Company: SONM
Filing Date: 2025-10-31
Form Type: 10-Q
Source: 0001493152-25-020310
Chunk: 9

Company: SONIM TECHNOLOGIES INC
Filing Date: 2025-10-31
Form: 10-Q
Item: Item 8
Chunk 9
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, namely the delivery of product. A performance obligation
is a promise in a contract to transfer a distinct good or service to the customer and is defined as the unit of account for revenue recognition
under ASC 606. The Company also recognizes revenue from other contracts that may include a combination of products and NRE services or
from the provision of solely NRE services. Where there is a combination of products and NRE services, the Company accounts for the promises
as individual performance obligations if they are concluded as distinct. Performance obligations are considered distinct if they are
both capable of being distinct and distinct within the context of the contract. In determining whether performance obligations meet the
criteria for being distinct, the Company considers a number of factors, such as the degree of interrelation and interdependence between
obligations, and whether or not the good or service significantly modifies or transforms another good or service in the contract. During
the three and nine months ended September 30, 2025, and 2024, the Company did not have any contracts in which the products and NRE services
were concluded to be a single performance obligation. In certain cases, the Company may offer tiered pricing based on volumes purchased
for specific model phones. To date, all tiered pricing provisions have fallen into observable ranges of pricing to existing customers,
thus, not resulting in any material right which could be concluded as its own performance obligation. In addition, the Company does not
offer material post-contract support services to its customers.

Net
revenue for an individual contract is recognized at the related transaction price, which is the amount the Company expects to be entitled
to in exchange for transferring the goods and/or services. The transaction price for product sales is calculated as the product selling
price net of variable consideration which may include estimates for marketing development funds, sales incentives, and price protection
and stock rotation rights. The Company generally does not offer a right of return to its customers, except for certain distributors where
the company estimates future returns and reduces revenue on sales subject to return and maintains a reserve for returns allowance. Typically,
variable consideration does not need to be constrained as estimates are based on specific contract terms. However, the Company continues
to assess variable consideration estimates such that it is probable that a significant reversal of revenue will not occur. The transaction
price for a contract with multiple performance obligations is allocated to the separate performance obligations on a relative standalone
selling price basis. Standalone selling prices for products are determined based on the prices charged to customers