Socket Mobile, Inc. (NASDAQ:SCKT) Q1 2024 Earnings Call Transcript May 1, 2024 5:00 PM ET Company Participants Kevin Mills - Chief Executive Officer David Holmes - Chief Business Officer Lynn Zhao - Chief Financial Officer Conference Call Participants William Carroll - Private Investor Richard Greulich - REG Capital Advisors Operator Welcome to Socket Mobile, Inc.'s Q1 2024 Earnings Call. My name is Paul, and I will be your operator for today's call. Before we begin, I'd like to remind everyone that this co ...

Exhibit 99.1 Socket Mobile Reports First Quarter 2024 Results FREMONT, Calif., – May 1, 2024 – Socket Mobile, Inc. (NASDAQ: SCKT), a leading provider of data capture and delivery solutions for enhanced workplace productivity, today reported financial results that are determined in accordance with generally accepted accounting principles in the United States ("GAAP") for the three months ended March 31, 2024. First Quarter 2024 Financial Highlights: " Our first quarter results were in line with our expectati ...

Part I [Business](index=4&type=section&id=Item%201.%20Business) Socket Mobile offers Bluetooth-connected data capture solutions for mobile applications in diverse sectors - The company provides data capture solutions, including barcode scanners and NFC/RFID readers, for mobile applications in sectors like point of sale (POS), commercial services, asset tracking, and healthcare[14](index=14&type=chunk) - Socket Mobile's primary products are cordless data capture devices (barcode scanners, RFID/NFC readers) that connect via Bluetooth to iOS, Android, and Windows devices, offering the CaptureSDK for app developer integration[18](index=18&type=chunk) - The company designs its products and subcontracts manufacturing to third parties globally, with final assembly, testing, and distribution occurring at its Fremont, CA facility[28](index=28&type=chunk) - The company's growth is driven by the increasing adoption of mobile applications for smartphones and tablets in business, which creates demand for its data capture products[29](index=29&type=chunk) [Risk Factors](index=8&type=section&id=Item%201A.%20Risk%20Factors) The company faces risks from economic uncertainty, profitability challenges, supply chain dependencies, and intense competition - The company may not return to profitability and might require additional capital in the future, which may not be available on reasonable terms[52](index=52&type=chunk)[53](index=53&type=chunk) - Sales are highly dependent on application providers successfully integrating and marketing Socket Mobile's products within their own solutions[56](index=56&type=chunk) - The company relies on a limited number of suppliers for components, exposing it to risks of shortages or delays[60](index=60&type=chunk) - A significant portion of sales depends on a limited number of distributors, with Ingram Micro® and BlueStar together accounting for approximately **44%** and **50%** of worldwide sales in 2023 and 2022, respectively[69](index=69&type=chunk) - The business depends on strategic alliances with mobile operating system providers like Apple, Google, and Microsoft, who are not obligated to continue their collaboration[72](index=72&type=chunk)[73](index=73&type=chunk) - The loss of key senior managers, many of whom have over twenty years of service, could adversely affect the company's ability to compete[83](index=83&type=chunk) [Unresolved Staff Comments](index=17&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) The company has no unresolved staff comments to report - None[98](index=98&type=chunk) [Cybersecurity](index=17&type=section&id=Item%201C.%20Cybersecurity) The company's cybersecurity program, led by the CTO and overseen by the board, manages risks with no material business impact to date - The cybersecurity program is led by the Chief Technology Officer (CTO), who reports to the CEO, and is overseen by the board of directors[100](index=100&type=chunk)[102](index=102&type=chunk) - The company engages external experts to evaluate and test its risk management systems and requires annual cybersecurity training for all employees[101](index=101&type=chunk) - To date, cybersecurity risks have not materially affected the company's business, strategy, or financial condition, with only minor incidents reported[103](index=103&type=chunk) [Properties](index=17&type=section&id=Item%202.%20Properties) The company leases a 35,913 sq-ft facility in Fremont, CA, for its headquarters and manufacturing under an 87-month operating lease - The company leases a **35,913 sq-ft** facility in Fremont, CA for its office and manufacturing operations under an **87-month** lease starting February 2022, with a monthly rent of **$50,278** subject to **3%** annual increases[104](index=104&type=chunk) [Legal Proceedings](index=17&type=section&id=Item%203.%20Legal%20Proceedings) The company is not currently involved in any material legal proceedings - The company is not currently involved in any material legal proceedings[105](index=105&type=chunk) [Mine Safety Disclosures](index=18&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company's operations - Not applicable[106](index=106&type=chunk) Part II [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=19&type=section&id=Item%205.%20Market%20for%20Registrant%27s%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) The company's common stock trades on NASDAQ under "SCKT", does not pay dividends, and repurchased shares in Q1 2023 - The company's common stock is traded on the NASDAQ under the symbol "SCKT", and the company has not paid dividends nor anticipates paying them in the foreseeable future[108](index=108&type=chunk) Share Repurchase Activity (Q1 2023) | Period | Total Shares Purchased | Average Price Paid Per Share | | :--- | :--- | :--- | | Jan 3, 2023 to Mar 29, 2023 | 92,959 | $2.24 | [Selected Financial Data](index=20&type=section&id=Item%206.%20Selected%20Financial%20Data) The company reported 2023 revenues of **$17.0 million** and a net loss of **$1.9 million**, contrasting with 2022 revenues of **$21.2 million** Selected Financial Data (2019-2023) | (Amounts in thousands, except per share) | 2023 | 2022 | 2021 | 2020 | 2019 | | :--- | :--- | :--- | :--- | :--- | :--- | | **Revenues** | $17,034 | $21,238 | $23,199 | $15,700 | $19,253 | | **Gross profit** | $8,463 | $10,366 | $12,436 | $8,335 | $10,101 | | **Net income (loss)** | $(1,919) | $87 | $4,466 | $(3,279) | $287 | | **Basic net income (loss) per share** | $(0.27) | $0.01 | $0.58 | $(0.51) | $0.05 | | **Total assets** | $28,742 | $28,598 | $25,575 | $15,609 | $20,009 | | **Total stockholders' equity** | $19,420 | $20,322 | $20,046 | $11,173 | $13,785 | [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=21&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) In 2023, revenue decreased by **20%** to **$17.0 million**, resulting in an operating loss of **$3.1 million**, despite a gross margin improvement - Net cash provided by operating activities was **$48,562** in 2023, a significant improvement from net cash used of **$111,415** in 2022[116](index=116&type=chunk) - The company believes its existing cash, available borrowing capacity on its **$2.5 million** revolving credit facility, and funds from operations are sufficient to meet anticipated capital requirements[118](index=118&type=chunk)[119](index=119&type=chunk) Results of Operations (2023 vs. 2022) | Metric (in millions) | 2023 | 2022 | Change | % Change | | :--- | :--- | :--- | :--- | :--- | | **Revenues** | $17.0 | $21.2 | $(4.2) | -20% | | **Gross Profit** | $8.5 | $10.4 | $(1.9) | -18% | | **Gross Margin** | 49.7% | 48.8% | +0.9pp | N/A | | **R&D Expenses** | $4.8 | $4.4 | $0.4 | +11% | | **Sales & Marketing** | $4.0 | $3.6 | $0.4 | +10% | | **G&A Expenses** | $2.7 | $2.8 | $(0.1) | -3% | Contractual Obligations as of Dec 31, 2023 | Contractual Obligations | Total | < 1 year | 1 to 3 years | 4 to 5 years | > 5 years | | :--- | :--- | :--- | :--- | :--- | :--- | | Unconditional purchase obligations | $5,821,000 | $5,734,000 | $87,000 | $— | $— | | Operating leases | $3,794,000 | $637,000 | $1,325,000 | $1,406,000 | $426,000 | | **Total** | **$9,615,000** | **$6,371,000** | **$1,412,000** | **$1,406,000** | **$426,000** | [Quantitative and Qualitative Disclosures about Market Risk](index=27&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) The company faces interest rate and foreign currency risks, with a hypothetical **10%** adverse exchange rate change impacting Q4 2023 net income by **$36,000** - Interest rate risk exposure is primarily from the bank term loan and credit line facilities, which have variable rates based on the lender's prime rate, though there were no outstanding balances at the moment[149](index=149&type=chunk) - The company has foreign currency risk as it requires European distributors to pay in Euros and British pounds, where a **10%** adverse change in exchange rates would have resulted in a decrease in net income of approximately **$36,000** for Q4 2023[150](index=150&type=chunk) [Financial Statements and Supplementary Data](index=28&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) Audited financial statements show a **$1.9 million** net loss in 2023, an unqualified auditor opinion, and stable total assets at **$28.7 million** - The independent auditor, Sadler, Gibb & Associates, LLC, issued an unqualified opinion on the financial statements, identifying the Deferred Tax Asset Valuation Allowance Assessment and the Long-Lived Asset Impairment Assessment as critical audit matters[152](index=152&type=chunk)[157](index=157&type=chunk)[159](index=159&type=chunk) Balance Sheet Summary (in thousands) | | Dec 31, 2023 | Dec 31, 2022 | | :--- | :--- | :--- | | **Total Current Assets** | $10,699 | $12,769 | | **Total Assets** | $28,741 | $28,598 | | **Total Current Liabilities** | $6,500 | $4,972 | | **Total Liabilities** | $9,321 | $8,276 | | **Total Stockholders' Equity** | $19,420 | $20,322 | Statement of Operations Summary (in thousands) | | Year Ended Dec 31, 2023 | Year Ended Dec 31, 2022 | | :--- | :--- | :--- | | **Revenues** | $17,034 | $21,238 | | **Gross Profit** | $8,463 | $10,366 | | **Operating Loss** | $(3,121) | $(446) | | **Net Income (Loss)** | $(1,919) | $87 | | **Basic EPS** | $(0.27) | $0.01 | - Major customers accounting for over **10%** of total revenues in 2023 were Ingram Micro Inc. (**22%**), BlueStar, Inc. (**22%**), and ScanSource, Inc. (**14%**)[220](index=220&type=chunk) - As of December 31, 2023, the company had **$3.0 million** in outstanding secured subordinated convertible notes, with conversion prices of **$1.46** and **$1.34** per share[235](index=235&type=chunk)[237](index=237&type=chunk) - As of December 31, 2023, the company had U.S. Federal net operating loss carryforwards of **$21.7 million** and state net operating loss carryforwards of **$23.6 million**[265](index=265&type=chunk) [Changes in and Disagreements with Accountants on Accounting and Financial Disclosure](index=53&type=section&id=Item%209.%20Changes%20in%20and%20Disagreements%20with%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure) This item is not applicable to the company - Not Applicable[277](index=277&type=chunk) [Controls and Procedures](index=53&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management concluded that disclosure controls and internal control over financial reporting were effective as of December 31, 2023, with no material changes reported - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of the end of the period[278](index=278&type=chunk) - Management assessed internal control over financial reporting using the COSO framework and concluded that it was effective as of December 31, 2023[280](index=280&type=chunk)[281](index=281&type=chunk) - There were no changes in internal control over financial reporting during the last fiscal quarter that materially affected, or are reasonably likely to materially affect, these controls[283](index=283&type=chunk) [Other Information](index=54&type=section&id=Item%209B.%20Other%20Information) The company reports no other information - None[284](index=284&type=chunk) [Disclosure Regarding Foreign Jurisdictions that Prevent Inspections](index=54&type=section&id=Item%209C.%20Disclosure%20Regarding%20Foreign%20Jurisdictions%20that%20Prevent%20Inspections) This item is not applicable to the company - Not applicable[285](index=285&type=chunk) Part III [Directors, Executive Compensation, Security Ownership, and Related Matters](index=55&type=section&id=Items%2010-14) Information for Items 10-14, covering directors, executive compensation, and security ownership, is incorporated by reference from the upcoming Proxy Statement - Information for Items 10, 11, 12, 13, and 14 is incorporated by reference from the Registrant's Proxy Statement for the Annual Meeting of Stockholders to be held on May 15, 2024[288](index=288&type=chunk)[289](index=289&type=chunk)[290](index=290&type=chunk)[292](index=292&type=chunk)[293](index=293&type=chunk) Equity Compensation Plan Information (as of Dec 31, 2023) | Plan Category | Number of securities to be issued upon exercise of outstanding options | Weighted-average exercise price of outstanding options | Number of securities remaining available for future issuance | | :--- | :--- | :--- | :--- | | Equity compensation plans approved by security holders | 1,151,114 | $3.11 | 459,950 | Part IV [Exhibits, Financial Statement Schedules](index=56&type=section&id=Item%2015.%20Exhibits%2C%20Financial%20Statement%20Schedules) This section lists all financial statements and provides an index of exhibits filed with or incorporated by reference into the Form 10-K - All required financial statements are included in the report, and financial statement schedules are omitted because they are not applicable or the required information is included elsewhere[295](index=295&type=chunk)[296](index=296&type=chunk) - An index of exhibits is provided, listing various corporate documents, agreements, and certifications filed as part of the report[301](index=301&type=chunk)[302](index=302&type=chunk)

Socket Mobile, Inc. (NASDAQ:SCKT) Q4 2023 Earnings Conference Call March 5, 2024 5:00 PM ET Company Participants Kevin Mills – Chief Executive Officer Dave Holmes – Chief Business Officer Lynn Zhao – Chief Financial Officer Conference Call Participants BJ Cook – Singular Research Steve Swanson – Private Investor Operator Welcome to the Socket Mobile Inc. Q4 2023 Earnings Call. My name is Jen, and I will be your operator for today's call. Before we begin, I'd like to remind everyone that this conference call ...

Exhibit 99.1 Socket Mobile Reports Fourth Quarter 2023 and Full Year Results FREMONT, Calif., – March 5, 2024 – Socket Mobile, Inc. (NASDAQ: SCKT), a leading provider of data capture and delivery solutions for enhanced workplace productivity, today reported financial results that are determined in accordance with generally accepted accounting principles in the United States ("GAAP") for the three and twelve months ended December 31, 2023. Fourth Quarter 2023 Financial Highlights: Full Year 2023 Financial Hi ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q [X] QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934. For the quarterly period ended September 30, 2023 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934. For the transition period ___________________ to _____________________. Commission file number 1-13810 SOCKET MOBILE, INC. (Exact name of registrant as specified in its charter) Delaware 94- ...

Socket Mobile, Inc. (NASDAQ:SCKT) Q3 2023 Earnings Conference Call October 27, 2023 5:00 PM ET Company Participants Kevin Mills - President & CEO David Holmes - Chief Business Officer Lynn Zhao - CFO Conference Call Participants Chris Sakai - Singular Research Operator Welcome to the Socket Mobile Inc. Q3 2023 Earnings Call. My name is Jen, and I will be your operator for today's call. Before we begin, I'd like to remind everyone that this conference call may contain forward-looking statements within the me ...

Financial Performance - Total revenues for Q2 2023 were approximately $5.1 million, a decrease of 15% from $6.05 million in Q2 2022[95] - Gross profit margins for Q2 2023 were 51.8%, an improvement from 50.2% in Q2 2022, attributed to higher margins from direct online sales[96] - The decline in revenues was primarily due to weakness in the retail POS market, which is the main revenue source[95] Expenses - Research and development expenses for Q2 2023 were approximately $1.19 million, a 6% increase from $1.12 million in Q2 2022[97] - Sales and marketing expenses for Q2 2023 were approximately $1.01 million, reflecting a 4% increase from $964,000 in Q2 2022[98] - General and administrative expenses for Q2 2023 were approximately $749,000, a slight decrease of 2% from $761,000 in Q2 2022[99] - The company anticipates R&D expenses to remain at similar levels for the remainder of the year[97] Cash Flow - Net cash used in operating activities for the first half of 2023 was approximately $528,000, compared to net cash provided of $599,000 in the first half of 2022[105] - Net cash provided by financing activities was approximately $1,439,000 in the first half of 2023, a significant increase from net cash used of approximately $546,000 in the comparable period a year ago[109] - The company completed secured subordinated note financing of $1,582,000 in 2023, alongside proceeds from employee stock options amounting to $190,315[109] Investments - In the first half of 2023, the company invested approximately $1,104,000 in manufacturing tooling, firmware development, website development, and leasehold improvements, compared to $560,000 in the same period of 2022[109] Financial Obligations - Total contractual obligations as of June 30, 2023, amounted to $12,047,000, with $8,082,000 due within one year[113] - The company has a revolving credit line facility of up to $2.5 million, with variable interest rates based on the lender's prime rate, which could increase interest expenses if rates rise[116] Foreign Currency Risks - An adverse change of 10% in foreign exchange rates could have increased the company's net loss by approximately $30,000 for the second quarter of 2023[117] - The actual net adjustment for foreign currency effects on cash balances, collections, and payables was a loss of approximately $2,500 for the second quarter of 2023[117] - The company continues to monitor and assess risks related to foreign currency fluctuations to mitigate potential impacts on financial performance[117] Accounting Policies - Significant accounting policies include Revenue Recognition, Accounts Receivable Reserves, and Inventory Valuation, which may affect reported financial results[110] - The company had no off-balance sheet arrangements as of June 30, 2023[114]

Socket Mobile, Inc. (NASDAQ:SCKT) Q2 2023 Earnings Conference Call August 2, 2023 5:00 PM ET Company Participants Kevin Mills - President & Chief Executive Officer Dave Holmes - Chief Business Officer Lynn Zhao - Chief Financial Officer Conference Call Participants Chris Sakai - Singular Research Operator Welcome to the Socket Mobile Inc. Q2 2023 Earnings Call. My name is Paul, and I will be your operator for today's call. Before we begin, I'd like to remind everyone that this conference call may contain fo ...

Financial Performance - Revenues for Q1 2023 were $4,312,178, a decrease of 31.6% compared to $6,293,002 in Q1 2022[9] - Gross profit for Q1 2023 was $2,072,487, down 33.8% from $3,127,662 in Q1 2022[9] - Operating loss for Q1 2023 was $(955,412), compared to an operating income of $463,704 in Q1 2022[9] - Net loss for Q1 2023 was $(993,420), compared to a net income of $341,933 in Q1 2022, resulting in a net loss per share of $(0.12)[9] - Total revenues for Q1 2023 were approximately $4.3 million, a 31% decrease from $6.3 million in Q1 2022, primarily due to distribution inventory balancing activities[83] - Gross profit margins decreased to 48.1% in Q1 2023 from 49.7% in the same period last year, attributed to lower production volumes[84] - The company reported a net loss of $993,420 for Q1 2023, compared to a net income of $341,933 in Q1 2022[55] - Basic net loss per share for Q1 2023 was $(0.12), a decrease from a net income of $0.04 per share in Q1 2022[55] Assets and Liabilities - Total current assets decreased to $11,948,021 as of March 31, 2023, from $12,768,536 as of December 31, 2022[11] - Cash and cash equivalents at the end of Q1 2023 were $2,963,308, down from $3,623,469 at the beginning of the quarter[17] - Total liabilities increased to $8,478,108 as of March 31, 2023, compared to $8,276,231 as of December 31, 2022[12] - Stockholders' equity decreased to $19,449,450 as of March 31, 2023, from $20,321,757 as of December 31, 2022[12] - The balances of right-of-use assets and liabilities for operating leases were $3,443,826 and $3,630,508, respectively, as of March 31, 2023, compared to $3,559,658 and $3,736,564 on December 31, 2022[27] Cash Flow and Expenses - Operating cash flow for Q1 2023 was $105,665, compared to $(452,413) in Q1 2022[17] - The company incurred stock-based compensation of $295,833 in Q1 2023, up from $223,446 in Q1 2022[17] - Research and development expenses increased by 18% to approximately $1,247,000 in Q1 2023, compared to $1,054,000 in Q1 2022, driven by new product development and hiring[85] - Sales and marketing expenses rose by 12% to approximately $1,007,000 in Q1 2023, up from $900,000 in the same quarter last year, mainly due to additional hiring[86] - General and administrative expenses increased by 9% to approximately $774,000 in Q1 2023, compared to $710,000 in Q1 2022, primarily due to higher equity-based compensation[87] - Cash payments for operating lease liabilities were $153,181 in Q1 2023, up from $132,010 in Q1 2022[63] Revenue Sources and Customer Base - Major customers for the three months ended March 31, 2023 included Ingram Micro, Inc. at 23% and BlueStar, Inc. at 20% of total revenues[46] - SocketCare revenue for the quarters ended March 31, 2023 and 2022 was approximately $5,600 and $5,400, respectively, with unrecognized service revenue at approximately $34,000 as of March 31, 2023[25] - Company’s sales are significantly dependent on a limited number of distributors, with Ingram Micro® and BlueStar representing approximately 43% and 47% of worldwide sales in Q1 2023 and 2022, respectively[130] Strategic Risks and Market Conditions - Company faces risks from a limited number of qualified suppliers for essential components, which could adversely affect financial results[120] - Company must rapidly develop and introduce new products to remain competitive, as the market is prone to rapidly changing technology[123] - The expensing of employee stock options and restricted stocks will continue to adversely affect net income and earnings per share, making profitability harder to achieve[146] - The company’s ability to forecast demand accurately is crucial, as miscalculations could lead to excess inventory or production capacity issues[128] - Events outside the company's control, such as natural disasters or health epidemics, could materially impact business operations and financial condition[150] Stock and Shareholder Information - As of May 9, 2023, the company had 7,130,853 shares of common stock outstanding, with substantial shares freely tradable in the public market[155] - The company had 1,262,028 shares of common stock subject to outstanding options and 1,068,934 shares of restricted stock outstanding as of May 9, 2023[156] - The trading price of the company's common stock fluctuated between a high of $4.84 and a low of $1.47 from January 1, 2022, to the date of the report, indicating high volatility[158]