<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
AMENDMENT NO 1 TO
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported)
October 28, 1999
Puma Technology, Inc.
------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware
----------------------------------------------
(State or other jurisdiction of incorporation)
0-21709 77- 0349154
--------------------- ------------------------------------
(Commission File No.) (IRS Employer Identification Number)
2550 North First Street, #500
San Jose, California 95131
(Address of Principal Executive Offices)
(408) 321-7650
----------------------------------------------------
(Registrant's Telephone Number, Including Area Code)
<PAGE>
PUMA TECHNOLOGY, INC.
INDEX TO FINANCIAL STATEMENTS
This Current Report on Form 8-K/A amends Item 7 of the Current Report on Form
8-K filed with the Securities and Exchange Commission on October 29, 1999.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
<TABLE>
<S> <C>
(a) ProxiNet, Inc. Financial Statements Page
Balance Sheets as of December 31, 1997, December 31, 1998 and September 30,
1999 (unaudited) 3
Statements of Operations from date of inception to December 31, 1997, for
the years ended December 31, 1998, from date of inception to December 31,
1998, Nine months ended September 30, 1998 and September 30, 1999
(unaudited) and date of inception to September 30, 1999 (unaudited) 4
Statement of Redeemable Convertible Preferred Stock and Shareholders'
Deficit for the years ended December 31, 1997 and December 31, 1998 and for
the nine month period ended September 30, 1999 (unaudited) 5
Statements of Cash Flows from inception to December 31, 1997, for the years
ended December 31, 1998, from inception to December 31, 1998, for the nine
months ended September 30, 1998 and September 30, 1999 (unaudited) and form
inception to September 30, 1999 (unaudited) 6
Notes to Consolidated Financial Statements 7
Report of Independent Auditors 15
(b) Unaudited Pro Forma Condensed Combined Financial Information
Overview 16
Pro Forma Condensed Consolidated Statements of Operations for the three
month period ended October 31, 1999 17
Pro Forma Condensed Consolidated Statements of Operation for the year ended
July 31, 1999 18
Notes to Pro Forma Condensed Consolidated Financial Information 19
Signature 22
(c) Exhibits
23.1 Consent of Independent Accountants 23
</TABLE>
2
<PAGE>
PROXINET, INC.
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED BALANCE SHEETS
(in thousands)
<TABLE>
<CAPTION>
DECEMBER 31, SEPTEMBER 30,
1997 1998 1999
------ ------ -------------
(UNAUDITED)
<S> <C> <C> <C>
ASSETS
Current assets
Cash and cash equivalents $ 79 $ 2,364 $ 208
Prepaid expenses and other current assets 5 29 49
----- ------- -------
Total current assets 84 2,393 257
Property and equipment, net 62 214 318
Restricted cash - 20 20
----- ------- -------
Total assets $ 146 $ 2,627 $ 595
----- ------- -------
----- ------- -------
LIABILITIES, REDEEMABLE CONVERTIBLE PREFERRED STOCK
AND SHAREHOLDERS' DEFICIT
Current liabilities:
Notes payable, current $ 104 $ - $ 1,468
Accounts payable and accrued liabilities 94 367 262
----- ------- -------
Total current liabilities 198 367 1,730
----- ------- -------
Redeemable Convertible Preferred Stock:
$0.001 par value; 5,200,000 shares authorized:
usuable in series (liquidation value of $4,225
at December 31, 1998):
Series B: 2,600,000 shares authorized; none
2,403,742 and 2,404,307 (unaudited) shares issued
and outstanding at December 31, 1997 and 1998 and
September 30, 1999, respectively - 4,255 4,256
Series B-1: 2,600,000 shares authorized;
none issued and outstanding at December 31, 1997
and 1998 and September 30, 1999, respectively - - -
Shareholders' deficit
Convertible Preferred Stock-Series A: $0.001 par value;
56,000 shares authorized; 56,000 shares issued and
outstanding at December 31, 1997 and 1998
and as of September 30, 1999, respectively - - -
Common Stock: $0.001 par value; 20,000,000
shares authorized; 4,003,000, 3,720,600 and 2,580,644
shares issued and outstanding at December 31, 1997
and as of September 30, 1999 4 4 3
Additional paid-in 67 505 3,984
Deferred stock - (273) (3,517)
Deficit accumulated during the development (123) (2,231) (5,861)
----- ------- -------
Total shareholders' deficit (52) (1,995) (5,391)
----- ------- -------
Total liabilities, redeemable convertible preferred
stock and shareholders' deficit $ 146 $ 2,627 $ 595
----- ------- -------
----- ------- -------
</TABLE>
The accompanying notes are an integral part of these consolidated
financial statements.
3
<PAGE>
PROXINET, INC.
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
<TABLE>
<CAPTION>
PERIOD FROM JUNE 27, PERIOD FROM JUNE 27, PERIOD FROM JUNE 27,
1997 1997 1997
(DATE OF INCEPTION) YEAR ENDED (DATE OF INCEPTION) NINE MONTHS ENDED (DATE OF INCEPTION)
TO DECEMBER 31, DECEMBER 31, TO DECEMBER 31, SEPTEMBER 30, TO SEPTEMBER 30,
1997 1998 1998 1998 1999 1999
------------------- ------------ ------------------- ------------------ --------------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
OPERATING EXPENSES:
Research and development $ 38 $ 1,241 $ 1,279 $ 663 $ 1,598 $ 2,877
Sales and marketing 15 107 122 51 997 1,119
General and administrative 70 633 703 344 826 1,529
Noncash stock compensation - 82 82 10 216 298
------- ---------- ---------- -------- --------- ----------
Total operating expenses 123 2,063 2,186 1,068 3,637 5,823
------- ---------- ---------- -------- --------- ----------
Loss from operations: (123) (2,063) (2,186) (1,068) (3,637) (5,823)
Interest income - 24 24 - 25 49
Interest expense - (69) (69) (28) (18) (87)
------- ---------- ---------- -------- --------- ----------
Net loss $ (123) $ (2,108) $ (2,231) $ (1,096) $ (3,630) $ (5,861)
------- ---------- ---------- -------- --------- ----------
------- ---------- ---------- -------- --------- ----------
Net loss per share:
Basic and diluted $ (0.04) $ (0.57) $ (0.65) $ (0.29) $ (1.07) $ (1.71)
------- ---------- ---------- -------- --------- ----------
------- ---------- ---------- -------- --------- ----------
Weighted average shares:
Basic and diluted 3,019 3,679 3,458 3,725 3,384 3,436
------- ---------- ---------- -------- --------- ----------
------- ---------- ---------- -------- --------- ----------
</TABLE>
The accompanying notes are an integral part of these consolidated
financial statements.
4
<PAGE>
PROXINET, INC.
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENT OF REDEEMABLE CONVERTIBLE PREFERRED STOCK
AND SHAREHOLDERS' DEFICIT
(in thousands)
<TABLE>
<CAPTION>
REDEEMABLE DEFICIT
CONVERTIBLE CONVERTIBLE ACCUMULATED
PREFERRED STOCK PREFERRED STOCK COMMON STOCK ADDITIONAL DURING THE TOTAL
--------------- --------------- ------------- PAID-IN DEFERRED DEVELOPMENT SHAREHOLDERS'
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT CAPITAL COMPENSATION STAGE DEFICIT
------- ------ ------ ------ ------ ------ ---------- ------------ ----------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Issuance of Common Stock to Founders - $ - - $ - 4,000 $ 4 $ - $ - $ - $ 4
Issuance of Series A Convertible
Preferred Stock, for cash - - 56 - - - 67 - - 67
Exercise of Common Stock Options - - - - 3 - - - - -
Net loss - - - - - - - - (123) (123)
------- ------ ------ ------ ------ ------ ---------- ------------ ----------- ------------
Balance at December 31, 1997 - - 56 - 4,003 4 67 - (123) (52)
Issuance of Common Stock for cash - - - - 120 - - - - -
Issuance of Series B Redeemable
Convertible Preferred Stock, for
cash & conversion of notes
payable and issuance costs 2,404 4,255 - - - - (41) - - (41)
Exercise of Common Stock Options - - - - 11 - 1 - - 1
Repurchase of Common Stock - - - - (413) - - - - -
Issuance of warrants - - - - - - 123 - - 123
Deferred compensation - - - - - - 301 (301) - -
Amortization of deferred compensation - - - - - - - 28 - 28
Issuance of options to consultants - - - - - - 54 - - 54
Net loss - - - - - - - - (2,108) (2,108)
------- ------ ------ ------ ------ ------ ---------- ------------ ----------- ------------
Balance at December 31, 1998 2,404 4,255 56 - 3,721 4 505 (273) (2,231) (1,995)
Exercise of warrants (unaudited) - 1 - - - - - - - -
Exercise of common stock
options (unaudited) - - - - 199 - 19 - - 19
Repurchase of common stock
(unaudited) - - - - (1,339) (1) - - - (1)
Deferred compensation (unaudited) - - - - - - 3,456 (3,456) - -
Amortization of deferred
compensation (unaudited) - - - - - - - 212 - 212
Issuance of options to
consultants (unaudited) - - - - - - 4 - - 4
Net loss (unaudited) - - - - - - - - (3,630) (3,630)
------- ------ ------ ------ ------ ------ ---------- ------------ ----------- ------------
Balances at September 30,
1999 (unaudited) 2,404 $4,256 56 $ - 2,581 $ 3 $ 3,984 $(3,517) $(5,861) $(5,391)
------- ------ ------ ------ ------ ------ ---------- ------------ ----------- ------------
------- ------ ------ ------ ------ ------ ---------- ------------ ----------- ------------
</TABLE>
The accompanying notes are an integral part of these consolidated
financial statements.
5
<PAGE>
PROXINET, INC.
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
<TABLE>
<CAPTION>
PERIOD FROM PERIOD FROM PERIOD FROM
JUNE 27, JUNE 27, JUNE 27,
1997 (DATE OF 1997 (DATE OF NINE MONTHS ENDED 1997 (DATE OF
INCEPTION) TO YEAR ENDED INCEPTION) TO SEPTEMBER 30, INCEPTION) TO
DECEMBER 31, DECEMBER 31, DECEMBER 31, ---------------------- SEPTEMBER 30,
1997 1998 1998 1998 1999 1999
------------- ------------ ------------- -------- -------- -------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net loss $(123) $(2,108) $(2,231) $(1,096) $(3,630) $(5,861)
Adjustments to reconcile
net loss to net cash
provided by (used in)
operating activities:
(Gains) loss on
disposal of property
and equipment - 10 10 - - 10
Depreciation 3 45 48 29 92 140
Noncash stock compensation
expense 4 227 231 10 216 447
Changes in current assets
and liabilities:
Prepaid expenses
and other current (5) (24) (29) (54) (20) (49)
assets
Accounts payable and
accrued liabilities
94 273 367 187 (105) 262
----- ------- ------- ----- ------- -------
Net cash used in
operating
activities (27) (1,577) (1,604) (924) (3,447) (5,051)
----- ------- ------- ----- ------- -------
CASH FLOWS FROM INVESTING
ACTIVITIES:
Purchase of property and
equipment (65) (207) (272) (120) (196) (468)
Restricted cash - (20) (20) - - (20)
----- ------- ------- ----- ------- -------
Net cash used in
investing
activities (65) (227) (292) (120) (196) (488)
----- ------- ------- ----- ------- -------
CASH FLOWS FROM FINANCING
ACTIVITIES:
Proceeds from issuance of
Series A Convertible
Preferred Stock, net of
issuance costs 67 - 67 - - 67
Proceeds from issuance of
Series B redeemable
Convertible Preferred Stock,
net of issuance costs - 3,206 3,206 - 1 3,207
Issuance of Common Stock, net 1 1 - 18 19
Proceeds from promissory notes
payable, net 104 882 986 1,082 1,468 2,454
----- ------- ------- ----- ------- -------
Net cash provided
by financing
activities 171 4,089 4,260 1,082 1,487 5,747
----- ------- ------- ----- ------- -------
Net increase (decrease) in cash
and cash equivalents 79 2,285 2,364 38 (2,156) 208
Cash and cash equivalents at
beginning of period - 79 - 79 2,364 -
----- ------- ------- ----- ------- -------
Cash and cash equivalents at
end of period $ 79 $ 2,364 $ 2,364 $ 117 $ 208 $ 208
----- ------- ------- ----- ------- -------
----- ------- ------- ----- ------- -------
</TABLE>
The accompanying notes are an integral part of these consolidated
financial statements.
6
<PAGE>
PROXINET, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. The Company and Summary of Significant Accounting Policies
THE COMPANY
ProxiNet, Inc. (the "Company") was incorporated in California on June 27,
1997. The Company was formed to develop and manufacture proxy technology
to enable Web access and information delivery for hand held devices.
The consolidated financial statements include the accounts of
ProxiNet, Inc. and its wholly owned subsidiary, ProxiNet International Ltd.
All intercompany accounts and transactions have been eliminated in
consolidation.
The Company's activities since incorporation have primarily consisted of
establishing its offices and research facilities, recruiting personnel,
conducting research and development, performing business and financial
planning, and raising capital. Accordingly, the Company is considered to
be in the development stage at December 31, 1997 and 1998.
UNAUDITED INTERIM RESULTS
The interim financial statements as of September 30, 1999 and for the
nine months ended September 30, 1998 and 1999 and the period from June
27, 1997 (date of inception) to September 30, 1999 are unaudited. In
the opinion of management, interim financial statements have been
prepared on the same basis as the audited financial statements and
reflect all adjustments, consisting only of normal recurring
adjustments, necessary for the fair presentation of the results of
interim periods. The financial data and other information disclosed in
these notes to consolidated financial statements for the related periods
are unaudited. The results of operations for the interim periods are not
necessarily indicative of the results to be expected for any future
periods.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities
and disclosure of contingent assets and liabilities at the date of the
financial statements and reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
CASH EQUIVALENTS
The Company considers all highly liquid investments purchased with an
original maturity of three months or less to be cash equivalents. At
December 31, 1997 and 1998, none and $2,362,000, respectively, of money
market funds and certificates of deposit, the fair value of which
approximates costs, are included in cash and cash equivalents. The
Company deposits cash and cash equivalents with high credit quality
financial institutions.
RESTRICTED CASH
Restricted cash consists primarily of certificates of deposit that earn
interest at approximately 4.25% per annum. These certificates of deposit
are mainly used as a security for credit card charges.
CAPITALIZED SOFTWARE DEVELOPMENT COSTS
Software development costs are included in research and development and
are expensed as incurred. After technological feasibility is
established, material software development costs are capitalized. The
capitalized cost is then amortized on a straight-line basis over the
estimated product life, or on the ratio of current revenues to total
projected product revenues,
7
<PAGE>
whichever is greater. Through December 31, 1998, technological
feasibility for the Company's products was not established, and
therefore all research and development costs were expensed as incurred.
PROPERTY AND EQUIPMENT
Property and equipment are stated at cost. Depreciation is computed
using the straight-line method over the estimated useful lives of the
assets, generally 3 to 5 years.
LONG-LIVED ASSETS
The Company evaluates the recoverability of its long-lived assets in
accordance with Statement of Financial Accounting Standards No. 121,
"Accounting for the Impairment of Long-Lived Assets to be Disposed of"
("SFAS 121"). SFAS 121 requires recognition of impairment of long-lived
assets in the event the net book value of such assets exceeds the future
undiscounted cash flows attributable to such assets.
FAIR VALUE OF FINANCIAL INSTRUMENTS
The Company's financial instruments, including cash and cash equivalents
and accounts payable, are carried at cost, which approximates their fair
value because of the short-term maturity of these financial instruments.
STOCK-BASED COMPENSATION
The Company accounts for stock-based employee compensation arrangements
in accordance with provisions of Accounting Principles Board Opinion
No. 25, "Accounting for Stock Issued to Employees," ("APB No. 25") and
complies with the disclosure provisions of Statement of Financial
Accounting Standards No. 123, "Accounting for Stock-Based Compensation"
("SFAS No. 123").
COMPREHENSIVE INCOME
Effective January 1, 1998, the Company adopted the provisions of SFAS
No. 130, "Reporting Comprehensive Income." SFAS No. 130 establishes
standards for reporting comprehensive income and its components in
financial statements. Comprehensive income, as defined, includes all
changes in equity (net assets) during a period from non-owner sources.
During the period from June 27, 1997 (date of inception) to December 31,
1997, the year ended December 31, 1998, the nine months ended September
30, 1998 and 1999 (unaudited) and the periods from June 27, 1997 (date
of inception) to December 31, 1998 and to September 30, 1999
(unaudited), the Company has not had any significant transactions that
are required to be reported in comprehensive income.
CONCENTRATION OF CREDIT RISKS
Financial instruments that potentially subject the Company to a
concentration of credit risk consist of cash and cash equivalents. All
of the Company's available funds at December 31, 1997 and 1998 and
September 30, 1999 (unaudited), were deposited in money market accounts
and certificates of deposits with financial institutions which
management believes are of high credit quality.
NET INCOME (LOSS) PER SHARE
Basic net income (loss) per share is computed by dividing the net income
(loss) available to common stockholders for the period by the weighted
average number of shares of Common Stock outstanding during the period.
Diluted net income per share is computed by dividing the net income
(loss) for the period by the weighted average number of common and
potential common shares outstanding during the period. The calculation
of diluted net loss per share excludes potential common shares if the
effect is antidilutive. Potential common shares are composed of Common
Stock subject to repurchase rights and incremental shares of Common
Stock issuable upon the exercise of stock options, exercise of warrants,
upon conversion of Preferred Stock and conversion of debt.
8
<PAGE>
The following table sets forth the computation of basic and diluted net
loss per share for the periods presented (in thousands, except per share
amounts):
<TABLE>
<CAPTION>
PERIOD FROM PERIOD FROM PERIOD FROM
JUNE 27, JUNE 27, JUNE 27,
1997 (DATE OF 1997 (DATE OF NINE MONTHS ENDED 1997 (DATE OF
INCEPTION) TO YEAR ENDED INCEPTION) TO SEPTEMBER 30, INCEPTION) TO
DECEMBER 31, DECEMBER 31, DECEMBER 31, -------------------------- SEPTEMBER 30,
1997 1998 1998 1998 1999 1999
------------- ------------ ------------- ----------- ----------- -------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
Numerator:
Net loss available
to common stockholders $ (123) $ (2,108) $ (2,231) $ (1,096) $ (3,630) $ (5,861)
--------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- ---------
Denominator:
Weighted average shares 3,265 3,879 3,671 3,933 3,526 3,623
Common Stock subject
to repurchase (246) (200) (213) (208) (142) (187)
--------- --------- --------- --------- --------- ---------
Denominator for basic and
diluted calculation 3,019 3,679 3,458 3,725 3,384 3,436
--------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- ---------
Net loss per share
available to common
stockholders:
Basic and diluted $ (0.04) $ (0.57) $ (0.65) $ (0.29) $ (1.07) $ (1.71)
--------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- ---------
</TABLE>
The following table sets forth the potential shares of Common Stock that
are not included in the diluted net loss per share calculation above
because to do so would be antidilutive for the periods presented (in
thousands):
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------- SEPTEMBER 30,
1997 1998 1999
------ ------- -------------
(UNAUDITED)
<S> <C> <C> <C>
Series A Preferred Stock 56 56 56
Series B Preferred Stock - 2,404 2,404
Warrants - 277 78
Employee stock options 61 305 1,743
Common Stock subject
to repurchase 246 170 114
------ ------- -------------
363 3,212 4,395
------ ------- -------------
------ ------- -------------
</TABLE>
2. SUPPLEMENTAL CASH FLOW INFORMATION
<TABLE>
<CAPTION>
PERIOD FROM PERIOD FROM PERIOD FROM
JUNE 27, JUNE 27, JUNE 27,
1997 (DATE OF 1997 (DATE OF NINE MONTHS ENDED 1997 (DATE OF
INCEPTION) TO YEAR ENDED INCEPTION) TO SEPTEMBER 30, INCEPTION) TO
DECEMBER 31, DECEMBER 31, DECEMBER 31, --------------------------- SEPTEMBER 30,
1997 1998 1998 1998 1999 1999
------------- ------------ ------------- ---------- ---------- -------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
SUPPLEMENTAL NONCASH INVESTING
AND FINANCING ACTIVITY:
Conversion of promissory
notes payable to Series B
redeemable convertible
preferred stock $ - $ 1,008 $ 1,008 $ - $ - $ 1,008
------------- ------------ ------------- ----------- ---------- -------------
------------- ------------ ------------- ----------- ---------- -------------
</TABLE>
9
<PAGE>
3. BALANCE SHEET COMPONENTS
<TABLE>
<CAPTION>
DECEMBER 31,
---------------- SEPTEMBER 30,
1997 1998 1999
---- ---- -------------
(UNAUDITED)
<S> <C> <C> <C>
PROPERTY AND EQUIPMENT, NET:
Computer equipment $ 59 $232 $ 406
Furnitures fixtures, and office equipment 6 26 38
Software - - 10
---- ---- -----
65 258 454
Less: Accumulated depreciation (3) (44) (136)
---- ---- -----
$ 62 $214 $ 318
---- ---- -----
---- ---- -----
ACCOUNTS PAYABLE AND ACCRUED LIABILITIES:
Professional services $ 35 $207 $ 167
Payroll and related expenses 7 16 41
Other 52 144 54
---- ---- -----
$ 94 $367 $ 262
---- ---- -----
---- ---- -----
</TABLE>
4. RELATED PARTY TRANSACTIONS
During the period from July 1997 through September 1998, the Company
entered into a rental agreement with a company owned by the Chief
Executive Officer at that time, for office space in Berkley, California.
Total amount paid for rent, parking and utilities for this period
amounted to $68,000.
5. INCOME TAXES
<TABLE>
<CAPTION>
DECEMBER 31,
-----------------
1997 1998
---- ----
<S> <C> <C>
DEFERRED TAX ASSETS:
Net operating loss carryforwards $ 43 $ 802
Accruals and reserves - 11
Research credits 3 87
---- -----
46 900
---- -----
DEFERRED TAX LIABILITIES:
Depreciation $ - $ 6
---- -----
Net deferred tax assets 46 894
Valuation allowance (46) (894)
---- -----
$ - $ -
---- -----
---- -----
</TABLE>
Management believes that, based on a number of factors, it is more likely
than not that the deferred tax assets will not be utilized, such that a
full valuation allowance has been recorded.
10
<PAGE>
At December 31, 1998, the Company had approximately $2 million of federal
and $2 million of state net operating loss carryforwards available to
offset future taxable income which expire in varying amounts beginning in
2012. Under the Tax Reform Act of 1986, the amounts of and benefits from
net operating loss carryforwards may be impaired or limited in certain
circumstances. Events which cause limitations in the amount of net
operating losses that the Company may utilize in any one year include,
but are not limited to, a cumulative ownership change of more than 50%,
as defined, over a three year period.
6. CONVERTIBLE PROMISSORY NOTES
During 1997 and 1998, the Company borrowed $104,000 and $1,082,000,
respectively in the form of convertible promissory notes issued to
investors. The notes bore interest at rates 5% to 10% per annum and
were convertible, along with any accrued but unpaid interest on the
date of conversion, upon the closing of the Company's first financing
with aggregate offering proceeds of $1,000,000 or more. On October 8,
1998, $986,000 of the notes, along with the related accrued and unpaid
interest, were converted into Series B redeemable convertible
preferred stock. The remaining $200,000 of convertible promissory
notes was repaid to lenders on November 18, 1998. In connection with
the issuance of promissory notes, the Company also issued to investors
warrants to purchase 78,983 shares of the Company's Series B
redeemable convertible preferred stock. Using the Black-Scholes
pricing model, these warrants were valued at approximately $40,000 and
the related cost was expensed as interest expense.
7. CONVERTIBLE PREFERRED STOCK
Convertible Preferred Stock at December 31, 1998 consists of the
following (in thousands):
<TABLE>
<CAPTION>
PROCEEDS
SHARES NET OF
----------------------- LIQUIDATION ISSUANCE
SERIES AUTHORIZED OUTSTANDING AMOUNT COSTS
------ ---------- ----------- ----------- --------
<S> <C> <C> <C> <C>
A 56 56 $ 67 $ 67
B 2,600 2,404 4,255 4,255
B1 2,600 - - -
---------- ----------- ----------- --------
5,256 2,460 $ 4,322 $ 4,322
---------- ----------- ----------- --------
---------- ----------- ----------- --------
</TABLE>
The holders of Preferred Stock have various rights and preferences as
follows:
VOTING
Each share of Preferred Stock Series A, B, and B1 has voting rights equal
to an equivalent number of shares of Common Stock into which it is
convertible and votes together as one class with the Common Stock.
As long as any shares of Convertible Preferred Stock remain outstanding,
the Company must obtain approval from a majority of the holders of
Convertible Preferred Stock in order to alter the Articles of
Incorporation as related to Convertible Preferred Stock, change the
authorized number of shares of Convertible Preferred Stock, repurchase
any shares of Common Stock other than shares subject to the right of
repurchase by the Company, increase the authorized number of Directors
beyond five (5) Directors, create a new class of stock or effect a
merger, other corporate reorganization, sale of control or any other
transaction in which all or substantially all of the assets are sold,
conveyed or otherwise disposed of.
11
<PAGE>
DIVIDENDS
Holders of Series A, B and B1 Convertible Preferred Stock are entitled to
receive noncumulative dividends at the per annum rate of $0.096, $0.1416
and $0.1416 per share, respectively, when and if declared by the Board of
Directors. The holders of Series A, B and B1 Convertible Preferred Stock
will also be entitled to participate in dividends on Common Stock, when
and if declared by the Board of Directors, based on the number of shares
of Common Stock held on an as-if converted basis. No dividends on
Convertible Preferred Stock or Common Stock have been declared by the
Board from inception through December 31, 1998.
REDEMPTION
The Company will repurchase any shares of Series B and B1 Preferred Stock
at the redemption request of the holders of such shares at any time after
October 1, 2005. The redemption price of Series B and B1 Preferred Stock
shall be $1.77 per share plus a further amount equal to any dividends
declared but unpaid on such shares.
LIQUIDATION
In the event of any liquidation, dissolution or winding up of the
Company, the holders of Series B and B1 redeemable Convertible Preferred
Stock are entitled to receive an amount of $1.77 per share, respectively,
plus any declared but unpaid dividends prior to and in preference to any
distribution to the holders of Series A Convertible Preferred Stock and
Common Stock. After the payment to the holders of the Series B Preferred
Stock and Series B1 Preferred Stock of the preferential amounts so
payable to them the holders of shares of Series A Preferred Stock then
outstanding shall be entitled to be paid, out of the assets of the
Corporation available for distribution to its shareholders, whether from
capital, surplus or earnings, before any payment shall be made in respect
of the Corporation's Common Stock, an amount equal to $1.20 per share of
Series A Preferred Stock, plus all declared but unpaid dividends on each
share of Series A Preferred Stock then held by them. The remaining
assets, if any, shall be distributed pro rata among the holders of Common
Stock on the basis of the number of shares held by them.
CONVERSION
Each share of Series A, B and B1 Convertible Preferred Stock is
convertible, at the option of the holder, according to a conversion
ratio, subject to adjustment for dilution. Each share of Series A, B and
B1 Convertible Preferred Stock automatically converts into the number of
shares of Common Stock into which such shares are convertible at the then
effective conversion ratio upon: (1) the closing of a public offering of
Common Stock at a per share price of at least $5 per share with gross
proceeds of at least $10,000,000; or (2) the consent of the holders of
the majority of Convertible Preferred Stock.
WARRANTS
In connection with the convertible promissory notes, the Company issued
warrants to purchase 78,983 shares of Series B redeemable Convertible
Preferred Stock for $1.77 per share in October 1998. Such warrants were
outstanding at December 31, 1998 and expire in October 2008. Using the
Black-Scholes pricing model, the Company determined that the fair value
of the warrants was $40,000 at the date of grant and recorded such amount
as interest expense.
In connection with a professional services agreement, the Company issued
warrants to purchase 197,740 shares of the Company's Series B redeemable
convertible preferred stock for $1.77 per share in November 1998. Such
warrants were outstanding at December 31, 1998 and expired June 1999.
Using the Black-Scholes pricing model, the Company determined that the
fair value of the warrants was $83,000, which was recorded as an
operating expense.
12
<PAGE>
8. COMMON STOCK
The Company's Articles of Incorporation, as amended, authorize the
Company to issue 20,000,000 shares of $0.001 par value Common Stock. A
portion of the shares sold are subject to a right of repurchase by the
Company subject to vesting, which is generally over a four year period
from the earlier of grant date or employee hire date, as applicable,
until vesting is complete. At December 31, 1998, there were 169,531
shares subject to repurchase.
9. STOCK OPTION PLANS
In 1997, the Company adopted the 1997 Stock Option Plan (the "Plan").
The Plan provides for the granting of stock options to employees and
consultants of the Company. Options granted under the Plan may be
either incentive stock options or nonqualified stock options.
Incentive stock options ("ISO") may be granted only to Company
employees. Nonqualified stock options ("NSO") may be granted to
Company employees and consultants. The Company has reserved 1,323,484
shares of Common Stock for issuance under the Plan.
Options under the Plan may be granted for periods of up to ten years and
at prices no less than 85% of the estimated fair value of the shares on
the date of grant as determined by the Board of Directors, provided,
however, that (i) the exercise price of an ISO and NSO shall not be less
than 100% and 85% of the estimated fair value of the shares on the date
of grant, respectively, and (ii) the exercise price of an ISO and NSO
granted to a 10% shareholder shall not be less than 110% of the estimated
fair value of the shares on the date of grant, respectively.
<TABLE>
<CAPTION>
1997 1998
------------------------- -------------------------
SHARES PRICE SHARES PRICE
-------------- --------- -------------- ---------
(IN THOUSANDS) (IN THOUSANDS)
<S> <C> <C> <C> <C>
Options outstanding at
beginning of period - $ - 61 $ 0.12
Options granted 101 $ 0.12 262 $ 0.12
Options exercised (3) $ 0.12 (8) $ 0.12
Options canceled (37) $ 0.12 (10) $ 0.12
--- ---
Outstanding at December 31 61 $ 0.12 305 $ 0.12
--- ---
Options exercisable at December 31 29 $ 0.12 123 $ 0.12
--- ---
</TABLE>
<TABLE>
<CAPTION>
OPTIONS EXERCISABLE AT
OPTIONS OUTSTANDING AT DECEMBER 31, 1998 DECEMBER 31, 1998
-------------------------------------------- ----------------------------
WEIGHTED
AVERAGE WEIGHTED WEIGHTED
RANGE OF REMAINING AVERAGE AVERAGE
EXERCISE NUMBER CONTRACTUAL EXERCISE NUMBER EXERCISE
PRICE OUTSTANDING LIFE PRICE OUTSTANDING PRICE
- ---------- -------------- ----------- ---------- -------------- -----------
(IN THOUSANDS) (IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
$ 0.12 305 9.53 $ 0.12 123 $ 0.12
--- ---
305 123
--- ---
</TABLE>
13
<PAGE>
FAIR VALUE DISCLOSURES
Had compensation cost for the Company's stock-based compensation plan
been determined based on the fair value at the grant dates for the awards
under a method prescribed by SFAS No. 123, the Company's net loss and
loss per share would not have been materially affected.
The Company calculated the fair value of each option grant on the date of
grant using the Black-Scholes pricing model with the following
assumptions: dividend yield at 0%; weighted average expected option term
of 2 years; risk free interest rate of 5.9% to 6.0% and 4.6% to 5.5% for
the period from June 27, 1997 (date of inception) to December 31, 1997
and for the year ended December 31, 1998, respectively. The weighted
average fair value of options granted during 1997 and 1998 was $0.03.
NONCASH STOCK COMPENSATION (UNAUDITED)
In connection with stock option grants made in 1998 and in the nine
months ended September 30, 1999, the Company recognized deferred
compensation charge of $301,000 and $3,456,000, respectively, which is
being amortized on a straight-line basis over the vesting periods of the
options.
The following table sets forth-deferred compensation and amortization of
deferred compensation (in thousands):
<TABLE>
<CAPTION>
NINE MONTHS
YEAR ENDED ENDED
DECEMBER 31, SEPTEMBER 30,
1998 1999
------------ ------------
UNAUDITED
<S> <C> <C>
Deferred stock compensation $ (301) $ (3,456)
Amortization of deferred stock compensation 28 212
</TABLE>
10. SUBSEQUENT EVENTS
On October 28, 1999, the Company was acquired by Puma Technology, Inc.
("Puma") in exchange for 1,960,753 shares and 639,217 options to
acquire of Puma's common stock.
14
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Shareholders
of ProxiNet, Inc.
In our opinion, the accompanying consolidated balance sheets and the related
consolidated statements of operations, of redeemable convertible preferred stock
and shareholders' deficit and of cash flows present fairly, in all material
respects, the financial position of ProxiNet, Inc. ("the Company") (a
development stage company) at December 31, 1997 and 1998 and the results of
their operations and their cash flows for the period from June 27, 1997 (date of
inception) to December 31, 1997 and for the year ended December 31, 1998, in
conformity with generally accepted accounting principles. These financial
statements are the responsibility of the Company's management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these statements in accordance with
generally accepted auditing standards which require that we plan and perform the
audit to obtain reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements,
assessing the accounting principles used and significant estimates made by
management, and evaluating the overall financial statement presentation. We
believe that our audits provide a reasonable basis for the opinion expressed
above.
PricewaterhouseCoopers LLP
San Jose, California
December 30, 1999
15
<PAGE>
(b) UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENTS OF OPERATIONS
The following unaudited pro forma condensed combined statement of
operations gives effect to the acquisition by Puma Technology, Inc.,
("Puma" or the "Company") of ProxiNet, Inc. ("ProxiNet") in a transaction
accounted for as a purchase. The unaudited pro forma condensed combined
statements of operations are based on the individual statements of
operations of Puma and ProxiNet for the three months ended October 31,
1999 and the twelve months ended July 31, 1999, respectively.
The following unaudited pro forma condensed combined statements of
operations are not necessarily indicative of our future results of
operations or the results of operations which would have resulted had we
merged with ProxiNet at the beginning of the periods presented. In
addition, the pro forma results are not intended to be a projection of
future results.
16
<PAGE>
PUMA AND PROXINET
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
For the Three Months Ended
October 31, 1999
(in thousands, except per share data)
<TABLE>
<CAPTION>
PRO FORMA PRO FORMA
PUMA PROXINET ADJUSTMENTS COMBINED
------------- --------------- ------------------ ------------------
<S> <C> <C> <C> <C>
Revenue $ 6,278 $ - $ - $ 6,278
Cost of revenue 605 - 258 A 863
------------- --------------- ------------------ ------------------
Gross profit 5,673 - (258) 5,673
------------- --------------- ------------------ ------------------
Operating expenses:
Research and development 2,202 540 - 2,742
Sales and marketing 2,307 227 - 2,534
General and administrative 777 409 503 A 1,689
Non cash stock compensation - 235 - 235
In-process research and development 4,218 - (4,218) -
------------- --------------- ------------------ ------------------
Total operating expenses 9,504 1,411 (3,715) 7,200
------------- --------------- ------------------ ------------------
Loss from operations (3,831) (1,411) 3,457 (1,785)
Other income (expense), net 1,237 (18) - 1,219
------------- --------------- ------------------ ------------------
Loss before income taxes (2,594) (1,429) 3,457 (566)
Provision for income taxes 192 - - 192
------------- --------------- ------------------ ------------------
Net loss $ (2,786) $ (1,429) $ 3,457 $ (758)
------------- --------------- ------------------ ------------------
------------- --------------- ------------------ ------------------
Net Income/ (loss) per share
Basic $ (0.21) $ (0.05)
Diluted $ (0.21) $ (0.05)
Shares used in per share calculation
Basic 13,435 15,396
Diluted 13,435 15,396
</TABLE>
See accompanying notes
17
<PAGE>
PUMA AND PROXINET
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
(in thousands, except per share data)
For the year ended July 31, 1999
<TABLE>
<CAPTION>
PRO FORMA PRO-FORMA
PUMA PROXINET ADJUSTMENTS COMBINED
-------------- --------------- ----------------- ------------------
<S> <C> <C> <C> <C>
Revenue $ 20,043 $ - $ - $ 20,043
Cost of revenue 1,950 - 1,030 A 2,980
-------------- --------------- ----------------- ------------------
Gross profit 18,093 - (1,030) 17,063
-------------- --------------- ----------------- ------------------
Operating expenses:
Research and development 11,099 2,016 - 13,115
Sales and marketing 7,536 909 - 8,445
General and administrative 3,390 1,025 2,013 A 6,428
Non cash stock compensation - 136 - 136
In-process research and development - - -
Restructure 768 - - 768
-------------- --------------- ----------------- ------------------
Total operating expenses 22,793 4,086 2,013 28,892
-------------- --------------- ----------------- ------------------
Loss from operations (4,700) (4,086) (3,043) (11,829)
Other income (expense), net 3,739 (8) - 3,771
-------------- --------------- ----------------- ------------------
Loss before income taxes (961) (4,094) (3,043) (8,098)
Provision for income taxes 715 - - 715
-------------- --------------- ----------------- ------------------
Net loss $ (1,676) $ (4,094) $ (3,043) $ (8,813)
-------------- --------------- ----------------- ------------------
-------------- --------------- ----------------- ------------------
Net Income/ (loss) per share
Basic $ (0.13) $ (0.60)
Diluted $ (0.13) $ (0.60)
Shares used in per share calculation
Basic 12,824 14,785
Diluted 12,824 14,785
</TABLE>
See accompanying notes
18
<PAGE>
Note 1. Basis of Pro Forma Statements
On October 28, 1999, Puma Technology, Inc. ("Puma") completed the acquisition of
all of the outstanding capital stock of ProxiNet, Inc. ("ProxiNet"). The
transaction was completed pursuant to (a) the Agreement and Plan of Merger and
Reorganization dated as of August 22, 1999 by and among Puma and ProxiNet. Under
the terms of the agreement, Puma issued 1,960,753 shares and 639,217 options of
Common Stock in exchange for all outstanding shares of ProxiNet.
The components of purchase price are as follows:
<TABLE>
<S> <C>
Stock Consideration $11,502
Liabilities assumed 2,070
Estimated direct acquisition costs 526
Fair value of options issued 3,286
-----------
Total purchase price $17,384
-----------
-----------
</TABLE>
For the purposes of computing purchase price, the fair value of stock was
computed using an average of the closing price of Puma's common stock on the
date of announcement of the merger and two days preceding and succeeding the
merger.
The total purchase price was allocated to the estimated fair value of assets
acquired and liabilities assumed. The estimate of fair value of the assets
acquired is based on an independent appraisal and use of management estimates.
The allocation of purchase price is discussed further in Note 2.
Since the fiscal years of Puma and ProxiNet differ, for the purposes of
preparing pro forma condensed combined statements of operations for the three
months ended October 31, 1999 and the fiscal 1999, we have recast the statements
of operations of ProxiNet and presented them for the three months ended October
31, 1999 and the twelve months ended July 31, 1999, respectively. The pro forma
unaudited condensed combined statements of operations for the three months ended
October 31, 1999 assumes the transaction took place on August 1, 1999. The pro
forma unaudited condensed consolidated statement of operations for the fiscal
year ended July 31, 1999 assumes that the transaction took place on August 1,
1998.
There were no transactions between Puma and ProxiNet during the period presented
and there are no significant differences between the accounting policies of Puma
and ProxiNet.
The pro forma unaudited condensed consolidated financial statements should be
read in conjunction with the consolidated financial statements and notes thereto
of Puma, which were previously reported in Puma's Annual Report on Form 10-K for
the year ended July 31, 1999 and its Quarterly Report on Form 10-Q for the
quarter ended October 31, 1999, incorporated herein by reference, and with the
combined financial statements and notes thereto of ProxiNet included elsewhere
as exhibits in the Form 8-K. These pro forma statements are based on such
consolidated financial statements after giving effect to the transaction under
the purchase method of accounting and the assumptions and adjustments described
below. The pro forma information does not purport to be indicative of the
results which would have been reported if the purchase had been in effect for
the periods
19
<PAGE>
presented or which may result in the future.
Note 2. Pro Forma Adjustments
The pro forma adjustments are based on a preliminary allocation of the purchase
price to the assets acquired and liabilities assumed. This allocation is subject
to refinement and change over the next year. The allocation of the purchase
price is based on an independent appraisal of certain assets as well as
management estimates of fair value.
This Current Report on Form 8-K contains forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933 and Section 21E of the
Securities Exchange Act of 1934. In particular, the assumptions set forth below
which underlie the Company's calculation of the in-process research and
development costs contain forward-looking statements and are qualified by the
risks associated with "Risks Associated with New Product Development and Timely
Introduction of New and Enhanced Products," "Competition," "Product
Concentration: Risks Associated with New and Evolving Markets," "Uncertainties
Associated with Acquistions" and other risks detailed in Puma's Annual Report on
Form 10-K for the year ended July 31, 1999 and its Quarterly Report on Form 10-Q
for the quarter ended October 31, 1999 and other reports filed by Puma with the
Securities Exchange Commission from time to time. Actual results could differ
materially from those projected in these forward-looking statements as a result
of the risks described above as well as other risk factors set forth in Puma's
periodic reports both previously and hereafter filed with the Securities
Exchange commission.
The purchase price was allocated as follows (in thousands):
<TABLE>
<S> <C>
Fair value of equipment $ 307
Fair value of other tangible net assets 369
In-process research and development 4,218
Core technology 3,091
Acquired workforce 286
Unidentifiable Goodwill 9,113
-------
$17,384
-------
-------
</TABLE>
The value assigned to acquired in-process research and development was
determined by identifying research projects in areas for which technology
feasibility had not been established as of the acquisition date. These include
projects for ProxiWare and ProxiWeb technology. The value was determined by
estimating the revenue contribution and the percentage of completion of each of
these products. The projects were deemed to be 55% complete on the date of
acquisition. The net cash flows were then discounted utilizing a weighted
average cost of capital of 27.5%. This discount rate takes into consideration
the inherent uncertainties surrounding the successful development of the
in-process research and development, the expected profitability levels of such
technology, and the uncertainty of technological advances that could potentially
impact the estimates described above. Revenues were projected to be generated in
calendar 2000 for the products in development at the acquisition date. If these
projects are not successfully developed Puma's future revenues and profitability
may be adversely affected. Additionally, the value of other intangible assets
acquired may become impaired.
20
<PAGE>
Puma management believes that the IPR&D charge of $4,218,000 is valued
consistently with the SEC staff's current views regarding valuation
methodologies. There can be no assurances, however, that the SEC staff will not
take issue with any assumptions used in the Company's valuation model and
require the Company to further revise the amount allocated to IPR&D.
(A) Adjustment to record amortization expense of intangible assets over the
estimated useful life as follows:
Core Technology 3 years
Acquired Workforce 18 month
Unidentifiable Goodwill 5 years
(B) Adjustment to eliminate the non-recurring write-off of in-process research
and development costs directly attributable to the acquisition of ProxiNet.
Note 3. Pro Forma Loss per Share
Basic and diluted pro forma loss per share amounts were calculated based on
weighted average shares of Puma's Common Stock outstanding for the year ended
July 31, 1999 and three months ended October 31, 1999 and includes an additional
1,960,753 shares which were issued pursuant to the acquisition of ProxiNet as if
the transaction had occurred on August 1, 1998.
21
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the Registrant has duly caused this report to be signed on its behalf
by the undersigned hereunto duly authorized.
Date: January 11, 2000 PUMA TECHNOLOGY, INC.
By: /s/ KELLY HICKS
------------------------------
Name: Kelly J. Hicks
----------------------------
Title: Vice-President of Operations
-------------------------------
& Chief Financial Officer
-------------------------
22
<PAGE>
(c) Exhibit 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Registration
Statements on Form S-8 (Nos. 333-28277, 333-46691, 333-77961 and 333-0091) of
Puma Technology, Inc. of our report dated December 30, 1999, relating to the
financial statements of ProxiNet, Inc., which appears in the Current Report on
Form 8-K/A of Puma Technology, Inc. dated January 10, 2000.
PRICEWATERHOUSECOOPERS LLP
/s/ PricewaterhouseCoopers LLP
San Jose, California
January 10, 2000
23
