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<SEC-DOCUMENT>0000944075-04-000002.txt : 20040218
<SEC-HEADER>0000944075-04-000002.hdr.sgml : 20040218
<ACCEPTANCE-DATETIME>20040218162957
ACCESSION NUMBER:		0000944075-04-000002
CONFORMED SUBMISSION TYPE:	8-K
PUBLIC DOCUMENT COUNT:		2
CONFORMED PERIOD OF REPORT:	20040214
ITEM INFORMATION:		
ITEM INFORMATION:		Financial statements and exhibits
FILED AS OF DATE:		20040218

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			SOCKET COMMUNICATIONS INC
		CENTRAL INDEX KEY:			0000944075
		STANDARD INDUSTRIAL CLASSIFICATION:	ELECTRONIC COMPUTERS [3571]
		IRS NUMBER:				943155066
		STATE OF INCORPORATION:			DE
		FISCAL YEAR END:			1231

	FILING VALUES:
		FORM TYPE:		8-K
		SEC ACT:		1934 Act
		SEC FILE NUMBER:	001-13810
		FILM NUMBER:		04613555

	BUSINESS ADDRESS:	
		STREET 1:		37400 CENTRAL COURT
		CITY:			NEWARK
		STATE:			CA
		ZIP:			94560
		BUSINESS PHONE:		5107442700

	MAIL ADDRESS:	
		STREET 1:		37400 CENTRAL COURT
		CITY:			NEWARK
		STATE:			CA
		ZIP:			94560
</SEC-HEADER>
<DOCUMENT>
<TYPE>8-K
<SEQUENCE>1
<FILENAME>form-8k0204.htm
<DESCRIPTION>8-K
<TEXT>
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<HTML><HEAD><TITLE>Untitled Document</TITLE>

<BODY bgColor=#ffffff>
<DIV align=left>
<HR>

<DIV align=center><FONT face="Times New Roman, Times, serif" size=3><B><FONT
size=4>UNITED STATES<BR></FONT></B></FONT><FONT
face="Times New Roman, Times, serif" size=4><STRONG>SECURITIES AND EXCHANGE
COMMISSION</STRONG></FONT></DIV></DIV>
<P align=center><FONT face="Times New Roman, Times, serif" size=3>Washington,
D.C. 20549<BR><BR><BR><B>FORM 8-K</B><BR><BR><BR></FONT><FONT
face="Times New Roman, Times, serif" size=3><B>CURRENT REPORT</B><BR></FONT></P>
<P align=center><FONT face="Times New Roman, Times, serif" size=3>Pursuant to
Section 13 or 15(d) of </FONT><FONT face="Times New Roman, Times, serif"
size=3>the Securities Exchange Act of 1934<BR><B><BR></B></FONT></P>
<P align=center><FONT face="Times New Roman, Times, serif" size=3><B>February
  18</B></FONT><B><FONT face="Times New Roman, Times, serif" size=3>, 2004</FONT></B><FONT face="Times New Roman, Times, serif" size=3><BR>
  Date of
Report <BR>(date of earliest event reported)</FONT></P>
<P align=center><FONT face="Times New Roman, Times, serif"
size=3><BR></FONT></P>
<P align=center><FONT face="Times New Roman, Times, serif" size=5><STRONG><FONT
size=4>SOCKET COMMUNICATIONS, INC. </FONT></STRONG></FONT><FONT
face="Times New Roman, Times, serif"><BR><FONT size=2>(Exact name of Registrant
as specified in its charter) </FONT></FONT></P>
<P>&nbsp;
<TABLE cols=3 width="100%">

  <TR>
    <TD height=30>
      <CENTER><FONT face="Times New Roman, Times, serif" size=3>Delaware
      </FONT></CENTER></TD>
    <TD height=30>
      <CENTER><FONT face="Times New Roman, Times, serif" size=3>001-13810
      </FONT></CENTER></TD>
    <TD height=30>
      <CENTER><FONT face="Times New Roman, Times, serif" size=3>94-3155066
      </FONT></CENTER></TD></TR>
  <TR>
    <TD>
      <CENTER><FONT face="Times New Roman, Times, serif" size=2>(State or other
      jurisdiction of incorporation) </FONT></CENTER></TD>
    <TD>
      <CENTER><FONT face="Times New Roman, Times, serif" size=2>(Commission File
      Number) </FONT></CENTER></TD>
    <TD>
      <CENTER><FONT face="Times New Roman, Times, serif" size=2>(IRS employer
      identification number) </FONT></CENTER></TD></TR>
  </TABLE><FONT
face="Times New Roman, Times, serif"><BR></FONT>
<P align=center><FONT face="Times New Roman, Times, serif" size=3>37400 Central
Court<BR>Newark, CA 94560</FONT><FONT
face="Times New Roman, Times, serif"><BR><FONT size=2>(Address of principal
executive offices, including zip code) </FONT></FONT></P>
<P align=center><FONT face="Times New Roman, Times, serif" size=3>(510) 744-2700
</FONT><FONT face="Times New Roman, Times, serif"><BR><FONT size=2>(Registrant's
telephone number, including area code) <BR><BR><BR></FONT></FONT></P>
<DIV align=left></DIV>
<DIV align=left>
<HR>
</DIV><BR>
<P><FONT face="Times New Roman, Times, serif"><B>ITEM 12. RESULTS OF OPERATIONS
AND FINANCIAL CONDITION</B><BR></FONT></P>
<P><font face="Times New Roman, Times, serif" size="3">On February 18, 2004, Socket
  Communications, Inc. issued a press release reporting its results for the three
  months and year ended December 31, 2003. A copy of the press release is furnished
  as Exhibit 99.1.</font><FONT
face="Times New Roman, Times, serif"><BR>
  </FONT></P>
<P><FONT face="Times New Roman, Times, serif"><B>ITEM 7. FINANCIAL STATEMENTS
AND EXHIBITS</B><BR></FONT></P>
<P><FONT face="Times New Roman, Times, serif">(c) Exhibits.</FONT><FONT
face="Times New Roman, Times, serif"></FONT><FONT
face="Times New Roman, Times, serif"></FONT></P>
<P>&nbsp;</P>
<TABLE cellSpacing=0 cellPadding=0 width="100%" align=left border=0>

  <TR vAlign=bottom>
    <TD width=215 height=54>
      <DIV align=center><FONT face="Times New Roman, Times, serif">Exhibit
      Number</FONT></DIV></TD>
    <TD width=29 height=54>&nbsp;</TD>
    <TD width=680 height=54>
      <DIV align=center><FONT
      face="Times New Roman, Times, serif">Description</FONT></DIV></TD></TR>
  <TR vAlign=top>
    <TD vAlign=top align=middle width=215>----------------------------</TD>
    <TD width=29>&nbsp;</TD>
    <TD width=680>
      <DIV
      align=center>---------------------------------------------------------------------------------------------</DIV></TD></TR>
  <TR vAlign=top>
    <TD width=215>
      <DIV align=center><FONT
      face="Times New Roman, Times, serif">99.1</FONT></DIV></TD>
    <TD width=29>&nbsp;</TD>
    <TD width=680><FONT face="Times New Roman, Times, serif">Text of press release,
      dated February 18, 2004, titled "</FONT><font face="Times New Roman, Times, serif" size="3">Socket
      Communications Reports Record Fourth Quarter and 2003 Revenue</font><FONT face="Times New Roman, Times, serif">"</FONT></TD>
  </TR>
  </TABLE>
<P>&nbsp;</P>
<P><FONT face="Times New Roman, Times, serif" size=3><BR></FONT></P>
<P><FONT face="Times New Roman, Times, serif" size=3><BR></FONT></P>
<P>&nbsp;</P>
<P>&nbsp;</P>
<P>&nbsp;</P>
<P> </P>
<HR>

<P align=center><FONT
face="Times New Roman, Times, serif"><B>SIGNATURE</B><BR></FONT></P>
<P><FONT face="Times New Roman, Times, serif">Pursuant to the requirements of
the Securities Exchange Act of 1934, the registrant has duly caused this report
to be signed on its behalf by the undersigned hereunto duly
authorized.</FONT><FONT face="Times New Roman, Times, serif"
size=3><BR></FONT></P>
<DIR>
<DIR>
<DIR>
<DIR>
<DIR>
<BLOCKQUOTE><TR><TD>&nbsp;</TD> <TD>&nbsp;</TD> </TR><TR><TD>&nbsp;</TD>
  <TD>&nbsp;</TD> </TR><TR><TD>&nbsp;</TD> <TD>&nbsp;</TD>
  </TR><TR><TD>&nbsp;</TD> <TD>&nbsp;</TD> </TR><TR><TD>&nbsp;</TD>
  <TD>&nbsp;</TD> </TR><TR><TD>&nbsp;</TD> <TD>&nbsp;</TD>
  </TR><TR><TD>&nbsp;</TD> <TD>&nbsp;</TD> </TR><TR><TD>&nbsp;</TD>
  <TD>&nbsp;</TD> </TR>
  <P align=left> </P><TR valign="bottom"
align="left"></TR></BLOCKQUOTE></DIR></DIR></DIR></DIR></DIR>
<DIV align=left>
  <TABLE height=135 cellSpacing=0 cellPadding=0 width=847 align=left border=0>

    <TR>
      <TD width=470>
        <DIV align=left></DIV>
      </TD>
      <TD width=23>&nbsp;</TD>
      <TD width=348><font face="Times New Roman, Times, serif"><B>SOCKET COMMUNICATIONS,
        INC.</B></font></TD>
    </TR>
    <TR>
      <TD width=470>&nbsp;</TD>
      <TD width=23>&nbsp;</TD>
      <TD width=348><font face="Times New Roman, Times, serif">(Registrant)</font></TD>
    </TR>
    <TR>
      <TD width=470>&nbsp;</TD>
      <TD width=23>&nbsp;</TD>
      <TD width=348>&nbsp;</TD>
    </TR>
    <TR>
      <TD width=470>
        <DIV align=left></DIV>
      </TD>
      <TD width=23>&nbsp;</TD>
      <TD width=348>&nbsp;</TD>
    </TR>
    <TR>
      <TD width=470 height=19>
        <DIV align=left><FONT face="Times New Roman, Times, serif">Date: February
          18, 2004</FONT></DIV>
      </TD>
      <TD width=23 height=19><FONT
      face="Times New Roman, Times, serif">By:</FONT></TD>
      <TD width=348 height=19><FONT face="Times New Roman, Times, serif"><U>/s/
        David W. Dunlap</U></FONT></TD>
    </TR>
    <TR>
      <TD width=470 height=69>
        <DIV align=left></DIV>
      </TD>
      <TD width=23 height=69>&nbsp;</TD>
      <TD width=348 height=69><FONT face="Times New Roman, Times, serif">David
        W. Dunlap<BR>
        Vice President, Finance and Administration <BR>
        and Chief Financial Officer<BR>
        </FONT></TD>
    </TR>

  </TABLE>
</DIV>
<P>&nbsp;</P>
<P>&nbsp;</P>
<P>&nbsp;</P>
<P>&nbsp;</P>
<P>&nbsp;</P>
<P>&nbsp;</P>
<P>&nbsp;</P>
<HR>

<P align=center><FONT face="Times New Roman, Times, serif"><B>EXHIBIT
INDEX</B></FONT></P>
<P align=center>&nbsp;</P>
<TABLE cellSpacing=0 cellPadding=0 width="100%" align=left border=0>

  <TR vAlign=bottom>
    <TD width=215 height=54>
      <DIV align=center><FONT face="Times New Roman, Times, serif">Exhibit
      Number</FONT></DIV></TD>
    <TD width=29 height=54>&nbsp;</TD>
    <TD width=680 height=54>
      <DIV align=center><FONT
      face="Times New Roman, Times, serif">Description</FONT></DIV></TD></TR>
  <TR vAlign=top>
    <TD vAlign=top align=middle width=215>---------------------------</TD>
    <TD width=29>&nbsp;</TD>
    <TD width=680>
      <DIV
      align=center>-------------------------------------------------------------------------------------------------</DIV></TD></TR>
  <TR vAlign=top>
    <TD width=215>
      <DIV align=center><FONT
      face="Times New Roman, Times, serif">99.1</FONT></DIV></TD>
    <TD width=29>&nbsp;</TD>
    <TD width=680><font face="Times New Roman, Times, serif">Text of press release,
      dated February 18, 2004, titled "</font><font face="Times New Roman, Times, serif" size="3">Socket
      Communications Reports Record Fourth Quarter and 2003 Revenue </font><font face="Times New Roman, Times, serif">"</font></TD>
  </TR></TABLE>
<P>&nbsp;</P>
<P>&nbsp;</P>
<P>&nbsp;</P>
<P>&nbsp;</P>
<P align=center>&nbsp;</P>
<P>&nbsp;</P>
<P>&nbsp;</P>
<P>&nbsp;</P>
<HR>

<P>&nbsp;</P>
<DIV align=left>
<DIV align=left></DIV></DIV></BODY></HTML>

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.1 CHARTER
<SEQUENCE>3
<FILENAME>pressrelease.htm
<DESCRIPTION>PRESS RELEASE
<TEXT>
<html>
<head>
<title>Untitled Document</title>

</head>

<body bgcolor="#FFFFFF">
<p align="right"><font face="Times New Roman, Times, serif" size="3"><b>Exhibit
  99.1</b></font></p>
<p>&nbsp;</p>
<p><font face="Times New Roman, Times, serif" size="3"><b><font size="4">For Immediate
  Release</font></b></font></p>
<p><font face="Times New Roman, Times, serif" size="3">For further information,
  contact:<br>
  </font></p>
<table width="100%" border="0" cellspacing="0" cellpadding="0" align="left">
  <tr valign="bottom">
    <td width="291" height="25"><font face="Times New Roman, Times, serif" size="3">David
      Dunlap, CFO</font></td>
    <td width="190" height="25"><font face="Times New Roman, Times, serif" size="3">&nbsp;&nbsp</font></td>
    <td width="493" height="25"><font face="Times New Roman, Times, serif" size="3">Cormac
      Glynn</font></td>
  </tr>
  <tr valign="bottom">
    <td width="291" height="20"><font face="Times New Roman, Times, serif" size="3">Socket
      Communications, Inc.</font></td>
    <td width="190" height="20"><font face="Times New Roman, Times, serif" size="3">&nbsp;&nbsp</font></td>
    <td width="493" height="20"><font face="Times New Roman, Times, serif" size="3">CEOCast</font></td>
  </tr>
  <tr valign="bottom">
    <td width="291" height="20"><font face="Times New Roman, Times, serif" size="3">(510)
      744-2735</font></td>
    <td width="190" height="20"><font face="Times New Roman, Times, serif" size="3">&nbsp;&nbsp</font></td>
    <td width="493" height="20"><font face="Times New Roman, Times, serif" size="3">(212)
      732-4300</font></td>
  </tr>
  <tr valign="bottom">
    <td width="291" height="20">email: dave@socketcom.com</td>
    <td width="190" height="20">&nbsp;</td>
    <td width="493" height="20">email: cglynn@ceocast.com</td>
  </tr>
</table>
<p>&nbsp;</p>
<p>&nbsp;</p>
<p>&nbsp;</p>
<p align="center"><font face="Times New Roman, Times, serif" size="3"><b>Socket
  Communications Reports Record Fourth Quarter and 2003 Revenue </b><br>
  <i>Wireless connectivity and mobile bar code scanning products drive fifth consecutive
  quarter of <br>
  sequential revenue growth; revenue increases 49% from 2002 fourth quarter</i><br>
  <br>
  </font></p>
<p><font face="Times New Roman, Times, serif" size="3"><b>NEWARK, CA, February
  18, 2004</b> - Socket Communications, Inc. (NASDAQ: SCKT; PSE: SOK), The Mobile
  Connection&#153; Company, today reported record revenue for the fourth quarter
  and year ended December 31, 2003. Revenue for the fourth quarter was $6.0 million,
  the fourth consecutive quarter of record revenue. Fourth quarter revenue increased
  6 percent compared to revenue of $5.7 million for the previous quarter and an
  increase of 49 percent compared to revenue of $4.0 million for the same quarter
  a year ago. Net loss applicable to common stockholders for the fourth quarter
  was $0.1 million, or $0.00 per share, compared to the net loss applicable to
  common stockholders for the third quarter of 2003 of $0.3 million or $0.01 per
  share and for the fourth quarter a year ago of $0.6 million or $0.02 per share.
  Cash flow from operations (net loss less non-cash charges for depreciation,
  amortization of intangible assets, and foreign currency gains) was positive
  by $84,000 for the fourth quarter of 2003 compared with negative cash flow from
  operations of $0.2 million for the fourth quarter of 2002.</font></p>
<p><font face="Times New Roman, Times, serif" size="3">For the full year ended
  December 31, 2003, the Company reported revenue of $21.6 million, an increase
  of 32 percent compared to revenue of $16.3 million for the previous year. Net
  loss applicable to common stockholders was $2.0 million or $0.07 per share compared
  to the net loss applicable to common stockholders for 2002 of $3.1 million or
  $0.13 per share. </font></p>
<p><font face="Times New Roman, Times, serif" size="3">The balance sheet at December
  31, 2003 included cash of $6.4 million, a current ratio of 1.8 to one, equity
  of $16.5 million and no long term debt. At December 31, 2002, the Company's
  cash balances were $3.1 million, the current ratio was 1.0 to one, equity was
  $11.4 million and $0.7 million in Series E Redeemable Preferred stock was outstanding.</font></p>
<p><font face="Times New Roman, Times, serif" size="3">&quot;Socket achieved four
  consecutive record revenue quarters during 2003,&quot; said Kevin Mills, President
  and CEO. &quot;The primary growth driver continues to be the increasing use
  of Pocket PCs, particularly in the corporate environment. We experienced excellent
  growth across a number of our product lines.&quot; </font></p>
<p><font face="Times New Roman, Times, serif" size="3">&quot;We have been particularly
  pleased with the positive impact of wireless connectivity products on our revenue
  growth,&quot; continued Mills. &quot;Socket offers wireless connections in the
  form of plug-in cards and embedded modules with Bluetooth&reg; wireless technology,
  and we have been adding stand alone products incorporating Bluetooth wireless
  technology that work with handhelds such as our Cordless GPS Receiver, Cordless
  Serial Adapter, and our recently announced Cordless 56K Modem. Socket products
  with Bluetooth wireless technology offer a complete hardware and software solution
  and our embedded KwikBlue&#153; modules are being designed into over 20 models
  of industrialized Pocket PCs from 13 companies. Our wireless LAN 802.11b plug-in
  cards connect a Pocket PC to a wireless LAN network in a hotspot, home, or corporate
  environment. Wireless products in 2003 accounted for 30% of our revenue and
  $2.1 million of our revenue growth.&quot;</font></p>
<p><font face="Times New Roman, Times, serif" size="3">&quot;Bar code scanning
  was our fastest growing family of products in 2003, accounting for 31% of our
  revenue and $2.8 million of our revenue growth. During 2003, we expanded our
  product line to add a 2D bar code scanner and imager and a small SDIO bar code
  scanner designed to work with both Pocket PCs and Palm Tungsten models. Productivity
  benefits of portable lightweight bar code scanning combined with improving corporate
  capital spending are driving the growth of our family of bar code scanning products.&quot;</font></p>
<p><font face="Times New Roman, Times, serif" size="3">&quot;We expect these trends
  to continue in 2004,&quot; Mills concluded. &quot;Further improvements to the
  economy, projected increases in sales of handheld computers, and new products
  will continue to drive our expansion. Our focus in 2004 will be on further developing
  our wireless family of products, and on the further maturing of our industrial
  bar code scanning and embedded systems businesses. Socket's excellent brand
  name and well established worldwide distribution system are all expected to
  contribute to our continued growth.&quot;</font></p>
<p align="center"><font face="Times New Roman, Times, serif" size="3"><br>
  <b>Additional Quarterly and Annual Financial Information</b></font></p>
<p><font face="Times New Roman, Times, serif" size="3">The Company's balance sheet
  at December 31, 2003 included a cash balance of $6.4 million, reflecting a net
  increase of $3.3 million in cash during the year. The cash increase was primarily
  due to two equity financings during the year and the exercise of stock options
  and warrants contributing an aggregated $5.9 million, partially offset by $1.1
  million in payments for acquired Bluetooth wireless technology, use of cash
  to fund operating losses during the year of $0.4 million, working capital changes
  using $0.3 million in cash, investment in capital assets of $0.4 million, payment
  of cash dividends on preferred stock of $0.1 million, and lower bank line draws
  of $0.3 million at the end of the year. Cash increased $54,000 during the fourth
  quarter of 2003 reflecting positive cash flow from operations and $0.4 million
  of cash received from the exercise of stock options and warrants partially offset
  by payments for acquired Bluetooth wireless technology, investments in capital
  equipment and a lower bank line draw.</font></p>
<p><font face="Times New Roman, Times, serif" size="3">Connectivity products represented
  40% of the Company's revenue during 2003 compared to 37% in 2002. Bar code scanning
  products increased in 2003 to 31% of revenue compared to 24% of revenue in 2002.
  Revenue from embedded products and services decreased $56,000 from 16% of revenue
  in 2002 to 12% of revenue in 2003 due to a large initial rollout order from
  one customer in 2002. Serial card revenue decreased $0.15 million to $3.6 million
  in 2003, representing 17% of 2003 revenue compared to 23% in 2002. </font></p>
<p><font face="Times New Roman, Times, serif" size="3">Gross profit on sales was
  $10.7 million, or 50% of revenue for the year ended December 31, 2003, compared
  to gross profit on sales of $8.1 million, or 50% of revenue, in 2002. Gross
  profit on sales for the quarter ended December 31, 2003 was $3.0 million, or
  50% of revenue, compared to gross profit on sales of $2.1 million or 52 percent
  of revenue for the quarter ended December 31, 2002. Changes in gross profits
  during the fourth quarter of 2003 compared to the same period one year ago were
  primarily due to growth in sales of newer products that historically start with
  lower than average gross margins. The Company plans to engineer cost reductions
  in several of these products during 2004.</font></p>
<p><font face="Times New Roman, Times, serif" size="3">Research and development
  expense was $3.4 million in 2003 compared to $3.5 million in 2002, reflecting
  level headcount, reductions in funded engineering work as more internal engineering
  resources were focused on product development, offset by decreases in consulting
  and outside engineering services. Research and development expense was $0.9
  million for the fourth quarter in both years. Moderate increases in research
  and development expense are anticipated during 2004 as the Company maintains
  a proactive research and development program.</font></p>
<p><font face="Times New Roman, Times, serif" size="3">Sales and marketing expense
  was $5.2 million in 2003 compared to $4.9 million in 2002, reflecting increases
  in the number of sales and marketing personnel. Sales and marketing expense
  for the quarter ended December 31, 2003 was $1.3 million compared to $0.9 million
  in the quarter ended December 31, 2002, reflecting increases in sales and marketing
  personnel and increased levels of advertising and promotion. Sales and marketing
  expense are expected to increase in 2004 as the Company grows.</font></p>
<p><font face="Times New Roman, Times, serif" size="3">General and administrative
  expense was $2.9 million in 2003 compared to $2.1 million in 2002 reflecting
  increases in the costs of professional services and insurance and increased
  shareholder communications. General and administrative expense for the quarter
  ended December 31, 2003 was $0.8 million in 2003 compared to $0.5 million in
  the quarter ended December 31, 2002, reflecting the annual trend. General and
  administrative expense is expected to increase in 2004 as the Company grows.</font></p>
<p><font face="Times New Roman, Times, serif" size="3">Preferred stock dividends
  were $0.1 million in 2003 compared to $29,000 in 2002 reflecting dividends on
  the issue of $2.0 million of Series F Convertible Preferred Stock commencing
  in March 2003 and on declining balances of Series E Redeemable Preferred Stock.
  Dividends in 2002 related to the issue of $1.0 million of Series E Redeemable
  Preferred Stock issued in October 2002 that was fully converted during 2003.
  An accretion charge relating to Series F preferred stock in the first quarter
  of 2003 reflects the discount from market after giving effect to an allocation
  to the investor warrants of $0.3 million of the proceeds of the Series F issuance.
  Deemed dividend charges of $0.3 million in 2003 and $83,000 in 2002 arose from
  accreting the value of the Redeemable Preferred Stock up to its redemption value.
  </font></p>
<p><font face="Times New Roman, Times, serif" size="3"><b>Conference Call and
  Webcast</b></font></p>
<p><font face="Times New Roman, Times, serif" size="3">Management of Socket will
  hold a conference call today at 2 p.m. Pacific time to discuss the quarterly
  and annual results and outlook for the future. The call will be carried live
  and available via replay on www.ccbn.com, or participants may join the call
  by telephone at (800) 218-8862 or (303) 262-2130.<br>
  A replay will be available for one week at (800) 405-2236 or (303) 590-3000
  Passcode 570048#.</font></p>
<p><font face="Times New Roman, Times, serif" size="3"><b>About Socket</b></font></p>
<p><font face="Times New Roman, Times, serif" size="3">Socket Communications,
  Inc., the Mobile Connection&#153; Company, provides the broadest range of connectivity
  products for Windows Mobile-based computers, focusing on handhelds including
  Pocket PCs, Windows CE devices, Palm PDAs and mobile phones. Socket's Mobility
  Friendly&#153; products are feature-rich while promoting ease of use and lead
  the market with the smallest footprint and the most Battery Friendly&reg; power
  consumption in their class. Socket's Embedded Systems Group provides solutions
  using mobilityIC&#153; interface chips, KwikBlue&#153; modules with embedded
  Bluetooth wireless technology and a family of bar code scanning products. Socket
  is headquartered in Newark, California and can be reached at 510-744-2700 or
  www.socketcom.com. </font></p>
<p><font face="Times New Roman, Times, serif" size="2"><i>Socket and Battery Friendly
  are registered trademarks of Socket Communications, Inc. The Mobile Connection
  Company, Mobility Friendly, KwikBlue and mobilityIC are trademarks of Socket
  Communications, Inc. The Bluetooth word mark and logos are owned by the Bluetooth
  SIG, Inc. and any use of such marks by Socket Communications, Inc. is under
  license. All other trademarks and trade names contained herein are those of
  their respective owners. &copy; 2004, Socket Communications, Inc. All rights
  reserved.</i></font></p>
<p><font face="Times New Roman, Times, serif" size="3"><b>Forward Looking Statements</b><br>
  This press release contains forward-looking statements within the meaning of
  Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
  Securities Exchange Act of 1934, as amended. Such statements include forecasts
  of future financial results, market reactions and operating activities. Such
  statements are based on expectations of the market acceptance of our products,
  increased supplies of handheld computers, growth in demand for our products,
  the potential for additional revenue growth, expectations regarding timing of
  the introduction and availability of new products, and expectations regarding
  our ability to control our operating expenses and improve our cash flow. Such
  statements involve risks and uncertainties, and actual results could differ
  materially from the results anticipated in such forward-looking statements as
  a result of a number of factors. These factors include, but are not limited
  to, the risk of delays in the availability of new products due to technological,
  market or financial factors, including the availability of necessary working
  capital, our ability to successfully introduce and market future products, our
  ability to effectively manage and contain our operating costs, the availability
  of announced handheld computer hardware and software, market acceptance of handheld
  computers and emerging standards such as Bluetooth wireless technology and 802.11
  and of the company's related connection products, the failure of our strategic
  partnerships to benefit our business as expected, disruptions to our business
  or to the general economy caused by external forces such as terrorist activities
  or natural disasters, declines in consumer or corporate spending on technology
  products, or the other factors described in the company's most recent Form 10-K/A
  and 10-Q/A reports filed with the Securities and Exchange Commission.</font></p>
<p align="center"><font face="Times New Roman, Times, serif" size="3">--Financial
  tables to follow--</font></p>
<hr>
<p>&nbsp;</p>
<p>&nbsp;</p>
<table cellspacing=1 cellpadding=1 width=800 align=center border=1>
  <tr valign=bottom>
    <td colspan=5 height=70>
      <p align=center><font face="Times New Roman, Times, serif"
      size=3><b>Socket Communications, Inc. </b></font><br>
        <font face="Times New Roman, Times, serif"
      size=3><b>Condensed Summary Statements of Operations (Unaudited)<br>
        (Amounts in Thousands except per share amounts) </b></font></p>
    </td>
  </tr>
  <tr valign=bottom>
    <td width="40%" height=17>
      <p><font face="Times New Roman, Times, serif" size=3>&nbsp;&nbsp; </font></p>
    </td>
    <td colspan=2 height=17>
      <p align=center><font face="Times New Roman, Times, serif" size=3>Three
        Months Ended Dec 31,</font></p>
    </td>
    <td colspan=2 height=17>
      <div align="center"><font face="Times New Roman, Times, serif" size=3>Years
        ended Dec 31,</font></div>
    </td>
  </tr>
  <tr valign=bottom>
    <td width="40%" height=17>
      <p><font face="Times New Roman, Times, serif" size=3>&nbsp;&nbsp; </font></p>
    </td>
    <td width="17%" height=17>
      <p align=center><font face="Times New Roman, Times, serif"
      size=3><u>2003</u> </font></p>
    </td>
    <td width="15%" height=17>
      <p align=center><font face="Times New Roman, Times, serif"
      size=3><u>2002</u> </font></p>
    </td>
    <td width="15%" height=17>
      <p align=center><font face="Times New Roman, Times, serif"
      size=3><u>2003</u> </font></p>
    </td>
    <td width="13%" height=17>
      <p align=center><font face="Times New Roman, Times, serif"
      size=3><u>2002</u> </font></p>
    </td>
  </tr>
  <tr valign=bottom>
    <td width="40%" height=17>
      <p><font face="Times New Roman, Times, serif" size=3>Revenue </font></p>
    </td>
    <td width="17%" height=17>
      <p align=center><font face="Times New Roman, Times, serif" size=3>$ 6,006</font></p>
    </td>
    <td width="15%" height=17>
      <p align=center><font face="Times New Roman, Times, serif" size=3>$ 4,037</font></p>
    </td>
    <td width="15%" height=17>
      <p align=center><font face="Times New Roman, Times, serif" size=3>$ 21,611</font></p>
    </td>
    <td width="13%" height=17>
      <p align=center><font face="Times New Roman, Times, serif" size=3>$ 16,312</font></p>
    </td>
  </tr>
  <tr valign=bottom>
    <td width="40%" height=17>
      <p><font face="Times New Roman, Times, serif" size=3>Cost of revenue </font></p>
    </td>
    <td width="17%" height=17>
      <p align=center><font face="Times New Roman, Times, serif"
      size=3>3,026</font></p>
    </td>
    <td width="15%" height=17>
      <p align=center><font face="Times New Roman, Times, serif"
      size=3>1,934</font></p>
    </td>
    <td width="15%" height=17>
      <p align=center><font face="Times New Roman, Times, serif"
      size=3>10,908</font></p>
    </td>
    <td width="13%" height=17>
      <p align=center><font face="Times New Roman, Times, serif"
      size=3>8,177</font></p>
    </td>
  </tr>
  <tr valign=bottom>
    <td width="40%" height=17>
      <p><font face="Times New Roman, Times, serif" size=3>Gross profit</font></p>
    </td>
    <td width="17%" height=17>
      <p align=center><font face="Times New Roman, Times, serif"
      size=3>2,980</font></p>
    </td>
    <td width="15%" height=17>
      <p align=center><font face="Times New Roman, Times, serif"
      size=3>2,103</font></p>
    </td>
    <td width="15%" height=17>
      <p align=center><font face="Times New Roman, Times, serif"
      size=3>10,703</font></p>
    </td>
    <td width="13%" height=17>
      <p align=center><font face="Times New Roman, Times, serif"
      size=3>8,135</font></p>
    </td>
  </tr>
  <tr valign=bottom>
    <td width="40%" height=17>
      <blockquote>
        <p><font face="Times New Roman, Times, serif" size=3>Gross profit percent</font></p>
      </blockquote>
    </td>
    <td width="17%" height=17>
      <p align=center><font face="Times New Roman, Times, serif"
      size=3>50%</font> </p>
    </td>
    <td width="15%" height=17>
      <p align=center><font face="Times New Roman, Times, serif"
      size=3>52%</font></p>
    </td>
    <td width="15%" height=17>
      <p align=center><font face="Times New Roman, Times, serif"
      size=3>50%</font></p>
    </td>
    <td width="13%" height=17>
      <p align=center><font face="Times New Roman, Times, serif"
      size=3>50%</font></p>
    </td>
  </tr>
  <tr valign=bottom>
    <td width="40%" height=17>
      <p><font face="Times New Roman, Times, serif" size=3>Research and development
        </font></p>
    </td>
    <td width="17%" height=17>
      <p align=center><font face="Times New Roman, Times, serif"
      size=3>869</font></p>
    </td>
    <td width="15%" height=17>
      <p align=center><font face="Times New Roman, Times, serif"
      size=3>905</font></p>
    </td>
    <td width="15%" height=17>
      <p align=center><font face="Times New Roman, Times, serif"
      size=3>3,449</font></p>
    </td>
    <td width="13%" height=17>
      <p align=center><font face="Times New Roman, Times, serif"
      size=3>3,516</font></p>
    </td>
  </tr>
  <tr valign=bottom>
    <td width="40%" height=17>
      <p><font face="Times New Roman, Times, serif" size=3>Sales and marketing
        </font></p>
    </td>
    <td width="17%" height=17>
      <p align=center><font face="Times New Roman, Times, serif"
      size=3>1,314</font></p>
    </td>
    <td width="15%" height=17>
      <p align=center><font face="Times New Roman, Times, serif"
      size=3>939</font></p>
    </td>
    <td width="15%" height=17>
      <p align=center><font face="Times New Roman, Times, serif"
      size=3>5,189</font></p>
    </td>
    <td width="13%" height=17>
      <p align=center><font face="Times New Roman, Times, serif"
      size=3>4,889</font></p>
    </td>
  </tr>
  <tr valign=bottom>
    <td width="40%" height=17>
      <p><font face="Times New Roman, Times, serif" size=3>General and administrative
        </font></p>
    </td>
    <td width="17%" height=17>
      <p align=center><font face="Times New Roman, Times, serif"
      size=3>800</font></p>
    </td>
    <td width="15%" height=17>
      <p align=center><font face="Times New Roman, Times, serif"
      size=3>523</font></p>
    </td>
    <td width="15%" height=17>
      <p align=center><font face="Times New Roman, Times, serif"
      size=3>2,867</font></p>
    </td>
    <td width="13%" height=17>
      <p align=center><font face="Times New Roman, Times, serif"
      size=3>2,118</font></p>
    </td>
  </tr>
  <tr valign=bottom>
    <td width="40%" height=17><font face="Times New Roman, Times, serif"
      size=3>Amortization of intangible technology</font></td>
    <td width="17%" height=17>
      <div align=center><font face="Times New Roman, Times, serif"
      size=3>91</font></div>
    </td>
    <td width="15%" height=17>
      <div align=center><font face="Times New Roman, Times, serif"
      size=3>137</font></div>
    </td>
    <td width="15%" height=17>
      <div align=center><font face="Times New Roman, Times, serif"
      size=3>410</font></div>
    </td>
    <td width="13%" height=17>
      <div align=center><font face="Times New Roman, Times, serif"
      size=3>486</font></div>
    </td>
  </tr>
  <tr valign=bottom>
    <td width="40%" height=17>
      <blockquote>
        <p><font face="Times New Roman, Times, serif" size=3>Total operating expenses</font></p>
      </blockquote>
    </td>
    <td width="17%" height=17>
      <p align=center><font face="Times New Roman, Times, serif"
      size=3>3,074</font></p>
    </td>
    <td width="15%" height=17>
      <p align=center><font face="Times New Roman, Times, serif"
      size=3>2,504</font></p>
    </td>
    <td width="15%" height=17>
      <p align=center><font face="Times New Roman, Times, serif"
      size=3>11,915</font></p>
    </td>
    <td width="13%" height=17>
      <p align=center><font face="Times New Roman, Times, serif"
      size=3>11,009</font></p>
    </td>
  </tr>
  <tr valign=bottom>
    <td width="40%" height=17><font face="Times New Roman, Times, serif"
      size=3>Interest (income) expense, net</font></td>
    <td width="17%" height=17>
      <div align=center><font face="Times New Roman, Times, serif"
      size=3>(2)</font></div>
    </td>
    <td width="15%" height=17>
      <div align=center><font face="Times New Roman, Times, serif"
      size=3>45</font></div>
    </td>
    <td width="15%" height=17>
      <div align=center><font face="Times New Roman, Times, serif"
      size=3>38</font></div>
    </td>
    <td width="13%" height=17>
      <div align=center><font face="Times New Roman, Times, serif"
      size=3>97</font></div>
    </td>
  </tr>
  <tr valign=bottom>
    <td width="40%" height=17>
      <p><font face="Times New Roman, Times, serif" size=3>Net loss </font></p>
    </td>
    <td width="17%" height=17>
      <p align=center><font face="Times New Roman, Times, serif" size=3>(92) </font></p>
    </td>
    <td width="15%" height=17>
      <p align=center><font face="Times New Roman, Times, serif" size=3>(466)
        </font></p>
    </td>
    <td width="15%" height=17>
      <p align=center><font face="Times New Roman, Times, serif" size=3>(1,250)
        </font></p>
    </td>
    <td width="13%" height=17>
      <p align=center><font face="Times New Roman, Times, serif" size=3>(2,971)
        </font></p>
    </td>
  </tr>
  <tr valign=bottom>
    <td width="40%" height=29>
      <p><font face="Times New Roman, Times, serif" size=3>Deemed dividends/preferred
        stock accretion</font></p>
    </td>
    <td width="17%" height=29>
      <p align=center><font face="Times New Roman, Times, serif"
      size=3>--</font></p>
    </td>
    <td width="15%" height=29>
      <p align=center><font face="Times New Roman, Times, serif"
      size=3>(83)</font></p>
    </td>
    <td width="15%" height=29>
      <p align=center><font face="Times New Roman, Times, serif"
      size=3>(565)</font> </p>
    </td>
    <td width="13%" height=29>
      <p align=center><font face="Times New Roman, Times, serif"
      size=3>(83)</font></p>
    </td>
  </tr>
  <tr valign=bottom>
    <td width="40%" height=28>
      <p><font face="Times New Roman, Times, serif" size=3>Preferred stock dividends</font></p>
    </td>
    <td width="17%" height=28>
      <p align=center><font face="Times New Roman, Times, serif"
      size=3>(17)</font> </p>
    </td>
    <td width="15%" height=28>
      <p align=center><font face="Times New Roman, Times, serif"
      size=3>(29)</font></p>
    </td>
    <td width="15%" height=28>
      <p align=center><font face="Times New Roman, Times, serif"
      size=3>(137)</font> </p>
    </td>
    <td width="13%" height=28>
      <p align=center><font face="Times New Roman, Times, serif"
      size=3>(29)</font></p>
    </td>
  </tr>
  <tr valign=bottom>
    <td width="40%" height=17>
      <p><font face="Times New Roman, Times, serif" size=3>Net loss applicable
        to common stockholders</font> </p>
    </td>
    <td width="17%" height=17>
      <p align=center><font face="Times New Roman, Times, serif" size=3>$ (109)
        </font></p>
    </td>
    <td width="15%" height=17>
      <p align=center><font face="Times New Roman, Times, serif" size=3>$ (558)
        </font></p>
    </td>
    <td width="15%" height=17>
      <p align=center><font face="Times New Roman, Times, serif" size=3>$ (1,952)
        </font></p>
    </td>
    <td width="13%" height=17>
      <p align=center><font face="Times New Roman, Times, serif" size=3>$ (3,083)
        </font></p>
    </td>
  </tr>
  <tr valign=bottom>
    <td valign=top width="40%" height=17>
      <p><font face="Times New Roman, Times, serif" size=3>Net loss per share
        applicable to common stockholders</font></p>
    </td>
    <td width="17%" height=17>
      <p align=center><font face="Times New Roman, Times, serif" size=3>$ (0.00)
        </font></p>
    </td>
    <td width="15%" height=17>
      <p align=center><font face="Times New Roman, Times, serif" size=3>$ (0.02)
        </font></p>
    </td>
    <td width="15%" height=17>
      <p align=center><font face="Times New Roman, Times, serif" size=3>$ (0.07)
        </font></p>
    </td>
    <td width="13%" height=17>
      <p align=center><font face="Times New Roman, Times, serif" size=3>$ (0.13)
        </font></p>
    </td>
  </tr>
  <tr valign=bottom>
    <td width="40%" height=17>
      <p><font face="Times New Roman, Times, serif" size=3>Weighted average shares
        outstanding</font> </p>
    </td>
    <td width="17%" height=17>
      <p align=center><font face="Times New Roman, Times, serif"
      size=3>29,366</font></p>
    </td>
    <td width="15%" height=17>
      <p align=center><font face="Times New Roman, Times, serif"
      size=3>24,113</font></p>
    </td>
    <td width="15%" height=17>
      <p align=center><font face="Times New Roman, Times, serif"
      size=3>26,301</font></p>
    </td>
    <td width="13%" height=17>
      <p align=center><font face="Times New Roman, Times, serif"
      size=3>23,976</font></p>
    </td>
  </tr>
</table>
<p>&nbsp;</p>
<p>&nbsp;</p>
<table cellspacing=1 cellpadding=1 width=800 align=center border=1>
  <tr valign=bottom>
    <td colspan=5 height=70>
      <p align=center><font face="Times New Roman, Times, serif"
      size=3><b>Reconciliation of Net Loss to Cash Flow from Operations Excluding
        Working Capital Changes</b></font><font face="Times New Roman, Times, serif"
      size=3><b><br>
        (Amounts in Thousands) </b></font></p>
    </td>
  </tr>
  <tr valign=bottom>
    <td width="40%" height=17>
      <p><font face="Times New Roman, Times, serif" size=3>&nbsp;&nbsp; </font></p>
    </td>
    <td colspan=2 height=17>
      <p align=center><font face="Times New Roman, Times, serif" size=3>Three
        Months Ended Dec 31,</font></p>
    </td>
    <td colspan=2 height=17>
      <div align="center"><font face="Times New Roman, Times, serif" size=3>Year
        ended Dec 31,</font></div>
    </td>
  </tr>
  <tr valign=bottom>
    <td width="40%" height=17>
      <p><font face="Times New Roman, Times, serif" size=3>&nbsp;&nbsp; </font></p>
    </td>
    <td width="17%" height=17>
      <p align=center><font face="Times New Roman, Times, serif"
      size=3><u>2003</u> </font></p>
    </td>
    <td width="15%" height=17>
      <p align=center><font face="Times New Roman, Times, serif"
      size=3><u>2002</u> </font></p>
    </td>
    <td width="15%" height=17>
      <p align=center><font face="Times New Roman, Times, serif"
      size=3><u>2003</u> </font></p>
    </td>
    <td width="13%" height=17>
      <p align=center><font face="Times New Roman, Times, serif"
      size=3><u>2002</u> </font></p>
    </td>
  </tr>
  <tr valign=bottom>
    <td width="40%" height=17>
      <p><font face="Times New Roman, Times, serif" size=3>Net loss</font></p>
    </td>
    <td width="17%" height=17>
      <p align=center><font face="Times New Roman, Times, serif" size=3>$ (92)</font></p>
    </td>
    <td width="15%" height=17>
      <p align=center><font face="Times New Roman, Times, serif" size=3>$ (446)
        </font></p>
    </td>
    <td width="15%" height=17>
      <p align=center><font face="Times New Roman, Times, serif" size=3>$ (1,250)</font></p>
    </td>
    <td width="13%" height=17>
      <p align=center><font face="Times New Roman, Times, serif" size=3>$ (2,971)</font></p>
    </td>
  </tr>
  <tr valign=bottom>
    <td width="40%" height=17>
      <p><font face="Times New Roman, Times, serif" size=3>Add back Non-cash charges:</font></p>
    </td>
    <td width="17%" height=17>
      <p align=center><font face="Times New Roman, Times, serif" size=3>&nbsp;</font></p>
    </td>
    <td width="15%" height=17>
      <p align=center><font face="Times New Roman, Times, serif" size=3>&nbsp;</font></p>
    </td>
    <td width="15%" height=17>
      <p align=center><font face="Times New Roman, Times, serif" size=3>&nbsp;</font></p>
    </td>
    <td width="13%" height=17>
      <p align=center><font face="Times New Roman, Times, serif" size=3>&nbsp;</font></p>
    </td>
  </tr>
  <tr valign=bottom>
    <td width="40%" height=17>
      <p><font face="Times New Roman, Times, serif" size=3>Depreciation/amortization
        of property</font></p>
    </td>
    <td width="17%" height=17>
      <p align=center><font face="Times New Roman, Times, serif"
      size=3>128</font></p>
    </td>
    <td width="15%" height=17>
      <p align=center><font face="Times New Roman, Times, serif"
      size=3>127</font></p>
    </td>
    <td width="15%" height=17>
      <p align=center><font face="Times New Roman, Times, serif"
      size=3>569</font></p>
    </td>
    <td width="13%" height=17>
      <p align=center><font face="Times New Roman, Times, serif"
      size=3>444</font></p>
    </td>
  </tr>
  <tr valign=bottom>
    <td width="40%" height=17><font face="Times New Roman, Times, serif"
      size=3>Amortization of intangible technology</font></td>
    <td width="17%" height=17>
      <div align=center><font face="Times New Roman, Times, serif"
      size=3>91</font></div>
    </td>
    <td width="15%" height=17>
      <div align=center><font face="Times New Roman, Times, serif"
      size=3>137</font></div>
    </td>
    <td width="15%" height=17>
      <div align=center><font face="Times New Roman, Times, serif"
      size=3>410</font></div>
    </td>
    <td width="13%" height=17>
      <div align=center><font face="Times New Roman, Times, serif"
      size=3>486</font></div>
    </td>
  </tr>
  <tr valign=bottom>
    <td width="40%" height=17>
      <p><font face="Times New Roman, Times, serif" size=3>Foreign currency gains
        </font></p>
    </td>
    <td width="17%" height=17>
      <p align=center><font face="Times New Roman, Times, serif"
      size=3>(43)</font></p>
    </td>
    <td width="15%" height=17>
      <p align=center><font face="Times New Roman, Times, serif"
      size=3>(34)</font></p>
    </td>
    <td width="15%" height=17>
      <p align=center><font face="Times New Roman, Times, serif"
      size=3>(92)</font></p>
    </td>
    <td width="13%" height=17>
      <p align=center><font face="Times New Roman, Times, serif"
      size=3>(34)</font></p>
    </td>
  </tr>
  <tr valign=bottom>
    <td width="40%" height=17>
      <p><font face="Times New Roman, Times, serif" size=3>Cash flow from (used
        by) operations*</font></p>
    </td>
    <td width="17%" height=17>
      <p align=center><font face="Times New Roman, Times, serif" size=3>$ 84</font></p>
    </td>
    <td width="15%" height=17>
      <p align=center><font face="Times New Roman, Times, serif" size=3>$ (216)
        </font></p>
    </td>
    <td width="15%" height=17>
      <p align=center><font face="Times New Roman, Times, serif" size=3>$ (363)
        </font></p>
    </td>
    <td width="13%" height=17>
      <p align=center><font face="Times New Roman, Times, serif" size=3>$ (2,075)
        </font></p>
    </td>
  </tr>
  <tr valign=bottom>
    <td width="40%" height=17>
      <p><font face="Times New Roman, Times, serif" size=3>*Excludes working capital
        changes </font></p>
    </td>
    <td width="17%" height=17>
      <p align=center><font face="Times New Roman, Times, serif" size=3>&nbsp;</font></p>
    </td>
    <td width="15%" height=17>
      <p align=center><font face="Times New Roman, Times, serif" size=3>&nbsp;</font></p>
    </td>
    <td width="15%" height=17>
      <p align=center><font face="Times New Roman, Times, serif" size=3>&nbsp;</font></p>
    </td>
    <td width="13%" height=17>
      <p align=center><font face="Times New Roman, Times, serif" size=3>&nbsp;</font></p>
    </td>
  </tr>
</table>
<p>&nbsp;</p>
<hr>
<p>&nbsp;</p>
<table cellspacing=1 cellpadding=1 width=695 align=center border=1>
  <tr valign=bottom>
    <td colspan=3 height="61">
      <p align=center><font face="Times New Roman, Times, serif"
      size=3><b>Socket Communications, Inc. <br>
        Condensed Summary Balance Sheets <br>
        (Amounts in Thousands</b></font>) </p>
    </td>
  </tr>
  <tr valign=bottom>
    <td height=26 width="44%">&nbsp;</td>
    <td height=26 colspan="2">
      <div align="center"><font face="Times New Roman, Times, serif" size="3">December
        31, </font></div>
    </td>
  </tr>
  <tr valign=bottom>
    <td height=24 width="44%"><font face="Times New Roman, Times, serif" size=3>&nbsp</font></td>
    <td height=24 width="29%">
      <div align="center"><font face="Times New Roman, Times, serif" size=3>2003</font></div>
    </td>
    <td height=24 width="27%">
      <div align="center"><font face="Times New Roman, Times, serif" size=3>2002</font>*
      </div>
    </td>
  </tr>
  <tr valign=bottom>
    <td width="44%">
      <p><font face="Times New Roman, Times, serif" size=3>Cash</font> </p>
    </td>
    <td width="29%">
      <p align=center><font face="Times New Roman, Times, serif" size=3>$ 6,422</font></p>
    </td>
    <td width="27%">
      <p align=center><font face="Times New Roman, Times, serif" size=3>$ 3,146
        </font></p>
    </td>
  </tr>
  <tr valign=bottom>
    <td width="44%">
      <p><font face="Times New Roman, Times, serif" size=3>Accounts receivable,
        net </font></p>
    </td>
    <td width="29%">
      <p align=center><font face="Times New Roman, Times, serif" size=3>3,648</font></p>
    </td>
    <td width="27%">
      <p align=center><font face="Times New Roman, Times, serif" size=3>2,308
        </font></p>
    </td>
  </tr>
  <tr valign=bottom>
    <td width="44%">
      <p><font face="Times New Roman, Times, serif" size=3>Inventories </font></p>
    </td>
    <td width="29%">
      <p align=center><font face="Times New Roman, Times, serif" size=3>1,737
        </font></p>
    </td>
    <td width="27%">
      <p align=center><font face="Times New Roman, Times, serif"
      size=3>2,129</font></p>
    </td>
  </tr>
  <tr valign=bottom>
    <td width="44%">
      <p><font face="Times New Roman, Times, serif" size=3>Other current assets</font>
      </p>
    </td>
    <td width="29%">
      <p align=center><font face="Times New Roman, Times, serif" size=3>210</font></p>
    </td>
    <td width="27%">
      <p align=center><font face="Times New Roman, Times, serif" size=3>604</font></p>
    </td>
  </tr>
  <tr valign=bottom>
    <td width="44%">
      <p><font face="Times New Roman, Times, serif" size=3>Property and equipment,
        net </font></p>
    </td>
    <td width="29%">
      <div align=center><font face="Times New Roman, Times, serif"
      size=3>585</font></div>
    </td>
    <td width="27%">
      <div align=center><font face="Times New Roman, Times, serif"
      size=3>789</font></div>
    </td>
  </tr>
  <tr valign=bottom>
    <td width="44%">
      <p><font face="Times New Roman, Times, serif" size=3>Goodwill </font></p>
    </td>
    <td width="29%">
      <p align=center><font face="Times New Roman, Times, serif" size=3>9,798
        </font></p>
    </td>
    <td width="27%">
      <p align=center><font face="Times New Roman, Times, serif" size=3>9,798
        </font></p>
    </td>
  </tr>
  <tr valign=bottom>
    <td width="44%">
      <p><font face="Times New Roman, Times, serif" size=3>Intangible technology</font>
      </p>
    </td>
    <td width="29%">
      <p align=center><font face="Times New Roman, Times, serif" size=3>711</font></p>
    </td>
    <td width="27%">
      <p align=center><font face="Times New Roman, Times, serif" size=3>1,122
        </font></p>
    </td>
  </tr>
  <tr valign=bottom>
    <td width="44%">
      <p><font face="Times New Roman, Times, serif" size=3>Other assets</font>
      </p>
    </td>
    <td width="29%">
      <p align=center><font face="Times New Roman, Times, serif" size=3>154</font></p>
    </td>
    <td width="27%">
      <p align=center><font face="Times New Roman, Times, serif" size=3>171</font></p>
    </td>
  </tr>
  <tr valign=bottom>
    <td width="44%">
      <p><font face="Times New Roman, Times, serif" size=3>Total Assets </font></p>
    </td>
    <td width="29%">
      <p align=center><font face="Times New Roman, Times, serif" size=3>$ 23,265
        </font></p>
    </td>
    <td width="27%">
      <p align=center><font face="Times New Roman, Times, serif" size=3>$ 20,067
        </font></p>
    </td>
  </tr>
  <tr valign=bottom>
    <td colspan=3><font face="Times New Roman, Times, serif"
      size=3>&nbsp;</font></td>
  </tr>
  <tr valign=bottom>
    <td width="44%">
      <p><font face="Times New Roman, Times, serif" size=3>Accounts payable and
        accrued liabilities</font> </p>
    </td>
    <td width="29%">
      <p align=center><font face="Times New Roman, Times, serif" size=3>$ 3,751</font></p>
    </td>
    <td width="27%">
      <p align=center><font face="Times New Roman, Times, serif" size=3>$ 3,761
        </font></p>
    </td>
  </tr>
  <tr valign=bottom>
    <td width="44%">
      <p><font face="Times New Roman, Times, serif" size=3>Bank line of credit</font>
      </p>
    </td>
    <td width="29%">
      <p align=center><font face="Times New Roman, Times, serif" size=3>1,567</font></p>
    </td>
    <td width="27%">
      <p align=center><font face="Times New Roman, Times, serif" size=3>1,906
        </font></p>
    </td>
  </tr>
  <tr valign=bottom>
    <td width="44%">
      <p><font face="Times New Roman, Times, serif" size=3>Deferred income on
        shipments to distributors</font></p>
    </td>
    <td width="29%">
      <p align=center><font face="Times New Roman, Times, serif" size=3>852</font></p>
    </td>
    <td width="27%">
      <p align=center><font face="Times New Roman, Times, serif" size=3>531</font></p>
    </td>
  </tr>
  <tr valign=bottom>
    <td width="44%"><font face="Times New Roman, Times, serif" size=3>Note payable</font></td>
    <td width="29%">
      <div align=center><font face="Times New Roman, Times, serif"
      size=3>505</font></div>
    </td>
    <td width="27%">
      <div align=center><font face="Times New Roman, Times, serif"
      size=3>1,693</font></div>
    </td>
  </tr>
  <tr valign=bottom>
    <td width="44%"><font face="Times New Roman, Times, serif" size=3>Capital
      leases/other non-current liabilities</font></td>
    <td width="29%">
      <div align=center><font face="Times New Roman, Times, serif"
      size=3>92</font></div>
    </td>
    <td width="27%">
      <div align=center><font face="Times New Roman, Times, serif"
      size=3>44</font></div>
    </td>
  </tr>
  <tr valign=bottom>
    <td width="44%"><font face="Times New Roman, Times, serif" size=3>Series E
      redeemable convertible preferred stock</font></td>
    <td width="29%">
      <div align=center><font face="Times New Roman, Times, serif"
      size=3>--</font></div>
    </td>
    <td width="27%">
      <div align=center><font face="Times New Roman, Times, serif"
      size=3>731</font></div>
    </td>
  </tr>
  <tr valign=bottom>
    <td width="44%">
      <p><font face="Times New Roman, Times, serif" size=3>Common and convertible
        preferred stock </font></p>
    </td>
    <td width="29%">
      <p align=center><font face="Times New Roman, Times, serif" size=3>50,460
        </font></p>
    </td>
    <td width="27%">
      <p align=center><font face="Times New Roman, Times, serif" size=3>43,411
        </font></p>
    </td>
  </tr>
  <tr valign=bottom>
    <td width="44%">
      <p><font face="Times New Roman, Times, serif" size=3>Accumulated deficit</font>
      </p>
    </td>
    <td width="29%">
      <div align=center><font face="Times New Roman, Times, serif"
      size=3>(33,962)</font></div>
    </td>
    <td width="27%">
      <div align=center><font face="Times New Roman, Times, serif"
      size=3>(32,010)</font></div>
    </td>
  </tr>
  <tr valign=bottom>
    <td width="44%"><font face="Times New Roman, Times, serif" size=3>Total Liabilities
      and Equity</font></td>
    <td width="29%">
      <div align=center><font face="Times New Roman, Times, serif" size=3>$ 23,265
        </font></div>
    </td>
    <td width="27%">
      <div align=center><font face="Times New Roman, Times, serif" size=3>$ 20,067
        </font></div>
    </td>
  </tr>
  <tr valign=bottom>
    <td colspan=3>
      <p><font face="Times New Roman, Times, serif" size=3>*Derived from audited
        financial statements. </font></p>
    </td>
  </tr>
</table>
<p align="center">&nbsp;</p>
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