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SOCKET MOBILE, INC.

SOCKET MOBILE, INC.SCKTEarnings & Financial Report

Nasdaq · Industrials · Electronic Computers

Socket Mobile, Inc. designs, manufactures and sells portable data capture and payment acceptance solutions, including handheld barcode scanners, RFID readers and contactless payment terminals. Its core customer segments cover retail, healthcare, field services and logistics, with products compatible with major mobile operating systems and widely deployed across North America, Europe and Asia Pacific.

What changed in SOCKET MOBILE, INC.'s 10-K — 2024 vs 2025

Top changes in SOCKET MOBILE, INC.'s 2025 10-K

81 paragraphs added · 90 removed · 66 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

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It includes the 300 Series countertop readers (S320, S370), the 500 Series NFC Mobile Wallet Reader (S550), the 700 Series companion scanners (S700, S720, S730, S740), and the 800 Series attachable scanners (S800, S820, S840, S860). With an easy setup process and user-friendly design, SocketScan enhances efficiency by delivering fast, high-performance 1D/2D scanning while reducing human errors.
It includes the 300 Series countertop readers (S320, S370), the 500 Series NFC Mobile Wallet Reader (S550), the 700 Series companion scanners (S720, S730, S740), and the 800 Series attachable scanners (S800, S820, S840, S860). With an easy setup process and user-friendly design, SocketScan enhances efficiency by delivering fast, high-performance 1D/2D scanning while reducing human errors.
Our Mission, Vision, and Core Values Our mission is to supply innovative and cost-effective data capture tools for businesses that use mobile platforms to conduct business in mobile environments. 3 Table of Contents Our vision is to manage the complexity of capturing and delivering data across a spectrum of data sources, network technologies, and mobile systems so that our customers can concentrate on applications of the data.
Our Mission, Vision, and Core Values Our mission is to supply innovative and cost-effective data capture tools for businesses that use mobile platforms to conduct business in mobile environments. 4 Table of Contents Our vision is to manage the complexity of capturing and delivering data across a spectrum of data sources, network technologies, and mobile systems so that our customers can concentrate on applications of the data.
They may not offer extensive tools for app providers, such as our software developer kit (CaptureSDK), to integrate the features of our sophisticated data collection scanning software and hardware. This could potentially limit their ability to meet the consumer’s requirements fully. 5 Table of Contents NFC & RFID Contactless Reader/Writer .
They may not offer extensive tools for app providers, such as our software developer kit (CaptureSDK), to integrate the features of our sophisticated data collection scanning software and hardware. This could potentially limit their ability to meet the consumer’s requirements fully. 6 Table of Contents NFC & RFID Contactless Reader/Writer .
The number of our registered app providers for data capture applications continues to grow. 1 Table of Contents We were founded in March 1992 as Socket Communications, Inc. and reincorporated in Delaware in 1995 prior to our initial public offering in June 1995.
The number of our registered app providers for data capture applications continues to grow. 2 Table of Contents We were founded in March 1992 as Socket Communications, Inc. and reincorporated in Delaware in 1995 prior to our initial public offering in June 1995.
The Company and its Products” for a more detailed description of our products. 4 Table of Contents We design our products to comply with the regulations of the many worldwide agencies that regulate the safety, performance, and use of electronic products. Competitive pricing.
The Company and its Products” for a more detailed description of our products. 5 Table of Contents We design our products to comply with the regulations of the many worldwide agencies that regulate the safety, performance, and use of electronic products. Competitive pricing.
XtremeScan is fully compatible with iPhone 16e, a durable, cost-effective device designed for industrial environments. With an extra-long battery life, enhanced drop resistance, and the trusted iOS platform, it is expected to become the go-to device for demanding industrial sectors. XtremeScan, combined with iPhones16e, will empower industrial businesses with durable, adaptable, and future-ready data capture technology. SocketCam family .
XtremeScan is fully compatible with iPhone 17e, a durable, cost-effective device designed for industrial environments. With an extra-long battery life, enhanced drop resistance, and the trusted iOS platform, it is expected to become the go-to device for demanding industrial sectors. XtremeScan, combined with iPhones 17e, will empower industrial businesses with durable, adaptable, and future-ready data capture technology. SocketCam family .
In addition, we may not be able to effectively protect our intellectual property rights in certain foreign countries. From time to time, we receive communications from third parties asserting that our products infringe, or may infringe, their proprietary rights.
From time to time, we receive communications from third parties asserting that our products infringe, or may infringe, their proprietary rights.
Our employees are not represented by a union, and we consider our employee relationships to be good. As of December 31, 2024, we had 22 persons in sales, marketing, and customer service, 13 persons in development engineering, 7 persons in finance and administration, and 17 persons in operations. 7 Table of Contents
As of December 31, 2025, we had 17 persons in sales, marketing, and customer service, 13 persons in development engineering, 7 persons in finance and administration, and 16 persons in operations. 8 Table of Contents
We use Bluetooth technology to provide a completely functional Bluetooth solution enabling connections and data transfers between Bluetooth-enabled devices.
We use Bluetooth technology to provide a completely functional Bluetooth solution enabling connections and data transfers between Bluetooth-enabled devices. Our companion applications assist Apple iOS, Android and Windows users with the proper setup and use of our data capture products.
Personnel Our future success will depend in significant part upon the continued service of certain of our key technical and senior management personnel, and our continuing ability to attract, assimilate and retain highly qualified technical, managerial, and sales and marketing personnel. Our total employee headcount was 59 and 61 as of December 31, 2024 and 2023, respectively.
Litigation could be brought against us that could result in significant additional expense or compel us to discontinue or redesign some of our products. 7 Table of Contents Personnel Our future success will depend in significant part upon the continued service of certain of our key technical and senior management personnel, and our continuing ability to attract, assimilate and retain highly qualified technical, managerial, and sales and marketing personnel.
End-users needing more than a free camera-based scanners can upgrade to advanced C860 or opt for a Socket hardware scanner. 2 Table of Contents DuraScan® Family .
End-users needing more than a free camera-based scanners can upgrade to advanced C860 or opt for a Socket hardware scanner. 3 Table of Contents DuraScan® Family . Our DuraScan® family includes 700 Series companion scanners (D720, D730, D740, D745, D751, D755, D760, D762, D764, D765), 800 Series attachable scanners (D800, D820, D840, D860), and the Wearable 900 Series (DW930, DW940).
As part of our confidentiality procedures, we generally enter into non-disclosure agreements with our employees, distributors and strategic partners, and limit access to our software, documentation and other proprietary information. Despite these precautions, it may be possible for a third-party to copy or otherwise obtain and use our products or technology without authorization, or to develop similar technology independently.
We rely on a combination of patent, copyright, trademark and trade secret laws, and confidentiality procedures to protect our proprietary rights. As part of our confidentiality procedures, we generally enter into non-disclosure agreements with our employees, distributors and strategic partners, and limit access to our software, documentation and other proprietary information.
Removed
Our DuraScan® family includes the 600 Series NFC & RFID readers (D600), 700 Series companion scanners (D700, D720, D730, D740, D745, D755, D760, D762), 800 Series attachable scanners (D800, D820, D840, D860), and the Wearable 900 Series (DW930, DW940).
Added
Despite these precautions, it may be possible for a third-party to copy or otherwise obtain and use our products or technology without authorization, or to develop similar technology independently. In addition, we may not be able to effectively protect our intellectual property rights in certain foreign countries.
Removed
Our companion applications assist Apple iOS, Android and Windows users with the proper setup and use of our data capture products. 6 Table of Contents We rely on a combination of patent, copyright, trademark and trade secret laws, and confidentiality procedures to protect our proprietary rights.
Added
Our total employee headcount was 53 and 59 as of December 31, 2025 and 2024, respectively. Our employees are not represented by a union, and we consider our employee relationships to be good.
Removed
Litigation could be brought against us that could result in significant additional expense or compel us to discontinue or redesign some of our products.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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A number of our officers and senior managers have been employed for more than twenty years by us, including our President, Chief Financial Officer, Vice President of Operations and Vice President of Engineering/Chief Technical Officer. Our future success will depend upon the continued service of key officers and senior managers.
A number of our officers and senior managers have been employed for more than twenty years by us, including our President, Chief Financial Officer, Chief Information Officer, Vice President of Operations and Vice President of Engineering/Chief Technical Officer. Our future success will depend upon the continued service of key officers and senior managers.
If our products are not in compliance with prevailing industry standards for a significant period of time, we would miss opportunities to sell our products for use with new hardware components from mobile computer manufacturers and OEMs, thus affecting our business. 13 Table of Contents Undetected flaws and defects in our products may disrupt product sales and result in expensive and time-consuming remedial action Our hardware and software products may contain undetected flaws, which may not be discovered until customers have used the products.
If our products are not in compliance with prevailing industry standards for a significant period of time, we would miss opportunities to sell our products for use with new hardware components from mobile computer manufacturers and OEMs, thus affecting our business. 14 Table of Contents Undetected flaws and defects in our products may disrupt product sales and result in expensive and time-consuming remedial action Our hardware and software products may contain undetected flaws, which may not be discovered until customers have used the products.
In addition, the stock markets in general, and the markets for high technology stocks in particular, have experienced high volatility that has often been unrelated to the operating performance of particular companies. These broad market fluctuations may adversely affect the trading price of our common stock. 16 Table of Contents Item 1B. Unresolved Staff Comments None.
In addition, the stock markets in general, and the markets for high technology stocks in particular, have experienced high volatility that has often been unrelated to the operating performance of particular companies. These broad market fluctuations may adversely affect the trading price of our common stock. 17 Table of Contents Item 1B. Unresolved Staff Comments None.
All advances are at our bank’s discretion and our bank is not obligated to make advances. 8 Table of Contents If app providers are not successful in their efforts to develop, market and sell the applications into which our software and products are incorporated, we may not achieve our sales projections.
All advances are at our bank’s discretion and our bank is not obligated to make advances. 9 Table of Contents If app providers are not successful in their efforts to develop, market and sell the applications into which our software and products are incorporated, we may not achieve our sales projections.
Failure to attract and retain such key personnel will adversely affect our ability to develop and market new products and product enhancements. 14 Table of Contents Our operating results could be harmed by economic, political, regulatory and other risks associated with export sales.
Failure to attract and retain such key personnel will adversely affect our ability to develop and market new products and product enhancements. 15 Table of Contents Our operating results could be harmed by economic, political, regulatory and other risks associated with export sales.
Consequently, these organizations may terminate their collaborations with us for a variety of reasons, including our failure to meet agreed-upon standards or for reasons beyond our control, such as changing market conditions, increased competition, discontinued product lines, and product obsolescence. 12 Table of Contents Our intellectual property and proprietary rights may be insufficient to protect our competitive position.
Consequently, these organizations may terminate their collaborations with us for a variety of reasons, including our failure to meet agreed-upon standards or for reasons beyond our control, such as changing market conditions, increased competition, discontinued product lines, and product obsolescence. Our intellectual property and proprietary rights may be insufficient to protect our competitive position.
If global financial conditions have an impact on our customer’s ability to pay us in a timely manner, consequently, we may experience increased difficulty in collecting our accounts receivable, and we may have to increase our reserves in anticipation of increased uncollectible accounts. We could face increased competition in the future, which would adversely affect our financial performance.
If global financial conditions have an impact on our customer’s ability to pay us in a timely manner, consequently, we may experience increased difficulty in collecting our accounts receivable, and we may have to increase our reserves in anticipation of increased uncollectible accounts. 11 Table of Contents We could face increased competition in the future, which would adversely affect our financial performance.
Our operating results may also fluctuate due to factors such as: · the demand for our products; · the size and timing of customer orders; · unanticipated delays or problems in our introduction of new products and product enhancements; 15 Table of Contents · the introduction of new products and product enhancements by our competitors; · the timing of the introduction and deployment of new applications that work with our products; · changes in the revenues attributable to royalties and engineering development services; · product mix; · timing of software enhancements; · changes in the level of operating expenses; · competitive conditions in the industry including competitive pressures resulting in lower average selling prices; · timing of distributors’ shipments to their customers; · delays in supplies of key components used in the manufacturing of our products; and · general economic conditions and conditions specific to our customers’ industries.
Our operating results may also fluctuate due to factors such as: · the demand for our products; · the size and timing of customer orders; · unanticipated delays or problems in our introduction of new products and product enhancements; · the introduction of new products and product enhancements by our competitors; · the timing of the introduction and deployment of new applications that work with our products; · changes in the revenues attributable to royalties and engineering development services; · product mix; · timing of software enhancements; · changes in the level of operating expenses; · competitive conditions in the industry including competitive pressures resulting in lower average selling prices; · timing of distributors’ shipments to their customers; · delays in supplies of key components used in the manufacturing of our products; and · general economic conditions and conditions specific to our customers’ industries. 16 Table of Contents Because we base our staffing and other operating expenses on anticipated revenues, unanticipated declines or delays in the receipt of orders can cause significant variations in operating results from quarter to quarter.
During the period from January 1, 2024 through the date of the report, our common stock price fluctuated between a high of $1.72 and a low of $0.91. We have experienced low trading volumes in our stock, and thus relatively small purchases and sales can have a significant effect on our stock price.
During the period from January 1, 2025 through March 25, 2026, our common stock price fluctuated between a high of $1.72 and a low of $0.82. We have experienced low trading volumes in our stock, and thus relatively small purchases and sales can have a significant effect on our stock price.
We cannot be sure that we will have sufficient resources to make adequate investments in research and development or that we will be able to identify trends or make the technological advances necessary to be competitive. 10 Table of Contents We may not be able to collect receivables from customers who experience financial difficulties .
We cannot be sure that we will have sufficient resources to make adequate investments in research and development or that we will be able to identify trends or make the technological advances necessary to be competitive. We may not be able to collect receivables from customers who experience financial difficulties . Our accounts receivable is derived primarily from distributors.
The market price of our common stock could also decline if one or more of our significant stockholders decided for any reason to sell substantial amounts of our common stock in the public market. As of March 20, 2025, we had 7,952,988 shares of common stock outstanding.
The market price of our common stock could also decline if one or more of our significant stockholders decided for any reason to sell substantial amounts of our common stock in the public market. As of March 25, 2026, we had 8,222,958 shares of common stock outstanding.
In addition, rapid increases in production levels to meet unanticipated demand could result in higher costs for manufacturing and supply of components and other expenses. These higher costs could lower our profit margins.
In addition, rapid increases in production levels to meet unanticipated demand could result in higher costs for manufacturing and supply of components and other expenses. These higher costs could lower our profit margins. Further, if production is increased rapidly, manufacturing yields could decline, which may also lower operating results.
In addition, in the event we reduce our prices, we credit our distributors for the difference between the purchase price of products remaining in their inventory and our reduced price for such products.
We allow our distribution channels to return a portion of their inventory to us for full credit against other purchases. In addition, in the event we reduce our prices, we credit our distributors for the difference between the purchase price of products remaining in their inventory and our reduced price for such products.
However, many of our customers may be thinly capitalized and may be prone to failure in adverse market conditions. Although our collection history has been good, from time to time a customer may not pay us because of financial difficulty, bankruptcy or liquidation.
Although our collection history has been good, from time to time a customer may not pay us because of financial difficulty, bankruptcy or liquidation.
Sales growth is contingent in part on our ability to enter into additional distribution relationships and expand our sales channels. We cannot predict whether we will be successful in establishing new distribution relationships, expanding our sales channels or maintaining our existing relationships.
We cannot predict whether we will be successful in establishing new distribution relationships, expanding our sales channels or maintaining our existing relationships. A failure to enter into new distribution relationships, expand our sales channels, or maintain our existing relationships could adversely impact our ability to grow our sales.
In the course of operating our business, we may receive claims of intellectual property infringement or otherwise become aware of potentially relevant patents or other intellectual property rights held by other parties. Many of our competitors have large intellectual property portfolios, including patents that may cover technologies that are relevant to our business.
We may become subject to claims of intellectual property rights infringement, which could result in substantial liability. In the course of operating our business, we may receive claims of intellectual property infringement or otherwise become aware of potentially relevant patents or other intellectual property rights held by other parties.
Because we distribute and fulfill resellers’ orders for our products primarily through distributors, we are subject to risks associated with channel distribution, such as risks related to their inventory levels and support for our products. Our distribution channels may build up inventories in anticipation of growth in their sales.
We rely primarily on distributors to distribute our products, and our sales would suffer if any of these distributors stopped distributing our products effectively. Because we distribute and fulfill resellers’ orders for our products primarily through distributors, we are subject to risks associated with channel distribution, such as risks related to their inventory levels and support for our products.
Our accounts receivable is derived primarily from distributors. We perform ongoing credit evaluations of our customers’ financial conditions but generally require no collateral from our customers. Reserves are maintained for potential credit losses, and such losses have historically been within such reserves.
We perform ongoing credit evaluations of our customers’ financial conditions but generally require no collateral from our customers. Reserves are maintained for potential credit losses, and such losses have historically been within such reserves. However, many of our customers may be thinly capitalized and may be prone to failure in adverse market conditions.
In connection with our participation in the development of various industry standards, we may be required to license certain of our patents to other parties, including our competitors that develop products based upon the adopted standards.
In connection with our participation in the development of various industry standards, we may be required to license certain of our patents to other parties, including our competitors that develop products based upon the adopted standards. 13 Table of Contents We also generally enter into confidentiality agreements with our employees, distributors, and strategic partners, and generally control access to our documentation and other proprietary information.
If such growth in their sales does not occur as anticipated, the inventory build-up could contribute to higher levels of product returns. The lack of sales by any one significant participant in our distribution channels could result in excess inventories and adversely affect our operating results and working capital liquidity.
Our distribution channels may build up inventories in anticipation of growth in their sales. If such growth in their sales does not occur as anticipated, the inventory build-up could contribute to higher levels of product returns.
As of March 20, 2025, we had 1,114,698 shares of common stock subject to outstanding options under our stock option plans, 1,140,202 shares of restricted stock outstanding, and 328,166 shares of common stock available for future issuance under the plans.
As of March 25, 2026, we had 1,296,634 shares of common stock subject to outstanding options under our stock option plans, 733,194 shares of restricted stock outstanding, and 602,347 shares of common stock available for future issuance under the plans.
In addition, many smaller companies, universities, and individuals have obtained or applied for patents in areas of technology that may relate to our business. The industry is moving towards aggressive assertion, licensing, and litigation of patents and other intellectual property rights.
Many of our competitors have large intellectual property portfolios, including patents that may cover technologies that are relevant to our business. In addition, many smaller companies, universities, and individuals have obtained or applied for patents in areas of technology that may relate to our business.
We are aware that unauthorized efforts to access our business records and information with sophisticated tools could bypass our controls and procedures and we remain alert to that possibility. 9 Table of Contents Deferred tax assets comprise a significant portion of our assets and are dependent upon future tax profitability to realize the benefits.
We are aware that unauthorized efforts to access our business records and information with sophisticated tools could bypass our controls and procedures and we remain alert to that possibility. 10 Table of Contents We may be unable to manufacture our products because we are dependent on a limited number of qualified suppliers for our components.
We also generally enter into confidentiality agreements with our employees, distributors, and strategic partners, and generally control access to our documentation and other proprietary information. Despite these precautions, it may be possible for a third-party to copy or otherwise obtain and use our products, services, or technology without authorization, develop similar technology independently, or design around our patents.
Despite these precautions, it may be possible for a third-party to copy or otherwise obtain and use our products, services, or technology without authorization, develop similar technology independently, or design around our patents. Additionally, effective copyright, trademark, and trade secret protection may be unavailable or limited in certain foreign countries.
Our agreements with distributors are generally nonexclusive and may be terminated on short notice by them without cause. Our distributors are not within our control, are not obligated to purchase products from us, and may offer competitive lines of products simultaneously.
Our distributors are not within our control, are not obligated to purchase products from us, and may offer competitive lines of products simultaneously. Sales growth is contingent in part on our ability to enter into additional distribution relationships and expand our sales channels.
Removed
We have recorded deferred tax assets on our balance sheet because we believe that it is more likely than not that we will generate sufficient tax profitability in the future to realize the tax savings that our deferred tax assets represent.
Added
The lack of sales by any one significant participant in our distribution channels could result in excess inventories and adversely affect our operating results and working capital liquidity. During the twelve months ended December 31, 2025 and 2024, Ingram Micro® and BlueStar Inc. and ScanSource, Inc together represented approximately 49% and 55%, respectively, of our worldwide sales.
Removed
If we do not achieve and maintain sufficient profitability, the tax savings represented by our deferred tax assets may never be realized and we would need to recognize a loss for those deferred tax assets. We may be unable to manufacture our products because we are dependent on a limited number of qualified suppliers for our components.
Added
We expect that a significant portion of our sales will continue to depend on sales to a limited number of distributors. 12 Table of Contents Our agreements with distributors are generally nonexclusive and may be terminated on short notice by them without cause.
Removed
Further, if production is increased rapidly, manufacturing yields could decline, which may also lower operating results. 11 Table of Contents We rely primarily on distributors to distribute our products, and our sales would suffer if any of these distributors stopped distributing our products effectively.
Added
The industry is moving towards aggressive assertion, licensing, and litigation of patents and other intellectual property rights.
Removed
During the twelve months ended December 31, 2024 and 2023, Ingram Micro® and BlueStar together represented approximately 48% and 44%, respectively, of our worldwide sales. We expect that a significant portion of our sales will continue to depend on sales to a limited number of distributors.
Removed
A failure to enter into new distribution relationships, expand our sales channels, or maintain our existing relationships could adversely impact our ability to grow our sales. We allow our distribution channels to return a portion of their inventory to us for full credit against other purchases.
Removed
Additionally, effective copyright, trademark, and trade secret protection may be unavailable or limited in certain foreign countries. We may become subject to claims of intellectual property rights infringement, which could result in substantial liability.
Removed
Because we base our staffing and other operating expenses on anticipated revenues, unanticipated declines or delays in the receipt of orders can cause significant variations in operating results from quarter to quarter.

Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Thus far all such incidents have been minor. 17 Table of Contents
Thus far all such incidents have been minor. 18 Table of Contents

Item 2. Properties

Properties — owned and leased real estate

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Item 2. Properties In February 2022, the Company entered into an 87-month operating lease agreement for an approximately 35,913 square-foot facility in Fremont, California, where our office and manufacturing operations are located. The current monthly rent obligation is $53,340, subject to annual 3% increases each May. Item 3.
Item 2. Properties In February 2022, the Company entered into an 87-month operating lease agreement for an approximately 35,913 square-foot facility in Fremont, California, where our office and manufacturing operations are located. The current monthly rent obligation is $54,940, subject to annual 3% increases each May. Item 3.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Performance Graph As a “smaller reporting company,” as defined by Rule 12b-2 of the Exchange Act, we have elected scaled disclosure reporting and therefore are not required to provide the stock performance graph. Recent Sales of Unregistered Securities. None. 19 Table of Contents
Performance Graph As a “smaller reporting company,” as defined by Rule 12b-2 of the Exchange Act, we have elected scaled disclosure reporting and therefore are not required to provide the stock performance graph. Recent Sales of Unregistered Securities. None. 20 Table of Contents
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Common Stock The Company’s common stock is traded on the NASDAQ Marketplace under the symbol “SCKT.” On March 20, 2025, the closing sales price for our common stock of 7,952,988 shares as reported on the NASDAQ Marketplace, was $1.15.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Common Stock The Company’s common stock is traded on the NASDAQ Marketplace under the symbol “SCKT.” On March 25, 2026, the closing sales price for our common stock of 8,222,958 shares as reported on the NASDAQ Marketplace, was $0.88.

Item 6. [Reserved]

Selected Financial Data — reserved (removed by SEC in 2021)

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Selected Financial Data The following selected financial data should be read in conjunction with Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and the financial statements and the notes thereto in Item 8, “Financial Statements and Supplementary Data.” Years Ended December 31, (Amounts in thousands, except per share) 2020 2021 2022 2023 2024 Income Statement Data: Revenues $ 15,700 $ 23,199 $ 21,238 $ 17,034 $ 18,763 Gross profit $ 8,335 $ 12,436 $ 10,366 $ 8,463 $ 9,311 Operating expenses $ 12,686 $ 9,739 $ 10,812 $ 11,584 $ 11,914 Net income (loss) before income taxes $ (3,330 ) $ 2,564 $ (621 ) $ (3,363 ) $ (2,793 ) Income tax benefit (expense) $ 51 $ 1,903 $ 708 $ 1,444 $ 551 Net income (loss) $ (3,279 ) $ 4,466 $ 87 $ (1,919 ) $ (2,242 ) Net income (loss) per share: Basic $ (0.51 ) $ 0.58 $ 0.01 $ (0.27 ) $ (0.30 ) Diluted $ (0.51 ) $ 0.48 $ 0.01 $ (0.27 ) $ (0.30 ) Weighted average shares outstanding: Basic 6,036 6,991 7,185 7,230 7,558 Diluted 6,036 8,923 7,533 7,230 7,558 At December 31, 2020 2021 2022 2023 2024 Balance Sheet Data: Cash and cash equivalents $ 2,122 $ 6,096 $ 3,624 $ 2,827 $ 2,492 Total assets $ 15,609 $ 25,575 $ 28,598 $ 28,742 $ 27,346 Bank line of credit $ — $ — $ — $ — $ — Term loan $ — $ 625 $ 125 $ — $ — Related party convertible notes payable $ 1,272 $ 1,201 $ 1,231 $ 2,836 $ 3,818 Convertible notes payable $ 170 $ 144 $ 147 $ 150 $ 150 Operating lease $ 741 $ 258 $ 3,737 $ 3,292 $ 2,817 Total stockholders’ equity $ 11,173 $ 20,046 $ 20,322 $ 19,420 $ 18,161 20 Table of Contents
Selected Financial Data The following selected financial data should be read in conjunction with Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and the financial statements and the notes thereto in Item 8, “Financial Statements and Supplementary Data.” Years Ended December 31, (Amounts in thousands, except per share) 2021 2022 2023 2024 2025 Income Statement Data: Revenues $ 23,199 $ 21,238 $ 17,034 $ 18,763 $ 15,078 Cost of Sales $ 12,436 $ 10,366 $ 8,463 $ 9,311 $ 7,590 Operating expenses $ 9,739 $ 10,812 $ 11,584 $ 11,914 $ 10,707 Net income (loss) before income taxes $ 2,564 $ (621 ) $ (3,363 ) $ (2,793 ) $ (3,715 ) Income tax benefit (expense) $ 1,903 $ 708 $ 1,444 $ 551 $ (10,663 ) Net income (loss) $ 4,466 $ 87 $ (1,919 ) $ (2,242 ) $ (14,378 ) Net income (loss) per share: Basic $ 0.58 $ 0.01 $ (0.27 ) $ (0.30 ) $ (1.81 ) Diluted $ 0.48 $ 0.01 $ (0.27 ) $ (0.30 ) $ (1.81 ) Weighted average shares outstanding: Basic 6,991 7,185 7,230 7,558 7,925 Diluted 8,923 7,533 7,230 7,558 7,925 At December 31, 2021 2022 2023 2024 2025 Balance Sheet Data: Cash and cash equivalents $ 6,096 $ 3,624 $ 2,827 $ 2,492 $ 2,032 Total assets $ 25,575 $ 28,598 $ 28,742 $ 27,346 $ 14,437 Bank line of credit $ — $ — $ — $ — $ — Term loan $ 625 $ 125 $ — $ — $ — Related party convertible notes payable $ 1,201 $ 1,231 $ 2,836 $ 3,818 $ 5,083 Convertible notes payable $ 144 $ 147 $ 150 $ 150 $ 400 Operating lease $ 258 $ 3,737 $ 3,292 $ 2,817 $ 2,289 Total stockholders’ equity $ 20,046 $ 20,322 $ 19,420 $ 18,161 $ 4,279 21 Table of Contents

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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We believe our critical accounting policies that are subject to these estimates are: Accounts Receivable Reserves, Revenue Recognition and Reserve for Future Returns, Inventory Valuation and Reserve, Stock-Based Compensation, Intangible Assets, Impairment of Long-Lived Assets, and Income Taxes. 21 Table of Contents Accounts Receivable Allowances Trade accounts receivables are recorded at the net invoice value and are not interest bearing.
We believe our critical accounting policies that are subject to these estimates are: Accounts Receivable Reserves, Revenue Recognition and Reserve for Future Returns, Inventory Valuation and Reserve, Stock-Based Compensation, Intangible Assets, Impairment of Long-Lived Assets, and Income Taxes. 22 Table of Contents Accounts Receivable Allowances Trade accounts receivables are recorded at the net invoice value and are not interest bearing.
Compensation cost for stock-based awards is recognized on a straight-line basis over the vesting period, which is usually the service period. 22 Table of Contents Intangible Assets The Company’s intangible assets consist of completed technologies and acquired license rights. Intangible assets are amortized over their estimated useful lives based upon the estimated economic value derived from the related intangible assets.
Compensation cost for stock-based awards is recognized on a straight-line basis over the vesting period, which is usually the service period. 23 Table of Contents Intangible Assets The Company’s intangible assets consist of completed technologies and acquired license rights. Intangible assets are amortized over their estimated useful lives based upon the estimated economic value derived from the related intangible assets.
Interest expense in both 2024 and 2023 was primarily related to the subordinated convertible notes (see Note 4, Secured Subordinated Convertible Notes Payable, of the Notes to Financial Statements included in this Annual Report on Form 10-K for further information). Interest income reflects the interest earned on cash balances. Interest income was nominal in each of the comparable periods.
Interest expense in both 2025 and 2024 was primarily related to the subordinated convertible notes (see Note 4, Secured Subordinated Convertible Notes Payable, of the Notes to Financial Statements included in this Annual Report on Form 10-K for further information). Interest income reflects the interest earned on cash balances. Interest income was nominal in each of the comparable periods.
Recent Accounting Pronouncements See Note 1, Organization and Summary of Significant Accounting Policies, of the Notes to Financial Statements included in this Annual Report on Form 10-K for additional information regarding the status of recent accounting pronouncements. 26 Table of Contents
Recent Accounting Pronouncements See Note 1, Organization and Summary of Significant Accounting Policies, of the Notes to Financial Statements included in this Annual Report on Form 10-K for additional information regarding the status of recent accounting pronouncements. 27 Table of Contents
Critical Accounting Policies Our significant accounting policies are described in Note 1, Organization and Summary of Significant Accounting Policies, of the Notes to Financial Statements included in our Annual Reports on Form 10-K for the years ended December 31, 2024 and 2023.
Critical Accounting Policies Our significant accounting policies are described in Note 1, Organization and Summary of Significant Accounting Policies, of the Notes to Financial Statements included in our Annual Reports on Form 10-K for the years ended December 31, 2025 and 2024.
In 2024 and 2023, we invested approximately $0.7 million and $2.2 million, respectively, in computer software development, website development, and manufacturing tooling. We expect to continue our investing activities, including planned capital expenditures. Net cash provided by financing activities in 2024 was approximately $0.9 million, compared to approximately $1.3 million in net cash provided by financing activities in 2023.
In 2025 and 2024, we invested approximately $0.5 million and $0.7 million, respectively, in computer software development, website development, and manufacturing tooling. We expect to continue our investing activities, including planned capital expenditures. Net cash provided by financing activities in 2025 was $1.3 million, compared to approximately $0.9 million in net cash provided by financing activities in 2024.
Our primary requirements for liquidity and capital arise from employee-related expenditures, inventory purchases, capital expenditures, leasing of facilities, general operating expenses, and interest and principal repayments related to our outstanding indebtedness. Net cash used in operating activities was $521,485 for 2024, compared with net cash provided by operating activities of $48,562 for 2023.
Our primary requirements for liquidity and capital arise from employee-related expenditures, inventory purchases, capital expenditures, leasing of facilities, general operating expenses, and interest and principal repayments related to our outstanding indebtedness. Net cash used in operating activities was $1,249,819 for 2025, compared with net cash used in operating activities of $521,485 for 2024.
This unaudited quarterly information has been prepared on the same basis as the annual information presented elsewhere herein, and, in our opinion, includes all adjustments (consisting only of normal recurring entries) necessary for a fair presentation of the information for the quarters presented. The operating results for any quarter are not necessarily indicative of results for any future period.
This unaudited quarterly information has been prepared on the same basis as the annual information presented elsewhere herein, and, in our opinion, includes all adjustments (consisting only of normal recurring entries) necessary for a fair presentation of the information for the quarters presented.
Contractual Obligations Our contractual obligations as of December 31, 2024 are outlined in the table shown below: Payments Due by Period Contractual Obligations Total 1 year 2 to 3 years 4 to 5 years More than 5 years Unconditional purchase obligations with contract manufacturers $ 6,159,000 $ 5,844,000 $ 315,000 $ — $ — Operating leases 3,165,000 657,000 1,369,000 1,139,000 — Total contractual obligations $ 9,324,000 $ 6,501,000 $ 1,684,000 $ 1,139,000 $ — 25 Table of Contents Off-Balance Sheet Arrangements As of December 31, 2024, we had no off-balance sheet arrangements as defined in Item 303 of Regulation S-K.
Contractual Obligations Our contractual obligations as of December 31, 2025 are outlined in the table shown below: Payments Due by Period Contractual Obligations Total 1 year 2 to 3 years 4 to 5 years More than 5 years Unconditional purchase obligations with contract manufacturers $ 2,869,000 $ 2,869,000 $ — $ — $ — Operating leases 2,509,000 677,000 1,406,000 426,000 — Total contractual obligations $ 5,378,000 $ 3,546,000 $ 1,406,000 $ 426,000 $ — 26 Table of Contents Off-Balance Sheet Arrangements As of December 31, 2025, we had no off-balance sheet arrangements as defined in Item 303 of Regulation S-K.
We believe that a continued commitment to Research and Development activities is essential to maintain or achieve a leadership position for our existing products, to provide innovative new product offerings, and to provide engineering support for key customers. In addition, we consider our ability to accelerate time to market for new products to be critical to our revenue growth.
We believe that a continued investment in R&D is essential to maintaining or achieving a leadership position for our existing products, delivering innovative new product offerings, and providing engineering support for key customers. In addition, our ability to accelerate time to market for new products is critical to driving revenue growth.
In 2024, financing activities primarily consisted of $974,000 in proceeds from convertible notes and approximately $24,000 from the exercise of stock options. These proceeds were offset by the acquisition of common stock for tax withholding obligations, totaling approximately $95,000.
In 2025, financing activities primarily consisted of $1,500,000 in proceeds from convertible notes, partially offset by approximately $173,000 used to repurchase common stock to satisfy tax withholding obligations. In 2024, financing activities primarily consisted of $974,000 in proceeds from convertible notes and approximately $24,000 from the exercise of stock options.
We believe that our existing balances of cash, and capital resources, inclusive of available borrowing capacity on the revolving credit facility and funds generated from operations, are sufficient to meet anticipated capital requirements, fund our operations and support our growth. Our cash requirements, however, are subject to change as business conditions change.
We believe our existing cash balances and capital resources, including available borrowing capacity under our revolving credit facility and potential convertible note financing, are sufficient to meet our anticipated capital requirements, fund operations, and support growth initiatives. However, our cash requirements may change as business conditions evolve.
Quarter Ended (unaudited) (Amounts in thousands, except per share amounts) Mar 31, 2023 Jun 30, 2023 Sep 30, 2023 Dec 31, 2023 Mar 31, 2024 Jun 30, 2024 Sep 30, 2024 Dec 31, 2024 Summary Quarterly Data: Revenue $ 4,312 $ 5,117 $ 3,206 $ 4,399 $ 4,978 $ 5,081 $ 3,872 $ 4,831 Cost of revenue 2,240 2,466 1,788 2,078 2,473 2,497 1,975 2,366 Gross profit 2,072 2,651 1,418 2,321 2,505 2,584 1,897 2,465 Operating expenses: Research and development 1,247 1,190 1,207 1,188 1,208 1,232 1,162 1,119 Sales and marketing 1,006 1,004 1,002 1,003 1,031 1,154 1,122 1,106 General and administrative 774 749 608 605 751 733 644 651 Total operating expenses 3,027 2,943 2,817 2,796 2,990 3,119 2,928 2,876 Interest expense, net (38 ) (55 ) (76 ) (73 ) (72 ) (73 ) (84 ) (102 ) Income tax (expense) benefit — (166 ) 150 1,460 — — — 551 Net income (loss) $ (993 ) $ (513 ) $ (1,325 ) $ 912 $ (557 ) $ (608 ) $ (1,115 ) $ 38 Basic net income (loss) per share $ (0.12 ) $ (0.06 ) $ (0.16 ) $ 0.11 $ (0.07 ) $ (0.08 ) $ (0.15 ) $ 0.00 Fully diluted net income (loss) per share $ (0.12 ) $ (0.06 ) $ (0.16 ) $ 0.08 $ (0.07 ) $ (0.08 ) $ (0.15 ) $ 0.00 Our quarterly revenue and operating results depend on the volume and timing of orders received, which are difficult to forecast.
The operating results for any quarter are not necessarily indicative of results for any future period. 25 Table of Contents Quarter Ended (unaudited) (Amounts in thousands, except per share amounts) Mar 31, 2024 Jun 30, 2024 Sep 30, 2024 Dec 31, 2024 Mar 31, 2025 Jun 30, 2025 Sep 30, 2025 Dec 31, 2025 Summary Quarterly Data: Revenue $ 4,978 $ 5,081 $ 3,872 $ 4,831 $ 3,966 $ 4,042 $ 3,107 $ 3,963 Cost of revenue 2,473 2,497 1,975 2,366 1,968 2,024 1,626 1,972 Gross profit 2,505 2,584 1,897 2,465 1,998 2,018 1,481 1,991 Operating expenses: Research and development 1,208 1,232 1,162 1,119 1,132 1,101 1,027 1,091 Sales and marketing 1,031 1,154 1,122 1,106 1,107 1,025 935 924 General and administrative 751 733 644 651 653 569 577 566 Total operating expenses 2,990 3,119 2,928 2,876 2,892 2,695 2,539 2,581 Interest expense, net (72 ) (73 ) (84 ) (102 ) (100 ) (115 ) (140 ) (141 ) Income tax (expense) benefit — — — 551 — — — (10,663 ) Net income (loss) $ (557 ) $ (608 ) $ (1,115 ) $ 38 $ (994 ) $ (792 ) $ (1,198 ) $ (11,394 ) Basic net income (loss) per share $ (0.07 ) $ (0.08 ) $ (0.15 ) $ 0.00 $ (0.13 ) $ (0.10 ) $ (0.15 ) $ (1.43 ) Fully diluted net income (loss) per share $ (0.07 ) $ (0.08 ) $ (0.15 ) $ 0.00 $ (0.13 ) $ (0.10 ) $ (0.15 ) $ (1.43 ) Our quarterly revenue and operating results depend on the volume and timing of orders received, which are difficult to forecast.
Therefore, we expect to continue to make significant Research and Development investments in the future. The investment percentage is impacted by revenue levels and investing cycles. Sales and Marketing Expenses Sales and marketing expenses in 2024 were approximately $4.4 million, an increase of approximately 10% compared to $4.0 million in 2023.
Accordingly, we expect to continue making significant R&D investments in the future. The level of investment as a percentage of revenue may fluctuate depending on revenue levels and investment cycles. Sales and Marketing Expenses Sales and marketing expenses in 2025 were approximately $4.0 million, a decrease of approximately 10% compared to $4.4 million in 2024.
Income Taxes We recorded an income tax benefit of $551,000 (an effective tax rate of 19.7%) in 2024, compared to $1.44 million (an effective tax rate of 42.9%) in 2023.
Income Taxes We recorded an income tax expense of $10.7 million in 2025, compared to an income tax benefit of $551,000 (an effective tax rate of 19.7%) in 2024. The change was primarily attributable to the establishment of a full valuation allowance against our deferred tax assets in 2025.
On December 31, 2024, the Company had no outstanding drawings against the revolving credit facility. The primary factors that influence our liquidity include the amount and timing of our revenues, cash collections from our customers, cash payments to our suppliers, capital expenditures, acquisitions, and share repurchases.
The primary factors affecting our liquidity include the amount and timing of revenues, the collection of receivables from customers, payments to suppliers, and capital expenditures.
Interest Expense, net of Interest Income Interest expense and other, net of interest income and other, was approximately $331,000 in 2024 compared to approximately $242,000 in 2023.
These actions improved operational efficiency while maintaining the support necessary for critical business functions and corporate operations. Interest Expense, net of Interest Income Interest expense and other, net of interest income and other, was approximately $497,000 in 2025 compared to approximately $331,000 in 2024.
The Company’s deferred tax asset, primarily representing future income tax savings from the application of net operating loss carryforwards, was valued at $10.7 million and $10.1 million as of December 31, 2024 and 2023, respectively. 24 Table of Contents Quarterly Results of Operations The following table sets forth a summary of quarterly statements of operations data for each of the quarters in 2023 and 2024.
Quarterly Results of Operations The following table sets forth a summary of quarterly statements of operations data for each of the quarters in 2024 and 2023.
We record uncertain tax positions in accordance with ASC 740 on the basis of a two-step process in which (1) we determine whether it is more likely than not that the tax positions will be sustained on the basis of the technical merits of the position and (2) for those tax positions that meet the more-likely-than-not recognition threshold, we recognize the largest amount of tax benefit that is more than 50 percent likely to be realized upon ultimate settlement with the related tax authority.
Based on this evaluation and in accordance with ASC 740, we concluded that it is more likely than not that our deferred tax assets will not be realized as of December 31, 2025. The Company accounts for uncertain tax positions in accordance with ASC 740.
This rise is attributed to the allocation of manufacturing overhead costs across higher production volumes. Research and Development Expenses For the years ended December 31, 2024 and 2023, our research and development expenses were approximately $4.7 million and $4.8 million, respectively. This represents an decrease of approximately $111,000, or 2%.
Research and Development Expenses For the years ended December 31, 2025 and 2024, our research and development expenses were approximately $4.4 million and $4.7 million, respectively, representing a decrease of approximately $370,000, or 8%. The decrease was primarily driven by cost management initiatives, including reduced employee-related expenses, as we focused R&D efforts on high-priority projects and optimized resource allocation.
Removed
In 2023, financing activities primarily consisted of $1.6 million in proceeds from convertible notes and approximately $213,000 from the exercise of stock options. These proceeds were partially offset by approximately $208,000 spent on repurchasing treasury stock and $125,000 in repayments of notes payable. We can borrow under the existing $2.5 million revolving credit facility, which matures on April 30, 2025.
Added
These proceeds were offset by the acquisition of common stock for tax withholding obligations, totaling approximately $95,000. We can borrow under the existing $1.0 million revolving credit facility, which matures on July 31, 2026. On December 31, 2025, the Company had no outstanding drawings against the revolving credit facility.
Removed
Income Taxes We account for income taxes under the asset and liability method under ASC 740 which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements.
Added
Income Taxes Effective December 31, 2025, the Company recorded a full valuation allowance of $10,663,419 against our deferred tax assets. In assessing the realizability of deferred tax assets, we considered all available positive and negative evidence, with significant weight given to objectively verifiable negative evidence, including cumulative losses in recent years.
Removed
Under this method, we determine deferred tax assets and liabilities on the basis of the differences between the financial statement and tax bases of assets and liabilities by using enacted tax rates in effect for the year in which the differences are expected to reverse.
Added
We recognize the tax benefit from a tax position only if it is more likely than not that the position will be sustained upon examination by the relevant taxing authorities, based on the technical merits of the position.
Removed
The effect of a change in tax rates on deferred tax assets and liabilities is recognized in income in the period that includes the enactment date. We recognize deferred tax assets to the extent that we believe that these assets are more likely than not to be realized.
Added
The amount of benefit recognized is measured as the largest amount that has a greater than 50% likelihood of being realized upon ultimate settlement. The Company records interest and penalties related to uncertain tax positions as a component of income tax expense. As of December 31, 2025, the Company had unrecognized tax benefits of approximately $991,000.
Removed
In making such a determination, we consider all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax-planning strategies, and results of recent operations.
Added
Results of Operations for Years Ended December 31, 2025 and 2024 Revenues Revenue for 2025 was $15.1 million, representing a decrease of 20% compared to revenue of $18.8 million for 2024.
Removed
If we determine that we would be able to realize our deferred tax assets in the future in excess of their net recorded amount, we would make an adjustment to the deferred tax asset valuation allowance, which would reduce the provision for income taxes.
Added
The decline was primarily attributable to a challenging macroeconomic environment, including reduced customer spending and longer sales cycles, as well as continued headwinds within our distribution channels, which resulted in lower order volumes. Gross Margins The annual gross margins on revenue decreased to 49.7% in 2025 from 50.4% in 2024.
Removed
Results of Operations for Years Ended December 31, 2024 and 2023 Revenues The revenue for 2024 was $18.8 million, an increase of 10% compared to revenue of $17.0 million for 2023 driven by the growth of our business serving retail POS app providers. Gross Margins The annual gross margins on revenue increased to 50.4% in 2024 from 49.7% in 2023.
Added
The decline primarily reflects lower sales volumes, which reduced absorption of fixed costs, partially offset by disciplined cost management and operational efficiency initiatives. Despite these headwinds, our focus on optimizing production processes and controlling direct costs helped maintain resilient gross margins.
Removed
The decrease in research and development expenses is primarily due to a reduction in consulting and professional services related to the development of new products in 2023. 23 Table of Contents Research and development expenses as a percentage of revenue were 25% in 2024 and 28% in 2023.
Added
These actions allowed us to maintain progress on key product development initiatives while improving operational efficiency. 24 Table of Contents Research and development expenses as a percentage of revenue were 29% in 2025 and 25% in 2024.
Removed
The increases in expenses in 2024 were primarily due to the impact of the increase in the number of employees and an annual salary increase. We anticipate that our compensation expense to increase as we selectively add new talent and adjust compensation to market conditions.
Added
The decrease was primarily driven by reductions in employee-related costs, as we optimized the sales and marketing workforce and aligned resources with strategic priorities. These actions improved operational efficiency while continuing to support revenue growth initiatives.
Removed
General and Administrative Expenses General and administrative expenses in 2024 were $2.78 million, marking an increase of approximately $44,000 or 2% compared to $2.74 million in 2023.
Added
General and Administrative Expenses General and administrative expenses in 2025 were $2.4 million, representing a decrease of approximately $413,000 or 15% compared to $2.8 million in 2024. The decrease was primarily driven by reductions in employee-related costs and professional services, as we optimized administrative resources and implemented cost management initiatives.
Removed
The increase is attributed primarily to the net adjustment from foreign currency fluctuations, which affected cash balances, collections, and payables, reflecting the dynamic nature of exchange rates and their influence on our financial position.
Removed
The Tax Cuts and Jobs Act of 2017 (“TCJA”), which was signed into U.S. law in December 2017, eliminated the option to immediately deduct research and development expenditures in the year incurred under Section 174 effective January 1, 2022. The amended provision under Section 174 requires us to capitalize and amortize these expenditures over five years (for U.S.-based research).
Removed
We are monitoring legislation for any further changes to Section 174 and the potential impact on our financial statements in 2025. Our net operating loss carryforwards will expire at various dates from 2025 through 2033.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

4 edited+0 added−1 removed1 unchanged
Based on a sensitivity analysis of our net foreign currency denominated assets and expenses at the beginning, during and at the end of the quarter ended December 31, 2024, an adverse change of 10% in exchange rates would have resulted in a decrease in our net income for the fourth quarter 2024 of approximately $36,000 if left unprotected.
Based on a sensitivity analysis of our net foreign currency denominated assets and expenses at the beginning, during and at the end of the quarter ended December 31, 2025, an adverse change of 10% in exchange rates would have resulted in a decrease in our net income for the fourth quarter 2025 of approximately $48,000 if left unprotected.
For the fourth quarter of 2024, the total net adjustment for the effects of changes in foreign currency on cash balances, collections, and payables, was a net loss of $23,000. We will continue to monitor, assess, and mitigate through hedging activities, our risks related to foreign currency fluctuations.
For the fourth quarter of 2025, the total net adjustment for the effects of changes in foreign currency on cash balances, collections, and payables, was a net loss of $3,000. We will continue to monitor, assess, and mitigate through hedging activities, our risks related to foreign currency fluctuations.
Consequently, interest rate increases could theoretically increase our interest expense on term loans and credit line, but at the moment, there is no outstanding balances. Foreign Currency Risk A substantial majority of our revenue, expense and purchasing activities are transacted in U.S. dollars.
Accordingly, interest rate increases could theoretically increase our interest expense on any outstanding borrowings under the credit facility. However, as of December 31, 2025, there were no outstanding balances under this facility. Foreign Currency Risk A substantial majority of our revenue, expense and purchasing activities are transacted in U.S. dollars.
Our bank credit line facilities, with a total limit of $2.5 million, have variable interest rates based upon the lender’s prime rate (minimum of 4.25%) plus 0.75%, for both the domestic line (up to $2.0 million) and the international line (up to $0.5 million).
Item 7A. Quantitative and Qualitative Disclosures about Market Risk Interest Rate Risk Our exposure to market risk for changes in interest rates relates primarily to our credit line facilities. Our domestic bank credit facility provides for borrowings of up to $1.0 million and has a variable interest rate based upon the lender’s prime rate (minimum of 4.25%) plus 0.75%.
Removed
Item 7A. Quantitative and Qualitative Disclosures about Market Risk Interest Rate Risk Our exposure to market risk for changes in interest rates relates primarily to our credit line facilities.

Other SCKT 10-K year-over-year comparisons