SOCKET MOBILE, INC.

Current report

Total revenues for the second quarter of 2026 were approximately $3.03 million, a 25% decrease from $4.04 million in the same period last year. For the six months ended June 30, 2026, total revenues were approximately $6.73 million, compared with $8.01 million for the same period in 2025, a decrease of 16%. The decline primarily reflected continued weakness in the retail scanning market, resulting in lower sales volumes.

Current report

Gross margin was 46.4% in the second quarter of 2026, compared with 49.9% in the same period last year. For the six months ended June 30, 2026, gross margin was 49.1%, compared with 50.2% for the same period in 2025. The decrease was primarily due to the underutilization of manufacturing capacity at the current production levels, which resulted in higher fixed manufacturing costs as a percentage of revenue.

Current report

Research and development expenses were approximately $1.05 million in the second quarter of 2026, a 4% decrease from approximately $1.10 million in the same period last year. For the six months ended June 30, 2026, research and development expenses were approximately $2.14 million, a 4% decrease from $2.23 million for the same period in 2025. The decrease was primarily attributable to lower employee-related costs resulting from the Company's ongoing cost management initiatives.

Current report

Sales and marketing expenses were approximately $809,000 in the second quarter of 2026, a 21% decrease from approximately $1.03 million in the same period last year. For the six months ended June 30, 2026, sales and marketing expenses were approximately $1.71 million, a 20% decrease from $2.13 million for the same period in 2025. The decrease primarily reflected the Company's cost reduction initiatives, including selective headcount reductions and other cost-saving measures, as well as lower travel and marketing-related expenses.

Current report

General and administrative expenses were approximately $741,000 in the second quarter of 2026, compared with approximately $569,000 in the same period last year, an increase of 30%. For the six months ended June 30, 2026, general and administrative expenses were approximately $1.41 million, a 15% increase from $1.22 million for the same period in 2025. The increase was primarily attributable to the absence of certain personnel cost savings recognized in the second quarter of 2025, as well as an unfavorable foreign currency impact, reflecting a foreign exchange loss in 2026 compared with a foreign exchange gain in the prior-year period. In response to continued business challenges, the Company implemented additional cost-saving measures beginning in the third quarter of 2026.

Current report

As reflected in our Statements of Cash Flows, net cash used in operating activities was approximately $633,000 in the first half of 2026, compared to net cash used in operating activities amounted to approximately $1,197,000 in the first half of 2025. We calculate net cash used in operating activities by adjusting our net loss (approximately $2,246,000 and $1,786,000 in the first half of 2026 and 2025, respectively) with items that did not require the use of cash. Those items include stock-based compensation expense, depreciation and amortization of equipment and intangible assets, amortization of debt discount and operating lease ROU assets. These amounts totaled approximately $1,187,000 and $1,246,000 in the first half of 2026 and 2025, respectively. In addition, we report increases in assets and reductions in liabilities as uses of cash and decreases in assets and increases in liabilities as sources of cash, together referred to as changes in operating assets and liabilities. In the first half of 2026, changes in operating assets and liabilities resulted in net cash provided by operating activities of approximately $426,000. This was primarily driven by collections of accounts receivable and lower inventory levels. These cash inflows were partially offset by lease payments and increases in accrued employee costs and accounts payable.

Current report

In the first half of 2025, changes in operating assets and liabilities resulted in net cash used in operating activities of approximately $657,000. This was primarily due to operating lease payment, higher accounts receivable driven by increased shipment levels at the end of the quarter, and an increase in prepaid expenses. The uses of cash were partially offset by reduction in inventory and increase in accounts payable.

Current report

Index

Previous report

Total revenues for the first quarter of 2026 were approximately $3.7 million, reflecting a 7% decline compared to $4.0 million in the same period last year. This decrease is primarily attributed to weaker demand in both domestic and international markets. In Q1, we experienced reduced purchasing activity from key customers, which negatively impacted sales volumes. While we remain confident in our long-term growth prospects, these short-term fluctuations are largely due to less robust demand for our products during this quarter.

Previous report

Our gross profit margin on sales reached 51.3% in Q1 2026, a slight increase from 50.4% in the same period last year. Despite the lower revenue in this quarter, we have successfully maintained our gross margin, demonstrating effective cost control and operational efficiency.

Previous report

In the first quarter of 2026, research and development expenses were approximately $1,090,000, reflecting a 4% decrease compared to approximately $1,132,000 in Q1 2025.

Previous report

Sales and marketing expenses in the first quarter of 2026 totaled approximately $902,000, reflecting a 19% decrease compared to approximately $1,106,000 in the same quarter last year. This decrease was primarily driven by reduced headcount.

Previous report

In the first quarter of 2026, the Company incurred approximately $665,000 in general and administrative expenses, reflecting a 2% increase from approximately $653,000 in the same quarter of 2025.

Previous report

As reflected in our Condensed Statements of Cash Flows, we used net cash of $768,856 in operating activities in the first quarter of 2026, compared to $732,970 in the same period last year. To calculate our net cash used in operating activities, we adjusted our net loss of $899,576 and $994,140 in the first quarter of 2026 and 2025, respectively, by adding back non-cash expenses such as stock-based compensation expense, depreciation and amortization, and deferred tax expenses and benefits, which amounted to $598,645 and $540,117 in the first quarters of 2026 and 2025, respectively. In addition, we analyze changes in operating assets and liabilities as a source or use of cash. In the first quarter of 2026, changes in operating assets and liabilities resulted in a net cash outflow of $467,925, primarily driven by increases in accounts receivable due to an increase in shipments toward the end of the quarter and lower accrued payroll and related expenses. This cash outflow was partially offset by a decrease in inventory levels. In the first quarter of 2025, changes in operating assets and liabilities resulted in a net cash outflow of $278,947, primarily driven by increases in accounts receivable due to customer payment delays and higher inventory levels resulting from slower sales. This cash outflow was partially offset by an increase in accounts payable, reflecting our cash management efforts.

Current report — wording carried from elsewhere

There were no outstanding balances of credit lines during the three and six months ended June 30, 2026 and 2025.