UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(X)

QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.

For the quarterly period ended September 30, 2025

( )

TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.

For the transition period ___________________ to _____________________.

Commission file number 1-13810

SOCKET MOBILE, INC.

(Exact name of registrant as specified in its charter)

Delaware		94-3155066
(State of incorporation)		(IRS Employer Identification No.)

40675 Encyclopedia Circle, Fremont, CA 94538

(Address of principal executive offices including zip code)

(510) 933-3000

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common stock, $0.001 Par Value per Share	SCKT	NASDAQ

Indicate by check mark whether the registrant (1) has ﬁled all reports required to be ﬁled by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to ﬁle such reports), and (2) has been subject to such ﬁling requirements for the past 90 days. YES [ X ] NO [ ]

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). YES [ X ] NO [ ]

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer [ ] Accelerated filer [ ] Non-accelerated filer [X]

Smaller reporting company [X] Emerging growth company [ ]

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [ ]

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). YES [ ] NO [X]

The number of shares of Common Stock ($0.001 par value) outstanding as of November 3, 2025 was 7,976,462 shares.

INDEX

	PAGE NO.
Part I. Financial Information

Item 1. Financial Statements (Unaudited):

Condensed Statements of Operations – Three Months and Nine Months Ended September 30, 2025 and 2024 (Unaudited)	1

Condensed Balance Sheets - September 30, 2025 (Unaudited) and December 31, 2024	2

Condensed Statements of Stockholders’ Equity – Three Months and Nine Months Ended September 30, 2025 and 2024 (Unaudited)	3

Condensed Statements of Cash Flows - Nine Months Ended September 30, 2025 and 2024 (Unaudited)	5

Notes to Condensed Financial Statements (Unaudited)	6

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	16

Item 3. Quantitative and Qualitative Disclosures about Market Risk	23

Item 4. Controls and Procedures	23

Part II. Other Information

Item 1A. Risk Factors	24

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	35

Item 6. Exhibits	35

Signatures	36

SOCKET MOBILE, INC.
CONDENSED STATEMENTS OF OPERATIONS
(Unaudited)


	Three Months Ended September 30,						Nine Months Ended September 30,
	2025			2024			2025			2024

Revenues	$	3,106,842		$	3,872,336		$	11,114,501		$	13,931,531

Cost of revenues		1,626,269			1,975,151			5,617,768			6,945,258

Gross profit		1,480,573			1,897,185			5,496,733			6,986,273

Operating expenses:
Research and development		1,026,648			1,162,025			3,259,487			3,602,060
Sales and marketing		934,587			1,122,261			3,066,023			3,307,777
General and administrative		577,325			644,175			1,800,238			2,128,030
Total operating expenses		2,538,560			2,928,461			8,125,748			9,037,867

Operating loss		(1,057,987	)		(1,031,276	)		(2,629,015	)		(2,051,594	)

Interest expense, net		(140,063	)		(84,164	)		(355,316	)		(228,892	)

Net loss before income taxes		(1,198,050	)		(1,115,440	)		(2,984,331	)		(2,280,486	)

Income tax benefit (expense)		—			—			—			—

Net loss	$	(1,198,050	)	$	(1,115,440	)	$	(2,984,331	)	$	(2,280,486	)

Net loss per share:

Basic	$	(0.15	)	$	(0.15	)	$	(0.38	)	$	(0.30	)
Diluted	$	(0.15	)	$	(0.15	)	$	(0.38	)	$	(0.30	)

Weighted average shares outstanding:

Basic		7,961,311			7,601,071			7,909,909			7,541,591
Diluted		7,961,311			7,601,071			7,909,909			7,541,591


	September 30, 2025 (Unaudited)			December 31, 2024
ASSETS
Current assets:
Cash and cash equivalents	$	2,015,749		$	2,491,964
Accounts receivable, net		1,544,986			1,588,095
Inventories, net		4,681,250			4,941,500
Prepaid expenses and other current assets		547,570			430,719
Deferred cost on shipments to distributors		108,984			142,939
Total current assets		8,898,539			9,595,217

Property and equipment:
Machinery and office equipment		3,012,960			2,776,992
Computer equipment, software and website development		3,872,754			3,732,733
		6,885,714			6,509,725
Accumulated depreciation		(4,643,465	)		(3,722,424	)
Property and equipment, net		2,242,249			2,787,301

Intangible assets, net		1,336,601			1,432,073
Other long-term assets		285,911			263,634
Deferred tax assets		10,663,419			10,663,419
Operating lease right-of-use asset		2,218,508			2,604,137
Total assets	$	25,645,227		$	27,345,781


LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable and accrued expenses	$	1,197,242		$	1,298,165
Accrued payroll and related expenses		509,177			678,768
Deferred revenue on shipments to distributors		344,431			392,543
Short term portion of deferred service revenue		18,489			17,886
Subordinated convertible notes payable, net of discount		400,000			150,000
Subordinated convertible notes payable, net of discount-related party		5,079,361			3,818,424
Operating lease – current portion		564,150			532,027
Total current liabilities		8,112,850			6,887,813
Long-term portion of deferred service revenue		11,210			12,839
Operating lease - long-term portion		1,860,655			2,284,634
Total liabilities		9,984,715			9,185,286

Commitments and contingencies		—			—
Stockholders’ equity:
Common stock, $0.001 par value: authorized 20,000,000 shares, 8,320,712 issued and 7,961,462 outstanding at September 30, 2025, and 7,964,881 shares issued and 7,605,631 shares outstanding at December 31, 2024		7,961			7,606
Additional paid-in capital		69,849,794			69,365,801
Treasury stock		(1,037,988	)		(1,037,988	)
Accumulated deficit		(53,159,255	)		(50,174,924	)
Total stockholders’ equity		15,660,512			18,160,495
Total liabilities and stockholders’ equity	$	25,645,227		$	27,345,781


							Additional											Total
	Common Stock						Paid-In			Treasury Stock					Accumulated			Stockholders’
	Shares			Amount			Capital			Shares		Amount			Deficit			Equity
Balance at December 31, 2024		7,605,631		$	7,606		$	69,365,801			359,250	$	(1,037,988	)	$	(50,174,924	)	$	18,160,495
Vesting of restricted stocks		421,190			421			(421	)		—		—			—			—
Restricted stock retired for tax withholding		(73,833	)		(74	)		74			—		—			—			—
Stock-based compensation		—			—			70,625			—		—			—			70,625
Net loss		—			—			—			—		—			(994,140	)		(994,140	)
Balance at March 31, 2025		7,952,988		$	7,953		$	69,436,079			359,250	$	(1,037,988	)	$	(51,169,064	)	$	17,236,980
Vesting of restricted stock		37,900			38			(38	)		—		—			—			—
Restricted stock retired for tax withholding		(31,627	)		(32	)		32			—		—			—			—
Stock-based compensation		—			—			230,690			—		—			—			230,690
Net loss		—			—			—			—		—			(792,141	)		(792,141	)
Balance at June 30, 2025		7,959,261		$	7,959		$	69,666,763			359,250	$	(1,037,988	)	$	(51,961,205	)	$	16,675,529
Vesting of restricted stocks		2,825			3			(3	)		—		—			—			—
Restricted stock retired for tax withholding		(624	)		(1	)		1			—		—			—			—
Stock-based compensation		—			—			183,033			—		—			—			183,033
Net loss		—			—			—			—		—			(1,198,050	)		(1,198,050	)
Balance at September 30, 2025		7,961,462		$	7,961		$	69,849,794			359,250	$	(1,037,988	)	$	(53,159,255	)	$	15,660,512


	Nine Months Ended September 30,
	2025			2024
Operating activities
Net loss	$	(2,984,331	)	$	(2,280,486	)
Adjustments to reconcile net loss to net cash used in operating activities:
Stock-based compensation		484,348			798,192
Depreciation and amortization		1,016,513			796,258
Amortization of debt discount		10,937			4,691
Amortization of operating lease ROU asset		385,629			366,839

Changes in operating assets and liabilities:
Accounts receivable		43,109			258,438
Inventories		260,250			158,634
Prepaid expenses and other current assets		(116,851	)		(31,046	)
Other assets		(22,277	)		1,000
Accounts payable and accrued expenses		(100,923	)		(247,127	)
Accrued payroll and related expenses		(169,591	)		178,067
Net deferred revenue on shipments to distributors		(14,157	)		(80,323	)
Deferred service revenue		(1,026	)		1,263
Net change in operating lease liability		(391,856	)		(358,850	)
Net cash used in operating activities		(1,600,226	)		(434,450	)

Investing activities
Purchases of PP&E including software and website development		(375,989	)		(564,440	)
Proceeds from tenant improvements allowance		—			72,800
Net cash used in investing activities		(375,989	)		(491,640	)

Financing activities
Proceeds from subordinated convertible notes payable, net of discount		250,000			—
Proceeds from subordinated convertible notes payable, net of discount - related party		1,250,000			989,049
Proceeds from stock options exercised		—			23,750
Net cash provided by financing activities		1,500,000			1,012,799
Net increase (decrease) in cash and cash equivalents		(476,215	)		86,709
Cash and cash equivalents at beginning of period		2,491,964			2,826,630
Cash and cash equivalents at end of period	$	2,015,749		$	2,913,339

Supplemental disclosure of cash flow information
Cash paid for interest	$	350,221		$	266,164
Supplemental disclosure of non-cash activities
Property acquired under operating lease	$	—		$	8,230


Fiscal Year	Amount
2025 (October 1, 2025 to December 31, 2025)	$	31,824
2026		127,296
2027		127,296
2028		127,296
2029		127,296
Thereafter		795,593
	$	1,336,601


	September 30,			December 31,
	2025			2024
Raw materials and sub-assemblies	$	5,444,577		$	5,404,171
Finished goods		317,616			533,272
Inventory reserves		(1,080,943	)		(995,943	)
Inventory, net	$	4,681,250		$	4,941,500


Annual minimum payments:	Amount
2025 (October 2025 through December 31, 2025)		165,891
2026		676,751
2027		692,644
2028		713,423
2029		425,646
Total minimum payments		2,674,355
Less: Present value factor		(249,550	)
Total operating lease liabilities		2,424,805
Less: Current portion of operating lease		(564,150	)
Long-term portion of operating lease	$	1,860,655

	Payments Due by Period
Contractual Obligations	Total		Less than 1 year		1 to 3 years		4 to 5 years		More than 5 years

Unconditional purchase obligations with contract manufacturers	$	3,358,000	$	3,358,000	$	—	$	—	$	—
Operating lease		2,675,000		672,000		1,397,000		606,000		—
Total contractual obligations	$	6,033,000	$	4,030,000	$	1,397,000	$	606,000	$	—


Exhibit Number	Exhibit Description

31.1*	Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2*	Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1**	Certification of Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101	XBRL Document


	September 30,			December 31,
	2025			2024
BlueStar, Inc.		36	%		32	%
ScanSource, Inc.		26	%		19	%
Sektor Ltd. AU.		10	%		*
Ingram Micro Inc.		*			15	%
*Customer accounted for less than 10% of the Company’s accounts receivable balances.


Date: November 7, 2025	/s/ Kevin J. Mills
	Kevin J. Mills
	President and Chief Executive Officer
	(Duly Authorized Officer and Principal Executive Officer)


Date: November 7, 2025	/s/ Lynn Zhao
	Lynn Zhao
	Vice President of Finance and Administration and Chief Financial Officer (Duly Authorized Officer and Principal Financial and Accounting Officer)

SEC Form 10-Q filed by Socket Mobile Inc.