944075--3/10/2006--SOCKET_COMMUNICATIONS

related topics

{product, market, service}

{customer, product, revenue}

{stock, price, share}

{property, intellectual, protect}

{personnel, key, retain}

{control, financial, internal}

{stock, price, operating}

{operation, international, foreign}

{operation, natural, condition}

{acquisition, growth, future}

{system, service, information}

{competitive, industry, competition}

{product, candidate, development}

We have a history of operating losses, and may not achieve ongoing profitability. 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. If third-parties do not produce and sell innovative products with which our products are compatible, we may not achieve our sales projections 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. We are required beginning in the first quarter of 2006 to expense options granted under our employee stock plans as compensation, and as a result we expect our net income and earnings per share will be reduced, we may have net losses, and may find it necessary to change our business practices to attract and retain employees. A significant portion of our revenue currently comes from two distributors, and any decrease in revenue from these distributors could harm our business. If the market for mobile computers fails to grow, we will not achieve our sales projections. Our sales will be hurt if the new technologies used in our products do not become widely adopted, or are adopted slower than expected. We could face increased competition in the future, which would adversely affect our financial performance. If we do not correctly anticipate demand for our products, our operating results will suffer. We rely primarily on distributors, resellers, and original equipment manufacturers to sell our products, and our sales would suffer if any of these third-parties stops selling our products effectively. 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. Our intellectual property and proprietary rights may be insufficient to protect our competitive position. We may become subject to claims of intellectual property rights infringement, which could result in substantial liability. New industry standards may require us to redesign our products, which could substantially increase our operating expenses. Undetected flaws and defects in our products may disrupt product sales and result in expensive and time-consuming remedial action. Our quarterly operating results may fluctuate in future periods, which could cause our stock price to decline. The loss of one or more of our senior personnel could harm our existing business. If we are unable to attract and retain highly skilled sales and marketing and product development personnel, our ability to develop new products and product enhancements will be adversely affected. We may not be able to collect revenues from customers who experience financial difficulties. We may be unable to manufacture our products, because we are dependent on a limited number of qualified suppliers for our components. Our operating results could be harmed by economic, political, regulatory and other risks associated with export sales. Our operations are vulnerable to interruption by fire, earthquake, power loss, telecommunications failure, and other events beyond our control. Failure to maintain effective internal controls could have a material adverse effect on our business, operating results and stock price. The sale of a substantial number of shares of Common Stock could cause the market price of our Common Stock to decline. Volatility in the trading price of our Common Stock could negatively impact the price of our Common Stock.

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944075--3/10/2006--SOCKET_COMMUNICATIONS_INC