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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
________________
FORM 10-Q
/ X / QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended October 31, 1997
/ / 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 333-11445
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,
SAN JOSE, CALIFORNIA 95131
408-321-7650
(Address and telephone number of principal executive office) (Zip Code)
Indicate by check mark whether the registrant (1) has filed all reports 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 / /
The number of shares outstanding of the registrant's common stock, par value
$0.001 per share, as of October 31, 1997 was 12,085,097.
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THIS REPORT CONSISTS OF 24 PAGES.
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PUMA TECHNOLOGY, INC.
FORM 10-Q
FOR THE QUARTERLY PERIOD ENDED OCTOBER 31, 1997
TABLE OF CONTENTS
PART I. FINANCIAL INFORMATION PAGE
----
Item 1. Condensed Consolidated Financial Statements 4
Item 2. Management's Discussion and Analysis of Financial Condition 8
and Results of Operations
PART II. OTHER INFORMATION
Item 6. Exhibits 21
Signature 23
Summary of Trademarks 24
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PART I. FINANCIAL INFORMATION
ITEM I. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
The condensed consolidated financial statements included under this item are as
follows:
FINANCIAL STATEMENT DESCRIPTION PAGE
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* Condensed Consolidated Balance Sheet 4
October 31 and July 31, 1997
* Condensed Consolidated Statement of Operations 5
Three Months Ended October 31, 1997 and 1996
* Condensed Consolidated Statement of Cash Flows 6
Three Months Ended October 31, 1997 and 1996
* Notes to Condensed Consolidated Financial Statements 7
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PUMA TECHNOLOGY, INC.
CONDENSED CONSOLIDATED BALANCE SHEET
(in thousands, except per share data)
(unaudited)
<TABLE>
<CAPTION>
October 31, July 31,
1997 1997
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<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 5,403 $ 5,824
Short-term investments 15,431 15,347
Accounts receivable, net 3,169 3,615
Inventories 257 224
Other current assets 606 443
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Total current assets 24,866 25,453
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Property and equipment, net 3,297 2,844
Other assets 1,090 1,116
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TOTAL ASSETS $ 29,253 $ 29,413
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LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 812 $ 1,215
Accrued liabilities 893 1,001
Deferred revenue 632 683
Current portion of capital lease obligations 25 25
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Total current liabilities 2,362 2,924
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Capital lease obligations, net of current portion 54 66
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Total liabilities 2,416 2,990
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Stockholders' equity:
Common stock, $0.001 par value; 12,085 and 12,032 shares issued and
outstanding at October 31, 1997 and July 31, 1997, respectively 12 12
Additional paid-in capital 31,704 31,525
Receivable from stockholders (192) (192)
Deferred stock compensation (74) (81)
Accumulated deficit (4,613) (4,841)
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Total stockholders' equity 26,837 26,423
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TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 29,253 $ 29,413
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</TABLE>
SEE ACCOMPANYING NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.
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PUMA TECHNOLOGY, INC.
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(in thousands, except per share data)
(unaudited)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
OCTOBER 31,
1997 1996
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<S> <C> <C>
REVENUE $ 5,237 $ 3,202
Cost of revenue 625 357
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GROSS PROFIT 4,612 2,845
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OPERATING EXPENSES:
Research and development 2,132 1,201
Sales and marketing 1,601 878
General and administrative 797 427
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Total operating expenses 4,530 2,506
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OPERATING INCOME 82 339
Interest and other income, net 285 11
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INCOME BEFORE INCOME TAXES 367 350
Provision for income taxes (139) (123)
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NET INCOME $ 228 $ 227
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NET INCOME PER SHARE $ 0.02 $ 0.02
SHARES USED IN PER SHARE CALCULATION 12,497 10,112
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</TABLE>
SEE ACCOMPANYING NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.
5
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PUMA TECHNOLOGY, INC.
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(in thousands)
(unaudited)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
OCTOBER 31,
1997 1996
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<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 228 $ 227
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Depreciation and amortization 255 119
Customer deposits and other - 22
Changes in operating assets and liabilities (325) (661)
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Net cash provided by (used in) operating activities 158 (293)
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CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment (663) (125)
Maturities (purchases) of short-term investments (84) -
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Net cash used in investing activities (747) (125)
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CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payments under capital lease obligations (12) (9)
Principal repayments on notes payable - (45)
Net proceeds upon exercise of stock options 31 -
Net proceeds of convertible preferred stock - 1,582
Net proceeds from newly issued common stock 149 241
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Net cash provided by financing activities 168 1,769
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Net increase (decrease) in cash and cash equivalents (421) 1,351
Cash and cash equivalents at the beginning of the period 5,824 982
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Cash and cash equivalents at the end of the period $ 5,403 $ 2,333
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</TABLE>
SEE ACCOMPANYING NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.
6
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PUMA TECHNOLOGY, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
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NOTE 1. BASIS OF PRESENTATION
The accompanying condensed consolidated financial statements for the three
months ended October 31, 1997 and 1996 are unaudited and reflect all normal
recurring adjustments which are, in the opinion of management, necessary
for their fair presentation. These condensed consolidated financial
statements should be read in conjunction with the Company's consolidated
financial statements and notes thereto included in the Company's Annual
Report on Form 10-K for the fiscal year ended July 31, 1997. The results
of operations for the interim period ended October 31, 1997 are not
necessarily indicative of results to be expected for the full year.
NOTE 2. NET INCOME PER SHARE
Net income per share is computed using the weighted average number of common
shares outstanding and common equivalent shares arising from the assumed
exercise of stock options (if dilutive) and preferred shares on an as-converted
basis. Pursuant to the requirements of the Securities and Exchange Commission
Staff Accounting Bulletin No. 83, common shares, convertible preferred stock
(using the as-converted method) and stock option warrants (using the treasury
stock method and the initial public offering price) issued during the 12 month
period prior to the initial public offering have been included in computations
as if they were outstanding for all periods through the effective date of the
initial public offering.
NOTE 3. RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
In February 1997, the FASB issued Statement No. 128 (SFAS No. 128), "Earnings
per Share" which will be effective commencing with the Company's quarter
ended January 31, 1998. SFAS No. 128 requires a change in the method
currently used to compute earnings per share and that all prior periods be
restated. Under the new requirements, primary and fully diluted earnings per
share calculations would be replaced by basic and diluted earnings per share
calculations. Basic and diluted earnings per share calculations applying
SFAS No. 128 will be the same as the Company's reported primary earnings per
share for the three month periods ended October 31, 1997 and 1996.
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PUMA TECHNOLOGY, INC.
ITEM II. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
THE FOLLOWING INFORMATION SHOULD BE READ IN CONJUNCTION WITH THE CONSOLIDATED
FINANCIAL STATEMENTS AND THE NOTES THERETO AND IN CONJUNCTION WITH
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS IN THE FORM 10-K. THIS QUARTERLY REPORT ON FORM 10-Q, AND IN
PARTICULAR MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS, CONTAINS FORWARD-LOOKING STATEMENTS REGARDING FUTURE
EVENTS OR THE FUTURE PERFORMANCE OF THE COMPANY THAT INVOLVE CERTAIN RISKS
AND UNCERTAINTIES INCLUDING THOSE DISCUSSED IN "FACTORS THAT MAY AFFECT
FUTURE OPERATING RESULTS" AND "BUSINESS RISKS" BELOW. IN THIS REPORT, THE
WORDS "ANTICIPATES," "BELIEVES", "EXPECTS", "INTENDS", "FUTURE" AND SIMILAR
EXPRESSIONS IDENTIFY FORWARD-LOOKING STATEMENTS. ACTUAL EVENTS OR THE ACTUAL
FUTURE RESULTS OF THE COMPANY MAY DIFFER MATERIALLY FROM ANY FORWARD-LOOKING
STATEMENTS DUE TO SUCH RISKS AND UNCERTAINTIES. THE COMPANY ASSUMES NO
OBLIGATION TO UPDATE THESE FORWARD-LOOKING STATEMENTS TO REFLECT ACTUAL
RESULTS OR CHANGES IN FACTORS OR ASSUMPTIONS AFFECTING SUCH FORWARD-LOOKING
ASSUMPTIONS. READERS ARE CAUTIONED NOT TO PLACE UNDUE RELIANCE ON THESE
FORWARD-LOOKING STATEMENTS, WHICH REFLECT MANAGEMENT'S ANALYSIS ONLY AS OF
THE DATE HEREOF. THE COMPANY UNDERTAKES NO OBLIGATION TO PUBLICLY RELEASE
THE RESULTS OF ANY REVISION TO THESE FORWARD-LOOKING STATEMENTS, WHICH MAY BE
MADE TO REFLECT EVENTS OR CIRCUMSTANCES AFTER THE DATE HEREOF OR TO REFLECT
THE OCCURRENCE OF UNANTICIPATED EVENTS.
RESULTS OF OPERATIONS
OVERVIEW
Puma Technology, Inc. ("Puma" or "the Company") develops, markets and
supports Mobile Data Exchange (MDE)-TM- software, including wireless infrared
connectivity and advanced data synchronization software. The Company
currently has two families of products -- its TranXit family of products that
supports infrared connectivity and its IntelliSync-TM- family of products
that performs advanced data synchronization.
TranXit software is licensed primarily to original equipment manufacturer
(OEM) customers, which are primarily makers of laptop computers. These OEM
customers license the Company's software for inclusion in their laptop
computers to enable infrared connectivity (IR) from the laptop back to
desktop computers. These OEM customers include the Company's software into
their products at the time of manufacture and for each device shipped, the
Company collects a royalty. Royalties are typically paid to the Company once
a quarter based on volume, although certain contracts contain fixed royalties
regardless of volume, for a given time period.
IntelliSync software is used for advanced data synchronization of data base
information that resides on a computer such as a desktop machine and
increasingly popular handheld devices such as electronic organizers, handheld
computers, smart phones and smart pagers. The Company's software actually
runs on the desktop computer and keeps information in the desktop and the
handheld device synchronized. IntelliSync software is currently distributed
directly to the end user and through the Company's retail distribution
channel, and is bundled with their products by some of the handheld device
manufacturers.
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The following table sets forth certain consolidated statement of income
data as a percentage of revenue for the periods indicated:
<TABLE>
<CAPTION>
THREE MONTHS ENDED
OCTOBER 31,
1997 1996
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<S> <C> <C>
REVENUE 100.0% 100.0%
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Cost of revenue 11.9 11.1
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GROSS PROFIT 88.1 88.9
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OPERATING EXPENSES:
Research and development 40.7 37.6
Sales and marketing 30.6 27.4
General and administrative 15.2 13.3
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Total operating expenses 86.5 78.3
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OPERATING INCOME 1.6 10.6
Interest and other income, net 5.4 0.3
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INCOME BEFORE INCOME TAXES 7.0 10.9
Provision for income taxes (2.6) (3.8)
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NET INCOME 4.4% 7.1%
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</TABLE>
REVENUE. The Company's revenue is derived from two primary sources; software
licenses and fees for service. License revenue is derived from the licensing
of software products and royalty agreements with OEMs. The Company's revenue
for the three months ended October 31, 1997 increased by 64% to $5,237,000 as
compared to $3,202,000 for the same period in 1996. The overall increase in
revenue was due to increased license revenue resulting from increased unit
shipments of the Company's TranXit and IntelliSync products and increased
service revenue resulting from increased customer funded engineering services.
Service revenue is derived from fees for services including customer funded
engineering services and amortization of maintenance contract programs.
Service revenue represented 14% and 2% of revenue for the three months ended
October 31, 1997 and 1996, respectively. The year over year increase in
service revenue is primarily due to increased customer funded engineering
services, and to a lesser extent, increased amortization of maintenance
contract programs. The Company believes this percentage may fluctuate in the
future.
OEM revenue continues to represent a significant portion of the Company's
revenue. OEM revenue represented 78% and 64% of the Company's revenue in
three months ended October 31, 1997 and 1996, respectively. Toshiba
represented 22% and 21% of revenue for the three months ended October 31,
1997 and 1996, respectively. Sharp represented 16% of revenue for the three
months ended October 31, 1997. Although several OEMs are subject to certain
contractual minimum purchase obligations, there can be no assurance that any
particular OEM will satisfy the obligation. Accordingly, the Company
recognizes revenue from minimum guaranteed
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royalties when such royalties are earned and become payable. The Company
believes that the percentage of revenue derived from OEMs may fluctuate in
future periods depending in part upon the marketing channels used by the
Company for future products currently under development.
International revenue continues to represent a significant portion of the
Company's revenue. International revenue represented approximately 67% and
58% of the Company's revenue in the first fiscal quarter of 1998 and 1997,
respectively.
The foregoing statements regarding new product information are
forward-looking statements. Actual events or the actual future results of
the Company may differ materially from any forward-looking statements due to
such risks and uncertainties. Introduction of new products and enhancements
of existing products can have a significant impact on the Company's revenue.
Any delays in the scheduled release of major new products and enhancements
can have a material adverse impact on the Company's business, operating
results and financial condition. The Company plans to introduce new versions
of IntelliSync for Notebooks, IntelliSync for PC's and other new products at
various times throughout the remainder of fiscal 1998. Any delays in
introduction of these products or failure of these products to achieve
anticipated levels of market acceptance will have an adverse impact on the
Company's business, operating results and financial condition.
COST OF REVENUE. Cost of revenue consists primarily of product media and
duplication, manuals, packing supplies, shipping expenses and personnel
related costs incurred under customer funded software development agreements.
For the three months ended October 31, 1997 and 1996, cost of revenue as a
percentage of revenue was approximately 12% and 11%, respectively. The
slight year over year increase in cost of revenue was primarily due to
increased costs associated with increased levels of customer funded
engineering services.
The Company's cost of revenue is affected by the mix between its distribution
channels and is affected by the mix between its revenue sources including
royalties, packaged product, customer funded engineering contracts and sales
and fulfillment via its Web site. A majority of IntelliSync revenue is
derived by direct sales to distributors and retailers as well as end-users.
The Company anticipates that gross profit as a percentage of total revenue
will decrease, to the extent sales to distributors and retailers increase in
proportion to the Company's total revenue. This decline in gross profit
percentage is anticipated since the average selling price to distributors and
retailers is lower due to distributor discounts and the cost of revenue is
higher due to product costs. Royalty revenue is derived largely from
licensing TranXit to OEM customers and cost of sales attributable to TranXit
royalties have not been significant so far.
RESEARCH AND DEVELOPMENT. Research and development expenses consist
primarily of salaries and other related expenses for research and development
personnel, quality assurance personnel, fees to outside contractors and the
cost of facilities and depreciation of capital equipment. Research and
development expenses increased 78% to $2,132,000 in the first fiscal quarter
of 1998 from $1,201,000 in the comparable fiscal quarter of 1997. The year
over year absolute dollar increase in research and development expenses from
the first quarter of fiscal 1997 to the first quarter of fiscal 1998 was
primarily due to increased personnel related costs and spending required to
develop the Company's IntelliSync product offerings and, to a lesser extent,
increased personnel related costs and spending required to develop enhanced
versions of TranXit and other new products. A significant portion of the
Company's research and development expenses are
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comprised of fees paid to outside contractors which are engaged by the
Company on a project-by-project basis. Research and development spending is
anticipated to increase in absolute dollars as the Company continues to
invest in product development. In addition, the Company believes research and
development expenses may fluctuate from quarter to quarter both in absolute
dollars as well as a percentage of revenue, depending upon the status of
various development projects.
Research and development expenses have been expensed as incurred. Statement
of Financial Accounting Standards No. 86 requires capitalization of certain
software development costs once technological feasibility is established.
The Company defines establishment of technological feasibility at the point
which product reaches beta. Software development costs incurred subsequent
to the establishment of technological feasibility through the period of
general market availability of the product are capitalized, if material. To
date, all of these software development costs have been insignificant and
expensed as incurred.
SALES AND MARKETING. Sales and marketing expenses consist primarily of
salaries, commissions, promotional expenses and other related expenses of
sales and marketing personnel. Sales and marketing expenses increased 82% to
$1,601,000 in the first fiscal quarter of 1998 from $878,000 for the
comparable quarter in the prior year. The year over year sales and marketing
expenses increase from the first quarter of fiscal 1997 to the first fiscal
quarter of 1998 were primarily due to increased marketing activities,
including product promotions and corporate advertising, and the expansion of
the Company's sales force and related personnel spending in an effort to
expand its customer base and channel presence. Additionally, in an effort to
expand its presence in the retail market channel, the Company has incurred
higher levels of market development and cooperative advertising expenses paid
to its distributors. The Company intends to focus its energy on creating end
user demand and, accordingly, expects to increase its investment in both its
sales and marketing team as well as advertising in fiscal 1998. Additionally,
the Company intends to continue expanding its sales and marketing
organization to promote new products and increase its presence in the
distribution and retail channel. As a result, the Company anticipates that
sales and marketing expenses will continue to increase in absolute dollars
throughout the remainder of fiscal 1998.
GENERAL AND ADMINISTRATIVE. General and administrative expenses consist
primarily of salaries and other related expenses of administrative, executive
and financial personnel and other outside professional fees. General and
administrative expenses increased 87% to $797,000 in the first fiscal quarter
of 1998 from $427,000 for the same period in the prior year. The year over
year increases in absolute general and administrative spending from the first
fiscal quarter of 1997 to the first fiscal quarter of 1998 was primarily due
to increased legal and financial costs, spending to support the need for a
growing infrastructure, and to a lesser extent, increased provisions for
doubtful accounts. The Company anticipates that its general and
administrative expenses will increase in absolute dollars in the future as
the Company expands its administrative staff, management information systems
and other items related to infrastructure.
INTEREST AND OTHER INCOME, NET. Interest and other income, net, represents
interest earned by the Company on its cash and short-term investments, offset
by interest expense on capitalized leases and miscellaneous fees and charges.
Interest and other income, net, increased to $285,000 in the first fiscal
quarter of 1998 from $11,000 for the same period in the prior year. The
increase in interest and other income, net, in the first quarter of fiscal
1998 as compared to the first quarter of fiscal 1997 was primarily due to
increased interest income on higher levels of cash equivalents
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and short-term investments. The increased balances were primarily a result of
proceeds generated from the Company's initial public offering in December
1996.
PROVISION FOR INCOME TAXES. Provision for income taxes increased to $139,000
in the first fiscal quarter of 1998 from $123,000 for the same period in the
prior year. The provision for income taxes primarily represents foreign
withholding taxes. The foreign withholding taxes are a function of royalties
earned by the Company from certain foreign customers. The Company's overall
tax rate for fiscal 1998 is significantly dependent on the amount and mix of
income derived from sources subject to foreign withholding taxes. The
Company's estimate of its fiscal 1998 income tax rate is based on current
projections and mix of its pre-tax income. Any adverse movements in such
projections could cause the income tax rate to increase.
LIQUIDITY AND CAPITAL RESOURCES
The Company's operating activities provided cash of $159,000 and used cash of
$293,000 in the first fiscal quarter of 1998 and 1997, respectively. Net cash
provided in the first quarter of fiscal 1998 was primarily due to net income
adjusted for depreciation and amortization and reductions in accounts
receivable. Net cash used in the first quarter of fiscal 1997 was primarily
due to by increases in accounts receivable, inventories and other assets and
decreases in accrued liabilities partially offset by net income adjusted for
depreciation and amortization and increases in deferred revenue and accrued
liabilities.
Cash used in investing activities was $747,000 and $125,000 in the first
fiscal quarter of 1998 and 1997, respectively. Cash used in the first quarter
of fiscal 1998 was primarily due to purchases of property and equipment, and
to a lesser extent, purchases of short-term investments. Cash used in the
first quarter of fiscal 1997 was primarily due to purchases of property and
equipment. The Company expects purchases of property and equipment to
increase in the remainder of fiscal 1998 as it purchases computer and other
equipment to enhance its infrastructure as well as expand its facility
located on the East Coast.
Cash provided by financing activities was $168,000 and $1,769,000 in the
first fiscal quarter of 1998 and 1997, respectively. Cash provided from
financing activities in the first quarter of fiscal 1998 was primarily due to
stock purchases of common stock under the Company's Employee Stock Purchase
Plan, and to a lesser extent, exercise of stock options. Cash provided from
financing activities in the first quarter of fiscal 1997 was primarily due to
the issuance of preferred stock and newly issued common stock.
At October 31, 1997 the Company's principal source of liquidity represented
by cash, cash equivalents and short-term investments totaled $20,834,000. The
Company currently has no significant capital commitments. The Company
currently has no bank financing arrangements. The Company believes that its
current cash, cash equivalents and short-term investment balances and cash
generated from operations, if any, will be sufficient to meet its working
capital and other cash requirements for at least the next twelve months.
FACTORS THAT MAY AFFECT FUTURE OPERATING RESULTS
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The Company expects that its future operating results could fluctuate
significantly as a result of numerous factors including, but not limited to,
the demand for the Company's products, the Company's success in developing
new products, the timing of new product introductions by the Company and its
competitors, market acceptance of the Company's 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 the Company's
products and mobile computing devices generally, the rate of growth of the
personal computer market in general and general economic conditions.
The Company's revenue is difficult to forecast in part because the market for
wireless IR connectivity and data synchronization software is rapidly
evolving. In addition, the Company typically operates 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 within the quarter, which
are difficult to forecast. In addition, a significant portion of the
Company's expense levels is fixed in advance based in large part on the
Company's forecasts of future revenue. If revenue is below expectations in
any given quarter, the adverse impact of the shortfall on the Company's
operating results may be magnified by the Company's 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 the Company's business, financial condition and operating results
that could be material.
The Company historically has derived a substantial portion of its revenue
from OEMs. Due to the Company's ongoing effort to expand into retail and
reseller distribution channels, an increasing percentage of the Company's
licensing activity is expected to result from the sale of products through
distributors and other resellers, which sales are harder to predict and may
have lower margins than other channels. Sales through such channels may
contribute to increased fluctuation of operating results. A significant
portion of the Company's revenue in any quarter is typically derived from
sales to a limited number of customers. The Company has generally recognized
a substantial portion of its revenue in the last month of each quarter, when
it typically receives royalty reports from its OEM customers. Any significant
deferral of purchases of the Company's products by its customers could have a
material adverse effect on the Company's business, operating results and
financial condition in any particular quarter. To the extent that significant
sales occur earlier than expected, operating results for subsequent quarters
may be adversely affected.
The Company recently expanded its sales channel by fulfilling orders via the
World Wide Web. Given its limited history, there can be no assurance of
continued acceptance or demand for orders placed via the Web. Additionally,
there can be no assurance that Web sales may not adversely affect sales in
the Company's retail and reseller sales channels.
The Company's gross margin on its service revenue is substantially lower than
its gross margin on license revenue. Any increase in service revenue would
have a corresponding increase in cost of revenue and may have an adverse
effect on the Company's gross margins. The Company may also reduce prices or
increase spending in response to competition or to pursue new market
opportunities.
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
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when business activity is reduced. The Company's revenues and operating
results may be adversely affected by diminished demand for the Company's
products on a seasonal basis.
Because of these factors, the Company believes that period-to-period
comparisons of its operating results are not necessarily meaningful and that
such comparisons should not be relied upon as indications of future
performance. As a result of the foregoing and other factors, the Company's
operating results and stock price may be subject to significant volatility,
particularly on a quarterly basis.
BUSINESS RISKS
LIMITED HISTORY OF OPERATIONS AND PROFITABILITY. Puma was organized in
August 1993 and began shipping products in October 1994. Accordingly, the
Company has a limited operating history upon which an evaluation of the
Company can be based. The Company has only been profitable in six quarters
since inception. The Company's results must be considered in light of the
risks, expenses and difficulties frequently encountered by companies in their
early stages of development, particularly companies in a new and evolving
market such as the mobile data exchange software market. Although the
Company has experienced increased quarterly revenue over the last six fiscal
quarters, such growth rates may not be sustainable and are not indicative of
future operating results. There can be no assurance that any of the
Company's business strategies will be successful or that the Company's
revenue growth or profitability will continue on a quarterly or annual basis.
RISKS ASSOCIATED WITH NEW PRODUCT DEVELOPMENT AND TIMELY INTRODUCTION OF NEW
AND ENHANCED PRODUCTS. The markets for the Company's products are
characterized by rapidly changing technologies, evolving industry standards,
frequent new product introductions and short product life cycles. The
Company first introduced its TranXit products in October 1994. As its
product families mature, the Company expects that their gross margins may
decline. The Company's future success will depend to a substantial degree
upon its ability to enhance its 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. The Company budgets amounts to expend 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 is 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 the
accurate anticipation of technological and market trends. The introduction
of new or enhanced products also requires the Company 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. The Company is continually required to recruit new
engineering personnel to meet increased engineering and testing requirements
associated with patent development and enhancement. There can be no
assurance that the Company will successfully develop, introduce or manage the
transition to new products. Nor can there be any
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assurance that the Company will be able to hire and retain sufficient
engineering personnel to meet the requirements inherent in this transition.
The Company has in the past, and may in the future, experience delays in the
introduction of its products, due to factors internal and external to the
Company. 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
the Company's operating results, particularly on a quarterly basis.
PRODUCT CONCENTRATION; RISKS ASSOCIATED WITH NEW AND EVOLVING MARKETS. The
market for Mobile Data Exchange software, including wireless IR connectivity
and advanced data synchronization software, is new and evolving. To date,
the Company has derived a substantial portion of its revenue from the
licensing of its TranXit IR connectivity software. Although additional
products are currently being sold and potential products are currently under
development, the Company believes that the TranXit and IntelliSync for
Notebooks product families may continue to account for a substantial portion
of the Company's revenue for the foreseeable future. The life cycle of
TranXit and IntelliSync for Notebooks is difficult to estimate because of,
among other factors, the emerging nature of the MDE software market and the
possibility of future competition. As a result, the Company's future
operating results, particularly in the near term, are dependent upon the
continued market acceptance of TranXit and IntelliSync for Notebooks. There
can be no assurance that TranXit will continue to meet with market acceptance
or that the Company will be successful in developing, introducing or
marketing new or enhanced products. A decline in the demand for TranXit, as
a result of competition, technological change or other factors, and the
failure to successfully develop, introduce or market new or enhanced products
would have a material adverse effect on the Company's business, financial
condition and results of operations.
The market for MDE software is still emerging, and there can be no assurance
that it will continue to grow or that, even if the market does grow, TranXit
or IntelliSync for Notebooks will be adopted. Moreover, although demand for
TranXit and its successor product IntelliSync for Notebooks has grown in
recent years with the Company's OEM customers, the Company has no accurate
method of determining the extent that end-users utilize TranXit or
IntelliSync for Notebooks. The Company's success in generating significant
revenue in these evolving markets will depend, among other things, on its
ability to educate potential OEMs, retail partners and end users about the
benefits of the Company's IR technology, to maintain and enhance its
relationships with leading OEMs and to develop effective retail distribution
channels. The inability of the Company to continue to penetrate the existing
market for MDE products or the failure of current markets to grow or new
markets to develop or be receptive to the Company's products would have a
material adverse effect on the Company's business, operating results and
financial condition. The emergence of markets for the Company's MDE products
will also be affected by a variety of factors beyond the Company's control.
In particular, the Company's products are designed to conform to certain
standard IR and data communications specifications, many of which have not
been adopted as industry standards. There can be no assurance that these
specifications will be widely adopted or that competing specifications will
not emerge which will be preferred by OEMs. The emergence of markets for the
Company's products is also critically dependent upon continued expansion of
the market for mobile computing devices and the timely introduction and
successful marketing and sale of notebook and desktop personal computers
("PCs"), personal electronic organizers, smart phones and smart pagers. In
addition, there can be no assurance that IR technology itself will be adopted
as the standard or preferred technology for MDE or that manufacturers of
personal computers will elect to bundle IR
15
<PAGE>
technology in their products. There can be no assurance that these or other
factors beyond the Company's control will not adversely affect the
development of markets for the Company's products.
DEPENDENCE ON OEMs. Revenue from OEMs was a substantial portion of the
Company's revenue during fiscal 1997, fiscal 1996 and fiscal 1995. Weakening
demand from any key OEM and the inability of the Company to replace revenue
provided by such OEM could have a material adverse effect on the Company's
business, operating results and financial condition. The Company maintains
individually significant receivable balances from major OEMs. If these OEMs
fail to meet their payment obligations, the Company's operating results could
be materially adversely affected.
RISKS ASSOCIATED WITH DEVELOPMENT OF RETAIL DISTRIBUTION CHANNEL. The Company
intends to distribute its products through distributors, major computer and
software retailing organizations, consumer electronics stores, discount
warehouse stores and other specialty retailers. The Company often sells on a
purchase order basis, and there are often no minimum purchase obligations on
behalf of any principal distributor or retailer. Distribution and retailing
companies in the computer industry have from time to time experienced
significant fluctuations in their businesses, and there have been a number of
business failures among these entities. The insolvency or business failure
of any significant distributor or retailer of the Company's products could
have a material adverse effect on the Company's business, operating results
and financial condition. Further, certain mass-market retailers have
established exclusive relationships under which such retailers will buy
customer software only from one or two intermediaries. In such instances,
the price or other terms on which the Company sells to such retailers may be
materially adversely affected by the terms imposed by such intermediaries, or
the Company may be unable to sell to such retailers on the terms, which the
Company deems acceptable.
Retailers of the Company's products typically have a limited amount of shelf
space and promotional resources, and there is intense competition among
consumer software producers for adequate levels of shelf space and
promotional support from retailers. The Company expects that, as the number
of consumer multimedia and software products and computer platforms
increases, this competition for shelf space will intensify. Due to increased
competition for limited shelf space, retailers and distributors are
increasingly in a better position to negotiate favorable terms of sale,
including price discounts, price protection and product return policies.
Retailers often require software publishers to pay fees or provide other
accommodations in exchange for shelf space. The Company's products
constitute a relatively small percentage of each retailer's sales volume, and
there can be no assurance that retailers will continue to purchase the
Company's products or provide the Company's products with adequate shelf
space and promotional support.
UNCERTAINTIES ASSOCIATED WITH ACQUISITIONS. The Company has been involved in
two acquisitions. These acquisitions have been motivated by many factors
including the desire to obtain new technologies, the desire to expand and
enhance the Company's product lines and the desire to attract key personnel.
In July 1997, the Company acquired substantially all of the assets of Real
World Solutions, Inc. (RWS), a developer of client/server solutions. As a
result of the acquisition four new employees
16
<PAGE>
joined the Company. RWS had incurred a cumulative loss through its
acquisition by Puma on July 17, 1997 of approximately $1.3 million on
cumulative revenue of $0.5 million.
In April 1996, the Company acquired IntelliLink Corp. As a result of the
acquisition the Company acquired two additional product families, as well as
other technologies. In addition, more than 20 new employees joined the
Company. IntelliLink had incurred a cumulative net loss through its
acquisition by Puma on April 30, 1996 of approximately $2.5 million on
cumulative revenue of approximately $4.2 million.
In connection with both acquisitions, the Company's personnel have dedicated
and will continue to dedicate substantial resources in order to achieve the
anticipated technological benefits and operating efficiencies from
integrating the two companies. Difficulties encountered in integrating the
two companies' technologies and operations could adversely affect the
Company's business, operating results and financial condition. Accordingly,
the increased operating expenses associated with the acquired businesses
could have a material adverse effect on the Company's business, operating
results and financial condition.
MANAGEMENT OF GROWTH. The Company is currently experiencing growth and rapid
change which has placed, and will continue to place, a significant strain on
its administrative, operational and financial resources and increased demands
on its systems and controls. This growth has resulted in a continuing
increase in the level of responsibility for both existing and new management
personnel. The Company anticipates that its continued growth will require it
to recruit, hire, train and retain a substantial number of new engineering,
managerial, sales and marketing personnel. The Company's ability to manage
its growth successfully will also require the Company to continue to expand
and improve its operational, management and financial systems and controls on
a timely basis. For example, the Company is currently in the process of
implementing a new management information system which will support the
current and anticipated needs in the business. There can be no assurance
that the Company will be able to successfully implement such a system on a
timely basis. If the Company's management is unable to manage growth
effectively, the Company's business, operating results and financial
condition will be materially adversely affected.
DEPENDENCE ON STRATEGIC BUSINESS RELATIONSHIPS; RISKS ASSOCIATED WITH
THIRD-PARTY SERVICES. The Company believes that its success is largely
dependent on its strategic relationships with key participants in the PC and
mobile computing device industries, including Compaq, IBM, Intel, Microsoft,
NEC, Sharp, Texas Instruments, Toshiba and 3COM. These relationships
generally enable the Company to receive prototypes from hardware
manufacturers and software vendors prior to their market introduction. The
Company is thereby in a stronger position to launch complementary product
offerings shortly after the commercial release of these companies' new
hardware and software products. The loss of any of these strategic
relationships or any other significant partner could materially adversely
affect the Company's product development efforts, its business, operating
results and financial condition and its ability to realize its strategic
objective to be the technological leader in its industry. In addition, the
Company relies significantly on third-party services. In particular, third
party services translate the Company's products into 13 different native
languages. The Company has generally been able to obtain translated,
functional versions of its products in a timely manner. However, any
significant delays by such third parties could delay new or existing
shipments of products and have a material adverse effect on the Company's
business, operating results and financial condition.
17
<PAGE>
COMPETITION. The Company expects the market for MDE software, including data
synchronization and IR connectivity software, to the extent it develops, to
become intensely competitive. The Company currently faces direct competition
with respect to a number of its individual products from several private
companies, including DataViz, Chapura and Traveling Software. In addition to
direct competition, the Company faces indirect competition from existing and
potential customers that provide internally developed solutions. As a
result, the Company must educate prospective customers as to the advantage of
the Company's products versus internally developed solutions. The Company
currently faces limited direct competition from major applications and
operating systems software vendors who may choose to incorporate data
synchronization and IR connectivity functionality into their software,
thereby potentially reducing the need for OEMs to include the Company's
products in their notebook and desktop PCs. For example, Microsoft's
inclusion of certain features permitting data synchronization and IR
connectivity between computers utilizing the Windows 95 operating system may
have the effect of reducing revenue from the Company's software if users of
Windows 95 perceive that their data synchronization and IR connectivity needs
are adequately met by Microsoft. Certain of the companies with which the
Company competes or may in the future compete, including internal software
development groups of its current and potential customers, have substantially
greater financial, marketing, sales and support resources and may have more
"brand-name" recognition than the Company. There can be no assurance that the
Company will be able either to develop software comparable or superior to
software offered by its 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 the Company expects that, in order
to remain competitive, it may have to decrease its unit royalties on certain
products.
DEPENDENCE ON KEY PERSONNEL. The Company's success depends to a significant
degree upon the continuing contributions of its engineering, management,
sales and marketing personnel. The Company has few employment contracts with
its key personnel and does not maintain any key person life insurance
policies. The loss of key management or technical personnel could adversely
affect the Company. The Company believes that its future success will depend
in large part upon its ability to attract and retain highly skilled
engineering, management, sales and marketing personnel. Failure to recruit,
hire, train and retain key personnel could have a material adverse effect on
the Company's business, operating results and financial condition.
PROPRIETARY RIGHTS, RISKS OF INFRINGEMENT AND SOURCE CODE RELEASE. The
Company relies on a combination of patent, copyright and trademark laws,
trade secrets, confidentiality procedures and contractual provisions to
protect its proprietary rights. The Company also believes that factors such
as the technological and creative skills of its personnel, new product
developments, frequent product enhancements and name recognition are
essential to establishing and maintaining a technology leadership position.
The Company seeks to protect its software, documentation and other written
materials under trade secret and copyright laws, which afford only limited
protection. The Company currently has four issued United States patents that
expire in 2012, 2014, 2015 and has six patent applications pending. In
addition, the Company has 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 the Company's patents will not
be invalidated, circumvented or challenged, that the rights granted
thereunder will provide competitive advantages to the Company or that any of
the
18
<PAGE>
Company's 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 the Company, if at all.
Furthermore, there can be no assurance that others will not develop
technologies that are similar or superior to the Company's technology or
design around the patents owned by the Company. Despite the Company's
efforts to protect its proprietary rights, unauthorized parties may attempt
to copy aspects of the Company's products or to obtain and use information
that the Company regards as proprietary. Policing unauthorized use of the
Company's products is difficult, and while the Company is unable to determine
the extent to which piracy of its software products exists, software piracy
can be expected to be a persistent problem. The Company distributes its
software products in the United States, Japan, Taiwan and member countries of
the European Union. The laws and practices of some foreign countries in
which the Company does business, in particular Taiwan, do not ensure that the
Company's means of protecting its proprietary rights in the United States or
abroad will be adequate or that competition will not independently develop
similar technology. There can be no assurance that the Company will not
distribute its software products in the future to countries where the
enforcement of proprietary rights may be equally or more uncertain. The
Company has also entered into source code escrow agreements with a limited
number of its customers 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 the Company, if the Company ceases to do
business or if the Company fails to meet its support obligations. The
Company also provides its source code to foreign language translation service
providers and consultants to the Company in limited circumstances. The
provision of source code may increase the likelihood of misappropriation by
third parties.
The Company is not aware that it is infringing any proprietary rights of
third parties. There can be no assurance, however, that third parties will
not claim infringement by the Company of their intellectual property rights.
In particular, because patent applications are kept confidential by the
Patent and Trademark Office, the Company has no means by which to monitor
patent applications filed by its competitors, which could result in future
infringement claims against the Company. The Company expects that software
product developers will increasingly be subject to infringement claims as the
number of products and competitors in the Company's 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-consuming to defend, result in
costly litigation, divert management's attention and resources or cause
product shipment delays. In addition, such claims could require the Company
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 the Company would be able to develop alternative technologies
or obtain such licenses or, if a license were obtainable, that the terms
would be commercially acceptable to the Company.
In the event of a successful claim of product infringement against the
Company and failure or inability of the Company to license the infringed or
similar technology, the Company's business, operating results and financial
condition would be materially adversely affected.
DEPENDENCE ON LICENSED TECHNOLOGY. The Company licenses technology on a
non-exclusive basis from several companies for use with its products and
anticipates that it will
19
<PAGE>
continue to do so in the future. The inability of the Company to continue to
license this technology or to license other necessary technology for use with
its products or substantial increases in royalty payments under third-party
licenses could have a material adverse effect on its business, operating
results and financial condition. In addition, the effective implementation
of the Company's products depends upon the successful operation of these
licenses in conjunction with the Company's products, and therefore any
undetected errors in products resulting from such licenses may prevent the
implementation or impair the functionality of the Company's products, delay
new product introductions and injure the Company's reputation. Such problems
could have a material adverse effect on the Company's business, operating
results and financial condition.
PRODUCT ERRORS; PRODUCT LIABILITY. Software products as complex as those
offered by the Company typically contain undetected errors or failures when
first introduced or as new versions are released. Testing of the Company's
products is particularly challenging because it is difficult to simulate the
wide variety of computing environments in which the Company's customers may
deploy these products. Accordingly, there can be no assurance that, despite
testing by the Company and by current and potential customers, errors will
not be found after commencement of commercial shipments, resulting in loss of
or delay in market acceptance, any of which could have a material adverse
effect upon the Company's business, operating results and financial
condition. Further, the Company's license agreements with its customers
typically contain provisions designed to limit the Company's exposure to
potential product liability claims. Although the Company has not experienced
any product liability claims, the sale and support of products by the Company
entails the risk of such claims. The Company does not currently maintain
product liability insurance. A successful product liability claim brought
against the Company could have a material adverse effect upon the Company's
business, operating results and financial condition.
RISKS ASSOCIATED WITH INTERNATIONAL OPERATIONS. International revenue
accounted for a significant portion of the Company's revenue in the first
quarter of fiscal 1998 and in fiscal 1997. The Company expects that
international revenue will continue to account for a significant portion of
its future revenue. Revenue from the Company's international operations is
subject to certain inherent risks, including unexpected changes in regulatory
requirements and tariffs, difficulties in staffing and managing foreign
operations, longer payment cycles, problems in collecting accounts receivable
and potentially adverse tax consequences. In addition, sales in Europe and
certain other parts of the world typically are adversely affected in the
summer months of each year when many customers and users reduce their
business activities. These seasonal factors may have a material adverse
effect on the Company's business, operating results and financial condition.
Although the Company's revenue is currently denominated in U.S. dollars,
fluctuations in currency exchange rates could cause the Company's products to
become relatively more expensive to customers in a particular country,
leading to a reduction in sales or profitability in that country.
Furthermore, future international activity may result in foreign currency
denominated sales, particularly if international revenue from distributors
increases. Consequently, gains and losses on the conversion to U.S. dollars
of accounts receivable and accounts payable arising from international
operations may contribute to fluctuations in the Company's operating results.
Royalty income by the Company from customers in certain countries, such as
Japan and Taiwan, is subject to withholding income taxes. The amount and mix
of the Company's income derived from such customers will impact the Company's
provision for income taxes. Differences in the amount and mix of the
Company's income actually derived from customers subject to foreign
withholding taxes as compared to the amounts forecasted by the Company may
adversely impact the Company's income tax rate.
20
<PAGE>
POTENTIAL VOLATILITY OF STOCK PRICE. The trading price of the Company's
Common Stock is likely to be highly volatile and may be significantly
affected by factors such as actual or anticipated fluctuations in the
Company's operating results; announcements of technological innovations; new
products or new contracts by the Company or its competitors; developments
with respect to patents; copyrights or proprietary rights; conditions and
trends in the software and other technology industries; adoption of new
accounting standards affecting the software industry; changes in financial
estimates by securities analysts; general market conditions and other
factors. In addition, the stock market has from time to time experienced
significant price and volume fluctuations that have particularly affected the
market prices for the common stocks of technology companies. These broad
market fluctuations may materially adversely affect the market price of the
Company's Common Stock.
DEPENDENCE ON YEAR 2000 COMPLIANCE OF THIRD-PARTY PRODUCTS. The Company's
synchronization software products operate as a conduit for data from handheld
devices to personal information manager software ("PIMs"). The Company has
no control as to whether the hardware devices and PIMs that the Company's
software supports will accurately process date and time data from, into and
between the 20th and 21st centuries. The Company and its business may be
adversely affected should the third-party products with which the Company's
software functions fail to accommodate the change in date from December 31,
1999 to January 1, 2000.
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS
(a) Exhibits
11.1 Computation of net income per share is on page 22.
27.1 Financial Data Schedule
ITEMS 1, 2, 3, 4 AND 5 ARE NOT APPLICABLE AND HAVE BEEN OMITTED
21
<PAGE>
PUMA TECHNOLOGY, INC.
COMPUTATION OF NET INCOME PER SHARE
(IN THOUSANDS, PER SHARE DATA)
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------
EXHIBIT 11.1 THREE MONTHS ENDED OCTOBER 31,
1997 1997
- -----------------------------------------------------------------------------------
<S> <C> <C>
NET INCOME $ 228 $ 227
------- -------
------- -------
PRIMARY:
Weighted average common shares outstanding 12,065 2,964
Common stock equivalents:
Preferred stock using the as if converted method - 4,089
Stock options using the treasury stock method 432 507
Shares related to Staff Accounting Bulletin No. 83 2,552
------- -------
Shares used in computing primary net income per share 12,497 10,112
------- -------
PRIMARY NET INCOME PER SHARE $ 0.02 $ 0.02
------- -------
------- -------
- -----------------------------------------------------------------------------------
</TABLE>
22
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Puma Technology, Inc.
Date: December 12, 1997 By: /s/ M. Bruce Nakao
-----------------------
M. Bruce Nakao
Sr. Vice President and
Chief Financial Officer
23
<PAGE>
PUMA TECHNOLOGY, INC.
SUMMARY OF TRADEMARKS
The following trademarks of Puma Technology, Inc., which may be registered in
certain jurisdictions, are referenced in this Form 10-Q:
IntelliLink
IntelliSync
Mobile Data Exchange
Puma Technology
TranXit
All other brand or product names are trademarks or registered trademarks of
their respective holders.
24
<TABLE> <S> <C>
<PAGE>
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<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUL-31-1998
<PERIOD-START> AUG-01-1997
<PERIOD-END> OCT-31-1997
<CASH> 5,403
<SECURITIES> 15,431
<RECEIVABLES> 3,335
<ALLOWANCES> 166
<INVENTORY> 257
<CURRENT-ASSETS> 24,866
<PP&E> 4,177
<DEPRECIATION> 880
<TOTAL-ASSETS> 29,253
<CURRENT-LIABILITIES> 2,362
<BONDS> 0
0
0
<COMMON> 12
<OTHER-SE> 26,825
<TOTAL-LIABILITY-AND-EQUITY> 29,253
<SALES> 0
<TOTAL-REVENUES> 5,237
<CGS> 0
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<NET-INCOME> 228
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</TABLE>