Socket Mobile(SCKT) - 2023 Q2 - Quarterly Report

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]