SCKT 10-K

Socket Mobile, Inc. (SCKT)

10-K 2025-03-25 For: 2024-12-31

View Original

Added on April 07, 2026

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common stock, $0.001 Par Value per Share	SCKT	NASDAQ


PART I
	Item 1.	Business	1
	Item 1A.	Risk Factors	8
	Item 1B.	Unresolved Staff Comments	17
	Item 1C.	Cybersecurity	17
	Item 2.	Properties	18
	Item 3.	Legal Proceedings	18
	Item 4.	Mine Safety Disclosures	18

PART II
	Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	19
	Item 6.	Selected Financial Data	20
	Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	21
	Item 7A.	Quantitative and Qualitative Disclosures about Market Risk	27
	Item 8.	Financial Statements and Supplementary Data	27
	Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	54
	Item 9A.	Controls and Procedures	54
	Item 9B.	Other Information	55
	Item 9C.	Disclosure Regarding Foreign Jurisdictions that Prevent Inspections	55

PART III
	Item 10.	Directors, Executive Officers and Corporate Governance	56
	Item 11.	Executive Compensation	56
	Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	56
	Item 13.	Certain Relationships and Related Transactions, and Director Independence	56
	Item 14.	Principal Accounting Fees and Services	56

PART IV
	Item 15.	Exhibits, Financial Statement Schedules	57

SIGNATURES			58

Index to Exhibits			59

	Years Ended December 31,
(Amounts in thousands, except per share)	2020			2021		2022			2023			2024
Income Statement Data:
Revenues	$	15,700		$	23,199	$	21,238		$	17,034		$	18,763
Gross profit	$	8,335		$	12,436	$	10,366		$	8,463		$	9,311
Operating expenses	$	12,686		$	9,739	$	10,812		$	11,584		$	11,914
Net income (loss) before income taxes	$	(3,330	)	$	2,564	$	(621	)	$	(3,363	)	$	(2,793	)
Income tax benefit (expense)	$	51		$	1,903	$	708		$	1,444		$	551
Net income (loss)	$	(3,279	)	$	4,466	$	87		$	(1,919	)	$	(2,242	)
Net income (loss) per share: Basic	$	(0.51	)	$	0.58	$	0.01		$	(0.27	)	$	(0.30	)
Diluted	$	(0.51	)	$	0.48	$	0.01		$	(0.27	)	$	(0.30	)
Weighted average shares outstanding:
Basic		6,036			6,991		7,185			7,230			7,558
Diluted		6,036			8,923		7,533			7,230			7,558

		At December 31,
		2020			2021		2022			2023			2024
Balance Sheet Data:
Cash and cash equivalents	$	2,122		$	6,096	$	3,624		$	2,827		$	2,492
Total assets	$	15,609		$	25,575	$	28,598		$	28,742		$	27,346

Bank line of credit	$	—		$	—	$	—		$	—		$	—
Term loan	$	—		$	625	$	125		$	—		$	—
Related party convertible notes payable	$	1,272		$	1,201	$	1,231		$	2,836		$	3,818
Convertible notes payable	$	170		$	144	$	147		$	150		$	150
Operating lease	$	741		$	258	$	3,737		$	3,292		$	2,817

Total stockholders’ equity	$	11,173		$	20,046	$	20,322		$	19,420		$	18,161

	Quarter Ended (unaudited)
(Amounts in thousands, except per share amounts)	Mar 31, 2023			Jun 30, 2023			Sep 30, 2023			Dec 31, 2023			Mar 31, 2024			Jun 30, 2024			Sep 30, 2024			Dec 31, 2024
Summary Quarterly Data:
Revenue	$	4,312		$	5,117		$	3,206		$	4,399		$	4,978		$	5,081		$	3,872		$	4,831
Cost of revenue		2,240			2,466			1,788			2,078			2,473			2,497			1,975			2,366
Gross profit		2,072			2,651			1,418			2,321			2,505			2,584			1,897			2,465
Operating expenses:
Research and development		1,247			1,190			1,207			1,188			1,208			1,232			1,162			1,119
Sales and marketing		1,006			1,004			1,002			1,003			1,031			1,154			1,122			1,106
General and administrative		774			749			608			605			751			733			644			651
Total operating expenses		3,027			2,943			2,817			2,796			2,990			3,119			2,928			2,876
Interest expense, net		(38	)		(55	)		(76	)		(73	)		(72	)		(73	)		(84	)		(102	)
Income tax (expense) benefit		—			(166	)		150			1,460			—			—			—			551
Net income (loss)	$	(993	)	$	(513	)	$	(1,325	)	$	912		$	(557	)	$	(608	)	$	(1,115	)	$	38
Basic net income (loss) per share	$	(0.12	)	$	(0.06	)	$	(0.16	)	$	0.11		$	(0.07	)	$	(0.08	)	$	(0.15	)	$	0.00
Fully diluted net income (loss) per share	$	(0.12	)	$	(0.06	)	$	(0.16	)	$	0.08		$	(0.07	)	$	(0.08	)	$	(0.15	)	$	0.00

	Payments Due by Period
Contractual Obligations	Total		1 year		2 to 3 years		4 to 5 years		More than 5 years
Unconditional purchase obligations with contract manufacturers	$	6,159,000	$	5,844,000	$	315,000	$	—	$	—
Operating leases		3,165,000		657,000		1,369,000		1,139,000		—
Total contractual obligations	$	9,324,000	$	6,501,000	$	1,684,000	$	1,139,000	$	—


	December 31,
	2024			2023
ASSETS
Current assets:
Cash and cash equivalents	$	2,491,964		$	2,826,630
Accounts receivable, net		1,588,095			1,699,696
Inventories, net		4,941,500			5,409,047
Prepaid expenses and other current assets		430,719			440,730
Deferred cost on shipments to distributors		142,939			322,580
Total current assets		9,595,217			10,698,683

Property and equipment:
Machinery and office equipment		2,776,992			2,700,759
Computer equipment		3,732,733			3,631,945
Property and equipment, gross		6,509,725			6,332,704
Accumulated depreciation		(3,722,424	)		(3,299,503	)
Property and equipment, net		2,787,301			3,033,201

Intangible assets, net		1,432,073			1,559,369
Other long-term assets		263,634			249,715
Deferred tax assets		10,663,419			10,112,419
Operating lease right-of-use asset		2,604,137			3,088,087
Total assets	$	27,345,781		$	28,741,474


LIABILITIES AND STOCKHOLDERS’ EQUITY

Current liabilities:
Accounts payable and accrued expenses	$	1,298,165		$	1,605,231
Accrued payroll and related expenses		678,768			579,974
Deferred revenue on shipments to distributors		392,543			825,670
Short term portion of deferred service revenue		17,886			19,885
Subordinated convertible notes payable, net of discount		150,000			150,000
Subordinated convertible notes payable, net of discount-related party		3,818,424			2,835,864
Operating lease – current portion		532,027			483,161
Total current liabilities		6,887,813			6,499,785

Long-term portion of operating lease		2,284,634			2,808,872
Long-term portion of deferred service revenue		12,839			12,813
Total liabilities		9,185,286			9,321,470

Commitments and contingencies		—			—
Stockholders’ equity:
Common stock, $0.001 par value: Authorized – 20,000,000 shares, Issued 7,964,881 and 7,695,371, and outstanding 7,605,631 and 7,336,121 at December 31, 2024 and December 31, 2023, respectively		7,606			7,336
Additional paid-in capital		69,365,801			68,383,230
Treasury stock, at cost (359,250 shares as of December 31, 2024 and 2023)		(1,037,988	)		(1,037,988	)
Accumulated deficit		(50,174,924	)		(47,932,574	)
Total stockholders’ equity		18,160,495			19,420,004
Total liabilities and stockholders’ equity	$	27,345,781		$	28,741,474


							Additional											Total
	Common Stock						Paid-In			Treasury Stock					Accumulated			Stockholders’
	Shares			Amount			Capital			Shares		Amount			Deficit			Equity
Balance on December 31, 2022		7,089,676		$	7,090		$	67,157,650			266,291	$	(829,563	)	$	(46,013,420	)	$	20,321,757
Vesting of restricted stock		255,687			256			(256	)		—		—			—			—
Restricted stock retired for tax withholding		(55,192	)		(56	)		(143,315	)		—		—			—			(143,371	)
Exercise of stock options		138,909			139			212,676			—		—			—			212,815
Stock-based compensation		—			—			1,156,382			—		—			—			1,156,382
Treasury shares purchased		(92,959	)		(93	)		93			92,959		(208,425	)		—			(208,425	)
Net income		—			—			—			—		—			(1,919,154	)		(1,919,154	)
Balance on December 31, 2023		7,336,121		$	7,336		$	68,383,230			359,250	$	(1,037,988	)	$	(47,392,574	)	$	19,420,004
Vesting of restricted stock		316,519			316			(316	)		—		—			—			—
Restricted stock retired for tax withholding		(72,009	)		(71	)		(95,134	)		—		—			—			(95,205	)
Exercise of stock options		25,000			25			23,725			—		—			—			23,750
Stock-based compensation		—			—			1,054,296			—		—			—			1,054,296
Net loss		—			—			—			—		—			(2,242,350	)		(2,242,350	)
Balance on December 31, 2024		7,605,631		$	7,606		$	69,365,801			359,250	$	(1,037,988	)	$	(50,174,924	)	$	18,160,495


Year		Balance at Beginning of Year		Charged to Costs and Expenses		Amounts Written Off		Balance at End of Year

	2024	$	40,651	$	—	$	—	$	40,651
	2023	$	40,651	$	—	$	—	$	40,651


Fiscal Year	Amount
2025		127,296
2026		127,296
2027		127,296
2028		127,296
2029		127,296
Thereafter		795,593
	$	1,432,073


Year		Balance at Beginning of Year		Additional Warranty Reserves		Amounts Charged to Reserves			Balance at End of Year

	2024	$	78,871	$	10,038	$	(10,038	)	$	78,871
	2023	$	78,871	$	13,417	$	(13,417	)	$	78,871


	Years Ended December 31,
Revenues: (in thousands)	2024		2023
United States	$	13,863	$	12,539
Europe		2,318		2,426
Asia and rest of world		2,582		2,069
Total	$	18,763	$	17,034


Annual minimum payments:	Amount
2025		657,164
2026		676,750
2027		692,644
2028		713,423
Thereafter		425,646
Total minimum payments		3,165,627
Less: Present value factor		(348,966	)
Total operating lease liabilities		2,816,661
Less: Current portion of operating lease		(532,027	)
Long-term portion of operating lease	$	2,284,634


	Years Ended December 31,
Income Statement Classification	2024		2023
Cost of revenues	$	119,872	$	137,116
Research and development	$	318,258	$	358,632
Sales and marketing	$	283,672	$	295,704
General and administrative	$	332,494	$	364,930
Stock-based compensation expenses	$	1,054,296	$	1,156,382


	Outstanding Options
	Number of Shares			Weighted Average Exercise Price Per Share		Remaining Contractual Term (in years)		Intrinsic Value
Balance as of December 31, 2022		1,296,722		$	2.93
Granted		—		$	—
Exercised		(138,909	)	$	1.53
Canceled		(6,698	)	$	1.46
Balance as of December 31, 2023		1,151,115		$	3.11
Granted		688,936		$	1.12
Exercised		(25,000	)	$	0.42
Canceled		(684,791	)	$	0.13
Balance as of December 31, 2024		1,130,260		$	1.93		7.33	$	20,142
Exercisable		509,875		$	2.86		4.75	$	20,142
Unvested		620,385		$	1.16		9.50	$	0


	Options Outstanding						Options Exercisable
Range of Exercise Prices	Number of Options Outstanding		Weighted Average Remaining Life (Years)		Weighted Average Exercise Price		Number of Options Exercisable		Weighted Average Exercise Price
$0.95 - $1.10		94,000		8.67	$	1.08		94,000	$	1.08
$1.12 - $1.25		613,349		9.50	$	1.12		613,349	$	1.12
$1.50 - $1.98		82,325		4.25	$	1.90		82,325	$	1.90
$2.00 - $2.27		33,500		0.25	$	2.21		33,500	$	2.21
$2.32 - $2.36		96,148		4.67	$	2.32		96,148	$	2.48
$2.40 - $2.71		19,000		4.08	$	2.48		19,000	$	3.85
$2.74 - $2.75		38,600		1.25	$	2.75		38,600	$	2.75
$2.82 - $2.95		38,551		4.42	$	2.93		38,551	$	2.93
$3.04 - $3.29		12,000		7.50	$	3.05		12,000	$	3.05
$3.45 - $3.88		17,000		1.92	$	3.81		17,000	$	3.81
$4.22 - $6.90		40,787		3.50	$	4.45		40,787	$	4.45
$7.20 - $33.75		45,000		6.33	$	8.58		45,000	$	8.58
$0.95 - $33.75		1,130,260		7.33	$	2.86		1,130,260	$	1.93


	Number of Restricted Stocks			Weighted Average Price Per Share
Unvested as of December 31, 2022		844,976		$	2.84
Granted		463,720		$	2.30
Vested		(286,062	)	$	2.02
Forfeited		(31,435	)	$	2.66
Unvested as of December 31, 2023		991,199		$	2.83
Granted		506,000		$	1.11
Vested		(316,519	)	$	1.16
Forfeited		(101,840	)	$	2.18
Unvested as December 31, 2024		1,078,840		$	0.98


	December 31,
Deferred tax assets:	2024			2023
Net operating loss carryforwards	$	6,189,000		$	6,201,000
Tax credits		879,000			891,000
Accruals & reserves		1,092,000			1,118,000
Lease liabilities		786,000			920,000
Depreciation		(98,000	)		12,000
Share-based compensation		160,000			229,000
Capitalized Research Costs		2,805,000			2,078,000
Total deferred tax assets		11,813,000			10,449,000
Valuation allowance		(430,000	)		(446,000	)
Net deferred tax assets		11,383,000			11,003,000
Deferred tax liabilities:
Amortization		8,000			(29,000	)
ROU assets		(728,000	)		(862,000	)
Net deferred tax asset (liability)	$	10,663,000		$	10,112,000


	Amount
Balance as of January 1, 2022	$	1,016,000
Increases (decreases) for current year tax provisions		24,000
Increases (decreases) for prior year tax provisions		(31,000	)
Decreases for expiration of statute of limitations		—
Settlements		—
Balance as of December 31, 2023		1,009,000
Increases (decreases) for current year tax provisions		13,000
Increases (decreases) for prior year tax provisions		(25,000	)
Decreases for expiration of statute of limitations		—
Settlements		—
Balance as of December 31, 2024	$	997,000

INDEX TO FINANCIAL STATEMENTS	PAGE

Report of Independent Registered Public Accounting Firm	28
Balance Sheets	31
Statements of Income	32
Statements of Stockholders’ Equity	33
Statements of Cash Flows	34
Notes to Financial Statements	35

			SOCKET MOBILE, INC.
			Registrant

Date: March 25, 2025			/s/ Kevin J. Mills
			Kevin J. Mills
			President and Chief Executive Officer

/s/ Kevin J. Mills Kevin J. Mills	President and Chief Executive Officer (Principal Executive Officer) and Director	March 25, 2025
/s/ Charlie Bass Charlie Bass	Chairman of the Board	March 25, 2025
/s/ Lynn Zhao Lynn Zhao	Vice President of Finance and Administration and Chief Financial Officer (Principal Financial and Accounting Officer) and Director	March 25, 2025
/s/ Bill Parnell Bill Parnell	Director	March 25, 2025
/s/ Ivan Lazarev Ivan Lazarev	Director	March 25, 2025
/s/ Alexis Hartmann Alexis Hartmann	Director	March 25, 2025