Company: SONM
Filing Date: 2025-05-12
Form Type: 10-Q
Source: 0001641172-25-009749
Chunk: 5

Company: SONIM TECHNOLOGIES INC
Filing Date: 2025-05-12
Form: 10-Q
Item: Item 8
Chunk 5
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. 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, which are directly
observable. The standalone selling price of the professional services are mostly based on time and materials. The Company determines
its estimates of variable consideration based on historical collection experience with similar payor classes, aged accounts receivable
by payor class, terms of payment agreements, correspondence from payors related to revenue audits or reviews, its historical settlement
activity of audited and reviewed claims and current economic conditions using the portfolio approach. Revenue is recognized only to the
extent that it is probable that a significant reversal of the cumulative amount recognized will not occur in future periods.

Revenue
is then recognized for each distinct performance obligation as control is transferred to the customer. Revenue attributable to hardware
is recognized at the time control of the product transfers to the customer. Control is generally transferred when the Company has a present
right to payment and title and the significant risks and rewards of ownership of products or services are transferred to its customers.
For most of the Company’s revenue attributable to hardware, control transfers when products are shipped. Revenue attributable to
professional services is recognized as the Company performs the professional services for the customer.

The
Company maintains agreements with certain customers that include provisions for product allowances under specific conditions. Accruals
for