8-K
Socket Mobile, Inc. (SCKT)
UNITED STATES
SECURITIESAND EXCHANGE COMMISSION
Washington,DC 20549
FORM8-K
CURRENTREPORT
Pursuantto Section 13 or 15(d) of
TheSecurities Exchange Act of 1934
October 22, 2020
Date of Report
(Date of earliest event reported)
****
SOCKETMOBILE, INC.
(Exact name of registrant as specified in its charter)
| Delaware | 001-13810 | 94-3155066 |
|---|---|---|
| (State or other jurisdiction of incorporation) | (Commission File Number) | (IRS Employer<br><br>Identification No.) |
39700 Eureka Drive
Newark, CA 94560
(Address of principal executive offices, including zip code)
(510) 933-3000
(Registrant’s telephone number, including area code)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
[ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Securities registered pursuant to Section 12(b) of the Act:
| Title<br> of each class | Trading<br> Symbol(s) | Name<br> of each exchange on which registered |
|---|---|---|
| Common<br> stock, $0.001 Par Value per Share | SCKT | NASDAQ |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2).
Emerging growth company [ ]
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [ ]
Item 2.02 Results of Operations and Financial Condition
On October 22, 2020, Socket Mobile, Inc. issued a press release reporting its results for the three and nine months ended September 30, 2020. The full text of the press release is furnished as Exhibit 99.1.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits.
| Exhibit Number | Description |
|---|---|
| 99.1 | Text<br> of press release, dated October 22, 2020, titled "Socket Mobile Reports Third Quarter Results". |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| SOCKET MOBILE, INC. | |
|---|---|
| Date: October 22, 2020 | /s/ Lynn Zhao |
| Lynn Zhao | |
| Vice President, Finance and Administration <br><br>and Chief Financial Officer |
EXHIBIT INDEX
| Exhibit Number | Description |
|---|---|
| 99.1 | Text<br> of press release, dated October 22, 2020, titled "Socket Mobile Reports Third Quarter Results". |
Exhibit 99.1
Socket Mobile Reports Third Quarter Results
NEWARK,Calif., – October 22, 2020 – Socket Mobile, Inc. (NASDAQ: SCKT), a leading innovator of data capture and delivery solutions for enhanced productivity, today reported third quarter 2020 results.
SocketMobile and its auditors did not complete the annual review process related to goodwill impairment, which is part of the quarter-endclosing procedures, in time to include in this release. The review takes longer than usual due to uncertainties and complicationsassociated with the impact of the COVID-19 pandemic. The results that are being released today assume there is no goodwill impairment.All numbers that would be negatively impacted by an adjustment to goodwill are asterisked. The results will be reported as soonas the goodwill review is completed or in the Form 10-Q for Q3.
Revenue for the third quarter of 2020 was $4.1 million, a decrease of 17 percent over revenue of $5.0 million for the same quarter a year ago and an increase of 51 percent sequentially from revenue of $2.7 million in the immediately preceding quarter. Net income***for the third quarter of 2020 was $424,000*, or $0.07*** per share, compared to net income of $94,000 in the third quarter of 2019, and net loss of $768,000 in the immediately preceding quarter.
Revenue for the nine months ended September 30, 2020 was $11 million, a decrease of 24.7 percent from revenue of $14.7 million in the same period a year ago. Net loss for the nine months ended September 30, 2020 was $434,000*****, compared to net income of $226,000 for the same period a year ago.
Gross margins on revenue for the three-month and nine-month periods ended September 30, 2020 was 55.3 percent and 53 percent, respectively, compared to gross margins on revenue of 52.9 percent and 52.3 percent, respectively, for the corresponding periods in 2019.
Operating expenses for the third quarter of 2020 were $1.8 million, a decrease of 27.2 percent compared to operating expenses of $2.5 million for the same quarter a year ago, and a decrease of 16 percent sequentially from the immediately preceding quarter. Operating expenses for the nine months ended September 30, 2020 were $6.3 million, a decrease of 13 percent compared to operating expenses of $7.3 million for the same period a year ago.
____________________________________
*Subject to the goodwill impairment review.
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“We were pleased to report revenue growth in Q3. We believe our Q3 results demonstrated our ability to adjust quickly to the extreme economic challenges posed by the COVID-19 pandemic and resulting uncertainties. We offset our lower revenues by proactive cost reductions, delays in non-critical discretionary spending and capital expenditures while maintaining critical longer-term projects. We also developed and implemented strategies to strengthen our balance sheet, including raising additional capital through debt financing. These actions allowed us to navigate the last two quarters well – returning to profitability in Q3, after experiencing abrupt and dramatic declines in economic and business activity in Q2,” said Kevin Mills, president and chief executive officer.
“The future will remain uncertain until the global pandemic is under much better control. Our Q3 results, coupled with our stronger balance sheet, have put us in a good position to withstand the uncertainty and rapidly changing economic situation. We will continue to serve our many application centric customers, who continue to service their customers with our products in these difficult times. We will continue to manage our expenses tightly while limiting our investment to long term strategically important projects. We would like to thank our employees for their continued commitment and hard work and thank our business partners for their support. We look forward to a stronger 2021,” Mills continued.
“I need to point out the Q3’s net income* may be impacted by adjustment to our goodwill, which is currently under review. Unfortunately, this annual review was not started in time and therefore, could not be completed before today’s announcement. We will report the results in the Form 10-Q that will be filed on or around November 13th,” Mills concluded.
____________________________________
*Subject to the goodwill impairment review.
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ConferenceCall
Management of Socket Mobile will hold a conference call and web cast today at 2 P.M. Pacific (5 P.M. Eastern) to discuss the quarterly results and outlook for the future. The dial-in number to access the call is (888) 424-8151 passcode 7255 653. From international locations, obtain the local dial-in number through your web browser at **http://web.meetme.net/r.aspx?p=12&a=UCNSkgVibLlosX.**A live and replay audio webcast of the conference call can be accessed through the link, https://onlinexperiences.com/Launch/QReg/ShowUUID=990E6CEA-E952-494D-B64A-821845B98860&LangLocaleID=1033
AboutSocket Mobile, Inc.
Socket Mobile is a leading provider of data capture and delivery solutions for enhanced productivity in workforce mobilization. Socket Mobile’s revenue is primarily driven by the deployment of third-party barcode enabled mobile applications that integrate Socket Mobile’s cordless barcode scanners and contactless reader/writers. Mobile Applications servicing the specialty retailer, field service, transportation, and manufacturing markets are the primary revenue drivers. Socket Mobile has a network of thousands of developers who use its software developer tools to add sophisticated data capture to their mobile applications. Socket Mobile is headquartered in Newark, Calif. and can be reached at +1-510-933-3000 or www.socketmobile.com. Follow Socket Mobile on Facebook, Twitter @socketmobile and on our sockettalk blog.
Forward-LookingStatements
This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Such forward-looking statements include, but are not limited to, statements regarding new mobile computer and data collection products, including details on the timing, distribution and market acceptance of the products, and statements predicting trends, sales and market conditions and opportunities in the markets in which we sell our products. Such statements involve risks and uncertainties, and actual results could differ materially from the results anticipated in such forward-looking statements as a result of a number of factors, including, but not limited to, the risk that our new products may be delayed or not rollout as predicted, if ever, due to technological, market, or financial factors, including the availability of necessary working capital, the risk that market acceptance and sales opportunities may not happen as anticipated, the risk that our application partners and current distribution channels may choose not to distribute the new products or may not be successful in doing so, the risk that acceptance of our new products in vertical application markets may not happen as anticipated, and other risks described in our most recent Form 10-K and 10-Q reports filed with the Securities and Exchange Commission.
| Socket Mobile Investor Contact: |
|---|
| Lynn<br> Zhao |
| Chief<br> Financial Officer |
| 510-933-3016 |
| lynn@socketmobile.com |
Socketis a registered trademark of Socket Mobile. All other trademarks and trade names contained herein may be those of their respectiveowners.
©2020, Socket Mobile, Inc. All rights reserved.
-- Financial tables to follow --
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SocketMobile, Inc.
SummaryStatements of Operations (Unaudited)
(Amountsin Thousands except per share amounts and percentages)
| Three months ended Sept 30, | Nine months ended Sept 30, | |||||||
|---|---|---|---|---|---|---|---|---|
| 2020 | 2019 | 2020 | 2019 | |||||
| Revenue | $ | 4,109 | $ | 4,980 | $ | 11,044 | $ | 14,668 |
| Cost of revenue | 1,835 | 2,344 | 5,186 | 7,003 | ||||
| Gross margin | 2,274 | 2,636 | 5,858 | 7,665 | ||||
| Gross margin percent | 55.3 | 52.9 | 53.0 | 52.3 | ||||
| Research & development | 681 | 1,015 | 2,421 | 2,906 | ||||
| Sales & marketing | 658 | 785 | 2,148 | 2,312 | ||||
| General & administrative | 486 | 707 | 1,741 | 2,053 | ||||
| Total operating expenses | 1,825 | 2,507 | 6,310 | 7,271 | ||||
| Operating income (loss) | 449 | 129 | (452 | 394 | ||||
| Other income | — | — | 70 | — | ||||
| Interest income (expense), net | (24 | (25 | (51 | (83 | ||||
| Income tax (expense) benefit | (1 | (10 | (1 | (85 | ||||
| Net income (loss) | $ | 424 | $ | 94 | $ | (434 | $ | 226 |
| Earnings (loss) per share: <br>Basic <br>Diluted | 0.07* 0.06* | 0.02 0.01 | (0.07)* (0.07)* | 0.04 0.04 | ||||
| Weighted average shares outstanding: <br>Basic <br>Diluted | 6,038 6,485 | 5,999 6,317 | 6,020 6,020 | 5,980 6,237 |
All values are in US Dollars.
*Subject to the goodwill impairment review.
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SocketMobile, Inc.
CondensedSummary Balance Sheets
(Amountsin Thousands)
| September 30, 2020 <br>(Unaudited) | December 31, 2019** | |||||
|---|---|---|---|---|---|---|
| Cash | $ | 1,775 | $ | 959 | ||
| Accounts receivable, net | 2,359 | 2,837 | ||||
| Inventories, net | 3,362 | 3,179 | ||||
| Deferred cost on shipments to distributors | 179 | 234<br> <br>308 | ||||
| Other current assets | 317 | 312 | ||||
| Property and equipment, net | 835 | 864 | ||||
| Goodwill | 4,427 | * | 4,427 | |||
| Deferred tax assets | 5,507 | 5,507 | ||||
| Operating leases right-of-use assets | 704 | 937 | ||||
| Other long-term assets | 170 | 202 | ||||
| Total assets | $ | 19,635 | * | $ | 19,458 | |
| Accounts payable and accrued liabilities | $ | 2,417 | $ | 2,651 | ||
| Bank line of credit | — | 1,413 | ||||
| Notes payable | 1,059 | 333 | ||||
| Subordinated convertible notes payable, net of discount | 168 | — | ||||
| Subordinated convertible notes payable, net of discount-related party | 1,265 | — | ||||
| Deferred revenue on shipments to distributors | 557 | 611 | ||||
| Deferred service revenue | 55 | 74 | ||||
| Operating lease liabilities | 855 | 1,134 | ||||
| Other liabilities | — | 8 | ||||
| Total liabilities | 6,376 | 6,224 | ||||
| Common stock | 61,532 | 61,073 | ||||
| Accumulated deficit | (48,273 | )* | (47,839 | ) | ||
| Total equity | 13,259 | * | 13,234 | |||
| Total liabilities and equity | $ | 19,635 | * | $ | 19,458 |
*Subject to the goodwill impairment review.
**Derived from audited financial statements.
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