Welcome to the Q1 2020 Management Conference Call. My name is Darryl, and I'll be the operator for today's call.

Before we begin, I would like to remind everybody 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 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. At this time all participants are in a listen-only mode, later we will conduct a question-and-answer session. [Operator Instructions] Please note that this conference is being recorded. I will now turn the call over to Kevin Mills. Kevin, you may begin..

Thank you, Operator. Good afternoon everyone, and thank you for joining us today. Our Q1 revenue was $4.2 million, a decrease of 9% compared to Q1 2019, which resulted in a loss of $90,000 for the quarter, compared to a small profit of $12,000 in Q1 2019. Our Q1 revenues were impacted by the COVID-19 pandemic, especially in the second-half of March.

As over 70% of our business is driven by retail-centric applications, our business which were severely impacted by the lockdowns we cannot be overly surprised by these results. While we live in extremely unpredictable times, and there is a high degree of uncertainty today, we would like to share our current expectations for Q2.

Based on the limited data we have collected since mid March, we believe our retail-centric business will continue to be severely impacted during Q2. And we expect demand will fall by more than 40%. Some companies, like Shopify, may be less impacted, and others may simply go away.

We believe commercial services and transportation-centric applications will be less impacted during Q2 as applications associated with food delivery and online shopping may see increased demand for data capture products.

While the current situation is extremely challenging and there remains a great deal of uncertainty, we believe Socket Mobile is better suited than most to survive in today's new reality. Socket Mobile is a data capture company, and has a strong position in the iPad and Android data capture markets.

While our demand has been driven by small businesses deploying iPad-based point-of-sale systems, our products and expertise are also used in many other market segments, such as delivery services, inspection services, and clinical settings.

Over the past 12 months, we have been expanding our product portfolio to cover harsh environments with our DuraScan product of families with -- and single-handed requirements with our DuraSled products. These products use the same tried and trusted data capture expertise, and can easily be integrated into new applications.

In addition, all our sales are application-driven, and 100% of our products are sold online, which has been the case for more than two years. Therefore, we are more adaptable than most, a very good quality in these fast-changing times.

Finally, we have received PPP funds which enabled us to protect our workforce and meet our obligations as we determine the best course of action to ensure that we can both survive in the short-term, and put ourselves in a position to service the requirements moving forward.

With that said, I'd now like to turn the call over to Lynn Zhao, Socket's CFO.

Lynn?.

Thank you, Kevin. Our gross profit margin for the first quarter of 2020 was 52.7%, and 51% in the first quarter of 2019. The operating expenses for the first quarter of 2020 was $2.3 million, and then $2.4 million for the first quarter of 2019.

Earnings before interest, taxes, depreciation, and amortization was $210,000 or $0.03 per share in the first quarter of 2020, compared to $270,000 or $0.05 per share in the first quarter a year ago, and $470,000 or $0.08 per share in the immediately preceding quarter. The impact of the COVID-19 pandemic has continued into Q2.

We are tightly managing our liquidity for our operating needs. In addition to leveraging the revolving credit facility, on April 20th, we received a loan proceed of $1,058,700 under the Paycheck Protection Program. The loan proceeds will be primarily used to cover payroll costs, rent, and the utility costs during the eight-week period after April 20.

The PPP loan enables us to maintain our staffing level. We expect that most of the amount borrowed is eligible to be forgiven. Principal and the interest payments on any unforgiven portion of the PPP loan will be deferred for six months, and then will accrue interest at a fixed annual rate of 1%.

The remaining PPP loan balance will carry a two-year maturity rate -- maturity date. There is no prepayment penalty on the PPP loan. Our annual shareholder meeting will be held on Wednesday, May 27, at 10:30 AM. The meeting was originally planned to be held at our company.

Due to the current shelter-in-place order, we'll provide a teleconference option for anyone who is interested to join the meeting remotely. The voting results will be collected and tallied to the meeting. We'll post the update on our app Web site after the meeting. Now, I would turn the call over to the Operator for your questions.

Darryl?.

Operator:.

Okay. Well, we would just like to thank everyone for participating in today's call, and wish you all a good afternoon. Thank you..

And thank you, ladies and gentlemen. This concludes today's conference. Thank you for participating. You may now disconnect..