XML 21 R10.htm IDEA: XBRL DOCUMENT v3.25.1
NOTE 4 — Secured Subordinated Convertible Notes Payable
 12 Months Ended
Dec. 31, 2024
Note 4 Secured Subordinated Convertible Notes Payable  
NOTE 4 — Secured Subordinated Convertible Notes Payable

NOTE 4 — Secured Subordinated Convertible Notes Payable

 

On August 31, 2020, the Company completed a secured subordinated convertible note financing of $1,530,000. The funds raised are used to increase the Company’s working capital balances. The notes had a three-year term that accrues interest at 10% per annum and matured on August 30, 2023. The interest on the notes is payable quarterly in cash. The holder of each note may require the Company to repay the principal amount of the note plus accrued interest at any time after August 31, 2021. The principal amount of each note is convertible at any time, at the option of the holder, into shares of the Company’s common stock at a conversion price of $1.46 per share, which was the market closing price of the common stock on Friday, August 28, 2020, the closing date of the financing. The notes did not contain a beneficial conversion feature because the conversion price is higher than the market closing price on the date of the notes payable. The notes are secured by the assets of the Company and are subordinated to amounts outstanding under the Company’s working capital bank line of credit with Western Alliance Bank. In February 2021, two noteholders elected to convert the note principal of $130,000 into shares of the Company’s common stock, reducing the outstanding notes balance to $1,400,000 as of December 31, 2024. The Company filed and caused it to be declared effective pursuant to the Securities Act of 1933, as amended, in November 2020, a Registration Statement to provide for resales of the shares of Common Stock issuable upon conversion of the Notes.

 

On November 16, 2022, the Company and the requisite noteholders executed a Secured Subordinated Convertible Note Extension Agreement, extending the maturity date from August 30, 2023, to August 30, 2024, with all other terms remaining unchanged. On May 1, 2024, the Company and the requisite noteholders extended the maturity date again, from August 30, 2024, to August 30, 2025, under the same terms. Due to the noteholders’ ability to call the notes, the notes are presented as current liabilities.

 

On May 26, 2023, the Company completed a secured subordinated convertible note financing $1,600,000. The proceeds from the Financing are used to increase the Company’s working capital balances. The secured subordinated convertible notes have a three-year term and will mature on May 26, 2026. The interest rate on the Notes is 10% per year, payable quarterly in cash. The holder of each Note may require the Company to repay the principal amount of the Note plus accrued interest at any time after May 26, 2024. The Notes are secured by the assets of the Company and are subordinated to the Company’s debts with Western Alliance Bank, its senior lender. The principal amount of each Note is convertible at any time, at the option of the holder, into shares of the Company’s common stock at a conversion price of $1.34 per share. Failure to pay the principal payment or any interest payment (with 5 days delinquency) when due are events of default under the Notes. The Company filed and caused it to be declared effective pursuant to the Securities Act of 1933, as amended, in June 2023 a Registration Statement to provide for resales of the shares of Common Stock issuable upon conversion of the Notes.

 

 

SOCKET MOBILE, INC.
NOTES TO FINANCIAL STATEMENTS

 

On August 21, 2024, the Company completed a secured subordinated convertible note financing of $1,000,000. The proceeds of the Financing are used to increase the Company’s working capital balances. The secured subordinated convertible notes have a three-year term and will mature on August 21, 2027. The interest rate on the Notes is 10% per year, payable quarterly in cash. The holder of each Note may require the Company to repay the principal amount of the Note plus accrued interest at any time after August 21, 2024. The Notes are secured by the assets of the Company and are subordinated to the Company’s debts with Western Alliance Bank, its senior lender. The principal amount of each Note is convertible at any time, at the option of the holder, into shares of the Company’s common stock at a conversion price of $0.9515 per share. Failure to pay the principal payment or any interest payment (with 5 days delinquency) when due are events of default under the Notes. The Company filed and caused it to be declared effective pursuant to the Securities Act of 1933, as amended, in November 2024 a Registration Statement to provide for resales of the shares of Common Stock issuable upon conversion of the Notes.

 

Total amortization of debt discount related to all convertible notes was $8,761 and $25,473 for the year ended December 31, 2024 and 2023, respectively. As of December 31, 2024, the remaining debt discount balance was $31,576.

 

Total interest expenses recognized related to the convertible note were $336,491 and $262,102 for the years ended December 31, 2024 and 2023, respectively.