UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
November 5, 2012
Date of Report
(Date of earliest event reported)
SOCKET MOBILE, 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 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))
Item 1.01 Entry Into a Material Definitive Agreement
On November 5, 2012, the Company’s Board of Directors approved the issue of up to $350,000 in convertible subordinated notes to its Chairman to be used for working capital purposes. The notes will be issued from time to time as funds are needed by the Company.
The notes are identical to the Notes issued on August 1, 2012 as reported on a Current Report on Form 8-K on August 3, 2012. The notes are two-year notes (“Notes”) that accrue interest at 8% and mature on August 1, 2014. Accrued interest is payable upon redemption. The notes and accrued interest may be redeemed after six months. The notes are convertible into common stock at the option of the holder at $2.44 per share as long as warrants previously issued to Hudson Bay Capital Master Fund are outstanding, or at the fair market value per share at the time each note is issued if the Hudson Bay Warrants are no longer outstanding. The Hudson Bay Capital Master Fund warrants expire on May 20, 2016. The Notes are secured by all of the assets of the Company and are subordinated to amounts outstanding under the Company’s working capital bank line of credit with Silicon Valley Bank.
The foregoing description of the Notes does not purport to be complete and is qualified in its entirety by reference to the full text of the Form of the Convertible Subordinated Note, a copy of which is attached hereto as Exhibit 10.1, and incorporated herein by reference.
Item 2.02 Results of Operations and Financial Condition.
On November 6, 2012, Socket Mobile, Inc. issued a press release reporting its results for the three and nine months ended September 30, 2012. A copy of the press release is furnished as Exhibit 99.1.
Item 3.02 Unregistered Sales of Equity Securities
The information set forth in Item 1.01 of this Current Report on Form 8-K that relates to the future unregistered sale of equity securities is incorporated by reference into this Item 3.02.
Securities to be issued upon conversion of the Notes into common stock will not be registered under the Securities Act. The securities issuable upon conversion of the Notes are being sold to accredited investors in reliance upon exemptions from registration under Section 4(2) of the Securities Act and Rule 506 of Regulation D promulgated thereunder. These securities may not be offered or sold in the United States absent registration under, or an exemption from, the Securities Act and any applicable state securities laws.
Item 8.01 Other Events
On November 5, 2012, the Company’s Board of Directors approved, as one of a number of cost saving measures, the transfer of the Company’s listing on the OTCQX tier of the OTC Markets to the OTCQB tier of the OTC Markets. The Company also issued a letter addressed to its customers, vendors, developers and valued employees requesting their continued support. A copy of the letter is furnished as Exhibit 99.2.
Item 9.01. Financial Statements and Exhibits
(d) Exhibits.
| Exhibit No. | Description | |
| 10.1 | Form of Convertible Subordinated Note | |
| 99.1 | Press release dated November 6, 2012 | |
| 99.2 | Letter to customers, vendors, developers and valued employees |
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. | |||
| By: | /s/ David W. Dunlap | ||
Name: David W. Dunlap Vice President, Finance and Administration and Chief Financial Officer | |||
Date: November 6, 2012
EXHIBIT INDEX
| Exhibit No. | Description | |
| 10.1 | Form of Convertible Subordinated Note | |
| 99.1 | Press release dated November 6, 2012 | |
| 99.2 | Letter to customers, vendors, developers and valued employees |
Exhibit 10.1
SUBORDINATED CONVERTIBLE NOTE
NEITHER THE ISSUANCE NOR SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE CONVERTIBLE HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION OF COUNSEL TO THE HOLDER (IF REQUESTED BY THE COMPANY), IN A FORM REASONABLY ACCEPTABLE TO THE COMPANY, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS SOLD OR ELIGIBLE TO BE SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER SAID ACT. NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE SECURITIES. ANY TRANSFEREE OF THIS NOTE SHOULD CAREFULLY REVIEW THE TERMS OF THIS NOTE.
Socket Mobile, Inc.
SUBORDINATED CONVERTIBLE NOTE
| Issuance Date: [Date funds received] | Principal Amount: U.S. $_______________ |
FOR VALUE RECEIVED, Socket Mobile, Inc., a Delaware corporation (the “Company”), hereby promises to pay to the order of [Note holder], or its registered assigns (“Holder”) the amount of [$_______], (the “Principal”) when due, whether by repayment in cash at the Maturity Date of August 1, 2014 or being called by the note holder on or after February 1, 2013, or upon conversion into common stock, and to pay interest (“Interest”) on any outstanding Principal at a simple Interest Rate of eight percent (8%) from the date set out above as the Issuance Date (the “Issuance Date”) until the same becomes due and payable, whether in cash at the Maturity Date or upon calling of the note and/or accrued interest or upon conversion into common stock. This Subordinated Convertible Note (including all Subordinated Convertible Notes issued in exchange or replacement hereof, this “Note”) is issued pursuant to a Socket Mobile Board of Directors resolution dated November 5, 2012 approving the issuance of the notes by the Company.
1. PAYMENTS OF PRINCIPAL. On the Maturity Date, the Company shall pay to the Holder an amount in cash representing all outstanding Principal. The Note Holder shall have the right, on or after February 1, 2013, to call for repayment of any or all of the note principal. Such call shall be made in writing to the Chief Financial Officer. Repayment shall be made no later than three business days following receipt of the repayment call notice.
2. INTEREST; INTEREST RATE. Interest on this Note shall commence accruing on the Issuance Date and shall be payable on the Maturity Date. Interest Rate shall be eight percent (8%) simple interest. The Note Holder shall have the right, on or after February 1, 2013, to call for repayment of any or all of the note interest. Such call shall be made in writing to the Chief Financial Officer. Repayment shall be made no later than three business days following receipt of the repayment call notice.
3. CONVERSION OF NOTES. This Note and accrued interest shall be convertible into validly issued, fully paid and non-assessable shares of Common Stock at any time on or prior to the Maturity Date at the option of the Holder.
(a) Conversion Right. At any time or times on or after the Issuance Date up to and including the Maturity Date, the Holder shall be entitled to convert any portion of the outstanding and unpaid Conversion Amount (as defined below) into validly issued, fully paid and non-assessable shares of Common Stock in accordance with Section 3(c), at the Conversion Price (as defined below). The Company shall not issue any fraction of a share of Common Stock upon any conversion. If the issuance would result in the issuance of a fraction of a share of Common Stock, the Company shall round such fraction of a share of Common Stock up to the nearest whole share. The Company shall pay any and all transfer, stamp, issuance and similar taxes that may be payable with respect to the issuance and delivery of Common Stock upon conversion of any Conversion Amount.
(b) Conversion Formula. The number of shares of Common Stock issuable upon conversion of any Conversion Amount pursuant to Section 3(a) shall be determined by dividing (x) such Conversion Amount by (y) the Conversion Price (the “Conversion Rate”).
(i) “Conversion Amount” means the portion of the Principal to be converted, redeemed or otherwise with respect to which this determination is being made, plus all accrued and unpaid Interest with respect to such portion of the Principal amount, in an amount as determined by the Holder.
(ii) “Conversion Price” means, as of any Conversion Date or other date of determination, a) if warrants previously issued to Hudson Bay Master Fund are outstanding on the Conversion Date, $2.44 per share; or b) if no warrants previously issued to Hudson Bay Master Fund are outstanding on the Conversion Date, the fair market value of the Company’s common stock on the date funds are accepted by the Company which shall be the date of the note.
(iii) “Conversion Date” means the date conversion is requested by the Holder. Conversion may be requested at anytime up to and including the Maturity Date.
(c) Mechanics of Conversion.
(i) Optional Conversion. To convert any Conversion Amount into shares of Common Stock on any “Conversion Date”, the Holder shall deliver (whether via facsimile or otherwise), for receipt on or prior to 11:59 p.m., Pacific time, on such date, a copy of an executed notice of conversion in the form attached hereto as Exhibit I (the “Conversion Notice”) to the Company. The Holder shall surrender this Note to a nationally recognized overnight delivery service for delivery to the Company (or an indemnification undertaking with respect to this Note in the case of its loss, theft or destruction as contemplated by Section 8). On or before the first (1st) Trading Day following the date of receipt of a Conversion Notice, the Company shall transmit by facsimile or email an acknowledgment of confirmation, in the form attached hereto as Exhibit II, of receipt of such Conversion Notice to the Holder and the Company’s transfer agent (the “Transfer Agent”). On or before the third (3rd) Trading Day following the date of receipt of a Conversion Notice, the Company shall cause the Transfer Agent to issue and deliver (via reputable overnight courier) to the address as specified in the Conversion Notice, a restricted certificate, registered in the name of the Holder or its designee, for the number of shares of Common Stock to which the Holder shall be entitled. If this Note is physically surrendered for conversion pursuant to this Section and the outstanding Principal of this Note is greater than the Principal portion of the Conversion Amount being converted, then the Company shall as soon as practicable and in no event later than three (3) Business Days after receipt of this Note and at its own expense, issue and deliver to the Holder (or its designee) a new Note representing the outstanding Principal not converted. The Person or Persons entitled to receive the shares of Common Stock issuable upon a conversion of this Note shall be treated for all purposes as the record holder or holders of such shares of Common Stock on the Conversion Date.
(ii) Principal Market Regulation. The Company shall not issue any shares of Common Stock upon conversion of this Note if the issuance of such shares of Common Stock would exceed the aggregate number of shares of Common Stock which the Company may issue upon conversion of the Note without breaching the Company’s obligations under the rules or regulations of the Principal Market, except that such limitation shall not apply in the event that the Company (A) obtains the approval of its stockholders as required by the applicable rules of the Principal Market for issuances of shares of Common Stock in excess of such amount or (B) obtains a written opinion from outside counsel to the Company that such approval is not required, which opinion shall be reasonably satisfactory to the Holder.
4. RESERVATION OF AUTHORIZED SHARES
The Company shall initially reserve out of its authorized and unissued Common Stock a number of shares of Common Stock for the Note sufficient to convert 100 percent of the principle and interest at the Maturity Date. So long as any of the Note is outstanding, the Company shall take all action reasonably necessary to reserve and keep available out of its authorized and unissued Common Stock, solely for the purpose of effecting the conversion of the Note and accrued interest, the number of shares required to be reserved by the previous sentence (the “Required Reserve Amount”).
5. VOTING RIGHTS. The Holder shall have no voting rights as the holder of this Note, except as required by law (including, without limitation, the Delaware General Corporation Law).
6. RANK. All payments due under this Note (a) shall rank pari passu with all Notes issued with the same rank (“Other Notes”), and (b) shall be senior to all other Indebtedness of the Company except assets securing specific liens relating to those assets, and Collateral assigned to Silicon Valley Bank which holds the senior security interest on all of the Company’s assets in connection with balances outstanding on the Company’s revolving line of credit.
7. SECURITY. This Note and the Other Notes are secured by the assets of the Company including its intellectual property assets (“Collateral”) excluding assets securing specific liens, and is in second position to Silicon Valley Bank which has a perfected senior position to the Collateral to secure outstanding balances on its revolving credit facilities with the Company.
8. LOST, STOLEN OR MUTILATED NOTE. Upon receipt by the Company of evidence reasonably satisfactory to the Company of the loss, theft, destruction or mutilation of this Note (as to which a written certification and indemnification shall suffice as such evidence), and, in the case of loss, theft or destruction, of any indemnification undertaking by the Holder to the Company in customary and reasonable form and, in the case of mutilation, upon surrender and cancellation of this Note, the Company shall execute and deliver to the Holder a new Note representing the outstanding Principal.
9. CURRENCY. All dollar amounts referred to in this Note are in United States Dollars (“U.S. Dollars”), and all amounts owing under this Note shall be paid in U.S. Dollars.
10. CANCELLATION. After all Principal and accrued Interest owed on this Note have been paid in full, this Note shall automatically be deemed canceled, shall be surrendered to the Company for cancellation and shall not be reissued.
11. GOVERNING LAW. This Note shall be construed and enforced in accordance with, and all questions concerning the construction, validity, interpretation and performance of this Note shall be governed by, the internal laws of the State of California, without giving effect to any choice of law or conflict of law provision or rule (whether of the State of California or any other jurisdictions) that would cause the application of the laws of any jurisdictions other than the State of California for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein, and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding is brought in an inconvenient forum or that the venue of such suit, action or proceeding is improper. Nothing contained herein shall be deemed to limit in any way any right to serve process in any manner permitted by law. In the event that any provision of this Note is invalid or unenforceable under any applicable statute or rule of law, then such provision shall be deemed inoperative to the extent that it may conflict therewith and shall be deemed modified to conform with such statute or rule of law. Any such provision which may prove invalid or unenforceable under any law shall not affect the validity or enforceability of any other provision of this Note. Nothing contained herein shall be deemed or operate to preclude the Holder from bringing suit or taking other legal action against the Company in any other jurisdiction to collect on the Company’s obligations to the Holder, to realize on any collateral or any other security for such obligations, or to enforce a judgment or other court ruling in favor of the Holder. THE COMPANY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE TO, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION WITH OR ARISING OUT OF THIS NOTE OR ANY TRANSACTION CONTEMPLATED HEREBY.
IN WITNESS WHEREOF, the Company has caused this Note to be duly executed as of the Issuance Date set out above.
| SOCKET MOBILE, INC. | |||
| By: | /s/ David W. Dunlap | ||
Name: David W. Dunlap Title: Chief Financial Officer | |||
EXHIBIT
I
Socket Mobile, INC.
CONVERSION NOTICE
Reference is made to the Subordinated Convertible Note (the “Note”) issued to the undersigned by Socket Mobile, Inc. (the “Company”). In accordance with and pursuant to the Note, the undersigned hereby elects to convert the Conversion Amount (as defined in the Note) of the Note indicated below into shares of Common Stock, $0.001 par value per share (the “Common Stock”), of the Company, as of the date specified below.
| Date of Conversion: | |||||||
| Aggregate Principal to be converted: | |||||||
| Aggregate accrued and unpaid Interest with respect to such portion of the Aggregate Principal and such Aggregate Interest to be converted: | |||||||
| AGGREGATE
CONVERSION AMOUNT TO BE CONVERTED: |
|||||||
| Please confirm the following information: | |||||||
| Conversion Price: | |||||||
| Number of shares of Common Stock to be issued: | |||||||
| Please issue the Common Stock into which the Note is being converted in the following name and to the following address: | |||||||
| Issue to: | |||||||
| Tax ID: | |||||||
| Facsimile Number: | |||||||
| Holder: | |||||||
| By: | |||||||
| Title: | Dated: | ||||||
EXHIBIT II
ACKNOWLEDGMENT
The Company hereby acknowledges this Conversion Notice and hereby directs American Stock Transfer & Trust to issue the above indicated number of shares of Common Stock.
| SOCKET MOBILE, INC. | |||
| By: | |||
Name: Title: | |||
Exhibit 99.1
Socket Mobile Reports Third Quarter 2012 Results
NEWARK, Calif., – November 6, 2012 - Socket Mobile, Inc. (OTCQX: SCKT), an innovative provider of mobile productivity products, today reported financial results for its third quarter ended September 30, 2012.
Revenue for the third quarter of 2012 was $2.8 million, compared to revenue of $4.7 million for the same quarter a year ago and revenue of $4.0 million in the immediately preceding quarter. Net loss for the third quarter of 2012 was $983,000, or a loss of $0.20 per share, compared to a net loss of $727,000, or $0.16 per share, in the third quarter of 2011 and a net loss of $755,000, or a loss of $0.16 per share, in the immediately preceding quarter. The portion of the net loss attributable to stock option expensing in the third quarter of 2012 was $106,000, or $0.02 per share, compared to $189,000, or $0.04 per share, in the third quarter of 2011.
Operating expenses for the third quarter of 2012 were $1.9 million, a decrease of 12 percent from operating expenses of $2.1 million for the same quarter a year ago, and down 15 percent from $2.2 million in the immediately preceding quarter.
Cash and cash equivalents were $0.4 million at September 30, 2012 compared to $1.0 million at December 31, 2011.
Kevin Mills, president and chief executive officer, commented, “Sales of our barcode scanning and our handheld computer products were both impacted by marketplace transitions during September, but we have seen a healthier order pace return in October. Sales of our barcode scanning products were slowed down by Apple’s announcement at the beginning of September of a pending product release, their mid-September announcement of the iPhone5 and the iOS6 operating system, and the late September shipping dates for the iPhone5, which, we believe, caused customers to delay September deployments until the newer Apple products could be obtained and evaluated. With our handheld computer products, we experienced purchasing delays in September after the supply of SoMo650s ran out as customers that had stocked SoMo650s were working to exhaust their inventories before purchasing the SoMo655. We view the September delays as an anomaly. We are taking steps to further reduce our operating costs in line with third quarter revenue.”
“During the third quarter there were a number of positive events that continue to strengthen our outlook. Our developer support program for our barcode scanners now has over 180 developers creating applications for Apple and Android Smartphone devices, more than doubling over the past six months. Our Apple-certified barcode scanners work with the new iPhone 5 and iPad mini. Our SocketScan software has been updated to work with the new Apple devices. The updated software has been submitted to Apple for certification and should be approved shortly. NCR Corporation recently launched its NCR Silver retail point of sale program for small and medium businesses using our barcode scanners. LightSpeed is also using our Apple Certified barcode scanners with Apple iPads in a new retail point of sale application. We announced in July a new software developer kit that supports both our Bluetooth Cordless Hand Scanner and the Red Laser technology used on many Apple and Android devices, making it easy for developers to support both the device’s built-in camera for limited barcode scanning and our professional barcode scanners. A new SDK for our SoMo handheld computer was announced last week providing customers for the SoMo655 with flexibility in using the SoMo Windows Mobile operating system,” Mills concluded.
For the nine months ended September 30, 2012, revenue was $10.8 million, compared to revenue of $13.1 million in the year ago period. Net loss for the nine months ended September 30, 2012 was $2.6 million, or a loss of $0.54 per share, compared to a net loss of $2.0 million, or a loss of $0.49 per share for the same period one year ago. The portion of the net loss attributable to stock option expensing for the nine months ended September 30, 2012 was $470,000, or $0.10 per share, compared to $549,000, or $0.13 per share, for the nine months ended September 30, 2011.
Conference
Call
Management of Socket will hold a conference call and web cast today at 2 PM Pacific, (5 PM Eastern) to discuss the quarterly
results and outlook for the future. The dial-in number to access the call is (877) 407-9210 from within the U.S. or (201) 689-8049
from international locations. A replay will be available via telephone for a week following the call at (877) 660-6853 from within
the U.S., or (201) 612-7415 from international locations. Conference ID is 401751#. The call will also be carried live and available
via replay through a link on Socket’s website at www.socketmobile.com. From the home page, choose “About Socket”/“Investor
Relations”/“Conference Calls and Events.”
About Socket Mobile, Inc.
With 20 years of experience in the Automatic Identification and Data Capture market, Socket makes mobile computing and productivity work. The company offers a family of handheld computers and an extensive portfolio of AIDC peripherals designed specifically for business mobility deployments and to enable productivity increases and drive operational efficiencies in healthcare, hospitality and other vertical markets. The company also offers OEM solutions for the mobile device market. Socket is headquartered in Newark, Calif. and can be reached at +1-510-933-3000 or www.socketmobile.com. Follow Socket Mobile on Twitter www.twitter.com/socketmobile and subscribe to sockettalk.socketmobile.com, the company’s official blog.
| Investor Relations Contact: | Socket Investor Contact: |
| Todd Kehrli / Jim Byers | Dave Dunlap |
| MKR Group, Inc. | Chief Financial Officer |
| 323-468-2300 | 510-933-3035 |
| sckt@mkr-group.com | dave@socketmobile.com |
Socket and SoMo are trademarks or registered trademarks of Socket Mobile. All other trademarks and trade names contained herein may be those of their respective owners.
© 2012, Socket Mobile, Inc. All rights reserved.
Forward Looking Statements
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 with respect to the distribution, timing and market acceptance of our products, and statements predicting trends, sales, order activity, backlog and market 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 shipments of our products may be delayed or not happen 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 integrator program and current distribution channels may choose not to distribute our products or may not be successful in doing so; the risk that acceptance of our 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 does not undertake any obligation to update any forward-looking statements.
--Financial tables to follow--
Socket Mobile, Inc.
Summary Statements of Operations (Unaudited)
(Amounts in Thousands)
| Three months ended Sept 30, | Nine months ended Sept 30, | |||||||||||||||
| 2012 | 2011 | 2012 | 2011 | |||||||||||||
| Revenue | $ | 2,796 | $ | 4,681 | $ | 10,788 | $ | 13,073 | ||||||||
| Cost of revenue | 1,814 | 2,684 | 6,784 | 7,735 | ||||||||||||
| Gross profit | 982 | 1,997 | 4,004 | 5,338 | ||||||||||||
| Gross profit percent | 35 | % | 43 | % | 37 | % | 41 | % | ||||||||
| Research and development | 635 | 702 | 2,159 | 2,020 | ||||||||||||
| Sales and marketing | 798 | 933 | 2,740 | 2,619 | ||||||||||||
| General and administrative | 454 | 504 | 1,564 | 1,631 | ||||||||||||
| Total operating expenses | 1,887 | 2,139 | 6,463 | 6,270 | ||||||||||||
| Interest expense, net | 70 | 13 | 127 | 58 | ||||||||||||
| Debt discount amortization | — | 564 | — | 1,033 | ||||||||||||
| Deferred tax provision | 8 | 8 | 24 | 24 | ||||||||||||
| Net loss | $ | (983 | ) | $ | (727 | ) | $ | (2,610 | ) | $ | (2,047 | ) | ||||
| Net loss per share: Basic and diluted | $ | (0.20 | ) | $ | (0.16 | ) | $ | (0.54 | ) | $ | (0.49 | ) | ||||
| Weighted average shares outstanding: Basic and Diluted | 4,861 | 4,440 | 4,851 | 4,203 | ||||||||||||
Socket Mobile, Inc.
Condensed Summary Balance Sheets
(Amounts in Thousands)
| September 30,2012 (Unaudited) | December 31, 2011* | |||||||
| Cash | $ | 407 | $ | 957 | ||||
| Accounts receivable | 1,289 | 2,791 | ||||||
| Inventories | 1,194 | 1,461 | ||||||
| Other current assets | 166 | 219 | ||||||
| Property and equipment, net | 386 | 312 | ||||||
| Goodwill | 4,427 | 4,427 | ||||||
| Intangible technology | 105 | 150 | ||||||
| Other assets | 82 | 80 | ||||||
| Total assets | $ | 8,056 | $ | 10,397 | ||||
| Accounts payable and accrued liabilities | $ | 3,907 | $ | 3,926 | ||||
| Bank line of credit | 655 | 1,110 | ||||||
| Notes payable and short term loan | 764 | — | ||||||
| Deferred income on shipments to distributors | 994 | 1,572 | ||||||
| Deferred service revenue | 390 | 415 | ||||||
| Other liabilities | 317 | 249 | ||||||
| Common stock | 60,843 | 60,329 | ||||||
| Accumulated deficit | (59,814 | ) | (57,204 | ) | ||||
| Total Liabilities and Equity | $ | 8,056 | $ | 10,397 | ||||
*Derived from audited financial statements.
# # #
Exhibit 99.2
November 6, 2012
To our customers, vendors, developers and valued employees:
Today Socket Mobile reported its third quarter results with disappointing revenues of $2.8 million, 31 percent below the previous quarter. We believe these results were an anomaly and the conditions that resulted in the drop will not recur in Q4. I wanted to provide you with an update and request your continued support during this period.
Our barcode scanning sales were impacted by Apple’s announcement in early September of its new iPhone and mini-tablet as many customers waited to evaluate these new units before proceeding with their deployment plans. We announced during the quarter the selection of our low cost barcode scanner for major programs such as the NCR Silver program that was launched by NCR late in the quarter, a retail point of sale system with an Apple tablet and our barcode scanner, and another retail point of sale program launched by LightSpeed. Our developer program now includes 180 registered developers who are developing barcode scanning applications primarily for use with Smartphones and tablets using the Apple, Android, or Windows Mobile operating systems which we support. We expect these applications to become major contributors to sales growth in Q4 and beyond.
Our handheld computer sales have been transitioning from the older SoMo650 model which sold out during the third quarter to its replacement, the SoMo655 model, which began shipping at the end of June. Many of our current customers purchased extra SoMo650’s prior to the release of the SoMo655 and are phasing into the SoMo655 as their supply of SoMo650s is depleted. In addition, many former HP customers are evaluating the SoMo655 as a replacement for their now discontinued HP handheld computer models. We’ve announced support from large companies like CBORD for their inventory and point of sale solutions, and we’ve noted the growing adoption by companies such as Zonal and Hewlett-Packard in the U.K. HP is selling our SoMo655 to health care entities in the National Health Service. Zonal has a major market share for restaurant and other hospitality applications and identifies us as a partner of choice on their website.
We continue to take steps to reduce our operating costs which we lowered in Q3 by 15% from the previous quarter, and we are taking further cost reduction measures this quarter consistent with maintaining our ability to develop and ship quality products and provide excellent customer support. Our objectives remain to operate the Company on a cash positive basis with anticipated growth combined with cost reductions bringing us to profitable operating levels.
We appreciate your continued support as we transition through this period.
Sincerely yours,
/s/ Kevin J. Mills
Kevin J. Mills
President and CEO