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[southacresdave]

Kozuh...SCKT... lol. Yeah, I've been hiding! I'm as ill about it as anyone else. And, yes, I've been averaging down a bit (though I will have more money in a couple weeks to buy even more shares). What killed them is having to go from the Nasdaq to the OTC market. I've been in discussion with management quite a bit (Dave Dunlap, the CFO, is very open to shareholders and encourages them to contact him). Getting the new products out (7ci scanner and Somo 655) cost them too much cash and transition from 650 to 655 for the Somo reduced expected sales and kept them under cash flow positive. Nasdaq was very strict. The only way they could of stayed on was to sell a ton of shares (to raise equity) to some vulture fund and management has no intention of screwing themselves this close to making it work---they didn't even look into a deal.

I was adamant to them that management show some type of support with the stock price down. I wanted insider buys on the open market. They responded with a debt conversion for $400K with shares convertible at $2 or $2.44. They did give themselves some stock options too (not much). I was told they did not need the working capital but this is the route they went to just add to working cash so they can go after potential big deals (which there are supposed to be two of in the scanner side of the business coming in Sept).

Kevin, CEO, bought $400K shares at $2 three years ago so he has a real incentive to make it succeed (plus his options are underwater). Charlie Bass, founder, has lost even more money on shares he's bought over the years. It tells you he still believes when he just ponied up $250K in a loan to the company. I still would like to see him buy shares in the open market.

The scanner side of the business is looking good. They keep building partners. Their new SDK software is innovative. This quarter it should finally show the payoff. A killer deal is they teamed up with Lightspeed. A very very successful venture fund just gave them $30M and plans on making Lightspeed a $1B business (Accel Partners-- http://pandodaily.com/2012/06/11/accel-invests-30m-in-lightspeed-and-the-top-vc-was-the-one-doing-the-wooing/ ) Socket's 7ci scanner is sold with the software. It should help tremendously in the future.

The Somo 655 transition is almost complete. 650s are just about gone and the 655 inventory is building. There are supposed to be some partnerships announced here too and they are looking for some big deals late in 3rd Q or 4th Q that will aid the company tremendously. I've been told a lot of new customers have been waiting for the new model and after they are done demoing it, Socket expects them to buy big.

The company is 1 year behind where I thought they would be last year. I still feel very good about it (other than the stock price). They HAVE to get to cash flow positive (or very very close to it this quarter) and HAVE to get to net income positive in 4th Q or otherwise no one will believe them anymore. The CFO is insistent they will. We'll see.

I've posted a lot over on Yahoo on what I've learned from management and research. I just don't duplicate it here as I wasn't sure how many people were interested.