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<SEC-DOCUMENT>0000944075-04-000010.txt : 20040421
<SEC-HEADER>0000944075-04-000010.hdr.sgml : 20040421
<ACCEPTANCE-DATETIME>20040421162517
ACCESSION NUMBER:		0000944075-04-000010
CONFORMED SUBMISSION TYPE:	8-K
PUBLIC DOCUMENT COUNT:		2
CONFORMED PERIOD OF REPORT:	20040331
ITEM INFORMATION:		
ITEM INFORMATION:		Financial statements and exhibits
FILED AS OF DATE:		20040421

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:		04745772

	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-8k0421.htm
<TEXT>
<html>
<head>

</head>

<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>April 21</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 April 21, 2004, Socket
  Communications, Inc. issued a press release reporting its results for the three
  months ended March 31, 2004. 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" size="3">Text of
      press release, dated April 21, 2004, titled "Socket Communications Reports
      First Quarter of Profitability on Record Revenue of $6.7 million".</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: April
          21, 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" size="3">Text of
      press release, dated April 21, 2004, titled "Socket Communications Reports
      First Quarter of Profitability on Record Revenue of $6.7 million".</font></td>
  </tr>
</table>
<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
<TEXT>
<html>
<head>


</head>

<body bgcolor="#FFFFFF">
<p align="right"><b><font size="3">Exhibit 99.1</font></b></p>
<p><font size="3" face="Times New Roman, Times, serif"><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="108%" border="0" cellspacing="0" cellpadding="0" align="left">
  <tr valign="bottom">
    <td width="456" height="25"><font face="Times New Roman, Times, serif" size="3">David
      Dunlap, CFO</font></td>
    <td width="228" height="25"><font face="Times New Roman, Times, serif" size="3">Cormac
      Glynn</font></td>
  </tr>
  <tr valign="bottom">
    <td width="456" height="20"><font face="Times New Roman, Times, serif" size="3">Socket
      Communications, Inc.</font></td>
    <td width="228" height="20"><font face="Times New Roman, Times, serif" size="3">CEOCast</font></td>
  </tr>
  <tr valign="bottom">
    <td width="456" height="20"><font face="Times New Roman, Times, serif" size="3">(510)
      744-2735</font></td>
    <td width="228" height="20"><font face="Times New Roman, Times, serif" size="3">(212)
      732-4300</font></td>
  </tr>
  <tr valign="bottom">
    <td width="456" height="20">email: dave@socketcom.com</td>
    <td width="228" height="20">email: cglynn@ceocast.com</td>
  </tr>
</table>
<p><font face="Times New Roman, Times, serif" size="3"> </font></p>
<p align="center">&nbsp;</p>
<p align="center">&nbsp;</p>
<p align="center">&nbsp;</p>
<p align="center"><font size="3" face="Times New Roman, Times, serif"><font size="6"><b><font size="5">Socket
  Communications Reports First Quarter of Profitability on<br>
  Record Revenue of $6.7 million</font></b><br>
  </font> <i>Growth in sales of mobile bar code scanning and wireless connectivity
  products drives revenue growth of 38 percent </i></font></p>
<p><font size="3" face="Times New Roman, Times, serif"><b>Newark, CA, April 21,
  2004</b> - Socket Communications, Inc. (NASDAQ: SCKT; PSE: SOK), the Mobile
  Connection&#153; Company, today reported record revenue for the first quarter
  ended March 31, 2003 of $6.7 million, the fifth consecutive record revenue quarter.
  First quarter revenue increased 38 percent compared to revenue of $4.9 million
  for the same quarter a year ago and increased 12 percent compared to revenue
  of $6.0 million for the previous sequential quarter. Net income applicable to
  common stockholders for the first quarter was $40,000, or $0.00 per share, compared
  to a net loss applicable to common stockholders for the first quarter a year
  ago of ($1.0) million or ($0.04) per share and a net loss for the previous quarter
  of ($108,000) or ($0.00) per share. </font></p>
<p><font size="3" face="Times New Roman, Times, serif">The balance sheet at March
  31, 2004 included cash of $7.7 million, a current ratio of 1.7 to one, equity
  of $16.6 million and no long term debt. </font></p>
<p><font size="3" face="Times New Roman, Times, serif">&quot;The combination of
  new products, growth in our wireless products and strong growth in our bar code
  scanning product line allowed us to report our first profitable quarter,&quot;
  said Kevin Mills, president and chief executive officer of Socket Communications.
  </font></p>
<p><font size="3" face="Times New Roman, Times, serif">&quot;The lightweight,
  highly mobile bar code scanning capabilities of a Pocket PC or Palm handheld
  computer in combination with our bar code scanning products brings significant
  productivity benefits to enterprises wanting to collect data quickly and easily,&quot;
  continued Mills. Enterprise deployment of Socket's mobile bar code scanning
  products and the Company's introduction last September of an SDIO mobile plug-in
  bar code scanner caused Socket's first quarter sales of these products to grow
  24 percent over the previous quarter and 85 percent over the same quarter a
  year ago.</font></p>
<p><font size="3" face="Times New Roman, Times, serif">&quot;In addition, growing
  recognition of the benefits of Bluetooth wireless technology and wireless LAN
  technology has resulted in continued increases in sales of our wireless connectivity
  products,&quot; said Mills. Wireless technology products are now available within
  all of Socket's product families and represented more than 34 percent of the
  Company's revenue in the first quarter. Socket products incorporating Bluetooth
  Wireless Technology include plug-in cards in CF and SDIO form factors, embedded
  modules, cordless serial adapters, and cordless stand-alone products. Cordless
  stand-alone products consist of a modem, GPS receiver and a recently announced
  cordless bar code scanner. &quot;Expanding the wireless connections available
  to mobile devices is one of our major focus areas. We will soon be enabling
  the use of our stand-alone Bluetooth wireless technology products with tablet
  PCs and notebooks, thereby expanding our market for these products. Plus, we
  are working on adding to and enhancing our wireless LAN technology products,&quot;
  said Mills.</font></p>
<p><font size="3" face="Times New Roman, Times, serif">In addition, Socket has
  more than 30 third-party design wins currently under development using the Company's
  embedded chips and Bluetooth modules. These chip design wins are primarily for
  wide area network cards, and the embedded Bluetooth module design wins are primarily
  for ruggedized industrial PDAs. Most of these design wins are expected to move
  from development to revenue-producing production stages during 2004.</font></p>
<p><font size="3" face="Times New Roman, Times, serif">&quot;The dynamics driving
  our growth over the last six quarters have resulted from our ability to innovate
  in developing new connection and data collection products, particularly bar
  code scanning and wireless connection products,&quot; Mills concluded. &quot;This
  has positioned Socket to capitalize on lower prices for handheld computing devices,
  improvements in the network infrastructures that enable higher speed data communications
  including mobile phone networks and Internet hotspots, growth in the sale of
  Pocket PCs including increasing enterprise deployments, and an improving economy.
  These factors, combined with Socket's excellent brand name and well established
  worldwide distribution system are expected to contribute to meeting our goal
  of continued profitable growth during the balance of this year.&quot;</font></p>
<p><font size="3" face="Times New Roman, Times, serif"><b>Additional Financial
  Information</b></font></p>
<p><font size="3" face="Times New Roman, Times, serif">The Company's balance sheet
  at March 31, 2004 included a cash balance of $7.7 million, reflecting a net
  increase of $1.3 million from the cash balance at December 31, 2003. Sources
  of cash were increased borrowings on the Company's bank line of credit of $1.9
  million, proceeds from the exercise of stock options and warrants of $0.1 million,
  and positive cash flow from earnings before depreciation and amortization of
  intangibles of $0.2 million. Cash was used for the payment of $0.3 million of
  a note payable to Nokia, $0.1 million was invested in property and equipment,
  and $0.5 million was used for working capital changes, primarily increases in
  accounts receivable of $0.7 million partially offset by $0.2 million of increases
  in accounts payable. The final installment payment on the Company's note payable
  to Nokia was paid in April 2004.</font></p>
<p><font size="3" face="Times New Roman, Times, serif">The calculation of diluted
  earnings per share includes shares assumed issued from the conversion of Series
  F convertible preferred stock, and the exercise of in-the-money stock options
  and warrants using the treasury stock method, which assumes repurchase of shares
  at current market prices with option and warrant exercise proceeds.</font></p>
<p><font size="3" face="Times New Roman, Times, serif">Revenue and revenue growth
  by Product Family in millions of dollars were as follows:</font></p>
<table cellspacing=1 cellpadding=1 width=667 align=center border=1>
  <tr valign=bottom>
    <td width="26%" height=49>
      <div align="center"><b>Product Family</b></div>
    </td>
    <td width="20%" height=49>
      <p align="center"><font face="Times New Roman, Times, serif" size=3><b>Q1
        2004<br>
        Revenue </b></font></p>
    </td>
    <td width="25%" height=49>
      <p align=center><font face="Times New Roman, Times, serif" size=3><b>% Growth
        Over<br>
        Q4 2003</b></font></p>
    </td>
    <td width="29%" height=49>
      <div align="center"><font face="Times New Roman, Times, serif" size=3><b>%
        Growth Over<br>
        Q1 2003</b></font></div>
    </td>
  </tr>
  <tr valign=bottom>
    <td width="26%" height=31>Connectivity Products</td>
    <td width="20%" height=31>
      <p align="center"><font face="Times New Roman, Times, serif" size=3>$2.6</font></p>
    </td>
    <td width="25%" height=31>
      <p align=center><font face="Times New Roman, Times, serif"
      size=3>6%</font></p>
    </td>
    <td width="29%" height=31>
      <div align="center">34%</div>
    </td>
  </tr>
  <tr valign=bottom>
    <td width="26%" height=17>Bar Code Scanning Products</td>
    <td width="20%" height=17>
      <p align="center">$2.4</p>
    </td>
    <td width="25%" height=17>
      <p align=center>24%</p>
    </td>
    <td width="29%" height=17>
      <p align=center><font face="Times New Roman, Times, serif" size=3>85%</font></p>
    </td>
  </tr>
  <tr valign=bottom>
    <td width="26%" height=17>Peripheral Connection Products</td>
    <td width="20%" height=17>
      <p align="center">$0.9</p>
    </td>
    <td width="25%" height=17>
      <p align=center><font face="Times New Roman, Times, serif" size=3>0%&nbsp;</font></p>
    </td>
    <td width="29%" height=17>
      <p align=center><font face="Times New Roman, Times, serif" size=3>&nbsp;(11%)</font></p>
    </td>
  </tr>
  <tr valign=bottom>
    <td width="26%" height=17>Embedded Products</td>
    <td width="20%" height=17>
      <p align="center">$0.8</p>
    </td>
    <td width="25%" height=17>
      <p align=center><font face="Times New Roman, Times, serif"
      size=3>17%</font></p>
    </td>
    <td width="29%" height=17>
      <p align=center><font face="Times New Roman, Times, serif"
      size=3>30%</font></p>
    </td>
  </tr>
  <tr valign=bottom>
    <td width="26%" height=17>
      <div align="center">Totals</div>
    </td>
    <td width="20%" height=17>
      <div align="center"><font face="Times New Roman, Times, serif"
      size=3>$6.7</font></div>
    </td>
    <td width="25%" height=17>
      <div align=center><font face="Times New Roman, Times, serif"
      size=3>12%</font></div>
    </td>
    <td width="29%" height=17>
      <div align=center><font face="Times New Roman, Times, serif"
      size=3>38%</font></div>
    </td>
  </tr>
</table>
<p><font size="3" face="Times New Roman, Times, serif"><br>
  </font><font size="3" face="Times New Roman, Times, serif">Growth in connectivity
  products during the first quarter of 2004 compared to the fourth and first quarters
  of 2003 was primarily due to growth in wireless connectivity products. Modem
  sales on the other hand were somewhat higher in the fourth quarter of 2003.
  Growth in bar code scanning products was primarily due to growth in the Company's
  In-Hand Scan plug-in bar code scanner and the introduction in September 2003
  of an SDIO bar code scanner. Peripheral connection products continued to decline
  moderately as more notebooks use USB technologies to attach peripherals. Embedded
  products' growth reflected increased sales of chips and embedded Bluetooth modules
  as more third party products move from design to production.</font></p>
<p><font size="3" face="Times New Roman, Times, serif">Gross profit for the first
  quarter of 2004 was $3.4 million, or 51 percent of revenue, compared to $3.0
  million or 50 percent of revenue for the previous quarter and $2.4 million or
  49 percent of revenue for the first quarter one year ago. The higher gross profit
  percentages reflect product cost reductions and the benefits of spreading fixed
  overhead costs over a larger number of products, partially offset by product
  price reductions to improve product competitiveness.</font></p>
<p><font size="3" face="Times New Roman, Times, serif">Research and development
  expense was $0.9 million in the first quarter of 2004 compared to $0.9 million
  in the fourth quarter of 2003 and $0.9 million in the first quarter of 2003.
  Compensation expense was higher in the first quarter of 2004 reflecting an increase
  in headcount. </font></p>
<p><font size="3" face="Times New Roman, Times, serif">Sales and marketing expense
  was $1.5 million in the first quarter of 2004 compared to $1.3 million in the
  fourth and first quarters of 2003. The increase in the first quarter of 2004
  reflects higher compensation expense from an increase in sales and marketing
  headcount and from increased market development fund expenses which are allocated
  as a percentage of sales to distributors and resellers for marketing and reflect
  increasing sales levels.</font></p>
<p><font size="3" face="Times New Roman, Times, serif">General and administrative
  expense was $0.8 million in the first quarter of 2004 compared to $0.8 million
  in the fourth quarter of 2003 and $0.7 million in the first quarter of 2003.
  The increases over the first quarter of 2003 reflect increases in the costs
  of professional services, including the costs of defending a patent infringement
  lawsuit, and insurance and increased shareholder communications. The Company
  has filed a motion for summary judgment dismissal of the lawsuit.</font></p>
<p><font size="3" face="Times New Roman, Times, serif">Preferred stock dividends
  were $13,000 in the first quarter of 2004 compared to $17,000 in the fourth
  quarter of 2003 and $32,000 in the first quarter of 2003 and reflect declining
  preferred stock balances outstanding resulting from conversion into common stock.
  The dividends relate to the issuance of $2.0 million in Series F convertible
  preferred stock in March 2003, which was 68 percent converted to common stock
  at December 31, 2003 and March 31, 2004, and to the issuance of $1.0 million
  in Series E redeemable preferred stock in October 2002 that was fully converted
  to common stock during the third quarter of 2003. The first quarter of 2003
  also had an accretion charge of $0.3 million relating to the Series F convertible
  preferred stock reflecting 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.</font></p>
<p><font size="3" face="Times New Roman, Times, serif"><b>Conference Call and
  Webcast</b><br>
  Management of Socket will hold a conference call today at 2 p.m. Pacific time
  to discuss the quarterly 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. A replay will be
  available for one week at (800) 405-2236 or (303) 590-3000, passcode: 576972#
  and a transcript of the call will be posted on Socket's website at www.socketcom.com
  within a few days.</font></p>
<p><font size="3" face="Times New Roman, Times, serif"><br>
  <b>About Socket Communications</b><br>
  Socket Communications, Inc., the Mobile Connection&#153; Company, provides a
  broad 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 size="3" face="Times New Roman, Times, serif"><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 our 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 and 10-Q reports filed
  with the Securities and Exchange Commission.</font></p>
<p><font size="3" face="Times New Roman, Times, serif">Socket and Battery Friendly
  are registered trademarks of Socket Communications, Inc. The Mobile Connection
  Company and Mobility Friendly are trademarks of Socket Communications, Inc.
  Bluetooth is a trademark owned by the Bluetooth SIG, Inc. All other product
  and company names herein may be trademarks of their respective owners. &copy;
  2004, Socket Communications, Inc. All rights reserved.</font></p>
<p align="center"><font size="3" face="Times New Roman, Times, serif"><br>
  - Financial Statements follow -</font></p>
<p> </p>
<hr>
<p align="center"><font size="3" face="Times New Roman, Times, serif"></font></p>
<p>&nbsp;</p>
<table cellspacing=1 cellpadding=1 width=688 align=center border=1>
  <tr valign=bottom>
    <td colspan=3 height=70>
      <p align=center><font size="3" face="Times New Roman, Times, serif"><b>Socket
        Communications, Inc.<br>
        Summary Consolidated Statements of Operations (Unaudited)<br>
        (Amounts in Thousands except per share amounts)</b></font></p>
    </td>
  </tr>
  <tr valign=bottom>
    <td width="51%" 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 March 31,</font></p>
    </td>
  </tr>
  <tr valign=bottom>
    <td width="51%" height=17>
      <p><font face="Times New Roman, Times, serif" size=3>&nbsp;&nbsp; </font></p>
    </td>
    <td width="25%" height=17>
      <p align=center><font face="Times New Roman, Times, serif"
      size=3><u>2004</u> </font></p>
    </td>
    <td width="24%" height=17>
      <p align=center><font face="Times New Roman, Times, serif"
      size=3><u>2003</u> </font></p>
    </td>
  </tr>
  <tr valign=bottom>
    <td width="51%" height=17>
      <p><font face="Times New Roman, Times, serif" size=3>Revenue </font></p>
    </td>
    <td width="25%" height=17>
      <p align=center><font face="Times New Roman, Times, serif" size=3>$ 6,743</font></p>
    </td>
    <td width="24%" height=17>
      <p align=center><font face="Times New Roman, Times, serif" size=3>$ 4,879</font></p>
    </td>
  </tr>
  <tr valign=bottom>
    <td width="51%" height=17>
      <p><font face="Times New Roman, Times, serif" size=3>Cost of revenue </font></p>
    </td>
    <td width="25%" height=17>
      <p align=center><font face="Times New Roman, Times, serif"
      size=3> 3,311</font></p>
    </td>
    <td width="24%" height=17>
      <p align=center>2,477</p>
    </td>
  </tr>
  <tr valign=bottom>
    <td width="51%" height=17>
      <p><font face="Times New Roman, Times, serif" size=3>Gross profit</font></p>
    </td>
    <td width="25%" height=17>
      <p align=center><font face="Times New Roman, Times, serif"
      size=3>3,432</font></p>
    </td>
    <td width="24%" height=17>
      <p align=center><font face="Times New Roman, Times, serif"
      size=3>2,402</font></p>
    </td>
  </tr>
  <tr valign=bottom>
    <td width="51%" height=17>
      <blockquote>
        <p><font face="Times New Roman, Times, serif" size=3>Gross profit percent</font></p>
      </blockquote>
    </td>
    <td width="25%" height=17>
      <p align=center><font face="Times New Roman, Times, serif"
      size=3>51%</font> </p>
    </td>
    <td width="24%" height=17>
      <p align=center><font face="Times New Roman, Times, serif"
      size=3>49%</font></p>
    </td>
  </tr>
  <tr valign=bottom>
    <td width="51%" height=17>
      <p><font face="Times New Roman, Times, serif" size=3>Research and development
        </font></p>
    </td>
    <td width="25%" height=17>
      <p align=center><font face="Times New Roman, Times, serif"
      size=3>924</font></p>
    </td>
    <td width="24%" height=17>
      <p align=center><font face="Times New Roman, Times, serif"
      size=3>921</font></p>
    </td>
  </tr>
  <tr valign=bottom>
    <td width="51%" height=17>
      <p><font face="Times New Roman, Times, serif" size=3>Sales and marketing
        </font></p>
    </td>
    <td width="25%" height=17>
      <p align=center><font face="Times New Roman, Times, serif"
      size=3>1,519</font></p>
    </td>
    <td width="24%" height=17>
      <p align=center><font face="Times New Roman, Times, serif"
      size=3>1,284</font></p>
    </td>
  </tr>
  <tr valign=bottom>
    <td width="51%" height=17>
      <p><font face="Times New Roman, Times, serif" size=3>General and administrative
        </font></p>
    </td>
    <td width="25%" height=17>
      <p align=center><font face="Times New Roman, Times, serif"
      size=3>847</font></p>
    </td>
    <td width="24%" height=17>
      <p align=center><font face="Times New Roman, Times, serif"
      size=3>674</font></p>
    </td>
  </tr>
  <tr valign=bottom>
    <td width="51%" height=17><font face="Times New Roman, Times, serif"
      size=3>Amortization of intangible technology</font></td>
    <td width="25%" height=17>
      <div align=center><font face="Times New Roman, Times, serif"
      size=3>92</font></div>
    </td>
    <td width="24%" height=17>
      <div align=center><font face="Times New Roman, Times, serif"
      size=3>116</font></div>
    </td>
  </tr>
  <tr valign=bottom>
    <td width="51%" height=17>
      <blockquote>
        <p><font face="Times New Roman, Times, serif" size=3>Total operating expenses</font></p>
      </blockquote>
    </td>
    <td width="25%" height=17>
      <p align=center><font face="Times New Roman, Times, serif"
      size=3>3,382</font></p>
    </td>
    <td width="24%" height=17>
      <p align=center><font face="Times New Roman, Times, serif"
      size=3>2,995</font></p>
    </td>
  </tr>
  <tr valign=bottom>
    <td width="51%" height=17><font face="Times New Roman, Times, serif"
      size=3>Interest (income) expense, net</font></td>
    <td width="25%" height=17>
      <div align=center><font face="Times New Roman, Times, serif"
      size=3>(3)</font></div>
    </td>
    <td width="24%" height=17>
      <div align=center><font face="Times New Roman, Times, serif"
      size=3>20</font></div>
    </td>
  </tr>
  <tr valign=bottom>
    <td width="51%" height=17>
      <p><font face="Times New Roman, Times, serif" size=3>Net income (loss) </font></p>
    </td>
    <td width="25%" height=17>
      <p align=center><font face="Times New Roman, Times, serif" size=3>53 </font></p>
    </td>
    <td width="24%" height=17>
      <p align=center><font face="Times New Roman, Times, serif" size=3>(613)
        </font></p>
    </td>
  </tr>
  <tr valign=bottom>
    <td width="51%" height=29>
      <p>Preferred stock dividends</p>
    </td>
    <td width="25%" height=29>
      <p align=center><font face="Times New Roman, Times, serif"
      size=3>(13)</font></p>
    </td>
    <td width="24%" height=29>
      <p align=center><font face="Times New Roman, Times, serif"
      size=3>(32)</font></p>
    </td>
  </tr>
  <tr valign=bottom>
    <td width="51%" height=28>
      <p><font face="Times New Roman, Times, serif" size=3>Deemed dividends/preferred
        stock accretion</font></p>
    </td>
    <td width="25%" height=28>
      <p align=center><font face="Times New Roman, Times, serif"
      size=3>--</font> </p>
    </td>
    <td width="24%" height=28>
      <p align=center><font face="Times New Roman, Times, serif"
      size=3>(383)</font></p>
    </td>
  </tr>
  <tr valign=bottom>
    <td width="51%" height=17>
      <p><font face="Times New Roman, Times, serif" size=3>Net income (loss) applicable
        to common stockholders</font> </p>
    </td>
    <td width="25%" height=17>
      <p align=center><font face="Times New Roman, Times, serif" size=3>$ 40</font></p>
    </td>
    <td width="24%" height=17>
      <p align=center><font face="Times New Roman, Times, serif" size=3>$ (1,028)
        </font></p>
    </td>
  </tr>
  <tr valign=bottom>
    <td valign=top width="51%" height=17>
      <p><font face="Times New Roman, Times, serif" size=3>Net income (loss) per
        share applicable to common stockholders<br>
        Basic<br>
        Diluted </font></p>
    </td>
    <td width="25%" height=17>
      <p align=center><font face="Times New Roman, Times, serif" size=3>$ 0.00<br>
        $ 0.00 </font></p>
    </td>
    <td width="24%" height=17>
      <p align=center><font face="Times New Roman, Times, serif" size=3>$ (0.04)<br>
        N/A </font></p>
    </td>
  </tr>
  <tr valign=bottom>
    <td width="51%" height=17>
      <p><font face="Times New Roman, Times, serif" size=3>Weighted average shares
        outstanding</font> <br>
        Basic<br>
        Diluted </p>
    </td>
    <td width="25%" height=17>
      <p align=center><font face="Times New Roman, Times, serif"
      size=3>29,934<br>
        34,479 </font></p>
    </td>
    <td width="24%" height=17>
      <p align=center><font face="Times New Roman, Times, serif"
      size=3>24,207<br>
        N/A </font></p>
    </td>
  </tr>
</table>
<br>
<br>
<br>
<br>
<hr>
<br>
<br>
<br>
<br>
<br>
<table cellspacing=1 cellpadding=1 width=674 align=center border=1>
  <tr valign=bottom>
    <td colspan=3 height="67">
      <p align="center"><b><font size="3" face="Times New Roman, Times, serif">Socket
        Communications, Inc.<br>
        Condensed Consolidated Summary Balance Sheets<br>
        (Amounts in Thousands)</font></b></p>
    </td>
  </tr>
  <tr valign=bottom>
    <td height=26 width="44%">&nbsp;</td>
    <td height=26>
      <div align="center"><font face="Times New Roman, Times, serif" size="3">March
        31, 2004<br>
        (Unaudited) </font></div>
    </td>
    <td height=26>
      <div align="center">December 31, 2003*<br>
      </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>$ 7,695</font></p>
    </td>
    <td width="27%">
      <p align=center><font face="Times New Roman, Times, serif" size=3>$ 6,422
        </font></p>
    </td>
  </tr>
  <tr valign=bottom>
    <td width="44%">
      <p><font face="Times New Roman, Times, serif" size=3>Accounts receivables
        </font></p>
    </td>
    <td width="29%">
      <p align=center><font face="Times New Roman, Times, serif" size=3>4,339</font></p>
    </td>
    <td width="27%">
      <p align=center><font face="Times New Roman, Times, serif" size=3>3,648
        </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>1,724
        </font></p>
    </td>
    <td width="27%">
      <p align=center><font face="Times New Roman, Times, serif"
      size=3>1,737</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>218</font></p>
    </td>
    <td width="27%">
      <p align=center><font face="Times New Roman, Times, serif" size=3>210</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>573</font></div>
    </td>
    <td width="27%">
      <div align=center><font face="Times New Roman, Times, serif"
      size=3>585</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>619</font></p>
    </td>
    <td width="27%">
      <p align=center><font face="Times New Roman, Times, serif" size=3>711 </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>148</font></p>
    </td>
    <td width="27%">
      <p align=center><font face="Times New Roman, Times, serif" size=3>154</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>$ 25,114
        </font></p>
    </td>
    <td width="27%">
      <p align=center><font face="Times New Roman, Times, serif" size=3>$ 23,265
        </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>$ 3,915</font></p>
    </td>
    <td width="27%">
      <p align=center><font face="Times New Roman, Times, serif" size=3>$ 3,751
        </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>3,456</font></p>
    </td>
    <td width="27%">
      <p align=center><font face="Times New Roman, Times, serif" size=3>1,567
        </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>895</font></p>
    </td>
    <td width="27%">
      <p align=center><font face="Times New Roman, Times, serif" size=3>852</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>123</font></div>
    </td>
    <td width="27%">
      <div align=center>505</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>88</font></div>
    </td>
    <td width="27%">
      <div align=center><font face="Times New Roman, Times, serif"
      size=3>92</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>50,559
        </font></p>
    </td>
    <td width="27%">
      <p align=center><font face="Times New Roman, Times, serif" size=3>50,460
        </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>(33,922)</font></div>
    </td>
    <td width="27%">
      <div align=center><font face="Times New Roman, Times, serif"
      size=3>(33,962)</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>$ 25,114
        </font></div>
    </td>
    <td width="27%">
      <div align=center><font face="Times New Roman, Times, serif" size=3>$ 23,265
        </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>
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