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<SEC-DOCUMENT>0000944075-04-000020.txt : 20040721
<SEC-HEADER>0000944075-04-000020.hdr.sgml : 20040721
<ACCEPTANCE-DATETIME>20040721162012
ACCESSION NUMBER:		0000944075-04-000020
CONFORMED SUBMISSION TYPE:	8-K
PUBLIC DOCUMENT COUNT:		2
CONFORMED PERIOD OF REPORT:	20040721
ITEM INFORMATION:		
ITEM INFORMATION:		Financial statements and exhibits
FILED AS OF DATE:		20040721

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:		04924593

	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-8k0721.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>July 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 July 21, 2004, Socket
  Communications, Inc. issued a press release reporting its results for the three
  and six months ended June 30, 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 height="41">
      <div align=center><font
      face="Times New Roman, Times, serif">99.1</font></div>
    </td>
    <td width=29 height="41">&nbsp;</td>
    <td width=680 height="41"><font face="Times New Roman, Times, serif" size="3">Text
      of press release, dated July 21, 2004, titled "Socket Communications Reports
      33 Percent Increase in Quarterly Revenue and Second Consecutive Quarter
      of Net Income</font><font face="Times New Roman, Times, serif" size="3">".</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: July
          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 July 21, 2004, titled "Socket Communications Reports
      33 Percent Increase in Quarterly Revenue and Second Consecutive Quarter
      of Net Income".</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>2
<FILENAME>pressrelease.htm
<TEXT>
<html>
<head>


</head>

<body bgcolor="#FFFFFF">
<p align="right"><font face="Times New Roman, Times, serif"><b><font size="3">Exhibit
  99.1</font></b></font></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="488" height="25"><font face="Times New Roman, Times, serif" size="3">David
      Dunlap, CFO</font></td>
    <td width="564" height="25"><font face="Times New Roman, Times, serif" size="3">Cormac
      Glynn</font></td>
  </tr>
  <tr valign="bottom">
    <td width="488" height="20"><font face="Times New Roman, Times, serif" size="3">Socket
      Communications, Inc.</font></td>
    <td width="564" height="20"><font face="Times New Roman, Times, serif" size="3">CEOcast,
      Inc. for Socket Communications, Inc.</font></td>
  </tr>
  <tr valign="bottom">
    <td width="488" height="20"><font face="Times New Roman, Times, serif" size="3">(510)
      744-2735</font></td>
    <td width="564" height="20"><font face="Times New Roman, Times, serif" size="3">(212)
      732-4300</font></td>
  </tr>
</table>
<p>&nbsp;</p>
<p align="center">&nbsp;</p>
<p align="center">&nbsp;</p>
<p align="center">&nbsp;</p>
<p align="center"><font face="Times New Roman, Times, serif" size="4"><b><font size="5">Socket
  Communications Reports 33 Percent Increase in Quarterly Revenue and Second Consecutive
  Quarter of Net Income</font></b></font></p>
<p align="center"><font face="Times New Roman, Times, serif" size="3"><b><i>Company
  Expects Second Half Revenue Growth and Increased Profitability </i></b></font></p>
<p><font face="Times New Roman, Times, serif" size="3"><b>Newark, CA -- July 21,
  2004</b> -- Socket Communications, Inc. (Nasdaq: SCKT) announced financial results
  for its second quarter ended June 30, 2004. The Company reported revenue of
  $6.7 million, an increase of 33 percent compared to revenue of $5.1 million
  for the same quarter a year ago. The company reported net income applicable
  to common stockholders for the quarter ended June 30, 2004 of $43,000 or $0.00
  per share compared to a net loss of ($0.5) million or ($0.02) per share for
  the same quarter a year ago. The second quarter represented the Company's second
  consecutive quarter of net income.</font></p>
<p><font face="Times New Roman, Times, serif" size="3">Revenue for the six months
  ended June 30, 2004 was $13.5 million, an increase of 35 percent compared to
  revenue of $10.0 million for the same period one year ago. Net income applicable
  to common stockholders for the six months ended June 30, 2004 was $83,000, or
  $0.00 per share, compared to a net loss of ($1.6) million or ($0.06) per share
  for the comparative period one year ago. </font></p>
<p><font face="Times New Roman, Times, serif" size="3">Revenue and earnings for
  the second quarter were flat in comparison to the previous quarter due to the
  timing of the receipt of orders. Backlog (orders received as of the end of the
  quarter that are shippable in the following quarter) increased from $1.4 million
  at the end of the first quarter of 2004 to $1.6 million at the end of the second
  quarter of 2004. Since July 1st, the Company has received an additional $1.5
  million in orders, a fast start for the third quarter, bringing its total shippable
  orders as of today to $3.1 million. </font></p>
<p><font face="Times New Roman, Times, serif" size="3">The balance sheet at June
  30, 2004 included cash of $7.6 million, a current ratio of 1.7 to one, equity
  of $16.7 million and no long term debt. Inventory balances at June 30, 2004
  increased to $2.7 million, compared to $1.7 million at March 31, 2004 and December
  31, 2003, in anticipation of the orders that the Company has received for shipment
  in July.</font></p>
<p><font face="Times New Roman, Times, serif" size="3">&quot;Our results this
  quarter demonstrates growing demand for our products, and would have been stronger
  except for order delays,&quot; said Kevin Mills, president and chief executive
  officer of Socket Communications. &quot;We expect that during the second half
  of this year we will be able to improve profitability through revenue growth,
  while maintaining our product margins and closely managing our expenses.&quot;</font></p>
<p><font face="Times New Roman, Times, serif" size="3">&quot;We have also been
  devoting considerable attention over the past several years to the support of
  software developers and value-added resellers who are creating mobile software
  applications using our data collection products,&quot; continued Mills. &quot;Our
  revenue growth rate of 77 percent for our data collection products for the first
  six months of this year, compared to the same period a year ago, is due in large
  part to the availability of software applications that use our growing family
  of data collection products. We have listed more than 40 companies on our website
  that are offering application software, and there are many more applications
  under development. We value the relationships we have built with value-added
  resellers and third party software vendors whose software becomes an important
  part of enterprise mobile computing solutions that use our products. These relationships,
  coupled with new products and broader platform support, should enable us to
  continue this growth.&quot; </font></p>
<p><font face="Times New Roman, Times, serif" size="3">&quot;We are particularly
  pleased with the pace of our new product development and the market acceptance
  of recently developed data collection products. We have sold more than $2 million
  of our SDIO bar code scanners since their introduction in September 2003. We
  began shipping our cordless hand scanner with Bluetooth wireless technology
  at the end of the second quarter of 2004. During the second quarter we also
  released new cordless software for tablets, laptops, notebooks and desktops
  to allow our cordless products to be used with all Windows based computers,
  and we will soon add the cordless hand scanner to that software. We also announced
  a CompactFlash RFID reader to address the needs for mobile RFID readers as this
  technology becomes more widely adopted.&quot;</font></p>
<p><font face="Times New Roman, Times, serif" size="3">&quot;Our branded connectivity
  product business continues to benefit from growth in revenue from our family
  of cordless products for handheld computers using Bluetooth wireless technology
  and growth of revenue from our wireless LAN plug-in products. These cordless
  products include a standalone GPS receiver, a standalone modem, a plug-in serial
  adapter, plug-in CompactFlash and SDIO cards, and embedded modules. Approximately
  $2.7 million, or 40 percent of our total revenue in the second quarter of 2004
  was from cordless and wireless products, compared to approximately 34 percent
  of our total revenue from these products in the first quarter of 2004.&quot;
  </font></p>
<p></p>
<p></p>
<p></p>
<p><u><b><font face="Times New Roman, Times, serif" size="3">Other Financial Information</font></b></u></p>
<p><font face="Times New Roman, Times, serif" size="3">The Company's balance sheet
  at June 30, 2004 included a cash balance of $7.6 million, reflecting a net increase
  of $1.1 million from the cash balance at December 31, 2003. Sources of cash
  for the six month period included increased borrowings on the Company's bank
  line of credit of $1.4 million, proceeds from the exercise of stock options
  and warrants of $0.1 million, and positive cash from operations of $0.3 million,
  including working capital changes. Cash was used to complete repayment of a
  note payable to Nokia Corporation of $0.5 million and investment in property
  and equipment of $0.2 million. The current ratio (current assets divided by
  current liabilities) at June 30, 2004 was 1.7 to 1.0.</font></p>
<p><font face="Times New Roman, Times, serif" size="3">Total revenue for the three
  and six month periods ended June 30, 2004 and revenue growth by product family
  in 2004 over the corresponding periods in 2003 in millions of dollars were as
  follows:</font></p>
<table cellspacing=1 cellpadding=1 width=708 align=center border=1>
  <tr valign=bottom>
    <td width="38%" height=20>
      <div align="center"><font face="Times New Roman, Times, serif" size="3"><b>Product
        Family</b></font></div>
    </td>
    <td width="16%" height=20>
      <p align="center"><font face="Times New Roman, Times, serif" size="3"><b>Q2
        2004<br>
        Revenue </b></font></p>
    </td>
    <td width="14%" height=20>
      <p align=center><font face="Times New Roman, Times, serif" size="3"><b>%
        Growth</b></font></p>
    </td>
    <td width="18%" height=20>
      <div align="center"><font face="Times New Roman, Times, serif" size="3"><b>Six
        Months<br>
        2004 Revenue</b></font></div>
    </td>
    <td width="14%" height=20>
      <div align="center"><font face="Times New Roman, Times, serif" size="3"><b>%
        Growth</b></font></div>
    </td>
  </tr>
  <tr valign=bottom>
    <td width="38%" height=31><font face="Times New Roman, Times, serif" size="3">Connectivity
      Products</font></td>
    <td width="16%" height=31>
      <p align="center"><font face="Times New Roman, Times, serif" size="3">$2.3</font></p>
    </td>
    <td width="14%" height=31>
      <p align=center><font face="Times New Roman, Times, serif" size="3">15%</font></p>
    </td>
    <td width="18%" height=31>
      <div align="center"><font face="Times New Roman, Times, serif" size="3">$4.9</font></div>
    </td>
    <td width="14%" height=31>
      <div align="center"><font face="Times New Roman, Times, serif" size="3">24%</font></div>
    </td>
  </tr>
  <tr valign=bottom>
    <td width="38%" height=17><font face="Times New Roman, Times, serif" size="3">Bar
      Code Scanning Products</font></td>
    <td width="16%" height=17>
      <p align="center"><font face="Times New Roman, Times, serif" size="3">2.4</font></p>
    </td>
    <td width="14%" height=17>
      <p align=center><font face="Times New Roman, Times, serif" size="3">69%</font></p>
    </td>
    <td width="18%" height=17>
      <p align=center><font face="Times New Roman, Times, serif" size="3">4.9</font></p>
    </td>
    <td width="14%" height=17>
      <p align=center><font face="Times New Roman, Times, serif" size="3">77%</font></p>
    </td>
  </tr>
  <tr valign=bottom>
    <td width="38%" height=17><font face="Times New Roman, Times, serif" size="3">Peripheral
      Connection Products</font></td>
    <td width="16%" height=17>
      <p align="center"><font face="Times New Roman, Times, serif" size="3">1.0</font></p>
    </td>
    <td width="14%" height=17>
      <p align=center><font face="Times New Roman, Times, serif" size="3">4%&nbsp;</font></p>
    </td>
    <td width="18%" height=17>
      <p align=center><font face="Times New Roman, Times, serif" size="3">&nbsp;1.8</font></p>
    </td>
    <td width="14%" height=17>
      <p align=center><font face="Times New Roman, Times, serif" size="3">&nbsp;(4%)</font></p>
    </td>
  </tr>
  <tr valign=bottom>
    <td width="38%" height=17><font face="Times New Roman, Times, serif" size="3">Embedded
      Products</font></td>
    <td width="16%" height=17>
      <p align="center"><font face="Times New Roman, Times, serif" size="3">1.0</font></p>
    </td>
    <td width="14%" height=17>
      <p align=center><font face="Times New Roman, Times, serif" size="3">49%</font></p>
    </td>
    <td width="18%" height=17>
      <p align=center><font face="Times New Roman, Times, serif" size="3">1.9</font></p>
    </td>
    <td width="14%" height=17>
      <p align=center><font face="Times New Roman, Times, serif" size="3">40%</font></p>
    </td>
  </tr>
  <tr valign=bottom>
    <td width="38%" height=17>
      <div align="center"><font face="Times New Roman, Times, serif" size="3">Totals</font></div>
    </td>
    <td width="16%" height=17>
      <div align="center"><font face="Times New Roman, Times, serif" size="3">$6.7</font></div>
    </td>
    <td width="14%" height=17>
      <div align=center><font face="Times New Roman, Times, serif" size="3">33%</font></div>
    </td>
    <td width="18%" height=17>
      <div align=center><font face="Times New Roman, Times, serif" size="3">$13.5</font></div>
    </td>
    <td width="14%" height=17>
      <div align=center><font face="Times New Roman, Times, serif" size="3">35%</font></div>
    </td>
  </tr>
</table>
<p><font size="3" face="Times New Roman, Times, serif"><br>
  Gross profit on sales was 51 percent for the quarter and six month periods ended
  June 30, 2004 compared to 49 percent for the corresponding periods a year ago.
  The higher margins resulted from product cost reduction programs partially offset
  by reductions in product pricing.</font></p>
<p><font face="Times New Roman, Times, serif" size="3">Research and development
  expense increased to $0.9 million for the quarter ended June 30, 2004 compared
  to $0.8 million for the same period a year ago, and to $1.8 million for the
  six month period ended June 30, 2004 compared to $1.7 million for the same period
  a year ago. These increases resulted from a moderate increase in engineering
  headcount in 2004 and increases in contract engineering services.</font></p>
<p><font face="Times New Roman, Times, serif" size="3">Sales and marketing expense
  increased to $1.5 million for the quarter ended June 30, 2004 compared to $1.2
  million for the same period a year ago, and to $3.0 million for the six month
  period ended June 30, 2004 compared to $2.5 million for the same period a year
  ago. The increases resulted from increased sales and marketing headcount in
  2004 and increased advertising and promotion.</font></p>
<p><font face="Times New Roman, Times, serif" size="3">General and administrative
  expense increased to $0.9 million for the quarter ended June 30, 2004 compared
  to $0.7 million for the same period a year ago, and to $1.7 million for the
  six month period ended June 30, 2004 compared to $1.4 million for the same period
  a year ago. The increases were primarily due to the costs of defending a patent
  litigation lawsuit initiated by Khyber Technologies in June 2003.</font></p>
<p><font face="Times New Roman, Times, serif" size="3">The Company settled the
  patent litigation lawsuit on July 15, 2004 by acquiring the patent from Khyber
  Technologies for $600,000. The patent, U.S. patent number 5,902,991 entitled
  Card Shaped Computer Peripheral Device, is a basic patent covering plug-in bar
  code scanners, imagers and RFID products, and further strengthens the Company's
  patent portfolio in the plug-in bar code scanner marketplace. The patent purchase
  will be capitalized as an intangible asset purchase during the third quarter
  of 2004.</font></p>
<p><font face="Times New Roman, Times, serif" size="3">Preferred stock dividends
  are paid quarterly to the remaining holders of Series F Convertible Preferred
  Stock issued in March 2003. Dividends in 2003 also included dividends to the
  holder of Series E Convertible Redeemable Preferred stock that was fully converted
  into common stock in the third quarter of 2003. Charges for preferred stock
  accretion in 2003 related to the conversion of Series E Preferred Stock and
  to the issue of Series F Preferred Stock.</font></p>
<p><font face="Times New Roman, Times, serif" size="3"><b>Quarterly Management
  Conference Call</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 <u>www.ccbn.com</u> or participants
  may join the call by telephone at (800) 366-7417 or hear a replay via telephone
  at 800-405-2236, access code 11003169# for a week following the call.</font></p>
<p><font face="Times New Roman, Times, serif" size="3"><b>About Socket Communications</b><br>
  Socket Communications, Inc., the Mobile Connection&#153; Company, provides a
  broad range of connectivity and data collection products for mobile computers,
  including Windows Mobile- based Pocket PCs, Windows CE devices, Palm PDAs and
  Smartphones, as well as Tablet PCs and notebooks. 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 hardware developers
  with solutions using mobilityIC&#153; interface chips and KwikBlue&#153; modules
  with embedded <i>Bluetooth</i>&reg; Wireless Technology. Socket is headquartered
  in Newark, California and can be reached at 510-744-2700 or <u>www.socketcom.com</u>.
  </font></p>
<p></p>
<p></p>
<p></p>
<p><b><font face="Times New Roman, Times, serif" size="3">Forward Looking Statements</font></b><font face="Times New Roman, Times, serif" size="3"><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, including statements forecasting
  future financial results and operating activities, market acceptance of our
  products, expectations for growth in demand for our products, expectations for
  expansion of the distribution channels for our products, expectations for the
  stabilization of gross margins on revenue, and the timing of introduction and
  availability of new products. 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, including, but
  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, continued growth in demand
  for handheld computers, market acceptance of emerging standards such as Bluetooth
  and of our related connection products, the ability of our strategic partnerships
  to benefit our business as expected, our ability to enter into additional distribution
  relationships, or the other factors described in our most recent Form 10-K and
  10-Q reports filed with the Securities and Exchange Commission.<br>
  </font></p>
<p><font face="Times New Roman, Times, serif" size="2">Socket and Battery Friendly
  are registered trademarks of Socket Communications, Inc. The Mobile Connection
  Company, Mobility Friendly, and KwikBlue 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 may be those of their respective
  owners. &copy; 2004, Socket Communications, Inc. All rights reserved.</font></p>
<p align="center"><font size="2" face="Times New Roman, Times, serif"></font><font size="3" face="Times New Roman, Times, serif"><br>
  --Financial tables to follow--</font></p>
<p> </p>
<hr>
<p align="center">&nbsp;</p>
<p>&nbsp;</p>
<table cellspacing=1 cellpadding=1 width=723 align=center border=1>
  <tr valign=bottom>
    <td colspan=5 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="37%" 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 June 30,</font></p>
    </td>
    <td colspan=2 height=17>
      <div align="center"><font face="Times New Roman, Times, serif" size="3">Six
        months ended June 30,</font></div>
    </td>
  </tr>
  <tr valign=bottom>
    <td width="37%" height=17>
      <p><font face="Times New Roman, Times, serif" size="3">&nbsp;&nbsp; </font></p>
    </td>
    <td width="16%" height=17>
      <p align=center><font face="Times New Roman, Times, serif" size="3"><u>2004</u>
        </font></p>
    </td>
    <td width="17%" height=17>
      <div align="center"><font face="Times New Roman, Times, serif" size="3"><u>2003</u>
        </font></div>
    </td>
    <td width="15%" height=17>
      <p align=center><font face="Times New Roman, Times, serif" size="3"><u>2004</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>
  </tr>
  <tr valign=bottom>
    <td width="37%" height=17>
      <p><font face="Times New Roman, Times, serif" size="3">Revenue </font></p>
    </td>
    <td width="16%" height=17>
      <p align=center><font face="Times New Roman, Times, serif" size="3">$ 6,732</font></p>
    </td>
    <td width="17%" height=17>
      <p align=center><font face="Times New Roman, Times, serif" size="3">$ 5,075</font></p>
    </td>
    <td width="15%" height=17>
      <p align=center><font face="Times New Roman, Times, serif" size="3">$ 13,475</font></p>
    </td>
    <td width="15%" height=17>
      <p align=center><font face="Times New Roman, Times, serif" size="3">$ 9,954</font></p>
    </td>
  </tr>
  <tr valign=bottom>
    <td width="37%" height=17>
      <p><font face="Times New Roman, Times, serif" size="3">Cost of revenue </font></p>
    </td>
    <td width="16%" height=17>
      <p align=center><font face="Times New Roman, Times, serif" size="3"> 3,317</font></p>
    </td>
    <td width="17%" height=17>
      <p align=center><font face="Times New Roman, Times, serif" size="3">2,584</font></p>
    </td>
    <td width="15%" height=17>
      <p align=center><font face="Times New Roman, Times, serif" size="3"> 6,628</font></p>
    </td>
    <td width="15%" height=17>
      <p align=center><font face="Times New Roman, Times, serif" size="3">5,061</font></p>
    </td>
  </tr>
  <tr valign=bottom>
    <td width="37%" height=17>
      <p><font face="Times New Roman, Times, serif" size="3">Gross margin</font></p>
    </td>
    <td width="16%" height=17>
      <p align=center><font face="Times New Roman, Times, serif" size="3">3,415</font></p>
    </td>
    <td width="17%" height=17>
      <p align=center><font face="Times New Roman, Times, serif" size="3">2,491</font></p>
    </td>
    <td width="15%" height=17>
      <p align=center><font face="Times New Roman, Times, serif" size="3">6,847</font></p>
    </td>
    <td width="15%" height=17>
      <p align=center><font face="Times New Roman, Times, serif" size="3">4,893</font></p>
    </td>
  </tr>
  <tr valign=bottom>
    <td width="37%" height=17>
      <blockquote>
        <p><font face="Times New Roman, Times, serif" size="3">Gross margin percent</font></p>
      </blockquote>
    </td>
    <td width="16%" height=17>
      <p align=center><font face="Times New Roman, Times, serif" size="3">51%</font>
      </p>
    </td>
    <td width="17%" height=17>
      <p align=center><font face="Times New Roman, Times, serif" size="3">49%</font></p>
    </td>
    <td width="15%" height=17>
      <p align=center><font face="Times New Roman, Times, serif" size="3">51%</font>
      </p>
    </td>
    <td width="15%" height=17>
      <p align=center><font face="Times New Roman, Times, serif" size="3">49%</font></p>
    </td>
  </tr>
  <tr valign=bottom>
    <td width="37%" height=17>
      <p><font face="Times New Roman, Times, serif" size="3">Research and development
        </font></p>
    </td>
    <td width="16%" height=17>
      <p align=center><font face="Times New Roman, Times, serif" size="3">910</font></p>
    </td>
    <td width="17%" height=17>
      <p align=center><font face="Times New Roman, Times, serif" size="3">793</font></p>
    </td>
    <td width="15%" height=17>
      <p align=center><font face="Times New Roman, Times, serif" size="3">1,834</font></p>
    </td>
    <td width="15%" height=17>
      <p align=center><font face="Times New Roman, Times, serif" size="3">1,714</font></p>
    </td>
  </tr>
  <tr valign=bottom>
    <td width="37%" height=17>
      <p><font face="Times New Roman, Times, serif" size="3">Sales and marketing
        </font></p>
    </td>
    <td width="16%" height=17>
      <p align=center><font face="Times New Roman, Times, serif" size="3">1,470</font></p>
    </td>
    <td width="17%" height=17>
      <p align=center><font face="Times New Roman, Times, serif" size="3">1,228</font></p>
    </td>
    <td width="15%" height=17>
      <p align=center><font face="Times New Roman, Times, serif" size="3">2,989</font></p>
    </td>
    <td width="15%" height=17>
      <p align=center><font face="Times New Roman, Times, serif" size="3">2,512</font></p>
    </td>
  </tr>
  <tr valign=bottom>
    <td width="37%" height=17>
      <p><font face="Times New Roman, Times, serif" size="3">General and administrative
        </font></p>
    </td>
    <td width="16%" height=17>
      <p align=center><font face="Times New Roman, Times, serif" size="3">896</font></p>
    </td>
    <td width="17%" height=17>
      <p align=center><font face="Times New Roman, Times, serif" size="3">737</font></p>
    </td>
    <td width="15%" height=17>
      <p align=center><font face="Times New Roman, Times, serif" size="3">1,743</font></p>
    </td>
    <td width="15%" height=17>
      <p align=center><font face="Times New Roman, Times, serif" size="3">1,411</font></p>
    </td>
  </tr>
  <tr valign=bottom>
    <td width="37%" height=17><font face="Times New Roman, Times, serif" size="3">Amortization
      of intangible technology</font></td>
    <td width="16%" height=17>
      <div align=center><font face="Times New Roman, Times, serif" size="3">92</font></div>
    </td>
    <td width="17%" height=17>
      <div align=center><font face="Times New Roman, Times, serif" size="3">101</font></div>
    </td>
    <td width="15%" height=17>
      <div align=center><font face="Times New Roman, Times, serif" size="3">184</font></div>
    </td>
    <td width="15%" height=17>
      <div align=center><font face="Times New Roman, Times, serif" size="3">217</font></div>
    </td>
  </tr>
  <tr valign=bottom>
    <td width="37%" height=17><font face="Times New Roman, Times, serif" size="3">Interest
      (income) expense, net</font></td>
    <td width="16%" height=17>
      <div align=center><font face="Times New Roman, Times, serif" size="3">(9)</font></div>
    </td>
    <td width="17%" height=17>
      <div align=center><font face="Times New Roman, Times, serif" size="3">15</font></div>
    </td>
    <td width="15%" height=17>
      <div align=center><font face="Times New Roman, Times, serif" size="3">(12)</font></div>
    </td>
    <td width="15%" height=17>
      <div align=center><font face="Times New Roman, Times, serif" size="3">34</font></div>
    </td>
  </tr>
  <tr valign=bottom>
    <td width="37%" height=17>
      <blockquote>
        <p><font face="Times New Roman, Times, serif" size="3">Total operating
          expenses</font></p>
      </blockquote>
    </td>
    <td width="16%" height=17>
      <p align=center><font face="Times New Roman, Times, serif" size="3">3,359</font></p>
    </td>
    <td width="17%" height=17>
      <p align=center><font face="Times New Roman, Times, serif" size="3">2,874</font></p>
    </td>
    <td width="15%" height=17>
      <p align=center><font face="Times New Roman, Times, serif" size="3">6,738</font></p>
    </td>
    <td width="15%" height=17>
      <p align=center><font face="Times New Roman, Times, serif" size="3">5,888</font></p>
    </td>
  </tr>
  <tr valign=bottom>
    <td width="37%" height=17>
      <p><font face="Times New Roman, Times, serif" size="3">Net income (loss)
        </font></p>
    </td>
    <td width="16%" height=17>
      <p align=center><font face="Times New Roman, Times, serif" size="3">56 </font></p>
    </td>
    <td width="17%" height=17>
      <p align=center><font face="Times New Roman, Times, serif" size="3">(383)
        </font></p>
    </td>
    <td width="15%" 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">(995)
        </font></p>
    </td>
  </tr>
  <tr valign=bottom>
    <td width="37%" height=29>
      <p><font face="Times New Roman, Times, serif" size="3">Preferred stock dividends</font></p>
    </td>
    <td width="16%" height=29>
      <p align=center><font face="Times New Roman, Times, serif" size="3">(13)</font></p>
    </td>
    <td width="17%" height=29>
      <p align=center><font face="Times New Roman, Times, serif" size="3">(58)</font></p>
    </td>
    <td width="15%" height=29>
      <p align=center><font face="Times New Roman, Times, serif" size="3">(26)</font></p>
    </td>
    <td width="15%" height=29>
      <p align=center><font face="Times New Roman, Times, serif" size="3">(90)</font></p>
    </td>
  </tr>
  <tr valign=bottom>
    <td width="37%" height=17>
      <p><font face="Times New Roman, Times, serif" size="3">Preferred stock accretion</font></p>
    </td>
    <td width="16%" height=17>
      <p align=center><font face="Times New Roman, Times, serif" size="3">--</font>
      </p>
    </td>
    <td width="17%" height=17>
      <p align=center><font face="Times New Roman, Times, serif" size="3">(102)</font></p>
    </td>
    <td width="15%" height=17>
      <p align=center><font face="Times New Roman, Times, serif" size="3">--</font>
      </p>
    </td>
    <td width="15%" height=17>
      <p align=center><font face="Times New Roman, Times, serif" size="3">(486)</font></p>
    </td>
  </tr>
  <tr valign=bottom>
    <td width="37%" height=17>
      <p><font face="Times New Roman, Times, serif" size="3">Net income (loss)
        applicable to common stockholders</font> </p>
    </td>
    <td width="16%" height=17>
      <p align=center><font face="Times New Roman, Times, serif" size="3">$ 43</font></p>
    </td>
    <td width="17%" height=17>
      <p align=center><font face="Times New Roman, Times, serif" size="3">$ (543)
        </font></p>
    </td>
    <td width="15%" height=17>
      <p align=center><font face="Times New Roman, Times, serif" size="3">$ 83</font></p>
    </td>
    <td width="15%" height=17>
      <p align=center><font face="Times New Roman, Times, serif" size="3">$ (1,571)
        </font></p>
    </td>
  </tr>
  <tr valign=bottom>
    <td valign=top width="37%" height=41>
      <p><font face="Times New Roman, Times, serif" size="3">Basic and diluted
        net income (loss) per share applicable to common stockholders</font></p>
    </td>
    <td width="16%" height=41>
      <p align=center><font face="Times New Roman, Times, serif" size="3">$ 0.00<br>
        </font></p>
    </td>
    <td width="17%" height=41>
      <p align=center><font face="Times New Roman, Times, serif" size="3">$ (0.02)<br>
        </font></p>
    </td>
    <td width="15%" height=41>
      <p align=center><font face="Times New Roman, Times, serif" size="3">$ 0.00<br>
        </font></p>
    </td>
    <td width="15%" height=41>
      <p align=center><font face="Times New Roman, Times, serif" size="3">$ (0.06)<br>
        </font></p>
    </td>
  </tr>
  <tr valign=bottom>
    <td rowspan="2" height=51 width="37%"><font face="Times New Roman, Times, serif" size="3">Weighted
      average shares outstanding: </font>
      <blockquote><font face="Times New Roman, Times, serif" size="3">Basic<br>
        Diluted </font></blockquote>
    </td>
    <td rowspan="2" height=84 width="16%">
      <p align=center><font face="Times New Roman, Times, serif" size="3">30,013<br>
        34,045 </font></p>
    </td>
    <td rowspan="2" height=84 width="17%">
      <p align=center><font face="Times New Roman, Times, serif" size="3">24,533<br>
        24,533 </font></p>
    </td>
    <td rowspan="2" height=84 width="15%">
      <p align=center><font face="Times New Roman, Times, serif" size="3">29,974<br>
        34,195 </font></p>
    </td>
    <td rowspan="2" height=84 width="15%">
      <p align=center><font face="Times New Roman, Times, serif" size="3">24,370<br>
        24,370 </font></p>
    </td>
  </tr>
  <tr valign=bottom> </tr>
</table>
<font face="Times New Roman, Times, serif"><br>
<br>
<br>
<br>
</font>
<hr>
<font face="Times New Roman, Times, serif"><br>
<br>
<br>
<br>
<br>
</font>
<table cellspacing=1 cellpadding=1 width=674 align=center border=1>
  <tr valign=bottom>
    <td colspan=3 height="67">
      <p align="center"><font face="Times New Roman, Times, serif" size="3"><b>Socket
        Communications, Inc.<br>
        Condensed Consolidated Summary Balance Sheets<br>
        (Amounts in Thousands)</b></font></p>
    </td>
  </tr>
  <tr valign=bottom>
    <td height=26 width="44%"><font face="Times New Roman, Times, serif" size="3">&nbsp;&nbsp;
      </font></td>
    <td height=26>
      <div align="center"><font face="Times New Roman, Times, serif" size="3">June
        30, 2004<br>
        (Unaudited) </font></div>
    </td>
    <td height=26>
      <div align="center"><font face="Times New Roman, Times, serif" size="3">
        December 31, 2003* </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">$ 7,558</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">4,206</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">2,695
        </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">151</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">551</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">528</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">136</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">$ 25,623
        </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">$ 4,641</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">2,964</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">1,207</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">--</font></div>
    </td>
    <td width="27%">
      <div align=center><font face="Times New Roman, Times, serif" size="3">505</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">87</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">50,603</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">(33,879)</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">$
        25,623</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>
<p>&nbsp;</p>
<p></p>
<p></p>
<p></p>
<p></p>
<p></p>
<p align="center"><font size="3" face="Times New Roman, Times, serif"># # #</font></p>
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