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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 APRIL 30, 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 April 30, 1997 was 11,997,428.
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THIS REPORT CONSISTS OF 26 PAGES.
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PUMA TECHNOLOGY, INC.
FORM 10-Q
FOR THE QUARTERLY PERIOD ENDED APRIL 30, 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 23
Signature 25
Summary of Trademarks 26
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
April 30, 1997 and July 31, 1996
- - Condensed Consolidated Statement of Operations 5
Three and Nine Months Ended April 30, 1997 and 1996
- - Condensed Consolidated Statement of Cash Flows 6
Nine Months Ended April 30, 1997 and 1996
- - Notes to Condensed Consolidated Financial Statements 7
3
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PUMA TECHNOLOGY, INC.
CONDENSED CONSOLIDATED BALANCE SHEET
(in thousands, except for par value)
(Unaudited)
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APRIL 30, JULY 31,
1997 1996
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ASSETS
Current assets:
Cash and cash equivalents $ 5,537 $ 982
Short-term investments 18,514 -
Accounts receivable, net 3,066 1,837
Inventories 179 165
Other current assets 382 114
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Total current assets 27,678 3,098
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Property and equipment, net 1,069 449
Other assets 453 457
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TOTAL ASSETS $ 29,200 $ 4,004
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LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 764 $ 682
Accrued liabilities 952 645
Deferred revenue 727 1,042
Current portion of capital lease obligations 11 21
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Total current liabilities 2,454 2,390
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Capital lease obligations, net of current portion 13 28
Convertible debenture - 933
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Total liabilities 2,467 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 April 30, 1997
and July 31, 1996, respectively - 3
Common stock, $0.001 par value; 11,997 and 4,297 shares
issued and outstanding at April 30, 1997 and July 31,
1996, respectively 12 4
Additional paid-in capital 31,499 6,686
Receivable from stockholders (499) (2,013)
Deferred stock compensation (87) (108)
Accumulated deficit (4,192) (5,501)
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Total stockholders' equity 26,733 653
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TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 29,200 $ 4,004
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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 NINE MONTHS ENDED
APRIL 30, APRIL 30,
1997 1996 1997 1996
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<S> <C> <C> <C> <C>
REVENUE $ 4,325 $ 2,101 $ 11,151 $ 5,005
Cost of revenue 534 142 1,186 362
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GROSS PROFIT 3,791 1,959 9,965 4,643
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OPERATING EXPENSES:
Research and development 1,610 750 4,240 2,112
Sales and marketing 1,046 652 2,804 1,411
General and administrative 460 236 1,392 628
In-process research and development - 2,680 - 2,680
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Total operating expenses 3,116 4,318 8,436 6,831
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OPERATING INCOME (LOSS) 675 (2,359) 1,529 (2,188)
Interest and other income, net 292 18 486 74
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INCOME (LOSS) BEFORE INCOME TAXES 967 (2,341) 2,015 (2,114)
Provision for income taxes (339) (151) (706) (376)
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NET INCOME (LOSS) $ 628 $ (2,492) $ 1,309 $ (2,490)
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NET INCOME (LOSS) PER SHARE $ 0.05 $ (0.26) $ 0.11 $ (0.26)
SHARES USED IN PER SHARE CALCULATION 12,752 9,488 11,579 9,463
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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)
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NINE MONTHS ENDED
APRIL 30,
1997 1996
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CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 1,309 $ (2,490)
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Depreciation and amortization 427 111
In-process research and development - 2,680
Customer deposits and other 22 (42)
Changes in operating assets and liabilities (1,437) (303)
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Net cash provided by (used in) operating activities 321 (44)
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CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment (849) (283)
Maturities (purchases) of short-term investments (18,514) 500
Cash used in acquisition of IntelliLink Corp., net - (51)
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Net cash provided by (used in) investing activities (19,363) 166
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CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payments under capital lease obligations (25) (16)
Proceeds from conversion of warrants 405 -
Principal repayments on notes payable - (119)
Net proceeds upon exercise of stock options 538 52
Note (advances) by stockholders, net (68) (242)
Net proceeds of convertible preferred stock 1,582 -
Net proceeds from newly issued common stock 21,165 71
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Net cash provided by (used in) financing activities 23,597 (254)
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Net increase (decrease) in cash and cash equivalents 4,555 (132)
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 $ 5,537 $ 1,868
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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 nine months ended April 30, 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 April 30, 1997 are not
necessarily indicative of results to be expected for the full year.
NOTE 2. 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 received for maintenance contract services
are recognized pro-ratably over the term of the subscription service.
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.
NOTE 3. 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.
7
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NOTE 4. RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
In February 1997, the FASB issued Statement No. 128 (SFAS No. 128), "Earnings
per Share" which will be effective for the Company's fiscal year ending July
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.
SFAS No. 128 is not expected to have a material impact on the Company's
earnings per share for the three and nine months periods ended April 30,
1997 and 1996.
NOTE 5. PURCHASE OF REAL WORLD SOLUTIONS, INC.
On June 2 1997, the Company signed a letter of intent to acquire Real World
Solutions, Inc. Headquartered in Campbell, California, Real World Solutions
provides client/server software solutions which enable wireless and Internet
access to corporate information from handheld and notebook computers. Under
the terms of the letter of intent, Puma would acquire all assets and assume
all liabilities of Real World Solutions. Consummation of the acquisition is
contingent upon satisfaction of certain terms and conditions stipulated in
the letter of intent. Total cash payments and consideration associated with
the acquisition are estimated to be approximately $700,000. The acquisition,
if completed, will be accounted for under the purchase method and the
Company anticipates a one-time charge to be incurred in its fourth fiscal
quarter for purchased research and development associated with Real World
Solution's products which have not yet reached technological feasibility.
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
"ANTICIPATE(S)," "BELIEVE(S)", "EXPECT(S)", "INTEND(S)", "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-TM- (MDE) software, including wireless infrared
connectivity and advanced data synchronization software. The Company
currently has two families of products - its TranXit-Registered Trademark-
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. As this product evolves, the Company may use other means of
distribution such as direct bundling arrangements with the handheld device
manufacturers.
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 NINE MONTHS ENDED
APRIL 30, APRIL 30,
1997 1996 1997 1996
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<S> <C> <C> <C> <C>
REVENUE 100.0 % 100.0 % 100.0 % 100.0 %
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Cost of Revenue 12.3 6.8 10.6 7.2
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GROSS PROFIT 87.7 93.2 89.4 92.8
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OPERATING EXPENSES:
Research and development 37.2 35.7 38.0 42.2
Sales and marketing 24.2 31.0 25.1 28.2
General and administrative 10.6 11.2 12.5 12.5
In-process research and development - 127.6 - 53.5
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Total operating expenses 72.0 205.5 75.7 136.5
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OPERATING INCOME (LOSS) 15.6 (112.3) 13.7 (43.7)
Interest and other income, net 6.8 0.9 4.4 1.5
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INCOME (LOSS) BEFORE INCOME TAXES 22.4 (111.4) 18.1 (42.2)
Provision for income taxes (7.8) (7.2) (6.3) (7.5)
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NET INCOME (LOSS) 14.5 % (118.6)% 11.7 % (49.8)%
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</TABLE>
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 and amortization of maintenance contract
programs. Service revenue represented 20% and 10% of revenue for the three
and nine months ended April 30, 1997, respectively. For all previous 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 April 30, 1997 increased to $4,325,000 from $2,101,000 for
the same period in fiscal 1996. For the nine months ended April 30, 1997,
revenue increased to $11,151,000 as compared to $5,005,000 for the nine
months ended April 30, 1996. The overall increases in revenue were primarily
due to increased engineering fee revenue for projects done on behalf of OEM
customers, and to a lesser extent, royalties resulting from increased unit
shipments of the Company's TranXit products. In addition, revenue increased
due to increased shipments of IntelliSync for Pilot, and to a lesser extent,
increased shipments of both IntelliSync for HP200LX and IntelliSync for
Windows CE. Revenue during the nine 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.
10
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OEM revenue continues to represent a significant portion of the Company's
revenue. OEM revenue represented 74% and 97% of the Company's revenue in the
three months ended April 30, 1997 and 1996, respectively. OEM revenue
represented 73% and 95% of the Company's revenue in the nine months ended
April 30, 1997 and 1996, respectively. Toshiba accounted for approximately
22% of revenue in the three and nine months ended April 30, 1997. Toshiba
represented 27% and 18% of revenue in the three and nine months ended April
30, 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. In addition, the Company
believes that the percentage of revenue derived from OEMs may fluctuate in
future periods depending in part upon the distribution 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 60% and
73% of the Company's revenue in the third fiscal quarter of 1997 and 1996,
respectively. International revenue represented approximately 57% and 71% of
the Company's revenue in the nine months ended April 30, 1997 and 1996,
respectively. The Company expects that international revenue will continue to
represent a significant portion of the Company's revenue for the foreseeable
future.
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 in the fourth fiscal quarter
in 1997 and at various times in 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 costs incurred
under customer funded software development agreements and also includes
hardware components for certain retail products. For the three months ended
April 30, 1997 and 1996, cost of revenue as a percentage of revenue was
approximately 12% and 7%, respectively. For the nine months ended April 30,
1997, cost of revenue represented 11% of revenue compared to 7% for the same
period of fiscal 1996. The increase in cost of revenue as a percentage of
revenue is primarily due to increased OEM costs due to increased third party
royalties for localized Japanese versions of current products and increased
costs associated with increased customer funded engineering fee revenue.
These cost increases were partially offset by decreased costs of retail
product as a result of orders fulfilled via the Web which began in March
1997. A high percent of Web orders do not require shipment of media or
manuals thereby substantially reducing the fulfillment costs of such orders.
The foregoing statements regarding cost of revenue are forward-looking
statements. Actual results could differ materially depending on changes in
sources of demands for the Company's products. The Company's cost of revenue
is affected by the mix between its distribution channels and by mix of its
revenue sources between royalties, packaged product, customer funded
engineering contracts and sales and fulfillment via Web. 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 in
proportion to the Company's total revenue, the Company anticipates that gross
profit as a percentage of total revenue will decrease, as the average selling
price through this channel is lower due to distributor discounts and the
11
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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 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 $1,610,000 in the third fiscal quarter of
1997 from $750,000 in the comparable quarter of 1996. For the nine months
ended April 30, 1997 research and development expenses totaled $4,240,000
representing a 101% increase compared to $2,112,000 for the same nine 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
$1,046,000 in the third fiscal quarter of 1997 from $652,000 for the
comparable quarter in the prior year. For the nine months ended April 30,
1997, sales and marketing expenses increased to $2,804,000 from $1,411,000
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 $460,000 in the third fiscal quarter of
1997 from $236,000 for the same period in the prior year and to $1,392,000
for the nine months ended April 30, 1997 from $628,000 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 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.
12
<PAGE>
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 $292,000 in
the third fiscal quarter of 1997 from $18,000 for the same period in the
prior year and increased to $486,000 for the nine months ended April 30, 1997
from $74,000 for the comparable fiscal 1996 period. The increase in interest
and other income in the three and nine month periods ended April 30, 1997 was
primarily due to increased interest income on increased cash, cash
equivalents and short-term investment base.
PROVISION FOR INCOME TAXES. Provision for income taxes increased to $339,000
in the third fiscal quarter of 1997 from $151,000 for the same period in the
prior year and increased to $706,000 for the nine months ended April 30, 1997
from $376,000 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 effective income tax rate to
increase.
13
<PAGE>
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, 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 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 recently expanded its sales channel by fulfilling orders via the
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. 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.
14
<PAGE>
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 five 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 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. 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 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.
15
<PAGE>
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
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 three 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.
16
<PAGE>
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 and 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
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.
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 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.
17
<PAGE>
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, Pilot Mirror 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. 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.
18
<PAGE>
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 two issued United States patents that
expire in 2012 and 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 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.
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.
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
19
<PAGE>
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 nine months 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 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.
20
<PAGE>
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.
UNCERTAINTIES ASSOCIATED WITH THE INTEGRATION OF INTELLILINK. In April 1996,
the Company acquired IntelliLink Corporation. 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.
Accordingly, the increased operating expenses associated with IntelliLink's
business could have a material adverse effect on the Company's business,
operating results and financial condition.
LIQUIDITY AND CAPITAL RESOURCES
Up until the Company's initial public offering in December 1996, the Company
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 $21.2 million from its
initial public offering of common stock.
The Company's operating activities provided cash of $321,000 during the nine
months ended April 30, 1997. The increased cash provided from operating
activities was primarily attributable to increased net income partially
offset by increases in accounts receivable, inventory, other assets and
decreases in deferred revenue.
Cash used in investing activities was $19,363,000 in the nine months ended
April 30, 1997. Cash used in investing activities primarily related to
purchases of short-term investments, and to a lesser extent,
21
<PAGE>
purchases of property and equipment. The Company expects that purchases of
property and equipment will increase in the next few fiscal quarters as it
purchases computer and other equipment to enhance its infrastructure as well
as expand both its Corporate and East coast facilities. Financing activities
provided $23,597,000 in the nine months ended April 30, 1997 due primarily to
the issuance of Common Stock and, to a much lesser extent, the issuance of
preferred stock and proceeds from conversion of warrants and exercise of
stock options.
At April 30, 1997 the Company's principal source of liquidity represented by
cash, cash equivalents and short-term investments totaled $24,051,000. 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.
22
<PAGE>
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS
(a) Exhibits
11.1 Computation of net income per share is on page 24.
ITEMS 1, 2, 3, 4 AND 5 ARE NOT APPLICABLE AND HAVE BEEN OMITTED.
23
<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 ENDED NINE MONTHS ENDED
APRIL 30, APRIL 30,
1997 1996 1997 1996
- ---------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
NET INCOME $ 628 $ (2,492) $1,309 $ (2,490)
--------- ----------- -------- -----------
--------- ----------- -------- -----------
PRIMARY:
Weighted average common shares outstanding 11,990 2,847 5,086 2,822
Common stock equivalents:
Preferred stock using the as if converted method - 4,089 4,089 4,089
Stock options using the treasury stock method 695 - 418 -
Shares related to Staff Accounting Bulletin No. 83:
Shares of common stock - 1,408 1,408 1,408
Stock options - 463 322 463
Preferred stock using the as if converted method - 286 87 286
Convertible debenture using the as if converted method - 341 133 341
Warrants 67 54 36 54
--------- ----------- -------- -----------
Shares used in computing primary net income per share 12,752 9,488 11,579 9,463
--------- ----------- -------- -----------
PRIMARY NET INCOME (LOSS) PER SHARE $ 0.05 $ (0.26) $ 0.11 $ (0.26)
--------- ----------- -------- -----------
--------- ----------- -------- -----------
- ---------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
(1) For an explanation of the number of shares used to compute net income per
share, see notes to condensed consolidated financial statements.
24
<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: June 10, 1997 By: /s/ M. Bruce Nakao
--------------------
M. Bruce Nakao
Sr. Vice President and
Chief Financial Officer
25
<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.
26
<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> APR-30-1997
<CASH> 5,537
<SECURITIES> 18,514
<RECEIVABLES> 3,189
<ALLOWANCES> 123
<INVENTORY> 179
<CURRENT-ASSETS> 382
<PP&E> 1,616
<DEPRECIATION> 547
<TOTAL-ASSETS> 29,200
<CURRENT-LIABILITIES> 2,454
<BONDS> 0
0
0
<COMMON> 12
<OTHER-SE> 26,721
<TOTAL-LIABILITY-AND-EQUITY> 29,200
<SALES> 11,151
<TOTAL-REVENUES> 11,151
<CGS> 1,186
<TOTAL-COSTS> 1,186
<OTHER-EXPENSES> 8,436
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 19
<INCOME-PRETAX> 2,015
<INCOME-TAX> 706
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,309
<EPS-PRIMARY> .11
<EPS-DILUTED> .11
</TABLE>
