NEWARK, Calif., Feb. 13, 2019 /PRNewswire/ -- 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.
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 and Twitter
@socketmobile.
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
David 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 and
development
|
3,640
|
3,473
|
892
|
944
|
Sales and
marketing
|
2,982
|
2,953
|
771
|
715
|
General and
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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SOURCE Socket Mobile, Inc.