Company: SONM
Filing Date: 2025-08-08
Form Type: 10-Q
Source: 0001641172-25-022821
Chunk: 8

Company: SONIM TECHNOLOGIES INC
Filing Date: 2025-08-08
Form: 10-Q
Item: Item 8
Chunk 8
---
 of obtaining contracts as an expense when incurred when the amortization
period of the assets that otherwise would have been recognized is one year or less. These costs are included in sales and marketing expenses.

The
non-recurring costs associated with design and development of new products for technical approval represent costs to fulfill a contract
pursuant to ASC 340-40, Other Assets and Deferred Costs. Accordingly, the Company capitalizes these contract fulfillment costs
and amortizes such costs over the estimated period of time they are expected to be recovered, which is typically three to four years,
the estimated life of a particular product model. As of June 30, 2025, and December 31, 2024, the net contract fulfillment assets were
$8,014 and $6,399, respectively.

If
the Company determines that such contract fulfillment costs are not expected to be recovered, it records an impairment in the period
such determination is made. During the three months ended June 30, 2024, the Company recorded an impairment of contract fulfillment assets
of $3,217 due to a decrease in projected profit of one of its hotspots and the cancellation of a consumer durable product. During
the three months ended June 30, 2025, the Company recorded an impairment of contract fulfillment assets of $1,084 due to the end of life
of a legacy smartphone, which is included in cost of revenues in the Condensed Consolidated Statements of Operations. 

NOTE
3 — Significant Balance Sheet Components

The
following table presents the components of the Company’s accounts receivable, net:

   Schedule of Accounts Receivable

    June 30, 2025  
    December 31, 2024 
  
    Trade receivables 
    $5,576  
    $6,906 
  
    Allowance for credit losses 
     (2,706) 
     (2,567)
  
    Total accounts receivable 
    $2,870  
    $4,339 

As
of January 1, 2024, accounts receivable, net, was $25,304 and non-trade receivables was $961.

The
Company has non-trade receivables from manufacturing vendors resulting from the sale of components to the vendors who manufacture and
assemble final products for the Company.

The
Company determines the probability of default for each pool of receivables with similar risk characteristics. The probability of loss
is applied to