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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 JANUARY 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.)
2940 NORTH FIRST STREET, SAN JOSE, CALIFORNIA 95134
408-321-7650 (Zip Code)
(Address and telephone number of principal executive office)
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 January 31, 1997 was 11,981,891.
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THIS REPORT CONSISTS OF 25 PAGES.
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PUMA TECHNOLOGY, INC.
FORM 10-Q
FOR THE QUARTERLY PERIOD ENDED JANUARY 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 9
and Results of Operations
PART II. OTHER INFORMATION
Item 6. Exhibits 22
Signature 24
Summary of Trademarks 25
2
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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
January 31, 1997 and July 31, 1996
- - Condensed Consolidated Statement of Operations 5
Three and Six Months Ended January 31, 1997 and 1996
- - Condensed Consolidated Statement of Cash Flows 6
Six Months Ended January 31, 1997 and 1996
- - Notes to Condensed Consolidated Financial Statements 7
3
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PUMA TECHNOLOGY, INC.
CONDENSED CONSOLIDATED BALANCE SHEET
(in thousands)
(Unaudited)
<TABLE>
<CAPTION>
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JANUARY 31, JULY 31,
1997 1996
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<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 8,967 $ 982
Short-term investments 15,749 -
Accounts receivable, net 2,209 1,837
Inventories 216 165
Other current assets 355 114
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Total current assets 27,496 3,098
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Property and equipment, net 517 449
Other assets 514 457
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TOTAL ASSETS $ 28,527 $ 4,004
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LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 726 $ 682
Accrued liabilities 649 645
Deferred revenue 879 1,042
Current portion of capital lease obligations 14 21
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Total current liabilities 2,268 2,390
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Capital lease obligations, net of current portion 16 28
Convertible debenture - 933
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Total liabilities 2,284 3,351
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Stockholders' equity:
Stock subscription - 1,582
Convertible preferred stock, $0.001 par value;
none and 2,620 shares issued - -
and outstanding at January 31, 1997 and
July 31, 1996, respectively - 3
Common stock, $0.001 par value; 11,982 and 4,297
shares issued and outstanding at January 31,
1997 and July 31, 1996, respectively 12 4
Additional paid-in capital 31,644 6,686
Receivable from stockholders (499) (2,013)
Deferred stock compensation (94) (108)
Accumulated deficit (4,820) (5,501)
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Total stockholders' equity 26,243 653
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TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY $ 28,527 $ 4,004
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</TABLE>
SEE ACCOMPANYING NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.
4
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PUMA TECHNOLOGY, INC.
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(in thousands, except per share data)
(Unaudited)
<TABLE>
<CAPTION>
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THREE MONTHS ENDED SIX MONTHS ENDED
JANUARY 31, JANUARY 31,
1997 1996 1997 1996
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<S> <C> <C> <C> <C>
REVENUE $ 3,624 $ 1,752 $ 6,826 $ 2,904
Cost of revenue 295 115 652 220
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GROSS PROFIT 3,329 1,637 6,174 2,684
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OPERATING EXPENSES:
Research and development 1,429 676 2,630 1,362
Sales and marketing 880 494 1,758 759
General and administrative 505 232 932 392
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Total operating expenses 2,814 1,402 5,320 2,513
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OPERATING INCOME 515 235 854 171
Interest and other income, net 183 31 194 56
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INCOME BEFORE INCOME TAXES 698 266 1,048 227
Provision for income taxes (244) (137) (367) (225)
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NET INCOME $ 454 $ 129 $ 681 $ 2
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NET INCOME PER SHARE $ 0.04 $ 0.01 $ 0.06 $ -
SHARES USED IN PER SHARE CALCULATION 11,843 9,861 10,975 9,769
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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>
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SIX MONTHS ENDED
JANUARY 31,
1997 1996
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<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 681 $ 2
Adjustments to reconcile net income to net cash
used in operating activities:
Depreciation and amortization 283 67
Customer deposits and other 20 (26)
Changes in operating assets and liabilities (779) (880)
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Net cash provided by (used in) operating activities 205 (837)
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CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment (219) (165)
Purchases of short-term investments (15,749) -
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Net cash (used in) investing activities (15,968) (165)
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CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payments under capital lease obligations (19) (8)
Proceeds from conversion of warrants 405 -
Net proceeds upon exercise of stock options 548 52
Note repayments by stockholders 1,514 -
Net proceeds from newly issued common stock 21,300 -
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Net cash provided by financing activities 23,748 44
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Net increase (decrease) in cash and cash equivalents 7,985 (958)
Cash and cash equivalents at the beginning of the period 982 2,000
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Cash and cash equivalents at the end of the period $ 8,967 $ 1,042
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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
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NOTE 1. BASIS OF PRESENTATION
The accompanying condensed consolidated financial statements for the three
and six months ended January 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
registration statement on Form S-1 as amended on December 4, 1996. The
results of operations for the interim period ended January 31, 1997 are not
necessarily indicative of results to be expected for the full year.
NOTE 2. ACQUISITION
On April 30, 1996, the Company completed its acquisition of IntelliLink Corp.
("IntelliLink"), a provider of advanced data synchronization software. The
consolidated financial statements of the Company include the results of
IntelliLink from the date of acquisition. The total purchase price of $3.5
million (including $1.2 million for liabilities assumed) was quantified based
partially on an independent appraisal of the Company's Common Stock by
Columbia Financial Advisors, Inc. The purchase price was assigned, based on
another independent appraisal, to the fair value of the assets acquired
including $327,000 to tangible assets acquired, $2,680,000 to in-process
research and development, $120,000 to identified intangible assets and the
remaining $356,000 to goodwill. The in-process research and development was
expensed in the quarter ended July 31, 1996. The goodwill and other
intangible assets were capitalized and are being amortized over periods
ranging from two to three years.
NOTE 3. REVENUE RECOGNITION
For all periods presented, the Company has recognized revenue in accordance
with the provisions of American Institute of Certified Public Accountants
Statement of Position No. 91-1 entitled "Software Revenue Recognition."
License revenue is recognized upon shipment of software if no significant
obligation remains and collection of the resulting receivable is deemed
probable. Revenue from OEMs under minimum guaranteed royalty arrangements,
which are not subject to significant future obligations, is recognized when
such royalties are earned and become payable. Royalty revenue that is
subject to significant future obligations is recognized when such obligations
are fulfilled. Royalty revenue that exceeds minimum guarantees is recognized
in the period earned. Payments from customers received before revenue
recognition criteria have been met are recorded as deferred revenue. The
Company cannot predict when such revenue will be recognized or the extent to
which new agreements, which may provide for additional contract advances or
minimum royalty payments, will be executed. The Company also provides a
limited amount of telephone technical support to its customers. These
activities are generally considered insignificant post-contract customer
support obligations and related costs are accrued upon recognition of the
license revenue.
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NOTE 4. 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 5. COMMON STOCK
The Company completed its initial public offering in December 1996 in an
underwriting led by Deutsche Morgan Grenfell Technology and Alex. Brown &
Sons. The offering consisted of 2,500,000 of newly issued shares sold by the
Company and 1,985,000 shares sold by existing shareholders, and resulted in
net proceeds to the Company of approximately $21.3 million.
In October 1996, the board of directors adopted the 1996 Employee Stock
Purchase Plan (the "Purchase Plan") which authorizes the issuance of 250,000
shares of common stock. Shares may be purchased under the Purchase Plan at
85% of the lesser of the fair market value of the common stock on the grant
or purchase date. In addition, the board of directors also approved the
increase of 1,000,000 in the number of shares authorized for issuance under
the 1993 Stock Option Plan.
In November 1996, the Company reincorporated in the state of Delaware. The
par value of the Company's common stock is $0.001.
8
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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 COMPANY'S REGISTRATION STATEMENT ON FORM S-1 AS AMENDED ON
DECEMBER 4, 1996. 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") 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-Registered Trademark- 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 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 the
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 residing on the desktop
and the handheld device synchronized. IntelliSync software is currently
distributed directly to the end user and through the retail distribution
channel. As this product evolves, other means of distribution such as direct
bundling arrangements with the handheld device manufacturer are contemplated.
9
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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>
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THREE MONTHS ENDED SIX MONTHS ENDED
JANUARY 31, JANUARY 31,
1997 1996 1997 1996
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<S> <C> <C> <C> <C>
REVENUE 100% 100% 100% 100%
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Cost of revenue 8.1% 6.6% 9.6% 7.6%
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GROSS PROFIT 91.9% 93.4% 90.4% 92.4%
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OPERATING EXPENSES:
Research and development 39.4% 38.6% 38.5% 46.9%
Sales and marketing 24.3% 28.2% 25.7% 26.1%
General and administrative 13.9% 13.2% 13.7% 13.5%
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Total operating expenses 77.6% 80.0% 77.9% 86.5%
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OPERATING INCOME 14.3% 13.4% 12.5% 5.9%
Interest and other income, net 5.0% 1.8% 2.9% 1.9%
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INCOME BEFORE INCOME TAXES 19.3% 15.2% 15.4% 7.8%
Provision for income taxes (6.8)% (7.8)% (5.4)% (7.7)%
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NET INCOME 12.5% 7.4% 10.0% 0.1%
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</TABLE>
10
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REVENUE. The Company's revenue is derived primarily from license revenue and
service revenue. License revenue is derived from the sale of software
products and royalty agreements with OEMs. Service revenue is derived from
customer funded engineering services. For all periods presented, service
revenue was less than 10% of revenue. The Company believes this percentage
may fluctuate in the future. The Company's revenue for the three months
ended January 31, 1997 increased by 107% to $3,624,000 as compared to
$1,752,000 for the same period in fiscal 1996. For the six months ended
January 31, 1997, revenue increased to $6,826,000 as compared to $2,904,000
for the six month period ended January 31, 1996. The overall increases in
revenue were partially due to increased royalties resulting from increased
unit shipments of the Company's TranXit products. In addition, revenue
increased due to shipments of IntelliSync products, in particular,
IntelliSync for Pilot. Revenue during the six months ended 1996 did not
include any revenues from IntelliSync products which were introduced in the
fourth fiscal quarter of 1996 or IntelliLink products as the IntelliLink
acquisition was not completed until April 30, 1996.
OEM revenue continues to represent a significant portion of the Company's
revenue. OEM revenue represented 78% and 90% of the Company's revenue in
three months ended January 31, 1997 and 1996, respectively. OEM revenue
represented 72% and 93% of the Company's revenue in the six months ended
January 31, 1997 and 1996, respectively. Two OEMs accounted for
approximately 39% of revenue in the three months ended January 31, 1997 and
each individually represented more than 10% of the Company's revenue in the
same period. One of these same OEMs (Toshiba) represented 22% of revenue for
the six months ended January 31, 1997. Toshiba represented 14% and 13% of
revenue in the three and six months ended January 31, 1996, respectively.
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 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 52% and
74% of the Company's revenue in the second fiscal quarter of 1997 and 1996,
respectively. International revenue represented approximately 55% and 70% in
the six months ended January 31, 1997 and 1996, 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 TranXit, IntelliSync and several new products at various times in fiscal
1997. 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 costs incurred
under customer funded software development agreements and also includes hardware
components for certain retail products. For the three months ended January
31, 1997 and 1996, cost of revenue as a percentage of revenue was approximately
8% and 7%, respectively. For the six months ended January 31, 1997, cost of
revenue represented 10% of revenue compared to 8% for the same period of fiscal
1996. The Company's cost of revenue is affected by the mix between its
distribution channels and by mix of its revenue sources including royalties,
packaged
11
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product and customer funded engineering contracts. A majority of IntelliSync
revenue is derived by direct sales to distributors and retailers as well as
end-users. As sales to distributors and retailers increase, the Company
anticipates that gross margins will decrease, as the average selling price
through this channel 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 are generally insignificant.
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 to $1,429,000 in the second fiscal quarter of
1997 from $676,000 in the comparable quarter of 1996. For the six months
ended January 31, 1997 research and development expenses totaled $2,630,000
representing a 93% increase compared to $1,362,000 for the same six month
period in fiscal 1996. The absolute year over year increase in research and
development expenses was primarily due to increased personnel related costs
and spending to develop the Company's IntelliSync product offerings and, to a
lesser extent, increased personnel related costs and spending to develop
enhanced versions of TranXit and to introduce other new products in the
market. A significant portion of the Company's research and development
expenses are comprised of fees paid to outside contractors which are engaged
by the Company on a project-by-project basis. The Company anticipates that
research and development expenses will increase in absolute dollars as the
Company continues to invest in product development. However, such 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 to
$880,000 in the second fiscal quarter of 1997 from $494,000 for the
comparable quarter in the prior year. For the six months ended January 31,
1997, sales and marketing expenses increased to $1,758,000 from $759,000 for
the same period in the prior fiscal year. Sales and marketing expenses
increased in absolute dollars primarily due to the expansion of the Company's
sales force, related travel and entertainment expenses and increased
marketing activities in an effort to expand its customer base and channel
presence. 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. Accordingly, the Company anticipates that
sales and marketing expenses will continue to increase in absolute dollars.
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 to $505,000 in the second fiscal quarter of
1997 from $232,000 for the same period in the prior year and to $932,000 for
the six months ended January 31, 1997 from $392,000 for the comparable fiscal
1996 period. The year over year increase in absolute general and
administrative spending was primarily due to increased headcount to support
the need for
12
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a growing infrastructure, and to a lesser extent, amortization of intangible
assets related to the acquisition of IntelliLink. 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 long-term debt and capitalized leases and
miscellaneous fees and charges. Interest and other income, net, increased to
$183,000 in the second fiscal quarter of 1997 from $31,000 for the same
period in the prior year and increased to $194,000 for the six months ended
January 31, 1997 from $56,000 for the comparable fiscal 1996 period. The
increase in interest and other income in the three and six month periods
ended January 31, 1997 was primarily due to increased interest income on a
larger cash, cash equivalents and short-term investment base resulting from
the Company's recent initial public offering.
PROVISION FOR INCOME TAXES. Provision for income taxes increased to $244,000
in the second fiscal quarter of 1997 from $137,000 for the same period in
the prior year and increased to $367,000 for the six months ended January 31,
1997 from $225,000 for the comparable fiscal 1996 period. 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 currently estimates its effective
income tax rate for fiscal 1997 to be approximately 35%. The Company's tax
rate for fiscal 1997 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 1997 income tax rate is based on current
projections of the amount and mix of its pre-tax income. Any adverse
movement in such projections could cause the income tax rate to increase.
13
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FACTORS THAT MAY AFFECT FUTURE OPERATING RESULTS
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, 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 planned expansion 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, and to the extent that significant sales
occur earlier than expected, operating results for subsequent quarters may be
adversely affected.
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. In addition, certain of the Company's
retail products contain hardware as well as software components. The
Company's expense levels, therefore, may be higher than those of other
software companies. The Company may also reduce prices or increase spending
in response to competition or to pursue new market opportunities.
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The Company has not experienced seasonality to date; however, the operating
results of many software companies reflect seasonal fluctuations, and there
can be no assurance that the Company will not experience such fluctuations in
the future. For example, sales in Europe and certain other countries
typically are adversely affected in the summer months when business
activities are reduced.
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 four 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.
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 product family may
continue to account for a substantial portion of the Company's revenue for
the foreseeable future. The life cycle of TranXit 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. 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
will be adopted. Moreover, although demand for TranXit 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. 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
15
<PAGE>
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 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 1995, fiscal 1996 and the first and second
fiscal quarters in 1997. 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.
MANAGEMENT OF GROWTH. The Company is currently experiencing rapid growth and
expansion, 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 evaluating a new management information system.
There can be no assurance that the Company will be able to purchase or
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.
UNCERTAINTIES ASSOCIATED WITH THE INTEGRATION OF INTELLILINK. In April 1996,
the Company acquired IntelliLink. 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 the acquisition, 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. In addition,
there can be no assurance that the Company will be able to develop products
utilizing IntelliLink technology, that anticipated research and development
costs will be sufficient to develop any such products or that any such
products will achieve market acceptance and generate significant revenue.
Accordingly, the increased operating expenses associated with IntelliLink's
16
<PAGE>
business could have a material adverse effect on the Company's business,
operating results and financial condition.
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 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 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. There can be no assurance that the Company will
successfully develop, introduce or manage the transition to new products.
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.
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 U.S. Robotics. 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.
RISKS ASSOCIATED WITH DEVELOPMENT OF RETAIL DISTRIBUTION CHANNEL. The
Company intends to distribute its products increasingly 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
17
<PAGE>
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.
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 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
18
<PAGE>
attract and retain highly-skilled engineering, management, sales and
marketing personnel. In particular, the Company is currently attempting to
recruit new engineering personnel; however, there can be no assurance that
the Company will be successful at hiring or retaining these 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 one issued United States patent that
expires in 2012 and has seven 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 patent will not be invalidated,
circumvented or challenged, that the rights granted thereunder will provide
competitive advantages to the Company or that any of the 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 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.
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. Any such claims, with or without
merit, could be time-consuming to defend, result in costly litigation, divert
management's
19
<PAGE>
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 to 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 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 fiscal 1995,
fiscal 1996 and the first half of 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
20
<PAGE>
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.
POTENTIAL VOLATILITY OF STOCK PRICE. The trading price of the 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.
LIQUIDITY AND CAPITAL RESOURCES
Up until the Company's initial public offering in December 1996, the Company
has financed its operations and met its capital expenditure requirements
primarily from proceeds from the private sale of preferred stock and common
stock. Through October 31, 1996, the Company had raised approximately $6.8
million from the sale of Preferred and Common Stock. In December 1996, the
Company generated net proceeds of approximately $21,300,000 from its initial
public offering of common stock.
The Company's operating activities provided cash of $205,000 during the six
month period ended January 31, 1997 and used cash of $837,000 during the six
month period ended January 31, 1996. The increased cash provided in the six
month period in fiscal 1997 was attributable to increased net profit
partially offset by increases in accounts receivable, inventory, other assets
and decreases in deferred revenue.
Cash used in investing activities was $15,968,000 and $165,000 in the six
month periods ended January 31, 1997 and 1996, respectively. Cash used in
investing activities in first six months of fiscal 1997 of $15,968,000 was
primarily related to purchases of short-term investments, and to a lesser
extent, purchases of property and equipment. Financing activities provided
$23,748,000 in the six month period ended January 31, 1997 due primarily to
the issuance of common stock and, to a much lesser extent, issuance of
preferred stock and proceeds from conversion of warrants and exercises of
stock options.
At January 31, 1997 the Company's principal source of liquidity represented
by cash, cash equivalents and short-term investments totaled $24,716,000.
The Company currently has no significant capital commitments other than
commitments under capital leases. 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.
21
<PAGE>
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS
(a) Exhibits
11.1 Computation of net income per share is on page 23.
ITEMS 1, 2, 3, 4 AND 5 ARE NOT APPLICABLE AND HAVE BEEN OMITTED.
22
<PAGE>
EXHIBIT 11.1
PUMA TECHNOLOGY, INC.
COMPUTATION OF NET INCOME PER SHARE (1)
(in thousands, except per share data)
(Unaudited)
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------
THREE MONTHS SIX MONTHS
ENDED ENDED
JANUARY 31, JANUARY 31,
1997 1996 1997 1996
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
NET INCOME $ 454 $ 129 $ 681 $ 2
------ ------ ------ ------
------ ------ ------ ------
PRIMARY:
Weighted average common shares outstanding 5,103 2,863 4,635 2,822
Common stock equivalents:
Preferred stock using the as if converted method 4,089 4,089 4,089 4,089
Stock options using the treasury stock method 526 357 263 306
Shares related to Staff Accounting Bulletin No. 83:
Shares of common stock 1,408 1,408 1,408 1,408
Stock options 181 463 322 463
Preferred stock using the as if converted method 174 286 87 286
Convertible debenture using the as if converted method 341 341 133 341
Warrants 21 54 38 54
------ ------ ------ ------
Shares used in computing primary net income per share 11,843 9,861 10,975 9,769
------ ------ ------ ------
PRIMARY NET INCOME PER SHARE $ 0.04 $ 0.01 $ 0.06 $ -
------ ------ ------ ------
------ ------ ------ ------
- -----------------------------------------------------------------------------------------------
</TABLE>
(1) For an explanation of the number of shares used to compute net income per
share, see notes to condensed consolidated financial statements.
23
<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: March 10, 1997 By: /S/ M. BRUCE NAKAO
-------------------------------
M. Bruce Nakao
Sr. Vice President and
Chief Financial Officer
24
<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
Mobil Data Exchange
Puma Technology
TranXit
All other brand or product names are trademarks or registered trademarks of
their respective holders.
25
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JUL-31-1997
<PERIOD-START> AUG-01-1996
<PERIOD-END> JAN-01-1997
<CASH> 8,967
<SECURITIES> 15,749
<RECEIVABLES> (2,332)
<ALLOWANCES> 123
<INVENTORY> 216
<CURRENT-ASSETS> 355
<PP&E> 986
<DEPRECIATION> (469)
<TOTAL-ASSETS> 28,527
<CURRENT-LIABILITIES> 2,268
<BONDS> 0
0
0
<COMMON> 12
<OTHER-SE> 26,231
<TOTAL-LIABILITY-AND-EQUITY> 28,527
<SALES> 6,826
<TOTAL-REVENUES> 6,826
<CGS> 652
<TOTAL-COSTS> 652
<OTHER-EXPENSES> 5,320
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 19
<INCOME-PRETAX> 1,048
<INCOME-TAX> 367
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 681
<EPS-PRIMARY> .06
<EPS-DILUTED> .06
</TABLE>