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NOTE 10 — Subsequent Events

12 Months Ended

Dec. 31, 2022

Subsequent Events [Abstract]

NOTE 10 — Subsequent Events

NOTE 10 — Subsequent Events

The Company evaluated subsequent events and transactions that occurred between January 1, 2023 through March 24, 2023. Other than described below, the Company did not identify any subsequent events that would have required adjustment or disclosure in the audited financial statements.

402,370 shares of restricted stocks at a weighted average price of $2.45 per share have been granted from the 2004 Equity Incentive Plan subsequent to December 31, 2022. The shares include annual refresher grants to all continuing employees with a weighting reflecting the level of responsibility and performance of the employee and initial grants to two newly hired employees.

The Company has issued 29,195 shares of common stock for the exercise of stock options.

89,197 shares of common stock were repurchased from the market at the average price of $2.25.

On March 13, 2023, the Company entered into an ICS Deposit Placement Agreement with IntraFi Network LLC through its own bank, Bridge Bank, a division of Western Alliance Bank. The ICS program offers its customers’ demand or savings products with access to unlimited FDIC insurance, thereby helping the Company retain the full amount of the deposit on its balance sheet.

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

Not Applicable.

Item 9A. Controls and Procedures

Conclusion Regarding the Effectiveness of Disclosure Controls and Procedures

Our management evaluated, with the participation of our Chief Executive Officer and our Chief Financial Officer, the effectiveness of our disclosure controls and procedures as of the end of the period covered by this Annual Report on Form 10-K. Based on this evaluation, our Chief Executive Officer and our Chief Financial Officer have concluded that our disclosure controls and procedures are effective to ensure that information we are required to disclose in reports that we file or submit under the Securities Exchange Act of 1934 is (i) recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms, and (ii) accumulated and communicated to our management, including our Chief Executive Officer and our Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

Management’s Annual Report on Internal Control Over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting. There are inherent limitations in the effectiveness of any internal control, including the possibility of human error and the circumvention or overriding of controls. Accordingly, even effective internal control can provide only reasonable assurances with respect to financial statement preparation. Further, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

We assessed the effectiveness of the Company’s internal control over financial reporting as of December 31, 2022. In making this assessment, we used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control – Integrated Framework issued in 2013. This assessment included review of the documentation of controls, testing of operating effectiveness of controls and a conclusion on this assessment.

Based on our assessment using those criteria, we believe that, as of December 31, 2022, our internal control over financial reporting is effective.

This annual report does not include an attestation report of the Company’s registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by the Company’s registered public accounting firm pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act, which exempts non-accelerated filers from Section 404(b) of the Sarbanes-Oxley Act of 2002.

Changes in Internal Control Over Financial Reporting

There was no change in our internal control over financial reporting that occurred during the last fiscal quarter covered by this Annual Report on Form 10-K that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

Item 9B. Other Information

None.

Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections

Not applicable.

PART III

Item 10. Directors, Executive Officers and Corporate Governance

The information required hereunder is incorporated by reference from our Proxy Statement to be filed in connection with our annual meeting of stockholders to be held on June 7, 2023.

Item 11. Executive Compensation

The information required hereunder is incorporated by reference from our Proxy Statement to be filed in connection with our annual meeting of stockholders to be held on June 7, 2023.

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

Certain information required hereunder is incorporated by reference from our Proxy Statement to be filed in connection with our annual meeting of stockholders to be held on June 7, 2023.

The following table provides information as of December 31, 2022 about our common stock that may be issued under the Company’s existing equity compensation plans. For additional information about the stock-based compensation plans see Note 6, Stock-Based Compensation Plan, of the Notes to Financial Statements included in this Annual Report on Form 10-K.

Number of

securities to be issued

upon exercise of

outstanding options

Weighted average

exercise price of

outstanding options

Number of securities

remaining available

for future issuance

under equity

compensation plans

Equity compensation plans approved

by security holders (1)

1,296,722

$ 2.93

453,798

(1) Consists of the 2004 Equity Incentive Plan. Pursuant to an affirmative vote by security holders in June 2004, an annual increase in the number of shares authorized under the 2004 Equity Incentive Plan is added on the first day of each fiscal year equal to the least of (a) 400,000 shares, (b) four percent of the total outstanding shares of the Company’s common stock on that date, or (c) a lesser amount as determined by the Board of Directors. As a result, a total of 283,587 shares became available for grant under the 2004 Equity Incentive Plan on January 1, 2023, in addition to those set forth in the table above.

Item 13. Certain Relationships and Related Transactions, and Director Independence

Certain information required hereunder is incorporated by reference from our Proxy Statement to be filed in connection with our annual meeting of stockholders to be held on June 7, 2023.

Item 14. Principal Accounting Fees and Services

Certain information required hereunder is incorporated by reference from our Proxy Statement to be filed in connection with our annual meeting of stockholders to be held on June 7, 2023.

PART IV

Item 15. Exhibits, Financial Statement Schedules

(a) Documents filed as part of this report:

1. All financial statements.

INDEX TO FINANCIAL STATEMENTS PAGE

Report of Independent Registered Public Accounting Firm 29

Balance Sheets 31

Statements of Income 32

Statements of Stockholders' Equity 33

Statements of Cash Flows 34

Notes to Financial Statements 35

2. Financial statement schedules.

All financial statement schedules are omitted because they are not applicable or not required or because the required information is included in the financial statements or notes herein.

3. Exhibits.

See Index to Exhibits on page 58. The Exhibits listed on the accompanying Index to Exhibits are filed or incorporated by reference as part of this report.

(b) Exhibits:

See Index to Exhibits on page 58. The Exhibits listed on the accompanying Index to Exhibits are filed or incorporated by reference as part of this report.

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

SOCKET MOBILE, INC.

Registrant

Date: March 30, 2023 /s/ Kevin J. Mills

Kevin J. Mills

President and Chief Executive Officer



Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.

/s/ Kevin J. Mills
Kevin J. Mills

President and Chief Executive Officer (Principal Executive Officer) and Director
March 30, 2023

/s/ Charlie Bass
Charlie Bass Chairman of the Board March 30, 2023

/s/ Lynn Zhao
Lynn Zhao

Vice President of Finance and Administration and Chief Financial Officer (Principal Financial and Accounting Officer) and Director
March 30, 2023

/s/ Bill Parnell
Bill Parnell Director March 30, 2023

/s/ Brenton E. MacDonald.
Brenton E. MacDonald Director March 30, 2023

/s/ David W. Dunlap
David W. Dunlap Director March 30, 2023

/s/ Ivan Lazarev
Ivan Lazarev Director March 30, 2023

/s/ Laura Weinstein
Laura Weinstein Director March 30, 2023

Index to Exhibits

Exhibit Number
Description

3.1 (1) Amended and Restated Certificate of Incorporation.

3.2 Certificate of Amendment to the Restated Certificate, as filed June 20, 2013.

3.3 (2) Bylaws, as amended February 17, 2008.

4.1 (3) Form of Secured Subordinated Convertible Note issued August 31, 2020.



10.1 (4) Form of Indemnification Agreement entered into between the Company and its directors and officers.

10.2 (5)* 2004 Equity Incentive Plan and forms of agreement thereunder.



10.3 (6)* Form of Management Incentive Variable Compensation Plan between the Company and certain eligible participants.

10.4 (7) Standard Industrial/Commercial Multi-Tenant Lease by and between Del Norte Farms, Inc. and the Company dated October 24, 2006 (assigned to Newark Eureka Industrial Capital, LLC September 17, 2007).

10.5 (8) Second Amendment to Standard Industrial/Commercial Multi-Lessee Lease – Net dated August 30, 2010.

10.6 (9) Third Amendment to Standard Industrial/Commercial Multi-Tenant Lease – Net dated December 28, 2012.

10.7 (10) Warrants for the Purchase of Shares of Common Stock Issued November 19, 2010 to the Investor and the Placement Agent in connection with a private placement.

10.8 (11) Loan and Security Agreement dated February 27, 2014 by and between the Company and Bridge Bank, National Association.

10.9 (12) Form of Employment Agreement dated May 1, 2017 between the Company and the officers of the Company.

10.10 (13) Business Financing Modification Agreement dated February 26, 2016 by and between the Company and Western Alliance Bank, an Arizona corporation.

10.11 (14) Business Financing Modification Agreement dated March 20, 2017 by and between the Company and Western Alliance Bank, an Arizona corporation.

10.12 (15) Business Financing Modification Agreement dated January 31, 2018 by and between the Company and Western Alliance Bank, an Arizona corporation.

10.13 (16) Tender Offer Statement to purchase up to 1,250,000 shares of common stock at a price not greater than $4.25 nor less than $3.75 per share.

10.14 (17) Business Financing Modification Agreement dated June 4, 2018 by and between the Company and Western Alliance Bank, an Arizona corporation.

10.15 (18) Business Financing Modification Agreement dated January 8, 2020 by and between the Company and Western Alliance Bank, an Arizona corporation.

10.16 (19) Amended and Restated Business Financing Agreement dated January 29, 2021 by and between the Company and Western Alliance Bank, an Arizona corporation.

10.17 First Business Financing Modification Agreement dated February 9, 2022 by and between the Company and Western Alliance Bank, an Arizona corporation.

10.18 (20) Second Business Financing Modification Agreement and Waiver of Defaults dated January 25, 2023 by and between the Company and Western Alliance Bank, an Arizona corporation.

10.19 (21) 2021 Technology Transfer Agreement, dated as of February 26, 2021, by and between the Company and SpringCard SAS

10.20 (22) Secured Subordinated Convertible Note Extension Agreement, effective as of November 16, 2022

11.1 Computation of Earnings per Share (see Statements of Operations in Item 8).

14.1 (23) Code of Business Conduct and Ethics.



23.1 Consent of Sadler Gibb & Associates, LLC, Independent Registered Public Accounting Firm.

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
Inline XBRL Document.

104 Cover Page Interactive Data File.

_________

* Executive compensation plan or arrangement.

(1) Incorporated by reference to exhibits filed with the Company’s Form 10-K filed on March 16, 2009

(2) Incorporated by reference to exhibits filed with the Company’s Form 8-K filed on February 20, 2008.

(3) Incorporated by reference to exhibits filed with the Company’s Form 8-K filed on September 1, 2020.

(4) Incorporated by reference to exhibits filed with the Company’s Form 8-K filed on March 8, 2012.

(5) Incorporated by reference to Appendix C filed with the Company’s Form DEF 14A filed on April 29, 2004 and Item 4 on Form 8-K filed on June 5, 2013 reporting extension of the Plan to April 23, 2024.

(6) Incorporated by reference to Appendix B filed with the Company’s Form DEF 14A filed on March 16, 2011.

(7) Incorporated by reference to exhibits filed with the Company’s Form 10-Q filed on November 13, 2006.

(8) Incorporated by reference to exhibits filed with the Company’s Form 8-K filed on August 30, 2010.

(9) Incorporated by reference to exhibits filed with the Company’s Form 8-K filed on January 4, 2013.

(10) Incorporated by reference to exhibits filed with the Company’s Form 8-K filed on November 19, 2010.

(11) Incorporated by reference to exhibits filed with the Company’s Form 8-K filed on March 7, 2014.

(12) Incorporated by reference to exhibits filed with the Company’s Form 8-K filed on May 4, 2017.

(13) Incorporated by reference to exhibits filed with the Company’s Form 8-K filed on March 3, 2016.

(14) Incorporated by reference to exhibits filed with the Company’s Form 8-K filed on March 21, 2017.

(15) Incorporated by reference to exhibits filed with the Company’s Form 8-K filed on February 2, 2018.

(16) Incorporated by reference to the Company’s Schedule TO filed on February 2, 2018.

(17) Incorporated by reference to exhibits filed with the Company’s Form 8-K filed on June 8, 2018.

(18) Incorporated by reference to exhibits filed with the Company’s Form 8-K filed on January 14, 2020.

(19) Incorporated by reference to exhibits filed with the Company’s Form 8-K filed on February 3, 2021.

(20) Incorporated by reference to exhibits filed with the Company’s Form 8-K filed on January 25, 2023.

(21) Incorporated by reference to exhibits filed with the Company’s Form 8-K filed on March 4, 2021.

(22) Incorporated by reference to exhibits filed with the Company’s Form 8-K filed on November 16, 2022.

(23) Incorporated by reference to exhibits filed with the Company’s Form 10-K filed on March 10, 2006.