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 March 31, 2021 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 94-3155 ...

Financial Data and Key Metrics Changes - The company's Q1 2021 revenue was $4.8 million, representing a 14% increase from $4.2 million in Q1 2020 [6] - Net income for Q1 2021 was $203,000, or $0.03 per fully diluted share, compared to a net loss of $90,000, or a loss of $0.01 per fully diluted share in Q1 2020 [6] - Gross profit margin increased to 53.5%, up 2.8% from the first quarter of 2020 [13] Business Line Data and Key Metrics Changes - Revenue growth was driven by retail-centric customers, particularly Shopify and Square, benefiting from the easing of COVID restrictions [6] - There is a growing demand for mobile systems that support both indoor and outdoor operations, especially in hospitality [7] - The commercial services segment is expected to continue strong growth throughout the year [7] Market Data and Key Metrics Changes - The company is experiencing significant demand for contactless readers, particularly in the context of COVID health passports [10] - The S550 contactless reader has been successfully used in several COVID bubble trials, indicating its effectiveness [11] Company Strategy and Development Direction - The company entered into a technology transfer agreement with SpringCard SAS to acquire a perpetual royalty-free license for core technology in contactless products [10] - The focus is on completing development tools to support scanners and contactless readers, aiming to integrate these into partner solutions [11] - The company is working to mitigate supply chain issues that could impact product delivery [8][9] Management's Comments on Operating Environment and Future Outlook - Management expects strong demand for products as the world reopens, despite ongoing supply chain challenges [12] - The company is confident in having sufficient supply commitments for Q2 and is actively working to address potential issues for Q3 and Q4 [9] Other Important Information - The cash balance as of March 31 was $5 million, up from $2.8 million on December 31, 2020, attributed to profitable operations and other financial activities [13] - The acquisition of SpringCard technology is reported as an intangible asset valued at $1.9 million [14] - The company renewed its credit facilities, increasing the domestic line of credit to $3 million [14] Q&A Session Summary - There were no questions from participants during the Q&A session [17]

Part I [Business](index=4&type=section&id=Item%201.%20Business) Socket Mobile, Inc. develops Bluetooth-connected barcode scanners and RFID/NFC readers, integrating them into mobile applications for diverse sectors - The company's primary products are **cordless data capture devices** (barcode scanners, RFID/NFC readers) connecting via Bluetooth to mobile devices[17](index=17&type=chunk) Key Product Families | Product Family | Description | Models | | :--- | :--- | :--- | | **Companion SocketScan** | Ergonomic, independent scanners available in multiple colors | S700, S730, S740, S760 | | **Companion DuraScan** | Durable, IP54-rated scanners for tougher environments, including medical-grade options | D700, D730, D740, D745, D750, D755, D760 | | **Attachable Scanners** | Scanners that attach to mobile devices to create a one-handed solution | DuraSled, SocketScan 800 Series (S800, S840, S860) | | **Contactless RFID/NFC** | Handheld and membership card reader/writers for tap-and-go applications | D600, S550 | - The business strategy relies on a **registered developer program** and **Capture SDK** for easy integration into third-party mobile applications[17](index=17&type=chunk)[32](index=32&type=chunk) - Products are manufactured by **third-party contractors** globally, with final assembly and distribution in Newark, CA[24](index=24&type=chunk)[30](index=30&type=chunk) - In 2020, **cost-containment measures** were implemented due to COVID-19, including hiring freezes and reduced spending[14](index=14&type=chunk) - Total employee headcount **decreased from 56 to 48** from 2019 to 2020[30](index=30&type=chunk)[47](index=47&type=chunk) [Risk Factors](index=11&type=section&id=Item%201A.%20Risk%20Factors) The company faces significant risks from the COVID-19 pandemic, profitability challenges, capital needs, and dependence on application developers - The **COVID-19 pandemic** poses significant risks, including demand volatility and supply chain disruptions[49](index=49&type=chunk)[51](index=51&type=chunk) - Dependence on **application developers** for product integration and sales poses a risk to revenue projections[54](index=54&type=chunk) - A **limited number of distributors** account for a significant portion of revenue, with Ingram Micro and BlueStar representing **54% in 2020**[65](index=65&type=chunk) - Competition from **larger firms** and devices with **built-in scanning functions** presents a challenge[68](index=68&type=chunk)[72](index=72&type=chunk) - Reliance on a **limited number of component suppliers** creates risk of shortages or delays impacting financial results[62](index=62&type=chunk) - The market's **rapidly changing technology** and **short product life cycles** necessitate timely new product introductions[63](index=63&type=chunk) [Unresolved Staff Comments](index=21&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) The company reports no unresolved staff comments - None[97](index=97&type=chunk) [Properties](index=21&type=section&id=Item%202.%20Properties) The company leases a 37,100 square-foot facility in Newark, California, serving as its headquarters - The company leases a **37,100 square-foot facility** in Newark, California, with the lease expiring in June 2022[98](index=98&type=chunk) [Legal Proceedings](index=21&type=section&id=Item%203.%20Legal%20Proceedings) The company is not currently a party to any material legal proceedings - The company is **not currently a party to any material legal proceedings**[99](index=99&type=chunk) [Mine Safety Disclosures](index=21&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - Not applicable[100](index=100&type=chunk) Part II [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=22&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,' with approximately 15,000 beneficial stockholders, and no dividends are anticipated - The company's common stock trades on **NASDAQ** under the symbol **"SCKT"**[103](index=103&type=chunk) - As of March 19, 2021, there were approximately **15,000 beneficial stockholders**[103](index=103&type=chunk) - The company has **not paid dividends** and does not anticipate paying them in the foreseeable future[103](index=103&type=chunk) [Selected Financial Data](index=24&type=section&id=Item%206.%20Selected%20Financial%20Data) This section summarizes five years of key financial data, showing 2020 revenues of $15.7 million and a net loss of $3.3 million Selected Financial Data (2016-2020) | (Amounts in thousands except per share) | 2018 | 2019 | 2020 | | :--- | :--- | :--- | :--- | | **Revenues** | $16,454 | $19,253 | $15,700 | | **Gross profit** | $8,456 | $10,101 | $8,335 | | **Operating expenses** | $9,042 | $9,494 | $12,686* | | **Net income (loss)** | $(571) | $287 | $(3,279) | | **Basic EPS** | $(0.09) | $0.05 | $(0.51) | | **Diluted EPS** | $(0.09) | $0.05 | $(0.51) | | **Total assets** | $18,597 | $19,458 | $15,059 | | **Total stockholders' equity** | $12,405 | $13,234 | $10,623 | *Included a $4.4 million goodwill impairment charge [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=25&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) In 2020, revenue decreased to $15.7 million, resulting in a $3.3 million net loss primarily from a goodwill impairment, while liquidity improved [Results of Operations](index=28&type=section&id=Results%20of%20Operations%20for%20Years%20Ended%20December%2031%2C%202020%20and%202019) Revenue decreased 19% to $15.7 million in 2020, leading to a $3.3 million net loss primarily due to a $4.4 million goodwill impairment Comparison of Operations (2020 vs. 2019) | (Amounts in millions) | 2020 | 2019 | % Change | | :--- | :--- | :--- | :--- | | **Revenues** | $15.7 | $19.3 | -19% | | **Gross Profit** | $8.3 | $10.1 | -18% | | **Gross Margin** | 53.1% | 52.5% | +0.6 p.p. | | **R&D Expense** | $3.1 | $3.9 | -19% | | **Sales & Marketing Expense** | $2.8 | $3.0 | -6% | | **General & Admin Expense** | $2.3 | $2.6 | -12% | | **Goodwill Impairment** | $4.4 | $0.0 | N/A | | **Net Income (Loss)** | ($3.3) | $0.3 | N/A | - Operating expense reductions across R&D, Sales & Marketing, and G&A were due to **employee compensation cuts** from COVID-19 cost-saving initiatives[127](index=127&type=chunk)[129](index=129&type=chunk)[130](index=130&type=chunk) - A **$4.47 million goodwill impairment charge** in 2020 was the primary driver of the net loss[134](index=134&type=chunk) [Liquidity and Capital Resources](index=25&type=section&id=Liquidity%20and%20Capital%20Resources) The company strengthened its financial position, ending 2020 with **$2.1 million cash** and an **undrawn $2.5 million credit facility** to fund operations - As of December 31, 2020, the company held approximately **$2.1 million in cash**[109](index=109&type=chunk) - A **$2.5 million revolving credit facility**, maturing January 31, 2023, was undrawn at year-end 2020[109](index=109&type=chunk) [Cash Flows and Contractual Obligations](index=31&type=section&id=Cash%20Flows%20and%20Contractual%20Obligations) In 2020, operating activities provided $0.80 million cash, while financing activities provided $0.89 million, resulting in total contractual obligations of $7.0 million Summary of Cash Flows (2020 vs. 2019) | (Amounts in millions) | 2020 | 2019 | | :--- | :--- | :--- | | Net cash provided by operating activities | $0.80 | $0.87 | | Net cash used in investing activities | ($0.5) | ($0.6) | | Net cash provided by (used in) financing activities | $0.89 | ($0.40) | Contractual Obligations as of Dec 31, 2020 | Contractual Obligations | Total | Due within 1 year | | :--- | :--- | :--- | | Unconditional purchase obligations | $6,256,000 | $6,256,000 | | Operating leases | $779,000 | $516,000 | | **Total** | **$7,035,000** | **$6,772,000** | [Quantitative and Qualitative Disclosures about Market Risk](index=32&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) The company's primary market risks are interest rate risk from variable-rate debt and foreign currency risk from Euro and British pound sales - **Interest rate risk** stems from variable-rate bank term loans and credit line facilities[145](index=145&type=chunk) - **Foreign currency risk** arises from Euro and British pound sales to European distributors, with Euro receivables partially hedged[146](index=146&type=chunk) [Financial Statements and Supplementary Data](index=32&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section presents audited financial statements for 2020 and 2019, including balance sheets, statements of operations, cash flows, and detailed notes [Financial Statements](index=36&type=section&id=Financial%20Statements) Audited financial statements show total assets decreased to $15.1 million in 2020 due to a goodwill impairment, resulting in a $3.3 million net loss Balance Sheet Highlights (As of Dec 31) | (Amounts in thousands) | 2020 | 2019 | | :--- | :--- | :--- | | Cash and cash equivalents | $2,122 | $959 | | Total current assets | $7,936 | $7,521 | | Goodwill | $0 | $4,427 | | Total assets | $15,058 | $19,458 | | Total current liabilities | $4,149 | $5,468 | | Total liabilities | $4,436 | $6,224 | | Total stockholders' equity | $10,622 | $13,234 | Statement of Operations Highlights (Year Ended Dec 31) | (Amounts in thousands) | 2020 | 2019 | | :--- | :--- | :--- | | Revenues | $15,700 | $19,253 | | Gross profit | $8,335 | $10,101 | | Total operating expenses | $12,685 | $9,494 | | Net income (loss) | $(3,279) | $287 | | Basic EPS | $(0.51) | $0.05 | [Notes to Financial Statements](index=41&type=section&id=Notes%20to%20Financial%20Statements) Notes detail a $4.4 million goodwill impairment, revenue concentration with two major customers, PPP loan forgiveness, and new convertible note financing - A **$4.427 million non-cash goodwill impairment charge** was recorded in 2020 due to a stock price drop[193](index=193&type=chunk) - **Revenue concentration** remains, with Ingram Micro and BlueStar accounting for **31% and 23%** of 2020 revenues, respectively[222](index=222&type=chunk) - A **$1.0587 million PPP loan** received in April 2020 was **fully forgiven** in December 2020, recorded as debt extinguishment income[234](index=234&type=chunk) - In August 2020, the company raised **$1.53 million** through **secured subordinated convertible notes** with a 10% annual interest rate[238](index=238&type=chunk)[239](index=239&type=chunk) - Post-year-end, a **technology license from SpringCard SAS** was acquired for **184,332 shares of common stock** (valued at $2 million) and a warrant[279](index=279&type=chunk) [Changes in and Disagreements with Accountants on Accounting and Financial Disclosure](index=60&type=section&id=Item%209.%20Changes%20in%20and%20Disagreements%20with%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure) This item is not applicable as there were no changes or disagreements with accountants - Not Applicable[282](index=282&type=chunk) [Controls and Procedures](index=60&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, 2020 - Management concluded that **disclosure controls and procedures were effective** as of the report period end[283](index=283&type=chunk) - Internal control over financial reporting was deemed **effective** as of December 31, 2020, based on the COSO framework assessment[286](index=286&type=chunk) [Other Information](index=61&type=section&id=Item%209B.%20Other%20Information) There is no other information to report for this item - None[289](index=289&type=chunk) Part III [Directors, Executive Officers, Corporate Governance, Executive Compensation, and Other Matters](index=62&type=section&id=Item%2010-14) Information for Items 10 through 14 is incorporated by reference from the company's Proxy Statement for the May 26, 2021 annual meeting - Information for Items 10-14 is **incorporated by reference** from the Proxy Statement for the May 13, 2021 Annual Meeting[8](index=8&type=chunk) Part IV [Exhibits, Financial Statement Schedules](index=63&type=section&id=Item%2015.%20Exhibits%2C%20Financial%20Statement%20Schedules) This section lists all financial statements and an index to exhibits filed with or incorporated by reference into the Form 10-K - This section includes **financial statements** and an **index to all exhibits** filed with or incorporated into the Form 10-K[301](index=301&type=chunk)[304](index=304&type=chunk)

Socket Mobile, Inc. (NASDAQ:SCKT) Q4 2020 Results Conference Call February 24, 2021 5:00 PM ET Company Participants Kevin Mills - President and CEO Lynn Zhao - CFO Operator Welcome to the Socket Mobile Fourth Quarter and Full-Year 2020 Conference Call. My name is Adrianne, 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 meaning of Section 27A of the Securities Act of 1933 as amended, and Se ...

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, 2020 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 2020 Results Conference Call October 22, 2020 5:00 PM ET Company Participants Kevin Mills - President and Chief Executive Officer Lynn Zhao - Chief Financial Officer Operator Welcome to the Socket Mobile Q3 Management Conference Call. My name is Karen. 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 meaning of Section 27A of the Securities Act of 1933, as a ...

```markdown Part I. Financial Information [Item 1. Financial Statements (Unaudited)](index=4&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) This section presents Socket Mobile's unaudited condensed financial statements and detailed notes for Q2 2020 and 2019... [Condensed Statements of Operations](index=4&type=section&id=Condensed%20Statements%20of%20Operations) For the three and six months ended June 30, 2020, Socket Mobile, Inc. reported significant declines in revenue and a shift from net income to net loss compared to the prior year, primarily due to the impact of COVID-19 Condensed Statements of Operations | Metric | Three Months Ended June 30, 2020 (USD) | Three Months Ended June 30, 2019 (USD) | Six Months Ended June 30, 2020 (USD) | Six Months Ended June 30, 2019 (USD) | | :--------------------------------- | :------------------------------- | :------------------------------- | :------------------------------- | :------------------------------- | | Revenues | $2,715,024 | $5,060,105 | $6,935,710 | $9,688,696 | | Gross profit | $1,361,526 | $2,629,641 | $3,585,241 | $5,029,483 | | Operating income (loss) | $(809,874) | $217,846 | $(900,709) | $264,856 | | Net income (loss) | $(768,023) | $119,790 | $(858,350) | $131,629 | | Basic Net income (loss) per share | $(0.13) | $0.02 | $(0.14) | $0.02 | | Diluted Net income (loss) per share| $(0.13) | $0.02 | $(0.14) | $0.02 | [Condensed Balance Sheets](index=5&type=section&id=Condensed%20Balance%20Sheets) As of June 30, 2020, the company's total assets and liabilities decreased compared to December 31, 2019, with a notable reduction in current assets, particularly accounts receivable and bank lines of credit Condensed Balance Sheets | Metric | June 30, 2020 (Unaudited) (USD) | December 31, 2019 (USD) | | :--------------------------------- | :------------------------ | :------------------ | | Cash and cash equivalents | $926,983 | $958,860 | | Accounts receivable, net | $1,770,112 | $2,837,006 | | Inventories, net | $3,253,709 | $3,178,908 | | Total current assets | $6,359,936 | $7,520,724 | | Total assets | $18,121,411 | $19,458,487 | | Total current liabilities | $4,234,642 | $5,468,488 | | Bank lines of credit | $450,000 | $1,412,449 | | Total liabilities | $5,490,126 | $6,224,261 | | Total stockholders' equity | $12,631,285 | $13,234,226 | [Condensed Statements of Stockholders' Equity](index=7&type=section&id=Condensed%20Statements%20of%20Stockholders'%20Equity) Stockholders' equity decreased from **$13.23 million** at December 31, 2019, to **$12.63 million** at June 30, 2020, primarily due to a net loss of **$768,023** in Q2 2020, partially offset by stock-based compensation Condensed Statements of Stockholders' Equity | Metric | December 31, 2019 (USD) | June 30, 2020 (USD) | | :----------------------- | :---------------- | :-------------- | | Total Stockholders' Equity | $13,234,226 | $12,631,285 | | Net Loss (Q2 2020) | N/A | $(768,023) | | Stock-based compensation | N/A | $131,369 | [Condensed Statements of Cash Flows](index=8&type=section&id=Condensed%20Statements%20of%20Cash%20Flows) For the six months ended June 30, 2020, the company generated net cash from operating activities, a significant improvement from cash used in the prior year, largely due to decreases in accounts receivable Condensed Statements of Cash Flows | Activity | Six Months Ended June 30, 2020 (USD) | Six Months Ended June 30, 2019 (USD) | | :--------------------------------------- | :----------------------------- | :----------------------------- | | Net cash provided by (used in) operating activities | $244,371 | $(137,341) | | Net cash used in investing activities | $(256,183) | $(187,458) | | Net cash (used in) provided by financing activities | $(20,065) | $255,516 | | Net decrease in cash and cash equivalents | $(31,877) | $(69,283) | | Cash and cash equivalents at end of period | $926,983 | $1,015,708 | - Net cash provided by operating activities in H1 2020 was primarily due to decreases in accounts receivable driven by lower shipments in Q2 2020[95](index=95&type=chunk) [Notes to Condensed Financial Statements (Unaudited)](index=9&type=section&id=Notes%20to%20Condensed%20Financial%20Statements%20(Unaudited)) The notes provide essential context to the financial statements, detailing the basis of presentation, accounting policies, inventory, financing, segment information, stock-based compensation, and commitments... [NOTE 1 — Basis of Presentation](index=9&type=section&id=NOTE%201%20%E2%80%94%20Basis%20of%20Presentation) - The unaudited condensed financial statements are prepared in accordance with GAAP for interim financial information and Form 10-Q instructions, not including all footnotes required for complete financial statements[20](index=20&type=chunk) [NOTE 2 — Summary of Significant Accounting Policies](index=9&type=section&id=NOTE%202%20%E2%80%94%20Summary%20of%20Significant%20Accounting%20Policies) - The company recognizes revenue on sales to distributors upon product shipment and title transfer, less a reserve for estimated returns. Deferred revenue on shipments to distributors was **$432,506** at June 30, 2020, down from **$611,029** at December 31, 2019[24](index=24&type=chunk) - The company adopted ASU 2016-02 (Leases) effective January 1, 2019, recognizing right-of-use assets and lease liabilities for office space, with no impact on the Statements of Operations[26](index=26&type=chunk) - As a smaller reporting company (SRC), the implementation of ASU 2016-13 (Credit Losses) is not required until January 1, 2023[27](index=27&type=chunk) [NOTE 3 — Inventories](index=11&type=section&id=NOTE%203%20%E2%80%94%20Inventories) NOTE 3 — Inventories | Inventory Component | June 30, 2020 (USD) | December 31, 2019 (USD) | | :------------------------ | :------------ | :---------------- | | Raw materials and sub-assemblies | $3,545,065 | $3,767,588 | | Finished goods | $356,283 | $241,681 | | Inventory reserves | $(647,639) | $(830,361) | | Inventory, net | $3,253,709 | $3,178,908 | [NOTE 4 — Bank Financing Arrangements](index=11&type=section&id=NOTE%204%20%E2%80%94%20Bank%20Financing%20Arrangements) - The company entered into the Seventh Amended and Restated Business Financing Agreement on January 8, 2020, extending the revolving line of credit maturity to January 31, 2022[33](index=33&type=chunk) - As of June 30, 2020, the Asset Coverage Ratio was **1.5 to 1.0**, exceeding the required **1.25 to 1.0**[34](index=34&type=chunk) NOTE 4 — Bank Financing Arrangements | Debt Type | June 30, 2020 (USD) | | :---------------------- | :------------ | | Term loan | $83,333 | | Lines of credit - domestic line | $450,000 | | Total lines of credit | $450,000 | [NOTE 5 — Term loans](index=12&type=section&id=NOTE%205%20%E2%80%94%20Term%20loans) - On April 20, 2020, the company received a **$1,058,700** PPP loan under the CARES Act, with a **1%** interest rate and a two-year maturity, primarily used for payroll, rent, and utilities[37](index=37&type=chunk)[38](index=38&type=chunk) - On June 26, 2020, the company secured a **$150,000** EIDL loan at **3.75%** interest for working capital, with payments deferred for 12 months and a 30-year term[40](index=40&type=chunk) - The company also received a **$10,000** EIDL grant on June 23, 2020, which was recorded as other income in Q2[41](index=41&type=chunk) [NOTE 6 — Segment Information and Concentrations](index=13&type=section&id=NOTE%206%20%E2%80%94%20Segment%20Information%20and%20Concentrations) - The company operates in the mobile barcode scanning and RFID/NFC data capture market, distributing products globally through distributors, resellers, and online channels[42](index=42&type=chunk) NOTE 6 — Segment Information and Concentrations | Geographic Area | Three Months Ended June 30, 2020 (USD) | Three Months Ended June 30, 2019 (USD) | Six Months Ended June 30, 2020 (USD) | Six Months Ended June 30, 2019 (USD) | | :---------------- | :------------------------------- | :------------------------------- | :------------------------------- | :------------------------------- | | Americas | $2,242,225 | $3,975,771 | $5,385,634 | $7,653,571 | | Europe | $200,012 | $604,931 | $815,541 | $1,097,923 | | Asia Pacific | $272,787 | $479,403 | $734,535 | $937,202 | | Total revenues | $2,715,024 | $5,060,105 | $6,935,710 | $9,688,696 | NOTE 6 — Segment Information and Concentrations | Customer | % of Total Revenues (3 Months Ended June 30, 2020) (%) | % of Total Revenues (3 Months Ended June 30, 2019) (%) | % of Total Revenues (6 Months Ended June 30, 2020) (%) | % of Total Revenues (6 Months Ended June 30, 2019) (%) | | :--------------- | :------------------------------------------------- | :------------------------------------------------- | :------------------------------------------------- | :------------------------------------------------- | | Ingram Micro Inc. | 29% | 41% | 33% | 42% | | BlueStar, Inc. | 25% | 18% | 20% | 19% | | ScanSource, Inc. | 14% | * | 10% | * | - At June 30, 2020, **38%** of accounts payable was concentrated in the top supplier, and the top two suppliers accounted for **54%** of inventory purchases for the three months ended June 30, 2020[47](index=47&type=chunk) [NOTE 7 — Stock-Based Compensation](index=15&type=section&id=NOTE%207%20%E2%80%94%20Stock-Based%20Compensation) - Total stock-based compensation expense for the three and six months ended June 30, 2020, was **$131,369** and **$263,434**, respectively[52](index=52&type=chunk) - **293,000 shares** of restricted stock were awarded for the six months ended June 30, 2020, compared to **116,050 shares** in the prior year, with **394,506 shares** outstanding as of June 30, 2020[51](index=51&type=chunk) [NOTE 8 — Net Income (Loss) Per Share Applicable to Common Stockholders](index=15&type=section&id=NOTE%208%20%E2%80%94%20Net%20Income%20(Loss)%20Per%20Share%20Applicable%20to%20Common%20Stockholders) NOTE 8 — Net Income (Loss) Per Share Applicable to Common Stockholders | Metric | Three Months Ended June 30, 2020 (USD) | Three Months Ended June 30, 2019 (USD) | Six Months Ended June 30, 2020 (USD) | Six Months Ended June 30, 2019 (USD) | | :--------------------------------------- | :------------------------------- | :------------------------------- | :------------------------------- | :------------------------------- | | Net income (loss) | $(768,023) | $119,790 | $(858,350) | $131,629 | | Basic EPS | $(0.13) | $0.02 | $(0.14) | $0.02 | | Diluted EPS | $(0.13) | $0.02 | $(0.14) | $0.02 | | Basic Weighted average shares outstanding | 6,009,383 (Shares) | 5,999,159 (Shares) | 6,011,670 (Shares) | 5,969,666 (Shares) | | Diluted Weighted average shares outstanding | 6,009,383 (Shares) | 6,271,507 (Shares) | 6,011,670 (Shares) | 6,203,889 (Shares) | - **2,259,937** stock options and **394,506** restricted stocks were excluded from diluted net loss per share calculation for the three and six months ended June 30, 2020, due to their anti-dilutive effect[56](index=56&type=chunk) [NOTE 9 — Taxes](index=17&type=section&id=NOTE%209%20%E2%80%94%20Taxes) - No deferred tax benefit was recorded for losses in the three and six months ended June 30, 2020. In contrast, deferred tax expenses of **$68,749** and **$75,419** were recorded for the comparable periods in 2019[57](index=57&type=chunk) [NOTE 10 — Commitments and Contingencies](index=17&type=section&id=NOTE%2010%20%E2%80%94%20Commitments%20and%20Contingencies) - Operating lease expense for office space was **$103,208** and **$206,416** for the three and six-month periods ended June 30, 2020, respectively[59](index=59&type=chunk) - As of June 30, 2020, the company had non-cancelable purchase commitments for inventory totaling approximately **$3,651,000**[66](index=66&type=chunk) NOTE 10 — Commitments and Contingencies | Annual Minimum Payments | Amount (USD) | | :------------------------ | :----- | | 2020 (July 1 - Dec 31) | $249,994 | | 2021 | $515,822 | | 2022 | $262,789 | | Total minimum payments | $1,028,605 | | Total operating lease liabilities | $964,256 | | Current portion of operating lease | $(455,928) | | Long-term portion of operating lease | $508,328 | [NOTE 11 — Subsequent Events](index=18&type=section&id=NOTE%2011%20%E2%80%94%20Subsequent%20Events) - As of August 7, 2020, **5,000** restricted stocks at **$1.49** per share were granted from the 2004 Equity Incentive Plan subsequent to June 30, 2020[68](index=68&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=19&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on the company's financial performance and condition, highlighting product offerings, revenue trends, cost of sales, operating expenses, and liquidity... [The Company and its products](index=19&type=section&id=The%20Company%20and%20its%20products) - Socket Mobile, Inc. is a leading innovator of data capture and delivery solutions, primarily offering cordless barcode scanners (SocketScan® 700 Series, DuraScan® 700 Series) and RFID/NFC reader/writers (D600, S550)[71](index=71&type=chunk)[72](index=72&type=chunk)[73](index=73&type=chunk)[76](index=76&type=chunk) - The company also provides DuraSled products that combine iPhones with scanners for single-handed solutions and a Software Developer Kit (Capture SDK) to integrate data capture capabilities into mobile applications[74](index=74&type=chunk)[75](index=75&type=chunk)[77](index=77&type=chunk) [Revenues](index=21&type=section&id=Revenues) - Total revenues for the three and six months ended June 30, 2020, decreased by **46%** and **28%** respectively, to **$2.7 million** and **$6.9 million**, primarily due to lower sales resulting from COVID-19[79](index=79&type=chunk) [Cost of Sales and Gross Margins](index=21&type=section&id=Cost%20of%20Sales%20and%20Gross%20Margins) - Gross margins on sales for the three and six-month periods ended June 30, 2020, were **50%** and **52%**, respectively, slightly down from **52%** in the corresponding periods a year ago[81](index=81&type=chunk) [Research and Development Expense](index=22&type=section&id=Research%20and%20Development%20Expense) - Research and development expenses decreased by **14%** and **8%** for the three and six months ended June 30, 2020, respectively, primarily due to a reduction in employee compensation as a COVID-19 cost-saving initiative[84](index=84&type=chunk) [Sales and Marketing Expense](index=22&type=section&id=Sales%20and%20Marketing%20Expense) - Sales and marketing expenses decreased by **6%** and **2%** for the three and six months ended June 30, 2020, respectively, mainly due to reduced employee compensation as a COVID-19 cost-saving measure[86](index=86&type=chunk) [General and Administrative Expense](index=22&type=section&id=General%20and%20Administrative%20Expense) - General and administrative expenses decreased by **8%** and **7%** for the three and six months ended June 30, 2020, respectively, primarily due to a reduction in employee compensation as a COVID-19 cost-saving initiative[88](index=88&type=chunk) [Interest Expense, Net of Interest Income](index=22&type=section&id=Interest%20Expense,%20Net%20of%20Interest%20Income) - Net interest expense decreased significantly to approximately **$8,100** and **$27,600** for the three and six months ended June 30, 2020, respectively, from **$29,300** and **$57,800** in the prior year, mainly due to a lower average outstanding balance of bank term loans and credit lines[89](index=89&type=chunk) [Income Taxes](index=23&type=section&id=Income%20Taxes) - The company did not record a deferred tax benefit for losses in the three and six months ended June 30, 2020, but recorded deferred tax expenses in the comparable 2019 periods[92](index=92&type=chunk)[93](index=93&type=chunk) - Deferred tax assets, primarily from net operating loss carryforwards, were valued at approximately **$5,506,000** at June 30, 2020[92](index=92&type=chunk) [Liquidity and Capital Resources](index=23&type=section&id=Liquidity%20and%20Capital%20Resources) - Net cash provided by operating activities was approximately **$244,000** in the first half of 2020, a significant improvement from net cash used of **$137,000** in the prior year, driven by decreases in accounts receivable[94](index=94&type=chunk)[95](index=95&type=chunk) - Net cash used in financing activities was approximately **$20,000** in the first half of 2020, compared to net cash provided of **$256,000** in the prior year, influenced by PPP and EIDL loan proceeds offset by bank line repayments[98](index=98&type=chunk) [Contractual Obligations](index=24&type=section&id=Contractual%20Obligations) Contractual Obligations | Contractual Obligations | Total (USD) | Less than 1 year (USD) | 1 to 3 years (USD) | 4 to 5 years (USD) | More than 5 years (USD) | | :------------------------ | :----------- | :--------------- | :----------- | :----------- | :---------------- | | Unconditional purchase obligations with contract manufacturers | $3,651,000 | $3,651,000 | $— | $— | $— | | Operating lease for office | $996,000 | $447,000 | $549,000 | $— | $— | | Operating lease for copier | $33,000 | $15,000 | $18,000 | $— | $— | | Total contractual obligations | $4,680,000 | $4,113,000 | $567,000 | $— | $— | [Off-Balance Sheet Arrangements](index=24&type=section&id=Off-Balance%20Sheet%20Arrangements) - As of June 30, 2020, the company had no off-balance sheet arrangements[100](index=100&type=chunk) [Item 3. Quantitative and Qualitative Disclosures about Market Risk](index=25&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) This section outlines the company's exposure to market risks, specifically interest rate risk and foreign currency risk, and the strategies employed to mitigate them [Interest Rate Risk](index=25&type=section&id=Interest%20Rate%20Risk) - The company's bank term loan and credit line facilities have variable interest rates, making them susceptible to interest rate increases. A **1%** increase in interest rates would have increased Q2 2020 borrowing costs by approximately **$1,061**[102](index=102&type=chunk) [Foreign Currency Risk](index=25&type=section&id=Foreign%20Currency%20Risk) - The company hedges a significant portion of its European receivables denominated in Euros to reduce foreign currency risk. An adverse **10%** change in exchange rates would have resulted in a net income decrease of approximately **$9,000** for Q1 2020 if unhedged[103](index=103&type=chunk) - For Q2 2020, the net adjustment for foreign currency effects on cash, collections, payables, and derivatives resulted in a net loss of **$5,580**[103](index=103&type=chunk) [Item 4. Controls and Procedures](index=26&type=section&id=Item%204.%20Controls%20and%20Procedures) Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were effective as of June 30, 2020, with no material changes in internal control over financial reporting during the quarter [Conclusion Regarding the Effectiveness of Disclosure Controls and Procedures](index=26&type=section&id=Conclusion%20Regarding%20the%20Effectiveness%20of%20Disclosure%20Controls%20and%20Procedures) - The CEO and CFO concluded that disclosure controls and procedures were effective as of June 30, 2020, ensuring timely and accurate reporting[105](index=105&type=chunk) [Changes in Internal Control Over Financial Reporting](index=26&type=section&id=Changes%20in%20Internal%20Control%20Over%20Financial%20Reporting) - There were no material changes in internal control over financial reporting during the quarter ended June 30, 2020[106](index=106&type=chunk) Part II. Other Information [Item 1A. Risk Factors](index=27&type=section&id=Item%201A.%20Risk%20Factors) This section details various risks that could materially affect the company's business, financial condition, and operating results, including global economic conditions (especially COVID-19 impacts), ability to return to profitability, need for additional capital, dependence on application developers, internal control failures, cybersecurity threats, quarterly operating fluctuations, compliance with credit covenants, reliance on deferred tax assets and goodwill, supplier dependence, product development challenges, customer and distributor concentration, intellectual property protection, and personnel retention... - Global economic conditions, particularly the COVID-19 pandemic, have reduced sales and pose significant challenges, with future impacts highly uncertain[110](index=110&type=chunk) - The company may not return to profitability and may require additional capital, which might not be available on reasonable terms or without substantial dilution[111](index=111&type=chunk)[112](index=112&type=chunk) - Dependence on application developers for product integration and sales, and a limited number of distributors (Ingram Micro and BlueStar accounted for **53%** of H1 2020 revenues), poses significant business risks[113](index=113&type=chunk)[126](index=126&type=chunk) - Risks include quarterly operating result fluctuations due to order timing and product mix, potential failure to maintain effective internal controls, and dependence on a limited number of suppliers for component parts[117](index=117&type=chunk)[118](index=118&type=chunk)[119](index=119&type=chunk)[114](index=114&type=chunk)[122](index=122&type=chunk) - The company faces intense competition, the need to rapidly develop new products in a fast-changing technology market, and challenges in protecting its intellectual property[124](index=124&type=chunk)[125](index=125&type=chunk)[128](index=128&type=chunk)[137](index=137&type=chunk) [Item 6. Exhibits](index=38&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including certifications from the Chief Executive Officer and Chief Financial Officer as required by the Sarbanes-Oxley Act of 2002 - Exhibits include certifications from the CEO (31.1, 32.1) and CFO (31.2, 32.1) pursuant to Sections 302 and 906 of the Sarbanes-Oxley Act of 2002[157](index=157&type=chunk)[164](index=164&type=chunk) [Signatures](index=39&type=section&id=Signatures) The report is duly signed on behalf of Socket Mobile, Inc. by Kevin J. Mills, President and Chief Executive Officer, and Lynn Zhao, Vice President of Finance and Administration and Chief Financial Officer, on August 12, 2020 - The report was signed by Kevin J. Mills, President and CEO, and Lynn Zhao, VP of Finance and Administration and CFO, on August 12, 2020[161](index=161&type=chunk) ```

Socket Mobile, Inc. (NASDAQ:SCKT) Q2 2020 Earnings Conference Call July 31, 2020 5:00 PM ET Company Participants Kevin Mills – President and Chief Executive Officer Lynn Zhao – Chief Financial Officer Conference Call Participants Operator Welcome to the Q2 2020 Management Conference Call. My name is Daryl, and I will be your operator for today's call. Before we begin, I'd like to remind everyone that this conference may contain forward-looking statements within the meaning of Section 27A of the Securities A ...

[Part I. Financial Information](index=4&type=section&id=Part%20I.%20Financial%20Information) [Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) The unaudited condensed financial statements for the three months ended March 31, 2020, show a decrease in revenue to $4.2 million from $4.6 million in the prior-year period, resulting in a net loss of $90,327 compared to a net income of $11,839 in Q1 2019, with total assets slightly increasing to $19.6 million and net cash used in operating activities improving to ($50,790) from ($406,101) year-over-year, and a significant subsequent event being the receipt of a $1.06 million SBA loan in April 2020 Condensed Statements of Operations (Three Months Ended March 31) | Metric | 2020 | 2019 | | :--- | :--- | :--- | | **Revenues** | $4,220,686 | $4,628,592 | | **Gross Profit** | $2,223,715 | $2,399,843 | | **Operating Income (Loss)** | ($90,835) | $47,010 | | **Net Income (Loss)** | ($90,327) | $11,839 | | **Diluted EPS** | ($0.01) | $0.00 | Condensed Balance Sheet Highlights | Metric | March 31, 2020 | December 31, 2019 | | :--- | :--- | :--- | | **Total Current Assets** | $7,775,556 | $7,520,724 | | **Total Assets** | $19,634,717 | $19,458,487 | | **Total Current Liabilities** | $5,727,681 | $5,468,488 | | **Total Liabilities** | $6,367,249 | $6,224,261 | | **Total Stockholders' Equity** | $13,267,468 | $13,234,226 | Condensed Statements of Cash Flows (Three Months Ended March 31) | Metric | 2020 | 2019 | | :--- | :--- | :--- | | **Net cash used in operating activities** | ($50,790) | ($406,101) | | **Net cash used in investing activities** | ($154,681) | ($100,318) | | **Net cash provided by financing activities** | $389,436 | $350,698 | | **Net increase (decrease) in cash** | $183,965 | ($155,721) | | **Cash and cash equivalents at end of period** | $1,142,825 | $929,270 | - Subsequent to the quarter end, on April 20, 2020, the Company received a U.S. Small Business Administration (SBA) loan of **$1,058,700** pursuant to the Paycheck Protection Program (PPP) under the CARES Act[59](index=59&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=18&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management attributes the 9% year-over-year revenue decline in Q1 2020 to the COVID-19 pandemic, which severely impacted its retail-centric business segment, resulting in an operating loss of approximately $91,000 despite stable gross margins and slightly lower operating expenses, with liquidity managed through bank credit lines and significantly improved net cash used in operations compared to Q1 2019 - Q1 2020 revenue was approximately **$4.2 million**, a **9% decrease** from Q1 2019, primarily impacted by the COVID-19 pandemic as over **70%** of the company's business is driven by retail-centric applications[71](index=71&type=chunk) - Gross profit margins were **53%** in Q1 2020, a slight improvement from **52%** in Q1 2019[72](index=72&type=chunk) - Operating expenses for Q1 2020 were **$2.31 million**, a slight decrease from **$2.35 million** in Q1 2019, with reductions in R&D and G&A expenses partially offset by a small increase in Sales and Marketing[9](index=9&type=chunk)[73](index=73&type=chunk)[74](index=74&type=chunk) - Net cash used in operating activities was **$50,790** in Q1 2020, a significant improvement from **$406,000** used in Q1 2019. Net cash from financing activities was approximately **$390,000**, primarily from net borrowings on bank lines of credit[81](index=81&type=chunk)[84](index=84&type=chunk) [Quantitative and Qualitative Disclosures about Market Risk](index=23&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) The company's primary market risks are interest rate risk on its variable-rate bank loans and foreign currency risk from sales denominated in Euros and British pounds, with a 1% interest rate increase estimated to raise Q1 2020 borrowing costs by only $3,500, and an unprotected 10% adverse change in foreign exchange rates estimated to decrease Q1 2020 net income by approximately $20,000, though hedging mitigates a significant portion of European receivables currency risk - Exposure to interest rate risk is primarily from the bank term loan and credit line facilities, which have variable rates. A hypothetical **1% increase** in the interest rate would have increased Q1 2020 borrowing costs by approximately **$3,500**[87](index=87&type=chunk) - The company is exposed to foreign currency risk as it requires European distributors to purchase in Euros and pays European employees in Euros and British pounds. An adverse **10% change** in exchange rates would have resulted in a decrease in net income of approximately **$20,000** for Q1 2020 if left unprotected[88](index=88&type=chunk) [Controls and Procedures](index=24&type=section&id=Item%204.%20Controls%20and%20Procedures) Based on an evaluation as of March 31, 2020, the company's Chief Executive Officer and Chief Financial Officer concluded that the disclosure controls and procedures are effective, with no material changes in the company's internal control over financial reporting during the first quarter of 2020 - Management, including the CEO and CFO, concluded that as of the end of the period covered by the report, the company's disclosure controls and procedures were effective[90](index=90&type=chunk) - There were no changes in internal control over financial reporting during the quarter ended March 31, 2020, that have materially affected, or are reasonably likely to materially affect, internal controls[91](index=91&type=chunk) [Part II. Other Information](index=25&type=section&id=Part%20II.%20Other%20Information) [Risk Factors](index=25&type=section&id=Item%201A.%20Risk%20Factors) The company identifies significant risks that could adversely affect its business, including the negative impact of global economic conditions such as the COVID-19 pandemic on product demand, high dependence on application developers and a limited number of distributors (Ingram Micro and BlueStar), potential inability to return to profitability, reliance on a limited number of component suppliers, intense market competition, and the need to rapidly develop new products to keep pace with changing technology - The COVID-19 pandemic has reduced product purchases due to worldwide business curtailments and could restrict access to capital markets if conditions worsen[94](index=94&type=chunk) - The company is dependent on application developers to integrate its products into their solutions and successfully market them. Delays or failures by these developers would adversely affect revenue[97](index=97&type=chunk) - A significant portion of revenue comes from a limited number of distributors. In Q1 2020, Ingram Micro and BlueStar represented approximately **53%** of worldwide revenues[110](index=110&type=chunk) - Several component parts are sourced from a limited number of suppliers, exposing the company to risks of shortages or supply interruptions that could materially harm financial results[106](index=106&type=chunk) - The market is characterized by rapidly changing technology and short product life cycles, requiring successful and timely new product introductions to compete effectively[107](index=107&type=chunk) [Exhibits](index=36&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, which consist of the certifications by the Chief Executive Officer and Chief Financial Officer as required by Sections 302 and 906 of the Sarbanes-Oxley Act of 2002 - The exhibits filed with this report include: * 31.1: Certification of CEO pursuant to Section 302 of the Sarbanes-Oxley Act * 31.2: Certification of CFO pursuant to Section 302 of the Sarbanes-Oxley Act * 32.1: Certification of CEO and CFO pursuant to Section 906 of the Sarbanes-Oxley Act[142](index=142&type=chunk) [Signatures](index=37&type=section&id=Signatures) [Signatures](index=37&type=section&id=Signatures) The quarterly report was duly signed and authorized on May 15, 2020, by the company's principal executive and financial officers - The report is signed by Kevin J. Mills, President and Chief Executive Officer, and Lynn Zhao, Vice President of Finance and Administration and Chief Financial Officer[145](index=145&type=chunk)

Socket Mobile, Inc. (NASDAQ:SCKT) Q1 2020 Earnings Conference Call April 29, 2020 5:00 PM ET Company Participants Kevin Mills - CEO Lynn Zhao - CFO Conference Call Participants Operator Welcome to the Q1 2020 Management Conference Call. My name is Darryl, and I'll be the operator for today's call. Before we begin, I would like to remind everybody that this conference call may contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of t ...