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<SEC-DOCUMENT>0000944075-04-000024.txt : 20041020
<SEC-HEADER>0000944075-04-000024.hdr.sgml : 20041020
<ACCEPTANCE-DATETIME>20041020163423
ACCESSION NUMBER:		0000944075-04-000024
CONFORMED SUBMISSION TYPE:	8-K
PUBLIC DOCUMENT COUNT:		2
CONFORMED PERIOD OF REPORT:	20041020
ITEM INFORMATION:		Results of Operations and Financial Condition
ITEM INFORMATION:		Financial Statements and Exhibits
FILED AS OF DATE:		20041020
DATE AS OF CHANGE:		20041020

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:		041087805

	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-8k1020.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>October 20</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 2.02. RESULTS OF OPERATIONS
  AND FINANCIAL CONDITION</b><br>
  </font></p>
<p><font face="Times New Roman, Times, serif" size="3">On October 20, 2004, Socket
  Communications, Inc. issued a press release reporting its results for the three
  and nine months ended September 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 9.01. 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 October 20, 2004, titled "</font><font face="Times New Roman, Times, serif" size="4"><font size="3">Socket
      Communications Reports Profitable Third Quarter and Nine Months Results</font></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: October
          20, 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 October 20, 2004, titled "</font><font face="Times New Roman, Times, serif" size="4"><font size="3">Socket
      Communications Reports Profitable Third Quarter and Nine Months Results</font></font><font face="Times New Roman, Times, serif" size="3">".</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>
<table width="955" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="483"><font face="Times New Roman, Times, serif" size="3">For further
      information, contact:</font></td>
    <td width="564" height="25" valign="bottom"><font face="Times New Roman, Times, serif" size="3">Investor
      Relations Contact:</font></td>
  </tr>
  <tr>
    <td width="483">&nbsp;</td>
    <td width="564" height="25" valign="bottom"><font face="Times New Roman, Times, serif" size="3">
      </font></td>
  </tr>
  <tr>
    <td width="483"><font face="Times New Roman, Times, serif" size="3">David
      Dunlap, CFO</font></td>
    <td width="564" height="25" valign="bottom">Stephen D. Axelrod, CFA </td>
  </tr>
  <tr>
    <td width="483">Socket Communications, Inc.</td>
    <td width="564" height="25" valign="bottom">Wolfe Axelrod Weinberger Associates,
      LLC</td>
  </tr>
  <tr>
    <td width="483"><font face="Times New Roman, Times, serif" size="3">(510)
      744-2735</font></td>
    <td width="564" height="20" valign="bottom">(212) 370-4500</td>
  </tr>
  <tr>
    <td width="483"><font face="Times New Roman, Times, serif" size="3">dave@socketcom.com</font></td>
    <td width="564" height="20" valign="bottom">steve@wolfeaxelrod.com</td>
  </tr>
</table>
<p>&nbsp;</p>
<p align="center"><font face="Times New Roman, Times, serif" size="4"><b><font size="5">Socket
  Communications Reports Profitable Third Quarter and Nine Months Results</font></b></font></p>
<p align="center"><font face="Times New Roman, Times, serif" size="3"><b><i>Bar
  Code Scanning Product Sales Increased 42 Percent and 62 Percent for the Respective
  Three and Nine Months over Year-ago Periods</i></b></font></p>
<p><b>NEWARK, CA, October 20, 2004</b> - Socket Communications, Inc. (Nasdaq:
  SCKT) announced financial results for its third quarter and nine months ended
  September 30, 2004. The Company reported quarterly revenue of $6.2 million,
  an increase of 10 percent compared to revenue of $5.7 million for the same quarter
  a year ago. The Company reported net income applicable to common stockholders
  for the quarter ended September 30, 2004 of $89,000 or $0.00 per share compared
  to a net loss of $272,000 or ($0.01) per share for the same quarter a year ago.
  The third quarter represented the Company's third consecutive quarter of improved
  profitability. </p>
<p>Revenue for the nine months ended September 30, 2004 was $19.7 million, an
  increase of 26 percent compared to revenue of $15.6 million for the same period
  one year ago. Net income applicable to common stockholders for the nine months
  ended September 30, 2004 was $172,000 or $0.01 per share compared to a net loss
  of ($1.8) million or ($0.07) per share for the comparative period one year ago.
</p>
<p>Revenue for the third quarter of 2004 of $6.2 million was sequentially lower
  than revenue of $6.7 million for the second quarter of 2004. Net income applicable
  to common stockholders of $89,000 for the third quarter of 2004 was higher than
  net income applicable to common stockholders of $43,000 for the previous quarter
  due to higher gross margins and reduced operating expenses. </p>
<p>"We are pleased to report our third consecutive profitable quarter," said Kevin
  Mills, president and chief executive officer. "Our third quarter is typically
  Socket's seasonally weakest revenue quarter. Adding to that seasonality, the
  transitions to new model Pocket PCs by Dell and Hewlett-Packard that commenced
  in the third quarter and are nearing completion slowed customer purchases in
  our connectivity and bar code scanning product lines during the third quarter
  as customers awaited new products and as older models were phased out. We also
  experienced delays in shipping our new Cordless GPS Receiver until it passed
  our stringent performance tests, creating our own product availability gap that
  lowered GPS sales in the third quarter. Finally, one of our major European distributors
  was reorganized, with several months of substantially reduced sales activity
  by that distributor during the transition. I'm pleased to report that all of
  these challenges are behind us and business is returning to normal."</p>
<p>"New products and growth in the markets we serve are creating excellent opportunities
  for growth in our business," continued Mills. "As the transition to new Pocket
  PC models is completed, we believe that enterprise-driven market growth of Pocket
  PCs and the continued development of productivity-enhancing software applications
  will continue to drive revenue growth and improved profitability. Contributing
  to this growth will be new products such as our Cordless Hand Scanner, new improved
  Cordless GPS Receiver, new improved Wireless LAN plug-in products and a mobile
  battery charger for busy professionals on the go." </p>
<p>"We are also highly pleased that the developer community has been creating
  many mobile productivity solutions for Pocket PCs, tablets and notebooks that
  support our connection and data collection products," added Mills. Socket has
  sold more than 600 developer kits for its data collection products, including
  bar code scanning and its latest kit for an RFID reader, to assist developers
  in integrating the Company's products into their applications. Today the Company
  has posted on its website nearly 50 third-party applications that use the Company's
  products, and the Company is actively supporting additional software development
  with new channel partner programs such as its just-announced Strategic Vertical
  Integrators Program. The support of large software developers such as Siebel
  Systems, which expanded their enterprise software to the Pocket PC platform
  that enables data collection with the Company's products, opens up significant
  new opportunities for the Company. <font face="Times New Roman, Times, serif" size="3">
  </font></p>
<p></p>
<p></p>
<p></p>
<p><b><font face="Times New Roman, Times, serif" size="3">Other Financial Information</font></b></p>
<p>The Company's balance sheet at September 30, 2004 included a cash balance of
  $5.9 million, reflecting a net decrease of $0.5 million from the cash balance
  of $6.4 million at December 31, 2003. Sources of cash for the nine month period
  of 2004 included increased borrowings on the Company's bank line of credit of
  $0.4 million, proceeds from the exercise of stock options and warrants of $0.2
  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 in the first and second quarters, purchase property
  and equipment of $0.3 million throughout the nine month period, and purchase
  a bar code scanning patent for $0.6 million in the third quarter. Inventory
  balances at September 30, 2004 increased over the previous quarter by $0.5 million
  as the Company prepares for higher shipments in the fourth quarter. The current
  ratio (current assets divided by current liabilities) at September 30, 2004
  was 1.8 to 1.0.</p>
<p>Total revenue for the three and nine month periods ended September 30, 2004
  and revenue growth by product family in 2004 over the corresponding periods
  in 2003 in millions of dollars were as follows:</p>
<table cellspacing=1 cellpadding=1 width=708 align=center border=1>
  <tr valign=bottom>
    <td width="38%" height=20>
      <div align="left"><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>Q3
        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 <br>
        (Decline) </b></font></p>
    </td>
    <td width="18%" height=20>
      <div align="center"><font face="Times New Roman, Times, serif" size="3"><b>Nine
        Months<br>
        2004 Revenue</b></font></div>
    </td>
    <td width="14%" height=20 valign="top">
      <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">Bar
      Code Scanning Products</font></td>
    <td width="16%" height=31>
      <p align="center"><font face="Times New Roman, Times, serif" size="3">$2.8</font></p>
    </td>
    <td width="14%" height=31>
      <p align=center><font face="Times New Roman, Times, serif" size="3">42%</font></p>
    </td>
    <td width="18%" height=31>
      <div align="center"><font face="Times New Roman, Times, serif" size="3">$7.6</font></div>
    </td>
    <td width="14%" height=31>
      <div align="center"><font face="Times New Roman, Times, serif" size="3">62%</font></div>
    </td>
  </tr>
  <tr valign=bottom>
    <td width="38%" height=17>Connection Products</td>
    <td width="16%" height=17>
      <p align="center">1.6</p>
    </td>
    <td width="14%" height=17>
      <p align=center><font face="Times New Roman, Times, serif" size="3">(31%)</font></p>
    </td>
    <td width="18%" height=17>
      <p align=center><font face="Times New Roman, Times, serif" size="3">6.5</font></p>
    </td>
    <td width="14%" height=17>
      <p align=center><font face="Times New Roman, Times, serif" size="3">4%</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">17%&nbsp;</font></p>
    </td>
    <td width="18%" height=17>
      <p align=center><font face="Times New Roman, Times, serif" size="3">&nbsp;2.9</font></p>
    </td>
    <td width="14%" height=17>
      <p align=center><font face="Times New Roman, Times, serif" size="3">&nbsp;3%</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">0.8</p>
    </td>
    <td width="14%" height=17>
      <p align=center><font face="Times New Roman, Times, serif" size="3">51%</font></p>
    </td>
    <td width="18%" height=17>
      <p align=center><font face="Times New Roman, Times, serif" size="3">2.7</font></p>
    </td>
    <td width="14%" height=17>
      <p align=center><font face="Times New Roman, Times, serif" size="3">43%</font></p>
    </td>
  </tr>
  <tr valign=bottom>
    <td width="38%" height=17>
      <div align="left"><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">$6.2</font></div>
    </td>
    <td width="14%" height=17>
      <div align=center><font face="Times New Roman, Times, serif" size="3">10%</font></div>
    </td>
    <td width="18%" height=17>
      <div align=center><font face="Times New Roman, Times, serif" size="3">$19.7</font></div>
    </td>
    <td width="14%" height=17>
      <div align=center><font face="Times New Roman, Times, serif" size="3">26%</font></div>
    </td>
  </tr>
</table>
<p><font size="3" face="Times New Roman, Times, serif"><br>
  Gross profit on sales was 52 percent for the third quarter and 51 percent for
  the nine months ended September 30, 2004 compared to 50 percent and 49 percent,
  respectively, for the corresponding periods a year ago. The higher margins resulted
  from product cost reduction programs partially offset by reductions in product
  pricing and product mix, where higher margin products have become a greater
  percentage of the total sales mix in 2004. </font></p>
<p><font size="3" face="Times New Roman, Times, serif">Research and development
  expense was approximately $0.9 million for the quarter ended September 30, 2004
  compared to $0.87 million for the same period a year ago, and was $2.7 million
  for the nine month period ended September 30, 2004 compared to $2.6 million
  for the same period a year ago. Research and development expense has been relative
  flat, reflecting similar engineering staffing levels and expenditures in all
  periods. </font></p>
<p><font size="3" face="Times New Roman, Times, serif">Sales and marketing expense
  increased to $1.42 million for the quarter ended September 30, 2004 compared
  to $1.36 million for the same period a year ago, and was $4.4 million for the
  nine month period ended September 30, 2004 compared to $3.9 million for the
  same period a year ago. These increases resulted from moderate increases in
  sales and marketing headcount in 2004 and increased advertising, promotion and
  outside services. </font></p>
<p><font size="3" face="Times New Roman, Times, serif">General and administrative
  expense increased to $0.71 million for the quarter ended September 30, 2004
  compared to $0.66 million for the same period a year ago, and was $2.5 million
  for the nine month period ended September 30, 2004 compared to $2.1 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
  2003 that was concluded in the third quarter of 2004 with the purchase of a
  patent from Khyber by the Company for $0.6 million. The patent was capitalized
  as an intangible asset purchase during the third quarter of 2004. </font></p>
<p>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 paid to the holder of Series E Convertible Redeemable Preferred stock,
  which 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 issuance of Series F Preferred Stock.</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 www.ccbn.com. Participants may join
  the call by telephone at (800) 218-8862 or hear a replay via telephone at (303)
  590-3000, using access code 576972#, 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 data collection and connectivity 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 general market growth of handheld computers, growth
  in demand for our products, expansion of the distribution channels for our products,
  and adoption of our embedded products by manufacturers of electronic devices.
  We also comment on gross margin levels, on our cash balances, and on the timing
  of the 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. </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. 2004, Socket Communications, Inc. All rights reserved.</font></p>
<p align="center"><font face="Times New Roman, Times, serif" size="3"> </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=753 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 Sept 30,</font></p>
    </td>
    <td colspan=2 height=17>
      <div align="center"><font face="Times New Roman, Times, serif" size="3">Nine
        months ended Sept 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>
      <p align=center><font face="Times New Roman, Times, serif"
      size=3><u>2003</u> </font></p>
    </td>
    <td width="15%" height=17>
      <p align=center><font face="Times New Roman, Times, serif" size="3"><u>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">Revenues </font></p>
    </td>
    <td width="16%" height=17>
      <p align=center><font face="Times New Roman, Times, serif" size="3">$ 6,204</font></p>
    </td>
    <td width="17%" height=17>
      <p align=center><font face="Times New Roman, Times, serif" size=3>$ 5,652</font></p>
    </td>
    <td width="15%" height=17>
      <p align=center><font face="Times New Roman, Times, serif" size="3">$ 19,679</font></p>
    </td>
    <td width="15%" height=17>
      <p align=center><font face="Times New Roman, Times, serif" size=3>$ 15,605</font></p>
    </td>
  </tr>
  <tr valign=bottom>
    <td width="37%" height=17>
      <p><font face="Times New Roman, Times, serif" size="3">Cost of revenues
        </font></p>
    </td>
    <td width="16%" height=17>
      <p align=center><font face="Times New Roman, Times, serif" size="3"> 2,963</font></p>
    </td>
    <td width="17%" height=17>
      <p align=center><font face="Times New Roman, Times, serif"
      size=3>2,822</font></p>
    </td>
    <td width="15%" height=17>
      <p align=center><font face="Times New Roman, Times, serif" size="3"> 9,591</font></p>
    </td>
    <td width="15%" height=17>
      <p align=center><font face="Times New Roman, Times, serif"
      size=3>7,882</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">3,241</font></p>
    </td>
    <td width="17%" height=17>
      <p align=center><font face="Times New Roman, Times, serif"
      size=3>2,830</font></p>
    </td>
    <td width="15%" height=17>
      <p align=center><font face="Times New Roman, Times, serif" size="3">10,088</font></p>
    </td>
    <td width="15%" height=17>
      <p align=center><font face="Times New Roman, Times, serif"
      size=3>7,723</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">52%</font>
      </p>
    </td>
    <td width="17%" height=17>
      <p align=center><font face="Times New Roman, Times, serif"
      size=3>50%</font> </p>
    </td>
    <td width="15%" height=17>
      <p align=center><font face="Times New Roman, Times, serif" size="3">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">906</font></p>
    </td>
    <td width="17%" height=17>
      <p align=center><font face="Times New Roman, Times, serif"
      size=3>866</font></p>
    </td>
    <td width="15%" height=17>
      <p align=center><font face="Times New Roman, Times, serif" size="3">2,740</font></p>
    </td>
    <td width="15%" height=17>
      <p align=center><font face="Times New Roman, Times, serif"
      size=3>2,580</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">1,423</font></p>
    </td>
    <td width="17%" height=17>
      <p align=center><font face="Times New Roman, Times, serif"
      size=3>1,364</font></p>
    </td>
    <td width="15%" height=17>
      <p align=center><font face="Times New Roman, Times, serif" size="3">4,412</font></p>
    </td>
    <td width="15%" height=17>
      <p align=center><font face="Times New Roman, Times, serif"
      size=3>3,875</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">711</font></p>
    </td>
    <td width="17%" height=17>
      <p align=center><font face="Times New Roman, Times, serif"
      size=3>656</font></p>
    </td>
    <td width="15%" height=17>
      <p align=center><font face="Times New Roman, Times, serif" size="3">2,454</font></p>
    </td>
    <td width="15%" height=17>
      <p align=center><font face="Times New Roman, Times, serif"
      size=3>2,067</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">107</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">291</font></div>
    </td>
    <td width="15%" height=17>
      <div align=center><font face="Times New Roman, Times, serif"
      size=3>319</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">3,147</font></p>
    </td>
    <td width="17%" height=17>
      <div align=center>2,987</div>
    </td>
    <td width="15%" height=17>
      <p align=center><font face="Times New Roman, Times, serif" size="3">9,897</font></p>
    </td>
    <td width="15%" height=17>
      <div align=center>8,841</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">(7)</font></div>
    </td>
    <td width="17%" height=17>
      <p align=center>6</p>
    </td>
    <td width="15%" height=17>
      <div align=center><font face="Times New Roman, Times, serif" size="3">(19)</font></div>
    </td>
    <td width="15%" height=17>
      <p align=center>40</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">101</font></p>
    </td>
    <td width="17%" height=17>
      <p align=center><font face="Times New Roman, Times, serif" size=3>(163)
        </font></p>
    </td>
    <td width="15%" height=17>
      <p align=center><font face="Times New Roman, Times, serif" size="3">210
        </font></p>
    </td>
    <td width="15%" height=17>
      <p align=center><font face="Times New Roman, Times, serif" size=3>(1,158)
        </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">(12)</font></p>
    </td>
    <td width="17%" height=29>
      <p align=center><font face="Times New Roman, Times, serif"
      size=3>(30)</font> </p>
    </td>
    <td width="15%" height=29>
      <p align=center><font face="Times New Roman, Times, serif" size="3">(38)</font></p>
    </td>
    <td width="15%" height=29>
      <p align=center><font face="Times New Roman, Times, serif"
      size=3>(120)</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=28>
      <p align=center><font face="Times New Roman, Times, serif"
      size=3>(79)</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=28>
      <p align=center><font face="Times New Roman, Times, serif"
      size=3>(565)</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">$ 89</font></p>
    </td>
    <td width="17%" height=17>
      <p align=center><font face="Times New Roman, Times, serif" size=3>$ (272)
        </font></p>
    </td>
    <td width="15%" height=17>
      <p align=center><font face="Times New Roman, Times, serif" size="3">$172</font></p>
    </td>
    <td width="15%" height=17>
      <p align=center><font face="Times New Roman, Times, serif" size=3>$ (1,843)
        </font></p>
    </td>
  </tr>
  <tr valign=bottom>
    <td valign=bottom 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 valign="bottom">
      <p align=center><font face="Times New Roman, Times, serif" size="3">$ 0.00<br>
        </font></p>
    </td>
    <td width="16%" height=41 valign="bottom">
      <p align=center><font face="Times New Roman, Times, serif" size="3">$ (0.01)<br>
        </font></p>
    </td>
    <td width="15%" height=41 valign="bottom">
      <p align=center><font face="Times New Roman, Times, serif" size="3">$ 0.01<br>
        </font></p>
    </td>
    <td width="16%" height=41 valign="bottom">
      <p align=center><font face="Times New Roman, Times, serif" size="3">$ (0.07)<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: <br>
      </font><font face="Times New Roman, Times, serif" size="3">&nbsp&nbsp&nbsp&nbsp&nbspBasic<br>
      &nbsp&nbsp&nbsp&nbsp&nbspDiluted </font></td>
    <td rowspan="2" height=84 width="16%">
      <p align=center><font face="Times New Roman, Times, serif" size="3">30,100<br>
        33,939 </font></p>
    </td>
    <td rowspan="2" height=84 width="17%">
      <p align=center><font face="Times New Roman, Times, serif" size="3">27,128<br>
        27,128 </font></p>
    </td>
    <td rowspan="2" height=84 width="15%">
      <p align=center><font face="Times New Roman, Times, serif" size="3">30,016<br>
        34,101 </font></p>
    </td>
    <td rowspan="2" height=84 width="15%">
      <p align=center><font face="Times New Roman, Times, serif" size="3">25,289<br>
        25,289</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>
        Summary Consolidated Balance Sheets<br>
        (Amounts in Thousands)</b></font></p>
    </td>
  </tr>
  <tr valign=bottom>
    <td height=26 width="56%"><font face="Times New Roman, Times, serif" size="3">ASSETS</font><font face="Times New Roman, Times, serif" size="3">
      </font></td>
    <td height=26 width="21%">
      <div align="center"><font face="Times New Roman, Times, serif" size="3">Sept
        30, 2004<br>
        (Unaudited) </font></div>
    </td>
    <td height=26 width="23%">
      <div align="center"><font face="Times New Roman, Times, serif" size="3">
        December 31, 2003* </font></div>
    </td>
  </tr>
  <tr valign=bottom>
    <td width="56%">
      <p><font face="Times New Roman, Times, serif" size="3">Cash</font> </p>
    </td>
    <td width="21%">
      <p align=center><font face="Times New Roman, Times, serif" size="3">$ 5,895</font></p>
    </td>
    <td width="23%">
      <p align=center><font face="Times New Roman, Times, serif" size="3">$ 6,422
        </font></p>
    </td>
  </tr>
  <tr valign=bottom>
    <td width="56%">
      <p><font face="Times New Roman, Times, serif" size="3">Accounts receivable,
        net </font></p>
    </td>
    <td width="21%">
      <p align=center><font face="Times New Roman, Times, serif" size="3">3,165</font></p>
    </td>
    <td width="23%">
      <p align=center><font face="Times New Roman, Times, serif" size="3">3,648
        </font></p>
    </td>
  </tr>
  <tr valign=bottom>
    <td width="56%">
      <p><font face="Times New Roman, Times, serif" size="3">Inventories </font></p>
    </td>
    <td width="21%">
      <p align=center><font face="Times New Roman, Times, serif" size="3">3,177</font></p>
    </td>
    <td width="23%">
      <p align=center><font face="Times New Roman, Times, serif" size="3">1,737</font></p>
    </td>
  </tr>
  <tr valign=bottom>
    <td width="56%">
      <p><font face="Times New Roman, Times, serif" size="3">Other current assets</font>
      </p>
    </td>
    <td width="21%">
      <p align=center><font face="Times New Roman, Times, serif" size="3">274</font></p>
    </td>
    <td width="23%">
      <p align=center><font face="Times New Roman, Times, serif" size="3">210</font></p>
    </td>
  </tr>
  <tr valign=bottom>
    <td width="56%">
      <p><font face="Times New Roman, Times, serif" size="3">Property and equipment,
        net </font></p>
    </td>
    <td width="21%">
      <div align=center><font face="Times New Roman, Times, serif" size="3">520</font></div>
    </td>
    <td width="23%">
      <div align=center><font face="Times New Roman, Times, serif" size="3">585</font></div>
    </td>
  </tr>
  <tr valign=bottom>
    <td width="56%">
      <p><font face="Times New Roman, Times, serif" size="3">Goodwill </font></p>
    </td>
    <td width="21%">
      <p align=center><font face="Times New Roman, Times, serif" size="3">9,798
        </font></p>
    </td>
    <td width="23%">
      <p align=center><font face="Times New Roman, Times, serif" size="3">9,798
        </font></p>
    </td>
  </tr>
  <tr valign=bottom>
    <td width="56%">
      <p><font face="Times New Roman, Times, serif" size="3">Intangible technology</font>
      </p>
    </td>
    <td width="21%">
      <p align=center><font face="Times New Roman, Times, serif" size="3">1,021</font></p>
    </td>
    <td width="23%">
      <p align=center><font face="Times New Roman, Times, serif" size="3">711
        </font></p>
    </td>
  </tr>
  <tr valign=bottom>
    <td width="56%">
      <p><font face="Times New Roman, Times, serif" size="3">Other assets</font>
      </p>
    </td>
    <td width="21%">
      <p align=center><font face="Times New Roman, Times, serif" size="3">155</font></p>
    </td>
    <td width="23%">
      <p align=center><font face="Times New Roman, Times, serif" size="3">154</font></p>
    </td>
  </tr>
  <tr valign=bottom>
    <td width="56%">
      <p><font face="Times New Roman, Times, serif" size="3">Total assets </font></p>
    </td>
    <td width="21%">
      <p align=center><font face="Times New Roman, Times, serif" size="3">$ 24,005
        </font></p>
    </td>
    <td width="23%">
      <p align=center><font face="Times New Roman, Times, serif" size="3">$ 23,265
        </font></p>
    </td>
  </tr>
  <tr valign=bottom>
    <td colspan=3>&nbsp;</td>
  </tr>
  <tr valign=bottom>
    <td colspan="3">
      <p><font face="Times New Roman, Times, serif" size="3">LIABILITIES AND EQUITY</font><font face="Times New Roman, Times, serif" size="3">
        </font></p>
      </td>
  </tr>
  <tr valign=bottom>
    <td width="56%">
      <p><font face="Times New Roman, Times, serif" size="3">Accounts payable
        and accrued liabilities</font> </p>
    </td>
    <td width="21%">
      <p align=center><font face="Times New Roman, Times, serif" size="3">$ 3,905</font></p>
    </td>
    <td width="23%">
      <p align=center><font face="Times New Roman, Times, serif" size="3">$ 3,751
        </font></p>
    </td>
  </tr>
  <tr valign=bottom>
    <td width="56%">
      <p><font face="Times New Roman, Times, serif" size="3">Bank line of credit</font>
      </p>
    </td>
    <td width="21%">
      <p align=center><font face="Times New Roman, Times, serif" size="3">1,998</font></p>
    </td>
    <td width="23%">
      <p align=center><font face="Times New Roman, Times, serif" size="3">1,567
        </font></p>
    </td>
  </tr>
  <tr valign=bottom>
    <td width="56%">
      <p><font face="Times New Roman, Times, serif" size="3">Deferred income on
        shipments to distributors</font></p>
    </td>
    <td width="21%">
      <p align=center><font face="Times New Roman, Times, serif" size="3">1,186</font></p>
    </td>
    <td width="23%">
      <p align=center><font face="Times New Roman, Times, serif" size="3">852</font></p>
    </td>
  </tr>
  <tr valign=bottom>
    <td width="56%"><font face="Times New Roman, Times, serif" size="3">Note payable</font></td>
    <td width="21%">
      <div align=center><font face="Times New Roman, Times, serif" size="3">--</font></div>
    </td>
    <td width="23%">
      <div align=center><font face="Times New Roman, Times, serif" size="3">505</font></div>
    </td>
  </tr>
  <tr valign=bottom>
    <td width="56%"><font face="Times New Roman, Times, serif" size="3">Capital
      leases/other non-current liabilities</font></td>
    <td width="21%">
      <div align=center><font face="Times New Roman, Times, serif" size="3">90</font></div>
    </td>
    <td width="23%">
      <div align=center><font face="Times New Roman, Times, serif" size="3">92</font></div>
    </td>
  </tr>
  <tr valign=bottom>
    <td width="56%">
      <p><font face="Times New Roman, Times, serif" size="3">Common and convertible
        preferred stock </font></p>
    </td>
    <td width="21%">
      <p align=center><font face="Times New Roman, Times, serif" size="3">50,616</font></p>
    </td>
    <td width="23%">
      <p align=center><font face="Times New Roman, Times, serif" size="3">50,460
        </font></p>
    </td>
  </tr>
  <tr valign=bottom>
    <td width="56%">
      <p><font face="Times New Roman, Times, serif" size="3">Accumulated deficit</font>
      </p>
    </td>
    <td width="21%">
      <div align=center><font face="Times New Roman, Times, serif" size="3">(33,790)</font></div>
    </td>
    <td width="23%">
      <div align=center><font face="Times New Roman, Times, serif" size="3">(33,962)</font></div>
    </td>
  </tr>
  <tr valign=bottom>
    <td width="56%"><font face="Times New Roman, Times, serif" size="3">Total
      liabilities and equity</font></td>
    <td width="21%">
      <div align=center><font face="Times New Roman, Times, serif" size="3">$
        24,005</font></div>
    </td>
    <td width="23%">
      <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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