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NOTE 5 — Commitments and Contingencies

12 Months Ended

Dec. 31, 2021

Commitments and Contingencies Disclosure [Abstract]

NOTE 5 — Commitments and Contingencies

NOTE 5 — Commitments and Contingencies

Operating Lease Obligations

The Company leases office space under a non-cancelable operating lease that provides the Company approximately 37,100 square feet in Newark, California. The lease agreement expires on June 30, 2022. In February 2022, the Company entered into a 87-month lease agreement in Fremont, CA. The new space is approximately 35,913 square feet and will serve as the location for the Company’s new Corporate Headquarters, including office space and manufacturing. The Company will account for this lease as an operating lease under ASC 842. In June 2020, the Company also signed a new two-year equipment operating lease agreement. The Company pays $1,519 in monthly installments from September of 2020 through June 2022.

The operating lease expense under existing agreement was allocated in cost of goods sold and operating costs based on department headcount and amounted to $428,873 and $418,909 for the twelve-month periods ended December 31, 2021 and 2020, respectively.

On December 31, 2021, the balances of right-of-use assets and liabilities for the existing operating leases were approximately $210,839 and $258,097, respectively, compared to approximately $609,331, and $741,351, respectively, on December 31, 2020.

Cash payments included in the measurement of our existing operating lease liabilities were $515,822 and $478,461 for the twelve-month periods ended December 30, 2021 and 2020, respectively.

Future minimum lease payments under the existing operating lease as of December 31, 2021 are shown below:


Annual minimum payments:		Amount
2022			262,789
Total minimum payments			262,789
Less: Imputed interest			(4,692	)
Total operating lease liabilities			258,097
Less: Current portion of operating lease			(258,097	)
Long-term portion of operating lease		$	—

Purchase Commitments

On December 31, 2021, the Company’s non-cancelable purchase commitments for inventory to be used in the ordinary course of business during 2022 were approximately $11,911,000.

SOCKET MOBILE, INC.

NOTES TO FINANCIAL STATEMENTS

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.