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Originator-Name: webmaster@www.sec.gov
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<SEC-DOCUMENT>0000944075-05-000030.txt : 20051025
<SEC-HEADER>0000944075-05-000030.hdr.sgml : 20051025
<ACCEPTANCE-DATETIME>20051025165531
ACCESSION NUMBER:		0000944075-05-000030
CONFORMED SUBMISSION TYPE:	8-K
PUBLIC DOCUMENT COUNT:		2
CONFORMED PERIOD OF REPORT:	20051025
ITEM INFORMATION:		Results of Operations and Financial Condition
ITEM INFORMATION:		Financial Statements and Exhibits
FILED AS OF DATE:		20051025
DATE AS OF CHANGE:		20051025

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:		051154948

	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-8k1025.htm
<TEXT>
<html>
<head>

</head>

<body bgcolor="#FFFFFF">
<div align=left>
  <hr width="100%">
  <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 25</b></font><b><font face="Times New Roman, Times, serif" size=3>,
  2005</font></b><font face="Times New Roman, Times, serif" size=3><br>
  Date of Report <br>
  <font size="2">(date of earliest event reported)</font></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>
<p style="PAGE-BREAK-BEFORE: always">
  </p></font></font>
<div align=left></div>
<div align=left>
  <hr width="100%">
</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 25, 2005, Socket
  Communications, Inc. issued a press release reporting its results for the three
  and nine months ended September 30, 2005. 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>
      <hr color=#000000 noShade size=0>
    </td>
    <td width=29>&nbsp;</td>
    <td width=680>
      <div
      align=center>
        <hr color=#000000 noShade size=0>
      </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 25, 2005, titled "</font><font face="Times New Roman, Times, serif" size="3">Socket
      Communications Reports Third Quarter Profit of $0.01 per share</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><p style="PAGE-BREAK-BEFORE: always">
<p style="PAGE-BREAK-BEFORE: always">
<hr width="100%">
<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=80% 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
          25, 2005</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><p style="PAGE-BREAK-BEFORE: always">
<hr width="100%">
<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>
      <hr color=#000000 noShade size=0>
    </td>
    <td width=29>&nbsp;</td>
    <td width=680>
      <div
      align=center>
        <hr color=#000000 noShade size=0>
      </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 25, 2005, titled "</font><font face="Times New Roman, Times, serif" size="3">Socket
      Communications Reports Third Quarter Profit of $0.01 per share</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>
<p>&nbsp;</p>
<div align=left>
  <div align=left></div>
</div>
</body>
</html>
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.1 CHARTER
<SEQUENCE>2
<FILENAME>pressreleaseq3.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="5">For Immediate
  Release</font></b> </font> </p>
<p><font face="Times New Roman, Times, serif" size="3"><b><u>For further information,
  contact:</u></b><br>
  </font></p>
<table width="100%" 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">Stephen
      D. Axelrod, CFA</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">Wolfe
      Axelrod Weinberger Associates, LLC</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)
      370-4500</font></td>
  </tr>
  <tr valign="bottom">
    <td width="488" height="20"><font face="Times New Roman, Times, serif" size="3">email:
      dave@socketcom.com </font></td>
    <td width="564" height="20"><font face="Times New Roman, Times, serif" size="3">email:
      steve@wolfeaxelrod.com </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="3"><b><font size="4">Socket
  Communications Reports Third Quarter Profit of $0.01 per share</font></b><br>
  <br>
  <i><b>Company Has Been Profitable for Six of the Last Seven Quarters</b></i></font></p>
<p align="left"><font face="Times New Roman, Times, serif" size="3"><b><br>
  NEWARK, CA - October 25, 2005</b> - Socket Communications, Inc. (NASDAQ: SCKT),
  an innovative provider of mobile productivity products, today reported net income
  applicable to common stockholders for the third quarter ended September 30,
  2005 of $195,000 or $0.01 per share, compared to net income applicable to common
  stockholders of $89,000 or $0.00 per share for the same period a year ago, and
  compared to net income in the previous sequential quarter of $246,000 or $0.01
  per share. The Company has been profitable for six of its last seven quarters.
  Revenue for the quarter ended September 30, 2005 was $6,548,000, increasing
  6 percent compared to revenue of $6,204,000 in the same quarter a year ago,
  and was flat compared to revenue of $6,580,000 in the previous sequential quarter.
  </font></p>
<p><font face="Times New Roman, Times, serif" size="3">The Company reported net
  income applicable to common stockholders of $37,000 or $0.00 per share for the
  nine months ended September 30, 2005 compared to net income applicable to common
  stockholders of $172,000 or $0.01 per share for the nine months ended September
  30, 2004. Revenue for the first nine months of 2005 was $19.1 million, decreasing
  3 percent compared to revenue of $19.7 million for the same period a year ago.</font></p>
<p><font face="Times New Roman, Times, serif" size="3">The Company's balance sheet
  at September 30, 2005 included a cash balance of $6.6 million, reflecting a
  net increase of $0.6 million from the cash balance at December 31, 2004. Sources
  of cash for the nine month period reflected positive cash flow from operations
  of $1.7 million, including working capital changes. Cash was used to pay down
  a bank line of credit by $0.7 million and for investment in property and equipment
  of $0.4 million. The current ratio (current assets divided by current liabilities)
  at September 30, 2005 was 1.8 to 1.0. The Company has no long term debt.</font></p>
<p><font face="Times New Roman, Times, serif" size="3">&quot;We are pleased to
  report another profitable quarter while making progress in a number of significant
  areas,&quot; said Kevin Mills, president and chief executive officer of Socket
  Communications. &quot;The market for mobile computing continues to expand. The
  recent announcement by Palm adopting the Windows Mobile operating system for
  its Treo smartphone early next year is a solid indicator that Windows Mobile
  is likely to be the dominant operating system for handheld computers going forward
  and plays to Socket's strengths. Offering the Windows Mobile operating system
  on the Treo increases the number of Socket products that will work with the
  Palm Treo, such as our wireless LAN connection card and Wi-Fi Companion software.
  All of the application software that has been developed for the Windows Mobile
  platform will also work on the Treo, which should greatly expand its capabilities
  for data collection using bar code scanning. This operating system consolidation
  should make it easier for IT managers and developers to deploy market solutions
  which drive Socket product sales.&quot; </font></p>
<p><font face="Times New Roman, Times, serif" size="3">&quot;We continue to expand
  our family of data collection and connectivity products to enhance enterprise
  productivity in response to market demand. Recent products include our ruggedized
  cordless hand scanner, our combination bar code scanner and RFID reader/writer,
  and our just announced wearable ring scanner. We are broadening our markets
  by now supporting bar code scanning on RIM Blackberry devices with Bluetooth
  wireless technology and on Symbian Series 60 and Series 80 smartphones. Our
  Strategic Vertical Integrator (SVI) developer program continues to increase
  the number of third party software applications that integrate our data collection
  and connectivity products into productivity solutions for enterprises, including
  field force automation, retail merchandising, asset management and health care.
  We were pleased to announce support from SAP in incorporating our data collection
  products into their enterprise software. SAP is the second major enterprise
  software company to do so following a similar announcement from Siebel Systems
  last year. During the third quarter we also announced new applications from
  several of our SVI partners. These actions continue to build a foundation for
  long term revenue growth.&quot; </font></p>
<p><font face="Times New Roman, Times, serif" size="3"><b><u>Other Financial Information</u></b></font></p>
<p><font face="Times New Roman, Times, serif" size="3"><i>Revenue</i> by product
  family for the three and nine month periods ended September 30, 2005 compared
  to the corresponding periods in 2004 was as follows:</font></p>
<table cellspacing=1 cellpadding=1 width=80% 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>Q3
        2005<br>
        Revenue<br>
        (Millions) </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)<br>
        over Q3 2004</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>
        2005 Revenue<br>
        (Millions) </b></font></div>
    </td>
    <td width="14%" height=20>
      <div align="center"><font face="Times New Roman, Times, serif" size="3"><b>%
        Growth<br>
        (Decline)<br>
        over 9 Months 2004</b></font></div>
    </td>
  </tr>
  <tr valign=bottom>
    <td width="38%" height=31><font face="Times New Roman, Times, serif" size="3">Data
      Collection Products</font></td>
    <td width="16%" height=31>
      <p align="center"><font face="Times New Roman, Times, serif" size="3">$
        2.5</font></p>
    </td>
    <td width="14%" height=31>
      <p align=center><font face="Times New Roman, Times, serif" size="3">(9%)</font></p>
    </td>
    <td width="18%" height=31>
      <div align="center"><font face="Times New Roman, Times, serif" size="3">$
        7.5 </font></div>
    </td>
    <td width="14%" height=31>
      <div align="center"><font face="Times New Roman, Times, serif" size="3">(2%)</font></div>
    </td>
  </tr>
  <tr valign=bottom>
    <td width="38%" height=17><font face="Times New Roman, Times, serif" size="3">Connectivity
      Products</font></td>
    <td width="16%" height=17>
      <p align="center"><font face="Times New Roman, Times, serif" size="3"> 2.2
        </font></p>
    </td>
    <td width="14%" height=17>
      <p align=center><font face="Times New Roman, Times, serif" size="3">37%</font></p>
    </td>
    <td width="18%" height=17>
      <p align=center><font face="Times New Roman, Times, serif" size="3">6.6
        </font></p>
    </td>
    <td width="14%" height=17>
      <p align=center><font face="Times New Roman, Times, serif" size="3">1%</font></p>
    </td>
  </tr>
  <tr valign=bottom>
    <td width="38%" height=17><font face="Times New Roman, Times, serif" size="3">OEM
      Products</font></td>
    <td width="16%" height=17>
      <p align="center"><font face="Times New Roman, Times, serif" size="3">0.9
        </font></p>
    </td>
    <td width="14%" height=17>
      <p align=center><font face="Times New Roman, Times, serif" size="3">6%&nbsp;</font></p>
    </td>
    <td width="18%" height=17>
      <p align=center><font face="Times New Roman, Times, serif" size="3">2.5
        </font></p>
    </td>
    <td width="14%" height=17>
      <p align=center><font face="Times New Roman, Times, serif" size="3">&nbsp;(8%)
        </font></p>
    </td>
  </tr>
  <tr valign=bottom>
    <td width="38%" height=17><font face="Times New Roman, Times, serif" size="3">Serial
      Products</font></td>
    <td width="16%" height=17>
      <p align="center"><font face="Times New Roman, Times, serif" size="3">0.9
        </font></p>
    </td>
    <td width="14%" height=17>
      <p align=center><font face="Times New Roman, Times, serif" size="3">(16%)</font></p>
    </td>
    <td width="18%" height=17>
      <p align=center><font face="Times New Roman, Times, serif" size="3">2.5</font></p>
    </td>
    <td width="14%" height=17>
      <p align=center><font face="Times New Roman, Times, serif" size="3">(11%)
        </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">$
        6.5 </font></div>
    </td>
    <td width="14%" height=17>
      <div align=center><font face="Times New Roman, Times, serif" size="3">6%</font></div>
    </td>
    <td width="18%" height=17>
      <div align=center><font face="Times New Roman, Times, serif" size="3">$
        19.1 </font></div>
    </td>
    <td width="14%" height=17>
      <div align=center><font face="Times New Roman, Times, serif" size="3">(3%)
        </font></div>
    </td>
  </tr>
</table>
<p><font size="3" face="Times New Roman, Times, serif"><br>
  Revenue by product family for the quarter ended September 30, 2005 compared
  to the previous quarter ended June 30, 2005 was as follows:</font></p>
<p>&nbsp;</p>
<table cellspacing=1 cellpadding=1 width=80% 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>Q3
        2005<br>
        Revenue<br>
        (Millions) </b></font></p>
    </td>
    <td width="18%" height=20>
      <div align="center"><font face="Times New Roman, Times, serif" size="3"><b>Q2
        2005<br>
        Revenue<br>
        (Millions)</b></font></div>
    </td>
    <td width="14%" height=20>
      <div align="center"><font face="Times New Roman, Times, serif" size="3"><b>%
        Growth<br>
        (Decline) </b></font></div>
    </td>
  </tr>
  <tr valign=bottom>
    <td width="38%" height=31><font face="Times New Roman, Times, serif" size="3">Data
      Collection Products</font></td>
    <td width="16%" height=31>
      <p align="center"><font face="Times New Roman, Times, serif" size="3">$
        2.5</font></p>
    </td>
    <td width="18%" height=31>
      <div align="center"><font face="Times New Roman, Times, serif" size="3">$
        2.8</font></div>
    </td>
    <td width="14%" height=31>
      <div align="center"><font face="Times New Roman, Times, serif" size="3">(11%)</font></div>
    </td>
  </tr>
  <tr valign=bottom>
    <td width="38%" height=17><font face="Times New Roman, Times, serif" size="3">Connectivity
      Products</font></td>
    <td width="16%" height=17>
      <p align="center"><font face="Times New Roman, Times, serif" size="3"> 2.2
        </font></p>
    </td>
    <td width="18%" height=17>
      <p align=center><font face="Times New Roman, Times, serif" size="3"> 2.2
        </font></p>
    </td>
    <td width="14%" height=17>
      <p align=center><font face="Times New Roman, Times, serif" size="3">3% </font></p>
    </td>
  </tr>
  <tr valign=bottom>
    <td width="38%" height=17><font face="Times New Roman, Times, serif" size="3">OEM
      Products</font></td>
    <td width="16%" height=17>
      <p align="center"><font face="Times New Roman, Times, serif" size="3">0.9
        </font></p>
    </td>
    <td width="18%" height=17>
      <p align=center><font face="Times New Roman, Times, serif" size="3">0.8
        </font></p>
    </td>
    <td width="14%" height=17>
      <p align=center><font face="Times New Roman, Times, serif" size="3">&nbsp;24%
        </font></p>
    </td>
  </tr>
  <tr valign=bottom>
    <td width="38%" height=17><font face="Times New Roman, Times, serif" size="3">Serial
      Products</font></td>
    <td width="16%" height=17>
      <p align="center"><font face="Times New Roman, Times, serif" size="3">0.9
        </font></p>
    </td>
    <td width="18%" height=17>
      <p align=center><font face="Times New Roman, Times, serif" size="3"> 0.8
        </font></p>
    </td>
    <td width="14%" height=17>
      <p align=center><font face="Times New Roman, Times, serif" size="3">5% </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">$
        6.55</font></div>
    </td>
    <td width="18%" height=17>
      <div align=center><font face="Times New Roman, Times, serif" size="3">$
        6.58 </font></div>
    </td>
    <td width="14%" height=17>
      <div align=center><font face="Times New Roman, Times, serif" size="3">Flat
        </font></div>
    </td>
  </tr>
</table>
<p>&nbsp;</p>
<p><font face="Times New Roman, Times, serif" size="3">Third quarter revenue in
  2005 grew 6 percent over the third quarter a year ago. Connectivity product
  growth of 46 percent reflected higher sales of modems, wireless LAN and Bluetooth
  plug-in products, modems and GPS products and increases in sales of the Company's
  Wi-Fi Companion software. Data collection product revenue in the third quarter
  of 2005 compared to the same period a year ago was lower by 10 percent due to
  the timing of orders for bar code scanning products. Delays in the transition
  to new models of Pocket PCs by the two major Pocket PC manufacturers in the
  first half of 2005 and long lead times needed by customers to complete their
  product testing and field trials for data collection solutions continued to
  slow data collection product orders. The introduction of new data collection
  products by the Company, improved availability of new Pocket PC models, and
  expanded support for additional mobile device platforms are expected to increase
  future order rates for data collection products. OEM products revenue in the
  quarter increased 6% over the same quarter a year ago reflecting growth in sales
  of Bluetooth modules due to a higher sales volumes of OEM products containing
  the modules and more OEM devices using the modules, offset by the phasing down
  of third party sales of the Company's ASIC interface chips. Reduction in sales
  of serial products by 16 percent reflected a higher than normal order rate for
  these products in the third quarter of 2004 and a general slow decline in the
  use of legacy serial products.</font></p>
<p><font face="Times New Roman, Times, serif" size="3">Revenue for the nine months
  ended September 30, 2005 declined 3 percent compared to the corresponding period
  in 2004. The generally flat revenue results are due in large measure to transition
  delays in the availability of new models of Pocket PCs from September 2004 through
  June 2005 which also slowed sales of the Company's products. Comparative declines
  were more pronounced in the first six months of 2005 and were reduced to 3 percent
  for the nine month period as a result of third quarter 2005 revenue growth over
  the same period in 2004 and other factors described in the previous paragraph.
  </font></p>
<p></p>
<p><i><font face="Times New Roman, Times, serif" size="3">Gross profit on sales</font></i><font face="Times New Roman, Times, serif" size="3">
  was 50 percent for the quarter and nine month period ended September 30, 2005
  <br>
  compared to 52 percent and 51 percent respectively for the corresponding periods
  a year ago. The Company's average target margin is 50 percent and the margin
  tends to fluctuate within narrow ranges depending on product mix.</font></p>
<p><font face="Times New Roman, Times, serif" size="3"><i>Research and development
  expense</i> was $848,000 compared to $906,000 for the third quarters ended September
  30, 2005 and 2004, respectively, and was $2.6 million compared to $2.7 million
  for the nine month periods ended September 30, 2005 and 2004, respectively.
  Research and development expense fluctuates within narrow ranges depending on
  the internal and outside resources working on development projects. Research
  and development expenses are expected to increase in the fourth quarter of 2005.</font></p>
<p><font face="Times New Roman, Times, serif" size="3"><i>Sales and marketing
  expense</i> increased to $1.7 million for the quarter ended September 30, 2005
  compared to $1.4 million for the same period a year ago, and increased to $4.8
  million for the nine month period ended September 30, 2005 compared to $4.4
  million for the same period a year ago. The increases resulted from higher sales
  and marketing headcount in 2005, increases in related travel expenses, and increased
  advertising and promotion. Sales and marketing expense are expected to increase
  in the fourth quarter of 2005.</font></p>
<p><font face="Times New Roman, Times, serif" size="3"><i>General and administrative
  expense</i> decreased to $563,000 for the quarter ended September 30, 2005 compared
  to $711,000 for the same period a year ago, and to $2.0 million for the nine
  month period ended September 30, 2005 compared to $2.5 million for the same
  period a year ago. The decreases were primarily due to the costs in 2004 of
  defending a patent litigation lawsuit initiated by Khyber Technologies that
  was settled in July 2004, partially offset in the first quarter of 2005 by higher
  audit costs relating to a new requirement for the internal controls of the Company
  to be audited as mandated by Sarbanes-Oxley Section 404. General and administrative
  expenses are expected to increase in the fourth quarter of 2005.</font></p>
<p><font face="Times New Roman, Times, serif" size="3"><i>Preferred stock dividends</i>
  are paid quarterly at a rate of 8 percent per annum to the remaining holders
  of Series F Convertible Preferred Stock issued in March 2003. The Preferred
  Stock may be converted into common stock at any time at the option of the holder.
  Approximately 70% of the Preferred Stock has been converted into common stock.
  All remaining shares of Series F Convertible Preferred Stock convert into common
  stock in March 2006 unless sooner converted by the holder.</font></p>
<p><font face="Times New Roman, Times, serif" size="3"><b>Quarterly Management
  Conference Call</b></font></p>
<p><font face="Times New Roman, Times, serif" size="3"> Management of Socket will
  hold a conference call today at 2 p.m. Pacific time to discuss the quarterly
  results and outlook for the future. The call will be carried live and available
  via replay on www.ccbn.com or participants may join the call by telephone at
  (800) 240-5318 or hear a replay via telephone at 800-405-2236, access code 11041405#
  for a week following the call.</font></p>
<p><font face="Times New Roman, Times, serif" size="3"> <b>About Socket </b></font></p>
<p><font face="Times New Roman, Times, serif" size="3"> Socket Communications
  (NASDAQ: SCKT) develops and distributes a broad range of data collection and
  network connectivity products for mobile devices such as PDA's, Smartphones
  and tablet notebooks. Working collaboratively with mobile solutions from leading
  Strategic Vertical Integrators, world-class 3rd party software developers and
  OEM's, Socket's Battery Friendly&reg; products are proven to drive operational
  efficiencies, increase mobile workforce productivity, boost corporate performance
  and improve customer satisfaction. Socket is headquartered in Newark, California
  and can be reached at 510-744-2700 or www.socketcom.com.</font></p>
<p><font face="Times New Roman, Times, serif" size="3"><b>Forward Looking Statements</b></font></p>
<p><font face="Times New Roman, Times, serif" size="3">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 and other mobile computing devices, growth in demand
  for our products, expansion of the markets that we serve, adoption of our embedded
  products by third-party manufacturers of electronic devices, and 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, the integration of our products in third party hardware and software
  solutions, product delays associated with new model introductions and product
  changeovers, continued growth in demand for handheld computers, market acceptance
  of emerging standards such as Bluetooth and Wireless LAN and of our related
  connection and data collection 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="3"> <i><font 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. Wi-Fi&reg; is a registered trademark of the Wi-Fi Alliance.
  All other trademarks and trade names contained herein may be those of their
  respective owners. &copy; 2005 Socket Communications, Inc. All rights reserved.
  </font></i> </font> </p>
<p>&nbsp;</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 width="100%">
<p align="center">&nbsp;</p>
<p>&nbsp;</p>
<table cellspacing=1 cellpadding=1 width=80% 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="36%" 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 <br>
        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 <br>
        Sept 30,</font></div>
    </td>
  </tr>
  <tr valign=bottom>
    <td width="36%" height=17>
      <p><font face="Times New Roman, Times, serif" size="3">&nbsp;&nbsp; </font></p>
    </td>
    <td width="17%" height=17>
      <p align=center><font face="Times New Roman, Times, serif" size="3"><u>2005</u>
        </font></p>
    </td>
    <td width="16%" height=17>
      <div align="center"><font face="Times New Roman, Times, serif" size="3"><u>2004</u>
        </font></div>
    </td>
    <td width="16%" height=17>
      <p align=center><font face="Times New Roman, Times, serif" size="3"><u>2005</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>
  </tr>
  <tr valign=bottom>
    <td width="36%" height=17>
      <p><font face="Times New Roman, Times, serif" size="3">Revenue </font></p>
    </td>
    <td width="17%" height=17>
      <p align=center><font face="Times New Roman, Times, serif" size="3">$ 6,548</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="16%" height=17>
      <p align=center><font face="Times New Roman, Times, serif" size="3">$ 19,110</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>
  </tr>
  <tr valign=bottom>
    <td width="36%" height=17>
      <p><font face="Times New Roman, Times, serif" size="3">Cost of revenue </font></p>
    </td>
    <td width="17%" height=17>
      <p align=center><font face="Times New Roman, Times, serif" size="3"> 3,266</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="16%" height=17>
      <p align=center><font face="Times New Roman, Times, serif" size="3"> 9,468</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>
  </tr>
  <tr valign=bottom>
    <td width="36%" height=17>
      <p><font face="Times New Roman, Times, serif" size="3">Gross margin</font></p>
    </td>
    <td width="17%" height=17>
      <p align=center><font face="Times New Roman, Times, serif" size="3">3,282</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="16%" height=17>
      <p align=center><font face="Times New Roman, Times, serif" size="3">9,642</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>
  </tr>
  <tr valign=bottom>
    <td width="36%" height=17>
      <blockquote>
        <p><font face="Times New Roman, Times, serif" size="3">Gross margin percent</font></p>
      </blockquote>
    </td>
    <td width="17%" height=17>
      <p align=center><font face="Times New Roman, Times, serif" size="3">50%</font>
      </p>
    </td>
    <td width="16%" height=17>
      <p align=center><font face="Times New Roman, Times, serif" size="3">52%</font>
      </p>
    </td>
    <td width="16%" 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>
  </tr>
  <tr valign=bottom>
    <td width="36%" height=17>
      <p><font face="Times New Roman, Times, serif" size="3">Research and development
        </font></p>
    </td>
    <td width="17%" height=17>
      <p align=center><font face="Times New Roman, Times, serif" size="3">848</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="16%" height=17>
      <p align=center><font face="Times New Roman, Times, serif" size="3">2,635</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>
  </tr>
  <tr valign=bottom>
    <td width="36%" height=17>
      <p><font face="Times New Roman, Times, serif" size="3">Sales and marketing
        </font></p>
    </td>
    <td width="17%" height=17>
      <p align=center><font face="Times New Roman, Times, serif" size="3">1,654</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="16%" height=17>
      <p align=center><font face="Times New Roman, Times, serif" size="3">4,847</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>
  </tr>
  <tr valign=bottom>
    <td width="36%" height=17>
      <p><font face="Times New Roman, Times, serif" size="3">General and administrative
        </font></p>
    </td>
    <td width="17%" height=17>
      <p align=center><font face="Times New Roman, Times, serif" size="3">563</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="16%" height=17>
      <p align=center><font face="Times New Roman, Times, serif" size="3">1,975</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>
  </tr>
  <tr valign=bottom>
    <td width="36%" height=17><font face="Times New Roman, Times, serif" size="3">Amortization
      of intangibles</font></td>
    <td width="17%" height=17>
      <div align=center><font face="Times New Roman, Times, serif" size="3">36</font></div>
    </td>
    <td width="16%" height=17>
      <div align=center><font face="Times New Roman, Times, serif" size="3">107</font></div>
    </td>
    <td width="16%" height=17>
      <div align=center><font face="Times New Roman, Times, serif" size="3">167</font></div>
    </td>
    <td width="15%" height=17>
      <div align=center><font face="Times New Roman, Times, serif" size="3">291</font></div>
    </td>
  </tr>
  <tr valign=bottom>
    <td width="36%" height=17>
      <blockquote>
        <p><font face="Times New Roman, Times, serif" size="3">Total operating
          expenses</font></p>
      </blockquote>
    </td>
    <td width="17%" height=17>
      <p align=center><font face="Times New Roman, Times, serif" size="3">3,101</font></p>
    </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="16%" height=17>
      <p align=center><font face="Times New Roman, Times, serif" size="3">9,624</font></p>
    </td>
    <td width="15%" height=17>
      <p align=center><font face="Times New Roman, Times, serif" size="3">9,897</font></p>
    </td>
  </tr>
  <tr valign=bottom>
    <td width="36%" height=17><font face="Times New Roman, Times, serif" size="3">Interest
      (income), net</font></td>
    <td width="17%" height=17>
      <div align=center><font face="Times New Roman, Times, serif" size="3">(26)</font></div>
    </td>
    <td width="16%" height=17>
      <div align=center><font face="Times New Roman, Times, serif" size="3">(7)</font></div>
    </td>
    <td width="16%" height=17>
      <div align=center><font face="Times New Roman, Times, serif" size="3">(55)</font></div>
    </td>
    <td width="15%" height=17>
      <div align=center><font face="Times New Roman, Times, serif" size="3">(19)</font></div>
    </td>
  </tr>
  <tr valign=bottom>
    <td width="36%" height=17>
      <p><font face="Times New Roman, Times, serif" size="3">Net income </font></p>
    </td>
    <td width="17%" height=17>
      <p align=center><font face="Times New Roman, Times, serif" size="3">207
        </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="16%" height=17>
      <p align=center><font face="Times New Roman, Times, serif" size="3">73</font></p>
    </td>
    <td width="15%" height=17>
      <p align=center><font face="Times New Roman, Times, serif" size="3">210
        </font></p>
    </td>
  </tr>
  <tr valign=bottom>
    <td width="36%" height=29>
      <p><font face="Times New Roman, Times, serif" size="3">Preferred stock dividends</font></p>
    </td>
    <td width="17%" height=29>
      <p align=center><font face="Times New Roman, Times, serif" size="3">(12)</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="16%" height=29>
      <p align=center><font face="Times New Roman, Times, serif" size="3">(36)</font></p>
    </td>
    <td width="15%" height=29>
      <p align=center><font face="Times New Roman, Times, serif" size="3">(38)</font></p>
    </td>
  </tr>
  <tr valign=bottom>
    <td width="36%" height=17>
      <p><font face="Times New Roman, Times, serif" size="3">Net income applicable
        to common stockholders</font> </p>
    </td>
    <td width="17%" height=17>
      <p align=center><font face="Times New Roman, Times, serif" size="3">$ 195</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="16%" height=17>
      <p align=center><font face="Times New Roman, Times, serif" size="3">$ 37</font></p>
    </td>
    <td width="15%" height=17>
      <p align=center><font face="Times New Roman, Times, serif" size="3">$ 172</font></p>
    </td>
  </tr>
  <tr valign=bottom>
    <td valign=top width="36%" height=45>
      <p><font face="Times New Roman, Times, serif" size="3">Basic and diluted
        net income per share applicable to common stockholders</font></p>
    </td>
    <td width="17%" height=45>
      <p align=center><font face="Times New Roman, Times, serif" size="3">$ 0.01<br>
        </font></p>
    </td>
    <td width="16%" height=45>
      <p align=center><font face="Times New Roman, Times, serif" size="3">$ 0.00<br>
        </font></p>
    </td>
    <td width="16%" height=45>
      <p align=center><font face="Times New Roman, Times, serif" size="3">$ 0.00<br>
        </font></p>
    </td>
    <td width="15%" height=45>
      <p align=center><font face="Times New Roman, Times, serif" size="3">$ 0.01<br>
        </font></p>
    </td>
  </tr>
  <tr valign=bottom>
    <td rowspan="2" height=51 width="36%">
      <p><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&nbsp&nbsp&nbsp&nbspBasic<br>
        &nbsp&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp&nbspDiluted </font></p>
      </td>
    <td rowspan="2" height=51 width="17%">
      <p align=center><font face="Times New Roman, Times, serif" size="3">30,198
        <br>
        32,376 </font></p>
    </td>
    <td rowspan="2" height=51 width="16%">
      <p align=center><font face="Times New Roman, Times, serif" size="3">30,111
        <br>
        33,939 </font></p>
    </td>
    <td rowspan="2" height=51 width="16%">
      <p align=center><font face="Times New Roman, Times, serif" size="3">30,171
        <br>
        32,543 </font></p>
    </td>
    <td rowspan="2" height=51 width="15%">
      <p align=center><font face="Times New Roman, Times, serif" size="3">30,035
        <br>
        34,101 </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=80% 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="45%"><font face="Times New Roman, Times, serif" size="3">&nbsp;&nbsp;
      </font></td>
    <td height=26 width="28%">
      <div align="center"><font face="Times New Roman, Times, serif" size="3">Sept
        30, 2005<br>
        (Unaudited) </font></div>
    </td>
    <td height=26 width="27%">
      <div align="center"><font face="Times New Roman, Times, serif" size="3">
        December 31, 2004*<br>
        </font></div>
    </td>
  </tr>
  <tr valign=bottom>
    <td width="45%">
      <p><font face="Times New Roman, Times, serif" size="3">Cash</font> </p>
    </td>
    <td width="28%">
      <p align=center><font face="Times New Roman, Times, serif" size="3">$ 6,570</font></p>
    </td>
    <td width="27%">
      <p align=center><font face="Times New Roman, Times, serif" size="3">$ 5,932
        </font></p>
    </td>
  </tr>
  <tr valign=bottom>
    <td width="45%">
      <p><font face="Times New Roman, Times, serif" size="3">Accounts receivable
        </font></p>
    </td>
    <td width="28%">
      <p align=center><font face="Times New Roman, Times, serif" size="3">3,605
        </font></p>
    </td>
    <td width="27%">
      <p align=center><font face="Times New Roman, Times, serif" size="3"> 4,009
        </font></p>
    </td>
  </tr>
  <tr valign=bottom>
    <td width="45%">
      <p><font face="Times New Roman, Times, serif" size="3">Inventories </font></p>
    </td>
    <td width="28%">
      <p align=center><font face="Times New Roman, Times, serif" size="3">2,397
        </font></p>
    </td>
    <td width="27%">
      <p align=center><font face="Times New Roman, Times, serif" size="3">2,941</font></p>
    </td>
  </tr>
  <tr valign=bottom>
    <td width="45%">
      <p><font face="Times New Roman, Times, serif" size="3">Other current assets</font>
      </p>
    </td>
    <td width="28%">
      <p align=center><font face="Times New Roman, Times, serif" size="3">241</font></p>
    </td>
    <td width="27%">
      <p align=center><font face="Times New Roman, Times, serif" size="3">160</font></p>
    </td>
  </tr>
  <tr valign=bottom>
    <td width="45%">
      <p><font face="Times New Roman, Times, serif" size="3">Property and equipment,
        net </font></p>
    </td>
    <td width="28%">
      <div align=center><font face="Times New Roman, Times, serif" size="3">531</font></div>
    </td>
    <td width="27%">
      <div align=center><font face="Times New Roman, Times, serif" size="3">479</font></div>
    </td>
  </tr>
  <tr valign=bottom>
    <td width="45%">
      <p><font face="Times New Roman, Times, serif" size="3">Goodwill </font></p>
    </td>
    <td width="28%">
      <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="45%">
      <p><font face="Times New Roman, Times, serif" size="3">Intangible technology</font>
      </p>
    </td>
    <td width="28%">
      <p align=center><font face="Times New Roman, Times, serif" size="3">785</font></p>
    </td>
    <td width="27%">
      <p align=center><font face="Times New Roman, Times, serif" size="3">952
        </font></p>
    </td>
  </tr>
  <tr valign=bottom>
    <td width="45%">
      <p><font face="Times New Roman, Times, serif" size="3">Other assets</font>
      </p>
    </td>
    <td width="28%">
      <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">129</font></p>
    </td>
  </tr>
  <tr valign=bottom>
    <td width="45%">
      <p><font face="Times New Roman, Times, serif" size="3">Total Assets </font></p>
    </td>
    <td width="28%">
      <p align=center><font face="Times New Roman, Times, serif" size="3">$ 24,063
        </font></p>
    </td>
    <td width="27%">
      <p align=center><font face="Times New Roman, Times, serif" size="3">$ 24,400
        </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="45%">
      <p><font face="Times New Roman, Times, serif" size="3">Accounts payable
        and accrued liabilities</font> </p>
    </td>
    <td width="28%">
      <p align=center><font face="Times New Roman, Times, serif" size="3">$ 3,575</font></p>
    </td>
    <td width="27%">
      <p align=center><font face="Times New Roman, Times, serif" size="3">$ 3,350
        </font></p>
    </td>
  </tr>
  <tr valign=bottom>
    <td width="45%">
      <p><font face="Times New Roman, Times, serif" size="3">Bank line of credit</font>
      </p>
    </td>
    <td width="28%">
      <p align=center><font face="Times New Roman, Times, serif" size="3">2,254</font></p>
    </td>
    <td width="27%">
      <p align=center><font face="Times New Roman, Times, serif" size="3">2,949
        </font></p>
    </td>
  </tr>
  <tr valign=bottom>
    <td width="45%">
      <p><font face="Times New Roman, Times, serif" size="3">Deferred income on
        shipments to distributors</font></p>
    </td>
    <td width="28%">
      <p align=center><font face="Times New Roman, Times, serif" size="3">1,137</font></p>
    </td>
    <td width="27%">
      <p align=center><font face="Times New Roman, Times, serif" size="3">1,056</font></p>
    </td>
  </tr>
  <tr valign=bottom>
    <td width="45%"><font face="Times New Roman, Times, serif" size="3">Capital
      leases/other non-current liabilities</font></td>
    <td width="28%">
      <div align=center><font face="Times New Roman, Times, serif" size="3">61</font></div>
    </td>
    <td width="27%">
      <div align=center><font face="Times New Roman, Times, serif" size="3">93</font></div>
    </td>
  </tr>
  <tr valign=bottom>
    <td width="45%">
      <p><font face="Times New Roman, Times, serif" size="3">Common and convertible
        preferred stock </font></p>
    </td>
    <td width="28%">
      <p align=center><font face="Times New Roman, Times, serif" size="3">50,673</font></p>
    </td>
    <td width="27%">
      <p align=center><font face="Times New Roman, Times, serif" size="3">50,626
        </font></p>
    </td>
  </tr>
  <tr valign=bottom>
    <td width="45%">
      <p><font face="Times New Roman, Times, serif" size="3">Accumulated deficit</font>
      </p>
    </td>
    <td width="28%">
      <div align=center><font face="Times New Roman, Times, serif" size="3">(33,637)</font></div>
    </td>
    <td width="27%">
      <div align=center><font face="Times New Roman, Times, serif" size="3">(33,674)</font></div>
    </td>
  </tr>
  <tr valign=bottom>
    <td width="45%"><font face="Times New Roman, Times, serif" size="3">Total
      Liabilities and Equity</font></td>
    <td width="28%">
      <div align=center><font face="Times New Roman, Times, serif" size="3">$
        24,063</font></div>
    </td>
    <td width="27%">
      <div align=center><font face="Times New Roman, Times, serif" size="3">$
        24,400 </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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