Socket Mobile (SCKT) up 100%+ on incomplete earnings report

Socket Mobile (SCKT) more than doubled on Friday after the barcode-scanner maker reported a leap in third-quarter earnings but warned that the results were incomplete.

Shares of the Newark, Calif., company at last check were trading at $3.72, compared with Thursday’s close at $1.46.

Socket Mobile said in its earnings release that its auditors did not complete the part of the annual review related to goodwill impairment in time for the release. 

The company said the review took longer than usualdue to uncertainties and complications associated with the impact of the coronavirus pandemic. 

“We will report the results in the [Securities and Exchange Commission] Form 10-Q that will be filed on or around Nov. 13,” President and Chief Executive Kevin Mills said in a statement.

Socket Mobile said all numbers that would be hurt by a goodwill impairment were marked with an asterisk.

The company reported net income — which was marked with asterisks– of $424,000, or 6 cents a share, compared with $94,000, or 1 cent, in the year-earlier period. 

Revenue totaled $4.1 million, down 18% from a year earlier but up 51% from the second quarter.

Third-quarter operating expenses were $1.8 million, down 27% from a year ago.

Mills said the company offset lower revenue “by proactive cost reductions, delays in non-critical discretionary spending and capital expenditures while maintaining critical longer-term projects.”

“We also developed and implemented strategies to strengthen our balance sheet, including raising additional capital through debt financing,” Mills said. 

“These actions allowed us to navigate the last two quarters well — returning to profitability in the third quarter, after experiencing abrupt and dramatic declines in economic and business activity in the second quarter.”

In April, the company said it had received a loan of $1.06 million under the Paycheck Protection Program.

Goodwill impairment is an accounting charge that companies record when goodwill’s carrying value on financial statements exceeds its fair value. 

Goodwill is recorded after a company acquires assets and liabilities, and pays a price exceeding their identifiable net value.

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Jay Lorrence
Investor of 12 years and Managing Editor of Money Midnight, a news outlet focused on highly profitable investment ideas and bold underground research.
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