In 2001, the company faced a severe cash-flow crisis, as well as an onerous lawsuit from the company's Series A Preferred investors, who had placed a 'put' for $50 million against the company. The debenture holders were owed $32 million, and the company was dangerously close to violating the debenture covenants. The company's relationship with these parties was either adversarial or tenuous. Thus, Sorrento faced obligations of $82 million with no possible way to meet these obligations, and at the same time, the telecommunications industry was entering a period of steep and rapid recession.

In March 2002, the Sorrento board of directors appointed Phil Arneson as Chairman and Chief Executive, and tasked him to solve these problems.

Arneson focused on maintaining Sorrento's customer base, but also immediately met with and began negotiations with the Seies A and debenture holders to restructure the company in a debt-for-equity exchange.

The capital restructuring took approximately six months and was successfully completed.

Sorrento then made a strategic acquisition of a competitor on very favorable terms, resulting in additional revenues and a substantially broadened product line.

In the Winter of 2003, Arneson and Sorrento's CFO made a road trip which yielded $17 million cash.

Recognizing the need for a strategic partner in a challenging market, Sorrento was successfully sold on July 1, 2004.

Please refer to Sorrento article.