<SEC-DOCUMENT>0000944075-11-000022.txt : 20110401
<SEC-HEADER>0000944075-11-000022.hdr.sgml : 20110401
<ACCEPTANCE-DATETIME>20110401160326
ACCESSION NUMBER:		0000944075-11-000022
CONFORMED SUBMISSION TYPE:	424B3
PUBLIC DOCUMENT COUNT:		1
FILED AS OF DATE:		20110401
DATE AS OF CHANGE:		20110401

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:		424B3
		SEC ACT:		1933 Act
		SEC FILE NUMBER:	333-172948
		FILM NUMBER:		11731308

	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>424B3
<SEQUENCE>1
<FILENAME>socket_424b3.htm
<DESCRIPTION>FORM 424B3
<TEXT>
<HTML>
<HEAD></HEAD><BODY bgcolor=white>
<div align="right"><font face="Times New Roman, Times, serif" size="3"> </font></div>
<P ALIGN="left">&nbsp;</P>
<P ALIGN="center">&nbsp;</P>
<P ALIGN="center"><font face="Times New Roman, Times, serif" size="3"><b>FILED
  PURSUANT TO RULE 424 (b)(3)<br>
  <br>
  PROSPECTUS<br>
  <font size="4"><br>
  </font>282,485 Shares<br>
  <br>
  <font size="5">Socket Mobile, Inc.</font><br>
  <br>
  <font size="4">Common Stock</font> </b></font></P>
<P ALIGN="center"><font face="Times New Roman, Times, serif" size="3">____________________</font></P>
<P ALIGN="center">&nbsp;</P>
<P ALIGN="left">This prospectus relates to 282,485 shares of our Common Stock
  which may be sold from time to time by a certain stockholder set forth in the
  &quot;Selling Stockholders&quot; section of this prospectus. The shares offered
  pursuant to this prospectus represent shares of our Common Stock held by the
  selling stockholder or its transferees. <br>
</P>
<P ALIGN="left">The prices at which the selling stockholder or its transferees
  may sell the shares may be determined by the prevailing market prices for the
  shares or in negotiated transactions. We will not receive any proceeds from
  the sale of the shares offered by this prospectus. </P>
<P ALIGN="left">Our Common Stock is quoted on the Nasdaq Capital Market under
  the symbol &quot;SCKT.&quot; On March 14, 2011, the last reported sale price
  for our Common Stock on the Nasdaq Capital Market was $2.00 per share.<font face="Times New Roman, Times, serif" size="3">
  </font></P>
<P ALIGN="left"><font face="Times New Roman, Times, serif" size="3"><b>Investment
  in the securities involves a high degree of risk. See &quot;Risk Factors&quot;
  beginning on page 4.</b></font></P>
<P ALIGN="center"><font face="Times New Roman, Times, serif" size="3"><b>____________________<br>
  <br>
  </b></font></P>
<p><b>NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
  COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE
  ADEQUACY OR ACCURACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
  IS A CRIMINAL OFFENSE.</b></p>
<P ALIGN="center">&nbsp;</P>
<P ALIGN="center">&nbsp;</P>
<P ALIGN="center"><font face="Times New Roman, Times, serif" size="3"><b>The date
  of this prospectus is March 31, 2011.</b></font></P>
<P ALIGN="center">&nbsp;</P>
<P ALIGN="center">&nbsp;</P>
<hr align="LEFT" size=4>
<p>&nbsp;</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>TABLE
        OF CONTENTS </strong></font></p>
    </td>
  </tr>
  <tr>
    <td width="27" height="28"><font face="Times New Roman, Times, serif"></font></td>
    <td width="807" height="28"><font face="Times New Roman, Times, serif"></font></td>
    <td width="56" height="28">
      <div align="center"><font face="Times New Roman, Times, serif" size="3"><u>PAGE
        </u></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">PROSPECTUS
      SUMMARY</font></td>
    <td width="56">
      <div align="center"><font face="Times New Roman, Times, serif" size="3">1</font></div>
    </td>
  </tr>
  <tr>
    <td colspan="2">&nbsp;</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">RISK FACTORS</font></td>
    <td width="56">
      <div align="center">4</div>
    </td>
  </tr>
  <tr>
    <td colspan="2">&nbsp;</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">INFORMATION
      CONTAINED IN THIS PROSPECTUS</font></td>
    <td width="56">
      <div align="center">16</div>
    </td>
  </tr>
  <tr>
    <td colspan="2">&nbsp;</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">FORWARD-LOOKING
      STATEMENTS</font></td>
    <td width="56">
      <div align="center">16</div>
    </td>
  </tr>
  <tr>
    <td colspan="2">&nbsp;</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">USE OF
      PROCEEDS</font></td>
    <td width="56">
      <div align="center">16</div>
    </td>
  </tr>
  <tr>
    <td colspan="2">&nbsp;</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">SELLING
      STOCKHOLDER</font></td>
    <td width="56">
      <div align="center">17</div>
    </td>
  </tr>
  <tr>
    <td colspan="2">&nbsp;</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">PLAN OF
      DISTRIBUTION</font></td>
    <td width="56">
      <div align="center"><font face="Times New Roman, Times, serif" size="3">18</font></div>
    </td>
  </tr>
  <tr>
    <td colspan="2">&nbsp;</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">LEGAL
      MATTERS</font></td>
    <td width="56">
      <div align="center"><font face="Times New Roman, Times, serif" size="3">19</font></div>
    </td>
  </tr>
  <tr>
    <td colspan="2">&nbsp;</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">EXPERTS</font></td>
    <td width="56">
      <div align="center"><font face="Times New Roman, Times, serif" size="3">19</font></div>
    </td>
  </tr>
  <tr>
    <td colspan="2">&nbsp;</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">WHERE
      YOU CAN FIND MORE INFORMATION</font></td>
    <td width="56">
      <div align="center"><font face="Times New Roman, Times, serif" size="3">19</font></div>
    </td>
  </tr>
  <tr>
    <td colspan="2">&nbsp;</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">INFORMATION
      INCORPORATED BY REFERENCE</font></td>
    <td width="56">
      <div align="center"><font face="Times New Roman, Times, serif" size="3">19</font></div>
    </td>
  </tr>
</table>
<P ALIGN="center">&nbsp;</P>
<P ALIGN="center">&nbsp;</P>
<P ALIGN="center">&nbsp;</P>
<P ALIGN="center">- i -</P>
<hr align="LEFT" size=4>
<P ALIGN="center"><font face="Times New Roman, Times, serif"><b><br>
  <br>
  PROSPECTUS SUMMARY</b></font></P>
<P ALIGN="left"><font face="Times New Roman, Times, serif"><i>This summary highlights
  important features of this offering and the information included or incorporated
  by reference in this prospectus. This summary does not contain all of the information
  that you should consider before investing in our Common Stock. You should read
  the entire prospectus carefully, especially the risks of investing in our Common
  Stock discussed under &quot;Risk Factors.&quot;</i></font></P>
<P ALIGN="center"><font face="Times New Roman, Times, serif"><b><br>
  The Company</b></font></P>
<P ALIGN="left"><font face="Times New Roman, Times, serif"><br>
  We are a producer of mobile handheld computers and data collection products
  serving the business mobility markets. We offer a family of handheld computer
  products designed for business enterprise use and a wide range of data collection
  products including two dimensional (2D) and linear (1D) bar code scanners, Radio
  Frequency Identification (RFID) readers, and magnetic stripe readers. We also
  offer wearable ring scanners, customized versions of our handheld computers,
  embedded wireless LAN cards and Bluetooth modules as OEM products to third party
  companies. Our data collection products work with our handheld computers and
  our cordless hand scanners work with many third-party mobile handheld devices
  including smartphones, tablet computers, ultra-mobile personal computers (UMPCs),
  notebooks and desktop systems, adding data collection capabilities to these
  devices. Our products are designed to run or enhance mobile applications that
  enable the accessing, collection and processing of data by employees while mobile.
  Our mobile computing products utilize popular Bluetooth and wireless LAN connection
  technologies using management software we developed for ease of use. <br>
  </font></P>
<P ALIGN="left"><font face="Times New Roman, Times, serif">We work closely with
  software application developers offering or developing vertical software applications
  for use with our handheld computers and for use with smartphones, including
  phones running Apple iOS4, Google Android, RIM BlackBerry and Microsoft Windows
  operating systems for use with our cordless hand scanners. Healthcare and hospitality
  are two of the primary areas of focus for software application developers who
  have developed applications for use on our handheld computers, and a significant
  portion of our handheld computer sales now come from organizations within these
  two market segments. Other vertical markets benefiting from mobile solutions
  include 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 or medical
  enterprise, and then if required, back to the remote locations and mobile devices.<br>
  </font></P>
<P ALIGN="left"><font face="Times New Roman, Times, serif">We believe growth in
  the mobile workforce along with technical advances and cost reductions in mobile
  devices, smartphones and networking technologies along with the pervasive use
  of the Internet are driving broader adoption of mobile computing solutions.
  Our products are designed to address the growing need for mobile computing by
  today's mobile workforce by enabling them to run or enhance mobile applications
  that allow access to business data files, or collect and process data while
  mobile, thereby enhancing their productivity and allowing them to exploit time
  sensitive opportunities and improve customer satisfaction. Overall, our hardware
  products enable mobile third-party applications to become complete mobile data
  collection and connectivity solutions.</font></P>
<P ALIGN="center">&nbsp;</P>
<P ALIGN="center">&nbsp;</P>
<hr align="LEFT" size=4>
<P ALIGN="left"><font face="Times New Roman, Times, serif"><br>
  We also make available to original equipment manufacturers (OEMs) our wearable
  ring scanners, customized versions of our handheld computers, component Bluetooth
  and wireless LAN technologies. We customize these products and components for
  our use in our own products and leverage that investment through the sale of
  modified versions or modules and plug-in cards to OEM manufacturers to 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. <br>
  </font></P>
<P ALIGN="left"><font face="Times New Roman, Times, serif">Total employee headcount
  on December 31, 2010 was 64 people. We subcontract the manufacturing of all
  of our products to independent third-party contract manufacturers located in
  the U.S., China and Taiwan who have the equipment, know-how and capacity to
  manufacture products to our specifications. Our handheld computers and data
  collection products are sold through a worldwide network of distributors and
  resellers, vertical industry partners, and value added resellers (VARs). Our
  OEM products are sold directly to the original equipment manufacturers.<br>
  </font></P>
<P ALIGN="left"><font face="Times New Roman, Times, serif">We have financed our
  operations since inception primarily from the sale of equity capital. In November
  2010 we issued $1 million in convertible notes with an eighteen month term,
  convertible into Common Stock at the option of the holder, to provide additional
  working capital for the Company. </font><font face="Times New Roman, Times, serif">
  </font></P>
<P ALIGN="center">&nbsp;</P>
<P ALIGN="center"><font face="Times New Roman, Times, serif"><b>2011 Private Placement</b></font></P>
<P ALIGN="left">On February 23, 2011, we completed the sale of shares of our Common
  Stock in a private placement with AboCom Systems, Inc., a corporation organized
  under the laws of Taiwan and a contract manufacturer of the Company's products.
  The securities purchase agreement provided for the sale of $500,000 of Common
  Stock at the closing bid price immediately preceding the signing of the financing
  agreements. The Company issued 282,485 unregistered common shares priced at
  the closing bid price on February 23, 2011 of $1.77 per share. The proceeds
  were applied to trade payable balances related to the purchase of products owed
  by us to AboCom Systems, Inc. <br>
</P>
<P ALIGN="left">We issued these shares of Common Stock in reliance on an exemption
  from registration pursuant to Section 4(2) of the Securities Act of 1933, as
  amended, and Rule 506 of Regulation D promulgated thereunder. We are now registering
  for resale under this prospectus the shares of Common Stock issued to the investor
  in the private placement.<br>
  <br>
</P>
<table cellspacing=1 cellpadding=1 width=60% align=center border=1>
  <tr valign=bottom>
    <td colspan=3 height="22">
      <p align="center"><font face="Times New Roman, Times, serif" size="3"><b>The
        Offering</b></font></p>
    </td>
  </tr>
  <tr valign=bottom>
    <td height=10 colspan="2" valign="top">Common Stock offered by selling stockholder</td>
    <td height=10 width="58%" valign="top">282,485 shares of our Common Stock</td>
  </tr>
  <tr valign=bottom>
    <td colspan="2" valign="top">
      <p><font face="Times New Roman, Times, serif" size="3">Use of proceeds</font></p>
    </td>
    <td width="58%" valign="top">
      <p align=left>We will not receive any proceeds from the sale of shares in
        this offering.</p>
    </td>
  </tr>
  <tr valign=bottom>
    <td colspan="2" height="25" valign="top">
      <p><font face="Times New Roman, Times, serif" size="3">Nasdaq Capital Market
        symbol</font></p>
    </td>
    <td width="58%" height="25" valign="top">
      <p align=left><font face="Times New Roman, Times, serif" size="3">SCKT </font></p>
    </td>
  </tr>
</table>
<P ALIGN="left">&nbsp;</P>
<p align="center"><font face="Times New Roman, Times, serif">- 2-</font></p>
<hr align="LEFT" size=4>
<p>&nbsp;</p><P ALIGN="center"><font face="Times New Roman, Times, serif"><b>Corporate Information</b></font></P>
<P ALIGN="left"><br>
  We were founded in March 1992 as Socket Communications, Inc. and reincorporated
  in Delaware in 1995 prior to our initial public offering in June 1995. We began
  doing business as Socket Mobile, Inc. in January 2007 to better reflect our
  market focus on the mobile business market and changed our legal name to Socket
  Mobile, Inc. in April 2008. Our Common Stock trades on the NASDAQ Capital Market
  under the symbol &quot;SCKT&quot;. Our principal executive offices are located
  at 39700 Eureka Drive, Newark, CA 94560, and our phone number is (510) 933-3000.
  Our Internet home page is located at http://www.socketmobile.com; however, the
  information on, or that can be accessed through, our home page is not part of
  this Registration Statement. Our annual reports on Form 10-K, quarterly reports
  on Form 10-Q, current reports on Form 8-K, and any amendments to such reports
  are available free of charge on or through our Internet home page, as soon as
  reasonably practical after we electronically file such material with, or furnish
  it to, the Securities and Exchange Commission.</P>
<P ALIGN="left">&nbsp;</P>
<P ALIGN="left">&nbsp;</P>
<P ALIGN="left">&nbsp;</P>
<P ALIGN="left">&nbsp;</P>
<P ALIGN="left">&nbsp;</P>
<p align="center"><font face="Times New Roman, Times, serif">- 3-</font></p>
<hr align="LEFT" size=4>
<P ALIGN="center">&nbsp;</P>
<P ALIGN="center"><font face="Times New Roman, Times, serif"><b>RISK FACTORS</b></font></P>
<P ALIGN="left"><font face="Times New Roman, Times, serif"><i><br>
  An investment in the Common Stock offered by this prospectus involves a high
  degree of risk. You should carefully consider the risks described below, as
  well as the risks described in our annual and quarterly reports filed with the
  Securities and Exchange Commission, before deciding to purchase shares of our
  Common Stock. The risks described below are not the only ones that we face.
  Additional risks that generally apply to publicly traded companies, that are
  not yet identified or that we currently think are immaterial, may also adversely
  affect our company.<br>
  </i></font></P>
<P ALIGN="left"><font face="Times New Roman, Times, serif"><i>If any of the events,
  contingencies, circumstances or conditions described in the following risks
  actually occur, our business, financial condition or results of operations could
  be seriously harmed. The trading price of our Common Stock could, in turn, decline
  and you could lose all or part of your investment.</i></font><font face="Times New Roman, Times, serif"><i><br>
  </i></font></P>
<P ALIGN="left"><b>There is substantial doubt about our ability to continue as
  a going concern.</b><br>
</P>
<P ALIGN="left">Our financial statements have been prepared on a going concern
  basis. During the years ended December 31, 2010, 2009, and 2008, we incurred
  net losses of $4.0 million, $7.9 million, and $2.8 million, respectively. As
  of December 31, 2010, we have an accumulated deficit of $54.8 million and a
  working capital deficit of $1.6 million. The report of our Independent Registered
  Public Accounting Firm on our financial statements for the year ended December
  31, 2010 and 2009, contains an explanatory paragraph noting that certain conditions
  raise substantial doubt about our ability to continue as a going concern. Our
  continued operating losses and declines in our working capital balances are
  conditions that raise doubt about the Company's ability to continue as a going
  concern. Our ability to continue as a going concern is dependent upon our ability
  to establish profitable operations and to raise additional financing. We have
  been taking steps intended to reduce operating losses and achieve profitability
  including the introduction of new products, continued close support of our distributors
  and of our application partners as they establish their mobile applications
  in key vertical markets, and management of our costs. We believe that we will
  be able to improve our liquidity and secure additional sources of financing
  by managing our working capital balances, and raising additional capital as
  needed, including development funding from development partners and the issuance
  of additional equity securities. Nonetheless, there can be no assurance that
  we will be successful in achieving any of these steps, and there can be no assurance
  that additional financing will be available on acceptable terms, if at all,
  and any such terms may be dilutive to existing stockholders. Our inability to
  secure and maintain the necessary liquidity would have a material adverse effect
  on our financial condition and results of operations. Our financial statements
  do not include any adjustments to reflect the possible future effects on the
  recoverability and classification of assets or the amounts and classification
  of assets and liabilities that may result from the outcome of this uncertainty.<br>
</P>
<P ALIGN="left"><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><br>
</P>
<P ALIGN="left">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 these conditions cause our revenues to be materially less than forecast,
  we may find it necessary to initiate further reductions in our expenses and
  defer additional product development programs. In addition, 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.</P>
<P ALIGN="center">&nbsp;</P>
<P ALIGN="center"><font face="Times New Roman, Times, serif">- 4 -</font></P>
<hr align="LEFT" size=4>
<P ALIGN="center">&nbsp;</P>
<P ALIGN="left"><b>We have a history of operating losses and may not achieve ongoing
  profitability.</b><br>
</P>
<P ALIGN="left">We have been unprofitable in every quarter except one during the
  past three fiscal years. Fiscal year 2004 was the only profitable year in our
  history, and 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 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.<br>
</P>
<P ALIGN="left"><b>We may require additional capital in the future, but that capital
  may not be available on reasonable terms, if at all, or on terms that would
  not cause substantial dilution to your stock holdings.<br>
  </b> </P>
<P ALIGN="left">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, deployments
  by businesses of applications that use our handheld computers and our data collection
  products, and supply delays in key components such as we experienced in the
  fourth quarter of 2010. 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.<br>
</P>
<P ALIGN="left"><b>We may require additional capital in the future to repay our
  outstanding convertible note, but that capital may not be available on reasonable
  terms, if at all, or available only on terms that result in substantial dilution
  to your stock holdings.<br>
  </b> </P>
<P ALIGN="left">Although the convertible note that we issued in November 2010
  is priced to facilitate its conversion into equity over the eighteen-month term
  of the convertible note, such conversion is at the option of the noteholder
  and the note, including interest, if outstanding at the end of the eighteen-month
  period, would require repayment by the Company. Our failure to repay the convertible
  note including interest if outstanding at the end of its term, would be an event
  of default. In addition, the convertible note contains other events of default,
  including in the event the Company is unable to maintain the minimum cash and
  accounts receivables balance and the minimum current ratio required by the convertible
  note. There can be no assurance that capital to refinance the convertible note
  at the end of its eighteen-month term or upon an event of default would be available
  on terms acceptable to the Company, if at all. The terms of our November 2010
  convertible note financing contain certain anti-dilution provisions. Should
  we need to raise additional capital in the future at prices below the conversion
  price of the convertible note, if outstanding at such future time, substantial
  dilution could result from such a financing.</P>
<P ALIGN="left">&nbsp;</P>
<P ALIGN="left">&nbsp;</P>
<p align="center"><font face="Times New Roman, Times, serif">- 5 -</font></p>
<hr align="LEFT" size=4>
<P ALIGN="left"><font face="Times New Roman, Times, serif"><br>
  </font></P>
<p><b>Our quarterly operating results may fluctuate in future periods, which could
  cause our stock price to decline.</b><br>
</p>
<p>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 or in the manufacture of products relating to orders received,
  may adversely affect our quarterly operating results. Our operating results
  may also fluctuate due to factors such as:</p>
<ul>
  <li>the demand for our products;</li>
  <li>the size and timing of customer orders;</li>
  <li>unanticipated delays or problems in our introduction of new products and
    product enhancements;</li>
  <li>the introduction of new products and product enhancements by our competitors;</li>
  <li>the timing of the introduction and deployments of new applications that
    work with our products;</li>
  <li>changes in the revenues attributable to royalties and engineering development
    services;</li>
  <li>product mix;</li>
  <li>timing of software enhancements;</li>
  <li>changes in the level of operating expenses;</li>
  <li>competitive conditions in the industry including competitive pressures resulting
    in lower average selling prices;</li>
  <li>timing of distributors' shipments to their customers;</li>
  <li>delays in supplies of key components used in the manufacturing of our products,
    and </li>
  <li>general economic conditions and conditions specific to our customers' industries.</li>
</ul>
<p>Because we base our staffing and other operating expenses on anticipated revenues,
  unanticipated declines or 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.<br>
</p>
<p><b>Goodwill comprises a significant portion of our assets and may be subject
  to impairment write-downs in future periods which would substantially increase
  our losses, make it more difficult to achieve profitability, and cause our stock
  price to decline.<br>
  </b> </p>
<p>We review our goodwill for impairment at least annually and more often if factors
  suggest potential impairment. Many factors are considered in evaluating goodwill
  including our market capitalization, comparable companies within our industry,
  our estimates of our future performance, and discounted cash flow analysis.
  Many of these factors are highly subjective and may be negatively impacted by
  our financial results and market conditions in the future. We recorded goodwill
  impairment charges in 2009 of $5.4 million. We may incur goodwill impairment
  charges in the future and any future write-downs of our goodwill would increase
  our net losses, make it more difficult to achieve profitability, and as a result
  the market price of our Common Stock could be adversely affected.</p>
<p>&nbsp;</p>
<p>&nbsp;</p>
<P ALIGN="center"><font face="Times New Roman, Times, serif">- 6 -</font></P>
<hr align="LEFT" size=4>
<P ALIGN="center">&nbsp;</P>
<p><b>We may be unable to manufacture our products, because we are dependent on
  a limited number of qualified suppliers for our components.</b><br>
</p>
<p>Several of our component parts, including our serial interface chip, our Ethernet
  chip, our bar code scanning modules, and our 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. In particular, shipments of our mobile handheld computers
  in the fourth quarter 2010 were adversely affected by a worldwide supply chain
  LCD screen shortage, due to increased demand for LCD screens by tablet and smartphone
  manufacturers. If we are unable to procure certain component parts such as we
  experienced in the fourth quarter of 2010, 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. </p>
<p><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><br>
</p>
<p>Our success has been dependent upon the ability of third-parties in the mobile
  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
  vertical market software applications for use with our handheld computer and
  peripheral products, and standard Pocket PC handhelds, phone-integrated devices,
  tablet computers, and other phone-integrated devices, including those from Nokia,
  Blackberry, Google, Hewlett-Packard and Apple, 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 they offer, or curtailed development of future handheld
  computer products. If manufacturers are unable or choose not to ship new products
  such as Windows Mobile devices, or experience difficulties with new product
  transitions that cause delays in the market, or if these products fail to achieve
  or maintain market acceptance, the number of our potential new customers could
  be reduced and we may not be able to meet our sales expectations.<br>
</p>
<p><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><br>
</p>
<p>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.<br>
</p>
<p>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:</p>
<ul>
  <li>invest significant resources in research and development, sales and marketing,
    and customer support;</li>
</ul>
<p>&nbsp;</p>
<p align="center"><font face="Times New Roman, Times, serif">- 7 -</font></p>
<hr align="LEFT" size=4>
<p>&nbsp;</p><ul>
  <li><font face="Times New Roman, Times, serif">identify emerging trends, demands
    and standards in the field of mobile computing products;</font></li>
  <li><font face="Times New Roman, Times, serif">enhance our products by adding
    additional features; </font></li>
  <li><font face="Times New Roman, Times, serif">maintain superior or competitive
    performance in our products; and</font></li>
  <li><font face="Times New Roman, Times, serif">anticipate our end users' needs
    and technological trends accurately.</font></li>
</ul>
<p>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.<br>
</p>
<p><b>A significant portion of our revenue currently comes from several distributors,
  and any decrease in revenue from these distributors could harm our business.
  </b> </p>
<p>A significant portion of our revenue comes from two distributors, Tech Data
  Corporation and Ingram Micro Inc., which together represented approximately
  27%, 35%, and 31% of our worldwide revenues in fiscal years 2010, 2009, and
  2008, respectively. We expect that a significant portion of our revenue will
  continue to depend on sales to Tech Data Corporation and Ingram Micro Inc. Additionally,
  11% of our revenues in fiscal 2010 came from our distributor BlueStar, Inc.,
  and 10% of our revenue in fiscal 2010 came from Epocal, Inc., an OEM customer.
  We do not have long-term commitments from Tech Data Corporation, Ingram Micro
  Inc., or BlueStar, Inc. to carry our products. Any of these distributors 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 Corporation, Ingram Micro Inc., or BlueStar, Inc., we would experience
  disruption and delays in marketing our products.<br>
</p>
<p><b>If the market for mobile computers experiences delays, or fails to grow,
  we may not achieve our sales projections.</b><br>
</p>
<p>Substantially all of our peripheral products are designed for use with mobile
  computers, including handhelds, notebooks, tablets, and handhelds with integrated
  phones. If the mobile 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, or if the markets for our mobile handheld
  computers do not grow, or if the impact of the global economic financial crisis
  continues, we may not achieve our sales projections.<br>
</p>
<p><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><br>
</p>
<p>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.<br>
</p>
<p><b>We could face increased competition in the future, which would adversely
  affect our financial performance.</b><br>
</p>
<p>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:</p>
<ul>
  <li>some of our competitors have greater financial, marketing, and technical
    resources than we do; </li>
</ul>
<P ALIGN="left"><br>
  <br>
</P>
<P ALIGN="center"><font face="Times New Roman, Times, serif">- 8 -</font></P>
<hr align="LEFT" size=4>
<p>&nbsp;</p><ul>
  <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 manufacturers of personal
    computers, mobile phones and handheld computers offer products with built-in
    functions, such as Bluetooth wireless technology, Wi-Fi, or bar code scanning,
    that compete with our products.<br>
    </font></li>
</ul>
<P ALIGN="left"><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.<br>
  </font></P>
<P ALIGN="left"><font face="Times New Roman, Times, serif"><b>If we do not correctly
  anticipate demand for our products, our operating results will suffer.<br>
  </b> </font></P>
<P ALIGN="left"><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.<br>
  </font></P>
<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.<br>
  </font></P>
<P ALIGN="left"><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><br>
  </font></P>
<P ALIGN="left"><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
  and working capital liquidity.<br>
  </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>
<P ALIGN="left">&nbsp;</P>
<P ALIGN="left">&nbsp;</P>
<P ALIGN="center"><font face="Times New Roman, Times, serif">- 9 -</font></P>
<hr align="LEFT" size=4>
<P ALIGN="center">&nbsp;</P>
<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 and working capital
  liquidity by reducing our accounts receivable and increasing our inventory balances,
  particularly since we seek to continually introduce new and enhanced products
  and are likely to face increasing price competition.<br>
  </font></P>
<P ALIGN="left"><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.<br>
  </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.<br>
  </font></P>
<P ALIGN="left"><font face="Times New Roman, Times, serif">We have devoted significant
  research and development resources to design products to work with a number
  of operating systems used in mobile devices including Windows Mobile, Windows
  CE, Windows 7/Vista/XP, RIM Blackberry, Apple iOS, and Google's Android, and
  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, Apple, or Google 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>
<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><br>
  </font></P>
<P ALIGN="left"><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.<br>
  </font></P>
<P ALIGN="left"><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.</font></P>
<P ALIGN="left">&nbsp;</P>
<P ALIGN="center">&nbsp;</P>
<P ALIGN="center"><font face="Times New Roman, Times, serif">- 10 -</font></P>
<hr align="LEFT" size=4>
<P ALIGN="center">&nbsp;</P>
<P ALIGN="left"><font face="Times New Roman, Times, serif"> 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.<br>
  </font></P>
<P ALIGN="left"><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><br>
  </font></P>
<P ALIGN="left"><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.<br>
  </font></P>
<P ALIGN="left"><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.<br>
  </font></P>
<P ALIGN="left"><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.<br>
  </font></P>
<P ALIGN="left"><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><br>
  </font></P>
<P ALIGN="left"><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>&nbsp;</p>
<p>&nbsp;</p>
<P ALIGN="center"><font face="Times New Roman, Times, serif">- 11 -</font></P>
<hr align="LEFT" size=4>
<P ALIGN="center">&nbsp;</P>
<P ALIGN="left"><b>Undetected flaws and defects in our products may disrupt product
  sales and result in expensive and time-consuming remedial action.</b><br>
</P>
<P ALIGN="left">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.<br>
</P>
<P ALIGN="left"><b>The loss of one or more of our senior personnel could harm
  our existing business.</b><br>
</P>
<P ALIGN="left">A number of our officers and senior managers have been employed
  for sixteen to nineteen 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. <br>
</P>
<P ALIGN="left"><b>The expensing of options will continue to reduce our operating
  results and may continue to cause us to incur net losses such that we may find
  it necessary to change our business practices to attract and retain employees.<br>
  </b> </P>
<P ALIGN="left">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. Furthermore,
  on July 1, 2010, we completed a stockholder approved exchange offer for certain
  of our outstanding options. As a result, the total remaining unrecognized compensation
  costs related to unvested stock options increased by $0.74 million, which is
  being amortized over the weighted average remaining requisite period of 2.4
  years. The expensing of employee stock options adversely affected our net income
  and earnings per share in each of the quarters in fiscal 2010, 2009, and 2008,
  will continue to adversely affect future quarters, and will make profitability
  harder to achieve. 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.<br>
</P>
<P ALIGN="left"><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><br>
</P>
<P ALIGN="left">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.</P>
<P ALIGN="left">&nbsp;</P>
<P ALIGN="center">&nbsp;</P>
<P ALIGN="center"><font face="Times New Roman, Times, serif">- 12 -</font></P>
<hr align="LEFT" size=4>
<P ALIGN="center">&nbsp;</P>
<P ALIGN="left"><b>We may not be able to collect revenues from customers who experience
  financial difficulties.</b><br>
</P>
<P ALIGN="left">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.<br>
</P>
<P ALIGN="left"><b>Our operating results could be harmed by economic, political,
  regulatory and other risks associated with export sales.</b><br>
</P>
<P ALIGN="left">Export sales (sales to customers outside the United States) accounted
  for approximately 24%, 42%, and 37% of our revenue in fiscal years 2010, 2009,
  and 2008, respectively. Accordingly, our operating results are subject to the
  risks inherent in export sales, including:</P>
<ul>
  <li>longer payment cycles;</li>
  <li>unexpected changes in regulatory requirements, import and export restrictions
    and tariffs;</li>
  <li>difficulties in managing foreign operations;</li>
  <li>the burdens of complying with a variety of foreign laws;</li>
  <li>greater difficulty or delay in accounts receivable collection;</li>
  <li>potentially adverse tax consequences; and</li>
  <li>political and economic instability.<br>
  </li>
</ul>
<P ALIGN="left">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.<br>
</P>
<P ALIGN="left"><b>Our operations are vulnerable to interruption by fire, earthquake,
  power loss, telecommunications failure, and other events beyond our control.</b><br>
</P>
<P ALIGN="left">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.</P>
<P ALIGN="left">&nbsp;</P>
<P ALIGN="center">&nbsp;</P>
<P ALIGN="center"><font face="Times New Roman, Times, serif">- 13 -</font></P>
<hr align="LEFT" size=4>
<P ALIGN="center">&nbsp;</P>
<P ALIGN="left"><font face="Times New Roman, Times, serif"> <b>Failure to maintain
  effective internal controls could have a material adverse effect on our business,
  operating results and stock price.</b><br>
  </font></P>
<P ALIGN="left"><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
  control 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 control 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><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><br>
</p>
<p>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.<br>
</p>
<p>As of March 10, 2011, we had 4,084,476 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.<br>
</p>
<p>As of March 10, 2011, we had 1,394,673 shares of Common Stock subject to outstanding
  options under our stock option plans, and 129,439 shares of Common Stock 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, the shares of Common Stock underlying vested
  options will be eligible for resale in the public market as soon as the options
  are exercised.<br>
</p>
<p>As of March 10, 2011, we had 86,585 shares of Common Stock subject to outstanding
  warrants issued in our 2009 private placement. We have registered the resale
  of all shares of Common Stock subject to the warrants. Accordingly, the shares
  of Common Stock underlying these warrants will be eligible for resale in the
  public market as soon as the warrants are exercised, subject to S-3 prospectus
  delivery requirements.<br>
</p>
<p>As of March 10, 2011, we had 666,666 shares of Common Stock subject to the
  conversion of a note issued in our November 2010 senior convertible note financing.
  The conversion price of this note is subject to one additional conversion price
  reset one year from date of issuance of the note, and, depending upon the market
  price of our Common Stock at the time of such reset, can result in an increase
  in the number of shares we are obligated to issue upon conversion of the note
  up to an additional 97,732 shares in aggregate. As of March 10, 2011, we had
  550,000 shares of Common Stock subject to outstanding warrants issued in connection
  with the convertible note financing in November 2010. The warrants are not exercisable
  until May 20, 2011. We have registered the resale of all shares of Common Stock
  subject to the note conversion and warrants. Accordingly, the shares of Common
  Stock underlying the note and warrants will be eligible for resale in the public
  market as soon as the note is converted and the warrants are eligible and exercised,
  subject to S-3 prospectus delivery requirements.</p>
<p>&nbsp;</p>
<P ALIGN="center"><br>
  <font face="Times New Roman, Times, serif">- 14 -</font></P>
<hr align="LEFT" size=4>
<P ALIGN="center">&nbsp;</P>
<P ALIGN="left"><font face="Times New Roman, Times, serif"> Volatility in the
  trading price of our Common Stock could negatively impact the price of our Common
  Stock.<br>
  </font></P>
<P ALIGN="left"><font face="Times New Roman, Times, serif">During the period from
  January 1, 2010 through March 10, 2011, our Common Stock price fluctuated between
  a high of $5.44 and a low of $1.51. Following a one-for-ten reverse stock split
  effected on October 23, 2008, 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 ALIGN="left">&nbsp;</P>
<P ALIGN="left">&nbsp;</P>
<P ALIGN="left">&nbsp;</P>
<P ALIGN="left">&nbsp;</P>
<P ALIGN="left">&nbsp;</P>
<P ALIGN="left">&nbsp;</P>
<P ALIGN="left">&nbsp;</P>
<P ALIGN="left"><font face="Times New Roman, Times, serif"><br>
  <br>
  </font></P>
<P ALIGN="left">&nbsp;</P>
<P ALIGN="center"><font face="Times New Roman, Times, serif">- 15 -</font></P>
<hr align="LEFT" size=4>
<p>&nbsp;</p><P ALIGN="center"><font face="Times New Roman, Times, serif"><b> INFORMATION CONTAINED
  IN THIS PROSPECTUS</b></font></P>
<P ALIGN="left"><font face="Times New Roman, Times, serif"><br>
  You should rely only on the information contained in this prospectus. We have
  not authorized anyone to provide you with information different from that contained
  in this prospectus. The selling stockholder listed in this prospectus is offering
  to sell, and seeking offers to buy, shares of our Common Stock only in jurisdictions
  where offers and sales are permitted. The information contained in this prospectus
  is accurate only as of the date of this prospectus, regardless of the time of
  delivery of this prospectus or of any sale of our Common Stock.</font></P>
<P ALIGN="left">&nbsp;</P>
<P ALIGN="center"> <font face="Times New Roman, Times, serif"><b> FORWARD-LOOKING
  STATEMENTS</b><br>
  </font></P>
<P ALIGN="left">This prospectus contains forward looking statements within the
  meaning of the securities laws. These forward looking statements are subject
  to a number of risks and uncertainties, many of which are beyond our control.
  All statements other than statements of historical facts included in this prospectus,
  including the statements under &quot;Prospectus Summary&quot; and elsewhere
  in this prospectus regarding our strategy, future operations, financial position,
  estimated revenues, projected costs, prospects, plans and objectives of management
  are forward looking statements. When used in this prospectus, the words &quot;will,&quot;
  &quot;believe,&quot; &quot;anticipate,&quot; &quot;intend,&quot; &quot;estimate,&quot;
  &quot;expect,&quot; &quot;project&quot; and similar expressions are intended
  to identify forward looking statements, although not all forward looking statements
  contain such identifying words. All forward looking statements speak only as
  of the date of this prospectus. Neither we nor the selling stockholder undertake
  any obligation to update or revise publicly any forward looking statements,
  whether as a result of new information, future events or otherwise. Although
  we believe that our plans, intentions and expectations reflected in or suggested
  by the forward looking statements we make in this prospectus are reasonable,
  ultimately we may not achieve such plans, intentions or expectations.<br>
</P>
<P ALIGN="left">We disclose important factors that could cause our actual results
  to differ materially from our expectations under &quot;Risk Factors&quot; and
  elsewhere in this prospectus. Such factors include, among others, the following:
  our ability to raise sufficient capital to fund our operations, our ability
  to achieve profitability, developments in the market for our products, including
  the market for mobile computers that use the Windows Mobile operating system,
  developments in our relationships with our strategic partners, and world economic
  and financial conditions. These cautionary statements qualify all forward looking
  statements attributable to us or persons acting on our behalf.</P>
<P ALIGN="center"><font face="Times New Roman, Times, serif"><b><br>
  <br>
  USE OF PROCEEDS</b><br>
  </font></P>
<p align="left">We will not receive any of the proceeds from the sale of the shares
  sold under this prospectus. All proceeds from the sale of the shares will be
  for the account of the selling stockholder. See &quot;Selling Stockholder&quot;
  and &quot;Plan of Distribution.&quot;<br>
  <br>
</p>
<P ALIGN="center">&nbsp;</P>
<P ALIGN="center"><font face="Times New Roman, Times, serif">- 16 -</font></P>
<hr align="LEFT" size=4>
<P ALIGN="center">&nbsp;</P>
<P ALIGN="center"><font face="Times New Roman, Times, serif"><b>SELLING STOCKHOLDER</b><br>
  </font></P>
<P ALIGN="left">In connection with the private placement completed on February
  23, 2011, the Company entered into a registration rights agreement with the
  purchaser in the private placement, who is now the selling stockholder. The
  registration statement of which this prospectus is a part has been filed in
  accordance with the registration rights agreement. The shares of Common Stock
  covered by this prospectus consist of shares of Common Stock that we issued
  in the private placement. The table below sets forth, to our knowledge, information
  about the selling stockholder as of March 16, 2011. <br>
</P>
<P ALIGN="left">We do not know when or in what amounts the selling stockholder
  may offer shares for sale. The selling stockholder may sell any or all of the
  shares offered by this prospectus. Because the selling stockholder may offer
  all or some of the shares pursuant to this prospectus, and because there are
  currently no agreements, arrangements or understandings with respect to the
  sale of any of the shares, we cannot estimate the number of shares that will
  be held by the selling stockholder after completion of this offering. For purposes
  of this table, however, we have assumed that, after completion of this offering,
  none of the shares covered by this prospectus will be held by the selling stockholder.
  Such shares are subject to limitations on sale pursuant to an agreement between
  us and the selling stockholders as described below under &quot;Plan of Distribution.&quot;<br>
</P>
<P ALIGN="left">Beneficial ownership is determined in accordance with the rules
  of the SEC and includes voting or investment power with respect to shares of
  our Common Stock. Unless otherwise indicated below, to our knowledge, the selling
  stockholder named in the table has sole voting and investment power with respect
  to the shares of Common Stock beneficially owned by it. The number of shares
  of Common Stock beneficially owned prior to the offering shown in the table
  for the selling stockholder includes (i) all shares held by the selling stockholder
  prior to the private placement, plus (ii) all shares purchased by the selling
  stockholder pursuant to the private placement and being offered pursuant to
  the prospectus, as well as (iii) all options or other derivative securities
  held by the selling stockholder that are exercisable within 60 days of March
  16, 2011. </P>
<P ALIGN="left">Throughout this prospectus, when we refer to the &quot;selling
  stockholder,&quot; we mean the person listed in the table below, as well as
  the pledgees, donees, assignees, transferees, successors and others who later
  hold any of the selling stockholder's interests, and when we refer to the shares
  of our Common Stock being offered by this prospectus on behalf of the selling
  stockholder, we are referring to the shares of our Common Stock sold in the
  private placement unless otherwise indicated.</P>
<p>The selling stockholder may have sold or transferred, in transactions exempt
  from the registration requirements of the Securities Act of 1933, some or all
  of their shares of Common Stock since the date as of which the information in
  the table below is presented. Information about the selling stockholder may
  change over time. <br>
  <br>
</p>
<table width="87%" border=0 cellspacing=0 cellpadding=0 align="center">
  <tr valign="bottom">
    <td align="LEFT" height="19" width="35%">&nbsp;</td>
    <td align="CENTER" height="19" width="12%"><font face="Times New Roman, Times, serif"><b><font size="3">Shares
      Beneficially</font></b></font></td>
    <td align="CENTER" height="19" width="15%">&nbsp;</td>
    <td align="CENTER" height="19" colspan="2"><b>Shares Beneficially Owned<br>
      After Offering</b></td>
  </tr>
  <tr valign="bottom">
    <td align="LEFT" height="2" width="35%">
      <div align="left"><font size="3" face="Times New Roman, Times, serif"><b>Name<br>
        </b></font> </div>
      <hr NOSHADE>
    </td>
    <td align="CENTER" height="2" width="12%" valign="bottom"><font face="Times New Roman, Times, serif"><b><font size="3">Owned
      Prior to<br>
      Offering</font> </b> </font>
      <hr NOSHADE>
    </td>
    <td align="CENTER" height="2" width="15%" valign="bottom"><font face="Times New Roman, Times, serif"><b>Number
      of Shares<br>
      Being Offered</b></font>
      <hr NOSHADE>
    </td>
    <td align="CENTER" height="2" width="18%" valign="bottom"><font face="Times New Roman, Times, serif"><b>Number</b>
      </font>
      <hr NOSHADE>
    </td>
    <td align="CENTER" height="2" width="20%" valign="bottom"><font face="Times New Roman, Times, serif"><b><font size="3">Percent(1)
      </font> </b> </font>
      <hr NOSHADE>
    </td>
  </tr>
  <tr bgcolor="#FFFFFF" valign="top">
    <td width="35%" height="9">AboCom Systems, Inc. (2)</td>
    <td align="RIGHT" height="9" width="12%">
      <div align="center"><font size="3" face="Times New Roman, Times, serif">282,485
        (3)</font></div>
    </td>
    <td align="RIGHT" height="9" width="15%">
      <div align="center"><font size="3" face="Times New Roman, Times, serif">282,485
        </font></div>
    </td>
    <td align="RIGHT" height="9" width="18%">
      <div align="center"><font size="3" face="Times New Roman, Times, serif">-
        </font></div>
    </td>
    <td align="RIGHT" height="9" width="20%">
      <div align="center"><font size="3" face="Times New Roman, Times, serif">-</font></div>
    </td>
  </tr>
  <tr bgcolor="#FFFFFF" valign="top">
    <td colspan="6" height="51">
      <hr NOSHADE align="LEFT" width="120">
      <font size="2" face="Times New Roman, Times, serif"> (1) Based upon 4,152,458
      shares of Common Stock outstanding as of the close of business on March
      15, 2011 in accordance with Rule 13d-3 under the Securities Exchange Act
      of 1934.<br>
      (2) AboCom Systems, Inc. is a corporation organized under the laws of Taiwan.
      Their main factory is located at Ju-Nan Chen, Yu-Hih Road #77, Miao-Lih,
      Taiwan, Republic of China. AboCom Systems is a contract manufacturer of
      the company's products. Eric Oy, the President and Chief Executive Officer
      of AboCom Systems, Inc., has voting and investment control in respect of
      these securities.<br>
      (3) Represents 6.8% of the outstanding shares of Common Stock, based upon
      4,152,458 shares of Common Stock outstanding as of the close of business
      on March 15, 2011. </font></td>
  </tr>
</table>
<p>&nbsp;</p>
<P ALIGN="left">&nbsp;</P>
<P ALIGN="center"><font face="Times New Roman, Times, serif">- 17-</font></P>
<hr align="LEFT" size=4>
<P ALIGN="center">&nbsp;</P>
<P ALIGN="center"><font face="Times New Roman, Times, serif"><b>PLAN OF DISTRIBUTION</b></font></P>
<p><br>
  We are registering the shares of Common Stock issued in the February 23, 2011
  private placement for sale on behalf of the selling stockholder. These shares
  may be sold in one or more transactions at fixed prices, at prevailing market
  prices at the time of sale, at prices related to the prevailing market prices,
  at varying prices determined at the time of sale, or at negotiated prices. These
  sales may be effected at various times in one or more of the following transactions,
  or in other kinds of transactions: </p>
<ul>
  <li>transactions on the NASDAQ Stock Market or on any national securities exchange
    or U.S. inter-dealer system of a registered national securities association
    on which the Common Stock may be listed or quoted at the time of sale;</li>
  <li>in the over-the-counter market;</li>
  <li>in private transactions and transactions otherwise than on these exchanges
    or systems or in the over-the-counter market;</li>
  <li>in connection with short sales of shares of our Common Stock;</li>
  <li>by pledge to secure or in payment of debt and other obligations; </li>
  <li>through the writing of options, whether the options are listed on an options
    exchange or otherwise; </li>
  <li>in connection with the writing of non-traded and exchange-traded call options,
    in hedge transactions and in settlement of other transactions in standardized
    or over-the-counter options; or </li>
  <li>through a combination of any of the above transactions. </li>
</ul>
<p>The selling stockholder and its successors, including their transferees, pledgees
  or donees or their successors, may sell the shares directly to purchasers or
  through underwriters, broker-dealers or agents, who may receive compensation
  in the form of discounts, concessions or commissions from the selling stockholder
  or the purchasers. Discounts, concessions or commissions as to any particular
  underwriter, broker-dealer or agent may be in excess of those customary in the
  types of transactions involved. <br>
</p>
<p>In addition, any securities covered by this prospectus that qualify for sale
  pursuant to Rule 144 of the Securities Act may be sold under Rule 144 rather
  than pursuant to this prospectus. <br>
</p>
<p>We entered into a registration rights agreement for the benefit of the selling
  stockholder to register the Common Stock issued in the February 23, 2011 private
  placement under applicable federal and state securities laws. The registration
  rights agreement provides for cross-indemnification between the selling stockholder
  and us and our respective directors, officers and controlling persons against
  specific liabilities in connection with the offer and sale of the securities
  covered by this prospectus, including liabilities under the Securities Act.
  We will pay substantially all of the expenses incurred by the selling stockholders
  incident to the registration of the offering and sale of the securities covered
  by this prospectus.</p>
<p><font face="Times New Roman, Times, serif"><br>
  <br>
  </font> </p>
<p align="center"><font face="Times New Roman, Times, serif"><br>
  - 18 -</font></p>
<hr align="LEFT" size=4>
<font face="Times New Roman, Times, serif"><br>
</font>
<P ALIGN="left">&nbsp;</P>
<P ALIGN="center"><font face="Times New Roman, Times, serif"><b>LEGAL MATTERS</b></font></P>
<P ALIGN="left"><font face="Times New Roman, Times, serif">Wilson Sonsini Goodrich
  &amp; Rosati, Professional Corporation, Palo Alto, California will pass upon
  certain legal matters relating to the validity of the securities offered hereby.</font><font face="Times New Roman, Times, serif"><br>
  </font></P>
<P ALIGN="center"><font face="Times New Roman, Times, serif"><b>EXPERTS</b><br>
  </font></P>
<P ALIGN="left">Moss Adams LLP, independent registered public accounting firm,
  have audited our financial statements included in our Annual Report on Form
  10 K for the year ended December 31, 2010, as set forth in their report, which
  is incorporated by reference in this prospectus and elsewhere in the registration
  statement. Our financial statements are incorporated by reference in reliance
  on Moss Adams LLP's report, given on their authority as experts in accounting
  and auditing.</P>
<P ALIGN="center"><font face="Times New Roman, Times, serif"><b>WHERE YOU CAN
  FIND MORE INFORMATION</b><br>
  </font></P>
<P ALIGN="left">We have filed with the Securities and Exchange Commission a registration
  statement on Form S 3, of which this prospectus is a part, under the Securities
  Act with respect to the shares of Common Stock offered hereby. This prospectus
  does not contain all of the information included in the registration statement.
  Statements in this prospectus concerning the provisions of any document filed
  as an exhibit to the registration statement or otherwise filed by us with the
  SEC are not necessarily complete. You should refer to the copies of these documents
  for a more complete understanding of the matters involved. Each statement concerning
  these documents is qualified in its entirety by such reference.<br>
</P>
<P ALIGN="left">We are subject to the informational requirements of the Securities
  Exchange Act of 1934 and, accordingly, file reports, proxy statements and other
  information with the SEC. Copies of our reports, proxy statements and other
  information also may be inspected and copied at the SEC's public reference room
  located at 100 F Street, N.E., Washington, D.C. 20549. You can call the SEC
  at 1-800-SEC-0330 for further information about the operation of the public
  reference room. The SEC maintains a web site at http://www.sec.gov that contains
  reports, proxy and information statements and other information regarding registrants
  that file electronically with the Commission. You can also find these documents
  through our own web site which is located at http://www.socketmobile.com. Information
  included on our web site is not a part of this prospectus or any prospectus
  supplement.<br>
  <font face="Times New Roman, Times, serif"> </font></P>
<P ALIGN="center"><font face="Times New Roman, Times, serif"><b>INFORMATION INCORPORATED
  BY REFERENCE</b><br>
  </font></P>
<P ALIGN="left">The SEC allows us to &quot;incorporate by reference&quot; the
  information we file with them, which means that we can disclose important information
  to you in this document by referring you to other filings we have made with
  the SEC. The information incorporated by reference is considered to be part
  of this prospectus, and later information filed with the SEC will update and
  supersede this information. In this instance, we are incorporating by reference
  the documents and information listed below and any future filings made with
  the SEC under Section 13(a), 13(c), 14 or 15(d) of the Securities and Exchange
  Act prior to the completion of the offering covered by this prospectus:<br>
</P>
<P ALIGN="left">(1) Our Annual Report on Form 10 K for the year ended December
  31, 2010, filed with the SEC on March 16, 2011.<br>
</P>
<P ALIGN="left">(2) Our current reports on Form 8-K filed with the SEC on February
  17, 2011 and February 24, 2011.</P>
<P ALIGN="left">&nbsp;</P>
<P ALIGN="left">&nbsp;</P>
<p align="center"><font face="Times New Roman, Times, serif">- 19 -</font></p>
<hr align="LEFT" size=4>
<P ALIGN="left">&nbsp;</P>
<P ALIGN="left"><font face="Times New Roman, Times, serif"> (3) The description
  of our Common Stock contained in our Registration Statement on Form 8 A filed
  with the SEC on April 11, 1995, as amended by our Registration Statement on
  Form 8 A/A filed with the SEC on June 15, 1995.<br>
  </font></P>
<P ALIGN="left"><font face="Times New Roman, Times, serif">We will provide to
  any person, including any beneficial owner, to whom a prospectus is delivered,
  a copy of any of the information which has been incorporated by reference into
  this prospectus at no cost upon an oral or written request to:<br>
  <br>
  </font></P>
<P ALIGN="center"><font face="Times New Roman, Times, serif"><br>
  Socket Mobile, Inc.<br>
  39700 Eureka Drive<br>
  Newark, CA 94560<br>
  Attention: David W. Dunlap<br>
  Phone: (510) 933-3035</font></P>
<P ALIGN="center">&nbsp;</P>
<P ALIGN="center">&nbsp;</P>
<P ALIGN="center">&nbsp;</P>
<P ALIGN="center">&nbsp;</P>
<P ALIGN="center">&nbsp;</P>
<P ALIGN="center">&nbsp;</P>
<P ALIGN="center"><font face="Times New Roman, Times, serif">- 20 -</font></P>
<hr align="LEFT" size=4>
<P ALIGN="center">&nbsp;</P>
<hr NOSHADE>
<P ALIGN="center">&nbsp;</P>
<P ALIGN="center">282,485 Shares</P>
<P ALIGN="center"><font face="Times New Roman, Times, serif"><b><font size="5">SOCKET
  MOBILE, INC.</font></b></font></P>
<P ALIGN="center"><font face="Times New Roman, Times, serif" size="3">____________________</font></P>
<P ALIGN="center"><font face="Times New Roman, Times, serif"><b>COMMON STOCK<br>
  </b><font size="3">____________________</font></font></P>
<P ALIGN="center">&nbsp;</P>
<P ALIGN="center"><font face="Times New Roman, Times, serif"><b>PROSPECTUS</b></font></P>
<P ALIGN="center">&nbsp;</P>
<P ALIGN="center">&nbsp;</P>
<P ALIGN="center">&nbsp;</P>
<P ALIGN="center">&nbsp;</P>
<P ALIGN="left">No dealer, salesperson or other person is authorized to give any
  information or to represent anything not contained in this prospectus. You must
  not rely on any unauthorized information or representations. This prospectus
  is an offer to sell only the shares offered hereby, and only under circumstances
  and in jurisdictions where it is lawful to do so. The information contained
  in this prospectus is current only as of its date.</P>
<P ALIGN="left">&nbsp;</P>
<P ALIGN="center"> <font face="Times New Roman, Times, serif" size="3">March 31<b>,</b></font>
  2011</P>
<P ALIGN="center">&nbsp;</P>
<hr NOSHADE>
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