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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
[ X ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the fiscal year ended July 31, 2000
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from ____________________to____________________
Commission File Number 0-21709
PUMA TECHNOLOGY, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 77-0349154
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2550 North First Street, Suite 500 95131
San Jose, California (ZIP Code)
(Address of principal executive offices)
(408) 321-7650
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $.001 par value
(Title of class)
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 [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]
The aggregate market value of the voting stock held by non-affiliates of the
registrant as of October 13, 2000, was approximately $506,894,056.
The number of the registrant's $0.001 par value Common Stock outstanding as of
October 13, 2000, was 42,825,784 shares of Common Stock.
DOCUMENTS INCORPORATED BY REFERENCE:
Certain sections of the Proxy Statement for registrant's 2000 PART III
Annual Meeting of Stockholders to be held on December 6, 2000
to be filed with the Commission pursuant to Registration 14A
no later than 120 days after the end of the fiscal year covered
by this Form.
Certain sections of the Annual Report to Stockholders for fiscal PARTS II & IV
year ended July 31, 2000
TABLE OF CONTENTS
PART I..........................................................................................................1
ITEM 1. BUSINESS.........................................................................................1
OVERVIEW......................................................................................1
INDUSTRY BACKGROUND...........................................................................2
OUR TECHNOLOGY SOLUTION.......................................................................3
PRODUCTS......................................................................................5
TECHNOLOGY....................................................................................7
PROFESSIONAL SERVICES ORGANIZATION............................................................9
SALES AND MARKETING..........................................................................10
COMPETITION..................................................................................10
CUSTOMER SUPPORT.............................................................................11
RESEARCH AND DEVELOPMENT.....................................................................11
PROPRIETARY RIGHTS...........................................................................12
EMPLOYEES....................................................................................13
BUSINESS RISKS...............................................................................13
EXECUTIVE OFFICERS AND DIRECTORS OF THE REGISTRANT...........................................27
ITEM 2. PROPERTIES......................................................................................29
ITEM 3. LEGAL PROCEEDINGS...............................................................................29
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.............................................29
PART II........................................................................................................30
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS...........................30
ITEM 6. SELECTED FINANCIAL DATA........................................................................30
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS...........30
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK......................................31
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.....................................................31
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE............31
PART III.......................................................................................................32
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT..............................................32
ITEM 11. EXECUTIVE COMPENSATION..........................................................................32
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT..................................32
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS..................................................32
PART IV........................................................................................................33
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K................................33
SIGNATURES.....................................................................................................35
POWER OF ATTORNEY..............................................................................................35
REPORT OF INDEPENDENT ACCOUNTANTS ON FINANCIAL STATEMENT SCHEDULES.............................................36
SCHEDULE II VALUATION AND QUALIFYING ACCOUNTS.................................................................37
EXHIBIT 13.1 PORTIONS OF THE ANNUAL REPORT TO THE STOCKHOLDERS
FOR THE FISCAL ENDED JULY 31, 2000...............................................................38
EXHIBIT 21.1 SUBSIDIARIES OF THE REGISTRANTS..................................................................72
EXHIBIT 23.1 CONSENT OF INDEPENDENT ACCOUNTANTS...............................................................73
EXHIBIT 27.1 FINANCIAL DATA SCHEDULE..........................................................................74
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PART I
ITEM 1. BUSINESS
THIS ANNUAL REPORT ON FORM 10-K CONTAINS CERTAIN FORWARD-LOOKING STATEMENTS
THAT INVOLVE RISKS AND UNCERTAINTIES. WORDS SUCH AS "ANTICIPATES," "BELIEVES,"
"EXCEPTS," "FUTURE," "PLAN," "INTENDS" "SHOULD," AND SIMILAR EXPRESSIONS ARE
USED TO IDENTIFY FORWARD-LOOKING STATEMENT. THESE STATEMENTS ARE ONLY
PREDICTIONS. THE ACTUAL RESULTS THAT WE ACHIEVE MAY DIFFER MATERIALLY FROM THOSE
INDICATED IN ANY FORWARD LOOKING STATEMENTS DUE TO THE RISKS AND UNCERTAINTIES
SET FORTH UNDER "MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS," "BUSINESS RISKS" AND ELSEWHERE IN THIS FORM 10-K. WE
UNDERTAKE NO OBLIGATION TO REVISE ANY FORWARD LOOKING STATEMENTS IN ORDER TO
REFLECT EVENTS OR CIRCUMSTANCES THAT MAY ARISE AFTER THE DATE OF THIS REPORT.
READERS ARE URGED TO CAREFULLY REVIEW AND CONSIDER THE VARIOUS DISCLOSURES MADE
BY US IN THIS REPORT AND OUR REPORTS FILED WITH THE SECURITIES AND EXCHANGE
COMMISSION THAT ATTEMPT TO ADVISE INTERESTED PARTIES ON THE RISKS AND FACTORS
THAT MAY AFFECT OUR BUSINESS.
OVERVIEW
Puma Technology, Inc. (Pumatech or the Company) was incorporated in
California in August 1993 and reincorporated in Delaware in November 1996. We
develop, market and support synchronization, change detection/notification,
and Web rendering/browsing software that enables consumers, mobile
professionals and information technology officers to harness the full
capabilities of handheld organizers/computers, Web-enabled-cellular phones,
pagers and other wireless personal communications platforms. We provide a
mobile device management solution that addresses several scenarios for
synchronization, total customization of device-based applications,
centralized backup, security, information flow control, notification,
e-commerce and browsing of intranet and Internet-based information. Our
software is designed to improve the productivity of business professionals
and corporations who are increasingly relying on mobile computing devices to
address their growing needs for accessible, up-to-date information, whether
in or out of the office. Our product families, which include
Intellisync-Registered Trademark-, Intellisync Anywhere-Registered
Trademark-, Satellite Forms-Registered Trademark-, Browse-it-TM- and
Mind-it-TM-software, are designed to connect mobile devices to essential
information anytime, anywhere. The end-to-end Intellisync platform lets users
synchronize the critical connection between both wired and wireless handheld
devices and the vast stores of information found in corporate databases, the
Internet and individuals' PC applications. Intellisync Anywhere keeps users
current with remote and LAN-based data synchronization between groupware
servers and Palm OS-Registered Trademark- handhelds. Satellite Forms provides
the tools needed to create custom applications for Palm OS handhelds and the
ability to integrate those applications with desktop or network databases.
Browse-it enables users to view Web pages online or offline on their Palm OS
handhelds in a secure, conventional and quick manner. Mind-it technology
provides user-driven personalization, enabling users to track specific Web
information and be notified when that information changes.
We license our software products to several original equipment
manufacturers (OEMs) and business development organizations worldwide. In
addition, we sell our retail products through several distribution channels both
domestically and internationally, including major distributors, resellers,
computer dealers, retailers and mail-order companies. Internationally, we are
represented by over 20 distributors and resellers in Africa, Asia, Australia,
Canada, Europe, New Zealand, and South America.
In October 1999, we acquired ProxiNet, Inc. (ProxiNet), a startup company
involved in the development of software enabling users of Palm OS handheld
devices to browse Internet content. ProxiNet brought us a highly scalable
proxy-based transformation and delivery architecture. As a result, in June 2000
we announced Browse-it software which allows portals, wireless ISPs and
e-commerce companies to provide highly secure, real-time Web access to users of
Palm OS handheld devices, along with the ability to download Web pages for
offline viewing when wireless or wireline access is not available.
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In February 2000, we acquired NetMind Technologies, Inc. (NetMind), a
leading provider of scalable software solutions that integrate user-driven
personalization technologies into the Internet infrastructure, which brought us
a broad range of Web-based personalization, change-detection and notification
technologies. As a result, in June 2000 we announced Mind-it software which
enables users to receive instant notification of changes to any content they
request on the Internet or corporate intranet.
In July 2000, we acquired Dry Creek Software, LLC (Dry Creek), a company
specializing in the creation of software solutions that allow for transparent
data access between mobile devices, enterprise servers and Internet
applications. Dry Creek forms the core of our new Professional Services
Organization, through which we provide customized, turnkey solutions based on
the Mobile Application Platform (MAP) infrastructure for wireless carriers,
ISPs, Web portals and corporate enterprises.
RECENT EVENT
In October 2000, we signed and closed an asset purchase agreement with
Vanteon Corporation (Vanteon) of Rochester, New York, to acquire selective
assets and assume certain liabilities of The Windward Group (Windward), a
wholly owned subsidiary of Vanteon headquartered in Los Gatos, California.
Windward is a software developer whose extensive experience in providing
solutions for the handheld market includes creation of the desktop software
and synchronization architecture for Palm, Inc.'s original handheld, the
Pilot. Under the terms of the agreement, we paid $12,225,000 in cash up front
and issued approximately 171,000 shares of Pumatech common stock to Vanteon
which will be released from escrow based on achievement of performance
milestones over the next year. The transaction is being accounted for as a
purchase. In connection with this acquisition, we hired from Windward
approximately 40 additional employees in our professional services.
INDUSTRY BACKGROUND
In recent years, significant advancements in miniaturization, visual
displays, long-life batteries and portable communications have led to the
introduction of many innovative new mobile computing devices. These highly
portable devices allow users to work and communicate as they travel and have
fueled the significant growth of mobile computing. Electronic consumer
devices, such as personal electronic organizers, smart phones and pagers are
being introduced to provide data storage and information management
capabilities to the mobile business professional. Palm OS devices such as the
Palm V and Palm III, along with Pocket PC, Windows CE and Handspring
handhelds, are examples of popular handheld mobile devices. Industry
analysts, such as International Data Corporation (IDC), project that
purchases of handheld devices will grow from less than five million in 1997
to 15 million by 2001, with worldwide cellular phone subscribers jumping from
200 million to 600 million in the same time frame. According to the Yankee
Group's cell phone projections and our own worldwide estimates (based upon
research information provided by third party analysts such as Gartner Group)
of dataphone growth, users of data-capable cellular handsets, such as Nokia
9000I, are projected to grow from 1997's sub-20 million to approximately 110
million in 2001. And according to our worldwide estimates, the data-capable
small device area, characterized by offerings such as the Nokia 9110
Communicator, is anticipated to grow to approximately 125 million users in
2001, which represents a dramatic jump from 1997. With up to 25% of these new
phones and pagers potentially offering application intelligence, the overall
"smart device" market may be several times larger than that of handhelds
alone.
As more types of new mobile computing devices become available to business
professionals, users are faced with the difficulty of exchanging information
among these various devices. This problem of interoperability is caused by the
need to exchange information among different hardware devices, operating systems
and applications. Hardware platforms range from high-speed Pentium PCs with
hundreds of megabytes of memory and gigabytes of storage, to "shirt pocket"
organizers, with specialized processors and limited memory and storage. In
addition, these devices use numerous operating systems, such as Windows for
Workgroups, Windows 3.1, Windows 95, Windows 98, Windows 2000, Windows NT, DOS
and others, and utilize an even greater range of information management
applications, databases and data formats. Enabling these devices to communicate,
exchange and synchronize information is a
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complex and challenging task. Accomplishing this requires data-level, or
content-aware, synchronization technology to maintain complete, up-to-date
and accurate information. For example, content-aware data synchronization
technology allows users to exchange addresses from the Address Book software
application on a Palm OS handheld with Microsoft Outlook on a desktop PC or
Lotus Notes on corporate server, updating only the fields that have been most
recently modified, rather than copying one file over another, thereby
synchronizing both databases with the latest information.
Business professionals are continuously seeking ways to improve
productivity and, as a result, are increasingly using the growing number of new,
innovative mobile computing devices. In order to manage information effectively,
these users need convenient connectivity and synchronization solutions for the
specific combination of devices and applications that they use. These software
solutions must allow users to synchronize information maintained separately on
multiple devices, for example, contact databases maintained by a mobile
professional using a handheld computer in the field and by a support colleague
using a desktop PC in the office. A software solution that links such different
devices must address multiple hardware architectures, operating systems,
communications architectures and application specific data formats and
structures.
OUR TECHNOLOGY SOLUTION
Our software solutions, anchored by the award-winning Intellisync family
and Satellite Forms software, along with our recently announced Mobile
Application Platform (MAP), are designed to increase productivity for business
professionals by allowing users to easily access, exchange and synchronize
information stored on a variety of different computing devices. Our
technologies, products and services allow the mobile professional to access
information with easy-to-use applications, saving time and money.
The Intellisync product family allows users to synchronize data on
handheld mobile computing devices with data on PCs and groupware servers by
virtue of our patented Data Synchronization Extensions Technology (DSX
Technology-Registered Trademark- engine). Intellisync Anywhere software
automatically monitors in advance all changes in the groupware application
through the use of our Notification Transport Processing Technology (NXP
Technology-TM- engine), optimizing workgroup server performance and
minimizing synchronization time over potentially expensive wireless
connections. Intellisync for Notebooks, the next-generation successor to our
TranXit-Registered Trademark- product line, is designed to utilize infrared
connectivity (IR) technology for reliable, cost-effective file exchange,
synchronization and printing.
Satellite Forms software is the premier visual rapid application
development (RAD) tool for devices based on the Palm OS platform. Satellite
forms enables software developers to extend custom enterprise applications to
handheld computers, and to seamlessly integrate these handheld solutions with
enterprise data from Oracle, DB2, Microsoft Access, and many other databases.
Through this integration, Satellite Forms act as catalysts for the proliferation
of new and diverse custom software applications.
MAP is the common server platform on which we are building our new
mobile solutions. MAP, designed for maximum scalability and performance, will
enable companies to build leading-edge mobile solutions by providing both
Internet access and wireless access to mobile devices. It will include a
variety of data access engines geared to the mobile market, including a
synchronization engine, a personalization and notification engine, and a
query engine. MAP is deployed inside the firewalls of major corporations. In
addition, we expect to host our MAP platform for the public through our
Intellisync.com-SM- Web service which we expect to be available in the first
half of fiscal 2001.
Our technology solution includes the following characteristics:
- INTELLIGENT, CONTENT-AWARE DATA SYNCHRONIZATION. Our patented DSX
Technology engine provides content-aware data synchronization among a
growing number of handheld devices and industry-leading personal
information management (PIM) software, contact management and
scheduling applications such as Microsoft Outlook, Schedule+ and
Exchange, Lotus Notes and Organizer, Symantec ACT!, Novell GroupWise,
and others. This technology seamlessly and transparently translates the
information from one data format to another as the information is
synchronized. Built on a powerful synchronization engine, it can
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expand via device and application-specific translators to accommodate
new devices and applications. With the Intellisync Software Development
Kit (SDK), we have enabled independent software vendors (ISVs), device
original equipment manufacturers (OEMs) and Internet-based services to
build synchronization solutions for their products on the Intellisync
platform, further entrenching our standard and have lowered our own
development costs.
- ANYTIME, ANYWHERE HANDHELD ACCESS TO CORPORATE APPLICATION STANDARDS.
With the Intellisync Anywhere product line, we are providing desktop,
remote and local area network-based (LAN-based) synchronization between
Palm OS devices and corporate groupware messaging server applications,
including Microsoft Exchange and Lotus Domino. Using wired or wireless
connections, users can synchronize e-mail, calendar, contact and task
information from virtually any location.
- WIDESPREAD SOLUTIONS FOR INTEROPERABILITY. Our products provide
connectivity and content-aware data synchronization among
industry-leading PCs and mobile computing devices, operating systems
and applications. Our products operate with major PC operating systems
for Windows 95, Windows 98, Windows 2000, Windows NT and Lotus Notes,
as well as several proprietary operating systems. We also provide
interoperability across a wide range of industry-standard and
vendor-specific applications by supporting multiple data formats. Our
IR communications architecture enables robust operation across
IR-enabled platforms. Intellisync for Notebooks is backwards compatible
with previous versions of TranXit, allowing users to connect and
exchange information with all previous versions across different
operating systems.
- IR CONNECTIVITY SOFTWARE. Both Intellisync for Notebooks and the
TranXit product family are specifically designed for file exchange and
synchronization over convenient wireless IR connections. They fully
support the Infrared Data Association (IrDA) standards, with TranXit
being the first file exchange software to incorporate the new Fast IR
standard (IrDA-2) for 4.0 megabits per second (Mbps) connectivity. They
provide a rich set of wireless file transfer, synchronization and
wireless printing features that are both easy to use and
cost-effective. We have also bundled either TranXit or Intellisync for
Notebooks with the vast majority of IR-enabled notebooks shipped
worldwide.
- INTEGRATED MOBILE SOLUTIONS. MAP will enable users to easily develop
integrated mobile solutions. It will include a range of pre-built
services, including Browse-it, Mind-it, and Sync-it-TM- technologies.
These pre-built services implement frequently-used functionality in a
language-independent, reusable fashion, so that users do not have to
invest their own effort in re-implementing these services for their
applications. Browse-it supplies the key Web rendering/browsing
component of MAP. Browse-it, a super-thin client, renders Web content
that has been transformed by Browse-it servers. Browse-it employs the
look and feel of desktop browsers, transforming handheld devices into
information appliances, giving mobile users full and immediate access
to information and applications on the Web, with the ability to conduct
secure, encrypted transactions. Mind-it allows users of Wireless
Application Protocol (WAP) phones, cell phones, handhelds, pager, and
PCs to track specific business and personal information on the Internet
and be notified promptly when that information changes. MAP will also
employ Sync-it. Based on our synchronization software, Sync-it will
provide a single destination for the users to synchronize e-mail,
calendars, and other essential information among multiple devices and
applications simultaneously.
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PRODUCTS
We offer a wide range of software technologies, products and services to
the OEM, enterprise, retail and online markets. These technologies, products and
services allow users to synchronize the critical connections between both wired
and wireless handheld devices and the vast stores of information found in
corporate databases, the Internet and individuals' PC applications. By combining
our advanced data synchronization and IR connectivity technologies, we are able
to develop a number of products designed for a specific application, operating
system or hardware platform. We provide the tools needed to create custom
handheld applications. Our software enables users to view Web pages online or
offline via their Palm OS handheld devices. We also provide user-driven
personalization software, enabling users to track specific Web information and
be notified when that information changes.
PRODUCT NAME DESCRIPTION INTRODUCTION DATE
- ----------------------------------- ---------------------------------------------------------------- -------------------------
Intellisync Provides content-aware synchronization of e-mail, calendar, August 1996
contact, and task data between PC applications and Palm OS or
Pocket PC/Windows CE handhelds.
Intellisync for Notebooks Sold through the OEM channel, Intellisync for Notebooks September 1997
provides PC-to-PC file transfer and synchronization, including
PIM-to-PIM synchronization over wireless IR, wired connections
and network connections. Intellisync for Notebooks is the
successor of our TranXit product line.
Intellisync Gold Designed for the corporate market, Intellisync Gold is an October 1997
all-in-one site licensing solution for synchronization between
PCs and Palm OS, Pocket PC, and Windows CE handhelds.
MobileXtension-TM- for Lotus Notes Designed for users with custom Lotus Notes databases, January 1998
MobileXtension for Lotus Notes assists in the creation of Palm
OS-based applications and synchronization of the Notes database
to devices based on the Palm OS. This is an "add-on" product
to Satellite Forms Enterprise Edition, and is available
exclusively as a download product.
Intellisync Software Development Enables customers to develop translator software for both February 1998
Kit (SDK) applications and devices, which can be incorporated into
Intellisync product offerings.
Satellite Forms A rapid application development (RAD) tool, Satellite July 1998
Forms lets developers quickly create and deploy custom (acquired)
handheld applications for Palm OS devices, which can be tightly
integrated with desktop or network databases, including Oracle,
DB2, and Microsoft Access.
Intellisync Anywhere A server-based product which provides remote and LAN-based data March 1999
synchronization between Microsoft Exchange or Lotus Domino and
Palm OS handhelds. By addressing this pivotal requirement of
mobile corporate users, Intellisync Anywhere lets organizations
give handheld users untethered, up-to-date information while at
their desks, on the road or just in the office down the hall.
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PRODUCT NAME DESCRIPTION INTRODUCTION DATE
- ----------------------------------- ---------------------------------------------------------------- -------------------------
Mind-it A service for users who want to track business and personal February 2000
information on the Internet, and be notified when that (acquired)
information changes. Mind-it works with the browser and e-mail
users already have installed on their machines. It puts users
in control by letting them decide which portion of a page to
track, how often to receive updates, and where to be notified
about the change.
Mind-it for Webmasters A program for Webmasters who want to integrate Mind-it February 2000
buttons into their sites, allowing people to easily (acquired)
track changes to any page or search and bring visitors back
to the site.
Mind-it Server A secure, scalable server application that builds user-driven June 2000
personalization solutions, allowing users to monitor the
intranet, extranet, and/or the Internet, and to be notified
when specific information changes. Mind-it Server eliminates
the problem of searching for the same information when
bookmarks are not accessible. Mind-it HTML-to-WML (wireless
markup language) transformation capabilities ensure optimal
viewing of personalized Web content on WAP phones.
Browse-it A server based transformation engine that turns hypertext June 2000
markup language (HTML) pages into live, interactive content
uniquely reformatted for Palm OS handheld devices. Browse-it
enables users to view Web content online on Palm OS handhelds
via a wireless or wireline modem with no re-authoring required,
as well as to take "Snapshots" for offline viewing when online
access is not available.
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TECHNOLOGY
Our software products allow the exchange and synchronization of data across
diverse platforms, operating systems and applications. We have developed three
complementary proprietary technologies -- the DSX Technology engine for
content-aware data synchronization, NXP Technology engine and IR connectivity.
In addition, we recently announced our common server platform called the Mobile
Application Platform (MAP) which will employ a range of pre-built services,
including Browse-it, Mind-it, and Sync-it technologies, that will implement
functionality commonly used by many applications. These complementary
technologies, taken individually and together, enable us to provide
comprehensive solutions that meet the market's growing needs for convenient,
accurate, easy-to-use data exchange, synchronization and connectivity.
CONTENT-AWARE DSX TECHNOLOGY. Our content-aware Data Synchronization Extensions
Technology (DSX Technology) engine operates at both the file and record level to
synchronize data among different software applications and hardware platforms
during data transfer. With the DSX Technology engine, our products allow users
to synchronize not only files, but also the data within those files, and
synchronize databases by field or record, not just copy one database file from
one to another. This advanced data synchronization technology is composed of
three main components that collectively work to enable the effective transfer of
data across supported applications and platforms:
SYNCHRONIZATION ENGINE. Our proprietary synchronization engine is the
central component responsible for controlling the flow of data throughout
the entire synchronization process. It directs translator modules to
retrieve, add, delete, change and distribute data records or fields on
demand.
INTERMEDIATE DATA REPRESENTATION. Our synchronization technology makes
extensive use of modularity to maximize reusability for the translator
modules. The synchronization engine communicates with all translator
modules using a common "dialect," referred to as intermediate data
representation. Intermediate data representation stipulates rules for
exchanging common types of data imposing restrictions on data content
(i.e., the number and type of fields in each application). The existence of
a common data representation makes it possible for a new translator to
immediately synchronize with any supported application or mobile computing
device.
TRANSLATORS. Each translator module is responsible for interfacing with one
application or mobile computing device. When operating under Windows, a
translator is packaged as a separate Dynamic Link Library (DLL) for maximum
reusability. The development of new translators (as well as the maintenance
of existing modules) is greatly eased by the existence of the translator
framework, a collection of powerful C++ classes that supply software
engineers with the necessary abstractions to quickly and easily develop
translator modules to meet expanding market needs.
NXP TECHNOLOGY. A core technology underpinning the Intellisync Anywhere product
family of remote synchronization server solutions is Notification Transport
Processing Technology (NXP Technology). NXP Technology optimizes performance for
the increasingly common wireless connections by automatically checking for and
preparing for synchronization of all new information for each user, such as
email and appointments, stored on corporate servers. This process minimizes both
end user remote synchronization time and reduces the overhead on the corporate
messaging server itself.
IR CONNECTIVITY. Our infrared connectivity (IR) software enables the wireless
transfer of data among notebook and desktop PCs, printers and mobile computing
devices. Intellisync for Notebooks and the TranXit family are designed to
support IrDA standards, with TranXit being the first file exchange and
synchronization software to incorporate the new Fast IR standard (IrDA-2) for
4.0 Mbps connectivity.
COMMUNICATIONS ARCHITECTURE. Our software is based upon an extensive,
proprietary, network and device independent communications architecture,
enabling access to a variety of mobile computing devices through a flexible
and simple application program interface (API) that speeds the development
of new features. A layered, modular design allows the architecture to
leverage existing published data transfer protocols (IrDA, Windows
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Sockets), when available, and to create proprietary data transfer protocols
to provide connectivity to a broad range of devices without extensive
modification of the software.
Our IR communications architecture isolates hardware implementation details
from the rest of the protocol stack, enabling quick support of new IR
hardware implementations and fast adoption of new IR standards and
extensions. The architecture supports multiple vendors' implementation of
IrDA protocol stacks for migration to new operating systems and platforms.
Our communication protocols are designed to operate across a variety of
network and operating system environments, enabling mobile data exchange
among them. Our software currently supports data transfer among Windows for
Workgroups, Windows 3.1, Windows 95, Windows 98 and Windows 2000. We have
also worked with Microsoft to ensure that the Microsoft IR driver supports
Mobile Data Exchange among operating systems and IR devices.
MAP. As the mobile solutions of today are highly fragmented, many companies
and other users are forced to license point solutions from multiple vendors
to address their complete needs. To address this problem, we are creating the
Mobile Application Platform (MAP), a high-performance and extensive platform
that will support a broad range of mobile devices and services. MAP is
designed for maximum scalability and performance, and will empower both
Internet access and wireless access to mobile devices. This differs markedly
from the PC-centric connectivity solutions that enable Internet access only
while tethered to a PC. MAP will provide ubiquitous access to mobile devices
over both wired and wireless media, and will not require the PC to act as a
gateway to the network. MAP is deployed inside the firewalls of major
corporations. In addition, we expect to host our MAP platform for the public
through our Intellisync.com Web service which we expect to be available in
the first half of fiscal 2001.
MAP will include a variety of data access engines geared to the mobile market.
It will employ a Web content rendering/browsing engine (Browse-it), a
personalization and notification engine (Mind-it), and a synchronization engine
(Sync-it).
- BROWSE-IT.
Browse-it service facilitates both on-line (real-time) and offline
access to dynamic Web content. Browse-it introduces the technology
components needed to view the Web through a "peephole" (from handheld
devices having a small display). Browse-it also allows users to store
selected Web pages on their mobile device for offline viewing. The
Browse-it service can deliver Web content in a variety of markup
languages including Compact HTML (used for i-mode in Japan) and
standard Internet formats such as HTML and Extensible Markup Language
(XML). The Browse-it service uses a client-server architecture to
offload the work of content transformation to a powerful server,
reducing the load on the client and increasing performance. A thin
Browse-it CLIENT is available for devices lacking a standard browsing
client. For example, a small Browse-it client is currently available
for Palm OS handheld devices, supporting both efficient online and
offline viewing of Web pages. The Browse-it server includes multiple
components that make the viewing of web based data a robust user
experience on a handheld device: a Web SWITCH and FRONT-END (FE) that
communicates with mobile devices using well-known encryption technology
(DESX); DISTILLERS that are responsible for filtering and transforming
the Web page elements for rendering on the given mobile device; a CACHE
that is used to improve overall service performance and reduce access
frequency to the network; and advanced 128-bit encryption technology
(SSL) to access Web content from secure sites.
- MIND-IT.
The Mind-it service is another crucial component of MAP. It is a change
detection, notification and personalization service based on patented
technology developed by NetMind, one of the companies we recently
acquired. In its current form, the Web contains a huge volume of
publisher-centric and unqualified information that must inevitably be
viewed from a large display. Given the inherent size and capacity
limitations of mobile devices such as phones and pagers, it is simply
impractical to rely on the general Web
8
browsing model for these classes of devices and still achieve a
reasonable degree of usability. Mobile devices are designed for
selective access to content, and this is precisely the goal of the
Mind-it service. The user explicitly chooses items of interest using
the Mind-it personalization service, and receives only changes
matching their personal criteria. No senseless browsing over slow
wireless networks, and no spamming of irrelevant information.
Mind-it puts the user in the driver's seat and lets them control
precisely the changes and information they receive while mobile.
Mind-it was designed with a highly scalable, enterprise level
architecture, and as such incorporates separate, independent
software modules. RESPONDER is used to interact with the end-user at
the web-interface layer, permitting user account settings and the
creation of change detection and alert requests. DETECTOR constantly
monitors those pages on the internet that have been specified as
containing relevant data by the user (via the Responder interface)
and uses intelligent algorithms to detect changes at a specific and
granular level. NOTIFIER takes care of personalizing and sending (to
different form factors and networks) alerts to mobile devices over
standard means such as Simple Mail Transfer Protocol (SMTP), WAP and
Short Message Service (SMS). And finally, STORER is responsible for
managing the persistent database of relevant information on behalf
of each subscriber.
- SYNC-IT.
Based on Pumatech's synchronization software, our Sync-it
technology, which we expect to be released in the first half of
fiscal year 2001, will enable multipoint two-way sync via the
Internet. Using a hub and spoke model, Sync-it is designed from the
ground up to support synchronization of contacts, calendar, tasks,
and e-mail between the most popular devices, operating systems and
applications - seamlessly and accurately. In the Sync-it model, the
Sync-it server becomes the central data repository, deployed within
a corporate firewall or in an ASP configuration. Each device and/or
application represents a sync point or - to use the hub and spoke
analogy - "a spoke on the wheel."
The Sync-it SDK enables users to quickly and easily build and deploy
new sync points as they are needed - plugging them directly into the
Sync-it server. Users can then choose the appropriate sync points,
based on the devices and applications they use.
As a result of this flexible architecture, Sync-it will also support
server-to-server sync. Popular groupware applications such as MS
Exchange and Lotus Domino will be fully supported. Web properties will
also appreciate the turnkey solution that Sync-it will offer, allowing
web site data to be synced to a Sync-it server and from there directly
to all of the user's other sync points.
PROFESSIONAL SERVICES ORGANIZATION
Our Professional Services Organization, created in July 2000 with the
acquisition of Dry Creek, provides business application experience, technical
expertise and product knowledge to complement our MAP infrastructure and to
provide solutions to customers' business requirements. The major types of
services provided include software consulting, integration and hosting services
which allow more rapid and customer-unique end-to-end deployments.
Our recent acquisition of certain assets and liabilities of Windward,
including our hiring of approximately 40 employees from Windward, represents
a threefold expansion of our Professional Services Organization. Including
those new employees, approximately 70 professionals are now engaged in this
effort, focusing on delivering customized solutions based on our MAP
infrastructure for target markets such as wireless carriers, ISPs, Web
portals and corporate enterprises.
9
SALES AND MARKETING
We strive to be both a marketing and a technology partner with our OEM
customers and our strategic partners. Our sales and marketing organization sells
our products directly to our OEM partners, and then works with them on joint
marketing and channel programs. We work closely with OEM partners on their new
hardware products by providing them with technical input, thereby helping to
ensure that our software products will work successfully with the OEM's hardware
products. We also train and educate the OEM's sales and marketing organizations
on our products, allowing them to act as our "virtual" sales force to their
channels and direct customers. In addition, we work closely with our hardware
and software strategic partners to develop effective marketing programs designed
to increase sales.
We distribute our retail products through several distribution channels
both domestically and internationally. In the United States, our sales
organization works directly with major distributors, resellers, computer
dealers, retailers and mail order companies to distribute our retail packaged
products. Increasingly, we are also distributing our software products directly
to corporate customers through the Intellisync Gold and Intellisync Anywhere
enterprise site license programs. In order to further develop our brand name
recognition, we plan to continue to expand our joint marketing programs,
marketing channel promotions and bundling arrangements with our strategic
partners.
Revenue from OEMs was approximately 62%, 54% and 68% of revenue in fiscal
2000, fiscal 1999, and fiscal 1998, respectively. Although several OEMs are
subject to certain contractual minimum purchase obligations, there can be no
assurance that any particular OEM will satisfy the minimum obligations.
Weakening demand from any key OEM and the inability to replace revenue provided
by such OEM could have a material adverse effect on our business, operating
results and financial condition. We maintain individually significant receivable
balances from major OEMs. If these OEMs fail to meet their payment obligations,
our operating results could be materially adversely affected.
We market and sell through selected distributors and republishers that
focus on specific geographic and market segment areas. These international
partners operate as an extension of our marketing and sales organizations,
developing the appropriate sales channels in their regions. They also work with
local resellers as well as local offices of our OEM customers to develop
specific marketing and channel promotions for their regions. As of July 31,
2000, we were represented by over 20 distributors and resellers in Africa, Asia,
Australia, Canada, Europe, New Zealand and South America and are continuing to
expand our international reach as appropriate distributors or republishers are
found. Also, see "We are dependent on our international operations for a
significant portion of our revenues" section below under the caption "Business
Risks."
Our current customer base includes major OEMs in the PC market. No
customers accounted for more than 10% of total revenue in fiscal 2000. In fiscal
1999 and 1998, Toshiba Corporation accounted for approximately 14% and 18% of
our revenue, respectively, and no other customer accounted for more than 10% of
our revenue.
COMPETITION
We expect the market for our software, including data synchronization and
elements of our MAP to the extent they develop, to become intensely competitive.
To maintain or increase our competitive advantage, we will continually need to
enhance our current product, service and technology offerings, introduce new
product features and enhancements, and expand our professional service
capabilities. We currently face direct competition with respect to individual
elements of our MAP which includes our Sync-it, Browse-it and Mind-it
technologies. We face competition from Advanced Systems Network, Inc., Aeneid
Corporation, Aether Software, Alerts.com, Inc., AvantGo, Inc., Broadvision,
Inc., Chapura, Inc., DataViz, Inc., Extended Systems, Inc., FusionOne, Inc., IBM
Corporation, InfoSpace, Inc., Laplink.com, Inc., MicroStrategy, Inc., Motorola,
Inc., Net Perceptions, Inc., OpenTV, Inc., Oracle Corporation, Personify, Inc.,
Phone.com, Inc., River Run Computers, Inc. and The Informant. In addition to
direct competition noted above, we face indirect competition from existing and
potential customers that may provide internally developed solutions to each of
our elements of MAP. As a result, we must educate prospective customers as to
the advantage of our products versus internally developed solutions. We
currently face limited direct competition from major applications and operating
systems software vendors who may choose to
10
incorporate data synchronization functionality into their operating systems
software, thereby potentially reducing the need for OEMs to include our
products in their notebook and desktop PCs. For example, Microsoft's
inclusion of certain features permitting data synchronization between
computers utilizing the Windows 98 operating system may have the effect of
reducing revenue from our software if users of Windows 98 perceive that their
data synchronization needs are adequately met by Microsoft. Certain
companies, with whom we compete or may compete in the future, including
internal software development groups of our current and potential customers,
have substantially greater financial, marketing, sales and support resources
and may have more "brand-name" recognition than us. There can be no assurance
that we will be able to either develop software comparable or superior to
software offered by our current or future competitors or to adapt to new
technologies, evolving industry standards and changes in customer
requirements. In addition, the PC and mobile computing device markets
experience intense price competition, and we expect, in order to remain
competitive, we may have to decrease our unit royalties on certain products.
The principal competitive factors affecting the market for our software are
compatibility, functionality, reliability, OEM relationships and price. We
believe we compete favorably overall with respect to these factors.
We believe that users will want to be able to license point solutions from
a single vendor to address their complete needs, and that our MAP will support a
broad range of mobile devices and services to allow us to compete favorable with
other companies with no similar platform or whose mobile solutions are highly
fragmented.
We believe that users will want to be able to utilize data synchronization
functionality with a wide variety of mobile computing devices and software
applications, and that our standards-based approach will continue to allow us to
compete favorably with larger companies whose products may not be able to
support such a degree of interoperability. Our strategic relationships with
hardware and software vendors enable us to provide interoperability among a
broader range of applications than many of our current and potential
competitors.
Also, see "There are many companies providing competing products and
services" section below under the caption "Business Risks."
CUSTOMER SUPPORT
Our service and support organization provides secondary technical support
to OEMs, primary technical support to retailers and end users and education and
training services to OEMs and retailers. We also utilize an outsourced vendor to
provide technical support related to majority of our retail products. Our
current OEMs typically have software maintenance agreements with us that provide
for technical support which include maintenance of our products in accordance
with specifications contained in our guide for such products, as well as access
to technical support personnel by telephone, fax and e-mail. Customers under
license agreements are typically entitled to certain minor product updates and
modifications, primarily bug fixes. Our OEMs and some of our retail channel
partners provide telephone and initial support to end-users.
RESEARCH AND DEVELOPMENT
We seek to capitalize on our expertise in data synchronization technology
by developing products for new applications and increasing the functionality of
existing products. We believe our core DSX Technology and NXP Technology engines
are widely applicable, and we plan to continue to develop new products and
expand our MAP platform to include additional services based on our core
technologies.
As of July 31, 2000, our engineering group consisted of 158 full-time
employees and full-time equivalent consultants who were engaged in product
development and localization efforts for existing products. Product maintenance
and customer support responsibilities are shared by engineering group employees
on an as-needed basis.
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In fiscal 2000, fiscal 1999 and fiscal 1998, research and development
expenses were $17.1 million, $12.4 million and $10.4 million, respectively.
The markets for our products are characterized by rapidly changing
technologies, evolving industry standards, frequent new product introductions
and short product life cycles. We first introduced our TranXit products in
October 1994. Our future success will depend to a substantial degree upon our
ability to enhance our existing products and to develop and introduce, on a
timely and cost-effective basis, new products and features that meet changing
customer requirements and emerging and evolving industry standards. We plan our
budget for research and development based on planned product introductions and
enhancements; however, actual expenditures may significantly differ from
budgeted expenditures. Inherent in the product development process are a number
of risks. The development of new, technologically advanced software products is
a complex and uncertain process requiring high levels of innovation, as well as,
accurate anticipation of technological and market trends. The introduction of
new or enhanced products also requires us to manage the transition from older
products in order to minimize disruption in customer ordering patterns, avoid
excessive levels of older product inventories and ensure that adequate supplies
of new products can be delivered to meet customer demand. There can be no
assurance that we will successfully develop, introduce or manage the transition
to new products. We have in the past, and may in the future, experience delays
in the introduction of our products, due to factors internal and external. Any
future delays in the introduction or shipment of new or enhanced products, the
inability of such products to gain market acceptance or problems associated with
new product transitions could adversely affect our operating results,
particularly on a quarterly basis. Also, see "Our market changes rapidly due to
changing technology and evolving industry standards. If we do not adapt to meet
the sophisticated needs of our customers, our business and prospects will
suffer" section below under the caption "Business Risks."
PROPRIETARY RIGHTS
We rely on a combination of patent, copyright and trademark laws, trade
secrets, confidentiality procedures and contractual provisions to protect our
proprietary rights. We also believe that factors such as technological and
creative skills of our personnel, new product developments, frequent product
enhancements and name recognition are essential to establishing and maintaining
a technology leadership position. We seek to protect our software, documentation
and other written materials under trade secret and copyright laws, which afford
only limited protection. We currently have 11 issued United States patents that
expire in 2012 through 2018 and have 13 patent applications pending. In
addition, we have certain corresponding international patent applications
pending under the Patent Cooperation Treaty in countries to be designated at a
later date. There can be no assurance that our patents will not be invalidated,
circumvented or challenged, that the rights granted thereunder will provide
competitive advantages to us or that any of our pending or future patent
applications, whether or not being currently challenged by applicable
governmental patent examiners, will be issued with the scope of the claims
sought by us, if at all. Furthermore, there can be no assurance that others will
not develop technologies that are similar or superior to our technology or
design around the patents owned by us. Despite our efforts to protect our
proprietary rights, unauthorized parties may attempt to copy aspects of our
products or to obtain and use information that we regard as proprietary.
Policing unauthorized use of the our products is difficult, and while we are
unable to determine the extent to which piracy of our software products exists,
software piracy can be expected to be a persistent problem. In addition, the
laws of some foreign countries do not ensure that our means of protecting our
proprietary rights in the United States or abroad will be adequate or that
competition will not independently develop similar technology. We have entered
into source code escrow agreements with a limited number of our customers and
resellers requiring release of source code in certain circumstances. Such
agreements generally provide that such parties will have a limited,
non-exclusive right to use such code in the event that there is a bankruptcy
proceeding by or against us, if we cease to do business or if we fail to meet
our support obligations. We also provide our source code to foreign language
translation service providers and to consultants in a limited circumstance. The
provision of source code may increase the likelihood of misappropriation by
third parties.
We are not aware of any infringement of proprietary rights of any third
party. There can be no assurance, however, that third parties will not claim
infringement by us of their intellectual property rights. We expect that
software product developers will increasingly be subject to infringement claims
as the number of products and competitors in our industry segment grows and the
functionality of products in different industry segments overlaps and as patent
protection for software becomes increasingly popular. Any such claims, with or
without merit, could be time
12
consuming to defend, resulting in costly litigation, divert our attention and
resources or cause product shipment delays. In addition, such claims could
require us to discontinue the use of certain software codes or processes, to
cease the manufacture, use and sale of infringing products, to incur
significant litigation costs and expenses and to develop non-infringing
technology or to obtain licenses to the alleged infringing technology. There
can be no assurance that we would be able to develop alternative technologies
or to obtain such licenses or, if a license were obtainable, that the terms
would be commercially acceptable to us. In the event of a successful claim of
product infringement against us and failure or inability to license the
infringed or similar technology, our business, operating results and
financial condition would be materially adversely affected. Also, see "Our
failure to adequately protect our propriety rights may harm our competitive
position" section below under the caption "Business Risks."
EMPLOYEES
As of July 31, 2000, we had 268 employees and full-time equivalent
consultants, including 62 in sales and marketing, 158 in engineering, 16 in
professional services and 32 in operations, finance and administration. In
connection with our recent acquisition of certain assets and liabilities of
Windward, we hired from Windward approximately 40 additional employees in
professional services.
All of our employees are located in the United States with the exception of
seven, who are located in our foreign offices in Japan, United Kingdom, and
Canada. None are represented by a labor union. We have experienced no work
stoppages and believe our relationship with our employees is good.
Competition for qualified personnel in our industry is intense. We believe
that our future success will depend in part on our continued ability to hire,
train and retain qualified personnel. Also, see "We must retain and attract key
employees or else we may not grow or be successful" section below under the
caption "Business Risks."
BUSINESS RISKS
There are many factors that affect our business and the results of our
operations, some of which are beyond our control. The following is a description
of some of the important factors that may cause the actual results of our
operations in future periods to differ materially from those currently expected
or desired.
BECAUSE WE HAVE HAD LIMITED INTERNET OPERATING HISTORY, IT IS DIFFICULT TO
EVALUATE OUR BUSINESS AND WE MAY FACE VARIOUS RISKS, EXPENSES AND DIFFICULTIES
ASSOCIATED WITH EARLY STAGE COMPANIES.
Historically, we have licensed our products and technology primarily to PC
OEMs, corporations and to end users through our channels of distribution. In the
second quarter of fiscal 2000, we announced our Internet initiative. This
initiative has required us to add additional resources and to develop and market
our Intellisync.com portal and the products and technologies recently obtained
in the ProxiNet and NetMind acquisitions. We plan to market and license our new
Web-based products and solutions to wireless carriers, Web portals and
individual consumers. We also plan to offer these new products and solutions to
corporations. We expect to incur significant costs in completing the launch of
our Internet initiative.
Our overall operating results have changed significantly as a result of
developing and bringing to market our new Internet products. It is important to
understand that our historical financial statements include operating results of
our recently launched Internet initiative only to the extent that NetMind's
historical operating results have been reflected under pooling-of-interests
accounting. As a result of our Internet initiative, we expect our combined
results to reflect an operating loss for at least the next several fiscal
quarters. There can be no assurance that we will be able to achieve or sustain
profitability.
Since we just launched our Internet initiative, there is little information
on which to evaluate our business and prospects as an Internet company. An
investor in our common stock should consider the risks, expenses and
13
difficulties that young companies frequently encounter in the new and rapidly
evolving markets for Internet products and services. These risks to us include:
- our evolving new business model;
- our need and ability to manage growth; and
- rapid evolution of technology.
To address these risks and uncertainties, we must take several steps,
including:
- creating and maintaining strategic relationships;
- expanding sales and marketing activities;
- integrating existing and acquired technologies;
- expanding our customer base and retaining key clients;
- introducing new services, including our Professional Services
Organization;
- managing rapidly growing operations, including new facilities and
information technology infrastructure;
- competing in a highly competitive market; and
- attracting, retaining and motivating key employees.
We may not be successful in implementing any of our strategies or in
addressing these risks and uncertainties. We expect that our operating expenses
will continue to increase, primarily as a result of our investment in our new
Internet product initiative. Moreover, even if we accomplish our objectives, we
still may not achieve sustainable profitability in the future.
We have invested substantial amounts in technology and infrastructure
development. We expect to continue to invest substantial financial and other
resources to develop and introduce new Internet and wireless products and
services, and to expand our sales and marketing organizations, strategic
relationships and operating infrastructure. We expect that our cost of revenue,
sales and marketing expenses, general and administrative expenses, operations
and customer support expenses, and depreciation and amortization expenses will
continue to increase in absolute dollars and may increase as a percent of
revenue. If revenue does not correspondingly increase, our operating results and
financial condition could be negatively affected.
THE SIZE OF THE MOBILE COMPUTING MARKET CANNOT BE ACCURATELY PREDICTED, AND IF
OUR MARKET DOES NOT GROW AS WE EXPECT, OUR REVENUE WILL BE BELOW OUR
EXPECTATIONS AND OUR BUSINESS AND FINANCIAL RESULTS WILL SUFFER.
We are focusing on expanding into the mobile computing market, an
unproven market. Accordingly, the size of this market cannot be accurately
estimated and therefore we are unable to accurately determine the potential
demand for our products and services. If our customer base does not expand or if
there is not widespread acceptance of our products and services, our business
and prospects will be harmed. We believe that our potential to grow and increase
the market acceptance of our products depends principally on the following
factors, some of which are beyond our control:
- the effectiveness of our marketing strategy and efforts;
14
- our product and service differentiation and quality;
- our ability to provide timely, effective customer support;
- our distribution and pricing strategies as compared to our
competitors;
- growth in the sales of handheld devices supported by our
software and growth in wireless network capabilities to match
end user demand and requirements;
- our industry reputation; and
- general economic conditions such as downturns in the computer or
software markets.
OUR BUSINESS AND PROSPECTS DEPEND ON DEMAND FOR AND MARKET ACCEPTANCE OF THE
INTERNET, WIRELESS DEVICES AND MOBILE COMPUTING DEVICES.
The increased use of the Internet, wireless devices and mobile
computing devices for retrieving, sharing and transferring information among
businesses, consumers, suppliers and partners, and for Internet personalization
services has only begun to develop in recent years. Our success will depend in
large part on continued growth in the use of the Internet, wireless devices and
mobile computing devices. Critical issues concerning the commercial use of the
Internet, wireless devices and mobile computing devices, including security,
reliability, cost, ease of access and use, quality of service, regulatory
initiatives and necessary increases in bandwidth availability, remain unresolved
and are likely to affect the development of the market for our services. The
adoption of the Internet, wireless devices and mobile computing devices for
information retrieval and exchange, commerce and communications generally will
require the acceptance of a new medium of conducting business and exchanging
information. Demand for and market acceptance of the Internet, wireless devices
and mobile computing devices are subject to a high level of uncertainty and are
dependent on a number of factors, including:
- the growth in access to and market acceptance of new interactive
technologies;
- emergence of a viable and sustainable market for Internet
personalization services;
- the development of technologies that facilitate interactive
communication between organizations; and
- increases in bandwidth for data transmission.
If the market for Internet personalization services or the Internet,
wireless devices and mobile computing devices as a commercial or business medium
does not develop, or develops more slowly than expected, our business, results
of operations and financial condition will be seriously harmed.
Specifically, even if an Internet personalization services market does
develop, services that we currently offer or may offer in the future may not
achieve widespread market acceptance. Failure of our current and planned
services to operate as expected could delay or prevent their adoption. If our
target customers do not adopt, purchase and successfully deploy our current and
planned services, our revenue will not grow significantly and our business,
results of operations and financial condition will be seriously harmed. We have
not taken any steps to mitigate the risks associated with reduced demand for our
existing Internet personalization services.
OUR MARKET CHANGES RAPIDLY DUE TO CHANGING TECHNOLOGY AND EVOLVING INDUSTRY
STANDARDS. IF WE DO NOT ADAPT TO MEET THE SOPHISTICATED NEEDS OF OUR CUSTOMERS,
OUR BUSINESS AND PROSPECTS WILL SUFFER.
The market for our services is characterized by rapidly changing
technology, evolving industry standards and frequent new service introductions.
Our future success will depend to a substantial degree on our ability to offer
15
services that incorporate leading technology, address the increasingly
sophisticated and varied needs of our current and prospective customers and
respond to technological advances and emerging industry standards and practices
on a timely and cost-effective basis. You should be aware that:
- our technology or systems may become obsolete upon the
introduction of alternative technologies;
- we may not have sufficient resources to develop or acquire new
technologies or to introduce new services capable of competing
with future technologies or service offerings; and
- the price of the services we provide is expected to decline as
rapidly as the cost of any competitive alternatives.
We may not be able to effectively respond to the technological
requirements of the changing market. To the extent we determine that new
technologies and equipment are required to remain competitive, the development,
acquisition and implementation of such technologies and equipment are likely to
continue to require significant capital investment by us. Sufficient capital may
not be available for this purpose in the future, and even if it is available,
investments in new technologies may not result in commercially viable
technological processes and there may not be commercial applications for such
technologies. If we do not develop and introduce new products and services and
achieve market acceptance in a timely manner, our business and prospects may
suffer.
OPERATING RESULTS MAY FLUCTUATE SIGNIFICANTLY AND MAY BE DIFFICULT TO PREDICT.
Our operating results have fluctuated in the past, and with our Internet
product initiative and the ProxiNet, NetMind and Dry Creek acquisitions and
Windward asset acquisition, our operating results are likely to continue to
fluctuate significantly. A number of factors, many of which are outside of
our control, are likely to cause fluctuations in operating results,
including, but not limited to:
- the demand for our products and services;
- our success in developing new products and integrating acquired
technologies;
- the timing of new product introductions by us and our
competitors;
- market acceptance of our new and enhanced products and services;
- market acceptance of handheld devices generally, and those
supported by our products and services;
- the emergence of new industry standards;
- the timing of customer orders;
- the mix of products and services sold;
- product life cycles;
- competition;
- the mix of distribution channels employed;
- seasonal trends;
- the timing and magnitude of our capital expenditures, including
costs relating to the expansion of operations;
16
- the evolving and unpredictable nature of the markets for our
products and mobile computing devices generally;
- the rate of growth of the Internet and the personal computer
market in general; and
- general economic conditions.
In addition, we typically operate with a relatively small order backlog. As
a result, quarterly sales and operating results depend in part on the volume and
timing of orders received and fulfilled within the quarter, which are difficult
to forecast. A significant portion of our expense levels are fixed in advance,
based in large part on our resource requirements to meet planned product and
customer requirements. If revenue is below expectations in any given quarter,
the adverse impact of the shortfall on operating results may be magnified by our
inability to adjust spending to compensate for the shortfall. Therefore, a
shortfall in actual revenue as compared to estimated revenue would have an
immediate adverse effect on our business, operating results and financial
condition that could be material.
Due to our ongoing efforts to expand into retail and reseller channels, we
are focusing our efforts on licensing our server and personal applications to
corporations and licensing our Software Development Kits (SDKs) to software
developers and mobile computing device manufacturers. As a result, we expect
that our notebook and PC OEM revenue will decrease as a percentage of our
overall revenue. This new sales strategy has the following risks:
- sales into these channels are harder to predict and may have
lower margins than sales in other channels;
- we have a very limited history in penetration and support for
these channels;
- the average transaction size and sales cycle vary significantly,
making forecasting difficult;
- smaller transactions may have relatively higher administrative
costs;
- any significant deferral of purchases of our products by
customers could jeopardize our operating results in any
particular quarter;
- to the extent that significant sales occur earlier than
expected, operating results for subsequent quarters may be
adversely affected;
- products that are accepted in the OEM market may not be readily
accepted by corporations;
- we may incur increased costs related to new infrastructure
requirements; and
- planned marketing strategy may require significant expenditures
but may not have immediate or future beneficial effect on sales.
Our gross margin on service revenue, particularly non-recurring
engineering service and professional service revenue, is substantially lower
than gross margin on license revenue. We have recently acquired Dry Creek
and, in connection with the acquisition of assets from Windward, we hired a
number of employees of Windward, which form the basis of our professional
service group, and, consequently, we expect that professional service
revenue, as well as non-recurring engineering service revenue, will increase
in future quarters. Any increase in non-recurring engineering service and
professional service revenue would have a corresponding increase in cost of
revenue and would have an adverse effect on our gross margins as a percent of
total revenue. We may also change prices or increase spending in response to
competition or to pursue new market opportunities.
17
The operating results of many software companies reflect seasonal
fluctuation. For example, sales in Europe and certain other countries typically
are adversely affected in the summer months when business activity is reduced.
Our revenue and operating results may be adversely affected by diminished demand
for products on a seasonal basis.
Period-to-period comparisons of operating results are not a good
indication of future performance. It is likely that operating results in some
quarters will be below market expectations. In this event, the price of our
common stock is likely to decline.
RAPID GROWTH IN OUR BUSINESS COULD STRAIN OUR RESOURCES AND HARM OUR BUSINESS
AND FINANCIAL RESULTS.
The planned expansion of our Internet initiative as well as growth in
our existing enterprise business will place a significant strain on our
management, financial controls, operations systems, personnel and other
resources. To date, revenue recognized from our Internet initiatives, $2.0
million in fiscal 2000, has been limited. If we are successful in implementing
our marketing strategy, we also expect the demands on our technical support
resources to grow rapidly, and we may experience difficulties responding to
customer demand for our services and providing technical support in accordance
with our customers' expectations. We expect that these demands will require not
only the addition of new management personnel, but also the development of
additional expertise by existing management personnel and the establishment of
long-term relationships with third-party service vendors. Additionally, we have
recently opened additional facilities in New Hampshire and intend to open new
offices in Europe. We may encounter difficulties in integrating information and
communications systems in multiple locations. We may not be able to keep pace
with growth, successfully implement and maintain our operational and financial
systems or successfully obtain, integrate and utilize the employees, facilities,
third-party vendors and equipment, or management, operational and financial
resources necessary to manage a developing and expanding business in our
evolving and increasingly competitive industry. If we are unable to manage
growth effectively, we may lose customers or fail to attract new customers and
our business and financial results will suffer.
BECAUSE TRACKING INTERNET-BASED INFORMATION ACROSS THE ENTIRE WORLDWIDE WEB IS A
HIGHLY COMPLEX PROCESS, OUR PRODUCTS AND SERVICES MAY HAVE ERRORS OR DEFECTS
THAT COULD SERIOUSLY HARM OUR BUSINESS.
The tracking of Internet-based information across the entire worldwide
Web is a highly complex process. We and our customers have, from time to time,
discovered errors and defects in our software. In the future, there may be
additional errors and defects in our software that may adversely affect our
products and services. If we are unable to efficiently fix errors or other
problems that may be identified, we could experience:
- loss of or delay in revenue and loss of market share;
- loss of customers;
- failure to attract new customers or achieve market acceptance;
- diversion of development resources;
- loss of reputation and credibility;
- increased service costs; and
- legal actions by our customers.
18
HOSTING OUR MOBILE APPLICATION PLATFORM ON INTELLISYNC.COM MAY NOT OCCUR OR
MAY NOT BE SUCCESSFUL; AND, IF SUCCESSFUL, MAY DIVERT OUR ATTENTION FROM OUR
EXISTING PRODUCT LICENSE BUSINESS WHICH COULD RESULT IN LOWER REVENUE FROM
SUCH BUSINESS.
Within the first half of fiscal year 2001, we intend to host our MAP for the
public through our Intellisync.com Web service. The MAP components are under
continued development. Any delay in launching Intellisync.com may have a
negative effect on our revenue and results of operations. In addition, even
if we launch it, our customers may not choose to use MAP through
Intellisync.com for their applications for a variety of reasons, including:
the actual or perceived reduction in security protections of mobile solutions
hosted on the Internet; the possible reluctance to be dependent on a third
party to host important information and infrastructure and to perform basic
support and other functions; and the possible inability of MAP to be able to
support many users in an enterprise-wide environment. Although we expect to
derive a significant portion of our future revenue from our Intellisync.com
subscription offering, we have not yet commercially introduced it and we do
not have a proven expense and revenue model for it. Intellisync.com may not
be commercially viable if our expense and revenue model is not acceptable to
our customers. This would seriously harm our business, particularly if the
failure of Intellisync.com and MAP to achieve market acceptance negatively
affects sales of our other products and services. In addition, if our
customers adopt the MAP offering through Intellisync.com, we may experience a
decline in the growth of our existing product license business.
IF WE ARE UNABLE TO SUCCESSFULLY EXPAND OUR PROFESSIONAL SERVICES ORGANIZATION,
CUSTOMER SATISFACTION AND DEMAND FOR OUR PRODUCTS WILL SUFFER.
We believe that successful implementation of our technology by our customers and
future growth in our product sales depend on our ability to provide our
customers with professional services, including customer support, training,
consulting and initial implementation and deployment of our products. We have
developed an in-house professional services organization with employees who can
perform these tasks and who also educate third-party systems integrators in the
use of our products so that they can provide these services to our customers.
Competition for qualified professional services personnel is intense due to the
limited number of people who have the requisite knowledge and skills. As a
result, we may not be able to attract or retain a sufficient number of qualified
professional services personnel. If we are unable to develop sufficient
relationships with third-party systems integrators and our professional services
organization is under-staffed, we could be unable to complete implementations in
a timely manner, which would cause delays in revenue recognition. In addition,
if we do not provide adequate customer support, consulting and training for our
customers, we could face customer dissatisfaction, damage to our reputation and
decreased overall demand for our products.
ACQUISITIONS WE HAVE MADE AND MAY MAKE IN THE FUTURE COULD DISRUPT OUR BUSINESS
OR NOT BE SUCCESSFUL AND HARM OUR FINANCIAL CONDITION.
We have in the past acquired or made investments in, and intend in
the future to acquire or make investments in other complementary companies,
products and technologies. We have acquired certain assets of Windward and
acquired Dry Creek, NetMind, ProxiNet, SoftMagic Corporation, RealWorld
Solutions, Inc. and IntelliLink Corporation. In the event of any future
acquisitions or investments, we could:
- issue stock that would dilute the ownership of our then existing
stockholders;
- incur debt;
- assume liabilities;
- face SEC challenges to the accounting treatment of these
acquisitions which may result in changes to our financial
statements and cause us to incur charges to earnings over time
that we did not expect;
19
- incur amortization expenses related to goodwill and other
intangible assets; or
- incur large and immediate write-offs.
These acquisitions and investments also involve numerous risks, including:
- problems integrating the operations, technologies or products
purchased with those we already have;
- unanticipated costs and liabilities;
- diversion of management's attention from our core business;
- adverse effects on existing business relationships with
suppliers and customers;
- risks associated with entering markets in which we have no or
limited prior experience; and
- potential loss of key employees, particularly those of the
acquired organizations.
WE HAVE ANTI-TAKEOVER DEFENSES THAT COULD DELAY OR PREVENT A TAKEOVER THAT
STOCKHOLDERS MAY CONSIDER FAVORABLE.
Certain provisions of our certificate of incorporation and bylaws and
provisions of Delaware law could have the effect of delaying, deferring or
preventing an acquisition of us. These provisions include a classified board of
directors and limitations on actions by our stockholders by written consent. In
addition, our board of directors has the right to issue up to 2,000,000 shares
of "blank check" preferred stock without stockholder approval, which could be
used to dilute the stock ownership of a potential hostile acquirer. The
preferred stock we issue could have mandatory redemption features, liquidation
preference and other rights that are senior to the rights of common
stockholders. Delaware law also imposes some restrictions on mergers and other
business combinations between us and any holder of 15% or more of our
outstanding common stock. Although we believe these provisions provide for an
opportunity to receive a higher bid by requiring potential acquirers to
negotiate with our board of directors, these provisions apply even if the offer
may be considered beneficial by some stockholders.
In addition, our stockholders may not take actions by written consent and
our stockholders are limited in their ability to make proposals at stockholder
meetings.
Our common stock will likely be subject to substantial price and volume
fluctuations due to a number of factors, some of which are beyond our control.
The trading price of our common stock has been and is likely to continue to
be highly volatile. Our stock price is subject to wide fluctuations in response
to a variety of factors including:
- quarterly variations in operating results;
- announcements of technological innovations;
- announcements of new software or services by us or our
competitors;
- changes in financial estimates by securities analysts; or
- other events beyond our control.
In addition, the stock market has experienced significant price and volume
fluctuations that have particularly affected the trading prices of equity
securities of many high technology companies. These fluctuations have often
20
been unrelated or disproportionate to the operating performance of these
companies. Any negative change in the public's perception of Internet or
Internet software companies or companies in the wireless communications
market could depress our stock price regardless of our operating results.
Recently, when the market price of a stock has been volatile, holders of
that stock have often instituted securities class action litigation against the
company that issued the stock when such stock declines. If any of our
stockholders brought such a lawsuit against us, we could incur substantial costs
defending the lawsuit. The lawsuit could also divert the time and attention of
our management.
We expect that our future operating results could fluctuate significantly
as a result of numerous factors including, but not limited to, the demand for
our products, our success in developing new products, the timing of new product
introductions by us and our competitors, the timing of releases of new handheld
devices by our customers, market acceptance of our new and enhanced products,
the emergence of new industry standards, the timing of customer orders, the mix
of products sold, competition, the mix of distribution channels employed, the
evolving and unpredictable nature of the markets for our products and mobile
computing devices generally, the rate of growth of the personal computer market
in general and general economic conditions.
WE MAY REQUIRE ADDITIONAL CAPITAL, WHICH WE MAY NOT BE ABLE TO OBTAIN.
The expansion and development of our business may require additional
capital in the future to fund our operating losses, working capital needs and
capital expenditures. We may not be able to obtain future equity or debt
financing on satisfactory terms or at all. Our failure to generate sufficient
cash flows from sales of products and services or to raise sufficient funds may
require us to delay or abandon some or all of our development and expansion
plans or otherwise forego market opportunities. Our inability to obtain
additional capital on satisfactory terms may delay or prevent the expansion of
our business, which could cause our business, operating results and financial
condition to suffer.
Our working capital is primarily comprised of cash, short-term
investments, accounts receivable, inventory, other current assets, accounts
payable, accrued expenses, deferred revenue and current portion of notes
payable. The timing and amount of our future capital requirements may vary
significantly depending on numerous factors, including our financial
performance, technological, competitive and other developments in our industry.
These factors may cause our actual revenue and costs to vary from expected
amounts, possibly to a material degree, and such variations are likely to affect
our future capital requirements.
WE ARE DEPENDENT ON OUR INTERNATIONAL OPERATIONS FOR A SIGNIFICANT PORTION OF
OUR REVENUES.
Our international activities expose us to additional risks. International
revenue, primarily from customers based in Japan, accounted for 27%, 40% and 48%
of our revenue in fiscal 2000, 1999 and 1998, respectively. A key component of
our strategy is to further expand our international activities. As we continue
to expand internationally, we are increasingly subject to risks of doing
business internationally, including:
- unexpected changes in regulatory requirements and tariffs;
- export controls relating to encryption technology and other
export restrictions;
- political and economic instability;
- difficulties in staffing and managing foreign operations;
- reduced protection for intellectual property rights in some
countries;
- longer payment cycles;
21
- problems in collecting accounts receivable;
- potentially adverse tax consequences;
- seasonal reductions in business activity during the summer
months in Europe and certain other parts of the world;
- fluctuations in currency exchange rates that may make our
products more expensive to international customers;
- causing gains and losses on the conversion to U.S. dollars of
accounts receivable and accounts payable arising from
international operations due to foreign currency denominated
sales;
- nonrefundable withholding taxes on royalty income from customers
in certain countries, such as Japan and Taiwan; and
- an adverse effect on our provision for income taxes based on the
amount and mix of income from foreign customers; and
- exposure to risk of non-payment by customers in foreign
countries with highly inflationary economies.
Any of these risks could harm our international operations. For example,
some European countries already have laws and regulations related to content
distributed on the Internet and technologies used on the Internet that are more
strict than those currently in force in the United States. The European
Parliament has recently adopted a directive relating to the reform of copyright
in the European Community that will, if made into law, restrict caching and
mirroring. Any or all of these factors could cause our business and prospects to
suffer.
Our international sales growth will be limited if we are unable to
establish additional foreign operations, expand international sales channel
management and support, hire additional personnel, customize products for
local markets and develop relationships with international service providers,
distributors and device manufacturers. Even if we are able to successfully
expand international operations, we cannot be certain that we will succeed in
maintaining or expanding international market demand for our products.
FOREIGN EXCHANGE FLUCTUATIONS COULD DECREASE OUR REVENUES OR CAUSE US TO LOSE
MONEY, ESPECIALLY SINCE WE DO NOT HEDGE AGAINST CURRENCY FLUCTUATIONS.
To date, the majority of our customers have paid for our services in
U.S. dollars. For fiscal 2000, 1999 and 1998, costs denominated in foreign
currencies were nominal and we had minimal foreign currency losses during those
periods. However, we believe that in the future an increasing portion of our
costs will be denominated in foreign currencies. Fluctuations in the value of
the Yen, Euro or other foreign currencies may cause our business and prospects
to suffer. We will also be exposed to increased risk of non-payment by our
customers in foreign countries, especially those with highly inflationary
economies. We currently do not engage in foreign exchange hedging activities
and, although we have not yet experienced any material losses due to foreign
currency fluctuation, our international revenues are currently subject to the
risks of foreign currency fluctuations and such risks will increase as our
international revenues increase.
REGULATIONS OR CONSUMER CONCERNS REGARDING PRIVACY ON THE INTERNET COULD LIMIT
MARKET ACCEPTANCE OF OUR PRODUCTS AND SERVICES.
Our products and services will allow our customers to develop and
maintain Web user profiles to tailor content to specific users. Profile
development involves both data supplied by the user and data derived from the
user's Web site behavior. Privacy concerns may cause users to resist providing
personal data or to avoid Web sites that track
22
user behavior. In addition, legislative or regulatory requirements may
heighten consumer concerns if businesses must notify Web site users that user
profile data may be used to direct product promotion and advertising to
users. Other countries and political entities, such as the European Economic
Community, have adopted such legislation or regulatory requirements. The
United States may do so in the future. If privacy legislation is enacted or
consumer privacy concerns limit the market acceptance of personalization
software, our business, financial condition and operating results could be
harmed.
We use cookies to provide users convenient access to the Web sites they
are minding and to track demographic information and user preferences. A cookie
is information keyed to a specific user that is stored on a computer's hard
drive, typically without the user's knowledge. Cookies are generally removable
by the user, although removal could affect the content available on a particular
site. A number of governmental bodies and commentators in the United States and
abroad have urged passage of laws limiting or abolishing the use of cookies. If
such laws are passed or if users begin to delete or refuse cookies as a common
practice, market demand for our products and services could be reduced.
ACTIONS BY MAJOR WEB SITE PROVIDERS TO BLOCK OUR SOFTWARE FROM MINDING THEIR
SITES COULD LIMIT MARKET ACCEPTANCE OF OUR PRODUCTS.
One of the primary benefits of our products and services is that they
bring users back to a Web site through click-throughs on links within our change
notifications. This is generally very beneficial to Web site providers. These
providers do, however, have the ability to detect our monitoring of their sites
and could block our access to their site. Widespread blocking by major Web sites
could seriously limit market acceptance of our products.
THERE ARE MANY COMPANIES PROVIDING COMPETING PRODUCTS AND SERVICES.
There are few substantial barriers to entry and we expect that we will
face additional competition from existing competitors and new market entrants
in the future.
We currently face direct competition with respect to individual elements
of our MAP including Sync-it, Browse-it and Mind-it. Sync-it faces
competition from Advanced Systems Network, Inc., Aether Software, Chapura,
Inc., DataViz, Inc., Extended Systems, Inc., FusionOne, Inc., IBM
Corporation, Laplink.com, Inc., Motorola, Inc., Phone.com, Inc. and River Run
Computers, Inc. Browse-it's transformation and mobile content distribution
features face competition from AvantGo, Inc., Broadvision, Inc., InfoSpace,
Inc., OpenTV, Inc. and Oracle Corporation. Finally, Mind-it faces competition
from Aeneid Corporation, Alerts.com, Inc., and The Informant in the area of
alerts and notifications and competition from MicroStrategy, Inc., Net
Perceptions, Inc. and Personify, Inc. in the areas of personalization,
profiling and analytics. In addition to direct competition noted above, we
face indirect competition from existing and potential customers that may
provide internally developed solutions to each of elements of MAP.
Many of our competitors have substantially greater financial, technical
and marketing resources, larger customer bases, longer operating histories,
greater name recognition and more established relationships in the industry than
we do. Our larger competitors may be able to provide customers with additional
benefits in connection with their Internet systems and network solutions,
including reduced communications costs. As a result, these companies may be able
to price their products and services more competitively than we can and respond
more quickly than us to new or emerging technologies and changes in customer
requirements. If we are unable to compete successfully against our current or
future competitors, we may lose market share, and our business and prospects
would suffer.
Increased competition could result in:
- price and revenue reductions and lower profit margins;
- loss of customers or failure to obtain additional customers; and
23
- loss of market share.
Any one of these could materially and adversely affect our business,
financial condition and results of operations.
THE INTEGRATION OF KEY NEW EMPLOYEES AND OFFICERS INTO OUR MANAGEMENT TEAM HAS
INTERFERED, AND WILL CONTINUE TO INTERFERE, WITH OUR OPERATIONS.
We have recently hired a number of key employees and we are currently
seeking additional engineering, and sales and marketing personnel. In addition,
there has been turnover among our officers as two individuals added as officers
at the closing of the NetMind merger have since left Pumatech. To integrate into
our company, new employees must spend a significant amount of time learning our
business model and management system, in addition to performing their regular
duties. Accordingly, the integration of new personnel has resulted and will
continue to result in some disruption to our ongoing operations. If we fail to
complete this integration in an efficient manner, our business and financial
results will suffer.
WE MUST RETAIN AND ATTRACT KEY EMPLOYEES OR ELSE WE MAY NOT GROW OR BE
SUCCESSFUL.
We are highly dependent on key members of our management and engineering
staff. The loss of one or more of these officers or key employees might
impede the achievement of our business objectives. Furthermore, recruiting
and retaining qualified technical personnel to perform research, development
and technical support is critical to our success. If our business grows, we
will also need to recruit a significant number of management, technical and
other personnel for our business. Competition for employees in our industry
and geographic location is intense. We may not be able to continue to attract
and retain skilled and experienced personnel on acceptable terms.
OUR FAILURE TO ADEQUATELY PROTECT OUR PROPRIETARY RIGHTS MAY HARM OUR
COMPETITIVE POSITION.
We rely on a combination of patents, copyrights, trademark, service mark
and trade secret laws and contractual restrictions to establish and protect
proprietary rights in our products and services. However, we will not be able to
protect our intellectual property if we are unable to enforce our rights or we
do not detect unauthorized use of our intellectual property.
Although we currently have 11 issued United States patents and have
additional 13 patent applications pending, we cannot be certain that such
patents and patent applications will provide an adequate level of intellectual
property protection. In addition, we have corresponding international patent
applications pending under the Patent Cooperation Treaty in countries to be
designated at a later date. We cannot be certain that any pending or future
patent applications will be granted, that any pending or future patents will not
be challenged, invalidated or circumvented, or that rights granted under any
patent that may be issued will provide competitive advantages to us.
We have also provided our source code under escrow agreements and to
foreign translators which may increase the likelihood of misappropriation by
third parties.
We have applied for trademarks and service marks on certain terms and
symbols that we believe are important for our business. However, the steps we
have taken to protect our technology or intellectual property may be inadequate.
Our competitors may independently develop technologies that are substantially
equivalent or superior to ours. Moreover, in other countries where we do
business, such as in Africa, Asia-Pacific and Europe, there may not be effective
legal protection of patents and other proprietary rights that we believe are
important to our business.
As a matter of company policy, we enter into confidentiality and assignment
agreements with our employees, consultants and vendors. We also control access
to and distribution of our software, documents and other proprietary
information. Notwithstanding these precautions, it may be possible for an
unauthorized third party to
24
copy or otherwise obtain and use our software or other proprietary
information or to develop similar software independently. Policing
unauthorized use of our products is difficult, particularly because the
global nature of the Internet makes it difficult to control the ultimate
destination or security of software and other transmitted data. The laws of
other countries may afford us little or no effective protection of our
intellectual property. The steps we have taken to prevent misappropriation of
our technology, including entering into agreements for that purpose may be
insufficient. In addition, litigation may be necessary in the future to
enforce our intellectual property rights, to protect our trade secrets, to
determine the validity and scope of the proprietary rights of others or to
defend against claims of infringement or invalidity. Such litigation, whether
successful or unsuccessful, could result in substantial costs and diversions
of our management resources, either of which could harm our business.
WE MAY BE UNABLE TO LICENSE NECESSARY TECHNOLOGY AND IT MAY BE SUBJECT TO
INFRINGEMENT CLAIMS BY THIRD PARTIES.
Our commercial success will also depend in part on not infringing the
proprietary rights of others and not breaching technology licenses that cover
technology used in our products. It is uncertain whether any third party patents
will require us to develop alternative technology or to alter our products or
processes, obtain licenses or cease activities that infringe on third party's
intellectual property rights. If any such licenses are required, we may not be
able to obtain such licenses on commercially favorable terms, if at all. Our
failure to obtain a license to any technology that we may require to
commercialize our products and services could cause our business and prospects
to suffer. Litigation may also be necessary to enforce any patents issued or
licensed to us or to determine the scope and validity of third party proprietary
rights.
WE ARE DEPENDENT ON NON-EXCLUSIVE LICENSES FOR CERTAIN TECHNOLOGY INCLUDED IN
OUR PRODUCTS.
We depend on development tools provided by a limited number of third party
vendors. Together with application developers, we rely primarily upon software
development tools provided by companies in the PC and mobile computing device
industries. If any of these companies fail to support or maintain these
development tools, we will have to support the tools itself or transition to
another vendor. Any maintenance or our support of the tools or transition could
be time consuming, could delay product release and upgrade schedule and could
delay the development and availability of third party applications used on the
our products. Failure to procure the needed software development tools or any
delay in availability of third party applications could negatively impact our
ability and the ability of third party application developers to release and
support our products or they could negatively and materially affect the
acceptance and demand for our products, business and prospects.
The risks associated with such non-exclusive third party licenses:
- If we are unable to continue to license the technology or to
license other necessary technologies for use with our products
or if there are substantial increases in royalty payments under
third-party licenses, it could jeopardize our operating results.
- The effective implementation of our products depends upon the
successful operation of these licenses in conjunction with our
products, and therefore any undetected errors in products
resulting from such licenses may prevent the implementation or
impair the functionality of our products, delay new product
introductions and injure our reputation. Such problems could
have a material adverse effect on our business, operating
results and financial condition.
- Although we are generally indemnified against claims that the
third party technology we license infringes the proprietary
rights of others, this indemnification is not always available
for all types of intellectual property rights (for example,
patents may be excluded) and, in some cases, the scope of such
indemnification is limited. Even if we receive broad
indemnification, third party indemnitors are not always
well-capitalized and may not be able to indemnify us in the
event of infringement, resulting in substantial exposure to us.
There can be no assurance that infringement or invalidity claims
arising from the incorporation of third party technology in our
products, and claims for
25
indemnification from our customers resulting from these
claims, will not be asserted or prosecuted against us. These
claims, even if not meritorious, could result in the
expenditure of significant financial and managerial resources
in addition to potential product redevelopment costs and
delay, all of which could materially adversely affect our
business, operating results and financial condition.
OUR PRODUCTS MAY CONTAIN PRODUCT ERRORS THAT COULD SUBJECT US TO PRODUCT
LIABILITY CLAIMS.
Our products may contain undetected errors or failures when first
introduced or as new versions are released, which can result in loss of or delay
in market acceptance and could adversely impact future operating results. We do
not currently maintain product liability insurance. Although our license
agreements contain provisions limiting our liability in the case of damages
resulting from use of the software, in the event of such damages, we may be
found liable, and in such event such damages could materially affect our
business, operating results and financial condition.
YEAR 2000 COMPUTER COMPLICATIONS COULD DISRUPT OUR OPERATIONS AND HARM OUR
BUSINESS.
Some computers, software, and other equipment include programming code
in which calendar year data is abbreviated to only two digits. As a result of
this design decision, some of these systems could fail to operate or fail to
produce correct results if "00" is interpreted to mean 1900, rather than
2000. These problems are commonly referred to as the "Millennium Bug" or
"Year 2000 Problem."
The Year 2000 Problem could affect computers, software, and other
equipment used, operated or maintained by us. We have not experienced any
significant problems on January 1, 2000 or since then and believe that our
computer systems are Year 2000 compliant.
We believe that we have substantially identified and resolved all
potential Year 2000 Problems with any of the software products that we
develop and market. However, we also believe that it is not possible to
determine with complete certainty that all Year 2000 Problems affecting our
software products have been identified or corrected due to the complexity of
these products and the fact that these products interact with other
third-party vendor products and operate on computer systems which are not
under our control.
Since January 1, 2000, we have had minimal interruptions with
third-party software and we have not received any significant complaints from
any customers relating to Year 2000 problems in their products. We have not
developed any Year 2000 contingency plans. We do not believe that the Year
2000 Problem will have a material adverse effect on our business or results
of operations.
26
EXECUTIVE OFFICERS AND DIRECTORS OF THE REGISTRANT
The executive officers and directors of the Company are as follows:
NAME AGE POSITION
------------------------ --- ---------------------------------------------------------
Bradley A. Rowe 40 President, Chief Executive Officer and Director
Stephen A. Nicol 40 Senior Vice President of Sales and Business Development,
Secretary and Director
Kelly Hicks 38 Vice President of Operations and Chief Financial Officer
John W. Stossel 36 Vice President of Professional Services
Michael M. Clair 52 Chairman of the Board
Tyrone F. Pike 46 Director
M. Bruce Nakao 56 Director
Gary E. Rieschel 43 Director
MR. ROWE co-founded Pumatech in August 1993 and has served as president since
October 1993 and chief executive officer since March 1995. He has also served as
a director of Pumatech since August 1993. Prior to founding Pumatech, from
January 1991 to July 1993, he held various management positions at SystemSoft
Corporation, a PC system software supplier, including vice president of
worldwide sales and general manager of desktop computing. In June 1988, Mr. Rowe
co-founded Extar Technologies, a manufacturer's representative of PC products,
where he held a number of management positions, including vice president of
sales and president until December 1990. From November 1983 to June 1988, Mr.
Rowe served in various sales positions at Western Digital Corporation, a storage
management company, including director of western area sales. Mr. Rowe currently
serves as a director of several privately-held companies. Mr. Rowe holds a B.S.
degree in engineering and management science from Princeton University.
MR. NICOL co-founded Pumatech in August 1993. He served as senior vice president
of sales of Pumatech until November 1999, when he was appointed senior vice
president of sales and business development. He has also served as a director of
Pumatech since August 1993. Prior to founding Pumatech, he served in several
capacities at SystemSoft Corporation, including director of sales for Japan and
Asia Pacific from July 1992 to July 1993 and as sales manager for the Eastern
United States from November 1991 to July 1992. Mr. Nicol co-founded Extar
Technologies in June 1988 where he served until November 1991 as vice president
of sales. Previously, Mr. Nicol served as OEM manager for Western Digital
Corporation and computer sales representative for Hewlett-Packard Company. He
holds an A.B. degree in Political Science from Princeton University.
MR. HICKS became the chief financial officer and vice president of operations of
Pumatech in May 1999. From November 1998 to May 1999, Mr. Hicks served as vice
president of finance and operations of Luminate Software, Inc. Mr. Hicks also
served as corporate controller of Pumatech from January 1997 to November 1998.
From 1991 to January 1997, Mr. Hicks served in various capacities with The Santa
Cruz Operation, Inc., last serving as corporate controller. Mr. Hicks holds a
B.S. degree in business administration with a concentration in Finance from
California State University, Chico.
MR. STOSSEL became the vice president of professional services of Pumatech in
July 2000. From February 1999 to July 2000, Mr. Stossel served as a member of
Dry Creek Software LLC, a mobile computing professional services firm he
founded in February 1999 and was acquired by Pumatech in July 2000. Prior to
founding Dry Creek, Mr. Stossel served as vice president of engineering of
Pumatech from July 1997 to January 1999. Mr. Stossel was also founder and
chief executive officer from January 1994 to July 1997 of RealWorld Solutions
which provided enterprise class software enabling handheld devices to access
data over the Internet and wireless networks. RealWorld was acquired by
Pumatech in July 1997. Previously, Mr. Stossel held a variety of management
and engineering positions at Apple Computer, Inc. and Charles Schwab & Co.,
Inc. Mr. Stossel is a dual-degree graduate of the University of Pennsylvania
and holds a B.S. degree in Economics from Wharton School along with a B.A.S.
concentrating in Electrical Engineering.
27
MR. CLAIR became a director of Pumatech in November 1994 and has served as
chairman of the board of Pumatech since March 1995. Since June 1995, Mr Clair
has served as an independent financial consultant. Mr. Clair was a founder of
SynOptics Communications (now Nortel Networks), a computer networking company,
and from January 1987 to November 1992, served as vice president of sales and
marketing and then as senior vice president of sales and customer service of
SynOptics. Mr. Clair has more than 25 years of experience in data processing,
data and voice communications and local area networking. He spent the early part
of his career with Tymshare, Inc., a computer time-sharing company, and ROLM, a
manufacturer of digital PBX equipment, in a variety of sales and marketing
positions. He holds a B.S. degree in business and an M.B.A. degree from the
University of Buffalo. Mr. Clair is a director of several private companies.
MR. PIKE became a director of Pumatech in October 1996. Since July 2000, Mr.
Pike has served as the vice president of VPN services of Internap Network
Services Corporation, a provider of centrally managed Internet connectivity
services. Since March 1993, Mr. Pike has served as director of Citrix Systems,
Inc., a publicly held supplier of application server products. From August 1996
to July 2000, Mr. Pike served as chairman of the board and chief executive
officer of VPNX.com, a supplier of provisioning software and services for
virtual private networks. Mr. Pike served in various senior management positions
at UB Networks, Inc., Global Village Communications, Inc., Intel Corporation,
and LAN Systems, Inc. Mr. Pike holds an A.B. degree in architecture from
Princeton University.
MR. NAKAO became a director of Pumatech in May 1999. Prior to joining Pumatech's
board of directors, from June 1996 to May 1999 Mr. Nakao was senior vice
president, finance and administration and the chief financial officer of
Pumatech. Prior to that, from May 1986 to June 1996, Mr. Nakao served in several
capacities at Adobe Systems Incorporated, a software company, most recently as
its senior vice president, finance and administration, chief financial officer
and treasurer. Prior to his retirement Mr. Nakao was with Ask Jeeves, Inc., an
Internet search company, where he served as its senior vice president, finance
and administration and chief financial officer from April 1999 until July 2000.
He holds a B.A. degree in business and economics from the University of
Washington and a M.B.A. degree from Stanford University.
MR. RIESCHEL became a director of Pumatech in February 2000. Mr. Rieschel is
currently an executive managing member and general partner of Softbank
Technology Ventures, a venture fund focused on early stage Internet companies.
Mr. Rieschel has held executive positions at nCUBE, a provider of broadcast
video, as vice president marketing from August 1994 to December 1995; Cisco
Systems, Inc., a provider of a computer networking products, as director
worldwide channels from 1993 to 1994; Sequent Computer Systems, Inc., a computer
software company, as director and general manager from 1984 to 1993; and Intel
Corporation, a semiconductor and computer company, from 1979 to 1982. He serves
as a director for MessageMedia, Inc., Net2Phone, Inc. and Preview Systems, Inc.
Mr. Rieschel holds a B.A. degree in Biology from Reed College and an M.B.A. from
Harvard Business School.
28
ITEM 2. PROPERTIES
At July 31, 2000, we leased the facilities described below:
LEASE
LOCATION FUNCTION SQUARE FEET EXPIRATION DATE
- ---------------------- -------------------------------------------------- ------------ --------------------
CALIFORNIA
San Jose, CA Corporate headquarters; administrative offices,
sales and marketing 31,952* April 2006
Santa Cruz, CA Engineering and professional services 4,030 November 2002
Emeryville, CA Engineering and professional services 6,753 August 2003
Campbell, CA Engineering and professional services 5,500 August 2002
1,500 Month to month lease
1,900 December 2000
NEW HAMPSHIRE
Nashua, NH Engineering, product marketing, and technical
support for Intellisync family of products 18,688 November 2003
9,006 October 2003
- ---------------
* 30% of property is subleased until May 2003.
We believe that our existing facilities are suitable for our present
purposes and the productive capacity in such facilities is substantially being
utilized. We anticipate, however, needing additional facilities in order to
support the expected growth of our operations. We anticipate that we can locate
and acquire such additional space when and as it is needed although we cannot be
certain that such space can be acquired on terms acceptable to us.
In the first quarter of fiscal 1999, we implemented a restructuring program
for the purpose of consolidating the majority of our engineering and development
work at existing facilities in Nashua, New Hampshire. As part of this program,
we implemented a reduction in force of approximately 40 positions that primarily
affected the engineering group located at the San Jose, California facility. The
severance charge was $210,000. The plan was completed at the end of February
1999. Some of the positions eliminated in San Jose were replaced in Nashua. Most
of the savings realized from this program are being realized in research and
development.
As part of the restructuring, we vacated a portion of the San Jose
facility. The restructure charge related to facilities was $558,000. The unused
balance as of July 31, 2000 was $221,000. We have secured a tenant for the
vacated portion of the San Jose facility.
ITEM 3. LEGAL PROCEEDINGS
Not Applicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of security holders of the Company
during the fourth quarter of fiscal year 2000.
29
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
The Common Stock of the Company began trading on the Nasdaq National
Market on December 5, 1996, under the symbol "PUMA." The following table sets
forth the high and low closing prices for the Company's Common Stock as reported
on the Nasdaq National Market from August 1, 1998, through July 31, 2000. These
prices are adjusted for the two-for-one stock split in the form of a stock
dividend paid to our stockholders on March 22, 2000. These prices reflect
inter-dealer prices, without retail mark-up, mark-down or commission, and may
not necessarily represent actual transactions.
HIGH LOW
---------- --------
FISCAL 1999
-----------
First fiscal quarter (August 1, 1998 to October 31,1998)............... $ 2 13/16 $ 1
Second fiscal quarter (November 1, 1998 to January 31, 1999)........... 2 1/4 1 3/8
Third fiscal quarter (February 1, 1999 to April 30, 1999).............. 2 11/16 1 29/32
Fourth fiscal quarter (May 1, 1999 to July 31, 1999)................... 3 7/32 2 3/8
FISCAL 2000
-----------
First fiscal quarter (August 1, 1999 to October 31,1999)............... $18 1/2 $ 2 3/16
Second fiscal quarter (November 1, 1999 to January 31, 2000)........... 65 5/16 17 1/2
Third fiscal quarter (February 1, 2000 to April 30, 2000).............. 98 22 14/16
Fourth fiscal quarter (May 1, 2000 to July 31, 2000)................... 37 19 3/4
As of October 13, 2000, there were approximately 358 stockholders of record
of the Company's common stock and 42,825,784 shares of common stock outstanding.
The Company has never paid dividends on its capital stock. The Company
currently intends to retain any future earnings for use in its business and does
not anticipate paying any cash dividends in the foreseeable future.
On July 13, 2000 and in connection with the acquisition of all the
outstanding membership interests of Dry Creek Software LLC, we issued 153,353
shares of common stock to the former members of Dry Creek. The issuance of these
shares was exempt from registration under Section 4(2) of the Securities Act of
1933. We have agreed to register the resale of the shares of common stock issued
in this transaction, although a registration statement has not yet been filed.
ITEM 6. SELECTED FINANCIAL DATA
The selected financial data for the five years ended July 31, 2000, which
appears on page 19 in the Registrant's Annual Report to Stockholders for the
fiscal year ended July 31, 2000 under the caption "Selected Condensed
Consolidated Financial Data" is incorporated herein by reference.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The information required by this Item is set forth on pages 20-31 of the
Registrant's Annual Report to Stockholders for the fiscal year ended July 31,
2000 under the caption "Management's Discussion and Analysis of Financial
Condition and Results of Operations," which is incorporated herein by reference.
30
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The information required by this Item is set forth on page 31 of the
Registrant's Annual Report to Stockholders for the fiscal year ended July 31,
2000 under the subheading "Financial Market Risks" under the caption
"Management's Discussion and Analysis of Financial Condition and Results of
Operations," which is incorporated herein by reference.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The financial statements, together with the report thereon of
PricewaterhouseCoopers LLP dated August 21, 2000, except as to Note 15, which is
as of October 9, 2000, appearing on pages 32-53 of the Registrant's Annual
Report to Stockholders for the fiscal year ended July 31, 2000, are incorporated
by reference in this Form 10-K Annual Report.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
Not Applicable
31
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Information relating to the directors and executive officers of the Company
is set forth in Part I, Item I of this report under the caption "Executive
Officers and Directors of the Registrant." Information relating to compliance
with Section 16(a) of the Exchange Act is incorporated by reference from the
definitive proxy statement for the Company's 2000 annual meeting of stockholders
to be filed with the Commission pursuant to Regulation 14A no later than 120
days after the end of the fiscal year covered by this form (the "Proxy
Statement") under the caption "Section 16(a) Beneficial Ownership Reporting
Compliance."
ITEM 11. EXECUTIVE COMPENSATION
The information required by this Item is incorporated by reference from the
Proxy Statement under the caption "Executive Compensation and Other Matters."
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information required by this Item is incorporated from the Proxy
Statement under the caption "Stock Ownership of Certain Beneficial Owners and
Management."
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information required by this Item is incorporated from the Proxy
Statement under the caption "Certain Transactions."
32
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a) 1. Financial Statements
The following consolidated financial statements of the Company
included in the Company's Annual Report to Stockholders for the fiscal
year ended July 31, 2000 are filed as part of this report:
Consolidated Balance Sheets at July 31, 2000 and 1999
Consolidated Statements of Operations for the three fiscal years
ended July 31, 2000
Consolidated Statements of Stockholders' Equity for the three
fiscal years ended July 31, 2000
Consolidated Statements of Cash Flows for the three fiscal years
ended July 31, 2000
Notes to Consolidated Financial Statements
Report of Independent Accountants
2. Supplemental Schedules
Report of Independent Accountants on Financial Statement Schedule
Schedule II - Valuation and Qualifying Accounts
Financial Statement Schedules, other than the schedule listed above,
have been omitted because the required information is contained in the
Consolidated Financial Statements and the Notes thereto, or because such
schedules are not required or applicable.
3. Exhibits
The exhibits listed on the accompanying index to exhibits
immediately preceding the financial statement schedules are filed as
part of, or incorporated by reference into, this Form 10K.
(b) Reports on Form 8-K
There were no reports on Form 8K filed during the last quarter of the
fiscal year covered by this report.
(c) Exhibits
EXHIBIT NUMBER EXHIBIT TITLE
- ------------------- ---------------------------------------------------------
2.1 2 Agreement and Plan Merger and Reorganization by and
among Puma Technology, Inc., CAT Acquisition
Corporation and ProxiNet, Inc., dated August 22, 1999.
2.2 3 Agreement and Plan of Merger and Reorganization by and
among Puma Technology, Inc. and Rocket Kitty
Acquisition Corp. and NetMind Technologies, Inc. dated
December 8,1999.
3.1 1 Certificate of Incorporation of Puma Technology, Inc., a
Delaware corporation.
3.2 1 Bylaws of Puma Technology, Inc., a Delaware corporation.
33
EXHIBIT NUMBER EXHIBIT TITLE
- ------------------- ---------------------------------------------------------
3.3 * 4 Puma Technology, Inc. 2000 Supplemental Stock Option Plan
and related form of stock option agreement.
3.4 * 5 ProxiNet 1997 Stock Plan.
3.5 * 6 NetMind Technologies, Inc. 1997 Stock Plan.
10.1 * 7 Amended and Restated 1993 Stock Option Plan and forms of
stock option agreements used thereunder.
10.2 * 7 Puma Technology, Inc. 1998 Employee Stock Purchase Plan
and form of notice of exercised used thereunder.
10.3 1 Lease Agreement dated October 18, 1995, between the
Company and Photonics Corporation.
10.4 + 1 Software License Agreement dated as of May 30, 1995,
between the Company and Toshiba Corporation.
10.5 + 1 Software License Agreement dated as of September 14, 1995,
between the Company and NEC Technologies, Inc. and
Amendment No. 1 thereto dated October 25, 1995 and
Amendment No. 2 thereto dated January 10, 1996.
10.6 + 1 Software License Agreement dated as of May 23, 1995,
between the Company and NEC Corporation and Amendment
No. 1 thereto dated February 19, 1996.
10.7 + 1 Software License Agreement dated as of May 20, 1996
between the Company and NEC Corporation.
10.8 1 Form of Indemnity Agreement for directors and officers.
10.9 8 Form of Stock Purchase Agreement by and between Puma
Technology, Inc. and each of the selling stockholders.
13.1 9 Portions of the Annual Report to Stockholders for the
fiscal year ended July 31, 2000 expressly incorporated
by reference herein.
21.1 9 Subsidiaries of the Registrant.
23.1 9 Consent of PriceWaterhouseCoopers LLP, Independent
Accountants.
24.1 9 Power of Attorney (reference page 35 of this Form-10K).
27.1 9 Financial Data Schedule (filed in EDGAR format only).
- ------------
+ Confidential treatment has been granted for portions of this exhibit.
* Management contract or compensatory plan or arrangement.
1. Incorporated by reference to the Company's Registration Statement on
Form S-1 (No. 333-011445).
2. Incorporated by reference to the Company's Report on Form 8-K filed on
October 29,1999.
3. Incorporated by reference to the Company's Report on Form 8-K filed on
December 10,1999.
4. Incorporated by reference to the Company's Report on Form S-8 filed on
May 5, 2000.
5. Incorporated by reference to the Company's Report on Form S-8 filed on
November 1, 1999.
6. Incorporated by reference to the Company's Report on Form S-8 filed on
February 24, 2000.
7. Incorporated by reference to the Company's Annual Report on Form 10-K for
fiscal year ended July 31, 1999 filed on October 29, 1999.
8. Incorporated by reference to the Company's Report on Form S-3 filed on
April 21, 2000.
9. Filed herewith.
(d) Financial Statement Schedules.
See Item 14 (a) above.
34
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this Form 10-K to be signed
on its behalf by the undersigned thereunto duly authorized, on this 27th day of
October, 2000.
Puma Technology, Inc.
Date: October 27, 2000 By: /s/ KELLY J. HICKS
--------------------------------
Kelly J. Hicks
Vice President of Operations and
Chief Financial Officer
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below hereby constitutes and appoints Bradley A. Rowe and Kelly Hicks,
and each of them acting individually, as his attorney-in-fact, each with full
power of substitution, for him in any and all capacities, to sign any and all
amendments to this Form 10-K, and to file the same, with exhibits thereto and
other documents in connection therewith, with the Securities and Exchange
Commission, hereby ratifying and confirming all that each said attorneys-in-fact
or his substitute or substitutes, may do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Exchange Act of 1934, this
Form 10-K has been signed below by the following persons in the capacities and
on the dates indicated:
SIGNATURE TITLE DATE
- ------------------------------------- --------------------------------------------- ---------------------
/s/ BRADLEY A. ROWE President, Chief Executive Officer and October 27, 2000
- ------------------------------- Director (Principal Executive Officer)
Bradley A. Rowe
/s/ STEPHEN A. NICOL Senior Vice President, Sales and October 27, 2000
- ------------------------------- Business Development, Secretary and
Stephen A. Nicol Director
/s/ KELLY J. HICKS Vice President of Operations and October 27, 2000
- ------------------------------- Chief Financial Officer (Principal
Kelly J. Hicks Financial and Accounting Officer)
/s/ MICHAEL M. CLAIR Chairman of the Board October 27, 2000
- -------------------------------
Michael M. Clair
/s/ TYRONE F. PIKE Director October 27, 2000
- -------------------------------
Tyrone F. Pike
/s/ M. BRUCE NAKAO Director October 27, 2000
- -------------------------------
M. Bruce Nakao
/s/ GARY E. RIESCHEL Director October 27, 2000
- -------------------------------
Gary E. Rieschel
35
REPORT OF INDEPENDENT ACCOUNTANTS ON FINANCIAL STATEMENT SCHEDULES
To the Board of Directors of Puma Technology, Inc.:
Our audits of the consolidated financial statements referred to in our report
dated August 21, 2000, except as to Note 15, which is as of October 9, 2000,
appearing in the Annual Report to Shareholders of Puma Technology, Inc. (which
report and consolidated financial statements are incorporated by reference in
this Annual Report on Form 10-K) also included an audit of the financial
statement schedules listed in Item 14(a)(2) of this Form 10-K. In our opinion,
these financial statement schedules present fairly, in all material respects,
the information set forth therein when read in conjunction with the related
consolidated financial statements.
/s/ PricewaterhouseCoopers LLP
San Jose, California
August 21, 2000
36
SCHEDULE II
PUMA TECHNOLOGY, INC.
VALUATION AND QUALIFYING ACCOUNTS
(IN THOUSANDS)
BALANCE AT CHARGED TO BALANCE
BEGINNING OF COSTS AND AT END OF
CLASSIFICATION PERIOD EXPENSES DEDUCTIONS PERIOD
- ------------------------------------------------------ ------------ ---------- ---------- ---------
(IN THOUSANDS)
Allowance for doubtful accounts and sales return for
the year ended:
July 31, 1998..................................... $ 677 $ 733 $ 467 $ 943
July 31, 1999..................................... $ 943 $ 904 $ 240 $1,607
July 31, 2000..................................... $1,607 $ 974 $ 597 $1,984
37