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<SEC-DOCUMENT>0000944075-09-000023.txt : 20090514
<SEC-HEADER>0000944075-09-000023.hdr.sgml : 20090514
<ACCEPTANCE-DATETIME>20090513173349
ACCESSION NUMBER:		0000944075-09-000023
CONFORMED SUBMISSION TYPE:	10-Q
PUBLIC DOCUMENT COUNT:		4
CONFORMED PERIOD OF REPORT:	20090331
FILED AS OF DATE:		20090514
DATE AS OF CHANGE:		20090513

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			SOCKET MOBILE, 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:		10-Q
		SEC ACT:		1934 Act
		SEC FILE NUMBER:	000-25904
		FILM NUMBER:		09823719

	BUSINESS ADDRESS:	
		STREET 1:		39700 EUREKA DRIVE
		CITY:			NEWARK
		STATE:			CA
		ZIP:			94560-4808
		BUSINESS PHONE:		5109333000

	MAIL ADDRESS:	
		STREET 1:		39700 EUREKA DRIVE
		CITY:			NEWARK
		STATE:			CA
		ZIP:			94560-4808

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	SOCKET COMMUNICATIONS INC
		DATE OF NAME CHANGE:	19950418
</SEC-HEADER>
<DOCUMENT>
<TYPE>10-Q
<SEQUENCE>1
<FILENAME>q1-2009.htm
<DESCRIPTION>10-Q
<TEXT>
<!DOCTYPE HTML PUBLIC "-//W3C//DTD HTML 4.0 Transitional//EN">
<!-- saved from url=(0042)file://N:\STMNTS\SEC\2002_06_Q\q2-2002.htm -->
<!-- saved from url=(0042)file://N:\STMNTS\SEC\2002_03_Q\q1-2002.htm --><HTML><HEAD><TITLE>10q doc</TITLE>

<META content="MSHTML 5.50.4522.1800" name=GENERATOR></HEAD>
<BODY bgColor=white>
<DIV align=left> </DIV>
<DIV align=left> </DIV>
<P align=center><font face="Times New Roman, Times, serif" size="3">UNITED STATES<BR>
  SECURITIES AND EXCHANGE COMMISSION<BR>
  WASHINGTON, D.C. 20549<BR>
  </font></P>
<P align=center><font face="Times New Roman, Times, serif" size="3"><STRONG>FORM
  10-Q</STRONG></font></P>
<TABLE cols=2 width="100%">
  <TR>
    <TD vAlign=top width="5%"><FONT size=3><STRONG>
      <CENTER>
        <font face="Times New Roman, Times, serif"> [X] </font>
      </CENTER>
      </STRONG></FONT></TD>
    <TD vAlign=top width="95%"><font size="3" face="Times New Roman, Times, serif"><b>QUARTERLY
      REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934.</b></font></TD>
  </TR>
</TABLE>
<P align=center><font face="Times New Roman, Times, serif" size="3"><STRONG>&nbsp;&nbsp;For
  the quarterly period ended March 31, 2009</STRONG></font></P>
<P align=center><font size="3" face="Times New Roman, Times, serif"><STRONG>OR</STRONG></font></P>
<TABLE cols=2 width="100%">
  <TR>
    <TD vAlign=top width="5%"><FONT size=3><STRONG>
      <CENTER>
        <FONT face="Times New Roman, Times, serif">[&nbsp;&nbsp;&nbsp;] </FONT>
      </CENTER>
      </STRONG></FONT></TD>
    <TD vAlign=top width="95%"><FONT face="Times New Roman, Times, serif"
      size=3><STRONG>TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE
      SECURITIES EXCHANGE ACT OF 1934.&nbsp;&nbsp;</STRONG><BR>
      <BR>
      For the transition period ____________ to ____________ </FONT></TD>
  </TR>
</TABLE>
<P align=center><font face="Times New Roman, Times, serif" size="3"><b>Commission
  file number 1-13810</b></font></P>
<P align=center><font face="Times New Roman, Times, serif" size="3"><STRONG><b><font size="6">SOCKET
  MOBILE, INC.</font></b></STRONG><BR>
  (Exact name of registrant as specified in its charter)</font></P>
<P>&nbsp;
<TABLE cols=2 width="100%">
  <TR>
    <td width="47%"><font size=3><strong>
      <center>
        <font face="Times New Roman, Times, serif" size="3">Delaware </font>
      </center>
      </strong></font></td>
    <TD width="17%"><font face="Times New Roman, Times, serif"></font></TD>
    <TD width="36%"><FONT size=3><STRONG>
      <CENTER>
        <font face="Times New Roman, Times, serif" size="3">94-3155066 </font>
      </CENTER>
      </STRONG></FONT></TD>
  </TR>
  <TR>
    <td width="47%"><font size=2>
      <center>
        <font size="3" face="Times New Roman, Times, serif">(State of incorporation)</font>
      </center>
      </font></td>
    <TD width="17%"><font face="Times New Roman, Times, serif"></font></TD>
    <TD width="36%"><FONT size=2>
      <CENTER>
        <font size="3" face="Times New Roman, Times, serif">(IRS Employer Identification
        No.) </font>
      </CENTER>
      </FONT></TD>
  </TR>
</TABLE>
<font face="Times New Roman, Times, serif" size="3"><BR>
</font>
<P align=center><font face="Times New Roman, Times, serif" size="3"><STRONG>39700
  Eureka Drive, Newark, CA 94560</STRONG><BR>
  (Address of principal executive offices including zip code)</font></P>
<P align=center><font face="Times New Roman, Times, serif" size="3"><STRONG>(510)
  933-3000</STRONG><BR>
  (Registrant's telephone number, including area code)<BR>
  </font></P>
<P><font face="Times New Roman, Times, serif" size="3">&nbsp;&nbsp;&nbsp; </font>
<P><font face="Times New Roman, Times, serif">Indicate by check mark whether the
  registrant (1) has filed all reports required to be filed by Section 13 or 15(d)
  of the Securities Exchange Act of 1934 during the preceding 12 months (or for
  such shorter period that the registrant was required to file such reports),
  and (2) has been subject to such filing requirements for the past 90 days. YES
  [ X ] NO [ ]</font></P>
<P><font face="Times New Roman, Times, serif">Indicate by check mark whether the
  registrant has submitted electronically and posted on its corporate Web site,
  if any, every Interactive Data File required to be submitted and posted pursuant
  to Rule 405 of Regulation S-T (&sect;232.405 of this chapter) during the preceding
  12 months (or for such shorter period that the registrant was required to submit
  and post such files). YES [ ] NO [ ]</font></P>
<P><font face="Times New Roman, Times, serif">Indicate by check mark whether the
  registrant is a large accelerated filer, an accelerated filer, a non-accelerated
  filer, or a smaller reporting company. See the definitions of "large accelerated
  filer," "accelerated filer," and "smaller reporting company" in Rule 12b-2 of
  the Exchange Act. Large accelerated filer [ ] Accelerated filer [ ] Non-accelerated
  filer [ ] Smaller reporting company [X]</font></P>
<P><font face="Times New Roman, Times, serif">Indicate by check mark whether the
  registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
  YES [ ] NO [X]</font></P>
<P><font face="Times New Roman, Times, serif">The number of shares of Common Stock
  ($0.001 par value) outstanding as of May 8, 2009 was 3,229,916 shares.</font></P>
<hr width="100%">
<div align="center"></div>
<P align=left><font face="Times New Roman, Times, serif" size="3"><a name="tab"></a></font></P>
<table width="879" border="0" cellspacing="0" cellpadding="0" align="center">
  <tr>
    <td colspan="3">
      <div align="center"></div>
      <p align=center><font face="Times New Roman, Times, serif" size="3"><strong>INDEX
        </strong></font></p>
    </td>
  </tr>
  <tr>
    <td width="27"><font face="Times New Roman, Times, serif"></font></td>
    <td width="807"><font face="Times New Roman, Times, serif"></font></td>
    <td width="56">
      <div align="center"><font face="Times New Roman, Times, serif" size="3"><u>PAGE
        <br>
        NO.</u></font></div>
    </td>
  </tr>
  <tr>
    <td colspan="3"><font face="Times New Roman, Times, serif">Part I. Financial
      Information</font></td>
  </tr>
  <tr>
    <td colspan="3"><font face="Times New Roman, Times, serif"></font></td>
  </tr>
  <tr>
    <td colspan="3"><font face="Times New Roman, Times, serif">Item 1. Financial
      Statements (Unaudited):</font></td>
  </tr>
  <tr>
    <td width="27"><font face="Times New Roman, Times, serif"></font></td>
    <td width="807"><font face="Times New Roman, Times, serif"></font></td>
    <td width="56" align="center" valign="bottom"><font face="Times New Roman, Times, serif"></font></td>
  </tr>
  <tr>
    <td width="27"><font face="Times New Roman, Times, serif"></font></td>
    <td width="807"><font face="Times New Roman, Times, serif" size="3"><a
  href="#bs">Condensed Balance Sheets - March 31, 2009 and December 31, 2008 </a></font></td>
    <td width="56" align="center" valign="bottom">
      <div align="center"><font face="Times New Roman, Times, serif">1</font></div>
    </td>
  </tr>
  <tr>
    <td width="27" height="10"><font face="Times New Roman, Times, serif"></font></td>
    <td width="807" height="10"><font face="Times New Roman, Times, serif"></font></td>
    <td width="56" height="10" align="center" valign="bottom"><font face="Times New Roman, Times, serif"></font></td>
  </tr>
  <tr>
    <td width="27" height="10"><font face="Times New Roman, Times, serif"></font></td>
    <td width="807" height="10"><font face="Times New Roman, Times, serif" size="3"><a
  href="#ops">Condensed Statements of Operations - Three Months Ended March 31,
      2009 and 2008</a></font></td>
    <td width="56" height="10" align="center" valign="bottom">
      <div align="center"><font face="Times New Roman, Times, serif"> 2</font></div>
    </td>
  </tr>
  <tr>
    <td width="27"><font face="Times New Roman, Times, serif"></font></td>
    <td width="807"><font face="Times New Roman, Times, serif"></font></td>
    <td width="56" align="center" valign="bottom"><font face="Times New Roman, Times, serif"></font></td>
  </tr>
  <tr>
    <td width="27"><font face="Times New Roman, Times, serif"></font></td>
    <td width="807"><font face="Times New Roman, Times, serif" size="3"><a
  href="#flows">Condensed Statements of Cash Flows - Three Months Ended March
      31, 2009 and 2008</a></font></td>
    <td width="56" align="center" valign="bottom">
      <div align="center"><font face="Times New Roman, Times, serif">3</font></div>
    </td>
  </tr>
  <tr>
    <td width="27"><font face="Times New Roman, Times, serif"></font></td>
    <td width="807"><font face="Times New Roman, Times, serif"></font></td>
    <td width="56" align="center" valign="bottom"><font face="Times New Roman, Times, serif"></font></td>
  </tr>
  <tr>
    <td width="27"><font face="Times New Roman, Times, serif"></font></td>
    <td width="807"><font face="Times New Roman, Times, serif" size="3"><a
  href="#notes">Notes to Condensed Financial Statements</a> </font></td>
    <td width="56" align="center" valign="bottom">
      <div align="center"><font face="Times New Roman, Times, serif">4</font></div>
    </td>
  </tr>
  <tr>
    <td colspan="2"><font face="Times New Roman, Times, serif"></font></td>
    <td width="56"><font face="Times New Roman, Times, serif"></font></td>
  </tr>
  <tr>
    <td colspan="2"><font face="Times New Roman, Times, serif" size="3"><a
href="#mda">Item 2. Management's Discussion and Analysis of Financial Condition
      and Results of Operations</a> </font></td>
    <td width="56">
      <div align="center"><font face="Times New Roman, Times, serif" size="3">11</font></div>
    </td>
  </tr>
  <tr>
    <td colspan="2"><font face="Times New Roman, Times, serif"></font></td>
    <td width="56"><font face="Times New Roman, Times, serif"></font></td>
  </tr>
  <tr>
    <td colspan="2"><font face="Times New Roman, Times, serif" size="3"><a
href="#qqd">Item 3. Quantitative and Qualitative Disclosures about Market Risk</a>
      </font></td>
    <td width="56">
      <div align="center"><font face="Times New Roman, Times, serif">20</font></div>
    </td>
  </tr>
  <tr>
    <td colspan="2"><font face="Times New Roman, Times, serif"></font></td>
    <td width="56"><font face="Times New Roman, Times, serif"></font></td>
  </tr>
  <tr>
    <td colspan="2"><font face="Times New Roman, Times, serif" size="3"><a
href="#item4">Item 4T. Controls and Procedures</a></font> </td>
    <td width="56">
      <div align="center"><font face="Times New Roman, Times, serif">21</font></div>
    </td>
  </tr>
  <tr>
    <td colspan="3"><font face="Times New Roman, Times, serif"></font></td>
  </tr>
  <tr>
    <td colspan="3">
      <div align="left"> <font face="Times New Roman, Times, serif" size="3"><a
href="#oth">Part II. Other Information</a></font></div>
    </td>
  </tr>
  <tr>
    <td colspan="2"><font face="Times New Roman, Times, serif"></font></td>
    <td width="56"><font face="Times New Roman, Times, serif"></font></td>
  </tr>
  <tr>
    <td colspan="2"><font face="Times New Roman, Times, serif" size="3"><a
href="#risk">Item 1A. Risk Factors</a></font></td>
    <td width="56">
      <div align="center"><font face="Times New Roman, Times, serif" size="3">22</font></div>
    </td>
  </tr>
  <tr>
    <td colspan="2"><font face="Times New Roman, Times, serif"></font></td>
    <td width="56"><font face="Times New Roman, Times, serif"></font></td>
  </tr>
  <tr>
    <td colspan="2"><font face="Times New Roman, Times, serif" size="3"><a
href="#sub">Item 4. Submission of Matters to a Vote of Security Holders</a></font></td>
    <td width="56">
      <div align="center"><font face="Times New Roman, Times, serif">33</font></div>
    </td>
  </tr>
  <tr>
    <td colspan="2"><font face="Times New Roman, Times, serif"></font></td>
    <td width="56"><font face="Times New Roman, Times, serif"></font></td>
  </tr>
  <tr>
    <td colspan="2"><font face="Times New Roman, Times, serif" size="3"><a
href="#item6">Item 6. Exhibits</a></font></td>
    <td width="56">
      <div align="center"><font face="Times New Roman, Times, serif">34</font></div>
    </td>
  </tr>
  <tr>
    <td colspan="2"><font face="Times New Roman, Times, serif"></font></td>
    <td width="56"><font face="Times New Roman, Times, serif"></font></td>
  </tr>
  <tr>
    <td colspan="2"><font face="Times New Roman, Times, serif" size="3"><a
href="#sig">Signatures</a></font></td>
    <td width="56">
      <div align="center"><font face="Times New Roman, Times, serif">35</font></div>
    </td>
  </tr>
  <tr>
    <td colspan="2"><font face="Times New Roman, Times, serif"></font></td>
    <td width="56"><font face="Times New Roman, Times, serif"></font></td>
  </tr>
  <tr>
    <td colspan="2"><font face="Times New Roman, Times, serif" size="3"><a
href="#ind">Index to Exhibits</a></font></td>
    <td width="56">
      <div align="center"><font face="Times New Roman, Times, serif" size="3">36</font></div>
    </td>
  </tr>
</table>
<P align=left>&nbsp; </P>
<P align="center"><font face="Times New Roman, Times, serif" size="3"><BR>
  <BR>
  </font>
<HR width="100%">
<font face="Times New Roman, Times, serif" size="3"><a href="#TAB">(Index)</a>
<a
name=bs></a> <BR>
<BR>
</font>
<P align=left><font face="Times New Roman, Times, serif" size="3"><b>Item 1. Financial
  Statements</b></font>
<div align="center" style="font-size: 12.0pt;color: #000000; background: #ffffff; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; "><font face="Times New Roman, Times, serif"><b>SOCKET
  MOBILE, INC.</b> <br>
  <b>BALANCE SHEETS</b> </font></div>
<center>
  <table width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10.0pt; margin-top: 12pt; ">
    <tr style="font-size: 8.0pt;">
      <td colspan="2" align="left" nowrap>&nbsp;</td>
      <td>&nbsp;</td>
      <td colspan="2" align="center" nowrap style="border-bottom: 1px solid #000000"><font face="Times New Roman, Times, serif" size="3">March
        31,<br>
        2009<br>
        (Unaudited)<br>
        </font></td>
      <td align="right" nowrap style="border-bottom: 1px solid #000000" valign="bottom">
        <div align="left"><font face="Times New Roman, Times, serif" size="3">&nbsp</font></div>
      </td>
      <td width="10">&nbsp;</td>
      <td colspan="2" align="center" valign="top" style="border-bottom: 1px solid #000000"><font face="Times New Roman, Times, serif" size="3"><br>
        December 31,<br>
        2008*</font></td>
      <td align="right" nowrap style="border-bottom: 1px solid #000000" valign="bottom">
        <div align="left"><font face="Times New Roman, Times, serif" size="3">&nbsp</font></div>
      </td>
    </tr>
    <tr valign="bottom">
      <td colspan="10" align="center" valign="top" bgcolor="#cceeff"> <font face="Times New Roman, Times, serif" size="3"><b>ASSETS</b></font></td>
    </tr>
    <tr>
      <td colspan="2" align="left" valign="top"><font face="Times New Roman, Times, serif" size="3">Current
        assets:</font></td>
      <td>&nbsp;</td>
      <td align="left" valign="bottom">&nbsp;</td>
      <td align="right" valign="bottom" nowrap>&nbsp;</td>
      <td>&nbsp;</td>
      <td width="10">&nbsp;</td>
      <td align="left" valign="bottom">&nbsp;</td>
      <td align="right" valign="bottom" nowrap>&nbsp;</td>
      <td>&nbsp;</td>
    </tr>
    <tr>
      <td colspan="2" align="left" valign="top" bgcolor="#CCEEFF">
        <div style="margin-left: 10px; text-indent: -10px"> <font size="3" face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;Cash
          and cash equivalents</font></div>
      </td>
      <td bgcolor="#CCEEFF">&nbsp;</td>
      <td align="left" valign="bottom" bgcolor="#CCEEFF"><font face="Times New Roman, Times, serif" size="3">$</font></td>
      <td align="right" valign="bottom" nowrap bgcolor="#CCEEFF"><font face="Times New Roman, Times, serif" size="3">1,418,252</font></td>
      <td bgcolor="#CCEEFF">&nbsp;</td>
      <td width="10" bgcolor="#cceeff">&nbsp;</td>
      <td align="left" valign="bottom" bgcolor="#CCEEFF"><font face="Times New Roman, Times, serif" size="3">$</font></td>
      <td align="right" valign="bottom" nowrap bgcolor="#CCEEFF"><font face="Times New Roman, Times, serif" size="3">757,342</font></td>
      <td bgcolor="#CCEEFF">&nbsp;</td>
    </tr>
    <tr>
      <td colspan="2" align="left" valign="top">
        <div style="margin-left: 10px; text-indent: -10px"> <font size="3" face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;Accounts
          receivable, net</font></div>
      </td>
      <td>&nbsp;</td>
      <td align="left" valign="bottom">&nbsp;</td>
      <td align="right" valign="bottom" nowrap><font face="Times New Roman, Times, serif" size="3">2,485,807</font></td>
      <td>&nbsp;</td>
      <td width="10">&nbsp;</td>
      <td align="left" valign="bottom">&nbsp;</td>
      <td align="right" valign="bottom" nowrap><font face="Times New Roman, Times, serif" size="3">3,334,661</font></td>
      <td>&nbsp;</td>
    </tr>
    <tr valign="bottom">
      <td colspan="2" align="left" valign="top" bgcolor="#cceeff">
        <div style="margin-left: 10px; text-indent: -10px"> <font size="3" face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;Inventories</font></div>
      </td>
      <td bgcolor="#cceeff">&nbsp;</td>
      <td align="left" valign="bottom" bgcolor="#cceeff">&nbsp;</td>
      <td align="right" valign="bottom" nowrap bgcolor="#cceeff"><font face="Times New Roman, Times, serif" size="3">2,921,385</font></td>
      <td bgcolor="#cceeff">&nbsp;</td>
      <td width="10" bgcolor="#cceeff">&nbsp;</td>
      <td align="left" valign="bottom" bgcolor="#cceeff">&nbsp;</td>
      <td align="right" nowrap bgcolor="#cceeff"><font face="Times New Roman, Times, serif" size="3">3,929,822</font></td>
      <td bgcolor="#cceeff">&nbsp;</td>
    </tr>
    <tr>
      <td colspan="2" align="left" valign="top">
        <div style="margin-left: 10px; text-indent: -10px"> <font size="3" face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;Prepaid
          expenses and other current assets</font></div>
      </td>
      <td>&nbsp;</td>
      <td valign=bottom align=left style="border-bottom: 1px solid #000000"><font face="Times New Roman, Times, serif" size="3"><b>&nbsp</b></font></td>
      <td align="right" valign="bottom" nowrap style="border-bottom: 1px solid #000000"><font face="Times New Roman, Times, serif" size="3">404,079</font></td>
      <td align="right" nowrap style="border-bottom: 1px solid #000000" valign="bottom">
        <div align="left"><font face="Times New Roman, Times, serif" size="3">&nbsp</font></div>
      </td>
      <td width="10">&nbsp;</td>
      <td valign=bottom align=left style="border-bottom: 1px solid #000000"><font face="Times New Roman, Times, serif" size="3"><b>&nbsp</b></font></td>
      <td align="right" valign="bottom" nowrap style="border-bottom: 1px solid #000000"><font face="Times New Roman, Times, serif" size="3">387,428</font></td>
      <td align="right" nowrap style="border-bottom: 1px solid #000000" valign="bottom">
        <div align="left"><font face="Times New Roman, Times, serif" size="3">&nbsp</font></div>
      </td>
    </tr>
    <tr>
      <td bgcolor="#CCEEFF" height="18">&nbsp;</td>
      <td align="left" valign="top" bgcolor="#CCEEFF" height="18">
        <div style="margin-left: 10px; text-indent: -10px"><font face="Times New Roman, Times, serif" size="3">
          &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total current assets</font></div>
      </td>
      <td bgcolor="#CCEEFF" height="18">&nbsp;</td>
      <td align="left" valign="bottom" bgcolor="#CCEEFF" height="18" style="border-bottom: 1px solid #000000"><font face="Times New Roman, Times, serif" size="3">&nbsp</font></td>
      <td align="right" valign="bottom" nowrap bgcolor="#CCEEFF" height="18" style="border-bottom: 1px solid #000000"><font face="Times New Roman, Times, serif" size="3">7,229,523</font></td>
      <td bgcolor="#CCEEFF" height="18" style="border-bottom: 1px solid #000000"><font face="Times New Roman, Times, serif" size="3">&nbsp</font></td>
      <td width="10" height="18" bgcolor="#cceeff">&nbsp;</td>
      <td align="left" valign="bottom" bgcolor="#CCEEFF" height="18" style="border-bottom: 1px solid #000000"><font face="Times New Roman, Times, serif" size="3">&nbsp</font></td>
      <td align="right" valign="bottom" nowrap bgcolor="#CCEEFF" height="18" style="border-bottom: 1px solid #000000"><font face="Times New Roman, Times, serif" size="3">8,409,253</font></td>
      <td bgcolor="#CCEEFF" height="18" style="border-bottom: 1px solid #000000"><font face="Times New Roman, Times, serif" size="3">&nbsp</font></td>
    </tr>
    <tr valign="bottom">
      <td colspan="2" align="left" valign="top" bgcolor="#FFFFFF"><font face="Times New Roman, Times, serif" size="3">&nbsp</font></td>
      <td bgcolor="#FFFFFF">&nbsp;</td>
      <td align="left" valign="bottom" bgcolor="#FFFFFF">&nbsp;</td>
      <td align="right" valign="bottom" nowrap bgcolor="#FFFFFF">&nbsp;</td>
      <td bgcolor="#FFFFFF">&nbsp;</td>
      <td width="10">&nbsp;</td>
      <td align="left" valign="bottom" bgcolor="#FFFFFF">&nbsp;</td>
      <td align="right" nowrap bgcolor="#FFFFFF">&nbsp;</td>
      <td bgcolor="#FFFFFF">&nbsp;</td>
    </tr>
    <tr valign="bottom">
      <td colspan="2" align="left" valign="top" bgcolor="#CCEEFF" height="8"><font face="Times New Roman, Times, serif" size="3">Property
        and equipment:</font></td>
      <td bgcolor="#cceeff" height="8">&nbsp;</td>
      <td align="left" valign="bottom" bgcolor="#cceeff" height="8">&nbsp;</td>
      <td align="right" valign="bottom" nowrap bgcolor="#cceeff" height="8">&nbsp;</td>
      <td bgcolor="#cceeff" height="8">&nbsp;</td>
      <td width="10" height="8" bgcolor="#cceeff">&nbsp;</td>
      <td align="left" valign="bottom" bgcolor="#cceeff" height="8">&nbsp;</td>
      <td align="right" nowrap bgcolor="#cceeff" height="8">&nbsp;</td>
      <td bgcolor="#cceeff" height="8">&nbsp;</td>
    </tr>
    <tr>
      <td colspan="2" align="left" valign="top">
        <div style="margin-left: 10px; text-indent: -10px"> <font size="3" face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;Machinery
          and office equipment</font></div>
      </td>
      <td>&nbsp;</td>
      <td align="left" valign="bottom">&nbsp;</td>
      <td align="right" valign="bottom" nowrap><font face="Times New Roman, Times, serif" size="3">2,135,397</font></td>
      <td>&nbsp;</td>
      <td width="10">&nbsp;</td>
      <td align="left" valign="bottom">&nbsp;</td>
      <td align="right" valign="bottom" nowrap><font face="Times New Roman, Times, serif" size="3">2,332,092</font></td>
      <td>&nbsp;</td>
    </tr>
    <tr valign="bottom">
      <td colspan="2" align="left" valign="top" bgcolor="#cceeff">
        <div style="margin-left: 10px; text-indent: -10px"> <font size="3" face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;Computer
          equipment</font></div>
      </td>
      <td bgcolor="#cceeff">&nbsp;</td>
      <td align=left style="border-bottom: 1px solid #000000" bgcolor="#cceeff"><font face="Times New Roman, Times, serif" size="3"><b>&nbsp</b></font></td>
      <td align="right" valign="bottom" nowrap bgcolor="#cceeff" style="border-bottom: 1px solid #000000"><font face="Times New Roman, Times, serif" size="3">1,202,015</font></td>
      <td align="right" nowrap style="border-bottom: 1px solid #000000" bgcolor="#cceeff">
        <div align="left"><font face="Times New Roman, Times, serif" size="3">&nbsp</font></div>
      </td>
      <td width="10" bgcolor="#cceeff">&nbsp;</td>
      <td align=left style="border-bottom: 1px solid #000000" bgcolor="#cceeff"><font face="Times New Roman, Times, serif" size="3"><b>&nbsp</b></font></td>
      <td align="right" nowrap bgcolor="#cceeff" style="border-bottom: 1px solid #000000"><font face="Times New Roman, Times, serif" size="3">1,206,668</font></td>
      <td align="right" nowrap style="border-bottom: 1px solid #000000" bgcolor="#cceeff">
        <div align="left"><font face="Times New Roman, Times, serif" size="3">&nbsp</font></div>
      </td>
    </tr>
    <tr>
      <td colspan="2" align="left" valign="top">
        <div style="margin-left: 10px; text-indent: -10px"><font face="Times New Roman, Times, serif" size="3">&nbsp</font>
        </div>
      </td>
      <td>&nbsp;</td>
      <td align="left" valign="bottom">&nbsp;</td>
      <td align="right" valign="bottom" nowrap><font face="Times New Roman, Times, serif" size="3">3,337,412</font></td>
      <td>&nbsp;</td>
      <td width="10">&nbsp;</td>
      <td align="left" valign="bottom">&nbsp;</td>
      <td align="right" valign="bottom" nowrap><font face="Times New Roman, Times, serif" size="3">3,538,760</font></td>
      <td>&nbsp;</td>
    </tr>
    <tr valign="bottom">
      <td colspan="2" align="left" valign="top" bgcolor="#cceeff">
        <div style="margin-left: 10px; text-indent: -10px"> <font size="3" face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;Accumulated
          depreciation</font></div>
      </td>
      <td bgcolor="#cceeff">&nbsp;</td>
      <td align=left style="border-bottom: 1px solid #000000" bgcolor="#cceeff"><font face="Times New Roman, Times, serif" size="3"><b>&nbsp</b></font></td>
      <td align="right" valign="bottom" nowrap bgcolor="#cceeff" style="border-bottom: 1px solid #000000"><font face="Times New Roman, Times, serif" size="3">(2,395,098</font></td>
      <td align="right" nowrap style="border-bottom: 1px solid #000000" bgcolor="#cceeff">
        <div align="left"><font face="Times New Roman, Times, serif" size="3">)&nbsp</font></div>
      </td>
      <td width="10" bgcolor="#cceeff">&nbsp;</td>
      <td align=left style="border-bottom: 1px solid #000000" bgcolor="#cceeff"><font face="Times New Roman, Times, serif" size="3"><b>&nbsp</b></font></td>
      <td align="right" nowrap bgcolor="#cceeff" style="border-bottom: 1px solid #000000"><font face="Times New Roman, Times, serif" size="3">(2,561,696</font></td>
      <td align="right" nowrap style="border-bottom: 1px solid #000000" bgcolor="#cceeff">
        <div align="left"><font face="Times New Roman, Times, serif" size="3">)&nbsp</font></div>
      </td>
    </tr>
    <tr>
      <td bgcolor="#FFFFFF">&nbsp;</td>
      <td align="left" valign="top" bgcolor="#FFFFFF">
        <div style="margin-left: 10px; text-indent: -10px"><font face="Times New Roman, Times, serif" size="3">
          &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Property and equipment, net</font></div>
      </td>
      <td bgcolor="#FFFFFF">&nbsp;</td>
      <td align="left" valign="bottom" bgcolor="#FFFFFF" style="border-bottom: 1px solid #000000"><font face="Times New Roman, Times, serif" size="3">&nbsp</font></td>
      <td align="right" valign="bottom" nowrap bgcolor="#FFFFFF" style="border-bottom: 1px solid #000000"><font face="Times New Roman, Times, serif" size="3">942,314</font></td>
      <td bgcolor="#FFFFFF" style="border-bottom: 1px solid #000000"><font face="Times New Roman, Times, serif" size="3">&nbsp</font></td>
      <td width="10">&nbsp;</td>
      <td align="left" valign="bottom" bgcolor="#FFFFFF" style="border-bottom: 1px solid #000000"><font face="Times New Roman, Times, serif" size="3">&nbsp</font></td>
      <td align="right" valign="bottom" nowrap bgcolor="#FFFFFF" style="border-bottom: 1px solid #000000"><font face="Times New Roman, Times, serif" size="3">977,064</font></td>
      <td bgcolor="#FFFFFF" style="border-bottom: 1px solid #000000"><font face="Times New Roman, Times, serif" size="3">&nbsp</font></td>
    </tr>
    <tr valign="bottom">
      <td colspan="2" align="left" valign="top" bgcolor="#cceeff"><font face="Times New Roman, Times, serif" size="3">&nbsp</font></td>
      <td bgcolor="#cceeff">&nbsp;</td>
      <td align="left" valign="bottom" bgcolor="#cceeff">&nbsp;</td>
      <td align="right" valign="bottom" nowrap bgcolor="#cceeff">&nbsp;</td>
      <td bgcolor="#cceeff">&nbsp;</td>
      <td width="10" bgcolor="#cceeff">&nbsp;</td>
      <td align="left" valign="bottom" bgcolor="#cceeff">&nbsp;</td>
      <td align="right" nowrap bgcolor="#cceeff">&nbsp;</td>
      <td bgcolor="#cceeff">&nbsp;</td>
    </tr>
    <tr valign="bottom">
      <td colspan="2" align="left" valign="top" bgcolor="#FFFFFF" height="8"><font face="Times New Roman, Times, serif" size="3">Intangible
        assets, net</font></td>
      <td bgcolor="#FFFFFF" height="8">&nbsp;</td>
      <td align="left" valign="bottom" bgcolor="#FFFFFF" height="8">&nbsp;</td>
      <td align="right" valign="bottom" nowrap bgcolor="#FFFFFF" height="8"><font face="Times New Roman, Times, serif" size="3">315,000</font></td>
      <td bgcolor="#FFFFFF" height="8">&nbsp;</td>
      <td width="10" height="8">&nbsp;</td>
      <td align="left" valign="bottom" bgcolor="#FFFFFF" height="8">&nbsp;</td>
      <td align="right" nowrap bgcolor="#FFFFFF" height="8"><font face="Times New Roman, Times, serif" size="3">346,787</font></td>
      <td bgcolor="#FFFFFF" height="8">&nbsp;</td>
    </tr>
    <tr valign="bottom">
      <td colspan="2" align="left" valign="top" bgcolor="#cceeff"><font face="Times New Roman, Times, serif" size="3">Goodwill</font></td>
      <td bgcolor="#cceeff">&nbsp;</td>
      <td align="left" valign="bottom" bgcolor="#cceeff">&nbsp;</td>
      <td align="right" valign="bottom" nowrap bgcolor="#cceeff"><font face="Times New Roman, Times, serif" size="3">9,797,946</font></td>
      <td bgcolor="#cceeff">&nbsp;</td>
      <td width="10" bgcolor="#cceeff">&nbsp;</td>
      <td align="left" valign="bottom" bgcolor="#cceeff">&nbsp;</td>
      <td align="right" nowrap bgcolor="#cceeff"><font face="Times New Roman, Times, serif" size="3">9,797,946</font></td>
      <td bgcolor="#cceeff">&nbsp;</td>
    </tr>
    <tr valign="bottom">
      <td colspan="2" align="left" valign="top" bgcolor="#FFFFFF"><font face="Times New Roman, Times, serif" size="3">Other
        assets</font></td>
      <td bgcolor="#FFFFFF">&nbsp;</td>
      <td align=left style="border-bottom: 1px solid #000000"><font face="Times New Roman, Times, serif" size="3"><b>&nbsp</b></font></td>
      <td align="right" valign="bottom" nowrap bgcolor="#FFFFFF" style="border-bottom: 1px solid #000000"><font face="Times New Roman, Times, serif" size="3">209,000</font></td>
      <td align="right" nowrap style="border-bottom: 1px solid #000000">
        <div align="left"><font face="Times New Roman, Times, serif" size="3">&nbsp</font></div>
      </td>
      <td width="10">&nbsp;</td>
      <td align=left style="border-bottom: 1px solid #000000"><font face="Times New Roman, Times, serif" size="3"><b>&nbsp</b></font></td>
      <td align="right" nowrap bgcolor="#FFFFFF" style="border-bottom: 1px solid #000000"><font face="Times New Roman, Times, serif" size="3">225,667</font></td>
      <td align="right" nowrap style="border-bottom: 1px solid #000000">
        <div align="left"><font face="Times New Roman, Times, serif" size="3">&nbsp</font></div>
      </td>
    </tr>
    <tr>
      <td bgcolor="#CCEEFF">&nbsp;</td>
      <td align="left" valign="top" bgcolor="#CCEEFF">
        <div style="margin-left: 10px; text-indent: -10px"><font face="Times New Roman, Times, serif" size="3">
          &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total assets</font></div>
      </td>
      <td bgcolor="#CCEEFF">&nbsp;</td>
      <td align="left" valign="bottom" bgcolor="#CCEEFF" style="border-bottom: 3px double #000000"><font face="Times New Roman, Times, serif" size="3">$</font></td>
      <td align="right" valign="bottom" nowrap bgcolor="#CCEEFF" style="border-bottom: 3px double #000000"><font face="Times New Roman, Times, serif" size="3">18,493,783</font></td>
      <td align="left" valign="bottom" bgcolor="#CCEEFF" style="border-bottom: 3px double #000000">&nbsp;</td>
      <td width="10" bgcolor="#cceeff">&nbsp;</td>
      <td align="left" valign="bottom" bgcolor="#CCEEFF" style="border-bottom: 3px double #000000"><font face="Times New Roman, Times, serif" size="3">$</font></td>
      <td align="right" valign="bottom" nowrap bgcolor="#CCEEFF" style="border-bottom: 3px double #000000"><font face="Times New Roman, Times, serif" size="3">19,756,717</font></td>
      <td align="left" valign="bottom" bgcolor="#CCEEFF" style="border-bottom: 3px double #000000">&nbsp;</td>
    </tr>
    <tr>
      <td colspan="10"><font face="Times New Roman, Times, serif" size="3">&nbsp</font></td>
    </tr>
    <tr valign="bottom">
      <td colspan="10" align="center" valign="top" bgcolor="#cceeff"> <font face="Times New Roman, Times, serif" size="3"><b>LIABILITIES
        AND STOCKHOLDERS&#146; EQUITY</b></font></td>
    </tr>
    <tr>
      <td colspan="2" align="left" valign="top" height="14"><font face="Times New Roman, Times, serif" size="3">Current
        liabilities:</font></td>
      <td height="14">&nbsp;</td>
      <td align="left" valign="bottom" height="14">&nbsp;</td>
      <td align="right" valign="bottom" nowrap height="14">&nbsp;</td>
      <td height="14">&nbsp;</td>
      <td height="14" width="10">&nbsp;</td>
      <td align="left" valign="bottom" height="14">&nbsp;</td>
      <td align="right" valign="bottom" nowrap height="14">&nbsp;</td>
      <td height="14">&nbsp;</td>
    </tr>
    <tr valign="bottom">
      <td colspan="2" align="left" valign="top" bgcolor="#cceeff">
        <div style="margin-left: 10px; text-indent: -10px"> <font size="3" face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;Accounts
          payable and accrued expenses</font></div>
      </td>
      <td bgcolor="#cceeff">&nbsp;</td>
      <td align="left" valign="bottom" bgcolor="#cceeff"><font face="Times New Roman, Times, serif" size="3">$</font></td>
      <td align="right" valign="bottom" nowrap bgcolor="#cceeff"><font face="Times New Roman, Times, serif" size="3">2,699,897</font></td>
      <td bgcolor="#cceeff">&nbsp;</td>
      <td width="10" bgcolor="#cceeff">&nbsp;</td>
      <td align="left" valign="bottom" bgcolor="#cceeff"><font face="Times New Roman, Times, serif" size="3">$</font></td>
      <td align="right" nowrap bgcolor="#cceeff"><font face="Times New Roman, Times, serif" size="3">3,513,770</font></td>
      <td bgcolor="#cceeff">&nbsp;</td>
    </tr>
    <tr>
      <td colspan="2" align="left" valign="top">
        <div style="margin-left: 10px; text-indent: -10px"> <font size="3" face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;Accrued
          payroll and related expenses</font></div>
      </td>
      <td>&nbsp;</td>
      <td align="left" valign="bottom">&nbsp;</td>
      <td align="right" valign="bottom" nowrap><font face="Times New Roman, Times, serif" size="3">750,679</font></td>
      <td>&nbsp;</td>
      <td width="10">&nbsp;</td>
      <td align="left" valign="bottom">&nbsp;</td>
      <td align="right" valign="bottom" nowrap><font face="Times New Roman, Times, serif" size="3">774,434</font></td>
      <td>&nbsp;</td>
    </tr>
    <tr valign="bottom">
      <td colspan="2" align="left" valign="top" bgcolor="#cceeff">
        <div style="margin-left: 10px; text-indent: -10px"> <font size="3" face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;Bank
          line of credit</font></div>
      </td>
      <td bgcolor="#cceeff">&nbsp;</td>
      <td align="left" valign="bottom" bgcolor="#cceeff">&nbsp;</td>
      <td align="right" valign="bottom" nowrap bgcolor="#cceeff"><font face="Times New Roman, Times, serif" size="3">1,575,802</font></td>
      <td bgcolor="#cceeff">&nbsp;</td>
      <td width="10" bgcolor="#cceeff">&nbsp;</td>
      <td align="left" valign="bottom" bgcolor="#cceeff">&nbsp;</td>
      <td align="right" bgcolor="#cceeff" nowrap><font face="Times New Roman, Times, serif" size="3">1,005,791</font></td>
      <td bgcolor="#cceeff">&nbsp;</td>
    </tr>
    <tr valign="bottom">
      <td colspan="2" align="left" valign="top">
        <div style="margin-left: 10px; text-indent: -10px"> <font size="3" face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;Deferred
          income on shipments to distributors</font></div>
      </td>
      <td>&nbsp;</td>
      <td align="left" valign="bottom">&nbsp;</td>
      <td align="right" valign="bottom" nowrap><font face="Times New Roman, Times, serif" size="3">1,996,188</font></td>
      <td>&nbsp;</td>
      <td width="10">&nbsp;</td>
      <td align="left" valign="bottom">&nbsp;</td>
      <td align="right" nowrap><font face="Times New Roman, Times, serif" size="3">2,434,393</font></td>
      <td>&nbsp;</td>
    </tr>
    <tr valign="bottom">
      <td colspan="2" align="left" valign="top" bgcolor="#cceeff">
        <div style="margin-left: 10px; text-indent: -10px"> <font size="3" face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;Current
          portion of capital leases and deferred rent</font></div>
      </td>
      <td bgcolor="#cceeff">&nbsp;</td>
      <td align=left style="border-bottom: 1px solid #000000" bgcolor="#cceeff"><font face="Times New Roman, Times, serif" size="3"><b>&nbsp</b></font></td>
      <td align="right" valign="bottom" nowrap style="border-bottom: 1px solid #000000" bgcolor="#cceeff"><font face="Times New Roman, Times, serif" size="3">33,333</font></td>
      <td align="right" nowrap style="border-bottom: 1px solid #000000" bgcolor="#cceeff">
        <div align="left"><font face="Times New Roman, Times, serif" size="3">&nbsp</font></div>
      </td>
      <td width="10" bgcolor="#cceeff">&nbsp;</td>
      <td align=left style="border-bottom: 1px solid #000000" bgcolor="#cceeff"><font face="Times New Roman, Times, serif" size="3"><b>&nbsp</b></font></td>
      <td align="right" nowrap style="border-bottom: 1px solid #000000" bgcolor="#cceeff"><font face="Times New Roman, Times, serif" size="3">30,019</font></td>
      <td align="right" nowrap style="border-bottom: 1px solid #000000" bgcolor="#cceeff">
        <div align="left"><font face="Times New Roman, Times, serif" size="3">&nbsp</font></div>
      </td>
    </tr>
    <tr>
      <td>&nbsp;</td>
      <td align="left" valign="top">
        <div style="margin-left: 10px; text-indent: -10px"> <font size="3" face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;&nbsp;Total
          current liabilities</font></div>
      </td>
      <td>&nbsp;</td>
      <td align="left" valign="bottom">&nbsp;</td>
      <td align="right" valign="bottom" nowrap><font face="Times New Roman, Times, serif" size="3">7,055,899</font></td>
      <td valign="bottom">&nbsp;</td>
      <td width="10">&nbsp;</td>
      <td align="left" valign="bottom">&nbsp;</td>
      <td align="right" nowrap valign="bottom"><font face="Times New Roman, Times, serif" size="3">7,758,407</font></td>
      <td valign="bottom">&nbsp;</td>
    </tr>
    <tr valign="bottom" bgcolor="#cceeff">
      <td colspan="2" align="left" valign="top"><font face="Times New Roman, Times, serif" size="3">&nbsp</font></td>
      <td>&nbsp;</td>
      <td align="left" valign="bottom">&nbsp;</td>
      <td align="right" valign="bottom" nowrap>&nbsp;</td>
      <td>&nbsp;</td>
      <td width="10">&nbsp;</td>
      <td align="left" valign="bottom">&nbsp;</td>
      <td align="right" nowrap>&nbsp;</td>
      <td>&nbsp;</td>
    </tr>
    <tr valign="bottom">
      <td colspan="2" align="left" valign="top"><font face="Times New Roman, Times, serif" size="3">Long
        term portion of capital leases and deferred rent</font></td>
      <td>&nbsp;</td>
      <td align="left" valign="bottom">&nbsp;</td>
      <td align="right" valign="bottom" nowrap><font face="Times New Roman, Times, serif" size="3">100,508</font></td>
      <td>&nbsp;</td>
      <td width="10">&nbsp;</td>
      <td align="left" valign="bottom">&nbsp;</td>
      <td align="right" nowrap><font face="Times New Roman, Times, serif" size="3">109,724</font></td>
      <td>&nbsp;</td>
    </tr>
    <tr bgcolor="#cceeff">
      <td colspan="2" align="left" valign="top" height="8"><font face="Times New Roman, Times, serif" size="3">Deferred
        income taxes</font></td>
      <td>&nbsp;</td>
      <td align=left style="border-bottom: 1px solid #000000" valign="bottom"><font face="Times New Roman, Times, serif" size="3"><b>&nbsp</b></font></td>
      <td align="right" valign="bottom" nowrap style="border-bottom: 1px solid #000000"><font face="Times New Roman, Times, serif" size="3">222,246</font></td>
      <td align="right" nowrap style="border-bottom: 1px solid #000000" valign="bottom">
        <div align="left"><font face="Times New Roman, Times, serif" size="3">&nbsp</font></div>
      </td>
      <td width="10">&nbsp;</td>
      <td align=left style="border-bottom: 1px solid #000000" valign="bottom"><font face="Times New Roman, Times, serif" size="3"><b>&nbsp</b></font></td>
      <td align="right" valign="bottom" nowrap style="border-bottom: 1px solid #000000"><font face="Times New Roman, Times, serif" size="3">214,261</font></td>
      <td align="right" nowrap style="border-bottom: 1px solid #000000" valign="bottom">
        <div align="left"><font face="Times New Roman, Times, serif" size="3">&nbsp</font></div>
      </td>
    </tr>
    <tr>
      <td colspan="2" align="left" valign="top">
        <div style="margin-left: 10px; text-indent: -10px"> <font size="3" face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;Total
          liabilities</font></div>
      </td>
      <td>&nbsp;</td>
      <td align="left" valign="bottom" style="border-bottom: 1px solid #000000"><font face="Times New Roman, Times, serif" size="3">&nbsp</font></td>
      <td align="right" valign="bottom" nowrap style="border-bottom: 1px solid #000000"><font face="Times New Roman, Times, serif" size="3">7,378,653</font></td>
      <td style="border-bottom: 1px solid #000000"><font face="Times New Roman, Times, serif" size="3">&nbsp</font></td>
      <td width="10">&nbsp;</td>
      <td align="left" valign="bottom" style="border-bottom: 1px solid #000000"><font face="Times New Roman, Times, serif" size="3">&nbsp</font></td>
      <td align="right" valign="bottom" nowrap style="border-bottom: 1px solid #000000"><font face="Times New Roman, Times, serif" size="3">8,082,392</font></td>
      <td style="border-bottom: 1px solid #000000"><font face="Times New Roman, Times, serif" size="3">&nbsp</font></td>
    </tr>
    <tr bgcolor="#cceeff">
      <td colspan="10"><font face="Times New Roman, Times, serif" size="3">&nbsp</font></td>
    </tr>
    <tr>
      <td colspan="2" align="left" valign="top" height="8"><font face="Times New Roman, Times, serif" size="3">Commitments
        and contingencies</font></td>
      <td>&nbsp;</td>
      <td align="left" valign="bottom">&nbsp;</td>
      <td align="right" valign="bottom" nowrap>&nbsp;</td>
      <td>&nbsp;</td>
      <td width="10">&nbsp;</td>
      <td align="left" valign="bottom">&nbsp;</td>
      <td align="right" valign="bottom" nowrap>&nbsp;</td>
      <td>&nbsp;</td>
    </tr>
    <tr bgcolor="#cceeff">
      <td colspan="2" align="left" valign="top" height="8"><font face="Times New Roman, Times, serif" size="3">Stockholders'
        equity:</font></td>
      <td>&nbsp;</td>
      <td align="left" valign="bottom">&nbsp;</td>
      <td align="right" valign="bottom" nowrap>&nbsp;</td>
      <td>&nbsp;</td>
      <td width="10">&nbsp;</td>
      <td align="left" valign="bottom">&nbsp;</td>
      <td align="right" valign="bottom" nowrap>&nbsp;</td>
      <td>&nbsp;</td>
    </tr>
    <tr>
      <td colspan="2" align="left" valign="top" height="19">
        <div style="margin-left: 10px; text-indent: -10px"> <font size="3" face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Common
          stock, $0.001 par value: Authorized shares&#151;10,000,000,</font></div>
      </td>
      <td height="19">&nbsp;</td>
      <td align="left" valign="bottom" height="19">&nbsp;</td>
      <td align="right" valign="bottom" nowrap height="19">&nbsp;</td>
      <td height="19">&nbsp;</td>
      <td width="10" height="19">&nbsp;</td>
      <td align="left" valign="bottom" height="19">&nbsp;</td>
      <td align="right" valign="bottom" nowrap height="19">&nbsp;</td>
      <td height="19">&nbsp;</td>
    </tr>
    <tr bgcolor="#cceeff">
      <td colspan="2" align="left" valign="top" height="18">
        <div style="margin-left: 10px; text-indent: -10px"> <font size="3" face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Issued
          and outstanding shares&#151;3,229,916 at March 31, 2009 and December
          31, 2008</font></div>
      </td>
      <td height="18">&nbsp;</td>
      <td align="left" valign="bottom" height="18">&nbsp;</td>
      <td align="right" valign="bottom" nowrap height="18"><font face="Times New Roman, Times, serif" size="3">3,230</font></td>
      <td height="18">&nbsp;</td>
      <td width="10" height="18">&nbsp;</td>
      <td align="left" valign="bottom" height="18">&nbsp;</td>
      <td align="right" valign="bottom" nowrap height="18"><font face="Times New Roman, Times, serif" size="3">3,230</font></td>
      <td height="18">&nbsp;</td>
    </tr>
    <tr valign="bottom">
      <td colspan="2" align="left" valign="top">
        <div style="margin-left: 10px; text-indent: -10px"> <font size="3" face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Additional
          paid-in capital</font></div>
      </td>
      <td>&nbsp;</td>
      <td align="left" valign="bottom">&nbsp;</td>
      <td align="right" valign="bottom" nowrap><font face="Times New Roman, Times, serif" size="3">54,740,712</font></td>
      <td>&nbsp;</td>
      <td width="10">&nbsp;</td>
      <td align="left" valign="bottom">&nbsp;</td>
      <td align="right" nowrap><font face="Times New Roman, Times, serif" size="3">54,588,192</font></td>
      <td>&nbsp;</td>
    </tr>
    <tr bgcolor="#cceeff">
      <td colspan="2" align="left" valign="top">
        <div style="margin-left: 10px; text-indent: -10px"> <font size="3" face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accumulated
          deficit</font></div>
      </td>
      <td>&nbsp;</td>
      <td valign=bottom align=left style="border-bottom: 1px solid #000000"><font face="Times New Roman, Times, serif" size="3"><b>&nbsp</b></font></td>
      <td align="right" valign="bottom" nowrap style="border-bottom: 1px solid #000000"><font face="Times New Roman, Times, serif" size="3">(43,628,812</font></td>
      <td align="right" nowrap style="border-bottom: 1px solid #000000" valign="bottom">
        <div align="left"><font face="Times New Roman, Times, serif" size="3">)&nbsp</font></div>
      </td>
      <td width="10">&nbsp;</td>
      <td valign=bottom align=left style="border-bottom: 1px solid #000000"><font face="Times New Roman, Times, serif" size="3"><b>&nbsp</b></font></td>
      <td align="right" valign="bottom" nowrap style="border-bottom: 1px solid #000000"><font face="Times New Roman, Times, serif" size="3">(42,917,097</font></td>
      <td align="right" nowrap style="border-bottom: 1px solid #000000" valign="bottom">
        <div align="left"><font face="Times New Roman, Times, serif" size="3">)&nbsp</font></div>
      </td>
    </tr>
    <tr>
      <td>&nbsp;</td>
      <td align="left" valign="top">
        <div style="margin-left: 10px; text-indent: -10px"> <font size="3" face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;&nbsp;Total
          stockholders&#146; equity</font></div>
      </td>
      <td>&nbsp;</td>
      <td align=left style="border-bottom: 1px solid #000000" valign="bottom"><font face="Times New Roman, Times, serif" size="3"><b>&nbsp</b></font></td>
      <td align="right" valign="bottom" nowrap style="border-bottom: 1px solid #000000"><font face="Times New Roman, Times, serif" size="3">11,115,130</font></td>
      <td align="right" nowrap style="border-bottom: 1px solid #000000" valign="bottom">
        <div align="left"><font face="Times New Roman, Times, serif" size="3">&nbsp</font></div>
      </td>
      <td width="10">&nbsp;</td>
      <td align=left style="border-bottom: 1px solid #000000" valign="bottom"><font face="Times New Roman, Times, serif" size="3"><b>&nbsp</b></font></td>
      <td align="right" valign="bottom" nowrap style="border-bottom: 1px solid #000000"><font face="Times New Roman, Times, serif" size="3">11,674,325</font></td>
      <td align="right" nowrap style="border-bottom: 1px solid #000000" valign="bottom">
        <div align="left"><font face="Times New Roman, Times, serif" size="3">&nbsp</font></div>
      </td>
    </tr>
    <tr valign="bottom">
      <td>&nbsp;</td>
      <td align="left" valign="top" bgcolor="#cceeff"><font size="3" face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total
        liabilities and stockholders&#146; equity</font></td>
      <td bgcolor="#cceeff">&nbsp;</td>
      <td align="left" style="border-bottom: 3px double #000000" bgcolor="#cceeff"><font face="Times New Roman, Times, serif" size="3">$</font></td>
      <td align="right" nowrap style="border-bottom: 3px double #000000" bgcolor="#cceeff"><font face="Times New Roman, Times, serif" size="3">18,493,783</font></td>
      <td align="left" bgcolor="#CCEEFF" style="border-bottom: 3px double #000000">&nbsp;</td>
      <td width="10" bgcolor="#cceeff">&nbsp;</td>
      <td align="left" style="border-bottom: 3px double #000000" bgcolor="#cceeff"><font face="Times New Roman, Times, serif" size="3">$</font></td>
      <td align="right" nowrap style="border-bottom: 3px double #000000" bgcolor="#cceeff"><font face="Times New Roman, Times, serif" size="3">19,756,717</font></td>
      <td align="left" bgcolor="#CCEEFF" style="border-bottom: 3px double #000000">&nbsp;</td>
    </tr>
    <tr valign="bottom">
      <td colspan="10" align="left" valign="top" height="8">
        <div style="margin-left: 10px; text-indent: -10px"> <font size="2" face="Times New Roman, Times, serif">_____________________________________________<br>
          * Derived from audited financial statements.</font></div>
      </td>
    </tr>
  </table>
</center>
<P align=left>&nbsp;
<P align=center>
<P align=center>
<P></P>
<P align=center><font face="Times New Roman, Times, serif" size="3">See accompanying
  notes.<BR>
  <BR>
  1</font>
<HR width="100%">
<font face="Times New Roman, Times, serif" size="3"><BR>
<a href="#TAB">(Index)</a> <a name=ops></a><BR>
</font>
<div align="center" style="font-size: 12.0pt;color: #000000; background: #ffffff; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; "><font face="Times New Roman, Times, serif"><b><font size="3">SOCKET
  MOBILE, INC.</font></b> <font size="3"><br>
  <b>CONDENSED STATEMENTS OF OPERATIONS<br>
  </b>(Unaudited)</font><br>
  </font></div>
<div align="center" style="font-size: 12.0pt;color: #000000; background: #ffffff; margin-top: 2pt; margin-left: 0; margin-right: 0; margin-bottom: 0; "></div>
<center>
  <table width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10.0pt; margin-top: 12pt; ">
    <tr>
      <td colspan="3">&nbsp;</td>
      <td width="2%">&nbsp;</td>
      <td align="center" nowrap colspan="7"><font face="Times New Roman, Times, serif" size="3">Three
        Months Ended March&nbsp;31,</font></td>
    </tr>
    <tr>
      <td colspan="3" align="left" nowrap>&nbsp;</td>
      <td width="2%">&nbsp;</td>
      <td colspan="2" align="center" nowrap style="border-bottom: 1px solid #000000"><font face="Times New Roman, Times, serif" size="3">2009</font></td>
      <td align="right" nowrap style="border-bottom: 1px solid #000000" valign="bottom">
        <div align="left"><font face="Times New Roman, Times, serif" size="3">&nbsp</font></div>
      </td>
      <td width="1%">&nbsp;</td>
      <td colspan="2" align="center" nowrap style="border-bottom: 1px solid #000000"><font face="Times New Roman, Times, serif" size="3">2008</font></td>
      <td align="right" nowrap style="border-bottom: 1px solid #000000" valign="bottom">
        <div align="left"><font face="Times New Roman, Times, serif" size="3">&nbsp</font></div>
      </td>
    </tr>
    <tr valign="bottom">
      <td colspan="3" align="left" valign="top" bgcolor="#cceeff">
        <div style="margin-left: 10px; text-indent: -10px"><font face="Times New Roman, Times, serif" size="3">
          Revenues</font></div>
      </td>
      <td width="2%" bgcolor="#cceeff">&nbsp;</td>
      <td align="left" valign="bottom" width="2%" bgcolor="#cceeff"><font face="Times New Roman, Times, serif" size="3">$</font></td>
      <td align="right" valign="bottom" nowrap bgcolor="#cceeff" width="11%"><font face="Times New Roman, Times, serif" size="3">4,771,890</font></td>
      <td width="1%" bgcolor="#cceeff">&nbsp;</td>
      <td width="1%" bgcolor="#cceeff">&nbsp;</td>
      <td align="left" valign="bottom" width="2%" bgcolor="#cceeff"><font face="Times New Roman, Times, serif" size="3">$</font></td>
      <td align="right" nowrap bgcolor="#cceeff" width="11%"><font face="Times New Roman, Times, serif" size="3">6,169,869</font></td>
      <td width="1%" bgcolor="#cceeff">&nbsp;</td>
    </tr>
    <tr>
      <td colspan="3" align="left" valign="top">
        <div style="margin-left: 10px; text-indent: -10px"><font face="Times New Roman, Times, serif" size="3">
          Cost of revenues</font></div>
      </td>
      <td width="2%">&nbsp;</td>
      <td valign=bottom align=left style="border-bottom: 1px solid #000000" width="2%"><font face="Times New Roman, Times, serif" size="3"><b>&nbsp</b></font></td>
      <td align="right" valign="bottom" nowrap style="border-bottom: 1px solid #000000" width="11%"><font face="Times New Roman, Times, serif" size="3">2,546,437</font></td>
      <td align="right" nowrap style="border-bottom: 1px solid #000000" valign="bottom">
        <div align="left"><font face="Times New Roman, Times, serif" size="3">&nbsp</font></div>
      </td>
      <td width="1%">&nbsp;</td>
      <td valign=bottom align=left style="border-bottom: 1px solid #000000" width="2%"><font face="Times New Roman, Times, serif" size="3"><b>&nbsp</b></font></td>
      <td align="right" valign="bottom" nowrap style="border-bottom: 1px solid #000000" width="11%"><font face="Times New Roman, Times, serif" size="3">3,152,317</font></td>
      <td align="right" nowrap style="border-bottom: 1px solid #000000" valign="bottom">
        <div align="left"><font face="Times New Roman, Times, serif" size="3">&nbsp</font></div>
      </td>
    </tr>
    <tr valign="bottom">
      <td colspan="3" align="left" valign="top" bgcolor="#cceeff">
        <div style="margin-left: 10px; text-indent: -10px"><font face="Times New Roman, Times, serif" size="3">
          Gross profit</font></div>
      </td>
      <td width="2%" bgcolor="#cceeff">&nbsp;</td>
      <td align="left" valign="bottom" width="2%" bgcolor="#cceeff" style="border-bottom: 1px solid #000000"><font face="Times New Roman, Times, serif" size="3">&nbsp</font></td>
      <td align="right" valign="bottom" nowrap width="11%" bgcolor="#cceeff" style="border-bottom: 1px solid #000000"><font face="Times New Roman, Times, serif" size="3">2,225,453</font></td>
      <td width="1%" bgcolor="#cceeff" style="border-bottom: 1px solid #000000"><font face="Times New Roman, Times, serif" size="3">&nbsp</font></td>
      <td width="1%" bgcolor="#cceeff">&nbsp;</td>
      <td align="left" valign="bottom" width="2%" bgcolor="#cceeff" style="border-bottom: 1px solid #000000"><font face="Times New Roman, Times, serif" size="3">&nbsp</font></td>
      <td align="right" nowrap width="11%" bgcolor="#cceeff" style="border-bottom: 1px solid #000000"><font face="Times New Roman, Times, serif" size="3">3,017,552</font></td>
      <td width="1%" bgcolor="#cceeff" style="border-bottom: 1px solid #000000"><font face="Times New Roman, Times, serif" size="3">&nbsp</font></td>
    </tr>
    <tr>
      <td colspan="3" align="left" valign="top"><font face="Times New Roman, Times, serif" size="3">&nbsp</font></td>
      <td width="2%">&nbsp;</td>
      <td align="left" valign="bottom" width="2%">&nbsp;</td>
      <td align="right" valign="bottom" nowrap width="11%">&nbsp;</td>
      <td width="1%">&nbsp;</td>
      <td width="1%">&nbsp;</td>
      <td align="left" valign="bottom" width="2%">&nbsp;</td>
      <td align="right" valign="bottom" nowrap width="11%">&nbsp;</td>
      <td width="1%">&nbsp;</td>
    </tr>
    <tr>
      <td colspan="3" align="left" valign="top" bgcolor="#cceeff">
        <div style="margin-left: 10px; text-indent: -10px"><font face="Times New Roman, Times, serif" size="3">
          Operating expenses:</font></div>
      </td>
      <td width="2%" bgcolor="#CCEEFF">&nbsp;</td>
      <td align="left" valign="bottom" width="2%" bgcolor="#CCEEFF">&nbsp;</td>
      <td align="right" valign="bottom" nowrap width="11%" bgcolor="#CCEEFF">&nbsp;</td>
      <td width="1%" bgcolor="#CCEEFF">&nbsp;</td>
      <td width="1%" bgcolor="#CCEEFF">&nbsp;</td>
      <td align="left" valign="bottom" width="2%" bgcolor="#CCEEFF">&nbsp;</td>
      <td align="right" valign="bottom" nowrap width="11%" bgcolor="#CCEEFF">&nbsp;</td>
      <td width="1%" bgcolor="#CCEEFF">&nbsp;</td>
    </tr>
    <tr>
      <td colspan="3" align="left" valign="top" height="18">
        <div style="margin-left: 10px; text-indent: -10px"> <font size="3" face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Research
          and development</font></div>
      </td>
      <td height="18" width="2%">&nbsp;</td>
      <td align="left" valign="bottom" height="18" width="2%">&nbsp;</td>
      <td align="right" valign="bottom" nowrap height="18" width="11%"><font face="Times New Roman, Times, serif" size="3">776,474</font></td>
      <td height="18" width="1%">&nbsp;</td>
      <td height="18" width="1%">&nbsp;</td>
      <td align="left" valign="bottom" height="18" width="2%">&nbsp;</td>
      <td align="right" valign="bottom" nowrap height="18" width="11%"><font face="Times New Roman, Times, serif" size="3">1,186,822</font></td>
      <td height="18" width="1%">&nbsp;</td>
    </tr>
    <tr valign="bottom">
      <td colspan="3" align="left" valign="top" bgcolor="#cceeff">
        <div style="margin-left: 10px; text-indent: -10px"> <font size="3" face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Sales
          and marketing</font></div>
      </td>
      <td width="2%" bgcolor="#cceeff">&nbsp;</td>
      <td align="left" valign="bottom" width="2%" bgcolor="#cceeff">&nbsp;</td>
      <td align="right" valign="bottom" nowrap width="11%" bgcolor="#cceeff"><font face="Times New Roman, Times, serif" size="3">1,413,842</font></td>
      <td width="1%" bgcolor="#cceeff">&nbsp;</td>
      <td width="1%" bgcolor="#cceeff">&nbsp;</td>
      <td align="left" valign="bottom" width="2%" bgcolor="#cceeff">&nbsp;</td>
      <td align="right" nowrap width="11%" bgcolor="#cceeff"><font face="Times New Roman, Times, serif" size="3">1,943,349</font></td>
      <td width="1%" bgcolor="#cceeff">&nbsp;</td>
    </tr>
    <tr>
      <td colspan="3" align="left" valign="top">
        <div style="margin-left: 10px; text-indent: -10px"> <font size="3" face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;General
          and administrative</font></div>
      </td>
      <td width="2%">&nbsp;</td>
      <td align="left" valign="bottom" width="2%">&nbsp;</td>
      <td align="right" valign="bottom" nowrap width="11%"><font face="Times New Roman, Times, serif" size="3">641,999</font></td>
      <td width="1%">&nbsp;</td>
      <td width="1%">&nbsp;</td>
      <td align="left" valign="bottom" width="2%">&nbsp;</td>
      <td align="right" valign="bottom" nowrap width="11%"><font face="Times New Roman, Times, serif" size="3">805,467</font></td>
      <td width="1%">&nbsp;</td>
    </tr>
    <tr valign="bottom">
      <td colspan="3" align="left" valign="top" bgcolor="#cceeff">
        <div style="margin-left: 10px; text-indent: -10px"> <font size="3" face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Amortization
          of intangible assets</font></div>
      </td>
      <td width="2%" bgcolor="#cceeff">&nbsp;</td>
      <td align=left style="border-bottom: 1px solid #000000" bgcolor="#cceeff" width="2%"><font face="Times New Roman, Times, serif" size="3"><b>&nbsp</b></font></td>
      <td align="right" valign="bottom" nowrap style="border-bottom: 1px solid #000000" width="11%" bgcolor="#cceeff"><font face="Times New Roman, Times, serif" size="3">31,787</font></td>
      <td align="right" nowrap style="border-bottom: 1px solid #000000" bgcolor="#cceeff">
        <div align="left"><font face="Times New Roman, Times, serif" size="3">&nbsp</font></div>
      </td>
      <td width="1%" bgcolor="#cceeff">&nbsp;</td>
      <td align=left style="border-bottom: 1px solid #000000" bgcolor="#cceeff" width="2%"><font face="Times New Roman, Times, serif" size="3"><b>&nbsp</b></font></td>
      <td align="right" nowrap style="border-bottom: 1px solid #000000" width="11%" bgcolor="#cceeff"><font face="Times New Roman, Times, serif" size="3">31,787</font></td>
      <td align="right" nowrap style="border-bottom: 1px solid #000000" bgcolor="#cceeff">
        <div align="left"><font face="Times New Roman, Times, serif" size="3">&nbsp</font></div>
      </td>
    </tr>
    <tr>
      <td width="5%"><font face="Times New Roman, Times, serif" size="3">&nbsp</font></td>
      <td colspan="2" align="left" valign="top">
        <div style="margin-left: 10px; text-indent: -10px"><font face="Times New Roman, Times, serif" size="3">
          Total operating expenses</font></div>
      </td>
      <td width="2%">&nbsp;</td>
      <td align="left" valign="bottom" width="2%">&nbsp;</td>
      <td align="right" valign="bottom" nowrap width="11%"><font face="Times New Roman, Times, serif" size="3">2,864,102</font></td>
      <td width="1%">&nbsp;</td>
      <td width="1%">&nbsp;</td>
      <td align="left" valign="bottom" width="2%">&nbsp;</td>
      <td align="right" valign="bottom" nowrap width="11%"><font face="Times New Roman, Times, serif" size="3">3,967,425</font></td>
      <td width="1%">&nbsp;</td>
    </tr>
    <tr>
      <td colspan="3" align="left" valign="top" bgcolor="#cceeff"><font size="3" face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font></td>
      <td width="2%" bgcolor="#cceeff" valign="bottom">&nbsp;</td>
      <td align=left style="border-bottom: 1px solid #000000" bgcolor="#cceeff" valign="bottom" width="2%">&nbsp;</td>
      <td align="right" valign="bottom" nowrap style="border-bottom: 1px solid #000000" width="11%" bgcolor="#cceeff">&nbsp;</td>
      <td align="right" nowrap style="border-bottom: 1px solid #000000" bgcolor="#cceeff" valign="bottom">
        <div align="left"><font face="Times New Roman, Times, serif" size="3">&nbsp</font></div>
      </td>
      <td width="1%" bgcolor="#cceeff" valign="bottom">&nbsp;</td>
      <td align=left style="border-bottom: 1px solid #000000" bgcolor="#cceeff" valign="bottom" width="2%">&nbsp;</td>
      <td align="right" valign="bottom" nowrap style="border-bottom: 1px solid #000000" width="11%" bgcolor="#cceeff">&nbsp;</td>
      <td align="right" nowrap style="border-bottom: 1px solid #000000" bgcolor="#cceeff" valign="bottom">
        <div align="left"><font face="Times New Roman, Times, serif" size="3">&nbsp</font></div>
      </td>
    </tr>
    <tr>
      <td colspan="3" align="left" valign="top">
        <div style="margin-left: 10px; text-indent: -10px"><font face="Times New Roman, Times, serif" size="3">
          Operating loss</font></div>
      </td>
      <td width="2%">&nbsp;</td>
      <td align="right" valign="bottom"  width="2%">
        <div align="right"><font face="Times New Roman, Times, serif" size="3">&nbsp</font></div>
      </td>
      <td align="right" valign="bottom" nowrap  width="11%"><font face="Times New Roman, Times, serif" size="3">(638,649</font></td>
      <td width="1%"><font face="Times New Roman, Times, serif" size="3">)</font></td>
      <td width="1%">&nbsp;</td>
      <td align="left" valign="bottom"  width="2%"><font face="Times New Roman, Times, serif" size="3">&nbsp</font></td>
      <td align="right" valign="bottom" nowrap  width="11%"><font face="Times New Roman, Times, serif" size="3">(949,873</font></td>
      <td width="1%"><font face="Times New Roman, Times, serif" size="3">)</font></td>
    </tr>
    <tr valign="bottom">
      <td colspan="3" align="left" valign="top" bgcolor="#cceeff">
        <div style="margin-left: 10px; text-indent: -10px"><font face="Times New Roman, Times, serif" size="3">&nbsp</font>
        </div>
      </td>
      <td width="2%" bgcolor="#cceeff">&nbsp;</td>
      <td align="left" valign="bottom" width="2%" bgcolor="#cceeff">&nbsp;</td>
      <td align="right" valign="bottom" nowrap width="11%" bgcolor="#cceeff">&nbsp;</td>
      <td width="1%" bgcolor="#cceeff">&nbsp;</td>
      <td width="1%" bgcolor="#cceeff">&nbsp;</td>
      <td align="left" valign="bottom" width="2%" bgcolor="#cceeff">&nbsp;</td>
      <td align="right" nowrap width="11%" bgcolor="#cceeff">&nbsp;</td>
      <td width="1%" bgcolor="#cceeff">&nbsp;</td>
    </tr>
    <tr>
      <td colspan="3" align="left" valign="top">
        <div style="margin-left: 10px; text-indent: -10px"><font face="Times New Roman, Times, serif" size="3">
          Interest income and other</font></div>
      </td>
      <td width="2%">&nbsp;</td>
      <td align="left" valign="bottom" width="2%">&nbsp;</td>
      <td align="right" valign="bottom" nowrap width="11%"><font face="Times New Roman, Times, serif" size="3">350</font></td>
      <td width="1%">&nbsp;</td>
      <td width="1%">&nbsp;</td>
      <td align="left" valign="bottom" width="2%">&nbsp;</td>
      <td align="right" valign="bottom" nowrap width="11%"><font face="Times New Roman, Times, serif" size="3">11,928</font></td>
      <td width="1%">&nbsp;</td>
    </tr>
    <tr valign="bottom">
      <td colspan="3" align="left" valign="top" bgcolor="#cceeff">
        <div style="margin-left: 10px; text-indent: -10px"><font face="Times New Roman, Times, serif" size="3">
          Interest expense</font></div>
      </td>
      <td width="2%" bgcolor="#cceeff">&nbsp;</td>
      <td align=left style="border-bottom: 1px solid #000000" bgcolor="#cceeff" width="2%"><font face="Times New Roman, Times, serif" size="3"><b>&nbsp</b></font></td>
      <td align="right" valign="bottom" nowrap style="border-bottom: 1px solid #000000" width="11%" bgcolor="#cceeff"><font face="Times New Roman, Times, serif" size="3">(65,431</font></td>
      <td align="right" nowrap style="border-bottom: 1px solid #000000" bgcolor="#cceeff">
        <div align="left"><font face="Times New Roman, Times, serif" size="3">)&nbsp</font></div>
      </td>
      <td width="1%" bgcolor="#cceeff">&nbsp;</td>
      <td align=left style="border-bottom: 1px solid #000000" bgcolor="#cceeff" width="2%"><font face="Times New Roman, Times, serif" size="3"><b>&nbsp</b></font></td>
      <td align="right" nowrap style="border-bottom: 1px solid #000000" width="11%" bgcolor="#cceeff"><font face="Times New Roman, Times, serif" size="3">(12,694</font></td>
      <td align="right" nowrap style="border-bottom: 1px solid #000000" bgcolor="#cceeff">
        <div align="left"><font face="Times New Roman, Times, serif" size="3">)&nbsp</font></div>
      </td>
    </tr>
    <tr>
      <td colspan="3" align="left" valign="top" height="14">
        <div style="margin-left: 10px; text-indent: -10px"><font face="Times New Roman, Times, serif" size="3">&nbsp</font>
          <font face="Times New Roman, Times, serif" size="3">&nbsp</font> <font size="3" face="Times New Roman, Times, serif">&nbsp</font></div>
      </td>
      <td width="2%" height="14">&nbsp;</td>
      <td align="left" valign="bottom" width="2%" height="14">&nbsp;</td>
      <td align="right" valign="bottom" nowrap width="11%" height="14">&nbsp;</td>
      <td width="1%" height="14">&nbsp;</td>
      <td width="1%" height="14">&nbsp;</td>
      <td align="left" valign="bottom" width="2%" height="14">&nbsp;</td>
      <td align="right" valign="bottom" nowrap width="11%" height="14">&nbsp;</td>
      <td width="1%" height="14">&nbsp;</td>
    </tr>
    <tr valign="bottom">
      <td colspan="3" align="left" valign="top" height="14" bgcolor="#cceeff">
        <div style="margin-left: 10px; text-indent: -10px"><font face="Times New Roman, Times, serif" size="3">
          Net loss before deferred taxes</font></div>
      </td>
      <td height="14" width="2%" bgcolor="#cceeff">&nbsp;</td>
      <td align="left" valign="bottom" height="14" width="2%" bgcolor="#cceeff">&nbsp;</td>
      <td align="right" valign="bottom" nowrap height="14" width="11%" bgcolor="#cceeff"><font face="Times New Roman, Times, serif" size="3">(703,730</font></td>
      <td height="14" width="1%" bgcolor="#cceeff"><font face="Times New Roman, Times, serif" size="3">)</font></td>
      <td height="14" width="1%" bgcolor="#cceeff">&nbsp;</td>
      <td align="left" valign="bottom" height="14" width="2%" bgcolor="#cceeff">&nbsp;</td>
      <td align="right" nowrap height="14" width="11%" bgcolor="#cceeff"><font face="Times New Roman, Times, serif" size="3">(950,639</font></td>
      <td height="14" width="1%" bgcolor="#cceeff"><font face="Times New Roman, Times, serif" size="3">)</font></td>
    </tr>
    <tr>
      <td colspan="3" align="left" valign="top">
        <div style="margin-left: 10px; text-indent: -10px"><font face="Times New Roman, Times, serif" size="3">
          Deferred tax expense</font></div>
      </td>
      <td width="2%">&nbsp;</td>
      <td valign=bottom align=left style="border-bottom: 1px solid #000000" width="2%"><font face="Times New Roman, Times, serif" size="3"><b>&nbsp</b></font></td>
      <td align="right" valign="bottom" nowrap style="border-bottom: 1px solid #000000" width="11%"><font face="Times New Roman, Times, serif" size="3">(7,985</font></td>
      <td align="right" nowrap style="border-bottom: 1px solid #000000" valign="bottom">
        <div align="left"><font face="Times New Roman, Times, serif" size="3">)&nbsp</font></div>
      </td>
      <td width="1%">&nbsp;</td>
      <td valign=bottom align=left style="border-bottom: 1px solid #000000" width="2%"><font face="Times New Roman, Times, serif" size="3"><b>&nbsp</b></font></td>
      <td align="right" valign="bottom" nowrap style="border-bottom: 1px solid #000000" width="11%"><font face="Times New Roman, Times, serif" size="3">(7,985</font></td>
      <td align="right" nowrap style="border-bottom: 1px solid #000000" valign="bottom">
        <div align="left"><font face="Times New Roman, Times, serif" size="3">)&nbsp</font></div>
      </td>
    </tr>
    <tr>
      <td colspan="3" align="left" valign="top" height="16" bgcolor="#cceeff">
        <div style="margin-left: 10px; text-indent: -10px"><font face="Times New Roman, Times, serif" size="3">
          Net loss</font></div>
      </td>
      <td width="2%" height="16" bgcolor="#cceeff">&nbsp;</td>
      <td align="left" style="border-bottom: 3px double #000000" width="2%" bgcolor="#cceeff" valign="bottom"><font size="3" face="Times New Roman, Times, serif">$</font></td>
      <td align="right" valign="bottom" nowrap style="border-bottom: 3px double #000000" width="11%" bgcolor="#cceeff"><font face="Times New Roman, Times, serif" size="3">(711,715</font></td>
      <td align="left" style="border-bottom: 3px double #000000" width="1%" bgcolor="#cceeff" valign="bottom"><font size="3" face="Times New Roman, Times, serif">)</font></td>
      <td width="1%" height="16" bgcolor="#cceeff">&nbsp;</td>
      <td align="left" style="border-bottom: 3px double #000000" width="2%" bgcolor="#cceeff" valign="bottom"><font size="3" face="Times New Roman, Times, serif">$</font></td>
      <td align="right" valign="bottom" nowrap style="border-bottom: 3px double #000000" width="11%" bgcolor="#cceeff"><font face="Times New Roman, Times, serif" size="3">(958,624</font></td>
      <td align="left" style="border-bottom: 3px double #000000" width="1%" bgcolor="#cceeff" valign="bottom"><font size="3" face="Times New Roman, Times, serif">)</font></td>
    </tr>
    <tr>
      <td colspan="3" align="left" valign="top">
        <div style="margin-left: 10px; text-indent: -10px"></div>
      </td>
      <td width="2%">&nbsp;</td>
      <td valign=bottom align=left width="2%" ><font face="Times New Roman, Times, serif" size="3"><b>&nbsp</b></font></td>
      <td align="right" valign="bottom" nowrap  width="11%">&nbsp;</td>
      <td width="1%">&nbsp;</td>
      <td width="1%">&nbsp;</td>
      <td valign=bottom align=left width="2%" ><font face="Times New Roman, Times, serif" size="3"><b>&nbsp</b></font></td>
      <td align="right" valign="bottom" nowrap  width="11%">&nbsp;</td>
      <td width="1%">&nbsp;</td>
    </tr>
    <tr>
      <td colspan="3" align="left" valign="top" bgcolor="#cceeff"><font size="3" face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font></td>
      <td width="2%" bgcolor="#cceeff">&nbsp;</td>
      <td align="left" valign="bottom" width="2%" bgcolor="#cceeff">&nbsp;</td>
      <td align="right" valign="bottom" nowrap width="11%" bgcolor="#cceeff">&nbsp;</td>
      <td width="1%" bgcolor="#cceeff">&nbsp;</td>
      <td width="1%" bgcolor="#cceeff">&nbsp;</td>
      <td align="left" valign="bottom" width="2%" bgcolor="#cceeff">&nbsp;</td>
      <td align="right" valign="bottom" nowrap width="11%" bgcolor="#cceeff">&nbsp;</td>
      <td width="1%" bgcolor="#cceeff">&nbsp;</td>
    </tr>
    <tr>
      <td colspan="3" align="left" valign="top">
        <div style="margin-left: 10px; text-indent: -10px"><font face="Times New Roman, Times, serif" size="3">
          Net loss per share:</font></div>
      </td>
      <td width="2%">&nbsp;</td>
      <td align="left" valign="bottom" width="2%">&nbsp;</td>
      <td align="right" valign="bottom" nowrap width="11%">&nbsp;</td>
      <td width="1%">&nbsp;</td>
      <td width="1%">&nbsp;</td>
      <td align="left" valign="bottom" width="2%">&nbsp;</td>
      <td align="right" valign="bottom" nowrap width="11%">&nbsp;</td>
      <td width="1%">&nbsp;</td>
    </tr>
    <tr valign="bottom">
      <td colspan="3" align="left" valign="top" height="10" bgcolor="#cceeff">
        <div style="margin-left: 10px; text-indent: -10px"> <font size="3" face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Basic</font></div>
      </td>
      <td width="2%" bgcolor="#cceeff">&nbsp;</td>
      <td align="left" valign="bottom" style="border-bottom: 3px double #000000" width="2%" bgcolor="#cceeff"><font face="Times New Roman, Times, serif" size="3">$</font></td>
      <td align="right" valign="bottom" nowrap style="border-bottom: 3px double #000000" width="11%" bgcolor="#cceeff"><font face="Times New Roman, Times, serif" size="3">(0.22</font></td>
      <td align="left" style="border-bottom: 3px double #000000" width="1%" bgcolor="#cceeff"><font size="3" face="Times New Roman, Times, serif">)</font></td>
      <td width="1%" bgcolor="#cceeff">&nbsp;</td>
      <td align="left" valign="bottom" style="border-bottom: 3px double #000000" width="2%" bgcolor="#cceeff"><font face="Times New Roman, Times, serif" size="3">$</font></td>
      <td align="right" valign="bottom" nowrap style="border-bottom: 3px double #000000" width="11%" bgcolor="#cceeff"><font face="Times New Roman, Times, serif" size="3">(0.30</font></td>
      <td align="left" style="border-bottom: 3px double #000000" width="1%" bgcolor="#cceeff"><font size="3" face="Times New Roman, Times, serif">)</font></td>
    </tr>
    <tr valign="bottom">
      <td colspan="3" align="left" valign="top">
        <div style="margin-left: 10px; text-indent: -10px"> <font size="3" face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Diluted</font></div>
      </td>
      <td width="2%">&nbsp;</td>
      <td align="left" valign="bottom" style="border-bottom: 3px double #000000" width="2%"><font face="Times New Roman, Times, serif" size="3">$</font></td>
      <td align="right" valign="bottom" nowrap style="border-bottom: 3px double #000000" width="11%"><font face="Times New Roman, Times, serif" size="3">(0.22</font></td>
      <td align="left" style="border-bottom: 3px double #000000" width="1%"><font size="3" face="Times New Roman, Times, serif">)</font></td>
      <td width="1%">&nbsp;</td>
      <td align="left" valign="bottom" style="border-bottom: 3px double #000000" width="2%"><font face="Times New Roman, Times, serif" size="3">$</font></td>
      <td align="right" valign="bottom" nowrap style="border-bottom: 3px double #000000" width="11%"><font face="Times New Roman, Times, serif" size="3">
        (0.30</font></td>
      <td align="left" style="border-bottom: 3px double #000000" width="1%"><font size="3" face="Times New Roman, Times, serif">)</font></td>
    </tr>
    <tr>
      <td colspan="3" bgcolor="#cceeff"><font style="font-size: 10pt" face="Times New Roman, Times, serif" size="3">&nbsp;</font><font face="Times New Roman, Times, serif" size="3">&nbsp</font></td>
      <td width="2%" bgcolor="#cceeff">&nbsp;</td>
      <td align="left" valign="bottom" width="2%" bgcolor="#cceeff">&nbsp;</td>
      <td align="right" valign="bottom" nowrap width="11%" bgcolor="#cceeff">&nbsp;</td>
      <td width="1%" bgcolor="#cceeff">&nbsp;</td>
      <td width="1%" bgcolor="#cceeff">&nbsp;</td>
      <td align="left" valign="bottom" width="2%" bgcolor="#cceeff">&nbsp;</td>
      <td align="right" valign="bottom" nowrap width="11%" bgcolor="#cceeff">&nbsp;</td>
      <td width="1%" bgcolor="#cceeff">&nbsp;</td>
    </tr>
    <tr valign="bottom">
      <td colspan="3" align="left" valign="top">
        <div style="margin-left: 10px; text-indent: -10px"><font face="Times New Roman, Times, serif" size="3">
          Weighted average shares outstanding:</font></div>
      </td>
      <td width="2%">&nbsp;</td>
      <td align="left" valign="bottom" width="2%">&nbsp;</td>
      <td align="right" valign="bottom" nowrap width="11%">&nbsp;</td>
      <td width="1%">&nbsp;</td>
      <td width="1%">&nbsp;</td>
      <td align="left" valign="bottom" width="2%">&nbsp;</td>
      <td align="right" valign="bottom" nowrap width="11%">&nbsp;</td>
      <td width="1%">&nbsp;</td>
    </tr>
    <tr valign="bottom">
      <td colspan="3" align="left" valign="top" height="10" bgcolor="#cceeff">
        <div style="margin-left: 10px; text-indent: -10px"> <font size="3" face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Basic</font></div>
      </td>
      <td width="2%" bgcolor="#cceeff">&nbsp;</td>
      <td align="left" style="border-bottom: 3px double #000000" width="2%" bgcolor="#cceeff">&nbsp;</td>
      <td align="right" valign="bottom" nowrap style="border-bottom: 3px double #000000" width="11%" bgcolor="#cceeff"><font face="Times New Roman, Times, serif" size="3">3,229,916</font></td>
      <td align="left" style="border-bottom: 3px double #000000" width="1%" bgcolor="#cceeff">&nbsp;</td>
      <td width="1%" bgcolor="#cceeff">&nbsp;</td>
      <td align="left" style="border-bottom: 3px double #000000" width="2%" bgcolor="#cceeff">&nbsp;</td>
      <td align="right" valign="bottom" nowrap style="border-bottom: 3px double #000000" width="11%" bgcolor="#cceeff"><font face="Times New Roman, Times, serif" size="3">3,201,280</font></td>
      <td align="left" style="border-bottom: 3px double #000000" width="1%" bgcolor="#cceeff">&nbsp;</td>
    </tr>
    <tr valign="bottom">
      <td colspan="3" align="left" valign="top">
        <div style="margin-left: 10px; text-indent: -10px"> <font size="3" face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Diluted</font></div>
      </td>
      <td width="2%">&nbsp;</td>
      <td align="left" style="border-bottom: 3px double #000000" width="2%">&nbsp;</td>
      <td align="right" valign="bottom" nowrap style="border-bottom: 3px double #000000" width="11%"><font face="Times New Roman, Times, serif" size="3">3,229,916</font></td>
      <td align="left" style="border-bottom: 3px double #000000" width="1%">&nbsp;</td>
      <td width="1%">&nbsp;</td>
      <td align="left" style="border-bottom: 3px double #000000" width="2%">&nbsp;</td>
      <td align="right" valign="bottom" nowrap style="border-bottom: 3px double #000000" width="11%"><font face="Times New Roman, Times, serif" size="3">3,201,280</font></td>
      <td align="left" style="border-bottom: 3px double #000000" width="1%">&nbsp;</td>
    </tr>
  </table>
</center>
<P align=center>
<p>&nbsp;</p>
<P align=center><font face="Times New Roman, Times, serif" size="3">See accompanying
  notes. <BR>
  <BR>
  </font>
<P align=center>
<P align=center><font face="Times New Roman, Times, serif" size="3"> 2</font>
<HR width="100%">
<p><font face="Times New Roman, Times, serif" size="3"><a href="#TAB">(Index)</a></font>
  <font face="Times New Roman, Times, serif" size="3"><a
name=flows></a></font> </p>
<p>&nbsp;</p>
<p align="center"><font face="Times New Roman, Times, serif"><b>SOCKET MOBILE,
  INC.<br>
  CONDENSED STATEMENTS OF CASH FLOWS<br>
  </b>(Unaudited)</font></p>
<table style="MARGIN-TOP: 6pt; FONT-SIZE: 9.6pt" cellspacing=0 cellpadding=0
width="100%" align=center border=0>
  <tr style="FONT-SIZE: 10pt">
    <td colspan=4>&nbsp;</td>
    <td width="1%">&nbsp;</td>
    <td noWrap align=middle colspan=7>
      <div align="center"><font face="Times New Roman, Times, serif" size="3">Three
        Months Ended March&nbsp;31,</font></div>
    </td>
  </tr>
  <tr style="FONT-SIZE: 10pt">
    <td noWrap align=left colspan=4>&nbsp;</td>
    <td width="1%">&nbsp;</td>
    <td noWrap align=middle colspan=2 style="border-bottom: 1px solid #000000">
      <div align="center"><font face="Times New Roman, Times, serif" size="3">2009</font></div>
    </td>
    <td align="right" nowrap style="border-bottom: 1px solid #000000" valign="bottom">
      <div align="left"><font face="Times New Roman, Times, serif" size="3">&nbsp</font></div>
    </td>
    <td width="1%">&nbsp;</td>
    <td noWrap align=middle colspan=2 style="border-bottom: 1px solid #000000">
      <div align="center"><font face="Times New Roman, Times, serif" size="3">2008</font></div>
    </td>
    <td align="right" nowrap style="border-bottom: 1px solid #000000" valign="bottom">
      <div align="left"><font face="Times New Roman, Times, serif" size="3">&nbsp</font></div>
    </td>
  </tr>
  <tr valign=bottom>
    <td valign=top align=left colspan=4 bgcolor="#cceeff">
      <div
    style="MARGIN-LEFT: 10px; TEXT-INDENT: -10px"><font face="Times New Roman, Times, serif" size="3"><b>Operating
        activities</b></font></div>
    </td>
    <td width="1%" bgcolor="#cceeff">&nbsp;</td>
    <td valign=bottom align=left bgcolor="#cceeff">&nbsp;</td>
    <td valign=bottom noWrap align=right width="11%" bgcolor="#cceeff">&nbsp;</td>
    <td width="1%" bgcolor="#cceeff">&nbsp;</td>
    <td width="1%" bgcolor="#cceeff">&nbsp;</td>
    <td valign=bottom align=left width="1%" bgcolor="#cceeff">&nbsp;</td>
    <td valign=bottom noWrap align=right width="11%" bgcolor="#cceeff">&nbsp;</td>
    <td width="1%" bgcolor="#cceeff">&nbsp;</td>
  </tr>
  <tr>
    <td valign=top align=left colspan=4>
      <div style="MARGIN-LEFT: 10px; TEXT-INDENT: -10px"><font face="Times New Roman, Times, serif" size="3">&nbsp;&nbsp;
        Net loss</font></div>
    </td>
    <td width="1%">&nbsp;</td>
    <td valign=bottom align=left><font face="Times New Roman, Times, serif" size="3">$</font></td>
    <td valign=bottom noWrap align=right width="11%"><font face="Times New Roman, Times, serif" size="3">(711,715</font></td>
    <td width="1%"><font face="Times New Roman, Times, serif" size="3">)</font></td>
    <td width="1%">&nbsp;</td>
    <td valign=bottom align=left width="1%"><font face="Times New Roman, Times, serif" size="3">$</font></td>
    <td valign=bottom noWrap align=right width="11%"><font face="Times New Roman, Times, serif" size="3">(958,624</font></td>
    <td width="1%"><font face="Times New Roman, Times, serif" size="3">)</font></td>
  </tr>
  <tr valign=bottom>
    <td valign=top align=left colspan=4 bgcolor="#cceeff">
      <div style="MARGIN-LEFT: 10px; TEXT-INDENT: -10px"><font face="Times New Roman, Times, serif" size="3">&nbsp;&nbsp;
        Adjustments to reconcile net loss to net cash provided by (used in) operating
        activities:</font></div>
    </td>
    <td width="1%" bgcolor="#cceeff">&nbsp;</td>
    <td valign=bottom align=left bgcolor="#cceeff">&nbsp;</td>
    <td valign=bottom noWrap align=right width="11%" bgcolor="#cceeff">&nbsp;</td>
    <td width="1%" bgcolor="#cceeff">&nbsp;</td>
    <td width="1%" bgcolor="#cceeff">&nbsp;</td>
    <td valign=bottom align=left width="1%" bgcolor="#cceeff">&nbsp;</td>
    <td noWrap align=right width="11%" bgcolor="#cceeff">&nbsp;</td>
    <td width="1%" bgcolor="#cceeff">&nbsp;</td>
  </tr>
  <tr>
    <td valign=top align=left colspan=4>
      <div style="MARGIN-LEFT: 10px; TEXT-INDENT: -10px"><font face="Times New Roman, Times, serif" size="3">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Stock-based
        compensation</font></div>
    </td>
    <td width="1%">&nbsp;</td>
    <td valign=bottom align=left>&nbsp;</td>
    <td valign=bottom noWrap align=right width="11%"><font size="3" face="Times New Roman, Times, serif">152,520</font></td>
    <td width="1%">&nbsp;</td>
    <td width="1%">&nbsp;</td>
    <td valign=bottom align=left width="1%">&nbsp;</td>
    <td valign=bottom noWrap align=right width="11%"><font size="3" face="Times New Roman, Times, serif">219,066</font></td>
    <td width="1%">&nbsp;</td>
  </tr>
  <tr valign=bottom>
    <td valign=top align=left colspan=4 bgcolor="#cceeff">
      <div style="MARGIN-LEFT: 10px; TEXT-INDENT: -10px"><font face="Times New Roman, Times, serif" size="3">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Depreciation
        and amortization</font></div>
    </td>
    <td width="1%" bgcolor="#cceeff">&nbsp;</td>
    <td valign=bottom align=left bgcolor="#cceeff">&nbsp;</td>
    <td valign=bottom noWrap align=right width="11%" bgcolor="#cceeff"><font size="3" face="Times New Roman, Times, serif">122,789</font></td>
    <td width="1%" bgcolor="#cceeff">&nbsp;</td>
    <td width="1%" bgcolor="#cceeff">&nbsp;</td>
    <td valign=bottom align=left width="1%" bgcolor="#cceeff">&nbsp;</td>
    <td noWrap align=right width="11%" bgcolor="#cceeff"><font size="3" face="Times New Roman, Times, serif">150,273</font></td>
    <td width="1%" bgcolor="#cceeff">&nbsp;</td>
  </tr>
  <tr>
    <td colspan="4">
      <div style="MARGIN-LEFT: 10px; TEXT-INDENT: -10px"><font face="Times New Roman, Times, serif" size="3">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Amortization
        of intangible assets</font></div>
    </td>
    <td width="1%">&nbsp;</td>
    <td valign=bottom align=left>&nbsp;</td>
    <td valign=bottom noWrap align=right width="11%"><font size="3" face="Times New Roman, Times, serif">31,787</font></td>
    <td width="1%">&nbsp;</td>
    <td width="1%">&nbsp;</td>
    <td valign=bottom align=left width="1%">&nbsp;</td>
    <td valign=bottom noWrap align=right width="11%"><font size="3" face="Times New Roman, Times, serif">31,787</font></td>
    <td width="1%">&nbsp;</td>
  </tr>
  <tr valign=bottom>
    <td colspan="4" bgcolor="#cceeff">
      <div style="MARGIN-LEFT: 10px; TEXT-INDENT: -10px"><font face="Times New Roman, Times, serif" size="3">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net
        foreign currency transaction (gains) losses</font></div>
    </td>
    <td width="1%" bgcolor="#cceeff">&nbsp;</td>
    <td valign=bottom align=left bgcolor="#cceeff">&nbsp;</td>
    <td valign=bottom noWrap align=right width="11%" bgcolor="#cceeff"><font size="3" face="Times New Roman, Times, serif">(10,266</font></td>
    <td width="1%" bgcolor="#cceeff"><font size="3" face="Times New Roman, Times, serif">)</font></td>
    <td width="1%" bgcolor="#cceeff">&nbsp;</td>
    <td valign=bottom align=left width="1%" bgcolor="#cceeff">&nbsp;</td>
    <td noWrap align=right width="11%" bgcolor="#cceeff"><font size="3" face="Times New Roman, Times, serif">2,340</font></td>
    <td width="1%" bgcolor="#cceeff">&nbsp;</td>
  </tr>
  <tr valign=bottom>
    <td colspan="4">
      <div style="MARGIN-LEFT: 10px; TEXT-INDENT: -10px"><font face="Times New Roman, Times, serif" size="3">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Deferred
        tax expense</font></div>
    </td>
    <td width="1%">&nbsp;</td>
    <td valign=bottom align=left>&nbsp;</td>
    <td valign=bottom noWrap align=right width="11%"><font size="3" face="Times New Roman, Times, serif">7,985</font></td>
    <td valign=bottom noWrap align=left width="1%">&nbsp;</td>
    <td width="1%">&nbsp;</td>
    <td valign=bottom align=left width="1%">&nbsp;</td>
    <td noWrap align=right width="11%"><font size="3" face="Times New Roman, Times, serif">7,985</font></td>
    <td noWrap align=left width="1%">&nbsp;</td>
  </tr>
  <tr>
    <td colspan="4" bgcolor="#cceeff">
      <div style="MARGIN-LEFT: 10px; TEXT-INDENT: -10px"><font face="Times New Roman, Times, serif" size="3">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Change
        in deferred rent</font></div>
    </td>
    <td width="1%" bgcolor="#cceeff">&nbsp;</td>
    <td valign=bottom align=left bgcolor="#cceeff">&nbsp;</td>
    <td valign=bottom noWrap align=right width="11%" bgcolor="#cceeff"><font size="3" face="Times New Roman, Times, serif">(2,941</font></td>
    <td width="1%" bgcolor="#cceeff"><font size="3" face="Times New Roman, Times, serif">)</font></td>
    <td width="1%" bgcolor="#cceeff">&nbsp;</td>
    <td valign=bottom align=left width="1%" bgcolor="#cceeff">&nbsp;</td>
    <td valign=bottom noWrap align=right width="11%" bgcolor="#cceeff"><font size="3" face="Times New Roman, Times, serif">(81</font></td>
    <td width="1%" bgcolor="#cceeff"><font size="3" face="Times New Roman, Times, serif">)</font></td>
  </tr>
  <tr valign=bottom>
    <td colspan="4"><font face="Times New Roman, Times, serif" size="3"><b>&nbsp</b></font></td>
    <td width="1%">&nbsp;</td>
    <td valign=bottom align=left>&nbsp;</td>
    <td valign=bottom noWrap align=right width="11%">&nbsp;</td>
    <td width="1%">&nbsp;</td>
    <td width="1%">&nbsp;</td>
    <td valign=bottom align=left width="1%">&nbsp;</td>
    <td noWrap align=right width="11%">&nbsp;</td>
    <td width="1%">&nbsp;</td>
  </tr>
  <tr valign=bottom>
    <td colspan="4" bgcolor="#cceeff">
      <div style="MARGIN-LEFT: 10px; TEXT-INDENT: -10px"><font face="Times New Roman, Times, serif" size="3">&nbsp;&nbsp;
        Changes in operating assets and liabilities:</font></div>
    </td>
    <td width="1%" bgcolor="#cceeff">&nbsp;</td>
    <td valign=bottom align=left bgcolor="#cceeff">&nbsp;</td>
    <td valign=bottom noWrap align=right width="11%" bgcolor="#cceeff">&nbsp;</td>
    <td width="1%" bgcolor="#cceeff">&nbsp;</td>
    <td width="1%" bgcolor="#cceeff">&nbsp;</td>
    <td valign=bottom align=left width="1%" bgcolor="#cceeff">&nbsp;</td>
    <td noWrap align=right width="11%" bgcolor="#cceeff">&nbsp;</td>
    <td width="1%" bgcolor="#cceeff">&nbsp;</td>
  </tr>
  <tr>
    <td colspan="4">
      <div style="MARGIN-LEFT: 10px; TEXT-INDENT: -10px"><font face="Times New Roman, Times, serif" size="3">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accounts
        receivable</font></div>
    </td>
    <td width="1%">&nbsp;</td>
    <td valign=bottom align=left>&nbsp;</td>
    <td valign=bottom noWrap align=right width="11%"><font size="3" face="Times New Roman, Times, serif">829,850</font></td>
    <td valign=bottom noWrap align=left width="1%">&nbsp;</td>
    <td width="1%">&nbsp;</td>
    <td valign=bottom align=left width="1%">&nbsp;</td>
    <td valign=bottom noWrap align=right width="11%"><font size="3" face="Times New Roman, Times, serif">(620,624</font></td>
    <td valign=bottom noWrap align=left width="1%"><font face="Times New Roman, Times, serif" size="3">)</font></td>
  </tr>
  <tr valign=bottom>
    <td colspan="4" bgcolor="#cceeff">
      <div style="MARGIN-LEFT: 10px; TEXT-INDENT: -10px"><font face="Times New Roman, Times, serif" size="3">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Inventories</font></div>
    </td>
    <td width="1%" bgcolor="#cceeff">&nbsp;</td>
    <td valign=bottom align=left bgcolor="#cceeff">&nbsp;</td>
    <td valign=bottom noWrap align=right width="11%" bgcolor="#cceeff"><font size="3" face="Times New Roman, Times, serif">1,008,437</font></td>
    <td valign=bottom noWrap align=left width="1%" bgcolor="#cceeff">&nbsp;</td>
    <td width="1%" bgcolor="#cceeff">&nbsp;</td>
    <td valign=bottom align=left width="1%" bgcolor="#cceeff">&nbsp;</td>
    <td noWrap align=right width="11%" bgcolor="#cceeff"><font size="3" face="Times New Roman, Times, serif">(604,412</font></td>
    <td noWrap align=left width="1%" bgcolor="#cceeff"><font face="Times New Roman, Times, serif" size="3">)</font></td>
  </tr>
  <tr>
    <td colspan="4">
      <div style="MARGIN-LEFT: 10px; TEXT-INDENT: -10px"><font face="Times New Roman, Times, serif" size="3">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Prepaid
        expenses and other current assets</font></div>
    </td>
    <td width="1%">&nbsp;</td>
    <td valign=bottom align=left>&nbsp;</td>
    <td valign=bottom noWrap align=right width="11%"><font size="3" face="Times New Roman, Times, serif">(16,651</font></td>
    <td valign=bottom noWrap align=left width="1%"><font face="Times New Roman, Times, serif" size="3">)</font></td>
    <td width="1%">&nbsp;</td>
    <td valign=bottom align=left width="1%">&nbsp;</td>
    <td valign=bottom noWrap align=right width="11%"><font size="3" face="Times New Roman, Times, serif">(127,261</font></td>
    <td valign=bottom noWrap align=left width="1%"><font face="Times New Roman, Times, serif" size="3">)</font></td>
  </tr>
  <tr valign=bottom>
    <td colspan="4" bgcolor="#cceeff">
      <div style="MARGIN-LEFT: 10px; TEXT-INDENT: -10px"><font face="Times New Roman, Times, serif" size="3">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Other
        assets </font></div>
    </td>
    <td width="1%" bgcolor="#cceeff">&nbsp;</td>
    <td valign=bottom align=left bgcolor="#cceeff">&nbsp;</td>
    <td valign=bottom noWrap align=right width="11%" bgcolor="#cceeff"><font size="3" face="Times New Roman, Times, serif">16,667</font></td>
    <td width="1%" bgcolor="#cceeff">&nbsp;</td>
    <td width="1%" bgcolor="#cceeff">&nbsp;</td>
    <td valign=bottom align=left width="1%" bgcolor="#cceeff">&nbsp;</td>
    <td noWrap align=right width="11%" bgcolor="#cceeff"><font size="3" face="Times New Roman, Times, serif">(61,667</font></td>
    <td width="1%" bgcolor="#cceeff"><font size="3" face="Times New Roman, Times, serif">)</font></td>
  </tr>
  <tr>
    <td colspan="4">
      <div style="MARGIN-LEFT: 10px; TEXT-INDENT: -10px"><font face="Times New Roman, Times, serif" size="3">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accounts
        payable and accrued expenses</font></div>
    </td>
    <td width="1%">&nbsp;</td>
    <td valign=bottom align=left>&nbsp;</td>
    <td valign=bottom noWrap align=right width="11%"><font size="3" face="Times New Roman, Times, serif">(783,203</font></td>
    <td valign=bottom noWrap align=left width="1%"><font size="3" face="Times New Roman, Times, serif">)</font></td>
    <td width="1%">&nbsp;</td>
    <td valign=bottom align=left width="1%">&nbsp;</td>
    <td valign=bottom noWrap align=right width="11%"><font size="3" face="Times New Roman, Times, serif">1,105,261</font></td>
    <td valign=bottom noWrap align=left width="1%">&nbsp;</td>
  </tr>
  <tr>
    <td colspan="4" bgcolor="#cceeff">
      <div style="MARGIN-LEFT: 10px; TEXT-INDENT: -10px"><font face="Times New Roman, Times, serif" size="3">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accrued
        payroll and related expenses</font></div>
    </td>
    <td width="1%" bgcolor="#cceeff">&nbsp;</td>
    <td valign=bottom align=left bgcolor="#cceeff">&nbsp;</td>
    <td valign=bottom noWrap align=right width="11%" bgcolor="#cceeff"><font size="3" face="Times New Roman, Times, serif">(23,755</font></td>
    <td valign=bottom noWrap align=left width="1%" bgcolor="#cceeff"><font face="Times New Roman, Times, serif" size="3">)</font></td>
    <td width="1%" bgcolor="#cceeff">&nbsp;</td>
    <td valign=bottom align=left width="1%" bgcolor="#cceeff">&nbsp;</td>
    <td valign=bottom noWrap align=right width="11%" bgcolor="#cceeff"><font size="3" face="Times New Roman, Times, serif">(35,039</font></td>
    <td valign=bottom noWrap align=left width="1%" bgcolor="#cceeff"><font face="Times New Roman, Times, serif" size="3">)</font></td>
  </tr>
  <tr>
    <td colspan="4">
      <div style="MARGIN-LEFT: 10px; TEXT-INDENT: -10px"><font face="Times New Roman, Times, serif" size="3">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Deferred
        income on shipments to distributors</font></div>
    </td>
    <td width="1%">&nbsp;</td>
    <td valign=bottom align=left style="border-bottom: 1px solid #000000"><font face="Times New Roman, Times, serif" size="3"><b>&nbsp</b></font></td>
    <td valign=bottom noWrap align=right width="11%" style="border-bottom: 1px solid #000000"><font size="3" face="Times New Roman, Times, serif">(438,205</font></td>
    <td align="right" nowrap style="border-bottom: 1px solid #000000" valign="bottom">
      <div align="left"><font face="Times New Roman, Times, serif" size="3">)&nbsp</font></div>
    </td>
    <td width="1%">&nbsp;</td>
    <td valign=bottom align=left width="1%" style="border-bottom: 1px solid #000000" ><font face="Times New Roman, Times, serif" size="3">&nbsp</font></td>
    <td valign=bottom noWrap align=right width="11%" style="border-bottom: 1px solid #000000"><font size="3" face="Times New Roman, Times, serif">(134,774</font></td>
    <td align="right" nowrap style="border-bottom: 1px solid #000000" valign="bottom">
      <div align="left"><font face="Times New Roman, Times, serif" size="3">)&nbsp</font></div>
    </td>
  </tr>
  <tr>
    <td colspan="4" bgcolor="#cceeff">
      <div style="MARGIN-LEFT: 10px; TEXT-INDENT: -10px"><font face="Times New Roman, Times, serif" size="3">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
        Net cash provided by (used in) operating activities</font></div>
    </td>
    <td width="1%" bgcolor="#cceeff">&nbsp;</td>
    <td valign=bottom align=left bgcolor="#cceeff" style="border-bottom: 1px solid #000000"><font face="Times New Roman, Times, serif" size="3"><b>&nbsp</b></font></td>
    <td valign=bottom noWrap align=right width="11%" bgcolor="#cceeff" style="border-bottom: 1px solid #000000"><font size="3" face="Times New Roman, Times, serif">183,299</font></td>
    <td valign=bottom noWrap align=left width="1%" bgcolor="#cceeff" style="border-bottom: 1px solid #000000">&nbsp;</td>
    <td width="1%" bgcolor="#cceeff">&nbsp;</td>
    <td valign=bottom align=left width="1%" bgcolor="#cceeff" style="border-bottom: 1px solid #000000"><font face="Times New Roman, Times, serif" size="3">&nbsp</font></td>
    <td valign=bottom noWrap align=right width="11%" bgcolor="#cceeff" style="border-bottom: 1px solid #000000"><font size="3" face="Times New Roman, Times, serif">(1,025,770</font></td>
    <td valign=bottom noWrap align=left width="1%" bgcolor="#cceeff" style="border-bottom: 1px solid #000000"><font face="Times New Roman, Times, serif" size="3">)</font></td>
  </tr>
  <tr valign=bottom>
    <td colspan="4"><font face="Times New Roman, Times, serif" size="3">&nbsp</font></td>
    <td width="1%">&nbsp;</td>
    <td valign=bottom align=left>&nbsp;</td>
    <td valign=bottom noWrap align=right width="11%">&nbsp;</td>
    <td width="1%">&nbsp;</td>
    <td width="1%">&nbsp;</td>
    <td valign=bottom align=left width="1%">&nbsp;</td>
    <td noWrap align=right width="11%">&nbsp;</td>
    <td width="1%">&nbsp;</td>
  </tr>
  <tr>
    <td valign=top align=left colspan=4 bgcolor="#cceeff">
      <div
    style="MARGIN-LEFT: 10px; TEXT-INDENT: -10px"><font face="Times New Roman, Times, serif" size="3"><b>Investing
        activities</b></font></div>
    </td>
    <td width="1%" bgcolor="#cceeff">&nbsp;</td>
    <td valign=bottom align=left bgcolor="#cceeff">&nbsp;</td>
    <td valign=bottom noWrap align=right width="11%" bgcolor="#cceeff">&nbsp;</td>
    <td width="1%" bgcolor="#cceeff">&nbsp;</td>
    <td width="1%" bgcolor="#cceeff">&nbsp;</td>
    <td valign=bottom align=left width="1%" bgcolor="#cceeff">&nbsp;</td>
    <td valign=bottom noWrap align=right width="11%" bgcolor="#cceeff">&nbsp;</td>
    <td width="1%" bgcolor="#cceeff">&nbsp;</td>
  </tr>
  <tr valign=bottom>
    <td valign=top align=left colspan=4>
      <div style="MARGIN-LEFT: 10px; TEXT-INDENT: -10px"><font face="Times New Roman, Times, serif" size="3">&nbsp;&nbsp;
        Purchases of equipment and tooling</font></div>
    </td>
    <td width="1%">&nbsp;</td>
    <td valign=bottom align=left style="border-bottom: 1px solid #000000"><font face="Times New Roman, Times, serif" size="3"><b>&nbsp</b></font></td>
    <td valign=bottom noWrap align=right width="11%" style="border-bottom: 1px solid #000000"><font size="3" face="Times New Roman, Times, serif">(88,039</font></td>
    <td align="right" nowrap style="border-bottom: 1px solid #000000">
      <div align="left"><font face="Times New Roman, Times, serif" size="3">)&nbsp</font></div>
    </td>
    <td width="1%">&nbsp;</td>
    <td valign=bottom align=left width="1%" style="border-bottom: 1px solid #000000"><font face="Times New Roman, Times, serif" size="3">&nbsp</font></td>
    <td noWrap align=right width="11%" style="border-bottom: 1px solid #000000"><font size="3" face="Times New Roman, Times, serif">(104,941</font></td>
    <td align="right" nowrap style="border-bottom: 1px solid #000000">
      <div align="left"><font face="Times New Roman, Times, serif" size="3">)&nbsp</font></div>
    </td>
  </tr>
  <tr valign=bottom>
    <td valign=top align=left colspan=4 bgcolor="#cceeff">
      <div style="MARGIN-LEFT: 10px; TEXT-INDENT: -10px"><font face="Times New Roman, Times, serif" size="3">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
        &nbsp;&nbsp; Net cash used in investing activities</font></div>
    </td>
    <td width="1%" bgcolor="#cceeff">&nbsp;</td>
    <td valign=bottom align=left bgcolor="#cceeff" style="border-bottom: 1px solid #000000"><font face="Times New Roman, Times, serif" size="3"><b>&nbsp</b></font></td>
    <td noWrap align=right width="11%" bgcolor="#cceeff" style="border-bottom: 1px solid #000000"><font size="3" face="Times New Roman, Times, serif">(88,039</font></td>
    <td noWrap align=left width="1%" bgcolor="#cceeff" style="border-bottom: 1px solid #000000"><font face="Times New Roman, Times, serif" size="3">)</font></td>
    <td width="1%" bgcolor="#cceeff">&nbsp;</td>
    <td valign=bottom align=left width="1%" bgcolor="#cceeff" style="border-bottom: 1px solid #000000"><font face="Times New Roman, Times, serif" size="3">&nbsp</font></td>
    <td noWrap align=right width="11%" bgcolor="#cceeff" style="border-bottom: 1px solid #000000"><font size="3" face="Times New Roman, Times, serif">(104,941</font></td>
    <td noWrap align=left width="1%" bgcolor="#cceeff" style="border-bottom: 1px solid #000000"><font face="Times New Roman, Times, serif" size="3">)</font></td>
  </tr>
  <tr valign=bottom>
    <td colspan="4">
      <div style="MARGIN-LEFT: 10px; TEXT-INDENT: -10px"><font size="3" face="Times New Roman, Times, serif"><b><b>&nbsp</b></b></font></div>
    </td>
    <td width="1%">&nbsp;</td>
    <td valign=bottom align=left>&nbsp;</td>
    <td valign=bottom noWrap align=right width="11%">&nbsp;</td>
    <td valign=bottom noWrap align=left width="1%">&nbsp;</td>
    <td width="1%">&nbsp;</td>
    <td valign=bottom align=left width="1%">&nbsp;</td>
    <td noWrap align=right width="11%">&nbsp;</td>
    <td noWrap align=left width="1%">&nbsp;</td>
  </tr>
  <tr>
    <td valign=top align=left colspan=4 bgcolor="#cceeff">
      <div
    style="MARGIN-LEFT: 10px; TEXT-INDENT: -10px"><font face="Times New Roman, Times, serif" size="3"><b>Financing
        activities</b></font></div>
    </td>
    <td width="1%" bgcolor="#cceeff">&nbsp;</td>
    <td valign=bottom align=left bgcolor="#cceeff">&nbsp;</td>
    <td valign=bottom noWrap align=right width="11%" bgcolor="#cceeff">&nbsp;</td>
    <td width="1%" bgcolor="#cceeff">&nbsp;</td>
    <td width="1%" bgcolor="#cceeff">&nbsp;</td>
    <td valign=bottom align=left width="1%" bgcolor="#cceeff">&nbsp;</td>
    <td valign=bottom noWrap align=right width="11%" bgcolor="#cceeff">&nbsp;</td>
    <td width="1%" bgcolor="#cceeff">&nbsp;</td>
  </tr>
  <tr valign=bottom>
    <td valign=top align=left colspan=4>
      <div style="MARGIN-LEFT: 10px; TEXT-INDENT: -10px"><font face="Times New Roman, Times, serif" size="3">&nbsp;&nbsp;
        Payments on capital leases and equipment financing notes</font></div>
    </td>
    <td width="1%">&nbsp;</td>
    <td valign=bottom align=left>&nbsp;</td>
    <td valign=bottom noWrap align=right width="11%"><font size="3" face="Times New Roman, Times, serif">(2,961</font></td>
    <td width="1%"><font face="Times New Roman, Times, serif" size="3">)</font></td>
    <td width="1%">&nbsp;</td>
    <td valign=bottom align=left width="1%">&nbsp;</td>
    <td noWrap align=right width="11%"><font size="3" face="Times New Roman, Times, serif">(9,572</font></td>
    <td width="1%"><font face="Times New Roman, Times, serif" size="3">)</font></td>
  </tr>
  <tr valign=bottom>
    <td valign=top align=left colspan=4 bgcolor="#cceeff">
      <div style="MARGIN-LEFT: 10px; TEXT-INDENT: -10px"><font face="Times New Roman, Times, serif" size="3">&nbsp;&nbsp;
        Proceeds from borrowings under bank line of credit agreement</font></div>
    </td>
    <td width="1%" bgcolor="#cceeff">&nbsp;</td>
    <td valign=bottom align=left bgcolor="#cceeff">&nbsp;</td>
    <td valign=bottom noWrap align=right width="11%" bgcolor="#cceeff"><font size="3" face="Times New Roman, Times, serif">3,533,034</font></td>
    <td width="1%" bgcolor="#cceeff">&nbsp;</td>
    <td width="1%" bgcolor="#cceeff">&nbsp;</td>
    <td valign=bottom align=left width="1%" bgcolor="#cceeff">&nbsp;</td>
    <td noWrap align=right width="11%" bgcolor="#cceeff"><font size="3" face="Times New Roman, Times, serif">2,754,147</font></td>
    <td width="1%" bgcolor="#cceeff">&nbsp;</td>
  </tr>
  <tr>
    <td valign=top align=left colspan=4>
      <div style="MARGIN-LEFT: 10px; TEXT-INDENT: -10px"><font face="Times New Roman, Times, serif" size="3">&nbsp;&nbsp;
        Repayments of borrowings under bank line of credit agreement</font></div>
    </td>
    <td width="1%">&nbsp;</td>
    <td valign=bottom align=left>&nbsp;</td>
    <td valign=bottom noWrap align=right width="11%"><font size="3" face="Times New Roman, Times, serif">(2,963,023</font></td>
    <td width="1%" valign="bottom"><font face="Times New Roman, Times, serif" size="3">)</font></td>
    <td width="1%">&nbsp;</td>
    <td valign=bottom align=left width="1%">&nbsp;</td>
    <td valign=bottom noWrap align=right width="11%"><font size="3" face="Times New Roman, Times, serif">(2,622,009</font></td>
    <td width="1%" valign="bottom"><font face="Times New Roman, Times, serif" size="3">)</font></td>
  </tr>
  <tr valign=bottom>
    <td valign=top align=left colspan=4 height="22" bgcolor="#cceeff">
      <div style="MARGIN-LEFT: 10px; TEXT-INDENT: -10px"><font face="Times New Roman, Times, serif" size="3">&nbsp;&nbsp;
        Repayments of bank term loan</font></div>
    </td>
    <td height="22" width="1%" bgcolor="#cceeff">&nbsp;</td>
    <td valign=bottom align=left height="22" bgcolor="#cceeff">&nbsp;</td>
    <td valign=bottom noWrap align=right height="22" width="11%" bgcolor="#cceeff"><font size="3" face="Times New Roman, Times, serif">---</font></td>
    <td height="22" width="1%" bgcolor="#cceeff">&nbsp;</td>
    <td height="22" width="1%" bgcolor="#cceeff">&nbsp;</td>
    <td valign=bottom align=left height="22" width="1%" bgcolor="#cceeff">&nbsp;</td>
    <td bgcolor="#cceeff" noWrap align=right height="22" width="11%"><font size="3" face="Times New Roman, Times, serif">(38,142</font></td>
    <td height="22" width="1%" bgcolor="#cceeff"><font size="3" face="Times New Roman, Times, serif">)</font></td>
  </tr>
  <tr valign=bottom>
    <td valign=top align=left colspan=4 height="22">
      <div style="MARGIN-LEFT: 10px; TEXT-INDENT: -10px"><font face="Times New Roman, Times, serif" size="3">&nbsp;&nbsp;
        Stock options exercised</font></div>
    </td>
    <td height="22" width="1%">&nbsp;</td>
    <td align=left style="border-bottom: 1px solid #000000"><font face="Times New Roman, Times, serif" size="3"><b>&nbsp</b></font></td>
    <td noWrap align=right width="11%" style="border-bottom: 1px solid #000000"><font size="3" face="Times New Roman, Times, serif">---</font></td>
    <td align="right" nowrap style="border-bottom: 1px solid #000000">
      <div align="left"><font face="Times New Roman, Times, serif" size="3">&nbsp</font></div>
    </td>
    <td height="22" width="1%">&nbsp;</td>
    <td valign=bottom align=left height="22" width="1%" style="border-bottom: 1px solid #000000"><font face="Times New Roman, Times, serif" size="3">&nbsp</font></td>
    <td noWrap align=right width="11%" style="border-bottom: 1px solid #000000"><font size="3" face="Times New Roman, Times, serif">14,517</font></td>
    <td align="right" nowrap style="border-bottom: 1px solid #000000">
      <div align="left"><font face="Times New Roman, Times, serif" size="3">&nbsp</font></div>
    </td>
  </tr>
  <tr valign=bottom>
    <td valign=top align=left colspan=4 bgcolor="#cceeff">
      <div style="MARGIN-LEFT: 10px; TEXT-INDENT: -10px"><font face="Times New Roman, Times, serif" size="3">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
        Net cash provided by financing activities</font></div>
    </td>
    <td width="1%" bgcolor="#cceeff">&nbsp;</td>
    <td align=left bgcolor="#cceeff" style="border-bottom: 1px solid #000000"><font face="Times New Roman, Times, serif" size="3"><b>&nbsp</b></font></td>
    <td noWrap align=right width="11%" bgcolor="#cceeff" style="border-bottom: 1px solid #000000"><font size="3" face="Times New Roman, Times, serif">567,050</font></td>
    <td noWrap align=left width="1%" bgcolor="#cceeff" style="border-bottom: 1px solid #000000">&nbsp;</td>
    <td width="1%" bgcolor="#cceeff">&nbsp;</td>
    <td align=left width="1%" bgcolor="#cceeff" style="border-bottom: 1px solid #000000"><font face="Times New Roman, Times, serif" size="3">&nbsp</font></td>
    <td noWrap align=right width="11%" bgcolor="#cceeff" style="border-bottom: 1px solid #000000"><font size="3" face="Times New Roman, Times, serif">98,941</font></td>
    <td noWrap align=left width="1%" bgcolor="#cceeff" style="border-bottom: 1px solid #000000">&nbsp;</td>
  </tr>
  <tr>
    <td colspan="4">
      <div style="MARGIN-LEFT: 10px; TEXT-INDENT: -10px"><font size="3" face="Times New Roman, Times, serif"><b><b>&nbsp</b></b></font></div>
    </td>
    <td width="1%">&nbsp;</td>
    <td valign=bottom align=left>&nbsp;</td>
    <td valign=bottom noWrap align=right width="11%">&nbsp;</td>
    <td valign=bottom noWrap align=left width="1%">&nbsp;</td>
    <td width="1%">&nbsp;</td>
    <td valign=bottom align=left width="1%">&nbsp;</td>
    <td valign=bottom noWrap align=right width="11%">&nbsp;</td>
    <td valign=bottom noWrap align=left width="1%">&nbsp;</td>
  </tr>
  <tr valign=bottom>
    <td valign=top align=left colspan=4 bgcolor="#cceeff">
      <div style="MARGIN-LEFT: 10px; TEXT-INDENT: -10px"><font face="Times New Roman, Times, serif" size="3">Effect
        of exchange rate changes on cash and cash equivalents</font></div>
    </td>
    <td width="1%" bgcolor="#cceeff">&nbsp;</td>
    <td valign=bottom align=left style="border-bottom: 1px solid #000000" bgcolor="#cceeff"><font face="Times New Roman, Times, serif" size="3"><b>&nbsp</b></font></td>
    <td valign=bottom noWrap align=right width="11%" style="border-bottom: 1px solid #000000" bgcolor="#cceeff"><font size="3" face="Times New Roman, Times, serif">(1,400</font></td>
    <td align="right" nowrap style="border-bottom: 1px solid #000000" bgcolor="#cceeff">
      <div align="left"><font face="Times New Roman, Times, serif" size="3">)&nbsp</font></div>
    </td>
    <td width="1%" bgcolor="#cceeff">&nbsp;</td>
    <td align=left style="border-bottom: 1px solid #000000" bgcolor="#cceeff"><font face="Times New Roman, Times, serif" size="3"><b>&nbsp</b></font></td>
    <td bgcolor="#cceeff" noWrap align=right width="11%" style="border-bottom: 1px solid #000000"><font size="3" face="Times New Roman, Times, serif">11,756</font></td>
    <td align="right" nowrap style="border-bottom: 1px solid #000000" bgcolor="#cceeff">
      <div align="left"><font face="Times New Roman, Times, serif" size="3">&nbsp</font></div>
    </td>
  </tr>
  <tr valign=bottom>
    <td valign=top align=left colspan=4>
      <div style="MARGIN-LEFT: 10px; TEXT-INDENT: -10px"><font face="Times New Roman, Times, serif" size="3">Net
        increase (decrease) in cash and cash equivalents</font></div>
    </td>
    <td width="1%">&nbsp;</td>
    <td valign=bottom align=left>&nbsp;</td>
    <td valign=bottom noWrap align=right width="11%"><font size="3" face="Times New Roman, Times, serif">660,910</font></td>
    <td valign=bottom noWrap align=left width="1%">&nbsp;</td>
    <td width="1%">&nbsp;</td>
    <td valign=bottom align=left width="1%">&nbsp;</td>
    <td noWrap align=right width="11%"><font size="3" face="Times New Roman, Times, serif">(1,020,014</font></td>
    <td noWrap align=left width="1%"><font face="Times New Roman, Times, serif" size="3">)</font></td>
  </tr>
  <tr>
    <td valign=top align=left colspan=4 bgcolor="#cceeff"><font face="Times New Roman, Times, serif" size="3">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
      </font></td>
    <td width="1%" bgcolor="#cceeff">&nbsp;</td>
    <td valign=bottom align=left bgcolor="#cceeff" >&nbsp;</td>
    <td valign=bottom noWrap align=right width="11%" bgcolor="#cceeff" >&nbsp;</td>
    <td valign=bottom noWrap align=left width="1%" bgcolor="#cceeff">&nbsp;</td>
    <td width="1%" bgcolor="#cceeff">&nbsp;</td>
    <td valign=bottom align=left bgcolor="#cceeff" >&nbsp;</td>
    <td valign=bottom noWrap align=right width="11%" bgcolor="#cceeff" >&nbsp;</td>
    <td valign=bottom noWrap align=left width="1%" bgcolor="#cceeff">&nbsp;</td>
  </tr>
  <tr>
    <td valign=top align=left colspan=4>
      <div style="MARGIN-LEFT: 10px; TEXT-INDENT: -10px"><font face="Times New Roman, Times, serif" size="3">Cash
        and cash equivalents at beginning of period</font></div>
    </td>
    <td width="1%">&nbsp;</td>
    <td valign=bottom align=left style="border-bottom: 1px solid #000000"><font face="Times New Roman, Times, serif" size="3"><b>&nbsp</b></font></td>
    <td valign=bottom noWrap align=right width="11%" style="border-bottom: 1px solid #000000"><font size="3" face="Times New Roman, Times, serif">757,342</font></td>
    <td align="right" nowrap style="border-bottom: 1px solid #000000" valign="bottom">
      <div align="left"><font face="Times New Roman, Times, serif" size="3">&nbsp</font></div>
    </td>
    <td width="1%">&nbsp;</td>
    <td valign=bottom align=left style="border-bottom: 1px solid #000000"><font face="Times New Roman, Times, serif" size="3"><b>&nbsp</b></font></td>
    <td valign=bottom noWrap align=right width="11%" style="border-bottom: 1px solid #000000"><font size="3" face="Times New Roman, Times, serif">4,963,359</font></td>
    <td align="right" nowrap style="border-bottom: 1px solid #000000" valign="bottom">
      <div align="left"><font face="Times New Roman, Times, serif" size="3">&nbsp</font></div>
    </td>
  </tr>
  <tr valign=bottom bgcolor="#cceeff">
    <td valign=top align=left colspan=4 height="12">
      <div style="MARGIN-LEFT: 10px; TEXT-INDENT: -10px"><font face="Times New Roman, Times, serif" size="3">Cash
        and cash equivalents at end of period</font></div>
    </td>
    <td height="12" width="1%">&nbsp;</td>
    <td valign=bottom align=left height="12" style="border-bottom: 3px double #000000"><font face="Times New Roman, Times, serif" size="3">$</font></td>
    <td valign=bottom noWrap align=right height="12" width="11%" style="border-bottom: 3px double #000000"><font size="3" face="Times New Roman, Times, serif">1,418,252</font></td>
    <td align="left" style="border-bottom: 3px double #000000" width="1%">&nbsp;</td>
    <td height="12" width="1%">&nbsp;</td>
    <td valign=bottom align=left height="12" width="1%" style="border-bottom: 3px double #000000"><font face="Times New Roman, Times, serif" size="3">$</font></td>
    <td noWrap align=right height="12" width="11%" style="border-bottom: 3px double #000000"><font size="3" face="Times New Roman, Times, serif">3,943,345</font></td>
    <td align="left" style="border-bottom: 3px double #000000" width="1%">&nbsp;</td>
  </tr>
  <tr>
    <td valign=top align=left colspan=4 height="16">
      <div style="MARGIN-LEFT: 10px; TEXT-INDENT: -10px"></div>
    </td>
    <td height="16" width="1%">&nbsp;</td>
    <td valign=bottom align=left height="16">&nbsp;</td>
    <td valign=bottom noWrap align=right height="16" width="11%">&nbsp;</td>
    <td valign=bottom noWrap align=left height="16" width="1%">&nbsp;</td>
    <td height="16" width="1%">&nbsp;</td>
    <td valign=bottom align=left height="16" width="1%">&nbsp;</td>
    <td valign=bottom noWrap align=right height="16" width="11%">&nbsp;</td>
    <td valign=bottom noWrap align=left height="16" width="1%">&nbsp;</td>
  </tr>
  <tr bgcolor="#cceeff">
    <td valign=top align=left colspan=4>
      <div style="MARGIN-LEFT: 10px; TEXT-INDENT: -10px"><font face="Times New Roman, Times, serif" size="3"><b>Supplemental
        cash flow information </b></font></div>
    </td>
    <td width="1%">&nbsp;</td>
    <td valign=bottom align=left>&nbsp;</td>
    <td valign=bottom noWrap align=right width="11%">&nbsp;</td>
    <td width="1%">&nbsp;</td>
    <td width="1%">&nbsp;</td>
    <td valign=bottom align=left width="1%">&nbsp;</td>
    <td valign=bottom noWrap align=right width="11%">&nbsp;</td>
    <td width="1%">&nbsp;</td>
  </tr>
  <tr valign=bottom>
    <td valign=top align=left colspan=4>
      <div style="MARGIN-LEFT: 10px; TEXT-INDENT: -10px"><font face="Times New Roman, Times, serif" size="3">&nbsp;&nbsp;
        Cash paid for interest</font></div>
    </td>
    <td width="1%">&nbsp;</td>
    <td valign=bottom align=left width="1%"><font face="Times New Roman, Times, serif" size="3">$</font></td>
    <td valign=bottom noWrap align=right width="11%"><font size="3" face="Times New Roman, Times, serif">65,265</font></td>
    <td width="1%">&nbsp;</td>
    <td width="1%">&nbsp;</td>
    <td valign=bottom align=left width="1%"><font face="Times New Roman, Times, serif" size="3">$</font></td>
    <td noWrap align=right width="11%"><font size="3" face="Times New Roman, Times, serif">12,694</font></td>
    <td width="1%">&nbsp;</td>
  </tr>
</table>
<p><font face="Times New Roman, Times, serif" size="3"><BR>
  </font> </p>
<P align=center><font face="Times New Roman, Times, serif" size="3">See accompanying
  notes. <BR>
  <BR>
  3 <BR>
  </font>
<P align=center>
<HR width="100%">
<P align=left>
<P align=left><font face="Times New Roman, Times, serif" size="3"><a href="#TAB">(Index)</a></font>
  <font face="Times New Roman, Times, serif" size="3"><a name=notes></a></font>
<P align=center><font face="Times New Roman, Times, serif" size="3"><b>SOCKET
  MOBILE, INC.<br>
  NOTES TO CONDENSED FINANCIAL STATEMENTS<br>
  </b>(Unaudited) </font>
<p><font face="Times New Roman, Times, serif" size="3"><b><br>
  NOTE 1 - Basis of Presentation</b></font></p>
<p><font face="Times New Roman, Times, serif">The accompanying unaudited condensed
  financial statements of Socket Mobile, Inc. (the "Company") have been prepared
  in accordance with accounting principles generally accepted in the United States
  for interim financial information and with the instructions to Form 10-Q and
  Article 8 of Regulation S-X. Accordingly, they do not include all of the information
  and footnotes required by accounting principles generally accepted in the United
  States for complete financial statements. In the opinion of management, all
  adjustments, consisting only of normal recurring accruals considered necessary
  for fair presentation have been included. Certain information and footnote disclosures
  normally included in financial statements prepared in accordance with accounting
  principles generally accepted in the United States have been condensed or omitted.
  These condensed financial statements should be read in conjunction with the
  audited financial statements and notes included in the Company's Annual Report
  on Form 10-K for the year ended December 31, 2008.</font></p>
<p><font face="Times New Roman, Times, serif"><b>NOTE 2 - Summary of Significant
  Accounting Policies</b></font></p>
<p><font face="Times New Roman, Times, serif"><i>Use of Estimates</i><br>
  The preparation of financial statements in conformity with accounting principles
  generally accepted in the United States requires management to make estimates
  and assumptions that affect the reported amounts of assets and liabilities,
  the disclosure of contingent assets and liabilities at the date of the financial
  statements, and the reported amounts of revenue and expense during the reporting
  period. Actual results could differ from those estimates, and such differences
  may be material to the financial statements.</font></p>
<p><font face="Times New Roman, Times, serif">The Company makes adjustments to
  the value of inventory based on estimates of potentially excess and obsolete
  inventory after considering forecasted demand and forecasted average selling
  prices. However, forecasts are subject to revisions, cancellations, and rescheduling.
  Actual demand will inevitably differ from anticipated demand, and such differences
  may have a material effect on the Company's financial statements. </font></p>
<p><font face="Times New Roman, Times, serif"><i>Recent Accounting Standards </i><br>
  In September 2006, the FASB issued Statement of Financial Accounting Standards
  No. 157, "Fair Value Measurements" ("SFAS 157"), which establishes a framework
  for measuring fair value and enhances disclosures about fair value measurements.
  In February 2008, the FASB issued FASB Staff Position No. FAS 157-2, "Effective
  Date of FASB Statement No. 157," which provides for a one year deferral of the
  effective date of SFAS 157 for non-financial assets and non-financial liabilities,
  except those that are recognized or disclosed in the financial statements at
  fair value on a recurring basis. The Company adopted the provisions of SFAS
  157 as required. The adoption of SFAS 157 did not have a material impact on
  the Company's financial statements. Under SFAS 157, the definition of fair value
  focuses on the price that would be received upon the sale of an asset or the
  amount paid to transfer a liability. The fair value measurement should reflect
  all of the assumptions that market participants would use in pricing the asset
  or liability. SFAS 157 establishes a three-level hierarchy to prioritize the
  inputs used in valuation techniques for fair value consisting of: 1) observable
  inputs that reflect quoted prices in active markets; 2) inputs other than quoted
  prices with observable market data; and 3) unobservable data. SFAS 157 requires
  disclosures detailing the extent to which the Company measures assets and liabilities
  at fair value, the methods and assumptions used to measure fair value and the
  effect of fair value measurements on earnings. </font></p>
<p><font face="Times New Roman, Times, serif"><br>
  </font></p>
<p align=center><font face="Times New Roman, Times, serif" size="3">4<br>
  </font>
<p align=center>
<hr width="100%">
<p align=left>
<p align=left><font face="Times New Roman, Times, serif" size="3"><a href="#TAB">(Index)</a></font>
<p align=center><font face="Times New Roman, Times, serif" size="3"><b>SOCKET
  MOBILE, INC.<br>
  NOTES TO CONDENSED FINANCIAL STATEMENTS<br>
  </b>(Unaudited) </font>
<p><font face="Times New Roman, Times, serif"><i>Cash Equivalents and Foreign
  Currency Contracts</i><br>
  The Company considers all highly liquid investments purchased with a maturity
  date of 90 days or less at date of purchase to be cash equivalents. At March
  31, 2009, all of the Company's cash and cash equivalents consisted of amounts
  held in demand and money market deposits in banks. The Company regularly enters
  into forward foreign currency contracts to reduce exposures related to rate
  changes in certain foreign currencies. The Company's forward foreign currency
  contracts are recorded at fair value and are included in accrued liabilities
  at March 31, 2009. At March 31, 2009, these derivative instruments were not
  designated as hedges, and accordingly, changes in the fair value of the forward
  foreign currency contracts were recorded in net income. At March 31, 2009, contracts
  with a notional amount of $429,790 to hedge Euros were recorded as a liability
  with a fair value of $5,640 based on quotations from financial institutions.
  </font></p>
<p><font face="Times New Roman, Times, serif"><i>Liquidity<br>
  </i>The Company's cash balances at March 31, 2009 were $1,418,252, including
  cash of $1,575,802 drawn against its bank lines of credit. The Company's cash
  balances at March 31, 2009, reflect a net increase of $570,011 in amounts drawn
  on its bank lines of credit and net cash provided by operating activities of
  $183,299, in the three months ended March 31, 2009. In February of 2009, the
  Company extended its bank line of credit agreement which will now expire on
  March 24, 2010. The Company's balance sheet has a current ratio (current assets
  divided by current liabilities) of 1.02 to 1.0, and no material long term debt.
  In the fourth quarter of 2008 the Company took actions to reduce its expenses,
  including a reduction of 12% in its worldwide workforce, to align its cost structure
  with current economic conditions in light of slowing business spending due to
  the current economic downturn. The Company took additional actions in the first
  quarter of 2009 to reduce expenses. The Company has the ability to further reduce
  expenses if necessary. The Company believes its existing cash, plus its ability
  to reduce costs, and its bank lines of credit will be sufficient to meet its
  funding requirements at least through March 31, 2010. The Company may find it
  necessary to raise additional capital to fund its operations, however, there
  can be no assurance that additional capital will be available on acceptable
  terms, if at all, and any such terms may be dilutive to existing stockholders.
  </font></p>
<p><font face="Times New Roman, Times, serif"><b>NOTE 3 - Inventories</b></font></p>
<p><font face="Times New Roman, Times, serif">Inventories consist principally
  of raw materials and sub-assemblies, which are stated at the lower of cost (first-in,
  first-out) or market.<br>
  <br>
  </font></p>
<table width="70%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10.0pt; margin-top: 6pt; ">
  <tr>
    <td align="left" valign="top" width="60%">
      <div style="margin-left: 10px; text-indent: -10px"></div>
    </td>
    <td width="1%">&nbsp;</td>
    <td align="center" valign="bottom" colspan="2" style="border-bottom: 1px solid #000000"><font face="Times New Roman, Times, serif" size="3">March
      31,<br>
      2009</font></td>
    <td align="center" valign="bottom" nowrap width="1%">&nbsp;</td>
    <td width="1%" align="center">&nbsp;</td>
    <td align="center" valign="bottom" colspan="2" style="border-bottom: 1px solid #000000"><font face="Times New Roman, Times, serif" size="3">December
      31,<br>
      2008</font></td>
  </tr>
  <tr valign="bottom">
    <td align="left" valign="top" width="60%" bgcolor="#cceeff">
      <div style="margin-left: 10px; text-indent: -10px"><font face="Times New Roman, Times, serif" size="3">
        Raw materials and sub-assemblies</font></div>
    </td>
    <td width="1%" bgcolor="#cceeff">&nbsp;</td>
    <td align="left" width="2%" bgcolor="#cceeff"><font face="Times New Roman, Times, serif" size="3">$</font></td>
    <td align="right" nowrap width="11%" bgcolor="#cceeff"><font face="Times New Roman, Times, serif" size="3">2,735,535</font></td>
    <td width="1%" bgcolor="#cceeff">&nbsp;</td>
    <td width="1%" bgcolor="#cceeff">&nbsp;</td>
    <td align="left" valign="bottom" width="2%" bgcolor="#cceeff"><font face="Times New Roman, Times, serif" size="3">$</font></td>
    <td align="right" nowrap width="11%" bgcolor="#cceeff"><font face="Times New Roman, Times, serif" size="3">3,760,615</font></td>
  </tr>
  <tr>
    <td align="left" valign="top" width="60%">
      <div style="margin-left: 10px; text-indent: -10px"><font face="Times New Roman, Times, serif" size="3">Finished
        goods</font></div>
    </td>
    <td width="1%"><font face="Times New Roman, Times, serif" size="3">&nbsp</font></td>
    <td align="left" valign="bottom" width="2%" style="border-bottom: 1px solid #000000"><font face="Times New Roman, Times, serif" size="3">&nbsp</font></td>
    <td align="right" valign="bottom" nowrap width="11%" style="border-bottom: 1px solid #000000"><font face="Times New Roman, Times, serif" size="3">185,850</font></td>
    <td align="left" valign="bottom" nowrap width="1%">&nbsp;</td>
    <td width="1%">&nbsp;</td>
    <td align="left" valign="bottom" width="2%" style="border-bottom: 1px solid #000000"><font face="Times New Roman, Times, serif" size="3">&nbsp</font></td>
    <td align="right" valign="bottom" nowrap width="11%" style="border-bottom: 1px solid #000000"><font face="Times New Roman, Times, serif" size="3">169,207</font></td>
  </tr>
  <tr valign="bottom">
    <td align="left" valign="top" width="60%" bgcolor="#cceeff">
      <div style="margin-left: 10px; text-indent: -10px"> </div>
    </td>
    <td width="1%" bgcolor="#cceeff">&nbsp;</td>
    <td align="left" width="2%" bgcolor="#cceeff" style="border-bottom: 3px double #000000"><font face="Times New Roman, Times, serif" size="3">$</font></td>
    <td align="right" nowrap width="11%" bgcolor="#cceeff" style="border-bottom: 3px double #000000"><font face="Times New Roman, Times, serif" size="3">2,921,385</font></td>
    <td width="1%" bgcolor="#cceeff">&nbsp;</td>
    <td width="1%" bgcolor="#cceeff">&nbsp;</td>
    <td align="left" valign="bottom" width="2%" bgcolor="#cceeff" style="border-bottom: 3px double #000000"><font face="Times New Roman, Times, serif" size="3">$</font></td>
    <td align="right" nowrap width="11%" bgcolor="#cceeff" style="border-bottom: 3px double #000000"><font face="Times New Roman, Times, serif" size="3">3,929,822</font></td>
  </tr>
</table>
<p><font face="Times New Roman, Times, serif"><br>
  <br>
  </font></p>
<p align=center><font face="Times New Roman, Times, serif" size="3">5<br>
  </font>
<p align=center>
<hr width="100%">
<p align=left>
<p align=left><font face="Times New Roman, Times, serif" size="3"><a href="#TAB">(Index)</a></font>
<p align=center><font face="Times New Roman, Times, serif" size="3"><b>SOCKET
  MOBILE, INC.<br>
  NOTES TO CONDENSED FINANCIAL STATEMENTS<br>
  </b>(Unaudited) </font>
<p align=left>&nbsp;
<p><font face="Times New Roman, Times, serif" size="3"><b>NOTE 4 - Bank Financing
  Arrangements</b></font></p>
<p><font face="Times New Roman, Times, serif">On December 31, 2008 the Company
  entered into a new credit facility agreement with Silicon Valley Bank. The credit
  facility allowed the Company to borrow up to $2,500,000 based on the level of
  qualified domestic and international receivables, up to a maximum of $1,000,000
  and $1,500,000, respectively. On February 19, 2009, the Company agreed with
  Silicon Valley Bank to extend the term of the existing credit facility to March
  24, 2010, and to reallocate the domestic and international line limits to $1,500,000
  and $1,000,000, respectively. Advances against the domestic line are calculated
  at 80% of receivables, except for receivables from distributors which are calculated
  at 60%. Advances against the international line are calculated at 80% against
  hedged receivables and 70% against non-hedged receivables, except for receivables
  from distributors which are calculated at 60%. Borrowings under the lines bear
  an annual interest rate equal to the greater of (i) the Lender's prime rate
  plus 2%, or (ii) 6%. The annual interest rate in effect at March 31, 2009 and
  December 31, 2008 was 6%. There is also a collateral handling fee of 0.7% per
  month. The applicable interest and fees are calculated based on the full amount
  of the accounts receivable provided as collateral, rather than on the actual
  amounts borrowed. The outstanding amounts borrowed under the domestic and international
  lines at March 31, 2009, were $979,269 and $596,533, respectively. Under the
  credit agreement the Company must maintain minimum liquidity based upon a quick
  ratio calculated at the end of each month. The quick ratio is equal to the quotient
  of (i) cash and cash equivalents plus net eligible accounts receivable, divided
  by (ii) current liabilities minus deferred revenues. The minimum quick ratio
  required at March 31, 2009 is 0.75 and increases to 0.9 at the end of April
  and May 2009, and to 1.0 thereafter. The Company was in compliance with the
  covenant requirement at March 31, 2009.</font></p>
<p><font face="Times New Roman, Times, serif">The outstanding amounts borrowed
  under the domestic and international lines at December 31, 2008, were $603,872
  and $401,919, respectively. In addition, under the agreement in effect at December
  31, 2008, the Company was required to maintain a minimum liquidity (cash plus
  availability under the lines) of at least $250,000. The Company was in compliance
  with the liquidity requirement at December 31, 2008.</font></p>
<p align=left><font face="Times New Roman, Times, serif"><b>NOTE 5 - Intangible
  Assets</b> </font>
<p><font face="Times New Roman, Times, serif">Intangible assets consist of a patent
  purchased in 2004 for $600,000 covering the design and functioning of plug-in
  bar code scanners, bar code imagers, and radio frequency identification products,
  which is being amortized on a straight line basis over its estimated life of
  ten years, and intangible assets of $570,750 remaining from a prior acquisition
  in 2000 consisting of developed software and technology with estimated lives
  at the time of acquisition of 8.5 years.</font></p>
<p align=left><font face="Times New Roman, Times, serif">Amortization of all intangible
  assets in each of the quarters ended March 31, 2009 and 2008, was $31,787. Intangible
  assets as of March 31, 2009 consisted of the following: </font>
<p align=left>&nbsp;
<table
style="FONT-SIZE: 10pt; BACKGROUND: #ffffff; COLOR: #000000; FONT-FAMILY: 'Times New Roman', Times"
cellspacing=0 cellpadding=0 width="70%" align=center border=0>
  <!-- Table Width Row -->
  <tr style="FONT-SIZE: 1pt" valign=bottom>
    <td width="65%">&nbsp;</td>
    <!-- colindex=01 type=maindata -->
    <td width="1%">&nbsp;</td>
    <!-- colindex=02 type=gutter -->
    <td align=right width="1%">&nbsp;</td>
    <!-- colindex=02 type=lead -->
    <td align=right width="8%">&nbsp;</td>
    <!-- colindex=02 type=body -->
    <td align=left width="1%">&nbsp;</td>
    <!-- colindex=02 type=hang1 -->
    <td width="2%">&nbsp;</td>
    <!-- colindex=03 type=gutter -->
    <td align=right width="1%">&nbsp;</td>
    <!-- colindex=03 type=lead -->
    <td align=right width="8%">&nbsp;</td>
    <!-- colindex=03 type=body -->
    <td align=left width="1%">&nbsp;</td>
    <!-- colindex=03 type=hang1 -->
    <td width="2%">&nbsp;</td>
    <!-- colindex=04 type=gutter -->
    <td align=right width="1%">&nbsp;</td>
    <!-- colindex=04 type=lead -->
    <td align=right width="8%">&nbsp;</td>
    <!-- colindex=04 type=body -->
    <td align=left width="1%">&nbsp;</td>
    <!-- colindex=04 type=hang1 --></tr>
  <tr style="FONT-SIZE: 8pt" valign=bottom align=middle>
    <td valign=bottom noWrap align=left>&nbsp;</td>
    <td>&nbsp;</td>
    <td  valign=bottom noWrap
    align=middle colspan=2>
      <div align="center"><font size="3" face="Times New Roman, Times, serif">Gross</font></div>
    </td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td valign=bottom noWrap
    align=middle colspan=2>
      <div align="center"><font size="3" face="Times New Roman, Times, serif">Accumulated</font></div>
    </td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td style="BORDER-BOTTOM: #000000 1px solid" noWrap colspan=2>
      <div align="center"></div>
    </td>
    <td>&nbsp;</td>
  </tr>
  <tr style="FONT-SIZE: 8pt" valign=bottom align=middle>
    <td valign=bottom noWrap align=left>
      <div
     ></div>
    </td>
    <td>&nbsp; </td>
    <td style="BORDER-BOTTOM: #000000 1px solid" valign=bottom noWrap
    align=middle colspan=2>
      <div align="center"><font size="3" face="Times New Roman, Times, serif">Assets</font></div>
    </td>
    <td align="right" nowrap style="border-bottom: 1px solid #000000">
      <div align="left"><font face="Times New Roman, Times, serif" size="3">&nbsp</font></div>
    </td>
    <td>&nbsp; </td>
    <td style="BORDER-BOTTOM: #000000 1px solid" valign=bottom noWrap
    align=middle colspan=2>
      <div align="center"><font size="3" face="Times New Roman, Times, serif">Amortization</font></div>
    </td>
    <td align="right" nowrap style="border-bottom: 1px solid #000000">
      <div align="left"><font face="Times New Roman, Times, serif" size="3">&nbsp</font></div>
    </td>
    <td>&nbsp; </td>
    <td style="BORDER-BOTTOM: #000000 1px solid" valign=bottom noWrap
    align=middle colspan=2>
      <div align="center"><font size="3" face="Times New Roman, Times, serif">Net</font></div>
    </td>
    <td align="right" nowrap style="border-bottom: 1px solid #000000">
      <div align="left"><font face="Times New Roman, Times, serif" size="3">&nbsp</font></div>
    </td>
  </tr>
  <tr style="BACKGROUND: #cceeff" valign=bottom>
    <td valign=bottom align=left>
      <div style="MARGIN-LEFT: 9pt; TEXT-INDENT: -9pt"><font size="3" face="Times New Roman, Times, serif">Patent</font></div>
    </td>
    <td>&nbsp; </td>
    <td valign=bottom noWrap align=left><font size="3" face="Times New Roman, Times, serif">$</font>
    </td>
    <td valign=bottom noWrap align=right><font size="3" face="Times New Roman, Times, serif">600,000</font></td>
    <td valign=bottom noWrap align=left>&nbsp; </td>
    <td>&nbsp; </td>
    <td valign=bottom noWrap align=left><font size="3" face="Times New Roman, Times, serif">$
      </font></td>
    <td noWrap align=right><font size="3" face="Times New Roman, Times, serif">285,000</font></td>
    <td valign=bottom noWrap align=left>&nbsp;</td>
    <td>&nbsp; </td>
    <td valign=bottom noWrap align=left><font size="3" face="Times New Roman, Times, serif">$</font>
    </td>
    <td noWrap align=right><font size="3" face="Times New Roman, Times, serif">315,000</font></td>
    <td valign=bottom noWrap align=left>&nbsp; </td>
  </tr>
  <tr  valign=bottom>
    <td valign=bottom noWrap align=left>
      <div style="MARGIN-LEFT: 9pt; TEXT-INDENT: -9pt"><font size="3" face="Times New Roman, Times, serif">Project
        management tools </font></div>
    </td>
    <td>&nbsp; </td>
    <td valign=bottom noWrap align=left style="border-bottom: 1px solid #000000"><font size="3" face="Times New Roman, Times, serif">&nbsp</font>
    </td>
    <td valign=bottom noWrap align=right style="border-bottom: 1px solid #000000"><font size="3" face="Times New Roman, Times, serif">570,750</font></td>
    <td align="right" nowrap style="border-bottom: 1px solid #000000">
      <div align="left"><font face="Times New Roman, Times, serif" size="3">&nbsp</font></div>
    </td>
    <td>&nbsp; </td>
    <td valign=bottom noWrap align=left style="border-bottom: 1px solid #000000"><font size="3" face="Times New Roman, Times, serif">&nbsp
      </font></td>
    <td noWrap align=right style="border-bottom: 1px solid #000000"><font size="3" face="Times New Roman, Times, serif">570,750</font></td>
    <td align="right" nowrap style="border-bottom: 1px solid #000000">
      <div align="left"><font face="Times New Roman, Times, serif" size="3">&nbsp</font></div>
    </td>
    <td>&nbsp; </td>
    <td valign=bottom noWrap align=left style="border-bottom: 1px solid #000000"><font size="3" face="Times New Roman, Times, serif">&nbsp</font>
    </td>
    <td noWrap align=right style="border-bottom: 1px solid #000000"><font size="3" face="Times New Roman, Times, serif">---</font></td>
    <td align="right" nowrap style="border-bottom: 1px solid #000000">
      <div align="left"><font face="Times New Roman, Times, serif" size="3">&nbsp</font></div>
    </td>
  </tr>
  <tr valign=bottom>
    <td valign=bottom noWrap align=left bgcolor="#cceeff">
      <div style="MARGIN-LEFT: 9pt; TEXT-INDENT: -9pt"><font style="FONT-SIZE: 10pt" size="3" face="Times New Roman, Times, serif">&nbsp;&nbsp;
        </font><font size="3" face="Times New Roman, Times, serif">Total intangible
        assets</font></div>
    </td>
    <td bgcolor="#cceeff">&nbsp; </td>
    <td valign=bottom noWrap align=left style="border-bottom: 3px double #000000" bgcolor="#cceeff" ><font size="3" face="Times New Roman, Times, serif">$</font>
    </td>
    <td valign=bottom noWrap align=right style="border-bottom: 3px double #000000" bgcolor="#cceeff"><font size="3" face="Times New Roman, Times, serif">1,170,750</font></td>
    <td align="left" style="border-bottom: 3px double #000000" width="1%" bgcolor="#cceeff">&nbsp;</td>
    <td bgcolor="#cceeff">&nbsp; </td>
    <td valign=bottom noWrap align=left style="border-bottom: 3px double #000000" bgcolor="#cceeff"><font size="3" face="Times New Roman, Times, serif">$
      </font></td>
    <td noWrap align=right style="border-bottom: 3px double #000000" bgcolor="#cceeff"><font size="3" face="Times New Roman, Times, serif">855,750</font></td>
    <td align="left" style="border-bottom: 3px double #000000" width="1%" bgcolor="#cceeff">&nbsp;</td>
    <td bgcolor="#cceeff">&nbsp; </td>
    <td valign=bottom noWrap align=left style="border-bottom: 3px double #000000" bgcolor="#cceeff"><font size="3" face="Times New Roman, Times, serif">$</font>
    </td>
    <td noWrap align=right style="border-bottom: 3px double #000000" bgcolor="#cceeff"><font size="3" face="Times New Roman, Times, serif">315,000</font></td>
    <td align="left" style="border-bottom: 3px double #000000" width="1%" bgcolor="#cceeff">&nbsp;</td>
  </tr>
</table>
<font face="Times New Roman, Times, serif"><br>
</font>
<p><font face="Times New Roman, Times, serif"><b><br>
  </b></font></p>
<p align=center><font face="Times New Roman, Times, serif" size="3">6<br>
  </font>
<p align=center>
<hr width="100%">
<p align=left>
<p align=left><font face="Times New Roman, Times, serif" size="3"><a href="#TAB">(Index)</a></font>
<p align=center><font face="Times New Roman, Times, serif" size="3"><b>SOCKET
  MOBILE, INC.<br>
  NOTES TO CONDENSED FINANCIAL STATEMENTS<br>
  </b>(Unaudited) </font>
<p><font face="Times New Roman, Times, serif">Based on definite lived intangible
  assets recorded at March 31, 2009, and assuming no subsequent impairment of
  the underlying assets, the annual amortization expense is expected to be as
  follows:<br>
  <br>
  </font></p>
<table style="MARGIN-TOP: 3pt; FONT-SIZE: 10pt" cellspacing=0 cellpadding=0
width="60%" align=center border=0>
  <tr>
    <td noWrap align=left width="71%" style="border-bottom: 1px solid #000000" ><font size="3" face="Times New Roman, Times, serif">
      Year</font></td>
    <td width="4%">&nbsp;</td>
    <td colspan="4" style="border-bottom: 1px solid #000000">
      <div align="center"><font size="3" face="Times New Roman, Times, serif">Amount</font></div>
    </td>
  </tr>
  <tr valign=bottom>
    <td valign=top align=left bgcolor="#cceeff" width="71%">
      <div style="MARGIN-LEFT: 10px; TEXT-INDENT: -10px"><font size="3" face="Times New Roman, Times, serif">2009
        (nine months remaining)</font></div>
    </td>
    <td bgcolor="#cceeff" width="4%">&nbsp;</td>
    <td bgcolor="#cceeff" width="3%" align="right"><font size="3" face="Times New Roman, Times, serif">$</font></td>
    <td valign=bottom align=right bgcolor="#cceeff" colspan="2"><font size="3" face="Times New Roman, Times, serif">45,000</font></td>
    <td valign=bottom noWrap align=left bgcolor="#cceeff" width="10%">&nbsp;</td>
  </tr>
  <tr>
    <td valign=top align=left width="71%">
      <div style="MARGIN-LEFT: 10px; TEXT-INDENT: -10px"><font size="3" face="Times New Roman, Times, serif">2010</font></div>
    </td>
    <td width="4%">&nbsp;</td>
    <td width="3%">&nbsp;</td>
    <td valign=bottom align=right colspan="2"><font size="3" face="Times New Roman, Times, serif">60,000</font></td>
    <td width="10%">&nbsp;</td>
  </tr>
  <tr valign=bottom>
    <td valign=top align=left bgcolor="#cceeff" width="71%">
      <div style="MARGIN-LEFT: 10px; TEXT-INDENT: -10px"><font size="3" face="Times New Roman, Times, serif">2011</font></div>
    </td>
    <td bgcolor="#cceeff" width="4%">&nbsp;</td>
    <td bgcolor="#cceeff" width="3%">&nbsp;</td>
    <td valign=bottom align=right bgcolor="#cceeff" colspan="2"><font size="3" face="Times New Roman, Times, serif">60,000</font></td>
    <td valign=bottom noWrap align=left bgcolor="#cceeff" width="10%">&nbsp;</td>
  </tr>
  <tr valign=bottom>
    <td valign=top align=left width="71%">
      <div style="MARGIN-LEFT: 10px; TEXT-INDENT: -10px"><font size="3" face="Times New Roman, Times, serif">2012</font></div>
    </td>
    <td width="4%">&nbsp;</td>
    <td width="3%">&nbsp;</td>
    <td valign=bottom align=right colspan="2"><font size="3" face="Times New Roman, Times, serif">60,000</font></td>
    <td valign=bottom noWrap align=left width="10%">&nbsp;</td>
  </tr>
  <tr valign=bottom>
    <td valign=top align=left bgcolor="#cceeff" width="71%">
      <div style="MARGIN-LEFT: 10px; TEXT-INDENT: -10px"><font size="3" face="Times New Roman, Times, serif">2013</font></div>
    </td>
    <td bgcolor="#cceeff" width="4%">&nbsp;</td>
    <td bgcolor="#cceeff" width="3%">&nbsp;</td>
    <td valign=bottom align=right bgcolor="#cceeff" colspan="2"><font size="3" face="Times New Roman, Times, serif">60,000</font></td>
    <td valign=bottom noWrap align=left bgcolor="#cceeff" width="10%">&nbsp;</td>
  </tr>
  <tr valign=bottom>
    <td valign=top align=left width="71%">
      <div style="MARGIN-LEFT: 10px; TEXT-INDENT: -10px"><font size="3" face="Times New Roman, Times, serif">2014</font></div>
    </td>
    <td width="4%">&nbsp;</td>
    <td width="3%" style="border-bottom: 1px solid #000000"><font size="3" face="Times New Roman, Times, serif">&nbsp</font></td>
    <td valign=bottom align=right colspan="2" style="border-bottom: 1px solid #000000"><font size="3" face="Times New Roman, Times, serif">30,000</font></td>
    <td valign=bottom noWrap align=left width="10%" style="border-bottom: 1px solid #000000"><font size="3" face="Times New Roman, Times, serif">&nbsp</font></td>
  </tr>
  <tr valign=bottom bgcolor="#cceeff">
    <td valign=top align=left width="71%">
      <div style="MARGIN-LEFT: 10px; TEXT-INDENT: -10px"></div>
    </td>
    <td width="4%">&nbsp;</td>
    <td width="3%" align="right" style="border-bottom: 3px double #000000"><font size="3" face="Times New Roman, Times, serif">$</font></td>
    <td valign=bottom align=right colspan="2" style="border-bottom: 3px double #000000"><font size="3" face="Times New Roman, Times, serif">315,000</font></td>
    <td valign=bottom noWrap align=left width="10%" style="border-bottom: 3px double #000000"><font size="3" face="Times New Roman, Times, serif">&nbsp</font></td>
  </tr>
</table>
<p><font face="Times New Roman, Times, serif"><b><br>
  NOTE 6 - Segment Information</b></font></p>
<p><font face="Times New Roman, Times, serif"> The Company operates in one segment-mobile
  systems solutions for businesses. Mobile systems solutions typically consist
  of a handheld computer, data collection and connectivity peripherals, and third-party
  vertical applications software. The Company markets its products in the United
  States and foreign countries through its sales personnel, vertical industry
  partners, and distributors. Revenues for the geographic areas for the three
  months ended March 31, 2009 and 2008 are as follows:<br>
  <br>
  </font></p>
<table
style="FONT-SIZE: 10pt; BACKGROUND: #ffffff; COLOR: #000000; FONT-FAMILY: 'Times New Roman', Times"
cellspacing=0 cellpadding=0 width="60%" align=center border=0>
  <!-- Table Width Row -->
  <tr style="FONT-SIZE: 1pt" valign=bottom>
    <td width="65%">&nbsp;</td>
    <!-- colindex=01 type=maindata -->
    <td width="1%">&nbsp;</td>
    <!-- colindex=02 type=gutter -->
    <td align=right width="1%">&nbsp;</td>
    <!-- colindex=02 type=lead -->
    <td align=right width="8%">&nbsp;</td>
    <!-- colindex=02 type=body -->
    <td align=left width="1%">&nbsp;</td>
    <!-- colindex=02 type=hang1 -->
    <td width="2%">&nbsp;</td>
    <!-- colindex=03 type=gutter -->
    <td align=right width="1%">&nbsp;</td>
    <!-- colindex=03 type=lead -->
    <td align=right width="8%">&nbsp;</td>
    <!-- colindex=03 type=body -->
    <td align=left width="1%">&nbsp;</td>
    <!-- colindex=03 type=hang1 --> <!-- colindex=04 type=gutter --> <!-- colindex=04 type=lead -->
    <!-- colindex=04 type=body --> <!-- colindex=04 type=hang1 --></tr>
  <tr style="FONT-SIZE: 8pt" valign=bottom align=middle>
    <td valign=bottom noWrap align=left height="13">&nbsp; </td>
    <td height="13">&nbsp; </td>
    <td valign=bottom noWrap align=middle colspan=7 height="13" >
      <div align="center"><font size="3" face="Times New Roman, Times, serif">Three
        Months Ended March 31, </font></div>
    </td>
  </tr>
  <tr style="FONT-SIZE: 8pt" valign=bottom align=middle>
    <td valign=bottom noWrap align=left>
      <div
      ><font size="3" face="Times New Roman, Times, serif">Revenues:</font></div>
    </td>
    <td>&nbsp; </td>
    <td style="BORDER-BOTTOM: #000000 1px solid" valign=bottom noWrap
    align=middle colspan=2>
      <div align="center"><font size="3" face="Times New Roman, Times, serif">2009</font></div>
    </td>
    <td align="right" nowrap style="border-bottom: 1px solid #000000">
      <div align="left"><font face="Times New Roman, Times, serif" size="3">&nbsp</font></div>
    </td>
    <td>&nbsp; </td>
    <td style="BORDER-BOTTOM: #000000 1px solid" valign=bottom noWrap
    align=middle colspan=2>
      <div align="center"><font size="3" face="Times New Roman, Times, serif">2008</font></div>
    </td>
    <td align="right" nowrap style="border-bottom: 1px solid #000000">
      <div align="left"><font face="Times New Roman, Times, serif" size="3">&nbsp</font></div>
    </td>
  </tr>
  <tr style="BACKGROUND: #cceeff" valign=bottom>
    <td valign=bottom align=left>
      <div style="MARGIN-LEFT: 9pt; TEXT-INDENT: -9pt"><font size="3" face="Times New Roman, Times, serif">United
        States</font></div>
    </td>
    <td>&nbsp; </td>
    <td valign=bottom noWrap align=left><font size="3" face="Times New Roman, Times, serif">$</font>
    </td>
    <td valign=bottom noWrap align=right><font size="3" face="Times New Roman, Times, serif">2,753,346</font></td>
    <td valign=bottom noWrap align=left>&nbsp; </td>
    <td>&nbsp; </td>
    <td valign=bottom noWrap align=left><font size="3" face="Times New Roman, Times, serif">$
      </font></td>
    <td noWrap align=right><font size="3" face="Times New Roman, Times, serif">3,763,864</font></td>
    <td valign=bottom noWrap align=left>&nbsp; </td>
  </tr>
  <tr valign=bottom>
    <td valign=bottom noWrap align=left>
      <div style="MARGIN-LEFT: 9pt; TEXT-INDENT: -9pt"><font size="3" face="Times New Roman, Times, serif">Europe</font></div>
    </td>
    <td>&nbsp; </td>
    <td valign=bottom noWrap align=left>&nbsp; </td>
    <td valign=bottom noWrap align=right><font size="3" face="Times New Roman, Times, serif">1,536,957</font></td>
    <td valign=bottom noWrap align=left>&nbsp;</td>
    <td>&nbsp; </td>
    <td valign=bottom noWrap align=left>&nbsp;</td>
    <td noWrap align=right><font size="3" face="Times New Roman, Times, serif">1,668,491</font></td>
    <td valign=bottom noWrap align=left>&nbsp;</td>
  </tr>
  <tr style="BACKGROUND: #cceeff" valign=bottom>
    <td valign=bottom noWrap align=left>
      <div style="MARGIN-LEFT: 9pt; TEXT-INDENT: -9pt"><font size="3" face="Times New Roman, Times, serif">Asia
        and rest of world</font></div>
    </td>
    <td>&nbsp; </td>
    <td valign=bottom noWrap align=left style="border-bottom: 1px solid #000000"><font size="3" face="Times New Roman, Times, serif">&nbsp</font>
    </td>
    <td valign=bottom noWrap align=right style="border-bottom: 1px solid #000000"><font size="3" face="Times New Roman, Times, serif">481,587</font></td>
    <td align="right" nowrap style="border-bottom: 1px solid #000000" bgcolor="#cceeff">
      <div align="left"><font face="Times New Roman, Times, serif" size="3">&nbsp</font></div>
    </td>
    <td>&nbsp; </td>
    <td valign=bottom noWrap align=left style="border-bottom: 1px solid #000000"><font size="3" face="Times New Roman, Times, serif">&nbsp
      </font></td>
    <td noWrap align=right style="border-bottom: 1px solid #000000"><font size="3" face="Times New Roman, Times, serif">737,514</font></td>
    <td align="right" nowrap style="border-bottom: 1px solid #000000" bgcolor="#cceeff">
      <div align="left"><font face="Times New Roman, Times, serif" size="3">&nbsp</font></div>
    </td>
  </tr>
  <tr valign=bottom>
    <td valign=bottom noWrap align=left>
      <div style="MARGIN-LEFT: 9pt; TEXT-INDENT: -9pt"><font size="3" face="Times New Roman, Times, serif"><font style="FONT-SIZE: 10pt" size="2">&nbsp;&nbsp;
        &nbsp;&nbsp; </font>Total Revenues</font></div>
    </td>
    <td>&nbsp; </td>
    <td valign=bottom noWrap align=left style="border-bottom: 3px double #000000"><font size="3" face="Times New Roman, Times, serif">$</font>
    </td>
    <td valign=bottom noWrap align=right style="border-bottom: 3px double #000000"><font size="3" face="Times New Roman, Times, serif">4,771,890</font></td>
    <td align="left" style="border-bottom: 3px double #000000" width="1%">&nbsp;</td>
    <td>&nbsp; </td>
    <td valign=bottom noWrap align=left style="border-bottom: 3px double #000000"><font size="3" face="Times New Roman, Times, serif">$
      </font></td>
    <td noWrap align=right style="border-bottom: 3px double #000000"><font size="3" face="Times New Roman, Times, serif">6,169,869</font></td>
    <td align="left" style="border-bottom: 3px double #000000" width="1%">&nbsp;</td>
  </tr>
</table>
<p><font face="Times New Roman, Times, serif"><br>
  Export revenues are attributable to countries based on the location of the Company's
  customers. The Company does not hold long-lived assets in foreign locations.</font></p>
<p><font face="Times New Roman, Times, serif">Major customers who accounted for
  at least 10% of the Company's total revenues were as follows:<br>
  <br>
  </font></p>
<table
style="FONT-SIZE: 10pt; BACKGROUND: #ffffff; COLOR: #000000; FONT-FAMILY: 'Times New Roman', Times"
cellspacing=0 cellpadding=0 width="60%" align=center border=0>
  <!-- Table Width Row -->
  <tr style="FONT-SIZE: 1pt" valign=bottom>
    <td width="51%">&nbsp;</td>
    <!-- colindex=01 type=maindata -->
    <td width="9%">&nbsp;</td>
    <!-- colindex=02 type=gutter -->
    <td align=right width="11%">&nbsp;</td>
    <!-- colindex=02 type=lead -->
    <td align=right width="6%">&nbsp;</td>
    <!-- colindex=02 type=body -->
    <td align=left width="4%">&nbsp;</td>
    <!-- colindex=02 type=hang1 -->
    <td width="2%">&nbsp;</td>
    <!-- colindex=03 type=gutter -->
    <td align=right width="9%">&nbsp;</td>
    <!-- colindex=03 type=lead -->
    <td align=right width="8%">&nbsp;</td>
    <!-- colindex=03 type=body --> <!-- colindex=03 type=hang1 --> <!-- colindex=04 type=gutter -->
    <!-- colindex=04 type=lead --> <!-- colindex=04 type=body --> <!-- colindex=04 type=hang1 --></tr>
  <tr style="FONT-SIZE: 8pt" valign=bottom align=middle>
    <td valign=bottom noWrap align=left height="16" colspan="2">&nbsp; </td>
    <td valign=bottom noWrap align=middle colspan=6 height="16" >
      <div align="center"><font size="3" face="Times New Roman, Times, serif">Three
        Months Ended March 31, </font></div>
    </td>
  </tr>
  <tr style="FONT-SIZE: 8pt" valign=bottom align=middle>
    <td valign=bottom noWrap align=left colspan="2">
      <div
     ></div>
    </td>
    <td style="BORDER-BOTTOM: #000000 1px solid" valign=bottom noWrap
    align=middle colspan="2">
      <div align="center"><font size="3" face="Times New Roman, Times, serif">2009</font></div>
    </td>
    <td width="1%">&nbsp; </td>
    <td style="BORDER-BOTTOM: #000000 1px solid" valign=bottom noWrap
    align=middle colspan="3">
      <div align="center"></div>
      <div align="center"><font size="3" face="Times New Roman, Times, serif">2008</font></div>
    </td>
  </tr>
  <tr style="BACKGROUND: #cceeff" valign=bottom>
    <td valign=bottom align=left colspan="2">
      <div style="MARGIN-LEFT: 9pt; TEXT-INDENT: -9pt"><font size="3" face="Times New Roman, Times, serif">Tech
        Data</font></div>
    </td>
    <td noWrap align=right width="9%"><font size="3" face="Times New Roman, Times, serif">17</font></td>
    <td noWrap align=left width="8%"><font size="3" face="Times New Roman, Times, serif">%</font>
    </td>
    <td width="1%">&nbsp; </td>
    <td valign=bottom noWrap align=left width="1%">&nbsp;</td>
    <td noWrap align=right width="9%"><font size="3" face="Times New Roman, Times, serif">17</font></td>
    <td valign=bottom noWrap align=left width="8%"><font size="3" face="Times New Roman, Times, serif">%</font>
    </td>
  </tr>
  <tr valign=bottom>
    <td valign=bottom noWrap align=left colspan="2">
      <div style="MARGIN-LEFT: 9pt; TEXT-INDENT: -9pt"><font size="3" face="Times New Roman, Times, serif">Ingram
        Micro</font></div>
    </td>
    <td noWrap align=right width="9%"><font size="3" face="Times New Roman, Times, serif">23</font></td>
    <td noWrap align=left width="8%"><font size="3" face="Times New Roman, Times, serif">%</font></td>
    <td width="1%">&nbsp; </td>
    <td valign=bottom noWrap align=left width="1%">&nbsp;</td>
    <td noWrap align=right width="9%"><font size="3" face="Times New Roman, Times, serif">11</font></td>
    <td valign=bottom noWrap align=left width="8%"><font size="3" face="Times New Roman, Times, serif">%</font></td>
  </tr>
  <tr valign=bottom>
    <td valign=bottom noWrap align=left colspan="2" bgcolor="#cceeff">
      <div style="MARGIN-LEFT: 9pt; TEXT-INDENT: -9pt"><font size="3" face="Times New Roman, Times, serif">Intermec
        Technologies Corporation</font></div>
    </td>
    <td noWrap align=right width="9%" bgcolor="#cceeff"><font size="3" face="Times New Roman, Times, serif">*</font></td>
    <td noWrap align=left width="8%" bgcolor="#cceeff">&nbsp;</td>
    <td width="1%" bgcolor="#cceeff">&nbsp; </td>
    <td valign=bottom noWrap align=left width="1%" bgcolor="#cceeff">&nbsp;</td>
    <td noWrap align=right width="9%" bgcolor="#cceeff"><font size="3" face="Times New Roman, Times, serif">15</font></td>
    <td valign=bottom noWrap align=left width="8%" bgcolor="#cceeff"><font size="3" face="Times New Roman, Times, serif">%</font></td>
  </tr>
  <tr valign=bottom>
    <td valign=bottom noWrap align=left colspan="8" height="26">
      <div style="MARGIN-LEFT: 9pt; TEXT-INDENT: -9pt"><font size="2" face="Times New Roman, Times, serif">_____________________________________________<br>
        * Customer accounts for less than 10% of total revenues for the period</font></div>
    </td>
  </tr>
</table>
<p>&nbsp;</p>
<p align=center><font face="Times New Roman, Times, serif" size="3">7<br>
  </font>
<p align=center>
<hr width="100%">
<p align=left>
<p align=left><font face="Times New Roman, Times, serif" size="3"><a href="#TAB">(Index)</a></font>
<p align=center><font face="Times New Roman, Times, serif" size="3"><b>SOCKET
  MOBILE, INC.<br>
  NOTES TO CONDENSED FINANCIAL STATEMENTS<br>
  </b>(Unaudited) </font>
<p><font face="Times New Roman, Times, serif"><b>NOTE 7 - Stock-Based Compensation</b></font></p>
<p><font face="Times New Roman, Times, serif">The Company accounts for share-based
  awards in accordance with SFAS 123R. SFAS 123R requires all share-based awards
  to employees, including grants of employee stock options, to be recognized in
  the financial statements based on their fair values. Under SFAS 123R, the Company
  uses a binomial lattice valuation model to estimate the fair value of stock
  option grants made on or after January 1, 2006. The binomial lattice model incorporates
  calculations for expected volatility, risk-free interest rates, employee exercise
  patterns and post-vesting employment termination behavior, and these factors
  affect the estimate of the fair value of the Company's stock option grants.
  The Company uses a Black-Scholes valuation model for options granted prior to
  January 1, 2006.</font></p>
<p><font face="Times New Roman, Times, serif">Total stock-based compensation expense
  recognized in our statements of income for the three months ended March 31,
  2009 and 2008 is shown below:<br>
  <br>
  </font></p>
<table width="60%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10.0pt; margin-top: 6pt; ">
  <tr>
    <td align="left" nowrap width="72%" height="21">&nbsp;</td>
    <td width="1%" height="21">&nbsp;</td>
    <td colspan="7" align="center" nowrap height="21" >
      <div align="center" class="border"><font size="3" face="Times New Roman, Times, serif">Three
        Months Ended March 31,</font></div>
    </td>
  </tr>
  <tr class="border">
    <td align="left" valign="top" width="72%" height="13">
      <div style="margin-left: 10px; text-indent: -10px">
        <div align="left"><font size="3" face="Times New Roman, Times, serif">Income
          Statement Classification</font></div>
      </div>
    </td>
    <td width="1%" class="border" height="13">&nbsp;</td>
    <td align="center" valign="bottom" colspan="3" class="border" style="border-bottom: 1px solid #000000" height="13"><font face="Times New Roman, Times, serif" size="3">&nbsp;&nbsp;
      2009</font></td>
    <td width="1%" class="border" height="13">&nbsp;</td>
    <td align="center" valign="bottom" colspan="3" class="border" height="13" style="border-bottom: 1px solid #000000"><font face="Times New Roman, Times, serif" size="3">&nbsp;&nbsp;2008</font></td>
  </tr>
  <tr valign="bottom">
    <td align="left" valign="top" width="72%" bgcolor="#cceeff">
      <div style="margin-left: 10px; text-indent: -10px"><font style="FONT-SIZE: 10pt" size="3" face="Times New Roman, Times, serif">&nbsp;&nbsp;
        </font><font size="3" face="Times New Roman, Times, serif">Cost of revenues</font></div>
    </td>
    <td width="1%" bgcolor="#cceeff">&nbsp;</td>
    <td align="left" width="3%" bgcolor="#cceeff"><font size="3" face="Times New Roman, Times, serif">$</font></td>
    <td align="right" nowrap width="7%" bgcolor="#cceeff"><font size="3" face="Times New Roman, Times, serif">11,349</font></td>
    <td width="2%" bgcolor="#cceeff">&nbsp;</td>
    <td width="1%" bgcolor="#cceeff">&nbsp;</td>
    <td align="left" valign="bottom" width="2%" bgcolor="#cceeff"><font size="3" face="Times New Roman, Times, serif">$</font></td>
    <td align="right" nowrap width="7%" bgcolor="#cceeff"><font size="3" face="Times New Roman, Times, serif">9,196</font></td>
    <td align="left" valign="bottom" nowrap width="2%" bgcolor="#cceeff">&nbsp;</td>
  </tr>
  <tr>
    <td align="left" valign="top" width="72%">
      <div style="margin-left: 10px; text-indent: -10px"><font style="FONT-SIZE: 10pt" size="3" face="Times New Roman, Times, serif">&nbsp;&nbsp;
        </font><font size="3" face="Times New Roman, Times, serif">Research and
        development</font></div>
    </td>
    <td width="1%">&nbsp;</td>
    <td align="left" width="3%" valign="bottom" >&nbsp;</td>
    <td align="right" valign="bottom" nowrap width="7%" ><font size="3" face="Times New Roman, Times, serif">31,697</font></td>
    <td align="left" valign="bottom" nowrap width="2%" >&nbsp;</td>
    <td width="1%">&nbsp;</td>
    <td align="left" valign="bottom" width="2%" >&nbsp;</td>
    <td align="right" valign="bottom" nowrap width="7%" ><font size="3" face="Times New Roman, Times, serif">57,554</font></td>
    <td align="left" valign="bottom" nowrap width="2%" >&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td align="left" valign="top" width="72%" bgcolor="#cceeff">
      <div style="margin-left: 10px; text-indent: -10px"><font style="FONT-SIZE: 10pt" size="3" face="Times New Roman, Times, serif">&nbsp;&nbsp;
        </font><font size="3" face="Times New Roman, Times, serif">Sales and marketing</font></div>
    </td>
    <td width="1%" bgcolor="#cceeff">&nbsp;</td>
    <td align="left" width="3%" bgcolor="#cceeff" >&nbsp;</td>
    <td align="right" nowrap width="7%" bgcolor="#cceeff" ><font size="3" face="Times New Roman, Times, serif">56,973</font></td>
    <td width="2%" bgcolor="#cceeff" >&nbsp;</td>
    <td width="1%" bgcolor="#cceeff">&nbsp;</td>
    <td align="left" valign="bottom" width="2%" bgcolor="#cceeff" >&nbsp;</td>
    <td align="right" nowrap width="7%" bgcolor="#cceeff" ><font size="3" face="Times New Roman, Times, serif">67,102</font></td>
    <td align="left" valign="bottom" nowrap width="2%" bgcolor="#cceeff" >&nbsp;</td>
  </tr>
  <tr>
    <td align="left" valign="top" width="72%">
      <div style="margin-left: 10px; text-indent: -10px"><font style="FONT-SIZE: 10pt" size="3" face="Times New Roman, Times, serif">&nbsp;&nbsp;
        </font><font size="3" face="Times New Roman, Times, serif">General and
        administrative</font></div>
    </td>
    <td width="1%">&nbsp;</td>
    <td valign=bottom noWrap align=left style="border-bottom: 1px solid #000000"><font size="3" face="Times New Roman, Times, serif">&nbsp</font>
    </td>
    <td align="right" valign="bottom" nowrap width="7%" style="border-bottom: 1px solid #000000"><font size="3" face="Times New Roman, Times, serif">52,501</font></td>
    <td align="right" valign="bottom" nowrap width="2%" style="border-bottom: 1px solid #000000"><font size="3" face="Times New Roman, Times, serif">&nbsp</font></td>
    <td width="1%">&nbsp;</td>
    <td valign=bottom noWrap align=left style="border-bottom: 1px solid #000000"><font size="3" face="Times New Roman, Times, serif">&nbsp</font>
    </td>
    <td align="right" valign="bottom" nowrap width="7%" style="border-bottom: 1px solid #000000"><font size="3" face="Times New Roman, Times, serif">85,214</font></td>
    <td align="right" valign="bottom" nowrap width="2%" style="border-bottom: 1px solid #000000"><font size="3" face="Times New Roman, Times, serif">&nbsp</font></td>
  </tr>
  <tr valign="bottom">
    <td align="left" valign="top" width="72%" bgcolor="#cceeff">
      <div style="margin-left: 10px; text-indent: -10px"><font style="FONT-SIZE: 10pt" size="3" face="Times New Roman, Times, serif">&nbsp;&nbsp;
        </font><font size="3" face="Times New Roman, Times, serif">Total</font></div>
    </td>
    <td width="1%" bgcolor="#cceeff">&nbsp;</td>
    <td align="left" width="3%" bgcolor="#cceeff" style="border-bottom: 3px double #000000"><font size="3" face="Times New Roman, Times, serif">$</font></td>
    <td align="right" nowrap width="7%" bgcolor="#cceeff" style="border-bottom: 3px double #000000"><font size="3" face="Times New Roman, Times, serif">152,520</font></td>
    <td align="left" style="border-bottom: 3px double #000000" width="2%" bgcolor="#cceeff">&nbsp;</td>
    <td width="1%" bgcolor="#cceeff">&nbsp;</td>
    <td align="left" valign="bottom" width="2%" bgcolor="#cceeff" style="border-bottom: 3px double #000000"><font size="3" face="Times New Roman, Times, serif">$</font></td>
    <td align="right" nowrap width="7%" bgcolor="#cceeff" style="border-bottom: 3px double #000000"><font size="3" face="Times New Roman, Times, serif">219,066</font></td>
    <td align="left" style="border-bottom: 3px double #000000" width="2%" bgcolor="#cceeff">&nbsp;</td>
  </tr>
</table>
<p><font face="Times New Roman, Times, serif"><br>
  The decline in stock-based compensation expense in the first quarter of 2009
  compared to the same period one year ago, reflects older grants with higher
  valuations, compared to more current grants, becoming fully expensed. </font></p>
<p><font face="Times New Roman, Times, serif">The weighted average per share fair
  value of stock options granted during the three months ended March 31, 2009
  and 2008 was estimated at $1.35 and $4.19, respectively. At March 31, 2009,
  options issued to employees for 1,175,945 shares were outstanding, of which
  747,156 were exercisable. At March 31, 2008, options issued to employees for
  1,083,075 shares were outstanding, of which 749,519 were exercisable. As of
  March 31, 2009, the total remaining unrecognized compensation costs related
  to unvested stock options was approximately $1.16 million, which will be amortized
  over the weighted average remaining requisite period of 2.7 years.</font></p>
<p><font face="Times New Roman, Times, serif">Weighted average assumptions for
  stock options granted during the three months ended March 31, 2009 and 2008
  are shown below:<br>
  <br>
  </font></p>
<table width="60%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10.0pt; margin-top: 6pt; ">
  <tr class="border">
    <td align="left" valign="top" width="70%" height="19">&nbsp;</td>
    <td width="1%" class="border" height="19">&nbsp;</td>
    <td colspan="7" align="center" nowrap height="21" >
      <div align="center"><font size="3" face="Times New Roman, Times, serif">Three
        Months Ended March 31,</font></div>
    </td>
  </tr>
  <tr class="border">
    <td align="left" valign="top" width="70%" height="16">
      <div style="margin-left: 10px; text-indent: -10px">
        <div align="center" ></div>
      </div>
    </td>
    <td width="1%" class="border" height="16">&nbsp;</td>
    <td align="right" valign="bottom" nowrap colspan="2" height="16">
      <div align="center" style="border-bottom: 1px solid #000000" ><font size="3" face="Times New Roman, Times, serif">2009</font></div>
    </td>
    <td width="1%"class="border" height="16"><font face="Times New Roman, Times, serif" size="3">&nbsp
      </font></td>
    <td align="right" valign="bottom" nowrap colspan="2" height="16">
      <div align="center" style="border-bottom: 1px solid #000000"><font size="3" face="Times New Roman, Times, serif">2008</font></div>
    </td>
  </tr>
  <tr valign="bottom">
    <td align="left" valign="top" width="70%" bgcolor="#cceeff">
      <div style="margin-left: 10px; text-indent: -10px"><font size="3" face="Times New Roman, Times, serif">
        Risk-free interest rate (%) </font></div>
    </td>
    <td width="1%" bgcolor="#cceeff">&nbsp;</td>
    <td align="right" nowrap width="9%" bgcolor="#cceeff"><font size="3" face="Times New Roman, Times, serif">2.78</font></td>
    <td width="5%" bgcolor="#cceeff"><font size="3" face="Times New Roman, Times, serif">%</font></td>
    <td width="1%" bgcolor="#cceeff">&nbsp;</td>
    <td align="right" valign="bottom" nowrap width="9%" bgcolor="#cceeff"><font size="3" face="Times New Roman, Times, serif">3.84</font></td>
    <td align="left" valign="bottom" nowrap width="5%" bgcolor="#cceeff"><font size="3" face="Times New Roman, Times, serif">%</font></td>
  </tr>
  <tr>
    <td align="left" valign="top" width="70%">
      <div style="margin-left: 10px; text-indent: -10px"><font size="3" face="Times New Roman, Times, serif">Dividend
        yield</font></div>
    </td>
    <td width="1%">&nbsp;</td>
    <td align="right" valign="bottom" nowrap width="9%"><font size="3" face="Times New Roman, Times, serif">---</font></td>
    <td align="left" valign="bottom" nowrap width="5%">&nbsp;</td>
    <td width="1%">&nbsp;</td>
    <td align="right" valign="bottom" nowrap width="9%"><font size="3" face="Times New Roman, Times, serif">---</font></td>
    <td align="left" valign="bottom" nowrap width="5%">&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td align="left" valign="top" width="70%" bgcolor="#cceeff">
      <div style="margin-left: 10px; text-indent: -10px"><font size="3" face="Times New Roman, Times, serif">
        Volatility factor</font></div>
    </td>
    <td width="1%" bgcolor="#cceeff">&nbsp;</td>
    <td align="right" nowrap width="9%" bgcolor="#cceeff"><font size="3" face="Times New Roman, Times, serif">0.93</font></td>
    <td width="5%" bgcolor="#cceeff">&nbsp;</td>
    <td width="1%" bgcolor="#cceeff">&nbsp;</td>
    <td align="right" valign="bottom" nowrap width="9%" bgcolor="#cceeff"><font size="3" face="Times New Roman, Times, serif">0.68</font></td>
    <td align="left" valign="bottom" nowrap width="5%" bgcolor="#cceeff">&nbsp;</td>
  </tr>
  <tr>
    <td align="left" valign="top" width="70%">
      <div style="margin-left: 10px; text-indent: -10px"><font size="3" face="Times New Roman, Times, serif">Expected
        option life (years)</font></div>
    </td>
    <td width="1%">&nbsp;</td>
    <td align="right" valign="bottom" nowrap width="9%"><font size="3" face="Times New Roman, Times, serif">4.4</font></td>
    <td align="left" valign="bottom" nowrap width="5%">&nbsp;</td>
    <td width="1%">&nbsp;</td>
    <td align="right" valign="bottom" nowrap width="9%"><font size="3" face="Times New Roman, Times, serif">4.8</font></td>
    <td align="right" valign="bottom" nowrap width="5%">&nbsp;</td>
  </tr>
</table>
<font face="Times New Roman, Times, serif"><br>
</font>
<p>&nbsp;</p>
<p align=center><font face="Times New Roman, Times, serif" size="3">8<br>
  </font>
<p align=center>
<hr width="100%">
<p align=left>
<p align=left><font face="Times New Roman, Times, serif" size="3"><a href="#TAB">(Index)</a></font>
<p align=center><font face="Times New Roman, Times, serif" size="3"><b>SOCKET
  MOBILE, INC.<br>
  NOTES TO CONDENSED FINANCIAL STATEMENTS<br>
  </b>(Unaudited) </font>
<p><font face="Times New Roman, Times, serif"><b>NOTE 8 - Net Loss Per Share Applicable
  to Common Stockholders</b></font></p>
<p><font face="Times New Roman, Times, serif">The Company calculates earnings
  per share in accordance with Financial Accounting Standards Board Statement
  No. 128, <i>Earnings per Share.</i></font></p>
<p><font face="Times New Roman, Times, serif">The following table sets forth the
  computation of basic and diluted net loss per share:<br>
  <br>
  </font></p>
<table
style="FONT-SIZE: 10pt; BACKGROUND: #ffffff; COLOR: #000000; FONT-FAMILY: 'Times New Roman', Times"
cellspacing=0 cellpadding=0 width="60%" align=center border=0>
  <!-- Table Width Row -->
  <tr style="FONT-SIZE: 8pt" valign=bottom align=middle>
    <td valign=bottom noWrap align=left height="13" width="59%">&nbsp; </td>
    <td height="13" width="0%">&nbsp; </td>
    <td valign=bottom noWrap align=middle colspan=8 height="13">
      <div align="center"><font size="3" face="Times New Roman, Times, serif">Three
        Months Ended March 31, </font></div>
    </td>
  </tr>
  <tr style="FONT-SIZE: 8pt" valign=bottom align=middle>
    <td valign=bottom noWrap align=left width="59%" height="16">
      <div
      ></div>
    </td>
    <td width="0%" height="16">&nbsp; </td>
    <td style="BORDER-BOTTOM: #000000 1px solid" valign=bottom noWrap
    align=middle colspan=3 height="16">
      <div align="center"><font size="3" face="Times New Roman, Times, serif">2009</font></div>
    </td>
    <td width="1%" height="16">&nbsp;</td>
    <td width="2%" height="16">&nbsp; </td>
    <td style="BORDER-BOTTOM: #000000 1px solid" valign=bottom noWrap
    align=middle colspan=3 height="16">
      <div align="center"><font size="3" face="Times New Roman, Times, serif">2008</font></div>
    </td>
  </tr>
  <tr style="BACKGROUND: #cceeff" valign=bottom>
    <td valign=bottom align=left width="59%">
      <div style="MARGIN-LEFT: 9pt; TEXT-INDENT: -9pt"><font size="3" face="Times New Roman, Times, serif">Numerator:</font></div>
    </td>
    <td width="0%">&nbsp; </td>
    <td valign=bottom noWrap align=left width="2%">&nbsp; </td>
    <td valign=bottom noWrap align=right width="11%">&nbsp;</td>
    <td valign=bottom noWrap align=left width="2%">&nbsp; </td>
    <td width="1%">&nbsp;</td>
    <td width="2%">&nbsp; </td>
    <td valign=bottom noWrap align=left width="2%">&nbsp;</td>
    <td valign=bottom noWrap align=right width="12%">&nbsp;</td>
    <td valign=bottom noWrap align=left width="2%">&nbsp; </td>
  </tr>
  <tr  valign=bottom>
    <td valign=bottom noWrap align=left width="59%">
      <div style="MARGIN-LEFT: 9pt; TEXT-INDENT: -9pt"><font style="FONT-SIZE: 10pt" size="3" face="Times New Roman, Times, serif">&nbsp;&nbsp;
        </font><font size="3" face="Times New Roman, Times, serif">Net loss</font></div>
    </td>
    <td width="0%">&nbsp; </td>
    <td valign=bottom noWrap align=left style="border-bottom: 3px double #000000" width="2%"><font size="3" face="Times New Roman, Times, serif">$&nbsp</font>
    </td>
    <td valign=bottom noWrap align=right style="border-bottom: 3px double #000000" width="11%"><font size="3" face="Times New Roman, Times, serif">(711,715</font></td>
    <td valign=bottom noWrap align=left width="2style="border-bottom: 3px double #000000"%" style="border-bottom: 3px double #000000"><font size="3" face="Times New Roman, Times, serif">)</font></td>
    <td width="1%">&nbsp;</td>
    <td width="2%">&nbsp; </td>
    <td noWrap align=left style="border-bottom: 3px double #000000" width="2%"><font size="3" face="Times New Roman, Times, serif">$&nbsp</font>
    </td>
    <td noWrap align=right style="border-bottom: 3px double #000000" width="11%"><font size="3" face="Times New Roman, Times, serif">(958,624</font></td>
    <td noWrap align=left width="2style="border-bottom: 3px double #000000"%" style="border-bottom: 3px double #000000"><font size="3" face="Times New Roman, Times, serif">)</font></td>
  </tr>
  <tr style="BACKGROUND: #cceeff" valign=bottom>
    <td valign=bottom align=left bgcolor="#cceeff" width="59%">
      <div style="MARGIN-LEFT: 9pt; TEXT-INDENT: -9pt"><font face="Times New Roman, Times, serif" size="3">&nbsp</font></div>
    </td>
    <td bgcolor="#cceeff" width="0%">&nbsp; </td>
    <td valign=bottom noWrap align=left bgcolor="#cceeff" width="2%">&nbsp; </td>
    <td valign=bottom noWrap align=right bgcolor="#cceeff" width="11%">&nbsp;</td>
    <td valign=bottom noWrap align=left bgcolor="#cceeff" width="2%">&nbsp; </td>
    <td bgcolor="#cceeff" width="1%">&nbsp;</td>
    <td bgcolor="#cceeff" width="2%">&nbsp; </td>
    <td valign=bottom noWrap align=left bgcolor="#cceeff" width="2%">&nbsp;</td>
    <td noWrap align=right bgcolor="#cceeff" width="11%">&nbsp;</td>
    <td noWrap align=left bgcolor="#cceeff" width="2%">&nbsp; </td>
  </tr>
  <tr valign=bottom>
    <td valign=bottom align=left width="59%">
      <div style="MARGIN-LEFT: 9pt; TEXT-INDENT: -9pt"><font size="3" face="Times New Roman, Times, serif">Denominator:</font></div>
    </td>
    <td width="0%">&nbsp; </td>
    <td valign=bottom noWrap align=left width="2%">&nbsp; </td>
    <td valign=bottom noWrap align=right width="11%">&nbsp;</td>
    <td valign=bottom noWrap align=left width="2%">&nbsp;</td>
    <td width="1%">&nbsp;</td>
    <td width="2%">&nbsp; </td>
    <td valign=bottom noWrap align=left width="2%">&nbsp;</td>
    <td noWrap align=right width="11%">&nbsp;</td>
    <td noWrap align=left width="2%">&nbsp;</td>
  </tr>
  <tr valign=bottom>
    <td valign=bottom noWrap align=left bgcolor="#cceeff" width="59%">
      <div style="MARGIN-LEFT: 9pt; TEXT-INDENT: -9pt"><font style="FONT-SIZE: 10pt" size="3" face="Times New Roman, Times, serif">&nbsp;&nbsp;
        </font><font size="3" face="Times New Roman, Times, serif">Weighted average
        common shares outstanding used in computing net loss per share:</font></div>
    </td>
    <td bgcolor="#cceeff" width="0%">&nbsp; </td>
    <td valign=bottom noWrap align=left bgcolor="#cceeff" width="2%">&nbsp; </td>
    <td valign=bottom noWrap align=right bgcolor="#cceeff" width="11%">&nbsp;</td>
    <td valign=bottom noWrap align=left bgcolor="#cceeff" width="2%">&nbsp; </td>
    <td bgcolor="#cceeff" width="1%">&nbsp;</td>
    <td bgcolor="#cceeff" width="2%">&nbsp; </td>
    <td valign=bottom noWrap align=left bgcolor="#cceeff" width="2%">&nbsp;</td>
    <td noWrap align=right bgcolor="#cceeff" width="11%">&nbsp;</td>
    <td noWrap align=left bgcolor="#cceeff" width="2%">&nbsp; </td>
  </tr>
  <tr valign=bottom>
    <td valign=bottom align=left width="59%">
      <div style="MARGIN-LEFT: 9pt; TEXT-INDENT: -9pt"><font style="FONT-SIZE: 10pt" size="3" face="Times New Roman, Times, serif">&nbsp;&nbsp;
        &nbsp;&nbsp; </font><font size="3" face="Times New Roman, Times, serif">Basic</font></div>
    </td>
    <td width="0%">&nbsp; </td>
    <td valign=bottom noWrap align=left width="2%" style="border-bottom: 3px double #000000"><font size="3" face="Times New Roman, Times, serif">&nbsp</font>
    </td>
    <td valign=bottom noWrap align=right width="11%" style="border-bottom: 3px double #000000"><font size="3" face="Times New Roman, Times, serif">3,229,916</font></td>
    <td valign=bottom noWrap align=left width="2%" style="border-bottom: 3px double #000000"><font size="3" face="Times New Roman, Times, serif">&nbsp
      </font></td>
    <td width="1%">&nbsp;</td>
    <td width="2%">&nbsp; </td>
    <td valign=bottom noWrap align=left width="2%" style="border-bottom: 3px double #000000"><font size="3" face="Times New Roman, Times, serif">&nbsp
      </font></td>
    <td noWrap align=right width="11%" style="border-bottom: 3px double #000000"><font size="3" face="Times New Roman, Times, serif">3,201,280</font></td>
    <td noWrap align=left width="2%" style="border-bottom: 3px double #000000"><font size="3" face="Times New Roman, Times, serif">&nbsp
      </font></td>
  </tr>
  <tr style="FONT-SIZE: 1pt" valign=bottom>
    <td noWrap align=left bgcolor="#cceeff" width="59%">
      <div style="MARGIN-LEFT: 9pt; TEXT-INDENT: -9pt"><font style="FONT-SIZE: 10pt" size="3" face="Times New Roman, Times, serif">&nbsp;&nbsp;
        &nbsp;&nbsp; </font><font size="3" face="Times New Roman, Times, serif">Diluted</font><font style="FONT-SIZE: 10pt" size="3" face="Times New Roman, Times, serif">
        </font></div>
    </td>
    <td bgcolor="#cceeff" width="0%">&nbsp; </td>
    <td style="border-bottom: 3px double #000000" bgcolor="#cceeff" width="2%"><font size="3" face="Times New Roman, Times, serif">&nbsp</font>
    </td>
    <td style="border-bottom: 3px double #000000" align="right" bgcolor="#cceeff" width="11%"><font size="3" face="Times New Roman, Times, serif">3,229,916</font></td>
    <td align="left" valign="bottom" bgcolor="#cceeff" style="border-bottom: 3px double #000000" width="2%"><font size="3" face="Times New Roman, Times, serif">&nbsp</font>
    </td>
    <td bgcolor="#cceeff" width="1%"><font face="Times New Roman, Times, serif" size="3">&nbsp</font></td>
    <td bgcolor="#cceeff" width="2%">&nbsp; </td>
    <td style="border-bottom: 3px double #000000" bgcolor="#cceeff" width="2%"><font size="3" face="Times New Roman, Times, serif">&nbsp</font>
    </td>
    <td style="border-bottom: 3px double #000000" align="right" bgcolor="#cceeff" width="11%"><font size="3" face="Times New Roman, Times, serif">3,201,280</font></td>
    <td align="left" bgcolor="#cceeff" style="border-bottom: 3px double #000000" width="2%"><font size="3" face="Times New Roman, Times, serif">&nbsp</font>
    </td>
  </tr>
  <tr style="BACKGROUND: #cceeff" valign=bottom>
    <td valign=bottom align=left bgcolor="#FFFFFF" width="59%">
      <div style="MARGIN-LEFT: 9pt; TEXT-INDENT: -9pt"><font face="Times New Roman, Times, serif"><font size="3"><font size="3">Net
        loss per share:</font></font></font></div>
    </td>
    <td bgcolor="#FFFFFF" width="0%">&nbsp; </td>
    <td valign=bottom noWrap align=left bgcolor="#FFFFFF" width="2%"><font size="3" face="Times New Roman, Times, serif">&nbsp</font>
    </td>
    <td valign=bottom noWrap align=right bgcolor="#FFFFFF" width="11%">&nbsp;</td>
    <td valign=bottom noWrap align=left bgcolor="#FFFFFF" width="2%"><font size="3" face="Times New Roman, Times, serif">&nbsp</font>
    </td>
    <td bgcolor="#FFFFFF" width="1%"><font face="Times New Roman, Times, serif" size="3">&nbsp</font></td>
    <td bgcolor="#FFFFFF" width="2%">&nbsp; </td>
    <td valign=bottom noWrap align=left bgcolor="#FFFFFF" width="2%">&nbsp;</td>
    <td noWrap align=right bgcolor="#FFFFFF" width="11%">&nbsp;</td>
    <td noWrap align=left bgcolor="#FFFFFF" width="2%"><font size="3" face="Times New Roman, Times, serif">&nbsp</font>
    </td>
  </tr>
  <tr style="BACKGROUND: #cceeff" valign=bottom>
    <td align=left width="59%">
      <div style="MARGIN-LEFT: 9pt; TEXT-INDENT: -9pt"><font style="FONT-SIZE: 10pt" size="3" face="Times New Roman, Times, serif">&nbsp;&nbsp;
        &nbsp;&nbsp; </font><font size="3" face="Times New Roman, Times, serif">Basic</font></div>
    </td>
    <td width="0%">&nbsp; </td>
    <td valign=bottom noWrap align=left style="border-bottom: 3px double #000000" width="2%"><font size="3" face="Times New Roman, Times, serif">$</font>
    </td>
    <td valign=bottom noWrap align=right style="border-bottom: 3px double #000000" width="11%"><font size="3" face="Times New Roman, Times, serif">(0.22</font></td>
    <td valign=bottom noWrap align=left width="2%" style="border-bottom: 3px double #000000"><font size="3" face="Times New Roman, Times, serif">)
      </font></td>
    <td valign="bottom" width="1%">&nbsp;</td>
    <td valign="bottom" width="2%">&nbsp; </td>
    <td valign=bottom noWrap align=left style="border-bottom: 3px double #000000" width="2%"><font size="3" face="Times New Roman, Times, serif">$
      </font></td>
    <td noWrap align=right style="border-bottom: 3px double #000000" width="11%"><font size="3" face="Times New Roman, Times, serif">(0.30</font></td>
    <td noWrap align=left width="2%" style="border-bottom: 3px double #000000"><font size="3" face="Times New Roman, Times, serif">)
      </font></td>
  </tr>
  <tr valign=bottom>
    <td noWrap align=left width="59%">
      <div style="MARGIN-LEFT: 9pt; TEXT-INDENT: -9pt"><font style="FONT-SIZE: 10pt" size="3" face="Times New Roman, Times, serif">&nbsp;&nbsp;
        &nbsp;&nbsp; </font><font size="3" face="Times New Roman, Times, serif">Diluted</font><font style="FONT-SIZE: 10pt" size="3" face="Times New Roman, Times, serif">
        </font></div>
    </td>
    <td width="0%">&nbsp; </td>
    <td valign=bottom noWrap align=left style="border-bottom: 3px double #000000" width="2%"><font size="3" face="Times New Roman, Times, serif">$</font>
    </td>
    <td valign=bottom noWrap align=right style="border-bottom: 3px double #000000" width="11%"><font size="3" face="Times New Roman, Times, serif">(0.22</font></td>
    <td valign=bottom noWrap align=left width="2%" style="border-bottom: 3px double #000000"><font size="3" face="Times New Roman, Times, serif">)
      </font></td>
    <td width="1%">&nbsp;</td>
    <td width="2%">&nbsp; </td>
    <td valign=bottom noWrap align=left width="2%" style="border-bottom: 3px double #000000"><font size="3" face="Times New Roman, Times, serif">$
      </font></td>
    <td noWrap align=right style="border-bottom: 3px double #000000" width="11%"><font size="3" face="Times New Roman, Times, serif">(0.30</font></td>
    <td noWrap align=left width="2%" style="border-bottom: 3px double #000000"><font size="3" face="Times New Roman, Times, serif">)
      </font></td>
  </tr>
</table>
<p><font face="Times New Roman, Times, serif"><br>
  For the quarters ended March 31, 2009 and 2008, the diluted net loss per share
  is equal to the basic net loss per share because the Company experienced losses
  in these periods. Thus no potential common shares underlying stock options have
  been included in the net loss per share calculation, as their effect is anti-dilutive.
  Options to purchase 1,175,945 and 1,170,120 shares of common stock at March
  31, 2009 and 2008, respectively, have been omitted from the net loss per share
  calculation.</font></p>
<p><br>
  <font face="Times New Roman, Times, serif"><b>NOTE 9 - Taxes</b></font></p>
<p><font face="Times New Roman, Times, serif">Deferred income tax reflects the
  net tax effects of temporary differences between the carrying amount of assets
  and liabilities for financial reporting purposes and the amount used for income
  tax purposes. Deferred tax expense of $7,985 for each of the three month periods
  ended March 31, 2009 and 2008, and the corresponding deferred tax liability
  shown on the Company's balance sheet, is related entirely to the deferred tax
  liability on the portion of the Company's goodwill amortized for tax purposes.
  Due to the indefinite characteristic of this deferred tax liability, it cannot
  be offset against deferred tax assets, and furthermore, this deferred tax liability
  may never reverse. The Company has not generated taxable income in any periods
  in any jurisdiction, foreign or domestic. The Company maintains a full valuation
  allowance for all other components of deferred tax assets. </font></p>
<p>&nbsp;</p>
<p align="center"><font face="Times New Roman, Times, serif" size="3">9<br>
  </font> </p>
<p align=center>
<hr width="100%">
<p align=left>
<p align=left><font face="Times New Roman, Times, serif" size="3"><a href="#TAB">(Index)</a></font>
<p align=center><font face="Times New Roman, Times, serif" size="3"><b>SOCKET
  MOBILE, INC.<br>
  NOTES TO CONDENSED FINANCIAL STATEMENTS<br>
  </b>(Unaudited) </font>
<p><font face="Times New Roman, Times, serif">On January 1, 2007, the Company
  adopted Financial Accounting Standards Board Interpretation No. 48, "Accounting
  for Uncertainty in Income Taxes - An Interpretation of FASB Statement No. 109,"
  ("FIN 48"). FIN 48 prescribes a recognition threshold that a tax position is
  required to meet before being recognized in the financial statements, and provides
  guidance on derecognition, measurement, classification, interest and penalties,
  accounting in interim periods, disclosure, and transition issues. At December
  31, 2008, the Company has an unrecognized tax benefit of approximately $643,000,
  which did not change significantly during the three months ended March 31, 2009.
  The application of FIN 48 does not result in a change to retained earnings,
  as the unrecognized tax benefit would be fully offset by the application of
  a valuation allowance. Future changes in the unrecognized tax benefit will have
  no impact on the effective tax rate due to the existence of the valuation allowance.
  It is the Company's policy to include interest and penalties related to tax
  positions as a component of income tax expense. No interest was accrued for
  the three month period ended March 31, 2009.</font></p>
<p><font face="Times New Roman, Times, serif">The Company files its tax returns
  as prescribed by the tax laws of the jurisdictions in which it operates. The
  Company is not currently under audit in any of its jurisdictions where income
  tax returns are filed. The tax years 1992 to 2008 remain open to examination
  by the major domestic taxing jurisdictions to which the Company is subject,
  and for the years 2001 to 2007 for the international taxing jurisdictions to
  which the Company is subject. </font></p>
<p>&nbsp;</p>
<p>&nbsp;</p>
<p>&nbsp;</p>
<p>&nbsp;</p>
<p><font face="Times New Roman, Times, serif"><br>
  </font></p>
<p>&nbsp;</p>
<p align=center><font face="Times New Roman, Times, serif" size="3">10<br>
  </font>
<p align=center>
<hr width="100%">
<p align=left>
<p align=left><font face="Times New Roman, Times, serif" size="3"><a href="#TAB">(Index)</a></font>
  <font face="Times New Roman, Times, serif" size="3"><a
name=mda></a></font>
<p><font face="Times New Roman, Times, serif" size="3"><b>Item 2. Management's
  Discussion and Analysis of Financial Condition and Results of Operations </b></font></p>
<p><font face="Times New Roman, Times, serif" size="3"><i>This Quarterly Report
  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. These statements include 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, expansion of the distribution channels for our products, adoption
  of our embedded products by third-party manufacturers of electronic devices,
  and the timing of the introduction and availability of new products, as well
  as other forecasts discussed under "Management's Discussion and Analysis of
  Financial Condition and Results of Operations." Words such as "may," "will,"
  "predicts," "anticipates," "expects," "intends," "plans," "believes," "seeks,"
  "estimates," variations of such words, and similar expressions are intended
  to identify such forward-looking statements. Such forward-looking statements
  are based on current expectations, estimates, and projections about our industry,
  management's beliefs, and assumptions made by management. These forward-looking
  statements are not guarantees of future performance and are subject to certain
  risks, uncertainties, and assumptions that are difficult to predict; therefore,
  actual results and outcomes may differ materially from what is expressed or
  forecasted in any such forward-looking statements. Factors that could cause
  actual results and outcomes to differ materially include, but are not limited
  to: the risk of delays in the availability of our products due to technological,
  market or financial factors including the availability of necessary working
  capital; our ability to successfully develop, introduce and market future products;
  the change in gross margins between current and future products; our ability
  to effectively manage and contain our operating costs; events in the U.S. and
  world economy, financial markets and credit markets; the availability of announced
  third-party handheld computer hardware and software that our products are intended
  to work with; product delays associated with new model introductions and product
  changeovers by the makers of products that our products are intended to work
  with; continued growth in demand for handheld computers; market acceptance of
  emerging standards such as Bluetooth and wireless LAN and of our related connection,
  data collection, and mobile handheld computer products; the ability of our strategic
  relationships to benefit our business as expected; our ability to enter into
  additional distribution relationships; or other factors described in this Form
  10-Q including "Part II, Item 1A. Risk Factors" and recent Form 8-K and Form
  10-K reports filed with the Securities and Exchange Commission. We assume no
  obligation to update such forward-looking statements or to update the reasons
  why actual results could differ materially from those anticipated in such forward-looking
  statements.</i></font></p>
<p><font face="Times New Roman, Times, serif" size="3"><i>You should read the
  following discussion in conjunction with the interim condensed financial statements
  and notes included elsewhere in this report, the Company's annual financial
  statements in the Form 10-K, and other information contained in other reports
  and documents filed from time to time with the Securities and Exchange Commission.</i></font></p>
<p><font face="Times New Roman, Times, serif" size="3"><b>Revenues<br>
  </b></font><font face="Times New Roman, Times, serif"><br>
  We are a producer of mobile computing hardware systems serving the business
  and medical mobility market. We offer a family of handheld computer products
  and a wide range of data collection and connectivity peripheral products for
  use with third-party vertical handheld computing applications software and devices.
  We also offer embedded Bluetooth and wireless LAN products. Our peripheral products
  work with many third-party mobile handheld devices including smart phones, handheld
  computers, tablet computers, ultra-mobile personal computers, and notebooks,
  adding data collection and connectivity capabilities to these devices. Our products
  are designed to enable the accessing, collection and processing of data by employees
  while mobile. Our products utilize popular Bluetooth and wireless LAN wireless
  connection technologies. Our plug-in and Bluetooth data collection products
  offer a variety of data collection technologies including laser and CMOS barcode
  scanning, linear and two dimensional barcode scanning, plus we offer RFID (radio
  frequency identification) and magnetic stripe readers.<br>
  <br>
  <br>
  </font></p>
<p align="center"><font face="Times New Roman, Times, serif" size="3">11<br>
  </font> </p>
<p align=center>
<hr width="100%">
<p><font face="Times New Roman, Times, serif" size="3"><a href="#TAB">(Index)</a></font></p>
<p><font face="Times New Roman, Times, serif">We work with more than 200 software
  integration companies that are offering or developing vertical software applications
  for use with handheld computers. Healthcare has been a primary area of focus
  for our software integration partners and more than half of our handheld computer
  sales now come from organizations within the healthcare industry. Other vertical
  markets benefiting from our mobile solutions include hospitality, retail merchandising,
  automotive, government and education. These mobile solutions are designed to
  improve the productivity of business enterprises and service providers by automating
  manual tasks, improving the quality of information collected, and enhancing
  mobile productivity by processing and transferring information from remote locations
  and mobile devices to the business enterprise, and then if required, back to
  the remote locations and mobile devices. </font></p>
<p><font face="Times New Roman, Times, serif">We believe that growth in the mobile
  workforce, technical advances and cost reductions in mobile devices and networking
  technologies, and the pervasive use of the Internet are driving broader adoption
  of mobile computing. Our products are designed to address the growing need for
  mobile computing by today's mobile workforce by enabling them to access, collect
  and process data while mobile, thereby enhancing their productivity, allowing
  them to exploit time sensitive opportunities and improving customer satisfaction.
  We make available to original equipment manufacturers ("OEMs") the Bluetooth
  and wireless LAN wireless technologies that we incorporate in our own products
  through the sale of modules and plug-in cards that these manufacturers embed
  into their products, including driver and device management software that is
  designed to simplify the ability of mobile employees to get and stay connected
  with Wi-Fi as well as with Bluetooth. Overall, our products enable the integration
  of hardware, software and applications into complete mobile data collection
  and connectivity solutions.</font></p>
<p><font face="Times New Roman, Times, serif">Most of our products, except our
  OEM embedded products, are sold through distributors and resellers that serve
  business customers. Our OEM embedded products are sold directly to the manufacturers
  of devices in which our products are embedded. The geographic regions we serve
  include the Americas, Europe, the Middle East, Africa and Asia Pacific. Total
  revenues for the first quarter of 2009 were $4.8 million, a decrease of 23%
  from revenues of $6.2 million in the first quarter of 2008.</font></p>
<p><font face="Times New Roman, Times, serif">Our revenues in the comparable three
  month periods may be classified into three broad product families:</font></p>
<ul>
  <li><font face="Times New Roman, Times, serif">Mobile handheld computer products;</font></li>
  <li><font face="Times New Roman, Times, serif">Mobile peripheral products: data
    collection, connectivity and serial interface; and </font></li>
  <li><font face="Times New Roman, Times, serif">OEM embedded products. </font></li>
</ul>
<p>&nbsp; </p>
<p align=center><font face="Times New Roman, Times, serif" size="3">12<br>
  </font>
<p align=center>
<hr width="100%">
<p align=left>
<p align=left><font face="Times New Roman, Times, serif" size="3"><a href="#TAB">(Index)</a></font>
  <font face="Times New Roman, Times, serif" size="3"><a
name=mda></a></font>
<p><font face="Times New Roman, Times, serif">Our <b><i>mobile handheld computer
  products</i></b> are designed to be durable devices that have features similar
  to heavier duty industrial handheld devices but at a significantly lower price.
  Our initial model, the SoMo&reg; 650 (SoMo is derived from <u>So</u>cket <u>Mo</u>bile),
  was introduced in June 2007 with initial volume shipments in September 2007,
  and features the Microsoft Windows Mobile Classic operating system, Versions
  5 and 6. Windows Mobile is the industry standard OS for mobile applications,
  thereby enabling the SoMo to be compatible with a large number of business applications
  and giving users a familiar computing environment. Our mobile handheld computers
  are easy to customize for a particular application by adding peripherals. The
  SoMo products have an expected product life cycle of three to five years to
  address the needs of our customers who are deploying mobile solutions. The SoMo's
  features include wireless LAN and Bluetooth, a fast processor, a large, bright
  screen display enabling its use outdoors, large amounts of SDRAM and flash memory,
  extended battery life, programmable action buttons to activate peripheral devices,
  reinforced CompactFlash and SDIO card slots, and a durable case. The SoMo is
  available with multiple language support and includes our Bluetooth, wireless
  LAN and barcode scanning software. The SoMo 650 was specifically designed without
  an integrated mobile phone to serve the market for business mobility applications
  that do not depend on mobile phone connections such as medication dispensing
  in the healthcare market or serving tables in the hospitality market, many of
  which use Bluetooth or wireless LAN connections for data communications. In
  late 2008, we introduced the SoMo 650 Rx Model with an antimicrobial additive
  incorporated into its plastic case for the healthcare market designed to reduce
  the risk of the spread of bacteria from the use of handheld devices in a healthcare
  environment. In April 2009 we extended our line of antimicrobial products for
  the healthcare market to include our Cordless Hand Scanners and CompactFlash
  Scan Cards. We also announced our SoMo 650 Back Pack Broadband ExpressCard Adapter,
  which attaches to the back of our SoMo 650 and accepts pre-certified and approved
  Novatel Wireless ExpressCards to extend the functionality of the SoMo 650 to
  include anytime, anywhere, data connectivity over a wide area network (WAN).
  The SoMo 650 Back Pack will be available in the third quarter of 2009 in both
  a standard version and an antimicrobial version for use in healthcare applications.
  We also offer a SoMo 650 Dx Model without Bluetooth or wireless LAN for high
  security environments. Mobile handheld computer products represented approximately
  32% of our revenue for the three months ended March 31, 2009, compared to 11%
  of our revenues in the same period one year ago.</font></p>
<p><font face="Times New Roman, Times, serif">Our <i><b>mobile peripheral products</b></i>
  consist of data collection, connectivity and serial interface products, which
  together represented approximately 49% of our revenues for the three months
  ended March 31, 2009 compared to 58% of our revenues for the same period one
  year ago.</font></p>
<p><font face="Times New Roman, Times, serif">Our <i>data collection products</i>
  enable the electronic collection of data from barcodes, radio frequency identification
  (RFID) tags, or magnetic stripes and consist of: </font></p>
<ul>
  <li><font face="Times New Roman, Times, serif"> barcode scanning products that
    plug into or connect wirelessly to handheld computers, tablet computers, ultra-mobile
    personal computers, notebook computers and smartphones that use Windows Mobile,
    Windows CE, Windows Vista/XP, RIM Blackberry, or Nokia E71 operating systems,
    and turn these devices into portable barcode scanners and RFID readers that
    can be used in various retail and industrial workplaces; Our cordless hand
    scanner and cordless ring scanner may also be connected wirelessly to a desktop
    computer, enabling mobile barcode scanning around a fixed workstation;</font></li>
  <li><font face="Times New Roman, Times, serif">RFID plug-in products that read
    radio frequency identification tags; </font></li>
  <li><font face="Times New Roman, Times, serif">a combination plug-in barcode
    scanner and RFID reader; and </font></li>
  <li><font face="Times New Roman, Times, serif" size="3">a plug-in magnetic stripe
    reader. <br>
    <br>
    </font></li>
</ul>
<p align=center><font face="Times New Roman, Times, serif" size="3">13<br>
  </font>
<p align=center>
<hr width="100%">
<p align=left>
<p align=left><font face="Times New Roman, Times, serif" size="3"><a href="#TAB">(Index)</a></font>
  <font face="Times New Roman, Times, serif" size="3"><a
name=mda></a></font>
<p><font face="Times New Roman, Times, serif">Our plug-in and Bluetooth cordless
  data collection products offer a variety of data collection technologies at
  several performance levels including laser and CMOS barcode scanning, linear
  and two dimensional barcode scanning and RFID reading, enabling solutions to
  be tailored to optimal price/performance levels. Our plug-in barcode scanners
  are available in both CompactFlash and SDIO form factors. We also offer a ring
  scanner worn on the index finger which connects to computing systems using the
  Bluetooth standard for short-range wireless connectivity. We have developed
  extensive barcode scanning and RFID reading software called SocketScan that
  supports all of our data collection products, and have software developer kits
  that assist third-party developers in integrating our SocketScan software and
  our hardware products into their applications and solutions. Data collection
  products represented approximately 36% of our revenues for the three months
  ended March 31, 2009, compared to 41% of our revenues for the same period one
  year ago.</font></p>
<p><font face="Times New Roman, Times, serif">Our <i>connectivity products</i>
  are connection devices that can be plugged into standard CompactFlash or Secure
  Digital SDIO expansion slots in handheld computers, tablet computers, ultra
  mobile personal computers, and notebook computers that use Windows Mobile, Windows
  XP/Vista, or Windows Tablet operating systems. These products allow users to
  connect their devices via Ethernet or telephone to communicate with other networks
  and devices such as desktop computers, other handheld computers, tablet computers,
  ultra-mobile personal computers, and notebook computers, smartphones and printers.
  Our connectivity products include: </font></p>
<ul>
  <li><font face="Times New Roman, Times, serif">modems for telephone connections
    that connect over a cable;</font></li>
  <li><font face="Times New Roman, Times, serif">Ethernet cards for local area
    network connections that connect over a cable; and </font></li>
  <li><font face="Times New Roman, Times, serif">accessory products such as batteries
    and cables.<br>
    </font></li>
</ul>
<p align="left"><font face="Times New Roman, Times, serif">Connectivity products
  represented approximately 5% of our revenues for the three months ended March
  31, 2009, compared to 8% of our revenues for the same period one year ago.</font></p>
<p align="left"><font face="Times New Roman, Times, serif">Our <i>serial interface
  products</i> enable the connection of a mobile computer to electronic devices
  either as a plug-in card (one, two or four ports) connecting over cables, or
  wirelessly over a Bluetooth network. During 2008 we introduced a USB to serial
  connector to enable a serial connection through a USB interface and plan to
  introduce in the second quarter of 2009 a USB to Ethernet Adapter to reflect
  the growing use of USB as a connection technology for mobile products. Serial
  interface products represented approximately 8% of our revenues in the three
  months ended March 31, 2009, compared to 9% in the same period one year ago.</font></p>
<p align="left"><font face="Times New Roman, Times, serif">Our <i><b>OEM embedded
  products</b></i> consist of Bluetooth and wireless LAN modules and plug-in cards
  used primarily by OEMs of industrial grade handheld computers and other devices
  to build wireless connection functions into their products using the Bluetooth
  and wireless LAN standards for wireless connectivity. Our plug-in cards and
  modules using the Bluetooth standard for short-range wireless connectivity include
  extensive communications software enabling the use of these products. Our products
  use the Bluetooth 2.0 standard, and we plan to upgrade later in 2009 to the
  Bluetooth 2.1 + EDR standard, continuing our commitment to keep our products
  current with evolving technology standards. Our plug-in cards for connecting
  to local wireless networks during 2008 used the wireless LAN 802.11b/g (or Wi-Fi)
  standard and included extensive communications software designed to make these
  products easy to use. We recently added Cisco Compatible Extensions (CCX) 4.0
  certification to our wireless LAN software to enable our wireless LAN products
  to be compatible with a Cisco wireless LAN infrastructure and are upgrading
  our plug-in cards and modules to incorporate the wireless LAN 802.11 a/b/g standard.
  In April 2009 we announced availability of our SDIO wireless LAN plug-in card
  with wireless LAN 802.11 a/b/g. OEM embedded products represented approximately
  19% of our revenues for the three months ended March 31, 2009, compared to 31%
  of our revenues for the same period one year ago. <br>
  </font></p>
<p>&nbsp;</p>
<p align=center><font face="Times New Roman, Times, serif" size="3">14<br>
  </font>
<p align=center>
<hr width="100%">
<p align=left>
<p align=left>
<p align=left><font face="Times New Roman, Times, serif" size="3"><a href="#TAB">(Index)</a></font>
<p align=left><font face="Times New Roman, Times, serif">Our revenues by product
  family for the three months ended March 31, 2009 and 2008, and the corresponding
  increase or decrease in revenues for the comparable periods are shown in the
  following table: </font>
<p align=left><font face="Times New Roman, Times, serif"><br>
  </font>
<table style="MARGIN-TOP: 6pt; FONT-SIZE: 10pt" cellspacing=0 cellpadding=0
width="80%" align=center border=0>
  <tr class="border">
    <td colspan=2 height="20" valign="bottom"  ><font size="3" face="Times New Roman, Times, serif"><i>(revenues
      in thousands)</i></font></td>
    <td height="20" valign="bottom" width="3%"  >&nbsp;</td>
    <td noWrap align=middle colspan=11 height="20">
      <div align="center"><font size="3" face="Times New Roman, Times, serif">Three
        months ended March 31,</font></div>
    </td>
    <td align=right style="border-bottom: 1px solid #000000" width="1%%" valign="bottom">
      <div align="left"></div>
    </td>
    <td noWrap align=middle colspan=2 height="20" >
      <div align="center"><font face="Times New Roman, Times, serif" size="3">Increase</font></div>
    </td>
  </tr>
  <tr valign=bottom>
    <td colspan="2" height="8"style="border-bottom: 1px solid #000000">
      <div style="MARGIN-LEFT: 10px; TEXT-INDENT: -10px"><font size="3" face="Times New Roman, Times, serif">Product
        family: </font></div>
    </td>
    <td height="8" width="3%">&nbsp;</td>
    <td align="center" colspan="5" style="border-bottom: 1px solid #000000" height="8"><font face="Times New Roman, Times, serif" size="3">2009</font></td>
    <td align=left width="1%">&nbsp;</td>
    <td align=right style="border-bottom: 1px solid #000000" colspan="5">
      <div align="center"><font size="3" face="Times New Roman, Times, serif">2008</font></div>
    </td>
    <td align=right style="border-bottom: 1px solid #000000" width="1%%">
      <div align="left"></div>
    </td>
    <td align="center" style="border-bottom: 1px solid #000000" height="8" colspan="2"><font face="Times New Roman, Times, serif" size="3">(Decrease)</font></td>
  </tr>
  <tr>
    <td colspan="2" bgcolor="#cceeff">
      <div style="MARGIN-LEFT: 10px; TEXT-INDENT: -10px"><font face="Times New Roman, Times, serif" size="3">&nbsp;&nbsp;
        Mobile handheld computer products</font></div>
    </td>
    <td width="3%" bgcolor="#cceeff">&nbsp;</td>
    <td valign=bottom align=left width="1%" bgcolor="#cceeff"><font size="3" face="Times New Roman, Times, serif">$</font></td>
    <td valign=bottom noWrap align=right width="5%" bgcolor="#cceeff"><font size="3" face="Times New Roman, Times, serif">1,541</font></td>
    <td width="1%" valign="bottom" bgcolor="#cceeff">&nbsp;</td>
    <td width="3%" valign="bottom" bgcolor="#cceeff">
      <div align="right"><font size="3" face="Times New Roman, Times, serif">32</font></div>
    </td>
    <td width="2%" valign="bottom" bgcolor="#cceeff"><font size="3" face="Times New Roman, Times, serif">%</font></td>
    <td valign=bottom align=left width="1%" bgcolor="#cceeff">&nbsp;</td>
    <td valign=bottom align=left width="1%" bgcolor="#cceeff"><font size="3" face="Times New Roman, Times, serif">$</font></td>
    <td valign=bottom noWrap align=right width="5%" bgcolor="#cceeff"><font size="3" face="Times New Roman, Times, serif">675</font></td>
    <td width="1%" valign="bottom" bgcolor="#cceeff">&nbsp;</td>
    <td width="3%" valign="bottom" bgcolor="#cceeff">
      <div align="right"><font size="3" face="Times New Roman, Times, serif">11</font></div>
    </td>
    <td width="2%" valign="bottom" bgcolor="#cceeff"><font size="3" face="Times New Roman, Times, serif">%</font></td>
    <td valign=bottom align=left width="1%%" bgcolor="#cceeff">&nbsp;</td>
    <td valign=bottom noWrap align=right width="5%" bgcolor="#cceeff"><font size="3" face="Times New Roman, Times, serif">128</font></td>
    <td width="1%" valign="bottom" bgcolor="#cceeff"><font size="3" face="Times New Roman, Times, serif">%</font></td>
  </tr>
  <tr valign=bottom>
    <td colspan="2">
      <div style="MARGIN-LEFT: 10px; TEXT-INDENT: -10px"><font face="Times New Roman, Times, serif" size="3">&nbsp;&nbsp;
        Mobile peripheral products:</font></div>
    </td>
    <td width="3%">&nbsp;</td>
    <td align=left width="1%">&nbsp;</td>
    <td align=right style="border-bottom: 1px solid #000000" width="3%">
      <div align="right"></div>
    </td>
    <td width="1%">&nbsp;</td>
    <td valign=bottom align=right style="border-bottom: 1px solid #000000" width="3%">
      <div align="right"></div>
    </td>
    <td valign=bottom align=right style="border-bottom: 1px solid #000000" width="2%">
      <div align="left"></div>
    </td>
    <td align=left width="1%">&nbsp;</td>
    <td align=left width="1%">&nbsp;</td>
    <td align=right style="border-bottom: 1px solid #000000" width="3%">
      <div align="right"></div>
    </td>
    <td width="1%">&nbsp;</td>
    <td align=right style="border-bottom: 1px solid #000000" width="3%">
      <div align="right"></div>
    </td>
    <td align=right style="border-bottom: 1px solid #000000" width="2%">
      <div align="left"></div>
    </td>
    <td align=left width="1%%">&nbsp;</td>
    <td align=right style="border-bottom: 1px solid #000000" width="3%">
      <div align="right"></div>
    </td>
    <td width="1%">&nbsp;</td>
  </tr>
  <tr>
    <td colspan="2" bgcolor="#cceeff">
      <div style="MARGIN-LEFT: 10px; TEXT-INDENT: -10px"><font face="Times New Roman, Times, serif" size="3">&nbsp;&nbsp;
        &nbsp;&nbsp; Data collection</font></div>
    </td>
    <td width="3%" bgcolor="#cceeff">&nbsp;</td>
    <td valign=bottom align=left width="1%" bgcolor="#cceeff">&nbsp;</td>
    <td valign=bottom noWrap align=right width="5%" bgcolor="#cceeff"><font size="3" face="Times New Roman, Times, serif">1,714</font></td>
    <td width="1%" valign="bottom" bgcolor="#cceeff">&nbsp;</td>
    <td width="3%" valign="bottom" bgcolor="#cceeff">
      <div align="right"><font size="3" face="Times New Roman, Times, serif">36</font></div>
    </td>
    <td width="2%" valign="bottom" bgcolor="#cceeff">
      <div align="left"><font size="3" face="Times New Roman, Times, serif">%</font></div>
    </td>
    <td valign=bottom align=left width="1%" bgcolor="#cceeff">&nbsp;</td>
    <td valign=bottom align=left width="1%" bgcolor="#cceeff">&nbsp;</td>
    <td valign=bottom noWrap align=right width="5%" bgcolor="#cceeff"><font size="3" face="Times New Roman, Times, serif">2,505</font></td>
    <td width="1%" valign="bottom" bgcolor="#cceeff">&nbsp;</td>
    <td width="3%" valign="bottom" bgcolor="#cceeff">
      <div align="right"><font size="3" face="Times New Roman, Times, serif">41</font></div>
    </td>
    <td width="2%" valign="bottom" bgcolor="#cceeff">
      <div align="left"><font size="3" face="Times New Roman, Times, serif">%</font></div>
    </td>
    <td valign=bottom align=left width="1%%" bgcolor="#cceeff">&nbsp;</td>
    <td valign=bottom noWrap align=right width="5%" bgcolor="#cceeff"><font size="3" face="Times New Roman, Times, serif">(32</font></td>
    <td width="1%" valign="bottom" bgcolor="#cceeff"><font size="3" face="Times New Roman, Times, serif">%)</font></td>
  </tr>
  <tr valign=bottom>
    <td colspan="2">
      <div style="MARGIN-LEFT: 10px; TEXT-INDENT: -10px"><font face="Times New Roman, Times, serif" size="3">&nbsp;&nbsp;
        &nbsp;&nbsp; Connectivity</font></div>
    </td>
    <td width="3%">&nbsp;</td>
    <td valign=bottom align=left width="1%">&nbsp;</td>
    <td valign=bottom noWrap align=right width="5%"><font size="3" face="Times New Roman, Times, serif">236</font></td>
    <td width="1%" valign="bottom">&nbsp;</td>
    <td width="3%" valign="bottom">
      <div align="right"><font size="3" face="Times New Roman, Times, serif">5</font></div>
    </td>
    <td width="2%" valign="bottom">
      <div align="left"><font size="3" face="Times New Roman, Times, serif">%</font></div>
    </td>
    <td valign=bottom align=left width="1%">&nbsp;</td>
    <td valign=bottom align=left width="1%">&nbsp;</td>
    <td noWrap align=right width="5%"><font size="3" face="Times New Roman, Times, serif">469</font></td>
    <td width="1%">&nbsp;</td>
    <td width="3%">
      <div align="right"><font size="3" face="Times New Roman, Times, serif">8</font></div>
    </td>
    <td width="2%">
      <div align="left"><font size="3" face="Times New Roman, Times, serif">%</font></div>
    </td>
    <td valign=bottom align=left width="1%%">&nbsp;</td>
    <td noWrap align=right width="5%"><font size="3" face="Times New Roman, Times, serif">(50</font></td>
    <td width="1%" valign="bottom"><font size="3" face="Times New Roman, Times, serif">%)</font></td>
  </tr>
  <tr valign=bottom>
    <td colspan="2" height="10" bgcolor="#cceeff">
      <div style="MARGIN-LEFT: 10px; TEXT-INDENT: -10px"><font face="Times New Roman, Times, serif" size="3">&nbsp;&nbsp;
        &nbsp;&nbsp; Serial interface products</font></div>
    </td>
    <td height="10" width="3%" bgcolor="#cceeff">&nbsp;</td>
    <td valign=bottom align=left width="1%" height="10" bgcolor="#cceeff">&nbsp;</td>
    <td valign=bottom noWrap align=right width="5%" height="10" bgcolor="#cceeff"><font size="3" face="Times New Roman, Times, serif">362</font></td>
    <td width="1%" valign="bottom" height="10" bgcolor="#cceeff">&nbsp;</td>
    <td width="3%" valign="bottom" height="10" bgcolor="#cceeff">
      <div align="right"><font size="3" face="Times New Roman, Times, serif">8</font></div>
    </td>
    <td width="2%" valign="bottom" height="10" bgcolor="#cceeff">
      <div align="left"><font size="3" face="Times New Roman, Times, serif">%</font></div>
    </td>
    <td valign=bottom align=left width="1%" height="10" bgcolor="#cceeff">&nbsp;</td>
    <td valign=bottom align=left width="1%" height="10" bgcolor="#cceeff">&nbsp;</td>
    <td noWrap align=right width="5%" height="10" bgcolor="#cceeff"><font size="3" face="Times New Roman, Times, serif">572</font></td>
    <td width="1%" height="10" bgcolor="#cceeff">&nbsp;</td>
    <td width="3%" height="10" bgcolor="#cceeff">
      <div align="right"><font size="3" face="Times New Roman, Times, serif">9</font></div>
    </td>
    <td width="2%" height="10" bgcolor="#cceeff">
      <div align="left"><font size="3" face="Times New Roman, Times, serif">%</font></div>
    </td>
    <td valign=bottom align=left width="1%%" height="10" bgcolor="#cceeff">&nbsp;</td>
    <td noWrap align=right width="5%" height="10" bgcolor="#cceeff"><font size="3" face="Times New Roman, Times, serif">(37</font></td>
    <td width="1%" valign="bottom" height="10" bgcolor="#cceeff"><font size="3" face="Times New Roman, Times, serif">%)</font></td>
  </tr>
  <tr>
    <td colspan="2">
      <div style="MARGIN-LEFT: 10px; TEXT-INDENT: -10px"><font face="Times New Roman, Times, serif" size="3">&nbsp;&nbsp;
        OEM embedded products</font></div>
    </td>
    <td width="3%">&nbsp;</td>
    <td valign=bottom align=left width="1%" style="border-bottom: 1px solid #000000"><font size="3" face="Times New Roman, Times, serif">&nbsp</font></td>
    <td valign=bottom noWrap align=right width="5%" style="border-bottom: 1px solid #000000"><font size="3" face="Times New Roman, Times, serif">919</font></td>
    <td width="1%" valign="bottom">&nbsp;</td>
    <td valign=bottom noWrap align=right width="5%" style="border-bottom: 1px solid #000000"><font size="3" face="Times New Roman, Times, serif">19</font></td>
    <td align="right" nowrap style="border-bottom: 1px solid #000000" valign="bottom">
      <div align="left"><font face="Times New Roman, Times, serif" size="3">%&nbsp</font></div>
    </td>
    <td valign=bottom align=left width="1%">&nbsp;</td>
    <td valign=bottom align=left width="1%" style="border-bottom: 1px solid #000000"><font size="3" face="Times New Roman, Times, serif">&nbsp</font></td>
    <td valign=bottom noWrap align=right width="5%" style="border-bottom: 1px solid #000000"><font size="3" face="Times New Roman, Times, serif">1,949</font></td>
    <td width="1%" valign="bottom">&nbsp;</td>
    <td valign=bottom noWrap align=right width="5%" style="border-bottom: 1px solid #000000"><font size="3" face="Times New Roman, Times, serif">31</font></td>
    <td align="right" nowrap style="border-bottom: 1px solid #000000" valign="bottom">
      <div align="left"><font face="Times New Roman, Times, serif" size="3">%&nbsp</font></div>
    </td>
    <td valign=bottom align=left width="1%%">&nbsp;</td>
    <td noWrap align=right width="5%" valign="bottom"><font size="3" face="Times New Roman, Times, serif">(53</font></td>
    <td width="1%" valign="bottom"><font size="3" face="Times New Roman, Times, serif">%)</font></td>
  </tr>
  <tr valign=bottom>
    <td colspan="2" bgcolor="#cceeff">
      <div style="MARGIN-LEFT: 10px; TEXT-INDENT: -10px"><font face="Times New Roman, Times, serif" size="3">&nbsp;&nbsp;
        &nbsp;&nbsp; Total</font></div>
    </td>
    <td width="3%" bgcolor="#cceeff">&nbsp;</td>
    <td valign=bottom align=left style="border-bottom: 3px double #000000" width="1%" bgcolor="#cceeff" ><font size="3" face="Times New Roman, Times, serif">$</font></td>
    <td valign=bottom align=right style="border-bottom: 3px double #000000" width="5%" bgcolor="#cceeff" ><font size="3" face="Times New Roman, Times, serif">4,772</font></td>
    <td width="1%" height="10" bgcolor="#cceeff">&nbsp;</td>
    <td align=right style="border-bottom: 3px double #000000" width="5%" bgcolor="#cceeff" ><font size="3" face="Times New Roman, Times, serif">100</font></td>
    <td width="2%" bgcolor="#cceeff" style="border-bottom: 3px double #000000"><font size="3" face="Times New Roman, Times, serif">%</font></td>
    <td align=left width="1%" height="14" bgcolor="#cceeff">&nbsp;</td>
    <td align=left style="border-bottom: 3px double #000000" width="1%" bgcolor="#cceeff" ><font size="3" face="Times New Roman, Times, serif">$</font></td>
    <td align=right style="border-bottom: 3px double #000000" width="5%" bgcolor="#cceeff" ><font size="3" face="Times New Roman, Times, serif">6,170</font></td>
    <td width="1%" height="10" bgcolor="#cceeff">&nbsp;</td>
    <td align=right style="border-bottom: 3px double #000000" width="5%" bgcolor="#cceeff" ><font size="3" face="Times New Roman, Times, serif">100</font></td>
    <td width="2%" bgcolor="#cceeff" style="border-bottom: 3px double #000000"><font size="3" face="Times New Roman, Times, serif">%</font></td>
    <td align=left width="1%%" height="14" bgcolor="#cceeff">&nbsp;</td>
    <td noWrap align=right width="5%" bgcolor="#cceeff"><font size="3" face="Times New Roman, Times, serif">(23</font></td>
    <td width="1%" bgcolor="#cceeff"><font size="3" face="Times New Roman, Times, serif">%)</font></td>
  </tr>
</table>
<p><font face="Times New Roman, Times, serif"><br>
  Our mobile handheld computer product revenues in the first quarter of 2009 were
  $1.5 million, an increase of 128% compared to revenues of $0.7 million in the
  first quarter of 2008. We began shipping our first mobile handheld computer,
  the SoMo 650, to customers through our distribution channel in the second quarter
  of 2007. In the third quarter of 2007, we completed our objectives of ramping
  up production and fully stocking our distribution channel to enable the commencement
  of widespread customer evaluation, qualification, and deployment. We began offering
  Windows Mobile 6 Classic and multiple language support for the SoMo 650 in the
  second quarter of 2008, giving customers a choice of operating systems and languages
  to best fit their needs. In late 2008, we introduced the SoMo 650 Model Rx with
  an antimicrobial case for the healthcare market designed to reduce the risk
  of the spread of bacteria from the use of handheld devices in a healthcare environment,
  and the SoMo 650 Model DX without Bluetooth or wireless LAN for high security
  environments. Increased revenues from our mobile handheld computer products
  in the first quarter of 2009, compared to the same quarter one year ago, reflect
  higher sales volumes due to a growing customer base with larger average unit
  deployments. Although the comparable first quarters indicate substantial growth
  in our mobile handheld computer revenues, we believe this growth has been slowed
  by the worldwide economic slowdown, as our customers are taking longer to make
  their deployment decisions. In the first quarter of 2009 mobile handheld computer
  revenues grew by 2% compared to the previous fourth quarter of 2008. In the
  fourth quarter of 2008, our mobile handheld computer revenues were flat compared
  with the previous third quarter.</font></p>
<p><font face="Times New Roman, Times, serif">Our data collection product revenues
  in the first quarter of 2009 were $1.7 million, a decrease of 32% compared to
  revenues of $2.5 million in the first quarter of 2008. Revenue decreases of
  $0.4 million were from reduced sales of our Cordless Hand Scanner, revenue decreases
  of $0.3 million were from reduced sales of our SDIO In-Hand Scan card, and additional
  decreases were from reduced sales of our primary scanning product, the CompactFlash
  In-Hand Scan card. Our data collection product revenues have been slowed in
  the first quarter 2009 by the worldwide economic slowdown. </font></p>
<p>&nbsp;</p>
<p align=center><font face="Times New Roman, Times, serif" size="3">15<br>
  </font>
<p align=center>
<hr width="100%">
<p><font face="Times New Roman, Times, serif" size="3"><a href="#TAB">(Index)</a></font>
</p>
<p><font face="Times New Roman, Times, serif">Our connectivity product revenues
  in the first quarter of 2009 were $236,000, a decline of 50% compared to revenues
  of $469,000 in the first quarter of 2008. The decline resulted from reduced
  sales volumes of our Modem plug-in products and Ethernet plug-in products due
  to reduced corporate deployment of these wired connection solutions and the
  effects of the worldwide economic slowdown.</font></p>
<p align=left><font face="Times New Roman, Times, serif">Our serial interface
  product revenues in the first quarter of 2009 were $362,000, a decrease of 37%
  compared to revenues of $572,000 in the first quarter of 2008. Revenue decreases
  were from reduced sales of our standard serial PC card products. Our standard
  serial PC card products are primarily sold to connect peripheral devices or
  other electronic equipment to notebook computers. Sales of our CompactFlash
  card product and cordless Bluetooth serial adapter product were flat in the
  comparable periods. </font>
<p><font face="Times New Roman, Times, serif">Our OEM embedded product revenues
  in the first quarter of 2009 were $0.9 million, a decrease of 53% compared to
  $1.9 million in the first quarter of 2008. Revenue decreases of $1.0 million
  in sales of our Bluetooth modules were from reduced shipments to our OEM customers
  due to last-buy purchases beginning in the third quarter of 2008, the majority
  of these shipments made in the latter half of 2008, with final remaining shipments
  completed in the first quarter of 2009. Increases in sales of our wireless LAN
  modules and wireless LAN plug-in cards were offset by declines in sales of our
  Bluetooth plug-in cards. Lower Bluetooth plug-in product revenues reflect lower
  overall requirements for these products by our OEM customer group.</font></p>
<p><font face="Times New Roman, Times, serif" size="3"><b>Gross Margins<br>
  </b></font><font face="Times New Roman, Times, serif">Our gross margins for
  the first quarter of 2009 were 47% compared to 49% in the comparable period
  one year ago. We generally price our products as a markup from our cost, and
  we offer discount pricing for higher volume purchases. Reductions in overall
  margins in the first quarter of 2009 compared to the same period one year ago
  are due primarily to increased sales of our mobile handheld computer, which
  comprised 32% of our revenues in the first quarter of 2009 compared to 11% in
  the first quarter last year, at margins below our average product margins. Additional
  margin declines in the first quarter of 2009 are due to our fixed overhead costs,
  which comprise a greater portion of the overall revenues and cost of goods sold
  due to lower revenues in the first quarter of 2009 compared to the same quarter
  one year ago.</font></p>
<p><font face="Times New Roman, Times, serif" size="3"><b>Research and Development
  Expense<br>
  </b></font><font face="Times New Roman, Times, serif">Research and development
  expense in the first quarter of 2009 was $0.8 million, a decrease of 35% compared
  to $1.2 million in the first quarter of 2008. Two thirds of the reduction in
  research and development expense in the first quarter of 2009 was due to reduced
  personnel costs as the result of the reduction-in-force action initiated in
  the fourth quarter of 2008 and reductions in employee compensation during the
  first quarter of 2009. In the fourth quarter of 2008 the Company initiated a
  range of expense reductions across all departments and functional expense categories
  in response to the worldwide economic slowdown, with additional reductions following
  in the first quarter of 2009. Additional reductions in research and development
  expense in the first quarter of 2009 were from reduced development fees due
  to a reduction in product development activities, and reduced equipment costs
  related to the reductions in product development activities. Research and development
  expense in the second quarter of 2009 are expected to continue at levels similar
  to the first quarter.<br>
  <br>
  <br>
  </font></p>
<p align=center><font face="Times New Roman, Times, serif" size="3">16<br>
  </font>
<p align=center>
<hr width="100%">
<p><font face="Times New Roman, Times, serif" size="3"><a href="#TAB">(Index)</a></font>
</p>
<p><font face="Times New Roman, Times, serif"><b>Sales and Marketing Expense</b><br>
  Sales and marketing expense for the first quarter of 2009 was $1.4 million,
  a decrease of 27% compared to $1.9 million in the first quarter of 2008. Over
  half of the reduction in sales and marketing expense in the first quarter of
  2009 was due to reduced personnel costs as a result of the reduction-in-force
  action initiated in the fourth quarter of 2008 referred to above and reductions
  in employee compensation during the first quarter of 2009. Additional notable
  reductions in sales and marketing expense in the first quarter of 2009 were
  in the categories of advertising and promotion expense, travel, outside services,
  and equipment costs. Sales and marketing expense in the second quarter of 2009
  is expected to continue at levels similar to the first quarter.</font></p>
<p><font face="Times New Roman, Times, serif" size="3"><b>General and Administrative
  Expense<br>
  </b></font><font face="Times New Roman, Times, serif">General and administrative
  expense for the first quarter of 2009 was $642,000, a decrease of 20% compared
  to $805,000 in the first quarter of 2008. Two thirds of the reduction in expense
  in the first quarter of 2009 was due to reduced payroll costs primarily from
  reductions in employee compensation. Additional reductions in general and administrative
  expense in the comparable first quarter periods were primarily in reduced consulting
  and professional fees. General and administrative expense is expected to decline
  in the second quarter of 2009 from first quarter levels due to the absence of
  professional fees expense related to the costs of our annual audit which are
  expensed in the fourth and first quarters.</font></p>
<p><font face="Times New Roman, Times, serif" size="3"><b>Amortization of Intangibles<br>
  </b></font><font face="Times New Roman, Times, serif">In July 2004 we acquired
  a patent which covers the design and functioning of plug-in bar code scanners,
  bar code imagers, and radio frequency identification products. The patent was
  purchased for $600,000 and has been capitalized as an intangible asset. The
  patent is being amortized on a straight line basis over a ten-year period. Intangible
  assets of $571,000 remaining from a prior acquisition in 2000 consist of developed
  software and technology with estimated lives at the time of acquisition of 8.5
  years. Such amount has now been fully amortized. Amortization charges for the
  three months ended March 31, 2009 and 2008 for all acquired intangibles were
  $32,000, but will be $15,000 per quarter going forward until fully amortized.</font></p>
<p><font face="Times New Roman, Times, serif" size="3"><b>Interest Income and
  Expense<br>
  </b></font><font face="Times New Roman, Times, serif">Interest income reflects
  interest earned on cash balances. Interest income in the first quarter of 2009
  was $350 compared to interest income of $12,000 in the comparable period one
  year ago. Lower interest income in the first quarter of 2009 reflects lower
  average cash balances combined with lower average rates of return.</font></p>
<p><font face="Times New Roman, Times, serif">Interest expense in the first quarter
  of 2009 was $65,000 compared to interest expense of $13,000 in the same period
  one year ago. Interest expense is related to interest on equipment lease financing
  obligations and interest on amounts drawn on our bank lines of credit, and in
  2008 also included interest related to a term loan outstanding during 2008,
  the balance of which was paid back in full at the end of 2008 in conjunction
  with a new credit line agreement. Higher interest expense in the first quarter
  of 2009 is due to higher average balances outstanding on our bank lines of credit
  at higher overall interest rates compared to the same quarter one year ago.
  Interest expense in the second quarter of 2009 is expected to continue at levels
  similar to the first quarter.<br>
  <br>
  </font></p>
<p>&nbsp;</p>
<p></p>
<p align=center><font face="Times New Roman, Times, serif" size="3">17<br>
  </font>
<p align=center>
<hr width="100%">
<p align=left>
<p align=left><font face="Times New Roman, Times, serif" size="3"><a href="#TAB">(Index)</a></font>
<p><font face="Times New Roman, Times, serif"><b>Taxes</b><br>
  Deferred income tax reflects the net tax effects of temporary differences between
  the carrying amount of assets and liabilities for financial reporting purposes
  and the amount used for income tax purposes. Deferred tax expense of $8,000
  in each of the three month periods ended March 31, 2009 and 2008, and the corresponding
  deferred tax liability shown on the Company's balance sheet, is related entirely
  to the deferred tax liability on the portion of the Company's goodwill amortized
  for tax purposes. Due to the indefinite characteristic of this deferred tax
  liability, it cannot be offset against deferred tax assets, and furthermore,
  this deferred tax liability may never reverse. The Company maintains a full
  valuation allowance for all other components of deferred tax assets. The Company
  has not generated taxable income in any periods in any jurisdiction, foreign
  or domestic.</font></p>
<p><font face="Times New Roman, Times, serif"><b>Liquidity and Capital Resources</b><br>
  We were unprofitable in the first quarter of 2009 and in each of the quarters
  in fiscal years 2008, 2007, and 2006. We were profitable in two quarters in
  2005, but unprofitable for fiscal year 2005. Fiscal year 2004 was the only profitable
  year in our history, but only to the extent of $288,000. Prior to 2004, we incurred
  significant operating losses in each financial period since our inception. We
  may continue to be unprofitable in the foreseeable future. Historically we have
  financed our operations through the sale of equity securities, equipment financing,
  and revolving bank lines of credit. Since our inception we have raised approximately
  $39 million in equity capital to fund our operations.</font></p>
<p><font face="Times New Roman, Times, serif">Cash provided by operating activities
  was $183,000 in the first quarter of 2009 compared to cash used in operating
  activities of $1,026,000 in the first quarter of 2008. Cash used in the first
  quarter of 2009 resulting from our net loss adjusted for non-cash items was
  $410,000 compared to cash used of $547,000 in the first quarter of 2008 from
  our net loss adjusted for non-cash items. Adjustments for non-cash items consisting
  of depreciation and amortization, amortization of intangibles, gains and losses
  on foreign currency transactions, changes in deferred rent, deferred tax expense,
  and stock-based compensation expense, totaled $302,000 in the first quarter
  of 2009 compared to $411,000 in the first quarter of 2008. Changes in working
  capital balances in the first quarter of 2009 resulted in a source of cash of
  $593,000, and were primarily from reductions in inventory, due primarily to
  reduced stocking levels of our mobile handheld computer as a result of actively
  managing overall inventory levels downward from year end levels, and reductions
  in accounts receivable due to lower shipments in the first quarter of 2009 compared
  to the previous quarter, partially offset by reductions in accounts payable
  due to reductions in overall expenses and inventory purchases in the first quarter
  that create those payables, and reductions in deferred income on shipments to
  distributors due to lower stocking levels of our products in the distribution
  channel. Changes in working capital balances in the first quarter of 2008 resulted
  in a use of cash of $479,000, and were primarily from increases in accounts
  receivable due to the timing of shipments in the last month of the first quarter
  of 2008 and the timing of collections from key distributors concentrated at
  the end of the immediately preceding quarter, and increases in inventories due
  primarily to stocking of our mobile handheld computer, partially offset by increases
  in accounts payable due to the purchases that led to the increased levels of
  inventories.</font></p>
<p><font face="Times New Roman, Times, serif">Cash used in investing activities
  was $88,000 in the first quarter of 2009 compared to $105,000 in the first quarter
  of 2008. Reduced investing activities reflects reductions in equipment and tooling
  purchases due to fewer development projects requiring these expenditures.</font></p>
<P>&nbsp;</P>
<p align=center><font face="Times New Roman, Times, serif" size="3">18<br>
  </font>
<p align=center>
<hr width="100%">
<p align=left>
<p align=left><font face="Times New Roman, Times, serif" size="3"><a href="#TAB">(Index)</a></font>
<p align=left><font face="Times New Roman, Times, serif">Cash provided by financing
  activities was $567,000 in the first quarter of 2009 compared to $99,000 in
  the first quarter of 2008. Financing activities in the first quarter of 2009
  consisted primarily of a net increase in the amounts drawn on our bank lines
  of credit. Financing activities in the first quarter of 2008 consisted of a
  net increase in amounts drawn on our bank lines of credit and the proceeds from
  the exercise of stock options, partially offset by repayments on our bank term
  loan, which was fully paid at the end of 2008 in conjunction with a new credit
  line agreement. </font>
<p align=left><font face="Times New Roman, Times, serif">Our cash balances at
  March 31, 2009 were $1.4 million, including cash of $1.6 million drawn against
  our bank line of credit. In February 2009, we extended our bank line of credit
  agreement which will now expire on March 24, 2010. At March 31, 2009, our balance
  sheet had a current ratio (current assets divided by current liabilities) of
  1.02 to 1.0, and no material long term debt. In the fourth quarter of 2008 the
  Company took actions to reduce expenses, including a reduction in force of 12%
  of our worldwide workforce, to align our cost structure with current economic
  conditions in light of slowing business spending due to the current economic
  downturn. We have taken additional actions in the first quarter of 2009 to reduce
  expenses. We have the ability to further reduce expenses if necessary. We believe
  our existing cash, plus our ability to reduce costs, and our bank lines of credit
  will be sufficient to meet our funding requirements at least through March 31,
  2010. If we can return to profitability and revenue growth, we anticipate requirements
  for cash will include funding of higher receivable and inventory balances, and
  increasing expenses, including more employees to support our growth and increases
  in salaries, benefits, and related support costs for employees. If we cannot
  return to profitability, we will not be able to support our operations from
  positive cash flows, and we would use our existing cash to support operating
  losses. There can be no assurance that additional capital will be available
  on acceptable terms, if at all, and any such terms may be dilutive to existing
  stockholders. If we are unable to secure the necessary capital for our business,
  we may need to suspend some or all of our current operations. </font>
<p><font face="Times New Roman, Times, serif">Our contractual cash obligations
  at March 31, 2009 are outlined in the table below:<br>
  <br>
  </font></p>
<table width="70%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10.0pt; margin-top: 6pt; ">
  <tr>
    <td colspan="2" height="15">&nbsp;</td>
    <td width="4%" height="15">&nbsp;</td>
    <td colspan="18" align="center" nowrap class="border" style="border-bottom: 1px solid #000000" height="15"><font size="3" face="Times New Roman, Times, serif">Payments
      Due by Period</font></td>
    <td width="1%" class="border" height="15">&nbsp;</td>
  </tr>
  <tr>
    <td colspan="2" style="border-bottom: 1px solid #000000">
      <div align="center"><font size="3" face="Times New Roman, Times, serif">Contractual
        Obligations</font></div>
    </td>
    <td width="4%"><font face="Times New Roman, Times, serif"><b><font size="3">&nbsp</font></b></font></td>
    <td colspan="2" align="center" nowrap class="border" style="border-bottom: 1px solid #000000"><font size="3" face="Times New Roman, Times, serif">Total</font></td>
    <td width="1%" class="border">&nbsp;</td>
    <td class="border" width="4%">&nbsp;</td>
    <td colspan="2" align="center" nowrap class="border" style="border-bottom: 1px solid #000000"><font size="3" face="Times New Roman, Times, serif">Less
      than<br>
      1 year</font></td>
    <td width="1%" class="border">&nbsp;</td>
    <td width="4%" class="border">&nbsp;</td>
    <td colspan="2" align="center" nowrap class="border" style="border-bottom: 1px solid #000000"><font size="3" face="Times New Roman, Times, serif">1
      to 3<br>
      years</font></td>
    <td width="1%" class="border">&nbsp;</td>
    <td width="4%" class="border">&nbsp;</td>
    <td colspan="2" align="center" nowrap class="border" style="border-bottom: 1px solid #000000"><font size="3" face="Times New Roman, Times, serif">4
      to 5<br>
      years</font></td>
    <td width="1%" class="border">&nbsp;</td>
    <td width="4%" class="border">&nbsp;</td>
    <td colspan="2" align="center" nowrap class="border" valign="bottom" style="border-bottom: 1px solid #000000"><font size="3" face="Times New Roman, Times, serif">More
      than<br>
      5 years</font></td>
    <td colspan="4" width="1%">&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td colspan="2" align="left" bgcolor="#cceeff">
      <div style="margin-left: 10px; text-indent: -10px"><font size="3" face="Times New Roman, Times, serif">
        Capital leases</font></div>
    </td>
    <td bgcolor="#cceeff" width="4%">&nbsp;</td>
    <td align="left" bgcolor="#cceeff" width="1%"><font size="3" face="Times New Roman, Times, serif">$</font></td>
    <td align="right" width="8%" nowrap bgcolor="#cceeff"><font size="3" face="Times New Roman, Times, serif">24,000</font></td>
    <td bgcolor="#cceeff" width="1%">&nbsp;</td>
    <td bgcolor="#cceeff" width="4%">&nbsp;</td>
    <td align="left" width="1%" bgcolor="#cceeff"><font size="3" face="Times New Roman, Times, serif"><font color="#000000">$</font></font></td>
    <td align="right" nowrap bgcolor="#cceeff" width="8%"><font size="3" face="Times New Roman, Times, serif">13,000</font></td>
    <td bgcolor="#cceeff" width="1%">&nbsp;</td>
    <td bgcolor="#cceeff" width="4%">&nbsp;</td>
    <td align="left" width="1%" bgcolor="#cceeff"><font size="3" face="Times New Roman, Times, serif"><font color="#000000">$</font></font></td>
    <td align="right" nowrap bgcolor="#cceeff" width="8%"><font size="3" face="Times New Roman, Times, serif">11,000</font></td>
    <td bgcolor="#cceeff" width="1%">&nbsp;</td>
    <td bgcolor="#cceeff" width="4%">&nbsp;</td>
    <td align="left" width="1%" bgcolor="#cceeff"><font size="3" face="Times New Roman, Times, serif"><font color="#000000">$</font></font></td>
    <td align="right" nowrap bgcolor="#cceeff" width="8%"><font size="3" face="Times New Roman, Times, serif">---</font></td>
    <td bgcolor="#cceeff" width="1%">&nbsp;</td>
    <td bgcolor="#cceeff" width="4%">&nbsp;</td>
    <td align="left" width="1%" bgcolor="#cceeff" valign="bottom"><font size="3" face="Times New Roman, Times, serif"><font color="#000000">$</font></font></td>
    <td align="right" nowrap bgcolor="#cceeff" width="8%"><font size="3" face="Times New Roman, Times, serif">---</font></td>
    <td colspan="4" width="1%">&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td colspan="2">
      <div style="margin-left: 10px; text-indent: -10px"><font size="3" face="Times New Roman, Times, serif">Operating
        leases</font></div>
    </td>
    <td width="4%">&nbsp;</td>
    <td align="left" width="1%">&nbsp;</td>
    <td align="right" width="8%" nowrap><font size="3" face="Times New Roman, Times, serif">1,252,000</font></td>
    <td width="1%">&nbsp;</td>
    <td width="4%">&nbsp;</td>
    <td align="left" width="1%">&nbsp;</td>
    <td align="right" width="8%" nowrap><font size="3" face="Times New Roman, Times, serif">372,000</font></td>
    <td width="1%">&nbsp;</td>
    <td width="4%">&nbsp;</td>
    <td align="left" width="1%">&nbsp;</td>
    <td align="right" width="8%" nowrap ><font size="3" face="Times New Roman, Times, serif">781,000</font></td>
    <td width="1%">&nbsp;</td>
    <td width="4%">&nbsp;</td>
    <td align="left" width="1%">&nbsp;</td>
    <td align="right" width="8%" nowrap><font size="3" face="Times New Roman, Times, serif">99,000</font></td>
    <td width="1%">&nbsp;</td>
    <td width="4%">&nbsp;</td>
    <td align="left" width="1%" valign="bottom">&nbsp;</td>
    <td align="right" width="8%" nowrap><font size="3" face="Times New Roman, Times, serif">---</font></td>
    <td colspan="4" width="1%">&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td colspan="2" align="left" bgcolor="#cceeff">
      <div style="margin-left: 10px; text-indent: -10px"><font size="3" face="Times New Roman, Times, serif">
        Bank line of credit</font></div>
    </td>
    <td bgcolor="#cceeff" width="4%">&nbsp;</td>
    <td align="left" bgcolor="#cceeff" width="1%">&nbsp;</td>
    <td align="right" width="8%" nowrap bgcolor="#cceeff"><font size="3" face="Times New Roman, Times, serif">1,576,000</font></td>
    <td bgcolor="#cceeff" width="1%">&nbsp;</td>
    <td bgcolor="#cceeff" width="4%">&nbsp;</td>
    <td align="left" width="1%" bgcolor="#cceeff"><font size="3" face="Times New Roman, Times, serif"><font color="#000000">$</font></font></td>
    <td align="right" nowrap bgcolor="#cceeff" width="8%"><font size="3" face="Times New Roman, Times, serif">1,576,000</font></td>
    <td bgcolor="#cceeff" width="1%">&nbsp;</td>
    <td bgcolor="#cceeff" width="4%">&nbsp;</td>
    <td align="left" width="1%" bgcolor="#cceeff">&nbsp;</td>
    <td align="right" nowrap bgcolor="#cceeff" width="8%"><font size="3" face="Times New Roman, Times, serif">---</font></td>
    <td bgcolor="#cceeff" width="1%">&nbsp;</td>
    <td bgcolor="#cceeff" width="4%">&nbsp;</td>
    <td align="left" width="1%" bgcolor="#cceeff">&nbsp;</td>
    <td align="right" nowrap bgcolor="#cceeff" width="8%"><font size="3" face="Times New Roman, Times, serif">---</font></td>
    <td bgcolor="#cceeff" width="1%">&nbsp;</td>
    <td bgcolor="#cceeff" width="4%">&nbsp;</td>
    <td align="left" width="1%" bgcolor="#cceeff" valign="bottom">&nbsp;</td>
    <td align="right" nowrap bgcolor="#cceeff" width="8%"><font size="3" face="Times New Roman, Times, serif">---</font></td>
    <td colspan="4" width="1%">&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td colspan="2">
      <div style="margin-left: 10px; text-indent: -10px"><font size="3" face="Times New Roman, Times, serif">
        Unconditional purchase obligations with contract manufacturers</font></div>
    </td>
    <td width="4%">&nbsp;</td>
    <td align="left" width="1%" style="border-bottom: 1px solid #000000"><font size="3" face="Times New Roman, Times, serif"><b><font color="#000000">&nbsp</font></b></font></td>
    <td align="right" width="8%" nowrap style="border-bottom: 1px solid #000000"><font size="3" face="Times New Roman, Times, serif">2,451,000</font></td>
    <td width="1%">&nbsp;</td>
    <td width="4%">&nbsp;</td>
    <td align="left" width="1%" style="border-bottom: 1px solid #000000"><font size="3" face="Times New Roman, Times, serif"><b><font color="#000000">&nbsp</font></b></font></td>
    <td align="right" nowrap width="8%" style="border-bottom: 1px solid #000000"><font size="3" face="Times New Roman, Times, serif">2,451,000</font></td>
    <td width="1%">&nbsp;</td>
    <td width="4%">&nbsp;</td>
    <td align="left" width="1%" style="border-bottom: 1px solid #000000"><font size="3" face="Times New Roman, Times, serif"><b><font color="#000000">&nbsp</font></b></font></td>
    <td align="right" nowrap width="8%" style="border-bottom: 1px solid #000000"><font size="3" face="Times New Roman, Times, serif">---</font></td>
    <td width="1%">&nbsp;</td>
    <td width="4%">&nbsp;</td>
    <td align="left" width="1%" style="border-bottom: 1px solid #000000"><font size="3" face="Times New Roman, Times, serif"><b><font color="#000000">&nbsp</font></b></font></td>
    <td align="right" nowrap width="8%" style="border-bottom: 1px solid #000000"><font size="3" face="Times New Roman, Times, serif">---</font></td>
    <td width="1%">&nbsp;</td>
    <td width="4%">&nbsp;</td>
    <td align="left" width="1%" valign="bottom" style="border-bottom: 1px solid #000000"><font size="3" face="Times New Roman, Times, serif"><b><font color="#000000">&nbsp</font></b></font></td>
    <td align="right" nowrap width="8%" style="border-bottom: 1px solid #000000"><font size="3" face="Times New Roman, Times, serif">---</font></td>
    <td colspan="4" width="1%">&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td colspan="2" bgcolor="#cceeff">
      <div style="margin-left: 10px; text-indent: -10px"><font size="3" face="Times New Roman, Times, serif">
        Total contractual cash obligations </font></div>
    </td>
    <td width="4%" bgcolor="#cceeff">&nbsp;</td>
    <td align="left" width="1%" style="border-bottom: 3px double #000000" bgcolor="#cceeff"><font size="3" face="Times New Roman, Times, serif"><font color="#000000">$</font></font></td>
    <td align="right" width="8%" nowrap style="border-bottom: 3px double #000000" bgcolor="#cceeff"><font size="3" face="Times New Roman, Times, serif">5,303,000</font></td>
    <td width="1%" bgcolor="#cceeff">&nbsp;</td>
    <td width="4%" bgcolor="#cceeff">&nbsp;</td>
    <td align="left" width="1%" style="border-bottom: 3px double #000000" bgcolor="#cceeff"><font size="3" face="Times New Roman, Times, serif"><font color="#000000">$</font></font></td>
    <td align="right" width="8%" nowrap style="border-bottom: 3px double #000000" bgcolor="#cceeff"><font size="3" face="Times New Roman, Times, serif">4,412,000</font></td>
    <td width="1%" bgcolor="#cceeff">&nbsp;</td>
    <td width="4%" bgcolor="#cceeff">&nbsp;</td>
    <td align="left" width="1%" style="border-bottom: 3px double #000000" bgcolor="#cceeff"><font size="3" face="Times New Roman, Times, serif"><font color="#000000">$</font></font></td>
    <td align="right" width="8%" nowrap style="border-bottom: 3px double #000000" bgcolor="#cceeff"><font size="3" face="Times New Roman, Times, serif">792,000</font></td>
    <td width="1%" bgcolor="#cceeff">&nbsp;</td>
    <td width="4%" bgcolor="#cceeff">&nbsp;</td>
    <td align="left" width="1%" style="border-bottom: 3px double #000000" bgcolor="#cceeff"><font size="3" face="Times New Roman, Times, serif"><font color="#000000">$</font></font></td>
    <td align="right" width="8%" nowrap style="border-bottom: 3px double #000000" bgcolor="#cceeff"><font size="3" face="Times New Roman, Times, serif">99,000</font></td>
    <td width="1%" bgcolor="#cceeff">&nbsp;</td>
    <td width="4%" bgcolor="#cceeff">&nbsp;</td>
    <td align="left" width="1%" valign="bottom" style="border-bottom: 3px double #000000" bgcolor="#cceeff"><font size="3" face="Times New Roman, Times, serif"><font color="#000000">$</font></font></td>
    <td align="right" width="8%" nowrap style="border-bottom: 3px double #000000" bgcolor="#cceeff"><font size="3" face="Times New Roman, Times, serif">---</font></td>
    <td colspan="4" width="1%">&nbsp;</td>
  </tr>
</table>
<p>&nbsp;</p>
<p><font face="Times New Roman, Times, serif" size="3"><b>Off-Balance Sheet Arrangements<br>
  </b></font><font face="Times New Roman, Times, serif">We have no off-balance
  sheet arrangements as defined in Item 303 of Regulation S-K.</font></p>
<p>&nbsp;</p>
<p align="center"><font face="Times New Roman, Times, serif" size="3">19<br>
  </font> </p>
<p align=center>
<hr width="100%">
<p align=left>
<p align=left><font face="Times New Roman, Times, serif" size="3"><a href="#TAB">(Index)</a></font>
<p align=left><font face="Times New Roman, Times, serif"><b>Recent Accounting
  Pronouncements<br>
  </b>In September 2006, the FASB issued Statement of Financial Accounting Standards
  No. 157, "Fair Value Measurements" ("SFAS 157"), which establishes a framework
  for measuring fair value and enhanced disclosures about fair value measurements.
  In February 2008, FASB issued FASB Staff Position No. FAS 157-2, "Effective
  Date of FASB Statement No. 157," which provides for a one year deferral of the
  effective date of SFAS 157 for non-financial assets and non-financial liabilities,
  except those that are recognized or disclosed in the financial statements at
  fair value on a recurring basis. We adopted the provisions of SFAS 157 as required.
  The adoption of this statement did not have a material impact on our financial
  statements. For additional discussion on fair value measurements see Note 1
  to the Condensed Financial Statements. </font>
<p align=left> <font face="Times New Roman, Times, serif" size="3"><br>
  <a
name=qqd></a></font>
<p align=left><font face="Times New Roman, Times, serif"><b>Item 3. Quantitative
  and Qualitative Disclosures About Market Risk</b></font>
<p align=left><font face="Times New Roman, Times, serif"><b>Interest Rate Risk</b>
  </font>
<p align=left><font face="Times New Roman, Times, serif">Our exposure to market
  risk for changes in interest rates relates primarily to invested cash and our
  bank credit line facilities. Our cash is invested in short-term money market
  investments backed by U.S. Treasury notes and other investments that mature
  within one year and whose principal is not subject to market rate fluctuations.
  Accordingly, interest rate declines would adversely affect our interest income
  but would not affect the carrying value of our cash investments. Based on a
  sensitivity analysis of our cash investments during the quarter ended March
  31, 2009, a decline of 1% in interest rates would not have had a material effect
  on our quarterly interest income. </font>
<p align=left><font face="Times New Roman, Times, serif">Our bank credit line
  facilities of up to $2.5 million have variable interest rates based upon the
  greater of either the lender's prime rate plus 2%, or 6%, for both the domestic
  line (up to $1.5 million) and the international line (up to $1.0 million). Accordingly,
  interest rate increases could increase our interest expense on our outstanding
  credit line balances. We utilized only a portion of our credit line facility
  at the end of 2008, followed by higher average outstanding balances on our credit
  line during the first quarter of 2009. Based on a sensitivity analysis, an increase
  of 1% in the interest rate would increase our borrowing costs by $13,000 for
  each $1 million of borrowings against our credit facility, if outstanding for
  the entire year, or a maximum of $33,000 if we utilized our entire credit line
  (in cases that the applicable interest rate is greater than 6%). The credit
  line agreement also specifies a fixed collateral handling fee of 0.7% per month
  on the full amount of the accounts receivable provided as collateral to the
  outstanding balances advanced under the credit line. </font>
<p align=left><font face="Times New Roman, Times, serif"><b>Foreign Currency Risk</b>
  </font>
<p align=left><font face="Times New Roman, Times, serif">A substantial majority
  of our revenue, expense and purchasing activities are transacted in U.S. dollars.
  However, we require our European distributors to purchase our products in Euros,
  we pay the expenses of our European employees in Euros and British pounds, and
  we may enter into selected future purchase commitments with foreign suppliers
  that may be paid in the local currency of the supplier. We hedge a significant
  portion of our European receivables balance denominated in Euros to reduce the
  foreign currency risk associated with these assets, and we have not been subject
  to significant losses from material foreign currency fluctuations. Based on
  a sensitivity analysis of our net foreign currency denominated assets and subsidiary
  expenses at the beginning, during and at the end of the quarter ended March
  31, 2009, an adverse change of 10% in exchange rates would result in an increase
  in our net loss for the first quarter of approximately $59,000, if left unprotected.
  For the first quarter of 2009 the total net adjustment for the effects of changes
  in foreign currency on cash balances, collections, payables, and derivatives
  was a net loss of $9,000. We will continue to monitor, assess, and mitigate
  through hedging activities, the risk associated with these exposures. </font>
<p align=left>&nbsp;
<p align=center><font face="Times New Roman, Times, serif" size="3">20<br>
  </font>
<p align=center>
<hr width="100%">
<p align=left>
<p align=left><font face="Times New Roman, Times, serif" size="3"><a href="#TAB">(Index)</a></font>
  <font face="Times New Roman, Times, serif" size="3"><a
name=item4></a></font>
<p><font face="Times New Roman, Times, serif"><b>Item 4T. Controls and Procedures</b>
  </font></p>
<p><font face="Times New Roman, Times, serif"><i>Conclusion Regarding the Effectiveness
  of Disclosure Controls and Procedures </i></font></p>
<p><font face="Times New Roman, Times, serif">Our management evaluated, with the
  participation of our Chief Executive Officer and our Chief Financial Officer,
  the effectiveness of our disclosure controls and procedures as of the end of
  the period covered by this Quarterly Report on Form 10-Q. Based on this evaluation,
  our Chief Executive Officer and our Chief Financial Officer have concluded that
  our disclosure controls and procedures are effective to ensure that information
  we are required to disclose in reports that we file or submit under the Securities
  Exchange Act of 1934 is (i) recorded, processed, summarized and reported within
  the time periods specified in Securities and Exchange Commission rules and forms,
  and (ii) accumulated and communicated to our management, including our Chief
  Executive Officer and our Chief Financial Officer, as appropriate to allow timely
  decisions regarding required disclosure. </font></p>
<p><font face="Times New Roman, Times, serif"><i>Changes in Internal Control Over
  Financial Reporting</i></font></p>
<p><font face="Times New Roman, Times, serif">There was no change in our internal
  control over financial reporting that occurred during the period covered by
  this Quarterly Report on Form 10-Q that has materially affected, or is reasonably
  likely to materially affect, our internal control over financial reporting.</font></p>
<p>&nbsp;</p>
<p align=center><font face="Times New Roman, Times, serif" size="3">21<br>
  </font>
<p align=center>
<hr width="100%">
<p align=left>
<p align=left><font face="Times New Roman, Times, serif" size="3"><a href="#TAB">(Index)</a></font>
  <font face="Times New Roman, Times, serif" size="3"><a
name=oth></a></font> <font face="Times New Roman, Times, serif" size="3"><a
name=risk></a></font>
<p><font face="Times New Roman, Times, serif"><b>PART II. OTHER INFORMATION </b>
  </font></p>
<p><font face="Times New Roman, Times, serif"><b>Item 1A. Risk Factors </b></font></p>
<p align=left><font face="Times New Roman, Times, serif"><i>The risks described
  in this Quarterly Report on Form 10-Q are not the only risks facing our Company.
  Additional risks and uncertainties not currently known to us or that we currently
  deem to be immaterial also may materially adversely affect our business, financial
  condition, and operating results. </i> </font>
<p align=left><font face="Times New Roman, Times, serif"><b>The global economic
  financial crisis may continue to have an impact on our business and financial
  condition in ways that we currently cannot predict, and may further limit our
  ability to raise additional funds. </b> </font>
<p align=left><font face="Times New Roman, Times, serif">The continued credit
  crisis and related turmoil in the global financial system may continue to have
  an impact on our business and our financial condition. We may face significant
  challenges if economic conditions and conditions in the financial markets do
  not improve or continue to worsen. In particular, should our revenues be materially
  less than forecast, we may find it necessary to initiate further reductions
  in our expenses, defer product development programs, we may have difficulty
  maintaining compliance with the existing covenant requirements in order to retain
  our bank line of credit, and would require additional capital to fund our operations.
  Our ability to access the capital markets and raise funds required for our operations
  may be severely restricted at a time when we would like, or need, to do so,
  which could have an adverse effect on our ability to meet our current and future
  funding requirements and on our flexibility to react to changing economic and
  business conditions. </font>
<p align=left><font face="Times New Roman, Times, serif"><b>We have a history
  of operating losses and may not achieve ongoing profitability. </b> </font>
<p><font face="Times New Roman, Times, serif">We were unprofitable in the first
  quarter of 2009 and in each of the quarters in fiscal years 2008, 2007, and
  2006. We were profitable in two quarters in 2005, but unprofitable for fiscal
  year 2005. Fiscal year 2004 was the first profitable year in our history, but
  only to the extent of $288,000. Prior to 2004, we incurred significant operating
  losses in each financial period since our inception. To achieve ongoing profitability,
  we must accomplish numerous objectives, including growth in our business and
  the development of successful new products. We cannot foresee with any certainty
  whether we will be able to achieve these objectives in the future. Accordingly,
  we may not generate sufficient net revenue or manage our expenses sufficiently
  to achieve ongoing profitability. If we cannot achieve ongoing profitability,
  we will not be able to support our operations from positive cash flows, and
  we would use our existing cash and bank line of credit to support operating
  losses. If we are unable to secure the necessary capital to replace that cash,
  we may need to suspend some or all of our current operations.</font></p>
<p><font face="Times New Roman, Times, serif"><b>We may require additional capital
  in the future, but that capital may not be available, if at all, on reasonable
  terms or on terms that would not cause substantial dilution to your stock holdings.</b></font></p>
<p><font face="Times New Roman, Times, serif">We may incur operating losses in
  future quarters and would need to raise capital to fund such losses. Our forecasts
  are highly dependent on factors beyond our control, including market acceptance
  of our products and sales of handheld computers. If capital requirements vary
  materially from those currently planned, we may require additional capital sooner
  than expected. There can be no assurance that such capital will be available
  in sufficient amounts or on terms acceptable to us, if at all. In addition,
  the availability of our bank line is dependent upon our meeting a minimum monthly
  liquidity covenant which has become more stringent (see "Note 4 - Bank Financing
  Arrangements" for more information). Operating losses could cause us to lose
  the availability of our bank line as a result of becoming non-compliant with
  this covenant, and there can be no assurance that such financing will continue
  to be available to us.</font></p>
<p>&nbsp;</p>
<p align=center><font face="Times New Roman, Times, serif" size="3">22<br>
  </font>
<p align=center>
<hr width="100%">
<p align=left>
<p align=left><font face="Times New Roman, Times, serif" size="3"><a href="#TAB">(Index)</a></font>
<p><font face="Times New Roman, Times, serif"><b>Our quarterly operating results
  may fluctuate in future periods, which could cause our stock price to decline.</b></font></p>
<p><font face="Times New Roman, Times, serif">We expect to experience quarterly
  fluctuations in operating results in the future. We generally ship orders as
  received, and as a result we may have little backlog. Quarterly revenues and
  operating results therefore depend on the volume and timing of orders received
  during the quarter, which are difficult to forecast. Historically, we have often
  recognized a substantial portion of our revenue in the last month of the quarter.
  This subjects us to the risk that even modest delays in orders may adversely
  affect our quarterly operating results. Our operating results may also fluctuate
  due to factors such as:</font></p>
<ul>
  <li><font face="Times New Roman, Times, serif" size="3">the demand for our products;<br>
    </font></li>
  <li><font face="Times New Roman, Times, serif" size="3">the size and timing
    of customer orders;<br>
    </font></li>
  <li><font face="Times New Roman, Times, serif" size="3">unanticipated delays
    or problems in our introduction of new products and product enhancements;<br>
    </font></li>
  <li><font face="Times New Roman, Times, serif" size="3">the introduction of
    new products and product enhancements by our competitors;<br>
    </font></li>
  <li><font face="Times New Roman, Times, serif" size="3">the timing of the introduction
    of new products that work with our connection products;<br>
    </font></li>
  <li><font face="Times New Roman, Times, serif" size="3">changes in the revenues
    attributable to royalties and engineering development services;<br>
    </font></li>
  <li><font face="Times New Roman, Times, serif" size="3">product mix;<br>
    </font></li>
  <li><font face="Times New Roman, Times, serif" size="3">timing of software enhancements;<br>
    </font></li>
  <li><font face="Times New Roman, Times, serif">changes <font size="3">in the
    level of operating expenses;<br>
    </font></font></li>
  <li><font face="Times New Roman, Times, serif" size="3">competitive conditions
    in the industry including competitive pressures resulting in lower average
    selling prices;<br>
    </font></li>
  <li><font face="Times New Roman, Times, serif">timing of distributors' shipments
    to their customers; and</font></li>
  <li><font face="Times New Roman, Times, serif">general economic conditions and
    conditions specifically in our customer's industries.</font></li>
</ul>
<p><font face="Times New Roman, Times, serif">Because we base our staffing and
  other operating expenses on anticipated revenues, delays in the receipt of orders
  can cause significant variations in operating results from quarter to quarter.
  As a result of any of the foregoing factors, or a combination, our results of
  operations in any given quarter may be below the expectations of public market
  analysts or investors, in which case the market price of our Common Stock would
  be adversely affected.</font></p>
<p>&nbsp;</p>
<p align=center><font face="Times New Roman, Times, serif" size="3">23<br>
  </font>
<p align=center>
<hr width="100%">
<p align=left>
<p align=left><font face="Times New Roman, Times, serif" size="3"><a href="#TAB">(Index)</a></font>
<p><font face="Times New Roman, Times, serif"><b>If third-parties do not produce
  and sell innovative products with which our products are compatible, or if our
  own line of mobile handheld computers is not successful, we may not achieve
  our sales projections.</b></font></p>
<p><font face="Times New Roman, Times, serif">Our success has been dependent upon
  the ability of third-parties in the mobile personal computer industry to successfully
  develop products that include or are compatible with our technology and then
  to sell these products into the marketplace. Even if we are successful in marketing
  and selling our new line of mobile handheld computers, our ability to generate
  increased revenue depends significantly on the commercial success of other parties'
  Windows mobile products, particularly standard Pocket PC handhelds, phone-integrated
  devices, tablet computers, and other phone-integrated devices, including those
  from Palm, Nokia, and Blackberry, with which our plug-in and wireless peripherals
  can be used, and the adoption of these mobile computer devices for business
  use. A number of manufacturers of handheld computers have reduced the number
  of handheld products offered, or curtailed development of future handheld computer
  products. If manufacturers are unable or choose not to ship new products such
  as Pocket PC and other Windows mobile devices, or experience difficulties with
  new product transitions that cause delays in the market as we have experienced
  in the past three years, or if these products, including our new line of mobile
  handheld computers, the first model of which we began shipping in June 2007,
  fail to achieve or maintain market acceptance, the number of our potential new
  customers would be reduced and we would not be able to meet our sales expectations.
  </font></p>
<p><font face="Times New Roman, Times, serif"><b>If we fail to develop and introduce
  new products rapidly and successfully, we will not be able to compete effectively,
  and our ability to generate sufficient revenues will be negatively affected.</b></font></p>
<p><font face="Times New Roman, Times, serif">The market for our products is prone
  to rapidly changing technology, evolving industry standards and short product
  life cycles. If we are unsuccessful at developing and introducing new products
  and services on a timely basis that include the latest technologies conforming
  to the newest standards and that are appealing to end users, we will not be
  able to compete effectively, and our ability to generate significant revenues
  will be seriously harmed.</font></p>
<p><font face="Times New Roman, Times, serif">The development of new products
  and services can be very difficult and requires high levels of innovation. The
  development process is also lengthy and costly. Short product life cycles expose
  our products to the risk of obsolescence and require frequent new product introductions.
  We will be unable to introduce new products and services into the market on
  a timely basis and compete successfully, if we fail to:</font></p>
<ul>
  <li><font face="Times New Roman, Times, serif">invest significant resources
    in research and development, sales and marketing, and customer support;<font size="3"><br>
    </font></font></li>
  <li><font face="Times New Roman, Times, serif">identify emerging trends, demands
    and standards in the field of mobile computing products;<font size="3"><br>
    </font></font></li>
  <li><font face="Times New Roman, Times, serif">enhance our products by adding
    additional features; <font size="3"><br>
    </font></font></li>
  <li><font face="Times New Roman, Times, serif" size="3">maintain superior or
    competitive performance in our products; and<br>
    </font></li>
  <li><font face="Times New Roman, Times, serif">anticipate our end users' needs
    and technological trends accurately.</font></li>
</ul>
<p><font face="Times New Roman, Times, serif">We cannot be sure that we will have
  sufficient resources to make adequate investments in research and development
  or that we will be able to identify trends or make the technological advances
  necessary to be competitive.</font></p>
<p align=left><font face="Times New Roman, Times, serif"><b>A significant portion
  of our revenue currently comes from two distributors, and any decrease in revenue
  from these distributors could harm our business. </b> </font>
<p><font face="Times New Roman, Times, serif">A significant portion of our revenue
  comes from two distributors, Tech Data Corp. and Ingram Micro, Inc., which together
  represented approximately 40% and 31% of our worldwide revenue in the first
  quarter of 2009 and fiscal year 2008, respectively. We expect that a significant
  portion of our revenue will continue to depend on sales to Tech Data Corp. and
  Ingram Micro, Inc. We do not have long-term commitments from Tech Data Corp.
  or Ingram Micro, Inc. to carry our products. Either could choose to stop selling
  some or all of our products at any time, and each of these companies also carries
  our competitors' products. If we lose our relationship with Tech Data Corp.
  or Ingram Micro, Inc., we would experience disruption and delays in marketing
  our products.</font></p>
<p>&nbsp; </p>
<p align=center> <font face="Times New Roman, Times, serif" size="3">24<br>
  </font>
<p align=center>
<hr width="100%">
<p align=left>
<p align=left><font face="Times New Roman, Times, serif" size="3"><a href="#TAB">(Index)</a></font>
<p align=left><font face="Times New Roman, Times, serif"><b>If the market for
  mobile computers experiences delays, or fails to grow, we will not achieve our
  sales projections.</b></font>
<p><font face="Times New Roman, Times, serif">Substantially all of our peripheral
  products are designed for use with mobile personal computers, including handhelds,
  notebook computers, tablets, and handheld computers with integrated phones.
  If the mobile personal computer industry does not grow, if its growth slows,
  or if product or operating system changeovers by mobile computer manufacturers
  and partners cause delays in the market, as we have experienced repeatedly in
  the past three years, or if the markets for our mobile handheld computers do
  not grow, or if the impact of the global economic financial crisis continues,
  we will not achieve our sales projections.</font></p>
<p><font face="Times New Roman, Times, serif"><b>Our sales will be hurt if the
  new technologies used in our products do not become widely adopted, or are adopted
  slower than expected.</b></font></p>
<p><font face="Times New Roman, Times, serif">Many of our products use new technologies,
  such as two dimensional bar code scanning and radio frequency identification,
  which are not yet widely adopted in the market. If these technologies fail to
  become widespread, or are adopted slower than expected, our sales will suffer.</font></p>
<p align=left><font face="Times New Roman, Times, serif"><b>We could face increased
  competition in the future, which would adversely affect our financial performance.
  </b> </font>
<p align=left><font face="Times New Roman, Times, serif">The market for mobile
  handheld computers in which we operate is very competitive. Our future financial
  performance is contingent on a number of unpredictable factors, including that:
  </font>
<ul>
  <li><font face="Times New Roman, Times, serif">some of our competitors have
    greater financial, marketing, and technical resources than we do; </font></li>
  <li><font face="Times New Roman, Times, serif">we periodically face intense
    price competition, particularly when our competitors have excess inventories
    and discount their prices to clear their inventories; and</font></li>
  <li><font face="Times New Roman, Times, serif">certain OEMs of personal computers,
    mobile phones and handheld computers offer built-in functions, such as Bluetooth
    wireless technology, Wi-Fi, or bar code scanning, that compete with our products.</font></li>
</ul>
<p><font face="Times New Roman, Times, serif">Increased competition could result
  in price reductions, fewer customer orders, reduced margins, and loss of market
  share. Our failure to compete successfully against current or future competitors
  could harm our business, operating results and financial condition.</font></p>
<p><font face="Times New Roman, Times, serif"><b>If we do not correctly anticipate
  demand for our products, our operating results will suffer.</b></font></p>
<p><font face="Times New Roman, Times, serif">The demand for our products depends
  on many factors and is difficult to forecast. We expect that it will become
  more difficult to forecast demand given current economic conditions, as we introduce
  and support more products, and as competition in the market for our products
  intensifies. If demand is lower than forecasted levels, we could have excess
  production resulting in higher inventories of finished products and components,
  which could lead to write-downs or write-offs of some or all of the excess inventories,
  and reductions in our cash balances. Lower than forecasted demand could also
  result in excess manufacturing capacity at our third-party manufacturers and
  in our failure to meet minimum purchase commitments, each of which may lower
  our operating results.</font></p>
<p>&nbsp;</p>
<p align="center"><font face="Times New Roman, Times, serif" size="3">25<br>
  </font> </p>
<p align=center>
<hr width="100%">
<p align=left>
<p align=left><font face="Times New Roman, Times, serif" size="3"><a href="#TAB">(Index)</a></font>
<p align=left><font face="Times New Roman, Times, serif">If demand increases beyond
  forecasted levels, we would have to rapidly increase production at our third-party
  manufacturers. We depend on suppliers to provide additional volumes of components,
  and suppliers might not be able to increase production rapidly enough to meet
  unexpected demand. Even if we were able to procure enough components, our third-party
  manufacturers might not be able to produce enough of our devices to meet our
  customer demand. In addition, rapid increases in production levels to meet unanticipated
  demand could result in higher costs for manufacturing and supply of components
  and other expenses. These higher costs could lower our profit margins. Further,
  if production is increased rapidly, manufacturing yields could decline, which
  may also lower operating results. </font>
<p><font face="Times New Roman, Times, serif"><b>We rely primarily on distributors,
  resellers, vertical industry partners, and OEMs to sell our products, and our
  sales would suffer if any of these third-parties stops selling our products
  effectively.</b></font></p>
<p><font face="Times New Roman, Times, serif">Because we sell our products primarily
  through distributors, resellers, vertical industry partners, and OEMs, we are
  subject to risks associated with channel distribution, such as risks related
  to their inventory levels and support for our products. Our distribution channels
  may build up inventories in anticipation of growth in their sales. If such growth
  in their sales does not occur as anticipated, the inventory build up could contribute
  to higher levels of product returns. The lack of sales by any one significant
  participant in our distribution channels could result in excess inventories
  and adversely affect our operating results.</font></p>
<p align=left><font face="Times New Roman, Times, serif">Our agreements with distributors,
  resellers, vertical industry partners, and OEMs are generally nonexclusive and
  may be terminated on short notice by them without cause. Our distributors, resellers,
  vertical industry partners, and OEMs are not within our control, are not obligated
  to purchase products from us, and may offer competitive lines of products simultaneously.
  Sales growth is contingent in part on our ability to enter into additional distribution
  relationships and expand our sales channels. We cannot predict whether we will
  be successful in establishing new distribution relationships, expanding our
  sales channels or maintaining our existing relationships. A failure to enter
  into new distribution relationships or to expand our sales channels could adversely
  impact our ability to grow our sales. </font>
<p align=left><font face="Times New Roman, Times, serif">We allow our distribution
  channels to return a portion of their inventory to us for full credit against
  other purchases. In addition, in the event we reduce our prices, we credit our
  distributors for the difference between the purchase price of products remaining
  in their inventory and our reduced price for such products. Actual returns and
  price protection may adversely affect future operating results, particularly
  since we seek to continually introduce new and enhanced products and are likely
  to face increasing price competition. </font>
<p>&nbsp;</p>
<p align="center"><font face="Times New Roman, Times, serif" size="3">26<br>
  </font> </p>
<p align=center>
<hr width="100%">
<p align=left>
<p align=left><font face="Times New Roman, Times, serif" size="3"><a href="#TAB">(Index)</a></font>
<p><font face="Times New Roman, Times, serif"><b>We depend on alliances and other
  business relationships with a small number of third-parties, and a disruption
  in any one of these relationships would hinder our ability to develop and sell
  our products.</b></font></p>
<p align=left><font face="Times New Roman, Times, serif">We depend on strategic
  alliances and business relationships with leading participants in various segments
  of the communications and mobile handheld computer markets to help us develop
  and market our products. Our strategic partners may revoke their commitment
  to our products or services at any time in the future or may develop their own
  competitive products or services. Accordingly, our strategic relationships may
  not result in sustained business alliances, successful product or service offerings,
  or the generation of significant revenues. Failure of one or more of such alliances
  could result in delay or termination of product development projects, failure
  to win new customers, or loss of confidence by current or potential customers.
  </font>
<p align=left><font face="Times New Roman, Times, serif">We have devoted significant
  research and development resources to design activities for Windows Mobile,
  Windows CE, Windows Vista/XP, RIM Blackberry, or Nokia E71 operating systems,
  and more recently, to develop our own family of mobile handheld computers. Such
  design activities have diverted financial and personnel resources from other
  development projects. These design activities are not undertaken pursuant to
  any agreement under which Microsoft, Research In Motion, or Symbian is obligated
  to continue the collaboration or to support the products produced from the collaboration.
  Consequently, these organizations may terminate their collaborations with us
  for a variety of reasons, including our failure to meet agreed-upon standards
  or for reasons beyond our control, such as changing market conditions, increased
  competition, discontinued product lines, and product obsolescence. </font>
<p align=left><font face="Times New Roman, Times, serif"><b>Our intellectual property
  and proprietary rights may be insufficient to protect our competitive position.
  </b> </font>
<p><font face="Times New Roman, Times, serif">Our business depends on our ability
  to protect our intellectual property. We rely primarily on patent, copyright,
  trademark, trade secret laws, and other restrictions on disclosure to protect
  our proprietary technologies. We cannot be sure that these measures will provide
  meaningful protection for our proprietary technologies and processes. We cannot
  be sure that any patent issued to us will be sufficient to protect our technology.
  The failure of any patents to provide protection to our technology would make
  it easier for our competitors to offer similar products. In connection with
  our participation in the development of various industry standards, we may be
  required to license certain of our patents to other parties, including our competitors,
  that develop products based upon the adopted standards.</font></p>
<p><font face="Times New Roman, Times, serif">We also generally enter into confidentiality
  agreements with our employees, distributors, and strategic partners, and generally
  control access to our documentation and other proprietary information. Despite
  these precautions, it may be possible for a third-party to copy or otherwise
  obtain and use our products, services, or technology without authorization,
  develop similar technology independently, or design around our patents.<br>
  <br>
  Effective copyright, trademark, and trade secret protection may be unavailable
  or limited in certain foreign countries. Furthermore, certain of our customers
  have entered into agreements with us which provide that the customers have the
  right to use our proprietary technology in the event we default in our contractual
  obligations, including product supply obligations, and fail to cure the default
  within a specified period of time. </font></p>
<p>&nbsp;</p>
<p align=center><font face="Times New Roman, Times, serif" size="3">27<br>
  </font>
<p align=center>
<hr width="100%">
<p align=left>
<p align=left><font face="Times New Roman, Times, serif" size="3"><a href="#TAB">(Index)</a></font>
<p><font face="Times New Roman, Times, serif"><b>We may become subject to claims
  of intellectual property rights infringement, which could result in substantial
  liability.</b></font></p>
<p><font face="Times New Roman, Times, serif">In the course of operating our business,
  we may receive claims of intellectual property infringement or otherwise become
  aware of potentially relevant patents or other intellectual property rights
  held by other parties. Many of our competitors have large intellectual property
  portfolios, including patents that may cover technologies that are relevant
  to our business. In addition, many smaller companies, universities, and individuals
  have obtained or applied for patents in areas of technology that may relate
  to our business. The industry is moving towards aggressive assertion, licensing,
  and litigation of patents and other intellectual property rights. In June 2007,
  we received a letter from Wi-LAN, Inc., accusing certain of our wireless LAN
  products of infringing two U.S. and one Canadian patent held by Wi-LAN, Inc.
  In October 2007, Wi-LAN, Inc. filed patent infringement lawsuits against a number
  of companies alleging that those companies infringe the two U.S. patents by
  manufacturing, using, or offering for sale products with wireless capability
  compliant with the IEEE 802.11 standards. Wi-LAN, Inc. is asking for money damages
  and a court order barring the sale of products that use the patented technology.
  We have not been named in the lawsuit, and we do not plan to make any changes
  to our current business at this time. Nonetheless, we may be added to the lawsuit
  in the future, and even if we are not, the outcome of this lawsuit may result
  in future changes to our business, including potential increased costs for those
  of our products that make use of the related technology. In October 2007, we
  received a letter from WIAV Solutions, LLC, offering to license the wireless
  technology covered by two U.S. patents held by WIAV Solutions, LLC. The two
  patents cover implementations of the 802.11 standard. To date we have not entered
  into discussions to license their technology.</font></p>
<p><font face="Times New Roman, Times, serif">If we are unable to obtain and maintain
  licenses on favorable terms for intellectual property rights required for the
  manufacture, sale, and use of our products, particularly those products which
  must comply with industry standard protocols and specifications to be commercially
  viable, our results of operations or financial condition could be adversely
  impacted.</font></p>
<p><font face="Times New Roman, Times, serif">In addition to disputes relating
  to the validity or alleged infringement of other parties' rights, we may become
  involved in disputes relating to our assertion of our own intellectual property
  rights. Whether we are defending the assertion of intellectual property rights
  against us or asserting our intellectual property rights against others, intellectual
  property litigation can be complex, costly, protracted, and highly disruptive
  to business operations by diverting the attention and energies of management
  and key technical personnel. Plaintiffs in intellectual property cases often
  seek injunctive relief, and the measures of damages in intellectual property
  litigation are complex and often subjective or uncertain. Thus, any adverse
  determinations in this type of litigation could subject us to significant liabilities
  and costs.</font></p>
<p>&nbsp;</p>
<p align=center><font face="Times New Roman, Times, serif" size="3">28<br>
  </font>
<p align=center>
<hr width="100%">
<p align=left>
<p align=left><font face="Times New Roman, Times, serif" size="3"><a href="#TAB">(Index)</a></font>
<p><font face="Times New Roman, Times, serif"><b>New industry standards may require
  us to redesign our products, which could substantially increase our operating
  expenses.</b></font></p>
<p><font face="Times New Roman, Times, serif">Standards for the form and functionality
  of our products are established by standards committees. These independent committees
  establish standards, which evolve and change over time, for different categories
  of our products. We must continue to identify and ensure compliance with evolving
  industry standards so that our products are interoperable and we remain competitive.
  Unanticipated changes in industry standards could render our products incompatible
  with products developed by major hardware manufacturers and software developers.
  Should any major changes, even if anticipated, occur, we would be required to
  invest significant time and resources to redesign our products to ensure compliance
  with relevant standards. If our products are not in compliance with prevailing
  industry standards for a significant period of time, we would miss opportunities
  to sell our products for use with new hardware components from mobile computer
  manufacturers and OEMs, thus affecting our business.</font></p>
<p><font face="Times New Roman, Times, serif" size="3"><b>Undetected flaws and
  defects in our products may disrupt product sales and result in expensive and
  time-consuming remedial action.</b></font></p>
<p><font face="Times New Roman, Times, serif">Our hardware and software products
  may contain undetected flaws, which may not be discovered until customers have
  used the products. From time to time, we may temporarily suspend or delay shipments
  or divert development resources from other projects to correct a particular
  product deficiency. Efforts to identify and correct errors and make design changes
  may be expensive and time consuming. Failure to discover product deficiencies
  in the future could delay product introductions or shipments, require us to
  recall previously shipped products to make design modifications, or cause unfavorable
  publicity, any of which could adversely affect our business and operating results.</font></p>
<p><font face="Times New Roman, Times, serif"><b>The loss of one or more of our
  senior personnel could harm our existing business.</b></font></p>
<p><font face="Times New Roman, Times, serif">A number of our officers and senior
  managers have been employed for thirteen to sixteen years by us, including our
  President, Executive Vice President, Chief Financial Officer, and Chief Technical
  Officer. Our future success will depend upon the continued service of key officers
  and senior managers. Competition for officers and senior managers is intense,
  and there can be no assurance that we will be able to retain our existing senior
  personnel. The loss of one or more of our officers or key senior managers could
  adversely affect our ability to compete.</font></p>
<p><font face="Times New Roman, Times, serif"><b>Beginning January 1, 2006 we
  began to expense options granted under our employee stock plans as compensation,
  and as a result our net income and earnings per share were negatively affected,
  we may continue to have net losses as a result of the requirement to expense
  options, and may find it necessary to change our business practices to attract
  and retain employees</b>.</font></p>
<p><font face="Times New Roman, Times, serif">Historically, we have used stock
  options as a key component of our employee compensation packages. We believe
  that stock options provide an incentive to our employees to maximize long-term
  stockholder value and, through the use of vesting, encourage valued employees
  to remain with us. The expensing of employee stock options adversely affected
  our net income and earnings per share in the first quarter of 2009 and in each
  of the quarters in fiscal years 2008, 2007, and 2006, will continue to adversely
  affect future quarters, and will make profitability harder to achieve or make
  our future profits or net losses worse. In addition, we may decide in response
  to the effects of expensing stock options on our operating results to reduce
  the number of stock options granted to employees or to grant options to fewer
  employees. This could adversely affect our ability to retain existing employees
  and attract qualified candidates, and also could increase the cash compensation
  we would have to pay to them.</font></p>
<p><font face="Times New Roman, Times, serif"><br>
  </font></p>
<p align=center><font face="Times New Roman, Times, serif" size="3">29<br>
  </font>
<p align=center>
<hr width="100%">
<p align=left>
<p align=left><font face="Times New Roman, Times, serif" size="3"><a href="#TAB">(Index)</a></font>
<p><font face="Times New Roman, Times, serif"><b>If we are unable to attract and
  retain highly skilled sales and marketing and product development personnel,
  our ability to develop and market new products and product enhancements will
  be adversely affected.</b></font></p>
<p><font face="Times New Roman, Times, serif">We believe our ability to achieve
  increased revenues and to develop successful new products and product enhancements
  will depend in part upon our ability to attract and retain highly skilled sales
  and marketing and product development personnel. Our products involve a number
  of new and evolving technologies, and we frequently need to apply these technologies
  to the unique requirements of mobile products. Our personnel must be familiar
  with both the technologies we support and the unique requirements of the products
  to which our products connect. Competition for such personnel is intense, and
  we may not be able to attract and retain such key personnel. In addition, our
  ability to hire and retain such key personnel will depend upon our ability to
  raise capital or achieve increased revenue levels to fund the costs associated
  with such key personnel. Failure to attract and retain such key personnel will
  adversely affect our ability to develop and market new products and product
  enhancements.</font></p>
<p><font face="Times New Roman, Times, serif"><b>We may not be able to collect
  revenues from customers who experience financial difficulties.</b></font></p>
<p><font face="Times New Roman, Times, serif">Our accounts receivable are derived
  primarily from distributors and OEMs. We perform ongoing credit evaluations
  of our customers' financial conditions but generally require no collateral from
  our customers. Reserves are maintained for potential credit losses, and such
  losses have historically been within such reserves. However, many of our customers
  may be thinly capitalized and may be prone to failure in adverse market conditions.
  Although our collection history has been good, from time to time a customer
  may not pay us because of financial difficulty, bankruptcy or liquidation. The
  current global financial crisis may have an impact on our customers' ability
  to pay us in a timely manner, and consequently, we may experience increased
  difficulty in collecting our accounts receivable, and we may have to increase
  our reserves in anticipation of increased uncollectible accounts.</font></p>
<p><font face="Times New Roman, Times, serif" size="3"><b>We may be unable to
  manufacture our products, because we are dependent on a limited number of qualified
  suppliers for our components.</b></font></p>
<p><font face="Times New Roman, Times, serif">Several of our component parts,
  including our serial interface chip, our Ethernet chip, our bar code scanning
  modules, and our new line of mobile handheld computers, are produced by one
  or a limited number of suppliers. Shortages could occur in these essential components
  due to an interruption of supply or increased demand in the industry. If we
  are unable to procure certain component parts, we could be required to reduce
  our operations while we seek alternative sources for these components, which
  could have a material adverse effect on our financial results. To the extent
  that we acquire extra inventory stocks to protect against possible shortages,
  we would be exposed to additional risks associated with holding inventory, such
  as obsolescence, excess quantities, or loss.</font></p>
<p>&nbsp;</p>
<p align=center><font face="Times New Roman, Times, serif" size="3">30<br>
  </font>
<p align=center>
<hr width="100%">
<p><font face="Times New Roman, Times, serif" size="3"><a href="#TAB">(Index)</a></font>
</p>
<p align="left"><font face="Times New Roman, Times, serif"><b>Our operating results
  could be harmed by economic, political, regulatory and other risks associated
  with export sales.</b></font></p>
<p><font face="Times New Roman, Times, serif">Export sales (sales to customers
  outside the United States) accounted for approximately 42% of our revenue in
  the first quarter of 2009 and 37% of our revenue in the fiscal year 2008. Accordingly,
  our operating results are subject to the risks inherent in export sales, including:</font></p>
<ul>
  <li><font face="Times New Roman, Times, serif" size="3">longer payment cycles;<br>
    </font></li>
  <li><font face="Times New Roman, Times, serif" size="3">unexpected changes in
    regulatory requirements, import and export restrictions and tariffs;<br>
    </font></li>
  <li><font face="Times New Roman, Times, serif" size="3">difficulties in managing
    foreign operations;<br>
    </font></li>
  <li><font face="Times New Roman, Times, serif">the <font size="3">burdens of
    complying with a variety of foreign laws;<br>
    </font></font></li>
  <li><font face="Times New Roman, Times, serif" size="3">greater difficulty or
    delay in accounts receivable collection;<br>
    </font></li>
  <li><font face="Times New Roman, Times, serif" size="3">potentially adverse
    tax consequences; and<br>
    </font></li>
  <li><font face="Times New Roman, Times, serif">political and economic instability.</font></li>
</ul>
<p><font face="Times New Roman, Times, serif">Our export sales are primarily denominated
  in United States dollars and in Euros for our sales to European distributors.
  Accordingly, an increase in the value of the United States dollar relative to
  foreign currencies could make our products more expensive and therefore potentially
  less competitive in foreign markets. Declines in the value of the Euro relative
  to the United States dollar may result in foreign currency losses relating to
  collection of Euro denominated receivables if left unhedged.</font></p>
<p><font face="Times New Roman, Times, serif"><b>Our operations are vulnerable
  to interruption by fire, earthquake, power loss, telecommunications failure,
  and other events beyond our control.</b></font></p>
<p><font face="Times New Roman, Times, serif">Our corporate headquarters is located
  near an earthquake fault. The potential impact of a major earthquake on our
  facilities, infrastructure, and overall business is unknown. Additionally, we
  may experience electrical power blackouts or natural disasters that could interrupt
  our business. Should a disaster be widespread, such as a major earthquake, or
  result in the loss of key personnel, we may not be able to implement our disaster
  recovery plan in a timely manner. Any losses or damages incurred by us as a
  result of these events could have a material adverse effect on our business.</font></p>
<p><font face="Times New Roman, Times, serif" size="3"><b>Failure to maintain
  effective internal controls could have a material adverse effect on our business,
  operating results and stock price. </b></font></p>
<p><font face="Times New Roman, Times, serif">We have evaluated and will continue
  to evaluate our internal control procedures in order to satisfy the requirements
  of Section 404 of the Sarbanes-Oxley Act, which requires an annual management
  assessment of the design and effectiveness of our internal controls over financial
  reporting. If we fail to maintain the adequacy of our internal controls, as
  such standards are modified, supplemented or amended from time to time, we may
  not be able to ensure that we can conclude on an ongoing basis that we have
  effective internal controls over financial reporting in accordance with Section
  404 of the Sarbanes-Oxley Act. Moreover, effective internal controls, particularly
  those related to revenue recognition, are necessary for us to produce reliable
  financial reports and are important to helping prevent financial fraud. If we
  cannot provide reliable financial reports or prevent fraud, our business and
  operating results could be harmed, investors could lose confidence in our reported
  financial information, and the trading price of our stock could drop significantly.</font></p>
<p>&nbsp;</p>
<p></p>
<p></p>
<p></p>
<p align=center><font face="Times New Roman, Times, serif" size="3">31<br>
  </font>
<p align=center>
<hr width="100%">
<p align=left>
<p align=left><font face="Times New Roman, Times, serif" size="3"><a href="#TAB">(Index)</a></font>
<p><font face="Times New Roman, Times, serif"><b>The sale of a substantial number
  of shares of our Common Stock could cause the market price of our Common Stock
  to decline.</b></font></p>
<p><font face="Times New Roman, Times, serif">Sales of a substantial number of
  shares of our Common Stock in the public market could adversely affect the market
  price for our Common Stock. The market price of our Common Stock could also
  decline if one or more of our significant stockholders decided for any reason
  to sell substantial amounts of our Common Stock in the public market.</font></p>
<p><font face="Times New Roman, Times, serif">As of May 8, 2009, we had 3,229,916
  shares of Common Stock outstanding. Substantially all of these shares are freely
  tradable in the public market, either without restriction or subject, in some
  cases, only to S-3 prospectus delivery requirements and, in other cases, only
  to manner of sale, volume, and notice requirements of Rule 144 under the Securities
  Act.</font></p>
<p><font face="Times New Roman, Times, serif">As of May 8, 2009, we had 1,266,887
  shares subject to outstanding options under our stock option plans, and 65,182
  shares were available for future issuance under the plans. We have registered
  the shares of Common Stock subject to outstanding options and reserved for issuance
  under our stock option plans. Accordingly, shares underlying vested options
  will be eligible for resale in the public market as soon as the options are
  exercised.</font></p>
<p><font face="Times New Roman, Times, serif"><b>Volatility in the trading price
  of our Common Stock could negatively impact the price of our Common Stock.</b></font></p>
<p><font face="Times New Roman, Times, serif">During the period from January 1,
  2008 through May 8, 2009, our Common Stock price (adjusted to reflect a one-for-ten
  reverse stock split effected on October 23, 2008) fluctuated between a high
  of $9.00 and a low of $0.50. Following the reverse stock split which significantly
  decreased the Company's share float, we have experienced low trading volumes
  in our stock, and thus relatively small purchases and sales can have a significant
  effect on our stock price. The trading price of our Common Stock could be subject
  to wide fluctuations in response to many factors, some of which are beyond our
  control, including general economic conditions and the outlook of securities
  analysts and investors on our industry. In addition, the stock markets in general,
  and the markets for high technology stocks in particular, have experienced high
  volatility that has often been unrelated to the operating performance of particular
  companies. These broad market fluctuations may adversely affect the trading
  price of our Common Stock.</font></p>
<p>&nbsp;</p>
<p align=center><font face="Times New Roman, Times, serif" size="3">32<br>
  </font>
<p align=center>
<hr width="100%">
<p align=left>
<p align=left><font face="Times New Roman, Times, serif" size="3"><a href="#TAB">(Index)</a></font>
  <font face="Times New Roman, Times, serif" size="3"><a name="sub"></a></font>
<p><font face="Times New Roman, Times, serif" size="3"><b>Item 4. Submission of
  Matters to a Vote of Security Holders</b></font></p>
<p><font face="Times New Roman, Times, serif">At our Annual Meeting of Stockholders,
  held at our Newark, California facilities on April 29, 2009, the stockholders
  elected seven directors to serve until the next annual meeting of stockholders
  (Item 1), and ratified the appointment of Moss Adams LLP to serve as the independent
  public accountants of the Company for the fiscal year ending December 31, 2009
  (Item 2). Total voting shares on the record date of March 2, 2009 consisted
  of 3,229,916 common shares. Each share of Common Stock was entitled to one vote.
  A total of 2,581,623 shares or 79.93% of outstanding shares were present or
  voting by proxy. Results of the stockholder vote were as follows:<br>
  <br>
  </font></p>
<table cellspacing=1 cellpadding=1 width=70% align=center border=1>
  <tr valign=bottom>
    <td width="240" height=23>
      <div align="left"><font face="Times New Roman, Times, serif">ITEM 1:<font size="2">
        </font></font></div>
    </td>
    <td height=23 width="117">
      <div align="center"><font face="Times New Roman, Times, serif">FOR</font></div>
    </td>
    <td width="117" height=23>
      <div align="center"><font face="Times New Roman, Times, serif">WITHHELD</font></div>
    </td>
    <td width="117" height=23>
      <div align="center"><font face="Times New Roman, Times, serif">RESULT</font></div>
    </td>
  </tr>
  <tr valign=bottom>
    <td height=21 width="240">
      <div align="left"><font face="Times New Roman, Times, serif"><u>Election
        of Directors:</u></font></div>
    </td>
    <td width="117" height=21>
      <div align="center"><font face="Times New Roman, Times, serif">&nbsp</font></div>
    </td>
    <td width="117" height=21>
      <div align="center"><font face="Times New Roman, Times, serif">&nbsp</font></div>
    </td>
    <td width="117" height=21>
      <div align="center"><font face="Times New Roman, Times, serif">&nbsp</font></div>
    </td>
  </tr>
  <tr valign=bottom>
    <td height=16 width="240">
      <div align="left"><font face="Times New Roman, Times, serif">Charlie Bass
        (1)</font></div>
    </td>
    <td height=21 width="117" valign="bottom">
      <div align="center"><font face="Times New Roman, Times, serif">1,987,357</font></div>
    </td>
    <td width="117" height=21 valign="bottom">
      <div align="center"><font face="Times New Roman, Times, serif">594,266</font></div>
    </td>
    <td width="117" height=16>
      <div align="center"><font face="Times New Roman, Times, serif">Elected</font></div>
    </td>
  </tr>
  <tr valign=bottom>
    <td height=14 width="240">
      <div align="left"><font face="Times New Roman, Times, serif">Kevin Mills</font></div>
    </td>
    <td height=16 width="117" valign="bottom">
      <div align="center"><font face="Times New Roman, Times, serif">1,890,372</font></div>
    </td>
    <td width="117" height=16 valign="bottom">
      <div align="center"><font face="Times New Roman, Times, serif">691,251</font></div>
    </td>
    <td width="117" height=14>
      <div align="center"><font face="Times New Roman, Times, serif">Elected</font></div>
    </td>
  </tr>
  <tr valign=bottom>
    <td height=15 width="240">
      <div align="left"><font face="Times New Roman, Times, serif">Micheal Gifford</font></div>
    </td>
    <td height=14 width="117" valign="bottom">
      <div align="center"><font face="Times New Roman, Times, serif">2,000,329</font></div>
    </td>
    <td width="117" height=14 valign="bottom">
      <div align="center"><font face="Times New Roman, Times, serif">581,294</font></div>
    </td>
    <td width="117" height=15>
      <div align="center"><font face="Times New Roman, Times, serif">Elected</font></div>
    </td>
  </tr>
  <tr valign=bottom>
    <td height=23 width="240">
      <div align="left"><font face="Times New Roman, Times, serif">Leon Malmed
        (1)(2)</font></div>
    </td>
    <td height=23 width="117" valign="bottom">
      <div align="center"><font face="Times New Roman, Times, serif">2,071,562</font></div>
    </td>
    <td width="117" height=23 valign="bottom">
      <div align="center"><font face="Times New Roman, Times, serif">510,061</font></div>
    </td>
    <td width="117" height=23>
      <div align="center"><font face="Times New Roman, Times, serif">Elected</font></div>
    </td>
  </tr>
  <tr valign=bottom>
    <td height=23 width="240">
      <div align="left"><font face="Times New Roman, Times, serif">Thomas Miller
        (1)</font></div>
    </td>
    <td height=23 width="117" valign="bottom">
      <div align="center"><font face="Times New Roman, Times, serif">2,059,091</font></div>
    </td>
    <td width="117" height=23 valign="bottom">
      <div align="center"><font face="Times New Roman, Times, serif">522,532</font></div>
    </td>
    <td width="117" height=23>
      <div align="center"><font face="Times New Roman, Times, serif">Elected</font></div>
    </td>
  </tr>
  <tr valign=bottom>
    <td height=14 width="240">
      <div align="left"><font face="Times New Roman, Times, serif">Peter Sealey
        (3)</font></div>
    </td>
    <td height=14 width="117" valign="bottom">
      <div align="center"><font face="Times New Roman, Times, serif">2,031,598</font></div>
    </td>
    <td width="117" height=14>
      <div align="center"><font face="Times New Roman, Times, serif">550,025</font></div>
    </td>
    <td width="117" height=14>
      <div align="center"><font face="Times New Roman, Times, serif">Elected</font></div>
    </td>
  </tr>
  <tr valign=bottom>
    <td height=15 width="240">
      <div align="left"><font face="Times New Roman, Times, serif">Enzo Torresi
        (3)</font></div>
    </td>
    <td height=15 width="117">
      <div align="center"><font face="Times New Roman, Times, serif">2,071,766</font></div>
    </td>
    <td width="117" height=15>
      <div align="center"><font face="Times New Roman, Times, serif">509,857</font></div>
    </td>
    <td width="117" height=15>
      <div align="center"><font face="Times New Roman, Times, serif">Elected</font></div>
    </td>
  </tr>
  <tr valign=bottom>
    <td height=45 colspan="4">
      <p align="left"><font face="Times New Roman, Times, serif">(1) Denotes member
        of the Audit Committee<br>
        (2) Denotes member of the Nominating Committee<br>
        (3) Denotes member of the Compensation Committee</font></p>
    </td>
  </tr>
</table>
<p>&nbsp;</p>
<table cellspacing=1 cellpadding=1 width=70% align=center border=1>
  <tr valign=bottom>
    <td width="240" height=20><font face="Times New Roman, Times, serif">ITEM
      2:<font size="2"> </font></font></td>
    <td height=20 width="95">
      <div align="center"><font face="Times New Roman, Times, serif">FOR</font></div>
    </td>
    <td width="95" height=20>
      <div align="center"><font face="Times New Roman, Times, serif">AGAINST</font></div>
    </td>
    <td width="95" height=20>
      <div align="center"><font face="Times New Roman, Times, serif">ABSTAIN</font></div>
    </td>
    <td width="95" height=20>
      <div align="center"><font face="Times New Roman, Times, serif">RESULT</font></div>
    </td>
  </tr>
  <tr valign=bottom>
    <td height=21 width="240">
      <div align="left"><font face="Times New Roman, Times, serif">Appoint Moss
        Adams LLP as the Company's independent auditors for the 2009 fiscal year
        (approval of a majority of votes cast required for approval).</font></div>
    </td>
    <td height=21 width="95" align="center" valign="middle">
      <div align="center"><font face="Times New Roman, Times, serif">2,294,888</font></div>
    </td>
    <td height=21 width="95" align="center" valign="middle">
      <div align="center"><font face="Times New Roman, Times, serif">44,277</font></div>
    </td>
    <td height=21 width="95" align="center" valign="middle">
      <div align="center"><font face="Times New Roman, Times, serif">242,306</font></div>
    </td>
    <td height=21 width="95" align="center" valign="middle">
      <div align="center"><font face="Times New Roman, Times, serif">Approved</font></div>
    </td>
  </tr>
</table>
<p>&nbsp;</p>
<p align=center><font face="Times New Roman, Times, serif" size="3">33<br>
  </font>
<p align=center>
<hr width="100%">
<p align=left>
<p align=left><font face="Times New Roman, Times, serif" size="3"><a href="#TAB">(Index)</a><a
name=item6></a></font>
<p align=left><font face="Times New Roman, Times, serif" size="3"><b>Item 6. Exhibits</b></font>
<p><font face="Times New Roman, Times, serif" size="3"> Exhibits</font></p>
<p><font face="Times New Roman, Times, serif">31.1 Certification of Chief Executive
  Officer and Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley
  Act of 2002.</font></p>
<p><font face="Times New Roman, Times, serif">31.2 Certification of Chief Executive
  Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley
  Act of 2002.</font></p>
<p><font face="Times New Roman, Times, serif">32.1 Certification of Chief Executive
  Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley
  Act of 2002.</font></p>
<p>&nbsp;</p>
<p>&nbsp;</p>
<p align=center><font face="Times New Roman, Times, serif" size="3">34<br>
  </font>
<p align=center>
<hr width="100%">
<p align=left>
<p align=left><font face="Times New Roman, Times, serif" size="3"><a href="#TAB">(Index)</a></font>
  <font face="Times New Roman, Times, serif" size="3"><a
name=sig></a></font>
<p>&nbsp;</p>
<div align="center"><font face="Times New Roman, Times, serif" size="3"><BR>
  </font></div>
<P align=center><font face="Times New Roman, Times, serif" size="3"><b>SIGNATURES</b></font></P>
<P>&nbsp;</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 thereunto duly authorized.</font></P>
<P>&nbsp;</P>
<P align=center><font face="Times New Roman, Times, serif" size="3"><U>SOCKET
  MOBILE, INC.<BR>
  </U>Registrant</font></P>
<P>&nbsp;
<TABLE cols=2 width="89%">
  <TR>
    <TD width="38%"><font face="Times New Roman, Times, serif" size="3">Date:
      May 12, 2009 </font></TD>
    <TD width="21%">
      <CENTER>
        <font face="Times New Roman, Times, serif"></font>
      </CENTER>
    </TD>
    <TD width="41%">
      <DIV align=left><font face="Times New Roman, Times, serif" size="3"><U>&nbsp;&nbsp;/s/
        Kevin J. Mills</U></font></DIV>
    </TD>
  </TR>
  <tr>
    <td width="38%"><font face="Times New Roman, Times, serif"></font></td>
    <td width="21%">
      <center>
        <font face="Times New Roman, Times, serif" size="3">&nbsp; </font>
      </center>
    </td>
    <td valign=top align=middle width="41%">
      <div align=left>
        <p><font face="Times New Roman, Times, serif" size="3">Kevin J. Mills<br>
          President and Chief Executive Officer</font><font face="Times New Roman, Times, serif"><br>
          (Duly Authorized Officer and Principal Executive Officer)</font></p>
      </div>
    </td>
  </tr>
  <tr>
    <td width="38%" height="44"><font face="Times New Roman, Times, serif"></font></td>
    <td width="21%" height="44"><font face="Times New Roman, Times, serif"></font></td>
    <td width="41%" height="44"><font face="Times New Roman, Times, serif"></font></td>
  </tr>
  <tr>
    <td width="38%"><font face="Times New Roman, Times, serif" size="3">Date:
      May 12, 2009 </font></td>
    <td width="21%">
      <center>
        <font face="Times New Roman, Times, serif"></font>
      </center>
    </td>
    <td width="41%">
      <div align=left><font face="Times New Roman, Times, serif" size="3"><u>&nbsp;&nbsp;/s/
        David W. Dunlap&nbsp;&nbsp;</u></font></div>
    </td>
  </tr>
  <tr>
    <td width="38%"><font face="Times New Roman, Times, serif"></font></td>
    <td width="21%">
      <center>
        <font face="Times New Roman, Times, serif" size="3">&nbsp; </font>
      </center>
    </td>
    <td valign=top align=middle width="41%">
      <div align=left><font face="Times New Roman, Times, serif" size="3">David
        W. Dunlap<br>
        Vice President of Finance and Administration and Chief Financial Officer
        <br>
        (Duly Authorized Officer and Principal Financial and Accounting Officer)
        </font></div>
    </td>
  </tr>
</TABLE>
<P>&nbsp;</P>
<P>&nbsp;</P>
<p align=center><font face="Times New Roman, Times, serif" size="3">35<br>
  </font>
<p align=center>
<hr width="100%">
<p align=left>
<p align=left><font face="Times New Roman, Times, serif" size="3"><a href="#TAB">(Index)</a></font>
  <font face="Times New Roman, Times, serif" size="3"><a
name=ind></a></font>
<P>&nbsp;</P>
<p align=center><font face="Times New Roman, Times, serif" size="3"><b>Index to
  Exhibits</b><br>
  <br>
  </font></p>
<table cellspacing=0 cellpadding=0 width=800 align=center border=0>
  <tr>
    <td valign=bottom width="10%" height=48>
      <p align=center><font face="Times New Roman, Times, serif" size="3">Exhibit
        <u>Number</u></font></p>
    </td>
    <td valign=bottom width="90%" height=48>
      <p align=center><font face="Times New Roman, Times, serif" size="3"><u>Description
        </u></font></p>
    </td>
  </tr>
  <tr>
    <td valign=top width="10%" height=25>
      <p align=right><font face="Times New Roman, Times, serif"></font></p>
    </td>
    <td valign=top width="90%" height=25>
      <p><font face="Times New Roman, Times, serif"></font></p>
    </td>
  </tr>
  <tr>
    <td valign=top width="10%" height=30>
      <p align=center><font face="Times New Roman, Times, serif" size="3">31.1&nbsp;</font>
      </p>
    </td>
    <td valign=top width="90%" height=30>
      <p><font face="Times New Roman, Times, serif">Certification of Chief Executive
        Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.</font></p>
    </td>
  </tr>
  <tr>
    <td valign=top width="10%" height=30>
      <p align=center><font face="Times New Roman, Times, serif" size="3">31.2&nbsp;</font>
      </p>
    </td>
    <td valign=top width="90%" height=30>
      <p><font face="Times New Roman, Times, serif">Certification of Chief Financial
        Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.</font></p>
    </td>
  </tr>
  <tr>
    <td valign=top width="10%" height=30>
      <p align=center><font face="Times New Roman, Times, serif" size="3">32.1&nbsp;</font>
      </p>
    </td>
    <td valign=top width="90%" height=30>
      <p><font face="Times New Roman, Times, serif">Certification of Chief Executive
        Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley
        Act of 2002.</font></p>
    </td>
  </tr>
</table>
<P>&nbsp;</P>
<P>&nbsp;</P>
<P>&nbsp;</P>
<P>&nbsp;</P>
<P>&nbsp;</P>
<P>&nbsp;</P>
<P>&nbsp;</P>
<p align=center><font face="Times New Roman, Times, serif" size="3">36<br>
  </font>
<p align=center>
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<DOCUMENT>
<TYPE>EX-31.1
<SEQUENCE>2
<FILENAME>exhibit311.htm
<DESCRIPTION>EXHIBIT 31.1
<TEXT>
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<body bgcolor="#FFFFFF">
<p align=left>
<p align=right><font face="Times New Roman, Times, serif" size="3">Exhibit 31.1
  </font>
<p align="center"><font face="Times New Roman, Times, serif" size="3"><b>CERTIFICATION</b></font></p>
<p><font face="Times New Roman, Times, serif">I, Kevin J. Mills, certify that:</font></p>
<p><font face="Times New Roman, Times, serif" size="3">1. I have reviewed this
  quarterly report on Form 10-Q of Socket Mobile, Inc.;</font></p>
<p><font face="Times New Roman, Times, serif" size="3">2. Based on my knowledge,
  this report does not contain any untrue statement of a material fact or omit
  to state a material fact necessary to make the statements made, in light of
  the circumstances under which such statements were made, not misleading with
  respect to the period covered by this report;</font></p>
<p><font face="Times New Roman, Times, serif" size="3">3. Based on my knowledge,
  the financial statements, and other financial information included in this report,
  fairly present in all material respects the financial condition, results of
  operations and cash flows of the registrant as of, and for, the periods presented
  in this report;</font></p>
<p><font face="Times New Roman, Times, serif" size="3">4. The registrant's other
  certifying officer and I are responsible for establishing and maintaining disclosure
  controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e))
  and internal control over financial reporting (as defined in Exchange Act Rules
  13a-15(f) and 15d-15(f)) for the registrant and have:</font></p>
<p><font face="Times New Roman, Times, serif" size="3">(a) Designed such disclosure
  controls and procedures, or caused such disclosure controls and procedures to
  be designed under our supervision, to ensure that material information relating
  to the registrant is made known to us by others within those entities, particularly
  during the period in which this report is being prepared;</font></p>
<p><font face="Times New Roman, Times, serif">(b) Designed such internal control
  over financial reporting, or caused such internal control over financial reporting
  to be designed under our supervision, to provide reasonable assurance regarding
  the reliability of financial reporting and the preparation of financial statements
  for external purposes in accordance with generally accepted accounting principles;</font></p>
<p><font face="Times New Roman, Times, serif">(c) Evaluated the effectiveness
  of the registrant's disclosure controls and procedures and presented in this
  report our conclusions about the effectiveness of the disclosure controls and
  procedures, as of the end of the period covered by this report based on such
  evaluation; and</font></p>
<p><font face="Times New Roman, Times, serif">(d) Disclosed in this report any
  change in the registrant's internal control over financial reporting that occurred
  during the registrant's most recent fiscal quarter (the registrant's fourth
  fiscal quarter in the case of an annual report) that has materially affected,
  or is reasonably likely to materially affect, the registrant's internal control
  over financial reporting; and</font></p>
<p><font face="Times New Roman, Times, serif" size="3">5. The registrant's other
  certifying officer and I have disclosed, based on our most recent evaluation
  of internal control over financial reporting, to the registrant's auditors and
  the audit committee of the registrant's board of directors (or persons performing
  the equivalent functions):</font></p>
<p><font face="Times New Roman, Times, serif">(a) All significant deficiencies
  and material weaknesses in the design or operation of internal control over
  financial reporting which are reasonably likely to adversely affect the registrant's
  ability to record, process, summarize and report financial information; and</font></p>
<p><font face="Times New Roman, Times, serif" size="3">(b) Any fraud, whether
  or not material, that involves management or other employees who have a significant
  role in the registrant's internal control over financial reporting.<br>
  <br>
  </font></p>
<table cols=2 width="97%">
  <tr>
    <td width="38%"><font face="Times New Roman, Times, serif" size="3">Date:
      May 12, 2009 </font></td>
    <td width="17%">
      <center>
      </center>
    </td>
    <td width="45%">
      <div align=left><font face="Times New Roman, Times, serif" size="3"><u>By:
        /s/ Kevin J. Mills</u></font></div>
    </td>
  </tr>
  <tr>
    <td width="38%">&nbsp;</td>
    <td width="17%">
      <center>
        <font face="Times New Roman, Times, serif" size="3">&nbsp; </font>
      </center>
    </td>
    <td valign=top align=middle width="45%">
      <div align=left><font face="Times New Roman, Times, serif" size="3">Name:
        Kevin J. Mills<br>
        Title: President and Chief Executive Officer (Principal Executive Officer)</font></div>
    </td>
  </tr>
</table>
<p><font face="Times New Roman, Times, serif" size="3"><br>
  </font></p>
<p align=center>&nbsp;
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<DOCUMENT>
<TYPE>EX-31.2
<SEQUENCE>3
<FILENAME>exhibit312.htm
<DESCRIPTION>EXHIBIT 31.2
<TEXT>
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<body bgcolor="#FFFFFF">
<p align=right><font face="Times New Roman, Times, serif" size="3">Exhibit 31.2
  </font>
<p align="center"><font face="Times New Roman, Times, serif" size="3"><b>CERTIFICATION</b></font>
</p>
<p><font face="Times New Roman, Times, serif"><br>
  I, David W. Dunlap, certify that:</font></p>
<p><font face="Times New Roman, Times, serif" size="3">1. I have reviewed this
  quarterly report on Form 10-Q of Socket Mobile, Inc.;</font></p>
<p><font face="Times New Roman, Times, serif" size="3">2. Based on my knowledge,
  this report does not contain any untrue statement of a material fact or omit
  to state a material fact necessary to make the statements made, in light of
  the circumstances under which such statements were made, not misleading with
  respect to the period covered by this report;</font></p>
<p><font face="Times New Roman, Times, serif" size="3">3. Based on my knowledge,
  the financial statements, and other financial information included in this report,
  fairly present in all material respects the financial condition, results of
  operations and cash flows of the registrant as of, and for, the periods presented
  in this report;</font></p>
<p><font face="Times New Roman, Times, serif" size="3">4. The registrant's other
  certifying officer and I are responsible for establishing and maintaining disclosure
  controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e))
  and internal control over financial reporting (as defined in Exchange Act Rules
  13a-15(f) and 15d-15(f)) for the registrant and have:</font></p>
<p><font face="Times New Roman, Times, serif" size="3">(a) Designed such disclosure
  controls and procedures, or caused such disclosure controls and procedures to
  be designed under our supervision, to ensure that material information relating
  to the registrant is made known to us by others within those entities, particularly
  during the period in which this report is being prepared;</font></p>
<p><font face="Times New Roman, Times, serif" size="3">(b) Designed such internal
  control over financial reporting, or caused such internal control over financial
  reporting to be designed under our supervision, to provide reasonable assurance
  regarding the reliability of financial reporting and the preparation of financial
  statements for external purposes in accordance with generally accepted accounting
  principles;</font></p>
<p><font face="Times New Roman, Times, serif" size="3">(c) Evaluated the effectiveness
  of the registrant's disclosure controls and procedures and presented in this
  report our conclusions about the effectiveness of the disclosure controls and
  procedures, as of the end of the period covered by this report based on such
  evaluation; and</font></p>
<p><font face="Times New Roman, Times, serif">(d) Disclosed in this report any
  change in the registrant's internal control over financial reporting that occurred
  during the registrant's most recent fiscal quarter (the registrant's fourth
  fiscal quarter in the case of an annual report) that has materially affected,
  or is reasonably likely to materially affect, the registrant's internal control
  over financial reporting; and</font></p>
<p><font face="Times New Roman, Times, serif" size="3">5. The registrant's other
  certifying officer and I have disclosed, based on our most recent evaluation
  of internal control over financial reporting, to the registrant's auditors and
  the audit committee of the registrant's board of directors (or persons performing
  the equivalent functions):</font></p>
<p><font face="Times New Roman, Times, serif" size="3">(a) All significant deficiencies
  and material weaknesses in the design or operation of internal control over
  financial reporting which are reasonably likely to adversely affect the registrant's
  ability to record, process, summarize and report financial information; and</font></p>
<p><font face="Times New Roman, Times, serif" size="3">(b) Any fraud, whether
  or not material, that involves management or other employees who have a significant
  role in the registrant's internal control over financial reporting.<br>
  <br>
  </font></p>
<table cols=2 width="96%">
  <tr>
    <td width="38%"><font face="Times New Roman, Times, serif" size="3">Date:
      May 12, 2009 </font></td>
    <td width="21%">
      <center>
        <font face="Times New Roman, Times, serif"><font face="Times New Roman, Times, serif"></font></font>
      </center>
    </td>
    <td width="41%">
      <div align=left><font face="Times New Roman, Times, serif" size="3"><u>By:
        /s/ David W. Dunlap&nbsp;&nbsp;</u></font></div>
    </td>
  </tr>
  <tr>
    <td width="38%"><font face="Times New Roman, Times, serif"></font></td>
    <td width="21%">
      <center>
        <font face="Times New Roman, Times, serif" size="3">&nbsp; </font>
      </center>
    </td>
    <td valign=top align=middle width="41%">
      <div align=left><font face="Times New Roman, Times, serif" size="3">Name:
        David W. Dunlap<br>
        Title: Vice President of Finance and Administration and Chief Financial
        Officer (Principal Financial Officer) </font></div>
    </td>
  </tr>
</table>
<p><font face="Times New Roman, Times, serif" size="3"><br>
  </font></p>
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<DOCUMENT>
<TYPE>EX-32.1
<SEQUENCE>4
<FILENAME>exhibit321.htm
<DESCRIPTION>EXHIBIT 32.1
<TEXT>
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<body bgcolor="#FFFFFF">
<p align=right><font face="Times New Roman, Times, serif" size="3">Exhibit 32.1</font>
<p align="center"><font face="Times New Roman, Times, serif">CERTIFICATION OF
  THE CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICER<br>
  PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002</font></p>
<p><font face="Times New Roman, Times, serif" size="3"><br>
  I, Kevin J. Mills, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant
  to Section 906 of the Sarbanes-Oxley Act of 2002, that the Quarterly Report
  of Socket Mobile, Inc. on Form 10-Q for the quarter ended March 31, 2009 fully
  complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange
  Act of 1934 and that information contained in such Quarterly Report on Form
  10-Q fairly presents in all material respects the financial condition and results
  of operations of Socket Mobile, Inc.</font></p>
<p>&nbsp;</p>
<div align="right"></div>
<table cols=2 width="43%" align="right">
  <tr>
    <td width="41%">
      <div align=left><font face="Times New Roman, Times, serif"
      size=3><u>By: &nbsp;&nbsp;/s/ Kevin J. Mills</u></font></div>
    </td>
  </tr>
  <tr>
    <td valign=top align=middle width="41%">
      <div align=left><font face="Times New Roman, Times, serif" size=3>Name:
        Kevin J. Mills<br>
        Title: &nbsp&nbspPresident and Chief Executive Officer <br>
        &nbsp&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp(Principal Executive
        Officer)<br>
        Date: &nbspMay 12, 2009</font></div>
    </td>
  </tr>
</table>
<p>&nbsp;</p>
<p>&nbsp;</p>
<p>&nbsp;</p>
<p>&nbsp;</p>
<p>I, David W. Dunlap, certify, pursuant to 18 U.S.C. Section 1350, as adopted
  pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that the Quarterly
  Report of Socket Mobile, Inc. on Form 10-Q for the quarter ended March 31, 2009
  fully complies with the requirements of Section 13(a) or 15(d) of the Securities
  Exchange Act of 1934 and that information contained in such Quarterly Report
  on Form 10-Q fairly presents in all material respects the financial condition
  and results of operations of Socket Mobile, Inc.</p>
<p>&nbsp;</p>
<p align="right"></p>
<table cols=2 width="43%" align="right">
  <tr>
    <td width="41%">
      <div align=left><font face="Times New Roman, Times, serif"
      size=3><u>By: &nbsp;&nbsp;/s/ David W. Dunlap&nbsp;&nbsp;</u></font></div>
    </td>
  </tr>
  <tr>
    <td valign=top align=middle width="41%">
      <div align=left><font face="Times New Roman, Times, serif" size=3>Name:
        David W. Dunlap<br>
        Title: &nbsp&nbspVice President of Finance and Administration <br>
        &nbsp&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp&nbspand Chief Financial
        Officer (Principal <br>
        &nbsp&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp&nbspFinancial Officer)<br>
        Date:&nbsp&nbsp&nbsp&nbspMay 12, 2009</font></div>
    </td>
  </tr>
</table>
<p>&nbsp;</p>
<p align=center>&nbsp;
<p align=center>&nbsp;
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