Socket Mobile, Inc.

Welcome, everyone, to Stock and Mobile, Inc. G2 2026 Earnings Call. My name is Lynn Zhao, CFO at Stock and Mobile. Before we begin, I'd like to remind everyone that this conference call may contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 as amended and Section 21E of the Securities and Exchange Act of 1934 as amended. Such forward-looking statements include, but are not limited to, statements regarding mobile data collection and mobile data collection products, including details on timing, distribution, and the market acceptance of products, and statements predicting trends, sales and market conditions, and opportunities in the market in which Sockin Mobile sells its products. Such statements involve risks and uncertainties, and the actual results could differ materially from the results anticipated in such forward-looking statements because of a number of factors including but not limited to the risk of manufacturer of socket products may be delayed or not rolled out as predicted due to technological market or financial factors including the availability of product components and the necessary working capital. The risk that market acceptance and sales opportunities may not happen as anticipated. The risk that sockets application partners and current distribution channels may choose not to distribute the products or may not be successful in doing so. The risk that acceptance of sockets products in vertical application markets may not happen as anticipated. as well as other risks described in SOCET's most recent Form 10-K and 10-Q reports filed with the Securities and Exchange Commission. SOCET does not undertake any obligation to update any such forward-looking statements. On the call with me today is Dave Holmes, President and Chief Executive Officer. I will now turn the call over to Dave. Dave, you may begin.

Thanks, Lynn. Good afternoon, everyone, and thank you for joining us today to discuss our results for the second quarter of 2026. The environment we are operating in remains difficult. Our top line results reflects the continued challenge we are seeing with our retail scanning business. Our second quarter revenue of 3.0 million fell short of expectations. Gross margin was 46.4% versus 49.9% in the prior year's quarter. and operating expenses came in at $2.6 million versus $2.7 million in the prior year's quarter. We are not at all satisfied with that outcome. We have implemented several plans to help bolster sales. We have also cut our costs further and have implemented several cost-cutting measures, including selective headcount reductions. These measures will remain in effect for the remainder of 2026. Along with our intense focus on cost control and cost elimination, We are aggressively implementing AI to make our resources more effective and more efficient. Our engineering team has systematically rolled this out over the last several months and will continue deploying with a similar comprehensive approach to the rest of the organization in Q3. This will allow us to deliver key revenue producing projects and efficiencies with our streamlined staff. We will also sharpen our focus on what we are selling. We have great products. We will simplify the decision process for our customers and coal products that are not producing revenue to make our offering easier to understand. We continue to focus on supporting our customers, executing our strategic priorities, and managing our business with financial discipline. Management believes these actions position the company to respond effectively if customer demand improves. With that, I'll turn the call back to Lynn for more details on our financial results. Lynn?

Thank you, Dave. Revenue for Q2 was $3 million compared to $3.9 million in the same quarter last year and $3.7 million in Q1 2026. Gross margin for the quarter was 46.4% compared with 49.9% in Q2 2025 and 51.3% in Q1 2026. The decline primarily reflects their underutilization of our manufacturing capacity at the current production and revenue levels, resulting in higher fixed manufacturing costs as a percentage of the revenue. Operating expenses for Q2 were $2.6 million, down from $2.7 million in the same prior year quarter and in Q1, 2026, reflecting our continued focus on managing operating expenses. As a result, we reported an operating loss of $1.2 million compared with $680,000 loss in Q2 2025 and $750,000 in Q1 2026. Adjusted EBITDA for Q2 was a loss of approximately $745,000 compared with a loss of $100,000 in the prior quarter and the $298,000 in Q1 2026. Loss per share was the $0.16 compared with the $0.10 in Q2 2025 and the $0.11 in Q1 2026. Turning to the balance sheet, cash totaled $1.6 million as of June 30, 2026, compared with $1.7 million at March 31, 2026. During the quarter, we continued to manage working capital and maintain a disciplined approach to operating expenses. Inventory net of reserves was $3.8 million as of June 30, 2026, down from $3.9 million at March 31, 2026. reflecting our continued efforts to align inventory levels with current demand. This concludes our prepared remarks. We will now open the call for questions. To ask a question, please click Raise Hand or press 9 on your telephone keypad. I will recognize you and unmute your line. Before asking your question, please state your full name and the company you represent. Are there any questions? Are there? Oh, yeah. Steve. Hi, Steve.