NOTE 4 —Significant Balance Sheet Components

Inventory consisted of the following:

 Schedule of Inventory

In August 2022, the Company stopped purchasing raw materials used by third-party manufacturers in the manufacturing of Sonim’s legacy devices. Excess raw materials were sold to ODM partners.

During the year ended December 31, 2021, the Company recorded a $1,594 write-down of the inventory value for scanners, aging raw materials and aging finished goods. The Company accrued a loss of approximately $300 on purchase commitments in connection with end-of-life products.

Distributor returns allowance

The Company records reductions to revenue related to future distributor product returns based on the Company’s expectation. The Company had inventory related to distributor product returns totaling approximately $4 and $229 as of December 31, 2022 and 2021.

Prepaid expenses and other current assets consisted of the following:

 Schedule of Prepaid Expenses and Other Current Assets

Property and equipment consisted of the following:

 Schedule of Property and Equipment

Depreciation and amortization expense of property and equipment for the years ended December 31, 2022 and 2021, was $244 and $301, respectively. During 2022, the Company retired or disposed of computer equipment, software, and leasehold improvements with a cost of $4,751 and accumulated depreciation of $4,621 as the Company stopped manufacturing in 2022 and two U.S. leases were terminated. The Company recorded a loss on the disposal of assets of $130 on these disposals that is included in other expense, net in the Consolidated Statements of Operations. During 2021, the Company disposed of computer equipment with a cost of $910 and accumulated depreciation of $856.

Contract fulfillment assets are capitalized costs to test and obtain certification for cell phones with specific carriers. These costs are amortized over the estimated life of a phone model, which is four years. Contract fulfillment assets for the years ended December 31, 2022 and 2021 are $6,848 and $2,345 respectively.

Other assets consisted of the following:

Schedule of Other Assets 

Accrued liabilities consisted of the following:

 Schedule of Accrued Expenses

The table below sets forth the activity in the warranty liability account, which is included in accrued expenses on the Consolidated Balance Sheets for the years ended December 31, 2022 and 2021:

 Schedule of Warrant Liability Included in Accrued Expenses on Consolidated Balance Sheet