Socket Mobile, Inc. Aktie

Okay. Welcome, everyone, to Socket Mobile, Inc. Q2 2026 Earnings Call. My name is Lynn Zhao, CFO at Socket 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 market acceptance of products and statements predicting trends, sales and market conditions and opportunities in the market in which Socket Mobile sells its products.

Such statements involve risks and uncertainties, and 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 manufacture of Socket's products may be delayed or not rolled out as predicted due to technological, market or financial factors, including the availability of product components and necessary working capital. The risk that market acceptance and sales opportunities may not happen as anticipated. The risk that Socket's 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 Socket's products in vertical application markets may not happen as anticipated as well as other risks described in Socket's most recent Form 10-K and 10-Q reports filed with the Securities and Exchange Commission. Socket 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 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 we'll 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 call 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 as 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 the 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 $760,000 in Q1 2026. Adjusted EBITDA for Q2 was a loss of approximately $745,000 compared with a loss of $100,000 in the prior year quarter and $298,000 in Q1 2026. Loss per share was $0.16 compared with $0.10 in Q2 2025 and $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.

[Operator Instructions] Are there any questions? Steve.

A couple of questions. Are we still a preferred supplier to Shopify? Or is our financial situation deteriorated enough that they are not on board with us anymore?

We are still a preferred supplier to Shopify. So nothing has changed there. Our revenue was down in retail and was down specific to the Shopify business over the last few quarters, but we -- but we're still a recommended supplier for Shopify.

Okay. And our cash burn rate, are there any going concern issues? Is your auditor opine on a going concern issue or not?

No, no. No going concern issue was raised.

And our burn rate, it looks like we burn -- we took down some inventory to give us some cash, and we were $100,000 less, I think you said, than we were in the prior quarter. Our burn rate -- how is our burn rate looking? And are we good for another year worth of cash flow burn? Or what do you -- what's your horizon for that?

No, we try to fund our working capital with the operations, but we still have the bank line we can tap in that we haven't. Yes. So hopefully, with the management of the expenses and the growth of revenue, we can continue to support the operations.

Okay. And I guess the last question I would have is, I've always liked this business model because you guys just supplied the hardware and the designers out there provided the software and designed it and sold it to the customers. But that's great when the business is moving ahead and growing. But what do you guys do now that that's fallen off, we're kind of waiting on them to sell their product, which would then include our hardware in that sale. How can management impact our business if we're waiting on our customers to sell a service to a third-party customer that would then buy our hardware to deliver the solution. I'm struggling a little bit with that.

That's a great question. And I think traditionally, our business has worked exactly as you suggest, and it is a great model when things are chugging away. So the downside of that business model is things are a little bit out of your control. And we anticipated this. And over the last couple of years, we've been working real hard to enter new markets, and we've started to do that. We've talked about it in the past couple of meetings, our entree into the industrial scanning market. That's a completely different business model really. It's entering and selling directly to enterprise customers, so not necessarily going to the software vendors first. We do go to the software vendors first at times, but a lot of times, we're selling directly to the enterprise customers.

And that business has started to pick up. We had our -- I believe it was about 10% of our revenue in Q2, and we expect that number to grow over the next few quarters. And that's really -- those are much bigger deals that we're working on. So when they hit, they have an immediate impact. And that's going to be one of the major hedges not only for hedging for retail and our dependency on retail, but also in the model that you suggest, Steve.

Okay. How is -- have we had any successes with that? I know you had a few companies that were -- I don't know, I'll call it a beta testing or they were trying out your equipment in the process to see if they liked it. Have we had any hard purchase orders yet? Or are we still more in the testing process and that's more of a '27 kind of a thing?

No, we've definitely had some purchases. I mentioned it was -- I believe it was 10% of our revenue in Q2. So it's not just a couple of people testing here and there anymore. It's really rolling these things out. And in some cases, we're in Phase 2 of rollouts. So what we have deployed out there has been working really well. It's all based on iOS and Apple platforms, which is gaining a lot of traction in the industrial space because of the familiarity of the UI and people are just used to using Apple devices at home, and they like to use them at work as well. So that's really working in our favor. And so yes, we have seen some success, and we expect more of it in the second half of the year.

Okay. And then one final question. Lynn, are we going to need to go tap into the -- we've done several loans that -- convertible loans. Are we going to need to do any more of those to our Chairman? Or are we just going to try to live off the bank loans going forward?

We try to live off operating generated cash. Yes, like you mentioned, we had convertible note financing in the past. Our Board approved the financing, but we haven't -- we're not going to comment anything before the information is released to public.

Okay. So you haven't tapped into that yet, but that's a lever there that if you want to pull it, management can decide to do so. Okay.

Are there any other questions? [Operator Instructions] I don't see any -- okay. Dave, I don't see other questions.

I think we can go ahead and close it.

Okay. All right. Yes. This concludes today's conference call. Thank you for attending.

Thanks, everyone.

Bye now.

Good day, everyone, and welcome to Socket Mobile, Inc.'s Q1 2026 Earnings Call. My name is Elvis, and I'll be your operator today. 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 market acceptance of products and statements predicting the trends, sales and market conditions and opportunities in the market in which Socket Mobile sells its products.

Such statements involve risks and uncertainties, and 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 that manufacture of Socket's products may be delayed or not rolled out as predicted due to technological, market or financial factors, including the availability of product components and necessary working capital; the risk that market acceptance and sales opportunities may not happen as anticipated; the risk that Socket's 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 Socket's products in vertical application markets may not happen as anticipated as well as other risks described in Socket's most recent Form 10-K and 10-Q reports filed with the Securities and Exchange Commission.

Socket does not undertake any obligation to update any such forward-looking statements. On the call with me today are Kevin Mills, Chief Executive Officer; Dave Holmes, Chief Business Officer; and Lynn Zhao, Chief Financial Officer.

Now I'll turn the call over to Kevin Mills. Please go ahead, Kevin.

Thank you, operator. Good afternoon, everyone, and thank you for joining us today to discuss our results for the first quarter of 2026. The environment we are operating in remains difficult. The customer caution and delayed spending we observed through 2025 carried into the New Year, and our top line results reflect that broader market reality.

We recognize that our first quarter revenue of $3.7 million fell short of expectations, and we are not satisfied with that outcome. That said, against the factors within our control, our team executed well despite lower volume. Gross margins expanded to 51.3%. This reflects the disciplined cost structure we have built and our continued focus on operational efficiencies.

Operating expenses came in at $2.7 million, an 8% reduction year-over-year. We lowered our inventory to $3.9 million, down from $4.2 million at year-end 2025. And we completed a $0.5 million secured subordinate convertible note financing.

With that said, I'll hand things over to Dave Holmes, who will discuss our product progress and provide an update on the customer engagement front. Dave?

Thank you, Kevin, and good afternoon, everyone. We continue to advance our product lineup and execute on our strategy to become a more complete data capture company. Our newest announcement, SM Link, marks an important milestone. It's the first time we've extended our professional scanning ecosystem to macOS.

This directly responds to customer demand and opens new addressable markets across retail, hospitality, health care and service desk environments. SM Link allows customers to use the same barcode and NFC readers they already deploy on iPhone and iPad now seamlessly on Mac. This cross-platform compatibility simplifies procurement, reduces total cost of ownership and deepens the stickiness of our reader portfolio.

The key differentiator is Apple Wallet Pass reading on macOS through our CaptureSDK, something previously unavailable on Mac. This positions the Socket Mobile uniquely for businesses that need to scan loyalty cards, tickets, voting passes and sort value credentials at the point of interaction. And with out-of-the-box compatibility with platforms like Shopify, Square and Lightspeed, the barrier to adoption is low.

SM Link enables all of these platforms on Mac and even enables our scanners to work with Square Register, which meaningfully broadens our addressable market. Turning to our Industrial segment. 2 years of investment are now translating into tangible results. The early customer interest I've referenced over the last couple of quarters has progressed into multiple active deployments.

We expect Industrial to represent approximately 10% of revenue this quarter, and we anticipate contribution building strongly through the second half of 2026. We're seeing demand across warehousing and logistics, manufacturing, mining, energy and construction. Sales cycles remain longer than our traditional markets, but the opportunity sizes are substantially larger.

Our new products are passing the test of the challenging environments and the pipeline gives us confidence in the trajectory. Large enterprise customers are continuing to shift to mobile computing platforms, smartphones and tablets for industrial and enterprise applications. When those transitions are to Apple platforms, that's a particularly strong fit for Socket Mobile.

We're also seeing growing demand for real-time data capture at the edge in logistics, inventory and field operations as companies look to drive operational productivity. Taken together, our new products and expanding customer base are leading us toward a more diversified and sustainable business.

With that, I'll turn it over to Lynn for more details on our financial results. Lynn?

Thanks, Dave. Good afternoon, everyone. Revenue in Q1 decreased 7% year-over-year to $3.7 million, down from $4 million in the same quarter last year in Q4 2025. Gross margin for the quarter improved to 51.3% compared with 50.4% in Q1 2025 and 50.2% in Q4 2025, primarily reflecting a higher mix of higher-margin sales during the quarter.

Operating expenses for Q1 were $2.7 million, down from $2.9 million in the same prior year quarter, but up slightly from $2.6 million in Q4 2025 as we continue to maintain cost control measures in response to slower business activity. As a result, we reported an operating loss of $0.8 million compared with a loss of $0.9 million in Q1 2025 and $0.6 million in Q4 2025.

Adjusted EBITDA for Q1 was a loss of $300,000 versus a loss of $480,000 in prior year quarter and $94,000 in Q4 2025. Loss per share was $0.11 compared with $0.13 in Q1 2025 and $1.43 in Q4 2025, which included a full valuation allowance of deferred tax assets. Turning to the balance sheet. Cash totaled $1.7 million as of March 31 compared with $2.0 million at December 31, 2025.

Cash outflows included $770,000 from operating activities and $50,000 in capital expenditures, partially offset by $500,000 raised through a subordinated convertible note during the quarter. Inventory net of reserves was $3.9 million as of March 31, down from $4.2 million at year-end 2025 as we continue to actively manage inventory levels to align with softer demand.

This concludes our prepared remarks. I will now turn the call over to the operator for questions.

[Operator Instructions] We have no questions at this time, Lynn. I'll turn it back over to you for any additional or closing comments.

Okay. Thank you for joining the call today. Hope you have a great rest of your day. Bye-bye.

That concludes our meeting today. You may now disconnect.

Good day, everyone, and welcome to the Socket Mobile Q4 2025 Earnings Call. My name is Elvis, and I'll be your operator for today's call.

Before we begin, I'd like to remind everyone that this conference 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 market acceptance of products and statements predicting the trends, sales and market conditions and opportunities in the markets in which Socket Mobile sells its products.

Such statements involve risks and uncertainties and 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 that manufacture of Socket's products may be delayed or not rolled out as predicted due to technological, market or financial factors, including the availability of product components and necessary working capital, the risk that market acceptance and sales opportunities may not happen as anticipated; the risk that Socket's 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 Socket's products in vertical application markets may not happen as anticipated as well as other risks described in Socket's most recent Form 10-K and 10-Q reports filed with the Securities and Exchange Commission. Socket does not undertake any obligation to update any such forward-looking statements.

On the call with me today are Kevin Mills, Chief Executive Officer; and Lynn Zhao, Chief Financial Officer. Now I'll turn the call over to Kevin. Please go ahead.

Thank you, operator. Good afternoon, everyone, and thank you for joining us today to discuss our performance for the fiscal year 2025. In 2025, we operated within a very challenging macroeconomic and distribution environment. While sales volumes were impacted by these external headwinds I am pleased to report that we made significant progress strengthening our product portfolio, expanding our technology capabilities and enhancing the overall value we deliver to our customers. Despite the volume pressure, our gross margins remained resilient. This is a direct result of our disciplined cost management and a relentless focus on operational efficiency.

We took deliberate steps this year to reinforce our financial position and preserve the resources necessary to support our longer-term innovation and service goals. We advanced our position in the mobile data capture market through a series of critical innovations designed to meet the needs of a more integrated digital world. We launched CaptureSDK 2.0, a unified next-generation development toolkit to simplify the lives of developers making it easier than ever to build seamless integrations across both iOS and Android platforms.

We introduced the SocketScan S721 with Bluetooth Low Energy for faster pairing and lower power usage. We also expanded our ruggedized line with the XtremeScan v16e, the DuraScan D751 NFC and RFID reader and the compact DuraScan D764 for direct part marking applications. A notable highlight for our enterprise strategy occurred on December 18 when our XtremeScan product was featured in the Apple Connected Worker series. This Apple hosted invitation-only webinar series is specifically designed for major companies interested in transitioning their workforce to iOS-based devices.

With over 50 large companies in attendance, we saw significant interest in our XtremeScan solutions. While we recognize that project with large-scale enterprises require time to mature, the first step is demonstrating what is possible. We were honored to showcase our solutions on this platform and expect to spend a significant portion of 2026, pursuing the high-value opportunities that have already surfaced from this event.

We also strengthened our international presence, particularly in the APAC region. We received official approval in Japan by our S370 and S550 as certified My Number Card readers. This milestone enables broader use in government services and digital identity authentication, contributing to growing engagement across retail, industrial and enterprise markets.

Looking ahead, we remain focused on delivering dependable, high-quality data capture solutions that help our customers improve productivity and stay competitive. We have continued to invest in product development and global reach because we believe these investments drive long-term value. We are proud of the progress we have achieved in 2025 and we sincerely appreciate the trust and support of our customers and partners as we continue to build for the future.

With that said, I will now turn the call over to Lynn.

Thank you, Kevin. Good afternoon, everyone. Thank you for joining today's call. Our Q4 revenue of $4 million decreased 18% year-over-year from $4.8 million in the prior year quarter, but increased 28% sequentially from $3.1 million in Q3 2025. Gross margin for Q4 was 50% compared to 51% in Q4 2024 and 48% in Q3 2025. Operating expenses for Q4 were $2.6 million representing a 10% year-over-year decrease and a 2% sequential increase from the preceding quarter. We recorded a Q4 operating loss of $730,000 compared to $513,000 loss in Q4 2024 and $1.2 million loss in the preceding quarter.

In Q4, driven by the cumulative losses in recent years, we recognized a onetime adjustment to establish a full valuation allowance of $10.7 million against our deferred tax assets in accordance with ASC 740. Net loss per share for Q4 was $1.43 compared to $0.00 per share in Q4 2024 and a loss of $0.15 per share in Q3 2025. Q4 adjusted EBITDA was a loss of $94,000 compared to an EBITDA gain of $140,000 in Q4 2024 and $540,000 loss in Q3 2025.

The revenue for the year was $50 million, a 20% decrease year-over-year compared to $19 million in 2024. Gross margin for the year was 49.7% compared to 50.4% in 2024. Operating expenses totaled $10.7 million, down 10% from $11.9 million in 2024, primarily reflecting employee cost management initiatives. We reported a full year operating loss of $3.7 million compared to an operating loss of $2.8 million in 2024. Net loss per share was $1.81 in 2025 compared to $0.30 in 2024. Adjusted EBITDA for 2025 was negative $1.2 million compared to negative $320,000 in 2024.

Turning to the balance sheet. We ended 2025 with $2 million in cash. During the year, we used the $1.4 million in operating activities, invested $5.5 million in capital expenditures and raised $1.5 million through issuance of subordinated convertible notes. As of December 31, 2025, the inventory net of reserves was $4.2 million compared to $4.9 million at the end of prior year.

This concludes our prepared remarks. I will now turn the call over to the operator for questions.

[Operator Instructions] Our first question today comes from Steve Swanson, a private investor.

Kevin, can you comment a little bit, we're 7 weeks into 2026. How are you feeling about the business right now?

I think we got off to a reasonably good start in January. So we're feeling okay. We have a lot of activity subject to the follow-up we did for the Apple event in December. So we've been extremely busy. Overall, I would say we're on track for a reasonable Q1. So I wouldn't say we're overly optimistic or pessimistic. I think things are kind of as expected as we started the year.

Okay. Another one. We've been trying to get into the warehousing and logistics business for a while now. Have we had any successes yet?

Yes. We have one large customer who is, I suppose, a Fortune, I don't know, 10 or thereabout company that we have deployed with. We have something in the region of 150 units being used on a daily basis. I think based on the feedback we've gotten, we've been able to update the units, and we feel that the second generation, which we announced in December, is substantially stronger. I think with the benefit of hindsight, we covered the camera in the initial rollout of our XtremeScan. And I think that we didn't realize how integral to many applications the camera is and that we incorrectly determined that the scanning would supersede the camera, which turned out to be not the case.

In our second generation, which we focused on the 16e, we have corrected that and the camera is now fully available to the user. And we've also been able to improve a number of other, let's say, shortcomings in the product based on the feedback we've got and the tests we've done. So I really feel that the V2 product, which we're in the process of now starting to ship is a large step forward in terms of the overall performance and benefit to the end user. So we feel particularly good about that.

[Operator Instructions] We have no further questions at this time. Lynn, I'll turn the program back over to you for any additional or closing comments.

Okay. Thank you everyone, for your time and for joining the call. Wishing you a good rest of the day.

That concludes our meeting today. You may now disconnect.

Good day, everyone, and welcome to the Socket Mobile, Inc. Q3 2025 Earnings Call. My name is Elvis, and I'll be your operator for today's call.

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 market acceptance of products and statements predicting the trends, sales, market conditions and opportunities in the market in which Socket Mobile sells its products.

Such statements involve risks and uncertainties, and 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 that manufacture of Socket's products may be delayed or not rolled out as predicted due to technological, market or financial factors, including the availability of product components and necessary working capital; the risk that market acceptance and sales opportunities may not happen as anticipated; the risk that Socket's 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 Socket's products in vertical application markets may not happen as anticipated as well as other risks described in Socket's most recent Form 10-K and 10-Q reports filed with the Securities and Exchange Commission.

Socket does not undertake any obligation to update any such forward-looking statements. On the call with me today are Kevin Mills, Chief Executive Officer; Dave Holmes, Chief Business Officer; and Lynn Zhao, Chief Financial Officer.

Now I'll turn the call over to Kevin Mills. Please go ahead, sir.

Thank you, operator. Good afternoon, everyone, and thank you for joining us today. Our revenue for Q3 was $3.1 million, a decrease of 20% over Q3 2024. Our Q3 expenses were $2.5 million, 16% lower than the $2.9 million in Q3 2024. Our operating loss was $1.1 million, which was similar to the loss reported in Q3 2024.

Overall, Q3 was another difficult quarter. Revenue came in lower than expected as sales to our distribution partners was much weaker than expected. Our distribution partners did not replenish their inventory at the same rate as their sales to end customers. Sales out of distribution were better than in Q2, but remained weak as the level of uncertainty continues to delay or cause projects to be canceled.

On the positive side, we did deliver Capture SDK 2.0, which is a significant milestone for Socket Mobile. Capture SDK 2.0 supports all of our new Bluetooth Low Energy products and remains fully compatible with existing devices using Bluetooth Classic.

The challenges of creating and delivering the software were significant, and I'm very proud of the work the software development team has done as it enables us to move forward with our next generation more faster, lower-cost products that our customers need without any significant development work required from the application partner.

Our application partners only need to recompile their current application with Capture SDK 2.0 and the app will fully support all existing and next-generation products, which was our goal. We estimate it will take about 90 days for most application developers to complete -- to include Capture 2.0, which is typically done in conjunction with our normal schedule release mechanisms, when -- and their end users will be able to use the new and improved products. There are a few apps that we expect will be updated in the coming weeks, and we plan to run promotions for the new products with some of these early adopter applications.

In Q3, we controlled tightly our expenses, reducing the overall expenses by 16% over 2024, while we maintained our investment in R&D and Apple sales opportunities. Securing even a few Apple-related opportunities will deliver substantial long-term benefits. We understand that this will strain our resources in Q4 and force us to continue to manage our expenses very tightly as we did in Q3. We expect Q4 to be EBITDA neutral and look forward to a stronger 2026.

With that said, I will now turn the call over to Dave.

Thank you, Kevin, and good afternoon, everyone. Today, I'd like to highlight some Q3 achievements, and I'll also spend a few minutes walking through our strategic priorities, how we see the market move -- evolving and how we intend to continue positioning Socket Mobile for a future of sustainable growth.

We have invested a lot into our expansion into the industrial scanning and handheld computing markets over the last 2 years. I mentioned last quarter that we were starting to see interest from a variety of customers in the industrial sector, and we've received our first POs from multiple Fortune 50 companies. The interest is coming from many verticals, such as warehousing and logistics, manufacturing, mining, energy and construction. Initial rollouts have been quite successful and many of the customers we have gained will continue rolling out devices and projects into 2026 and beyond.

The ruggedized scanning market is quite large, and our entry into this space will help us diversify our business beyond retail. We expect the momentum in this space to continue building for us in the coming quarters and years. Most of the interest and rollouts are with large enterprise customers, which are new to us. Although the sales cycles are long, the size of the opportunities we are seeing are quite substantial. We are expanding our addressable market, and we're putting structure into place to serve these customers in an efficient manner.

We have continued investing in our DuraSled and [ExtremeScan] product lines, which are all designed for iPhone. And now we're offering models with iPhone inside. This entrance into the mobile handheld computing market has opened the door to new customer segments and we're starting to gain real traction. We also have some market forces working in our favor, namely the continued shift to mobile computing platforms such as smartphones and tablets for enterprise and industrial applications. This works particularly well for us when those customers are transitioning to iOS devices.

We also see growing demand for real-time data capture at the edge, for example, in logistics, inventory and field operations to drive operational productivity. Our new product and technology investments are starting to extend our reach and diversify our customer base. Ultimately, this will make us a more sustainable as we become a more complete data capture company.

With that, I'll turn it over to Lynn for more details on our financial results. Lynn?

Okay. Thanks, Dave. Good afternoon, everyone. Thank you for joining today's call. Revenue in Q3 decreased 20% year-over-year to $3.1 million, down from $3.9 million in the same quarter last year and 23% sequentially from $4 million in Q2. However, sales-out to end users via our distributors remained stable with Q2, which is encouraging, especially since Q3 is usually our softest quarter. We view this resilience as a positive sign amid the market conditions.

Gross margin for the quarter was 47.7% compared with 49% in Q3 2024 and 49.9% in Q2 2025. The decline primarily reflects the impact of fixed overhead costs spread over lower revenue base.

Operating expenses for Q3 were $2.5 million compared with $2.9 million in the same quarter last year and $2.7 million in Q2. This reduction was mainly the result of management's cost control initiatives implemented in anticipation of slower business activity. As a result, we reported an operating loss of $1.1 million for the quarter compared with a loss of $1 million in Q3 2024 and a loss of $700,000 in Q2 2025.

Adjusted EBITDA for Q3 was a loss of [$540,000] versus a loss of $510 -- [$510,000] in Q3 last year and $100,000 in Q2 2025.

Diluted loss per share was $0.15, consistent with Q3 2024 and compared with $0.10 loss in Q2 2025.

Turning to the balance sheet. As of September 30, cash totaled $2 million compared with $2.6 million at June 30 and $2.5 million at December 31, 2024. Cash outflows during the quarter included $400,000 for operating activities and $190,000 for capital expenditures, primarily related to product tooling and software development. Inventory net of reserves was $4.7 million as of September 30 versus $5 million at year-end 2024. We continue to focus on managing inventory levels to avoid excess stock in a slower demand environment.

This concludes our prepared remarks. I will now turn the call over to the operator for questions.

[Operator Instructions] Our first question comes from Steve Swanson, a private investor.

Will we need to do any more convertible debt before too long?

We have no plan to do a convertible debt at this stage, Steve. I know I've said this in the past, and we ended up doing so. But currently, there are no plans to do a convertible debt. If we can get through Q4 at EBITDA neutral, we believe we have enough business in the hopper to get back to profitable operating levels.

Okay. So we think we got enough cash with what we're looking at going forward that we aren't going to need to raise any more cash. Is that right?

That's correct. We have no questions at this time. Lynn, I'll turn the program back over to you for any additional or closing comments.

Okay. Yes. I just want to thank you, everyone, for your time and wish you a good afternoon. Bye now.

That concludes our meeting today. You may now disconnect.