreement”). Pursuant to the Separation Agreement, we agreed to provide severance benefits (consisting of total cash severance pay of $400,000 and reimbursement of premiums to continue health insurance under COBRA for up to one year) to Mr. Wilkinson which were consistent with the severance benefits provided for in his employment agreement. In consideration for such severance benefits, the Separation Agreement includes a general release of claims by Mr. Wilkinson in favor of the Company. All of the
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stock options and stock awards that we had granted to Mr. Wilkinson prior to his separation terminated upon his separation to the extent that they had not vested prior to the date of his separation. In accordance with the Separation Agreement, Mr. Wilkinson’s participation in our transaction bonus plan terminated on November 30, 2021.
Mr.
Tirva
pro-rated
target annual bonus for the year in which the termination of employment occurs.Transaction Bonus Plan
In December 2019, our Board of Directors approved a transaction bonus plan that is intended to incentivize Company employees who are in a position to significantly impact the value received by the Company’s stockholders in a change of control transaction. Pursuant to the plan, upon consummation of a change of control transaction, 10% of the consideration payable to Company stockholders, after deducting transaction expenses, will be distributed to plan participants, including Mr. Wilkinson and Mr. Tirva. The plan has a three-year term and may be extended by the administrator. Subject to the terms of the plan, participants must be continuously providing services to the Company through the date of the closing of a change in control transaction to be eligible to receive a bonus thereunder, and payment is contingent upon delivery
and non-revocation of
a general release of claims. Our Board of Directors has allocated a 50% interest in the plan to Mr. Wilkinson and a 10% interest in the plan to Mr. Tirva.As noted above, Mr. Wilkinson’s participation in the transaction bonus plan terminated on November 30, 2021.
Executive Bonus Plan
Given the uncertainties of the global pandemic that existed during most of 2021, our Board of Directors did not approve bonus plan metrics or targets for 2021. Instead, the Board of Directors met at the end of the year and considered the Company’s performance during the year. The Board of Directors determined that Mr. Tirva would be paid a bonus of $400,000 based on the Company’s performance and his contributions during 2021.
Pension Benefits
Our named executive officers did not participate in, or otherwise receive any benefits under, any pension or retirement plan sponsored by us during 2021.
Nonqualified Deferred Compensation
Our named executive officers did not participate in, or earn any benefits under, a nonqualified deferred compensation plan sponsored by us during 2021.
Employee Benefit Plans
We believe that our ability to grant equity-based awards is a valuable and necessary compensation tool that aligns the long-term financial interests of our executive officers with the financial interests of our stockholders. In addition, we believe that our ability to grant options and other equity-based awards helps us to attract, retain and motivate
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executive officers and encourages them to devote their best efforts to our business and financial success. Vesting of equity awards (other than awards granted in lieu of cash salary or bonus) is generally tied to continuous service with us and serves as an additional retention measure. Our executive officers generally are awarded an initial new hire grant upon commencement of employment.
Each of our named executive officers currently employed by us holds equity awards under our 2019 Equity Incentive Plan that were granted subject to the general terms thereof and the applicable forms of award agreement thereunder. The specific vesting terms of each named executive officer’s equity awards are described above under “Outstanding Equity Awards as of December 31, 2021.”
Prior to our initial public offering, we granted all equity awards pursuant to our 2012 Equity Incentive Plan. We currently grant all equity awards pursuant to our 2019 Equity Incentive Plan. All options are granted with a per share exercise price equal to no less than the fair market value of a share of our Common Stock on the date of the grant, and generally vest on a monthly basis over 48 months, subject to the continued service with us through each vesting date. All options have a maximum term of up to 10 years from the date of grant, subject to earlier expiration following the cessation of an executive officer’s continuous service with us. Option vesting is subject to acceleration as described above under “Potential Payments upon Termination or Change in Control.” Options generally remain exercisable for three months following an executive officer’s termination, except in the event of a termination for cause or due to disability or death. Restricted stock unit awards (“RSUs”) generally vest annually over 4 years (other than awards granted in lieu of cash salary or bonus, which may be vested at grant), subject to the continued service with us through each vesting date.
Health and Welfare Benefits
We pay premiums for medical insurance, dental insurance, and vision insurance for all full-time employees, including our named executive officers. These benefits are available to all full-time employees, subject to applicable laws.
401(k) Plan
We maintain a defined contribution retirement plan that provides eligible U.S. employees with an opportunity to save for retirement on a tax advantaged basis. Eligible employees may defer eligible compensation onup to the statutorily prescribed annual limits on contributions under the Code. Contributions are allocated to each participant’s individual account and are then invested in selected investment alternatives according to the participants’ directions. Employees are immediately and fully vested in their contributions. The 401(k) plan is intended to be qualified under Section 401(a) of the Code with the 401(k) plan’s related trust intended to be tax exempt under Section 501(a) of the Code. As a
a pre-tax, or after-tax, basis,
tax-qualified
retirement plan, contributions to the 401(k) plan are deductible by us when made, and contributions and earnings on those amounts are not taxable to the employees until withdrawn or distributed from the 401(k) plan. We currently provide a matching contribution under the 401(k) plan.Director Compensation
The following table sets forth information regarding compensation earned during the year ended December 31, 2021 by
our non-employee directors
who served as directors during such year. Mr. Wilkinson, our former Chief Executive Officer, served on our Board of Directors but did not receive compensation for his service as a director and the compensation paid to Mr. Wilkinson for his service as an employee during the year ended December 31, 2021, is set forth in the “Summary Compensation Table” above.11
Name | Fees earned or Paid in Cash ($) | Stock awards (1)(4) ($) | Option awards (1) | Total($) | ||||||||||||
Alan Howe | $ | 50,000 | $ | 59,998 | (2) | — | $ | 109,998 | ||||||||
John Kneuer | $ | 64,667 | $ | 59,998 | (2) | — | $ | 124,665 | ||||||||
Sue Swenson | $ | 57,000 | $ | 59,998 | (2) | — | $ | 116,998 | ||||||||
Kenny Young (5) | — | — | — | $ | 0 | |||||||||||
Michael Mulica | $ | 21,500 | $ | 224,349 | (3) | — | $ | 245,849 | ||||||||
Ken Naumann (6) | — | $ | 39,100 | (6) | — | $ | 39,100 |
(1) | This column reflects the full grant date fair value for stock awards or options, respectively, granted during the year ended December 31, 2021 as measured pursuant to ASC Topic 718 as stock-based compensation in our consolidated financial statements. The grant date fair value of stock awards were based on the closing price per share of our common stock on the applicable grant date. These amounts do not necessarily correspond to the actual value that may be recognized from the stock awards by the non-employee directors. |
(2) | Each non-employee director was awarded 27,906 RSUs on November 12, 2021 having a grant date fair value of $59,998. |
(3) | Mr. Mulica was awarded 6,626 RSUs on June 17, 2021 for his initial appointment to the Board of Directors having a grant date fair value of $39,100, 75,000 RSUs on October 18, 2021 having a grant date fair value of $155,250, and 13,953 RSUs on November 12, 2021 having a grant date fair value of $29,999. |
(4) | As of December 31, 2021, each non-director employee held the following number of RSUs: (i) Mr. Howe (36,206); (ii) Mr. Kneuer (36,206); (iii) Ms. Swenson (36,206); and Mr. Mulica (95,579) Messrs. Young and Naumann, did not hold any RSUs at the end of fiscal 2021. As of December 31, 2021, eachnon-director employee held the following number stock options: (i) Mr. Howe (4,625); (ii) Mr. Kneuer (4,392); and (iii) Ms. Swenson (4,392). Messrs. Young, Mulica and Naumann did not hold any stock options at the end of fiscal 2021. |
(5) | Mr. Young declined to receive any compensation for his services as a member of the Board of Directors and any committee thereof. Mr. Young resigned from the Board of Directors effective February 3, 2022. |
(6) | Mr. Naumann was awarded 6,626 RSUs on June 17, 2021 for his initial appointment to the Board of Directors having a grant date fair value of $39,100. Mr. Naumann resigned from the Board of Directors effective July 16, 2021. |
Non-Employee Director
Compensation PolicyWe maintain a
non-employee
director compensation policy pursuant to which ournon-employee
directors are eligible to receive compensation for service on our Board of Directors and committees of our Board of Directors. Our Board of Directors or Compensation Committee may amend thenon-employee
director compensation policy from time to time.Equity Compensation
Each new
non-employee
director who joins our Board of Directors is granted an initial award of RSUs under our 2019 Equity Incentive Plan. Messrs. Mulica and Naumann each received an initial award of 6,626 RSUs under our 2019 Equity Incentive Plan in June 2021. Each of these annual awards vest in full on the earlier of the first anniversary of the grant date, immediately prior to the next annual meeting of the Company’s stockholders, a change in control of the Company, or the director’s death or disability, subject to the director’s continued service through the applicable vesting date.Each of our
non-employee
directors continuing to serve on the Board of Directors also receives an annual equity award of RSUs under our 2019 Equity Incentive Plan. As noted above, for 2021 these awards were granted on November 12, 2021 and had a grant date fair value of $59,998. Mr. Mulica’s annual grant waspro-rated
based on his 2021 service period and had a grant date fair value of $29,999. On the date of each annual meeting of our stockholders beginning in 2022, if an annual meeting is held, eachnon-employee
director who will continue as anon-employee
director following such meeting will be granted an award of RSUs under our 2019 Equity Incentive Plan having an aggregate grant date fair value of $60,000. Each of these annual awards vest in full on the earlier of the first anniversary of the grant date, immediately prior to the next annual meeting of the Company’s stockholders, a change in control of the Company, or the director’s death or disability, subject to the director’s continued service through the applicable vesting date.12
If a
non-employee
director is appointed or elected to our Board of Directors other than in connection with an annual meeting of stockholders, then suchnon-employee
director shall be awarded the full initial grant upon suchnon-employee
director’s appointment or election, and the annual grant to be awarded to suchnon-employee
director at the first annual meeting of stockholders following such appointment or election shall bepro-rated
for the number of months served prior to such annual meeting of stockholders.In addition to the above compensation, on October 18, 2021, in recognition of additional committee work and board of Directors assignments, Mr. Mulica was granted an additional received 75,000 RSUs with a grant date fair value of $155,250.
Each RSUs award granted under the policy will fully vest upon a change of control or the
non-employee
director’s death or disability.Cash Compensation
Each
non-employee
director will receive an annual cash retainer of $35,000 for serving on our Board of Directors. Thenon-executive
chairperson of our Board of Directors will receive an additional annual cash retainer of $25,000.The chairperson and members of the three principal standing committees of our Board of Directors will be entitled to the following annual cash retainers:
Board Committee | Chairperson Fee | Member Fee | ||||||
Audit Committee | $ | 15,000 | $ | 7,500 | ||||
Compensation Committee | $ | 10,000 | $ | 5,000 | ||||
Nominating and Corporate Governance Committee | $ | 7,500 | $ | 3,750 |
All annual cash compensation amounts will be payable in equal quarterly installments in arrears,
pro-rated
based on the days served in the applicable fiscal quarter.We also reimburse allincurred by
reasonable out-of-pocket expenses
non-employee
directors for their attendance at meetings of our Board of Directors or any committee thereof.Item 12. | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters. |
Security Ownership of Certain Beneficial Owners and Management
The following table sets forth information as of April 26, 2022 (except where otherwise indicated) regarding the beneficial ownership of our common stock by:
• | each person, or group of affiliated persons, who is known by us to own beneficially five percent or more of the outstanding shares of our common stock; |
• | each of our current directors; |
• | each of our named executive officers; and |
• | all of our current directors and executive officers as a group. |
The number of shares owned and percentage ownership in the following table is based on 19,269,338 shares of common stock outstanding on April 26, 2022. Except as otherwise indicated below, the address of each officer and director listed below is c/o 6500 River Place Boulevard, Bldg. 7, S#250, Austin, TX.
We have determined beneficial ownership in accordance with the rules of the SEC. These rules generally attribute beneficial ownership of securities to persons who possess sole or shared voting power or investment power with respect to those securities. In addition, these rules require that we include shares
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of common stock issuable pursuant to the exercise of stock options and RSUs that are either immediately exercisable or exercisable within 60 days of April 26, 2022. These shares are deemed to be outstanding and beneficially owned by the person holding those options and RSUs for the purpose of computing the percentage ownership of that person, but they are not treated as outstanding for the purpose of computing the percentage ownership of any other person. Unless otherwise indicated, we believe that the persons or entities identified in this table have sole voting and investment power with respect to all shares shown as beneficially owned by them, subject to applicable community property laws.
Name and Address of Beneficial Owner | Total | Percent | ||||||
5% Stockholders: | ||||||||
Directors and Named Executive Officers: | ||||||||
Robert Tirva (1) | 318,875 | 1.65 | % | |||||
Tom Wilkinson | 0 | * | ||||||
John Kneuer (2) | 7,144 | * | ||||||
Alan Howe (3) | 8,266 | * | ||||||
Susan G. Swenson (4) | 6,700 | * | ||||||
Mike Mulica (5) | 6,626 | * | ||||||
Total of all Current Directors and Executive Officers | 457,184 | 2.37 | % |
* | Represents less than 1% of the outstanding shares of our common stock. |
(1) | Consists of 259,809 shares held directly by Robert Tirva, 47,445 shares subject to RSUs vesting and exercisable within 60 days of April 26, 2022 and 11,621 shares issuable upon the exercise of outstanding options held by Robert Tirva exercisable within 60 days April 26, ,2022 |
(2) | Consists of 4,014 shares held directly by John Kneuer, and 3,100 shares subject to RSUs vesting and exercisable within 60 days of April 26, 2022. |
(3) | Consists of 4,933 shares held directly by Alan Howe, 3,100 shares subject to RSUs vesting and exercisable within 60 days of April 26, 2022 and 233 shares issuable upon the exercise of outstanding options that are fully vested. |
(4) | Consists of 3,600 shares held directly by Susan Swenson, and 3,100 shares subject to RSUs vesting and exercisable within 60 days of April 26, 2022. |
(5) | Consists of 6,626 shares subject to RSUs held by Mike Mulica exercisable within 60 days of April 26, 2022. |
Equity Compensation Plan Information
The following table provides certain information with respect to all of Sonim’s equity compensation plans in effect as of December 31, 2021:
Plan Category | Number of Securities to be Issued upon Exercise of Outstanding Options, Warrants and Rights (a) | Weighted-Average Exercise Price of Outstanding Options, Warrants and Rights (b) | Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding Securities Reflected in Column (a)) (c) | |||||||||
Equity compensation plans approved by security holders | 442,524 | (1) | $ | 39.9972 | (2) | 596,580 | (3) | |||||
Equity compensation plans not approved by security holders | — | — | — | |||||||||
Total | 442,524 | $ | 39.9972 | 596,580 |
(1) | The aggregate number consists of the following: 40,738 shares subject to options to purchase common stock issued pursuant to our 2012 Equity Incentive Plan as of December 31, 2021, 54,675 shares subject to options to purchase common stock issued pursuant to our 2019 Equity Incentive Plan as of December 31, 2021, and 347,111 shares issuable upon vesting of outstanding RSUs issued pursuant to our 2019 Equity Incentive Plan as of December 31, 2021. |
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(2) | This weighted average exercise price does not reflect shares that will be issued upon the vesting of outstanding RSUs. |
(3) | Includes 538,243 shares authorized for future issuance under our 2019 Equity Incentive Plan and 58,337 shares authorized for future issuance under our 2019 Employee Stock Purchase Plan as of December 31, 2021. Under 2019 Employee Stock Purchase Plan, the number of shares of common stock reserved for issuance will automatically increase on January 1 of each calendar year for 10 years, starting January 1, 2020, and ending on, and including, January 1, 2029, in an amount equal to the lesser of 1% of the total number of shares of capital stock outstanding on December 31st of the prior calendar year, and (ii) 50,000 shares, unless the Board of Directors or Compensation Committee determines prior to such date that there will be a lesser increase, or no increase. Effective January 1, 2022, 50,000 additional shares were added to the 2019 Employee Stock Purchase Plan. Under the 2019 Equity Incentive Plan, the number of shares subject to outstanding stock options or other stock awards that were granted under the 2012 Option Plan that are forfeited, terminated, expire, or are otherwise not issued are available for issuance. Additionally, the number of shares of common stock reserved for issuance under the 2019 Equity Incentive Plan will automatically increase on January 1 of each calendar year for 10 years, starting January 1, 2020 and ending on and including January 1, 2029, in an amount equal to 5% of the total number of shares of capital stock outstanding on December 31 of the prior calendar year, unless the Board of Directors or Compensation Committee determines prior to the date of increase that there will be a lesser increase, or no increase. Effective January 1, 2022, 940,444 additional shares were added to the 2019 Equity Incentive Plan. Subject to certain express limits of the 2019 Equity Incentive Plan, shares available for award purposes under the 2019 Equity Incentive Plan generally may be used for any type of award authorized under that plan, including options, stock appreciation rights, restricted stock, RSUs, performance-based stock or cash awards or other similar rights to purchase or acquire shares of our common stock. |
Item 13. | Certain Relationships and Related Transactions, and Director Independence. |
Policies and Procedures for Related Party Transactions
We have a written Related-Person Transactions Policy that sets forth the Company’s policies and procedures regarding the identification, review, consideration and approval or ratification of “related-persons transactions.” For purposes of the Company’s policy only, a “related-person transaction” is a transaction, arrangement or relationship (or any series of similar transactions, arrangements or relationships) in which the Company and any “related person” are participants involving an amount that exceeds $120,000. Transactions involving compensation for services provided to the Company as an employee, director, consultant or similar capacity by a related person are not covered by this policy. A related person is any executive officer, director, or more than 5% stockholder of the Company, including any of their immediate family members, and any entity owned or controlled by such persons.
Under the policy, where a transaction has been identified as a related-person transaction, management must present information regarding the proposed related-person transaction to the Audit Committee (or, where Audit Committee approval would be inappropriate, to another independent body of the Board of Directors) for consideration and approval or ratification. The presentation must include a description of, among other things, the material facts, the interests, direct and indirect, of the related persons, the benefits to the Company of the transaction and whether any alternative transactions were available. To identify related-person transactions in advance, the Company relies on information supplied by its executive officers, directors and certain significant stockholders. In considering related-person transactions, the Audit Committee takes into account the relevant available facts and circumstances including, but not limited to (a) the risks, costs and benefits to the Company, (b) the impact on a director’s independence in the event the related person is a director, immediate family member of a director or an entity with which a director is affiliated, (c) the terms of the transaction, (d) the availability of other sources for comparable services or products and (e) the terms available to or from, as the case may be, unrelated third parties or to or from employees generally. In the event a director has an interest in the proposed transaction, the director must recuse himself or herself form the deliberations and approval. The policy requires that, in determining whether to approve, ratify or reject a related-person transaction, the Audit Committee consider, in light of known circumstances, whether the transaction is in, or is not inconsistent with, the best interests of the Company and its stockholders, as the Audit Committee determines in the good faith exercise of its discretion.
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Related Party Transactions
The following is a description of transactions since January 1, 2020 to which we have been a participant and in which (i) the amount involved exceeded or will exceed the lesser of $120,000 or one percent of the average of our total assets as of December 31, 2021 and 2020, and (ii) any of our directors, executive officers or holders of more than 5% of our common stock, or any members of their immediate family, had or will have a direct or indirect material interest, other than compensation arrangements which are described in the sections titled “Executive Compensation” and
“Management—Non-Employee
Director Compensation.”B. Riley Loan Agreement
In October 2017, we entered into a subordinated term loan and security agreement (the “Loan Agreement”) with B. Riley Principal Investments, LLC, a former significant stockholder of the Company, pursuant to which we borrowed $10.0 million in principal secured subordinated indebtedness pursuant to the B. Riley Convertible Note. In March 2018, we amended the Loan Agreement to increase the available aggregate principal borrowings to $12.0 million and borrowed an additional $2.0 million in principal secured subordinated indebtedness pursuant to the B. Riley Convertible Note, as amended. In July 2019, we prepaid $3.25 million in principal and interest under the B. Riley Convertible Note.
On June 1, 2020, we entered into a Note Amendment and Debt Cancellation Agreement (the “Note Amendment”) with B. Riley Principal Investments, LLC, which provided that, contingent upon the closing of the underwritten public offering pursuant to a registration statementcertain principal amount, accrued interest and other amounts outstanding under the B. Riley Convertible Note would convert into shares of common stock to be issued to B. Riley Principal Investments, LLC or its affiliates at the public offering price of shares of our common stock in the offering.
Form S-1 (File No. 333-238869), that
Pursuant to the Note Amendment, as amended, $6,170,125.51 of principal amount, accrued interest and other amounts outstanding under the B. Riley Convertible Note converted into an aggregate of 8,226,834 shares of the Company’s common stock issued to the selling stockholders (the “Conversion Shares”) on June 10, 2020. On June 11, 2020, we entered into a registration rights agreement with the Robert Plaschke, our former Chief Executive Officer and a member of our Board of Directors, entities affiliated with B. Riley Financial, Inc. and the other parties thereto pursuant to which we agreed to file a registration statement covering the resale by such parties to the registration rights agreement of the Conversion Shares and to use our best efforts to cause such registration statement to become effective upon the time frames set forth in the registration rights agreement. We filed a registration statement on Form
S-1
covering the resale of the Conversion Shares on July 2, 2020 (FileNo. 333-239664),
which was declared effective by the SEC on July 13, 2020.Limitation of Liability and Indemnification of Officers and Directors
The Company provides indemnification for its directors and officers so that they will be free from undue concern about personal liability in connection with their service to the Company. Under the Company’s Bylaws, the Company is required to indemnify its directors and officers to the extent not prohibited under Delaware or other applicable law. The Company has also entered into indemnity agreements with its executive officers and directors. These agreements provide, among other things, that the Company will indemnify the officer or director, under the circumstances and to the extent provided for in the agreement, for expenses, damages, judgments, fines and settlements he or she may be required to pay in actions or proceedings which he or she is or may be made a party by reason of his or her position as a director, officer or other agent of the Company, and otherwise to the fullest extent permitted under Delaware law and the Company’s Bylaws.
Director Independence
As required by applicable rules of Nasdaq and our Corporate Governance Guidelines, a majority of the members of our Board of Directors qualify as “independent,” as affirmatively determined by the Board of Directors.
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Our Board of Directors undertook a review of the independence of each director and considered whether any director has a material relationship that could compromise his or her ability to exercise independent judgment in carrying out his or her responsibilities as a director. After review of all relevant transactions or relationships between each director, or any of his or her family members, and the Company, its senior management and its independent registered public accounting firm, the Board of Directors affirmatively determined that the following directors are independent directors within the meaning of the applicable Nasdaq listing standards: Ms. Swenson and Messrs. Howe, Kneuer and Mulica. In making these determinations, our Board of Directors considered certain relationships and transactions that occurred in the ordinary course of business between the Company and entities which some of our directors are or have been affiliated. The Board of Directors determined that such transactions would not impair the particular director’s independence or interfere with the exercise of independent judgment in carrying out director responsibilities. In addition, our Board of Directors previously determined that each of Kenny Young and Ken Naumann were independent directors pursuant to applicable rules of Nasdaq during their respective service on our Board of Directors in fiscal 2021.
Item 14. | Principal Accountant Fees and Services. |
Moss Adams LLP (Campbell, CA, PCAOB ID: 659), who performed our audit services for fiscal year 2021 including an audit of the consolidated financial statements and services related to filings with the SEC, has served as our independent registered public accounting firm since 2013.
The following table presents fees for professional audit services rendered by Moss Adams LLP for the audit of our annual financial statements for fiscal 2021 and fiscal 2020, and fees billed for other services rendered by Moss Adams LLP during fiscal 2021 and fiscal 2020.
Type of Fees | Fees for Fiscal 2021 | Fees for Fiscal 2020 | ||||||
Audit Fees (1) | $ | 664,250 | $ | 734,425 | ||||
Audit-Related Fees | — | — | ||||||
Tax Fees (2) | 39,108 | 72,991 | ||||||
All Other Fees | — | — | ||||||
Total Fees | $ | 703,358 | $ | 807,416 | ||||
(1) | Audit Fees consist of fees for: professional services rendered for the audit of our consolidated financial statements included in our annual report, the review of our interim consolidated financial statements included in our quarterly reports and services in connection with our Registration Statements on Form S-1 and FormS-3. |
(2) | Tax Fees consist of fees for tax compliance and tax advice. |
The Audit Committee must
pre-approve
all audit related services and permissiblenon-audit
services (unless in compliance with exceptions available under applicable laws and rules related to immaterial aggregate amounts of services) provided by our independent registered public accounting firm. However, the Audit Committee may delegate preapproval authority to one or more committee members so long as any such preapproval decisions are presented to the full committee at the next scheduled meeting.All services rendered by Moss Adams LLP, our independent registered public accounting firm, during fiscal 2021 and fiscal 2020 were
pre-approved
by the Audit Committee in accordance with the audit committeepre-approval
policy.17
PART IV
Item 15. | Exhibits and Financial Statement Schedules. |
The following documents are filed as part of this report:
1. | Financial Statements. |
See Part II, Item 8 of the Original Filing.
2. | Financial Statement Schedules. |
3. | Exhibits. |
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Exhibit Index
19
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31.4 | Certification of Principal Financial Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | * | ||||||||||||||||
32.1† | Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | 10-K | 001-38907 | 32.1 | March 21, 2022 | |||||||||||||
32.2† | Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | 10-K | 001-38907 | 32.1 | March 21, 2022 | |||||||||||||
101.INS† | XBRL Instance Document | |||||||||||||||||
101.SCH† | XBRL Taxonomy Extension Schema Document | |||||||||||||||||
101.CAL† | XBRL Taxonomy Extension Calculation Linkbase Document | |||||||||||||||||
101.DEF† | XBRL Taxonomy Extension Definition Linkbase Document | |||||||||||||||||
101.LAB† | XBRL Taxonomy Extension Label Linkbase Document | |||||||||||||||||
101.PRE† | XBRL Taxonomy Extension Presentation Linkbase Document | |||||||||||||||||
104 | Cover Page Interactive Data File - formatted in Inline XBRL and contained in Exhibit 101 |
† | Included on Original Filing |
* | Filed herewith. |
** | Compensatory plan or management contract |
+ | Portion of this exhibit (indicated by asterisks) have been omitted as the Registrant has determined that (i) the omitted information is not material and (ii) the omitted information would likely cause competitive harm to the Registrant if publicly disclosed. |
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this Amendment No. 1 to the Form
10-K
to be signed on its behalf by the undersigned, thereunto duly authorized.
Sonim Technologies, Inc. | ||||||
Date: May 2, 2022 | By: | /s/ Robert Tirva | ||||
Robert Tirva | ||||||
President, Chief Financial Officer and Chief Operating Officer ( Duly Authorized Officer ) |
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