Exhibit
99.1
Socket
Mobile Reports 2018 Financial Results
New
product development and completion of SocketScan transition highlight the year
NEWARK,
Calif., – February 13, 2019 – Socket Mobile, Inc. (NASDAQ: SCKT),
a leading innovator of data capture and delivery solutions for enhanced productivity, today reported
financial results for the fourth quarter and year ended December 31, 2018.
Full
Year Results:
Revenue
for 2018 was $16.5 million, a decrease of 23 percent versus 2017 revenue of $21.3 million.
Gross
margins in 2018 were $8.5 million, or 51.4 percent of revenue, down from $11.4 million, or 53.5 percent of revenue in 2017. Operating
expenses were $9.0 million in both years. Operating results in 2018 were a net loss before tax of $715,000 compared to net income
before tax of $2.3 million in 2017. The Company’s net loss in 2018 was $571,000 or $0.09 per share. 2017 included a one-time
write down of deferred tax assets of $2.6 million resulting from the lowering of Federal effective tax rates at the end of 2017
that resulting in a net loss for 2017 of $1.4 million or $0.23 per share.
EBITDA
or earnings before interest, taxes, depreciation and amortization totaled $334,000 in 2018 compared to $3.2 million in 2017. Free
cash flow, consisting of total cash flow from operations and investing activities, was $327,000 in 2018 compared to $1.9 million
in 2017.
The
Company’s balance sheet at December 31, 2018 included cash of $1.1 million compared to cash of $3.4 million at December
31, 2017. The current ratio (current assets divided by current liabilities) was 1.42 at December 31, 2018 compared to a current
ratio of 3.81 at December 31, 2017. In March 2018, the Company repurchased $4.9 million of its common shares, reducing shareholders’
equity by 18 percent. Shareholders’ equity at December 31, 2018 was $12.3 million compared to shareholders’ equity
at December 31, 2017 of $17.2 million.
Fourth
Quarter Results:
Revenue
for the fourth quarter of 2018 was $4.1 million, with gross margins of 50.3 percent, operating expenses of $2.2 million, and a
net loss before income taxes of $155,000. Revenue in the fourth quarter of 2017 was $4.4 million with gross margins of 53.0%,
operating expenses of $2.3 million and net income before income taxes of $68,000. As described under Full Year Results, the fourth
quarter of 2017 included a writedown of deferred tax assets of $2.6 million reflecting a reduction in the corporate effective
tax rate at the end of 2017 applicable to 2018 and beyond. Net loss for the fourth quarter of 2018 was $163,000, or a loss of
$0.03 per share compared to a net loss for the fourth quarter of 2017 of $2.7 million or $0.39 per share.
Comments
from our Chief Executive Officer:
Kevin
Mills, president and chief executive officer, commented, “Our revenue and bottom line were impacted during 2018 by a combination
of factors that are now behind us. We released new SocketScan barcode scanner products in April 2018, some four months behind
the original schedule, which impacted sales throughout 2018 while customers evaluated the new products and reduced their purchases
of the old. Our corporate deployments slowed by nearly $2 million in 2018 compared to 2017. For most of 2018, we were shipping
both our older family of products and our new SocketScan series to allow for a smooth transition. We discontinued our older products
in late 2018 and now the transition is completed.
“We
look forward to a return to the profitable growth that has been our history from 2014 through 2017. Our updated SocketScan and
DuraScan family of products are fully compatible with all applications that use our products, have an expected useful life of
at least three to five years, and are being well received. We’ve upgraded our application developer tools to meet the needs
of a growing developer community. Applications incorporating our barcode scanning products are growing in key mobile areas including
commercial services and retail point of sale. Our product portfolio includes new capabilities including an Apple iPhone DuraCase
for one handed barcode scanning nearing release this quarter, passport readers to read and capture passport numbers, and for our
developers, a token exchanger using the Near Field Communications technology available in many smartphones.
In
2018, we introduced to our Developer Community our new and improved Capture software developer kit (SDK). Our Capture SDK has
been re-engineered to better serve the fast-moving mobile development environment. Today, we have over 1,000 companies that are
registered members of our Developer Community, many of whom have more than one developer associated with their application development
efforts. Retail point of sale applications for the underserved small business community continue to be our largest application
category and the primary driver of our barcode scanner sales. Retail point of sale is also benefiting from new opportunities within
the retail environment such as are being created by the growing cannabis industry. Cannabis sales and products are highly regulated
and require track and trace records which are ideally suited to barcode scanning. We are also seeing a lot of development work
in the commercial services market which will contribute to our sales going forward.
Throughout
2018 we maintained an active product development program. We’ve delivered passport readers that support Optical Character
Recognition requirements in both rugged form factor products (model D760) and attachable form factor products (S860). We are releasing
this quarter a version of our DuraCase that supports Apple iPhone Models 6, 7 and 8 for one-handed barcode scanning. We have announced
to our Developer Community the S500 for electronic token exchange with a simple tap from Apple or other Near Field Communications
(NFC) enabled smartphones. Electronic tokens are used in loyalty programs, for personal identification and for payments. We expect
to ship this product in Q3, 2019 as applications become available.
“With
the completion of our SocketScan product and Capture SDK transitions, events that slowed our momentum in 2018, we look forward
in 2019 to enhancing our worldwide leadership position in mobile companion data capture solutions,” Mills concluded.
Conference
Call
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 8149499. From international
locations, obtain the local dial-in number through your web browser at http://web.meetme.net/r.aspx?p=11&a=UDoxoHWFJZKfNa.
A live and replay audio webcast of the conference call can be accessed through a link on Socket Mobile’s website at www.socketmobile.com.
From the home page, select “About Socket”/”Investor Relations”/ and “Conference Calls and Events.”
About
Socket Mobile, Inc.
Founded
in 1992, Socket Mobile is a leading innovator of data capture and delivery solutions for enhanced productivity in retail point
of sale, field service, transportation, manufacturing and other mobile markets. 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.
Socket Mobile has a robust network of thousands of developers registered to use its software developer’s kit to add sophisticated
barcode scanning to 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 and Twitter @socketmobile and subscribe to SocketTalk, the company’s
official blog.
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 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,
SocketScan and DuraScan are registered trademarks of Socket Mobile, Inc. All other trademarks and trade names contained herein
may be those of their respective owners. © 2019 Socket Mobile, Inc. All rights reserved.
| Socket
Mobile Contact: |
| Dave
Dunlap |
| Chief
Financial Officer |
| 510-933-3035 |
| dave@socketmobile.com |
–
Financial tables to follow –
Socket
Mobile, Inc.
Condensed
Summary Statements of Operations
(Amounts
in thousands except per share amounts)
| | |
Year ended Dec 31, | |
Three months ended Dec 31, |
| | |
(Unaudited)
2018 | |
2017* | |
(Unaudited)
2018 | |
2017* |
| Revenue | |
$ | 16,454 | | |
$ | 21,286 | | |
$ | 4,144 | | |
$ | 4,383 | |
| Cost of revenue | |
| 7,998 | | |
| 9,896 | | |
| 2,061 | | |
| 2,062 | |
| Gross profit | |
| 8,456 | | |
| 11,390 | | |
| 2,083 | | |
| 2,321 | |
| Gross profit percent | |
| 51.4 | % | |
| 53.5 | % | |
| 50.3 | % | |
| 53.0 | % |
Research & development
| |
| 3,640 | | |
| 3,473 | | |
| 892 | | |
| 944 | |
| Sales & marketing | |
| 2,982 | | |
| 2,953 | | |
| 771 | | |
| 715 | |
| General & administrative | |
| 2,420 | | |
| 2,546 | | |
| 546 | | |
| 596 | |
| Total operating expenses | |
| 9,042 | | |
| 8,972 | | |
| 2,209 | | |
| 2,255 | |
| Interest income (expense), net | |
| (129 | ) | |
| (80 | ) | |
| (29 | ) | |
| 2 | |
| Net income (loss) before income taxes | |
| (715 | ) | |
| 2,338 | | |
| (155 | ) | |
| 68 | |
| Income taxes - current | |
| — | | |
| (51 | ) | |
| — | | |
| 3 | |
| Deferred tax credits (tax expense) | |
| 144 | | |
| (1,071 | ) | |
| (8 | ) | |
| (145 | ) |
| Deferred taxes revaluation | |
| — | | |
| (2,647 | ) | |
| — | | |
| (2,647 | ) |
| Net (loss) | |
$ | (571 | ) | |
$ | (1,431 | ) | |
$ | (163 | ) | |
$ | (2,721 | ) |
| Net (loss) per share: | |
| | | |
| | | |
| | | |
| | |
| Basic and Fully Diluted | |
$ | (0.09 | ) | |
$ | (0.23 | ) | |
$ | (0.03 | ) | |
$ | (0.39 | ) |
| Weighted average shares outstanding:: | |
| | | |
| | | |
| | | |
| | |
| Basic and Fully Diluted | |
| 6,095 | | |
| 6,293 | | |
| 5,883 | | |
| 7,008 | |
*Derived
from audited financial statements.
Reconciliation
of GAAP Net Loss to Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) (Unaudited)
| | |
Year ended
Dec 31, | |
Three months ended
Dec 31, |
| | |
2018 | |
2017 | |
2018 | |
2017 |
| Net (loss) GAAP | |
$ | (571 | ) | |
$ | (1,431 | ) | |
$ | (163 | ) | |
$ | (2,721 | ) |
| Interest expense (income), net | |
| 129 | | |
| 80 | | |
| 29 | | |
| (2 | ) |
| Income tax expense (benefit) | |
| (144 | ) | |
| 3,769 | | |
| 8 | | |
| 2,789 | |
| Depreciation | |
| 432 | | |
| 314 | | |
| 117 | | |
| 78 | |
| Stock compensation expense | |
| 488 | | |
| 427 | | |
| 126 | | |
| 112 | |
| Net income EBITDA | |
$ | 334 | | |
$ | 3,159 | | |
$ | 117 | | |
$ | 256 | |
Socket
Mobile, Inc.
Condensed
Summary Balance Sheets
(Amounts
in Thousands)
| | |
December 31, |
| | |
| (Unaudited) 2018 | | |
| 2017* | |
| Cash | |
$ | 1,085 | | |
$ | 3,380 | |
| Accounts receivable | |
| 2,367 | | |
| 2,687 | |
| Inventories | |
| 2,272 | | |
| 2,198 | |
| Deferred costs on shipments to distributors | |
| 165 | | |
| 204 | |
| Other current assets | |
| 308 | | |
| 386 | |
| Deferred tax assets | |
| 5,781 | | |
| 5,637 | |
| Property and equipment, net | |
| 689 | | |
| 663 | |
| Goodwill | |
| 4,427 | | |
| 4,427 | |
| Other assets | |
| 237 | | |
| 272 | |
| Total Assets | |
$ | 17,331 | | |
$ | 19,854 | |
| Accounts payable and accrued liabilities | |
$ | 2,045 | | |
$ | 1,743 | |
| Bank line of credit | |
| 1,317 | | |
| — | |
| Term loan | |
| 833 | | |
| — | |
| Deferred revenue on shipments to distributors | |
| 397 | | |
| 493 | |
| Deferred service revenue | |
| 65 | | |
| 61 | |
| Other liabilities | |
| 269 | | |
| 327 | |
| Total liabilities | |
$ | 4,926 | | |
$ | 2,624 | |
| Common stock | |
| 60,530 | | |
| 64,784 | |
| Accumulated deficit | |
| (48,125 | ) | |
| (47,554 | ) |
| Total stockholder equity | |
$ | 12,405 | | |
$ | 17,230 | |
| Total Liabilities and Equity | |
$ | 17,331 | | |
$ | 19,854 | |
*Derived
from audited financial statements.
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