New product development and completion of SocketScan transition highlight the year
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 ... (click for more)
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