Cover
Cover - shares | 3 Months Ended | |
Sep. 30, 2022 | Nov. 09, 2022 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Quarterly Report | true | |
Document Transition Report | false | |
Document Period End Date | Sep. 30, 2022 | |
Document Fiscal Period Focus | Q3 | |
Document Fiscal Year Focus | 2022 | |
Current Fiscal Year End Date | --12-31 | |
Entity File Number | 1-13810 | |
Entity Registrant Name | SOCKET MOBILE, INC. | |
Entity Central Index Key | 0000944075 | |
Entity Tax Identification Number | 94-3155066 | |
Entity Incorporation, State or Country Code | DE | |
Entity Address, Address Line One | 40675 Encyclopedia Circle | |
Entity Address, City or Town | Fremont | |
Entity Address, State or Province | CA | |
Entity Address, Postal Zip Code | 94538 | |
City Area Code | (510) | |
Local Phone Number | 933-3000 | |
Title of 12(b) Security | Common stock, $0.001 Par Value per Share | |
Trading Symbol | SCKT | |
Security Exchange Name | NASDAQ | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | true | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 7,175,025 |
Condensed Statements of Operati
Condensed Statements of Operations - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Income Statement [Abstract] | ||||
Revenues | $ 3,727,871 | $ 6,319,044 | $ 16,066,855 | $ 17,084,913 |
Cost of revenues | 2,073,012 | 2,896,323 | 8,248,652 | 7,833,006 |
Gross profit | 1,654,859 | 3,422,721 | 7,818,203 | 9,251,907 |
Operating expenses: | ||||
Research and development | 1,096,400 | 1,014,175 | 3,271,122 | 2,917,501 |
Sales and marketing | 864,702 | 787,889 | 2,729,016 | 2,182,377 |
General and administrative | 641,184 | 666,884 | 2,112,504 | 2,141,911 |
Total operating expenses | 2,602,286 | 2,468,948 | 8,112,642 | 7,241,789 |
Operating income (loss) | (947,427) | 953,773 | (294,439) | 2,010,118 |
Interest expense, net | (43,092) | (50,147) | (133,703) | (150,276) |
Other income | 10,082 | |||
Net income (loss) before income taxes | (990,519) | 903,626 | (428,142) | 1,869,924 |
Income tax (benefit) expense | (116,485) | 260,000 | (1,603,711) | |
Net income (loss) | $ (874,034) | $ 643,626 | $ (428,142) | $ 3,473,635 |
Net income (loss) per share: | ||||
Basic | $ (0.11) | $ 0.08 | $ (0.05) | $ 0.46 |
Diluted | $ (0.11) | $ 0.07 | $ (0.05) | $ 0.37 |
Weighted average shares outstanding: | ||||
Basic | 7,153,210 | 7,162,924 | 7,202,239 | 6,927,837 |
Diluted | 7,153,210 | 8,939,384 | 7,202,239 | 8,932,395 |
Condensed Balance Sheets
Condensed Balance Sheets - USD ($) | Sep. 30, 2022 | Dec. 31, 2021 |
Current assets: | ||
Cash and cash equivalents | $ 4,237,342 | $ 6,095,886 |
Accounts receivable, net | 1,812,193 | 2,576,240 |
Inventories, net | 6,149,927 | 5,154,524 |
Prepaid expenses and other current assets | 576,185 | 395,161 |
Deferred cost on shipments to distributors | 206,206 | 158,977 |
Total current assets | 12,981,853 | 14,380,788 |
Property and equipment: | ||
Machinery and office equipment | 2,530,275 | 2,436,897 |
Computer equipment, software, and website development | 2,682,185 | 1,909,895 |
Property, plant, and equipment, gross | 5,212,460 | 4,346,792 |
Accumulated depreciation | (3,680,222) | (3,277,979) |
Property and equipment, net | 1,532,238 | 1,068,813 |
Intangible assets, net | 1,736,644 | 1,864,794 |
Other long-term assets | 311,696 | 89,448 |
Deferred tax assets | 7,960,419 | 7,960,419 |
Operating lease right-of-use asset | 3,674,173 | 210,839 |
Total assets | 28,197,023 | 25,575,101 |
Current liabilities: | ||
Accounts payable and accrued expenses | 1,717,113 | 2,169,055 |
Accrued payroll and related expenses | 761,478 | 692,994 |
Deferred revenue on shipments to distributors | 524,172 | 407,235 |
Short term portion of deferred service revenue | 23,363 | 17,128 |
Note Payable – current portion | 250,000 | 500,000 |
Subordinated convertible notes payable, net of discount | 146,435 | 143,514 |
Subordinated convertible notes payable, net of discount-related party | 1,223,232 | 1,201,334 |
Operating lease – current portion | 434,524 | 258,097 |
Total current liabilities | 5,080,317 | 5,389,357 |
Long-term portion of deferred service revenue | 14,173 | 14,281 |
Operating lease - long-term portion | 3,406,778 | |
Long-term portion of note payable | 125,000 | |
Total liabilities | 8,501,268 | 5,528,638 |
Commitments and contingencies | ||
Stockholders’ equity: | ||
Common Stock, Value, Issued | 7,137 | 7,184 |
Additional paid-in capital | 66,870,795 | 66,139,630 |
Treasury stock | (653,684) | |
Accumulated deficit | (46,528,493) | (46,100,351) |
Total stockholders’ equity | 19,695,755 | 20,046,463 |
Total liabilities and stockholders’ equity | $ 28,197,023 | $ 25,575,101 |
Condensed Balance Sheets (Paren
Condensed Balance Sheets (Parenthetical) - $ / shares | Sep. 30, 2022 | Dec. 31, 2021 |
Statement of Financial Position [Abstract] | ||
Common Stock, Par or Stated Value Per Share | $ 0.001 | $ 0.001 |
Common Stock, Shares Authorized | 20,000,000 | 20,000,000 |
Common Stock, Shares, Issued | 7,318,054 | 7,183,874 |
Common Stock, Shares, Outstanding | 7,137,112 | 7,183,874 |
Condensed Statements of Stockho
Condensed Statements of Stockholders' Equity - USD ($) | Common Stock [Member] | Additional Paid-in Capital [Member] | Treasury Stock [Member] | Retained Earnings [Member] | Total |
Beginning balance, value at Dec. 31, 2020 | $ 6,103 | $ 61,733,522 | $ (51,117,364) | $ 10,622,261 | |
Shares, Outstanding, Beginning Balance at Dec. 31, 2020 | 6,102,630 | ||||
Vesting of restricted stock | $ 39 | (39) | |||
Vesting of restricted stock | 38,775 | ||||
Exercise of stock options | $ 713 | 1,710,945 | $ 1,711,658 | ||
Exercise of stock option | 713,349 | ||||
Stock-based compensation | 148,772 | $ 148,772 | |||
Net income | 202,902 | 202,902 | |||
Cancellation of restricted stock | $ (3) | 3 | |||
Cancellation of restricted stock | (2,755) | ||||
Issuance of common stock for intangible assets | $ 184 | 1,686,956 | 1,687,140 | ||
Issuance of common stock for intangible assets | 184,332 | ||||
Conversion of convertible note | $ 89 | 129,911 | 130,000 | ||
Conversion of convertible note | 89,040 | ||||
Ending balance, value at Mar. 31, 2021 | $ 7,125 | 65,410,070 | (50,914,462) | 14,502,733 | |
Shares, Outstanding, Ending Balance at Mar. 31, 2021 | 7,125,371 | ||||
Beginning balance, value at Dec. 31, 2020 | $ 6,103 | 61,733,522 | (51,117,364) | 10,622,261 | |
Shares, Outstanding, Beginning Balance at Dec. 31, 2020 | 6,102,630 | ||||
Stock-based compensation | 504,676 | ||||
Net income | 3,473,635 | ||||
Conversion of convertible note | 130,000 | ||||
Ending balance, value at Sep. 30, 2021 | $ 7,174 | 65,915,139 | (47,643,729) | 18,278,584 | |
Shares, Outstanding, Ending Balance at Sep. 30, 2021 | 7,174,363 | ||||
Beginning balance, value at Mar. 31, 2021 | $ 7,125 | 65,410,070 | (50,914,462) | 14,502,733 | |
Shares, Outstanding, Beginning Balance at Mar. 31, 2021 | 7,125,371 | ||||
Vesting of restricted stock | $ 1 | (1) | |||
Vesting of restricted stock | 900 | ||||
Exercise of stock options | $ 16 | 66,873 | 66,889 | ||
Exercise of stock option | 16,063 | ||||
Stock-based compensation | 172,008 | 172,008 | |||
Net income | 2,627,107 | 2,627,107 | |||
Cancellation of restricted stock | (3) | 3 | |||
Repurchase and retirement of common stock | (1,176) | (1,176) | |||
Ending balance, value at Jun. 30, 2021 | $ 7,139 | 65,647,777 | (48,287,355) | 17,367,561 | |
Shares, Outstanding, Ending Balance at Jun. 30, 2021 | 7,139,084 | ||||
Beginning balance, value at Mar. 31, 2021 | $ 7,125 | 65,410,070 | (50,914,462) | 14,502,733 | |
Shares, Outstanding, Beginning Balance at Mar. 31, 2021 | 7,125,371 | ||||
Cancellation of restricted stock | (3,250) | ||||
Ending balance, value at Sep. 30, 2021 | $ 7,174 | 65,915,139 | (47,643,729) | 18,278,584 | |
Shares, Outstanding, Ending Balance at Sep. 30, 2021 | 7,174,363 | ||||
Beginning balance, value at Jun. 30, 2021 | $ 7,139 | 65,647,777 | (48,287,355) | 17,367,561 | |
Shares, Outstanding, Beginning Balance at Jun. 30, 2021 | 7,139,084 | ||||
Exercise of stock options | $ 38 | 83,463 | 83,501 | ||
Exercise of stock option | 38,529 | ||||
Stock-based compensation | 183,896 | 183,896 | |||
Net income | 643,626 | 643,626 | |||
Cancellation of restricted stock | $ (3) | 3 | |||
Cancellation of restricted stock | (3,250) | ||||
Ending balance, value at Sep. 30, 2021 | $ 7,174 | 65,915,139 | (47,643,729) | 18,278,584 | |
Shares, Outstanding, Ending Balance at Sep. 30, 2021 | 7,174,363 | ||||
Beginning balance, value at Dec. 31, 2021 | $ 7,184 | 66,139,630 | (46,100,351) | 20,046,463 | |
Shares, Outstanding, Beginning Balance at Dec. 31, 2021 | 7,183,874 | ||||
Vesting of restricted stock | $ 91 | (91) | |||
Vesting of restricted stock | 91,134 | ||||
Restricted stock retired for tax withholding | (26) | (115,189) | $ (115,215) | ||
Exercise of stock options | $ 24 | 39,508 | 39,532 | ||
Exercise of stock option | 24,200 | ||||
Stock-based compensation | 223,446 | 223,446 | |||
Net income | 341,933 | 341,933 | |||
Ending balance, value at Mar. 31, 2022 | $ 7,273 | 66,287,304 | (45,758,418) | 20,536,159 | |
Shares, Outstanding, Ending Balance at Mar. 31, 2022 | 7,273,051 | ||||
Beginning balance, value at Dec. 31, 2021 | $ 7,184 | 66,139,630 | (46,100,351) | 20,046,463 | |
Shares, Outstanding, Beginning Balance at Dec. 31, 2021 | 7,183,874 | ||||
Restricted stock retired for tax withholding | (26,157) | ||||
Stock-based compensation | 735,378 | ||||
Net income | (428,142) | ||||
Conversion of convertible note | |||||
Ending balance, value at Sep. 30, 2022 | $ 7,137 | 66,870,795 | $ (653,684) | (46,528,493) | $ 19,695,755 |
Shares, Outstanding, Ending Balance at Sep. 30, 2022 | 180,942 | 7,137,112 | |||
Beginning balance, value at Mar. 31, 2022 | $ 7,273 | 66,287,304 | (45,758,418) | $ 20,536,159 | |
Shares, Outstanding, Beginning Balance at Mar. 31, 2022 | 7,273,051 | ||||
Vesting of restricted stock | $ 1 | (1) | |||
Vesting of restricted stock | 1,200 | ||||
Restricted stock retired for tax withholding | 30 | 30 | |||
Restricted stock retired for tax withholding | (387) | ||||
Exercise of stock options | $ 19 | 41,950 | 41,969 | ||
Exercise of stock option | 19,390 | ||||
Stock-based compensation | 251,534 | 251,534 | |||
Net income | 103,959 | 103,959 | |||
Treasury shares purchased | $ (91) | 91 | $ (377,950) | (377,950) | |
Treasury shares purchased | (90,913) | ||||
Treasury Stock, Shares, Acquired | 90,913 | ||||
Ending balance, value at Jun. 30, 2022 | $ 7,202 | 66,580,908 | $ (377,950) | (45,654,459) | 20,555,701 |
Shares, Outstanding, Ending Balance at Jun. 30, 2022 | 7,202,341 | ||||
Exercise of stock options | $ 25 | 29,399 | 29,424 | ||
Exercise of stock option | 24,800 | ||||
Stock-based compensation | 260,398 | 260,398 | |||
Net income | (874,034) | (874,034) | |||
Treasury shares purchased | $ (90) | 90 | $ (275,734) | (275,734) | |
Treasury shares purchased | (90,029) | ||||
Treasury Stock, Shares, Acquired | 90,029 | ||||
Ending balance, value at Sep. 30, 2022 | $ 7,137 | $ 66,870,795 | $ (653,684) | $ (46,528,493) | $ 19,695,755 |
Shares, Outstanding, Ending Balance at Sep. 30, 2022 | 180,942 | 7,137,112 |
Condensed Statements of Cash Fl
Condensed Statements of Cash Flows - USD ($) | 9 Months Ended | |
Sep. 30, 2022 | Sep. 30, 2021 | |
Operating activities | ||
Net income (loss) | $ (428,142) | $ 3,473,635 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Stock-based compensation | 735,378 | 504,676 |
Depreciation and amortization | 575,328 | 555,900 |
Amortization of debt discount | 24,818 | 24,819 |
Amortization of operating lease ROU asset | 399,177 | |
Deferred tax expenses (benefits) | (1,610,000) | |
Changes in operating assets and liabilities: | ||
Accounts receivable | 764,047 | (590,613) |
Inventories | (995,403) | (1,238,694) |
Prepaid expenses and other current assets | (181,024) | (266,043) |
Other assets | (222,248) | (24,813) |
Accounts payable and accrued expenses | (451,911) | 148,111 |
Accrued payroll and related expenses | (46,731) | 327,427 |
Net deferred revenue on shipments to distributors | 69,708 | (42,270) |
Deferred service revenue | 6,127 | (17,989) |
Net change in operating lease liability | (279,306) | (61,133) |
Net cash (used in) provided by operating activities | (30,182) | 1,183,013 |
Investing activities | ||
Purchases of PP&E including software and website development | (910,603) | (562,910) |
Net cash used in investing activities | (910,603) | (562,910) |
Financing activities | ||
Common stocks repurchased | (653,684) | (1,176) |
Proceeds from note payable | 1,000,000 | |
Repayments of note payable | (375,000) | (250,000) |
Proceeds from stock options exercised | 110,925 | 1,862,048 |
Net cash (used in) provided by financing activities | (917,759) | 2,610,872 |
Net (decrease) increase in cash and cash equivalents | (1,858,544) | 3,230,975 |
Cash and cash equivalents at beginning of period | 6,095,886 | 2,121,763 |
Cash and cash equivalents at end of period | 4,237,342 | 5,352,738 |
Supplemental disclosure of cash flow information | ||
Cash paid for interest | 122,197 | 132,036 |
Supplemental disclosure of non-cash activities | ||
Payroll tax liability for retired restricted stock | 115,215 | |
Property acquired under operating lease | 3,862,511 | |
Conversion of note payable | 130,000 | |
Acquisition of intangible assets | $ 1,909,433 |
NOTE 1 _ Basis of Presentation
NOTE 1 — Basis of Presentation | 3 Months Ended |
Sep. 30, 2022 | |
Accounting Policies [Abstract] | |
NOTE 1 — Basis of Presentation | NOTE 1 — Basis of Presentation The accompanying unaudited condensed financial statements of Socket Mobile, Inc. (the “Company”) have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information and with the instructions to Form 10-Q and Article 8 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States for complete financial statements. In the opinion of management, all adjustments, consisting only of normal recurring accruals considered necessary for fair presentation have been included. The results of operations for the interim periods are not necessarily indicative of the operating results for the full fiscal year or any future period. These financial statements should be read in conjunction with the audited financial statements and notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021. |
NOTE 2 _ Summary of Significant
NOTE 2 — Summary of Significant Accounting Policies | 3 Months Ended |
Sep. 30, 2022 | |
Accounting Policies [Abstract] | |
NOTE 2 — Summary of Significant Accounting Policies | NOTE 2 — Summary of Significant Accounting Policies Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenue and expense during the reporting period. Actual results could differ from those estimates, and such differences may be material to the financial statements. Cash Equivalents and Fair Value of Financial Instruments The Company considers all highly liquid investments purchased with a maturity date of 90 days or less at date of purchase to be cash equivalents. On September 30, 2022, and December 31, 2021, all of the Company’s cash and cash equivalents consisted of amounts held in demand deposit accounts in banks. The aggregate cash balance on deposit in these accounts are insured by the Federal Deposit Insurance Corporation up to $250,000. The Company’s cash balance on deposit in these accounts may, at times, exceed the federally insured limits. The Company has never experienced any losses in such accounts. The carrying value of the Company’s cash and cash equivalents, accounts receivable, accounts payable, debt and foreign exchange contracts approximate fair value due to the relatively short period of time to maturity. Revenue Recognition and Deferred Revenue With the adoption of ASC 606 “Revenue from Contracts with Customers” in January 2017, the Company recognizes revenue on sales to distributors when shipping of product is completed and title transfers to distributor, less a reserve for estimated product returns (sales and cost of sales). The reserves are based on estimates of future returns calculated from actual return history, primarily from stock rotations, plus knowledge of pending returns outside of the norm. On September 30, 2022, the deferred revenue and deferred cost on shipments to distributors were $524,172 $206,206 $407,235 $158,977 SOCKET MOBILE, INC. NOTES TO CONDENSED FINANCIAL STATEMENTS (Unaudited) September 30, 2022 The Company also earns revenue from its SocketCare extended warranty program, which provides extended warranty and accidental breakage coverage for selected products. For the quarters ended September 30, 2022 and 2021, SocketCare revenue was approximately $5,623 $6,300 $37,500 Cost of Sales and Gross Margins Cost of sales primarily consists of the costs to manufacture our products, including the costs of materials, contract manufacturing, shipping costs, personnel and related expenses including stock-based compensation, equipment and facility expenses, warranty costs and inventory excess and obsolete provisions. The factors that impact our gross margins are the cost of materials, the mix of products and the extent to which we are able to efficiently utilize our manufacturing capacity. Leases In February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-02, Leases (Topic 842), which requires a lessee to recognize a liability representing future lease payments and a right-of-use asset representing its right to use the underlying asset for the lease term. For operating leases, a lessee is required to recognize at inception a right-of-use asset and a lease liability equal to the net present value of the lease payments, with lease expense recognized over the lease term on a straight-line basis. For leases with a term of twelve months or less, ASU 2016-02 allows a reporting entity to make an accounting policy election to not recognize a right-of-use asset and a lease liability, and to recognize lease expense on a straight-line basis. The Company adopted ASU 2016-02 effective January 1, 2019. On May 1, 2022, we entered into a building lease agreement for our corporate headquarters located in Fremont, CA. On September 30, 2022, the balances of right-of-use assets and liabilities for the operating lease were $3,674,173 $3,841,302 $210,839 $258,097 Recently Issued Financial Accounting Standards From time to time, new accounting pronouncements are issued by the FASB or other standards setting bodies and adopted by the Company as of the specified effective date. Unless otherwise discussed, management believes that the impact of recently issued standards that are not yet effective will not have a material impact on the Company’s financial position, results of operations or cash flows upon adoption. SOCKET MOBILE, INC. NOTES TO CONDENSED FINANCIAL STATEMENTS (Unaudited) September 30, 2022 |
NOTE 3 _ Acquisition of Intangi
NOTE 3 — Acquisition of Intangible Assets | 3 Months Ended |
Sep. 30, 2022 | |
Business Combination and Asset Acquisition [Abstract] | |
NOTE 3 — Acquisition of Intangible Assets | NOTE 3 — Acquisition of Intangible Assets On February 26, 2021, the Company entered into the 2021 Technology Transfer Agreement with SpringCard SAS (“SpringCard”). SpringCard is a market leader at the forefront of innovative electronic design and development. Its contactless and wireless solutions support a wide range of customers, from large international corporations to locally focused companies. Under the 2021 Technology Transfer Agreement, the Company acquired an irrevocable, perpetual, non-exclusive, transferable, worldwide, unlimited, unrestricted, royalty-free, fully paid-up right and license to SpringCard’s Contactless Technology Package for use in the Company’s Contactless Reader/Writer products. SpringCard received 184,332 50,000 $10.85 st March 29, 2021 $7.65 The Unaudited Condensed Balance Sheets include the intangible assets of the acquired technology at the carrying amount, net of amortization of $1,718,489 The SpringCard intangible assets will be amortized over their estimated useful lives of fifteen years on a straight-line basis, which commenced on April 1, 2021. As of September 30, 2022, the estimated future amortization of intangible assets is as follows: Fiscal Year Amount 2022 (October 1, 2022 to December 31, 2022) $ 31,824 2023 127,296 2024 127,296 2025 127,296 2026 127,296 Thereafter 1,177,481 Total $ 1,718,489 SOCKET MOBILE, INC. NOTES TO CONDENSED FINANCIAL STATEMENTS (Unaudited) September 30, 2022 |
NOTE 4 _ Inventories
NOTE 4 — Inventories | 3 Months Ended |
Sep. 30, 2022 | |
Inventory Disclosure [Abstract] | |
NOTE 4 — Inventories | NOTE 4 — Inventories Inventories consist principally of raw materials and sub-assemblies, which are stated at the lower of cost (first-in, first-out) or market. Inventories on September 30, 2022 and December 31, 2021 were as follows: September 30, December 31, 2022 2021 Raw materials and sub-assemblies $ 6,429,736 $ 5,757,869 Finished goods 601,134 277,598 Inventory reserves (880,943 ) (880,943 ) Inventory, net $ 6,149,927 $ 5,154,524 |
NOTE 5 _ Bank Financing Arrange
NOTE 5 — Bank Financing Arrangements | 3 Months Ended |
Sep. 30, 2022 | |
Debt Disclosure [Abstract] | |
NOTE 5 — Bank Financing Arrangements | NOTE 5 — Bank Financing Arrangements The Company initially entered into a Business Financing Agreement with Western Alliance Bank (the “Bank”), an Arizona corporation, on February 27, 2014, and this agreement has been amended and extended through the years. Eighth Financing Agreement On August 28, 2020, the Company entered into the Eighth Business Financing Modification Agreement and Consent with the Bank. The Bank consented to the issuance of subordinated debt in the amount less than $2,000,000, at an annual interest rate of less than 10%, such debt maturing in no sooner than 3 years. Amended and Restated Business Financing Agreement On January 29, 2021 $2.0 $1.0 First Financing Agreement On February 9, 2022, the Company entered into the First Business Financing Modification Agreement with the Bank. The Bank consented to the share repurchase program of up to $1.8 million. Future audit of accounts receivables will be performed once every twelve months. The Bank increased the credit limit for business credit cards to $250,000. Amounts outstanding under the CalCap Loan as of September 30, 2022 are as follows: September 30, 2022 Current portion of CalCap Loan $ 250,000 Long-term portion of CalCap Loan — CalCap Loan $ 250,000 Interest expense on the CalCap loan for the three and nine months ended September 30, 2022 was $4,523 $16,668 $994 $10,104 $27,656 $2,083 SOCKET MOBILE, INC. NOTES TO CONDENSED FINANCIAL STATEMENTS (Unaudited) September 30, 2022 |
NOTE 6 _ Secured Subordinated C
NOTE 6 — Secured Subordinated Convertible Notes Payable | 3 Months Ended |
Sep. 30, 2022 | |
Debt Disclosure [Abstract] | |
NOTE 6 — Secured Subordinated Convertible Notes Payable | NOTE 6 — Secured Subordinated Convertible Notes Payable On August 31, 2020, the Company completed a secured subordinated convertible note financing of $1,530,000 $1,350,000 The funds raised are used to increase the Company’s working capital balances. The secured subordinated convertible notes (the “Notes”) have a three-year term that accrue interest at 10% $1.46 Total issuance costs associated with the financing are $96,515 $1,530,000 $24,818 $30,333 Total interest expense recognized related to the convertible notes for the three and nine months ended September 30, 2022 was $43,560 $129,531 $43,560 $131,281 |
NOTE 7 _ Segment Information an
NOTE 7 — Segment Information and Concentrations | 3 Months Ended |
Sep. 30, 2022 | |
Segment Reporting [Abstract] | |
NOTE 7 — Segment Information and Concentrations | NOTE 7 — Segment Information and Concentrations Segment Information The Company operates in the mobile barcode scanning and RFID/NFC data capture market. Mobile scanning typically consists of mobile devices such as smartphones or tablets, with mobile scanning or NFC peripherals for data collection, and third-party vertical applications software. The Company distributes its products in the United States and foreign countries primarily through distributors and resellers. The Company markets its products primarily through App providers whose applications are designed to work with the Company’s products. SOCKET MOBILE, INC. NOTES TO CONDENSED FINANCIAL STATEMENTS (Unaudited) September 30, 2022 Revenues by geographic areas for the three and nine months ended September 30, 2022 and 2021 were as follows: Three Months Ended Nine Months Ended 2022 2021 2022 2021 Revenues: Americas $ 2,678,380 $ 4,641,767 $ 12,041,965 $ 12,958,256 Europe 486,073 967,752 2,137,008 2,621,278 Asia Pacific 563,418 709,525 1,887,882 1,505,379 Total revenues $ 3,727,871 $ 6,319,044 $ 16,066,855 $ 17,084,913 Export revenues are attributable to countries based on the location of the Company’s customers. The Company does not hold long-lived assets in foreign locations. Major Customers Customers who accounted for at least 10% of the Company’s total revenues for the three and nine months ended September 30, 2022 and 2021 were as follows: Three Months Ended September 30, Nine Months Ended September 30, 2022 2021 2022 2021 Ingram Micro Inc. 16% 33% 27% 29% BlueStar, Inc. 31% 15% 22% 25% ScanSource, Inc. * 14% 13% 11% *Customer accounted for less than 10% of the Company’s total revenue Concentration of Credit Risk Financial instruments that potentially subject the Company to significant concentrations of credit risk include cash, cash equivalents and accounts receivable. The Company invests its cash in demand deposit accounts in banks and the Company has not experienced losses on the investments. The Company’s trade accounts receivables are primarily with distributors. The Company performs ongoing credit evaluations of its customers’ financial condition, but the Company generally requires no collateral. Reserves are maintained for potential credit losses, and such losses have been within management’s expectations. Customers who accounted for at least 10% September 30, December 31, 2022 2021 BlueStar, Inc. 38% 21% ScanSource, Inc. 18% 24% Ingram Micro Inc. Percent of net accounts receivable balances 13% 28% Concentration of Suppliers Several of the Company’s component parts are produced by a sole or limited number of suppliers. Shortages could occur in these essential materials due to increased demand, or due to an interruption of supply. Suppliers may choose to restrict credit terms or require advance payments causing delays in the procurement of essential materials. The Company’s inability to procure certain materials could have a material adverse effect on the Company’s results. For the three months ended September 30, 2022 and 2021, the top three suppliers accounted for 55% 56% 24% 20% SOCKET MOBILE, INC. NOTES TO CONDENSED FINANCIAL STATEMENTS (Unaudited) September 30, 2022 NOTE 8 — Share Repurchase Program During the nine months ended September 30, 2022, the Company repurchased 180,942 shares of its common stock for $653,684 under a share repurchase program authorized by the Board of Directors (the “Program”) in January 2022. The Program authorizes the Company to repurchase 5% of outstanding shares, limited to 1.25% of outstanding shares per quarter, at the price not to exceed $5.00 per share totaling $1.8 million. Under the Program, shares are repurchased in open market transactions under plans complying with Rule 10b5-1 under the Securities Exchange Act of 1934, as amended. The 10b5-1 Plan was suspended because the Company reported a loss in Q3. On October 26, 2022, the Board of Directors authorized the Company to continue the Program even though the Company reported a loss in Q3. The Company entered a new 10b5-1 Plan during the open trading window to continue the repurchase Program. |
NOTE 9 _ Stock-Based Compensati
NOTE 9 — Stock-Based Compensation | 3 Months Ended |
Sep. 30, 2022 | |
Share-Based Payment Arrangement [Abstract] | |
NOTE 9 — Stock-Based Compensation | NOTE 9 — Stock-Based Compensation The Company recognizes the compensation cost in the financial statements for all stock-based awards to employees, including grants of stock options and restricted stock, based on the fair value of the awards as of the date that the awards are issued. Compensation cost for stock-based awards is recognized on a straight-line basis over the vesting period. The fair values of stock options are generally determined using a binomial lattice valuation model which incorporates assumptions about expected volatility, risk-free interest rate, dividend yield, and expected life. There were 49,000 182,000 The shares of restricted stock are issued to employees and consultants and are held in escrow by the Company until the shares vest on the schedule of 15% after year one, 20% after year two, 25% after year three and 40% after year four, subject to the employees and consultants being a continuing service provider on each of the vesting dates. If the service or employment is terminated, unvested shares revert to the Company. Shares are registered at grant, so share owners may vote at the annual stockholder meeting. Shares of restricted stock are granted at zero cost basis. Compensation cost of the restricted stock is recognized on a straight-line basis over the 4-year vesting period. For the nine months ended September 30, 2022 and 2021, the Company awarded 330,700 306,425 846,275 SOCKET MOBILE, INC. NOTES TO CONDENSED FINANCIAL STATEMENTS (Unaudited) September 30, 2022 Total stock-based compensation expenses for the three and nine months ended September 30, 2022 were $260,398 $735,378 $183,896 $504,676 |
NOTE 10 _ Net Income (Loss) Per
NOTE 10 — Net Income (Loss) Per Share | 3 Months Ended |
Sep. 30, 2022 | |
Accounting Policies [Abstract] | |
NOTE 10 — Net Income (Loss) Per Share | NOTE 10 — Net Income (Loss) Per Share The following table sets forth the reconciliation of basic shares to diluted shares and the computation of basic and diluted net income per share: Three Months Ended September 30, Nine Months Ended September 30, 2022 2021 2022 2021 Numerator: Net income (loss) $ (874,034 ) $ 643,626 $ (428,142 ) $ 3,473,635 Net income (loss) allocated to restricted stock award 92,388 (55,001 ) 42,794 (297,932 ) Adjusted net income (loss) for basic earnings per share $ (781,646 ) $ 588,625 $ (385,348 ) $ 3,175,703 Convertible note interest — 43,560 — 132,315 Adjusted net income (loss) before interest for diluted earnings per share $ (781,646 ) $ 632,185 $ (385,348 ) $ 3,308,018 Denominator: Weighted average shares outstanding used in computing net income (loss) per share: Basic 7,153,210 7,162,924 7,202,239 6,927,837 Effect of dilutive stock options — 817,556 — 1,045,654 Effect of convertible note weighted shares — 958,904 — 958,904 Diluted 7,153,210 8,939,384 7,202,239 8,932,395 Net income (loss) per share applicable to common stockholders: Basic $ (0.11 ) $ 0.08 $ (0.05 ) $ 0.46 Diluted $ (0.11 ) $ 0.07 $ (0.05 ) $ 0.37 In the three and nine months ended September 30, 2022, 1,334,522 50,000 SOCKET MOBILE, INC. NOTES TO CONDENSED FINANCIAL STATEMENTS (Unaudited) September 30, 2022 In the three and nine months ended September 30, 2021, 45,000 50,000 |
NOTE 11 _ Income Taxes
NOTE 11 — Income Taxes | 3 Months Ended |
Sep. 30, 2022 | |
Income Tax Disclosure [Abstract] | |
NOTE 11 — Income Taxes | NOTE 11 — Income Taxes The Company recorded income tax benefits of $116,485 $260,000 $1,603,711 |
NOTE 12 _ Commitments and Conti
NOTE 12 — Commitments and Contingencies | 3 Months Ended |
Sep. 30, 2022 | |
Commitments and Contingencies Disclosure [Abstract] | |
NOTE 12 — Commitments and Contingencies | NOTE 12 — Commitments and Contingencies Operating Lease Obligations The Company’s lease agreement for the office space in Newark, California expired on June 30, 2022. On May 1, 2022, the Company commenced a lease agreement for approximately 35,913 square feet at 40675 Encyclopedia in Fremont, California. This serves as the location for the Company’s Corporate Headquarters, including office space and manufacturing. The Company will pay a base monthly rent in the amount of $50,278 commencing on the first day of the fourth full month of the lease term. Base monthly rent will increase annually on May 1 st The Company accounted for the lease as an operating lease under ASC 842 using the bank loan interest rate in effect on May 1, 2022 at 5.0% to discount future lease payments. The lease term expires on July 31, 2029, with a one-time option to renew for a period of five years. The renewal period is not included in the measurement of the leases as the Company is not reasonably certain of exercising it. In July 2022, the Company also signed a two-year equipment operating lease agreement and the future lease payments are discounted at the interest rate of 5.5%. As of September 30, 2022, the balances of right-of-use assets and liabilities were $3,674,173 $3,841,302 $210,839 $258,097 The operating lease expense was allocated in cost of goods sold and operating expenses based on department headcount and amounted to $162,108 $484,713 $103,208 $309,625 Cash payments included in the measurement of the Company’s operating lease liabilities were $102,053 $364,842 $131,395 $384,427 SOCKET MOBILE, INC. NOTES TO CONDENSED FINANCIAL STATEMENTS (Unaudited) September 30, 2022 Future minimum lease payments for the operating lease in effect as of September 30, 2022 are shown below: Annual minimum payments: Amount 2022 (October 2022 through December 31, 2022) 152,332 2023 621,393 2024 636,861 2025 652,883 2026 672,470 Thereafter 1,831,714 Total minimum payments 4,567,653 Less: Present value factor (726,351 ) Total operating lease liabilities 3,841,302 Less: Current portion of operating lease (434,524 ) Long-term portion of operating lease $ 3,406,778 Purchase Commitments As of September 30, 2022, the Company has non-cancelable purchase commitments for inventory to be used in the ordinary course of business of approximately $9,494,000 Legal Matters The Company is subject to disputes, claims, requests for indemnification and lawsuits arising in the ordinary course of business. Under the indemnification provisions of the Company’s customer agreements, the Company routinely agrees to indemnify and defend its customers against infringement of any patent, trademark, copyright, trade secrets, or other intellectual property rights arising from customers’ legal use of the Company’s products or services. The exposure to the Company under these indemnification provisions is generally limited to the total amount paid for the indemnified products. However, certain indemnification provisions potentially expose the Company to losses in excess of the aggregate amount received from the customer. To date, there have been no claims against the Company by its customers pertaining to such indemnification provisions, and no amounts have been recorded. The Company is currently not a party to any material legal proceedings. |
NOTE 13 _ Subsequent Events
NOTE 13 — Subsequent Events | 3 Months Ended |
Sep. 30, 2022 | |
Subsequent Events [Abstract] | |
NOTE 13 — Subsequent Events | NOTE 13 — Subsequent Events The Company evaluated subsequent events and transactions that occurred between October 1, 2022 through the date of this report, the date that the unaudited condensed financial statements were issued. Other than described below, the Company did not identify any subsequent events that would have required adjustment or disclosure in the unaudited condensed financial statements. The Company issued 37,800 |
NOTE 2 _ Summary of Significa_2
NOTE 2 — Summary of Significant Accounting Policies (Policies) | 3 Months Ended |
Sep. 30, 2022 | |
Accounting Policies [Abstract] | |
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenue and expense during the reporting period. Actual results could differ from those estimates, and such differences may be material to the financial statements. |
Cash Equivalents and Fair Value of Financial Instruments | Cash Equivalents and Fair Value of Financial Instruments The Company considers all highly liquid investments purchased with a maturity date of 90 days or less at date of purchase to be cash equivalents. On September 30, 2022, and December 31, 2021, all of the Company’s cash and cash equivalents consisted of amounts held in demand deposit accounts in banks. The aggregate cash balance on deposit in these accounts are insured by the Federal Deposit Insurance Corporation up to $250,000. The Company’s cash balance on deposit in these accounts may, at times, exceed the federally insured limits. The Company has never experienced any losses in such accounts. The carrying value of the Company’s cash and cash equivalents, accounts receivable, accounts payable, debt and foreign exchange contracts approximate fair value due to the relatively short period of time to maturity. |
Revenue Recognition and Deferred Revenue | Revenue Recognition and Deferred Revenue With the adoption of ASC 606 “Revenue from Contracts with Customers” in January 2017, the Company recognizes revenue on sales to distributors when shipping of product is completed and title transfers to distributor, less a reserve for estimated product returns (sales and cost of sales). The reserves are based on estimates of future returns calculated from actual return history, primarily from stock rotations, plus knowledge of pending returns outside of the norm. On September 30, 2022, the deferred revenue and deferred cost on shipments to distributors were $524,172 $206,206 $407,235 $158,977 SOCKET MOBILE, INC. NOTES TO CONDENSED FINANCIAL STATEMENTS (Unaudited) September 30, 2022 The Company also earns revenue from its SocketCare extended warranty program, which provides extended warranty and accidental breakage coverage for selected products. For the quarters ended September 30, 2022 and 2021, SocketCare revenue was approximately $5,623 $6,300 $37,500 |
Cost of Sales and Gross Margins | Cost of Sales and Gross Margins Cost of sales primarily consists of the costs to manufacture our products, including the costs of materials, contract manufacturing, shipping costs, personnel and related expenses including stock-based compensation, equipment and facility expenses, warranty costs and inventory excess and obsolete provisions. The factors that impact our gross margins are the cost of materials, the mix of products and the extent to which we are able to efficiently utilize our manufacturing capacity. |
Leases | Leases In February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-02, Leases (Topic 842), which requires a lessee to recognize a liability representing future lease payments and a right-of-use asset representing its right to use the underlying asset for the lease term. For operating leases, a lessee is required to recognize at inception a right-of-use asset and a lease liability equal to the net present value of the lease payments, with lease expense recognized over the lease term on a straight-line basis. For leases with a term of twelve months or less, ASU 2016-02 allows a reporting entity to make an accounting policy election to not recognize a right-of-use asset and a lease liability, and to recognize lease expense on a straight-line basis. The Company adopted ASU 2016-02 effective January 1, 2019. On May 1, 2022, we entered into a building lease agreement for our corporate headquarters located in Fremont, CA. On September 30, 2022, the balances of right-of-use assets and liabilities for the operating lease were $3,674,173 $3,841,302 $210,839 $258,097 |
Recently Issued Financial Accounting Standards | Recently Issued Financial Accounting Standards From time to time, new accounting pronouncements are issued by the FASB or other standards setting bodies and adopted by the Company as of the specified effective date. Unless otherwise discussed, management believes that the impact of recently issued standards that are not yet effective will not have a material impact on the Company’s financial position, results of operations or cash flows upon adoption. |
NOTE 3 _ Acquisition of Intan_2
NOTE 3 — Acquisition of Intangible Assets (Tables) | 3 Months Ended |
Sep. 30, 2022 | |
Business Combination and Asset Acquisition [Abstract] | |
Estimated future amortization of intangible assets | Fiscal Year Amount 2022 (October 1, 2022 to December 31, 2022) $ 31,824 2023 127,296 2024 127,296 2025 127,296 2026 127,296 Thereafter 1,177,481 Total $ 1,718,489 |
NOTE 4 _ Inventories (Tables)
NOTE 4 — Inventories (Tables) | 3 Months Ended |
Sep. 30, 2022 | |
Inventory Disclosure [Abstract] | |
Inventories | September 30, December 31, 2022 2021 Raw materials and sub-assemblies $ 6,429,736 $ 5,757,869 Finished goods 601,134 277,598 Inventory reserves (880,943 ) (880,943 ) Inventory, net $ 6,149,927 $ 5,154,524 |
NOTE 5 _ Bank Financing Arran_2
NOTE 5 — Bank Financing Arrangements (Tables) | 3 Months Ended |
Sep. 30, 2022 | |
Debt Disclosure [Abstract] | |
Amounts outstanding under the CalCap Loan | September 30, 2022 Current portion of CalCap Loan $ 250,000 Long-term portion of CalCap Loan — CalCap Loan $ 250,000 |
NOTE 7 _ Segment Information _2
NOTE 7 — Segment Information and Concentrations (Tables) | 3 Months Ended |
Sep. 30, 2022 | |
Segment Reporting [Abstract] | |
Revenue by Geographic Area | Three Months Ended Nine Months Ended 2022 2021 2022 2021 Revenues: Americas $ 2,678,380 $ 4,641,767 $ 12,041,965 $ 12,958,256 Europe 486,073 967,752 2,137,008 2,621,278 Asia Pacific 563,418 709,525 1,887,882 1,505,379 Total revenues $ 3,727,871 $ 6,319,044 $ 16,066,855 $ 17,084,913 |
Customers who accounted for at least 10% of the Company's total revenues | Three Months Ended September 30, Nine Months Ended September 30, 2022 2021 2022 2021 Ingram Micro Inc. 16% 33% 27% 29% BlueStar, Inc. 31% 15% 22% 25% ScanSource, Inc. * 14% 13% 11% |
Customers who accounted for at least 10% of the Company's accounts receivable balances | September 30, December 31, 2022 2021 BlueStar, Inc. 38% 21% ScanSource, Inc. 18% 24% Ingram Micro Inc. Percent of net accounts receivable balances 13% 28% |
NOTE 10 _ Net Income (Loss) P_2
NOTE 10 — Net Income (Loss) Per Share (Tables) | 3 Months Ended |
Sep. 30, 2022 | |
Accounting Policies [Abstract] | |
Reconciliation of basic shares to diluted shares and the computation of basic and diluted net income per share | Three Months Ended September 30, Nine Months Ended September 30, 2022 2021 2022 2021 Numerator: Net income (loss) $ (874,034 ) $ 643,626 $ (428,142 ) $ 3,473,635 Net income (loss) allocated to restricted stock award 92,388 (55,001 ) 42,794 (297,932 ) Adjusted net income (loss) for basic earnings per share $ (781,646 ) $ 588,625 $ (385,348 ) $ 3,175,703 Convertible note interest — 43,560 — 132,315 Adjusted net income (loss) before interest for diluted earnings per share $ (781,646 ) $ 632,185 $ (385,348 ) $ 3,308,018 Denominator: Weighted average shares outstanding used in computing net income (loss) per share: Basic 7,153,210 7,162,924 7,202,239 6,927,837 Effect of dilutive stock options — 817,556 — 1,045,654 Effect of convertible note weighted shares — 958,904 — 958,904 Diluted 7,153,210 8,939,384 7,202,239 8,932,395 Net income (loss) per share applicable to common stockholders: Basic $ (0.11 ) $ 0.08 $ (0.05 ) $ 0.46 Diluted $ (0.11 ) $ 0.07 $ (0.05 ) $ 0.37 |
NOTE 12 _ Commitments and Con_2
NOTE 12 — Commitments and Contingencies (Tables) | 3 Months Ended |
Sep. 30, 2022 | |
Commitments and Contingencies Disclosure [Abstract] | |
Future minimum lease payments under the operating lease in effect as of September 30, 2022 | Annual minimum payments: Amount 2022 (October 2022 through December 31, 2022) 152,332 2023 621,393 2024 636,861 2025 652,883 2026 672,470 Thereafter 1,831,714 Total minimum payments 4,567,653 Less: Present value factor (726,351 ) Total operating lease liabilities 3,841,302 Less: Current portion of operating lease (434,524 ) Long-term portion of operating lease $ 3,406,778 |
NOTE 2 _ Summary of Significa_3
NOTE 2 — Summary of Significant Accounting Policies (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | Dec. 31, 2021 | |
Product Information [Line Items] | |||||
Deferred Revenue, Current | $ 524,172 | $ 524,172 | $ 407,235 | ||
Deferred Costs and Other Assets | 206,206 | 206,206 | 158,977 | ||
Revenues | 3,727,871 | $ 6,319,044 | 16,066,855 | $ 17,084,913 | |
Operating Lease, Right-of-Use Asset | 3,674,173 | 3,674,173 | 210,839 | ||
Operating Lease, Liability | 3,841,302 | 3,841,302 | $ 258,097 | ||
Service [Member] | |||||
Product Information [Line Items] | |||||
Deferred Revenue | 37,500 | $ 37,500 | |||
Service [Member] | |||||
Product Information [Line Items] | |||||
Revenues | $ 5,623 | $ 6,300 |
Estimated future amortization o
Estimated future amortization of intangible assets (Details) | Sep. 30, 2022 USD ($) |
Business Combination and Asset Acquisition [Abstract] | |
2022 (October 1, 2022 to December 31, 2022) | $ 31,824 |
2023 | 127,296 |
2024 | 127,296 |
2025 | 127,296 |
2026 | 127,296 |
Thereafter | 1,177,481 |
Total | $ 1,718,489 |
NOTE 3 _ Acquisition of Intan_3
NOTE 3 — Acquisition of Intangible Assets (Details Narrative) - USD ($) | 12 Months Ended | |||
Dec. 31, 2021 | Sep. 30, 2022 | Mar. 29, 2021 | Feb. 26, 2021 | |
Business Acquisition [Line Items] | ||||
Intangible Assets, Net (Excluding Goodwill) | $ 1,864,794 | $ 1,736,644 | ||
Spring Card [Member] | ||||
Business Acquisition [Line Items] | ||||
Business Acquisition, Equity Interest Issued or Issuable, Number of Shares | 184,332 | |||
Noncash or Part Noncash Acquisition, Noncash Financial or Equity Instrument Consideration, Warrants Issued | 50,000 | |||
Business Acquisition, Share Price | $ 7.65 | $ 10.85 | ||
Business Acquisition, Effective Date of Acquisition | Mar. 29, 2021 | |||
Intangible Assets, Net (Excluding Goodwill) | $ 1,718,489 |
Inventories (Details)
Inventories (Details) - USD ($) | Sep. 30, 2022 | Dec. 31, 2021 |
Inventory Disclosure [Abstract] | ||
Raw materials and sub-assemblies | $ 6,429,736 | $ 5,757,869 |
Finished goods | 601,134 | 277,598 |
Inventory reserves | (880,943) | (880,943) |
Inventory, net | $ 6,149,927 | $ 5,154,524 |
Amounts outstanding under the C
Amounts outstanding under the CalCap Loan (Details) - USD ($) | Sep. 30, 2022 | Dec. 31, 2021 |
Debt Disclosure [Abstract] | ||
Current portion of CalCap Loan | $ 250,000 | $ 500,000 |
Long-term portion of CalCap Loan | $ 125,000 | |
CalCap Loan | $ 250,000 |
NOTE 5 _ Bank Financing Arran_3
NOTE 5 — Bank Financing Arrangements (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | Dec. 31, 2021 | Jan. 29, 2021 | |
Line of Credit Facility [Line Items] | ||||||
Line of Credit Facility, Initiation Date | Jan. 29, 2021 | |||||
Interest Expense | $ 43,092 | $ 50,147 | $ 133,703 | $ 150,276 | ||
Domestic Revolving Facility [Member] | ||||||
Line of Credit Facility [Line Items] | ||||||
Line of Credit Facility, Maximum Borrowing Capacity | $ 2,000,000 | |||||
Term Loan [Member] | ||||||
Line of Credit Facility [Line Items] | ||||||
Line of Credit Facility, Maximum Borrowing Capacity | $ 1,000,000 | |||||
Interest Expense | 4,523 | 10,104 | 16,668 | 27,656 | ||
Interest Payable | $ 994 | $ 2,083 | $ 994 | $ 2,083 |
NOTE 6 _ Secured Subordinated_2
NOTE 6 — Secured Subordinated Convertible Notes Payable (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended | 36 Months Ended | |||||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2022 | Sep. 30, 2021 | Aug. 30, 2023 | Aug. 31, 2020 | Aug. 28, 2020 | |
Debt Instrument [Line Items] | ||||||||
Secured Subordinated Convertible Notes Issued | $ 1,530,000 | |||||||
Subordinated Borrowing, Interest Rate | 10% | |||||||
Debt Instrument, Convertible, Conversion Price | $ 1.46 | |||||||
Payments of Debt Issuance Costs | $ 96,515 | |||||||
Amortization of Debt Discount (Premium) | $ 24,818 | $ 24,819 | ||||||
Debt Instrument, Unamortized Discount (Premium), Net | $ 30,333 | 30,333 | ||||||
[custom:InterestOnConvertibleDebt] | $ 43,560 | $ 43,560 | $ 129,531 | $ 131,281 | ||||
Related Party [Member] | ||||||||
Debt Instrument [Line Items] | ||||||||
Secured Subordinated Convertible Notes Issued | $ 1,350,000 |
Revenue by Geographic Area (Det
Revenue by Geographic Area (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Revenues from External Customers and Long-Lived Assets [Line Items] | ||||
revenues | $ 3,727,871 | $ 6,319,044 | $ 16,066,855 | $ 17,084,913 |
Americas [Member] | ||||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||||
revenues | 2,678,380 | 4,641,767 | 12,041,965 | 12,958,256 |
EMEA [Member] | ||||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||||
revenues | 486,073 | 967,752 | 2,137,008 | 2,621,278 |
Asia Pacific [Member] | ||||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||||
revenues | $ 563,418 | $ 709,525 | $ 1,887,882 | $ 1,505,379 |
Customers who accounted for at
Customers who accounted for at least 10% of the Company's total revenues (Details) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Ingram Micro [Member] | ||||
Revenue, Major Customer [Line Items] | ||||
Percent of Total Revenue | 0.16 | 0.33 | 0.27 | 0.29 |
Blue Star [Member] | ||||
Revenue, Major Customer [Line Items] | ||||
Percent of Total Revenue | 0.31 | 0.15 | 0.22 | 0.25 |
Scan Source [Member] | ||||
Revenue, Major Customer [Line Items] | ||||
Percent of Total Revenue | 0.14 | 0.13 | 0.11 |
Customers who accounted for a_2
Customers who accounted for at least 10% of the Company's accounts receivable balances (Details) | Sep. 30, 2022 | Dec. 31, 2021 |
Revenue, Major Customer [Line Items] | ||
Threshold percentage of accounts receivable for disclosure | 10% | 10% |
Blue Star [Member] | ||
Revenue, Major Customer [Line Items] | ||
Percent of net accounts receivable balances | 0.38 | 0.21 |
Scan Source [Member] | ||
Revenue, Major Customer [Line Items] | ||
Percent of net accounts receivable balances | 0.18 | 0.24 |
Ingram Micro [Member] | ||
Revenue, Major Customer [Line Items] | ||
Percent of net accounts receivable balances | 0.13 | 0.28 |
NOTE 7 _ Segment Information _3
NOTE 7 — Segment Information and Concentrations (Details Narrative) | 3 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Dec. 31, 2021 | |
Revenue, Major Customer [Line Items] | |||
Threshold percentage of accounts receivable for disclosure | 10% | 10% | |
Supplier Concentration Risk [Member] | |||
Revenue, Major Customer [Line Items] | |||
Percentage of inventory purchases from top three suppliers | 55% | 56% | |
Accounts payable balances with top two suppliers | 0.24 | 0.20 |
NOTE 9 _ Stock-Based Compensa_2
NOTE 9 — Stock-Based Compensation (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended | ||||||
Sep. 30, 2022 | Jun. 30, 2022 | Mar. 31, 2022 | Sep. 30, 2021 | Jun. 30, 2021 | Mar. 31, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Share-Based Payment Arrangement [Abstract] | ||||||||
Share-Based Compensation Arrangement by Share-Based Payment Award, Options, Grants in Period, Net of Forfeitures | 49,000 | 182,000 | ||||||
Stock Issued During Period, Shares, Restricted Stock Award, Gross | 330,700 | 306,425 | ||||||
Common Stock, Other Shares, Outstanding | 846,275 | 846,275 | ||||||
Share-Based Payment Arrangement, Noncash Expense | $ 260,398 | $ 251,534 | $ 223,446 | $ 183,896 | $ 172,008 | $ 148,772 | $ 735,378 | $ 504,676 |
Reconciliation of basic shares
Reconciliation of basic shares to diluted shares and the computation of basic and diluted net income per share (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||||||
Sep. 30, 2022 | Jun. 30, 2022 | Mar. 31, 2022 | Sep. 30, 2021 | Jun. 30, 2021 | Mar. 31, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Numerator: | ||||||||
Net income (loss) | $ (874,034) | $ 103,959 | $ 341,933 | $ 643,626 | $ 2,627,107 | $ 202,902 | $ (428,142) | $ 3,473,635 |
Net income (loss) allocated to restricted stock award | 92,388 | (55,001) | 42,794 | (297,932) | ||||
Adjusted net income (loss) for basic earnings per share | (781,646) | 588,625 | (385,348) | 3,175,703 | ||||
Convertible note interest | 43,560 | 132,315 | ||||||
Adjusted net income (loss) before interest for diluted earnings per share | $ (781,646) | $ 632,185 | $ (385,348) | $ 3,308,018 | ||||
Denominator: Weighted average shares outstanding used in computing net income (loss) per share: | ||||||||
Basic | 7,153,210 | 7,162,924 | 7,202,239 | 6,927,837 | ||||
Effect of dilutive stock options | 817,556 | 1,045,654 | ||||||
Effect of convertible note weighted shares | 958,904 | 958,904 | ||||||
Diluted | 7,153,210 | 8,939,384 | 7,202,239 | 8,932,395 | ||||
Net income (loss) per share applicable to common stockholders: | ||||||||
Basic | $ (0.11) | $ 0.08 | $ (0.05) | $ 0.46 | ||||
Diluted | $ (0.11) | $ 0.07 | $ (0.05) | $ 0.37 |
NOTE 10 _ Net Income (Loss) P_3
NOTE 10 — Net Income (Loss) Per Share (Details Narrative) - shares | 9 Months Ended | |
Sep. 30, 2022 | Sep. 30, 2021 | |
Equity Option [Member] | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount | 1,334,522 | 45,000 |
Warrant [Member] | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount | 50,000 | 50,000 |
NOTE 11 _ Income Taxes (Details
NOTE 11 — Income Taxes (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Income Tax Disclosure [Abstract] | ||||
Income Tax Expense (Benefit) | $ 116,485 | $ (260,000) | $ 1,603,711 | |
Income Tax Expense (Benefit) | $ (116,485) | $ 260,000 | $ (1,603,711) |
Future minimum lease payments u
Future minimum lease payments under the operating lease in effect as of September 30, 2022 (Details) - USD ($) | Sep. 30, 2022 | Dec. 31, 2021 |
Annual minimum payments: | ||
2022 (October 2022 through December 31, 2022) | $ 152,332 | |
2023 | 621,393 | |
2024 | 636,861 | |
2025 | 652,883 | |
2026 | 672,470 | |
Thereafter | 1,831,714 | |
Total minimum payments | 4,567,653 | |
Less: Present value factor | (726,351) | |
Total operating lease liabilities | 3,841,302 | $ 258,097 |
Less: Current portion of operating lease | (434,524) | (258,097) |
Long-term portion of operating lease | $ 3,406,778 |
NOTE 12 _ Commitments and Con_3
NOTE 12 — Commitments and Contingencies (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | Dec. 31, 2021 | |
Commitments and Contingencies Disclosure [Abstract] | |||||
Operating Lease, Right-of-Use Asset | $ 3,674,173 | $ 3,674,173 | $ 210,839 | ||
Operating Lease, Liability | 3,841,302 | 3,841,302 | $ 258,097 | ||
Operating Lease, Expense | 162,108 | $ 103,208 | 484,713 | $ 309,625 | |
Operating Lease, Payments | 102,053 | $ 131,395 | 364,842 | $ 384,427 | |
Purchase Obligation, to be Paid, Year One | $ 9,494,000 | $ 9,494,000 |
NOTE 13 _ Subsequent Events (De
NOTE 13 — Subsequent Events (Details Narrative) - shares | 1 Months Ended | 3 Months Ended |
Nov. 09, 2022 | Mar. 31, 2021 | |
Subsequent Events [Abstract] | ||
Shares issued for exercise of stock options | 37,800 | 713,349 |