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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
[ X ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended July 31, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from _______________to________________
Commission File Number 333-11445
PUMA TECHNOLOGY, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 77-0349154
(State or other jurisdiction of (I.R.S Employer
incorporation or organization) Identification No.)
2550 North First Street, Suite 500 95131
San Jose, California (ZIP Code)
(Address of principal executive offices)
(408) 321-7650
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $.001 par value
(Title of class)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes [ X ] No [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to
the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [ ]
The aggregate market value of the voting stock held by non-affiliates of the
registrant as of September 25, 1997, was approximately $62,652,000.
The number of the registrant's $0.001 par value Common Stock outstanding as
of October 13, 1997, was 12,085,097 shares of Common Stock.
DOCUMENTS INCORPORATED BY REFERENCE:
Certain sections of the Proxy Statement for registrant's PART III
1997 Annual Meeting of Stockholders to be held on
December 10, 1997 to be filed with the Commission
pursuant to Registration 14A no later than 120 days
after the end of the fiscal year covered by this Form.
Certain sections of the Annual Report to Stockholders for PARTS II & IV
fiscal year ended July 31, 1997.
TABLE OF CONTENTS
PART I . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
ITEM 1. BUSINESS . . . . . . . . . . . . . . . . . . . . . . . . 3
ITEM 2. PROPERTIES . . . . . . . . . . . . . . . . . . . . . . 19
ITEM 3. LEGAL PROCEEDINGS . . . . . . . . . . . . . . . . . . . 19
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS . . 19
PART II . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS . . . . . . . . . . . . . . . . . . 21
ITEM 6. SELECTED FINANCIAL DATA . . . . . . . . . . . . . . . . 21
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS . . . . . . . . . . 21
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA . . . . . . 21
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE . . . . . . . . . . 22
PART III . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT . . 22
ITEM 11. EXECUTIVE COMPENSATION . . . . . . . . . . . . . . . . 22
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT . . . . . . . . . . . . . . . . . . . . . . 22
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS . . . . 22
PART IV . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS
ON FORM 8-K . . . . . . . . . . . . . . . . . . . . . . 23
EXHIBIT 11.1 . . . . . . . . . . . . . . . . . . . . . . . . . . 25
SCHEDULE II . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
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PART I
ITEM 1. BUSINESS
EXCEPT FOR THE HISTORICAL STATEMENTS CONTAINED HEREIN, THIS ANNUAL REPORT
ON FORM 10-K CONTAINS CERTAIN FORWARD LOOKING STATEMENTS WITHIN THE MEANING
OF SECTION 21E OF THE SECURITIES EXCHANGE ACT OF 1934. THE ACTUAL RESULTS
THAT THE COMPANY ACHIEVES MAY DIFFER MATERIALLY FROM THOSE INDICATED IN ANY
FORWARD LOOKING STATEMENTS DUE TO THE RISKS AND UNCERTAINTIES SET FORTH UNDER
"MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS", "CERTAIN BUSINESS RISKS" AND ELSEWHERE IN THIS FORM 10-K. THE
COMPANY UNDERTAKES NO OBLIGATION TO REVISE ANY FORWARD LOOKING STATEMENTS IN
ORDER TO REFLECT EVENTS OR CIRCUMSTANCES THAT MAY ARISE AFTER THE DATE OF
THIS REPORT. READERS ARE URGED TO CAREFULLY REVIEW AND CONSIDER THE VARIOUS
DISCLOSURES MADE BY THE COMPANY IN THIS REPORT AND IN THE COMPANY'S REPORTS
FILED WITH THE SECURITIES AND EXCHANGE COMMISSION THAT ATTEMPT TO ADVISE
INTERESTED PARTIES ON THE RISKS AND FACTORS THAT MAY AFFECT THE COMPANY'S
BUSINESS.
OVERVIEW
Puma develops, markets and supports Mobile Data Exchange-TM- ("MDE")
software, which allows users to easily access, exchange and synchronize
information stored on a variety of different computing devices such as
desktop computers and mobile computing devices, including notebook and
handheld computers, personal electronic organizers, smart phones and smart
pagers. The Company's MDE software is designed to improve the productivity of
business professionals who are increasingly relying on mobile computing
devices to address their growing needs for accessible, up-to-date
information, whether in or out of the office. Puma's IntelliSync-TM- product
family allows "content-aware" data synchronization among a wide range of
mobile computing devices. Puma's TranXit-Registered Trademark- product
family ("TranXit") is a leading software solution specifically designed to
utilize wireless infrared ("IR") connectivity technology for file exchange,
synchronization and printing and, along with IntelliSync, offers solutions
for convenient, reliable and cost-effective Mobile Data Exchange.
INDUSTRY BACKGROUND
In recent years, significant advancements in miniaturization, visual
displays, long-life batteries and portable communications have led to the
introduction of many innovative new mobile computing devices. These highly
portable devices allow users to work and communicate as they travel and have
fueled the significant growth of mobile computing. According to International
Data Corporation ("IDC"), portable computers represented 15.2% of total
personal computer ("PC") shipments of 58.2 million units in 1995. IDC
estimates that this percentage will grow to 19.6% of 117.2 million units in
the year 2000. Other electronic consumer devices, such as personal electronic
organizers and smart phones, are also being introduced to provide data
storage and information management capabilities to the mobile business
professional. The 3COM PalmPilot, Windows CE handheld PCs, Nokia 9000
Communicator, and the Sharp Mobile Organizer are examples of popular handheld
mobile devices. Dataquest estimates that 1.3 million handheld computers,
including organizers and other handheld devices, were shipped worldwide in
1995, and will grow to 5.3 million in the year 2000. IDC estimates that the
PDA market (which includes smart pagers) will grow from 858,000 units sold
last year to 1.8 million by the end of 1997, and out to 7.6 million in the
year 2001.
As more types of new mobile computing devices become available to
business professionals, users are faced with the difficulty of exchanging
information among these various devices. This problem of interoperability is
caused by the need to exchange information among different hardware devices,
operating systems and applications. Hardware platforms range from high-speed
Pentium PCs with hundreds of megabytes of memory and gigabytes of storage, to
"shirt pocket" organizers, with specialized processors and limited memory and
storage. In addition, these devices use numerous operating systems, such as
Windows for Workgroups, Windows 3.1, Windows 95, Windows NT, DOS and others,
and utilize an even greater range of information management applications,
databases and data formats. Enabling these devices to communicate,
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exchange and synchronize information is a complex and challenging task.
Accomplishing this requires data-level, or content-aware, synchronization
technology to maintain complete, up-to-date and accurate information. For
example, content-aware data synchronization technology allows users to
exchange addresses from the Address Book software application on a 3COM
PalmPilot with Lotus Organizer on a desktop PC, updating only the fields that
have been most recently modified, rather than copying one file over another,
thereby synchronizing both databases with the latest information.
In addition, while notebooks and a wide range of other mobile computing
devices have increased individual productivity, they have created certain
challenges in the areas of connectivity and synchronization of data and files
stored on those devices and on desktop computers. Until recently, users of
mobile computing devices were limited to cable and wired solutions as the
only effective means to connect to their desktop computers and printing
devices. Most PC notebook manufacturers, and a growing number of handheld
device manufacturers have adopted IR (infrared) as the most cost-effective,
efficient medium for wireless connectivity in the MDE software market. Today,
IR connectivity costs less than other connectivity technologies, requires
less space inside a device, and is based on a single, international standard
developed by the Infrared Data Association ("IrDA") which includes
approximately 150 companies including Compaq, Ericsson, HP, IBM, Intel,
Microsoft, Motorola, Nokia, Sharp and Toshiba. The Company believes the
market for IR connectivity is significant, as IDC estimates that 1.7 million
IR-enabled notebooks were shipped worldwide in 1995, and will grow to 20
million in the year 2000. IDC also estimates that the percentage of
IR-enabled notebook computers as a percentage of all notebook computers
shipped will increase from 21.2% in 1995 to 100.0% by the year 2000.
Business professionals are continuously seeking ways to improve
productivity and, as a result, are increasingly using the growing number of
new, innovative mobile computing devices. In order to manage information
effectively, these users need convenient connectivity and synchronization
solutions for the specific combination of devices and applications that they
use. MDE software solutions allow users to synchronize information maintained
separately on multiple devices (e.g., contact databases maintained by a
mobile professional using a handheld computer in the field and by a support
colleague using a desktop PC in the office). A software solution that links
such different devices must address multiple hardware architectures,
operating systems, communications architectures and application specific data
formats and structures.
THE PUMA SOLUTION
Puma's MDE software products, anchored by its award-winning IntelliSync
family, are designed to increase productivity for business professionals by
allowing users to easily access, exchange and synchronize information stored
on a variety of different computing devices. Puma's products allow the mobile
professional to access information at low cost with easy-to-use applications,
saving time and money. Puma's lntelliSync product family allows users to
synchronize data on handheld mobile computing devices with data on PCs by
virtue of Puma's patented DSX-TM- (data synchronization extensions)
content-aware data synchronization technology. The TranXit product family is
specifically designed to utilize IR connectivity technology for reliable,
cost-effective file exchange, synchronization and printing. The Puma solution
includes the following characteristics:
INTELLIGENT, CONTENT-AWARE DATA SYNCHRONIZATION. The Company's patented DSX
technology provides content-aware data synchronization among a growing number
of handheld devices and industry-leading personal information management
software ("PIMs") and contact management and scheduling applications such as
Lotus Organizer, Microsoft Schedule+ and Outlook, GoldMine, Symantec ACT!,
Novell GroupWise, ON Technology Meeting Maker, NetManage ECCO, Starfish
Sidekick and others. This technology seamlessly and transparently translates
the information from one data format to another as the information is
synchronized. Built on a powerful data translation engine, it can expand via
device and application-specific translators to accommodate new devices and
applications.
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WIDESPREAD SOLUTIONS FOR INTEROPERABILITY. Puma's products provide
connectivity and content-aware data synchronization among industry-leading
PCs and mobile computing devices, operating systems and applications. Puma
products operate with major PC operating systems including Windows 3.1,
Windows for Workgroups, Windows 95 and Windows NT as well as several
proprietary operating systems. Puma also provides interoperability across a
wide range of industry-standard and vendor-specific applications by
supporting multiple data formats. Puma's IR communications architecture
enables robust operation across IR-enabled platforms. IntelliSync for
Notebooks, the successor to TranXit, is backwards compatible with previous
versions of TranXit, allowing users to connect and exchange information with
all previous versions across different operating systems.
LEADING IR CONNECTIVITY SOFTWARE. Both IntelliSync for Notebooks and the
TranXit product family are specifically designed for file exchange and
synchronization over convenient wireless IR connections. They fully support
the IrDA standards, with TranXit being the first file exchange software to
incorporate the new Fast IR standard (IrDA-2) for 4.0 Mbps connectivity. They
provide a rich set of wireless file transfer, synchronization and wireless
printing features that are both easy to use and cost-effective. Puma has
bundled either TranXit or IntelliSync for Notebooks with the vast majority of
IR-enabled notebooks shipping worldwide.
STRATEGIC PARTNERS AND BROAD-BASED OEM ADOPTION WORLDWIDE. Puma has
achieved broad penetration into many of the leading OEM hardware vendors,
including Acer, Brother, Canon, Citizen, Compaq, DEC, Epson, Fujitsu, Gateway
2000, Hitachi, IBM, Matsushita, Mitsubishi, NEC, Olivetti, Samsung, Sanyo,
Sharp, Texas Instruments and Zenith. This allows business professionals to
choose virtually any mobile computing device and effectively manage data
between a PC or server and a mobile computing device. The Company believes
that its development projects with leading hardware and software vendors
significantly reduce time to market for its products.
STRATEGY
Puma's objective is to maintain its leadership position as a worldwide
provider of mobile data exchange software, including advanced data
synchronization and wireless IR connectivity software, for business
professionals. To achieve this objective, Puma has adopted the following key
strategies:
CREATE CROSS-PLATFORM STANDARD. The Company's strategy is to provide
innovative software solutions that allow a growing number of mobile computing
devices to communicate and exchange data. These mobile devices are based on
an increasing number of different operating systems, processor architectures,
communications architectures and applications which utilize incompatible data
formats. The Company plans to continue to work closely with leading operating
system suppliers, OEMs, semiconductor manufacturers, device manufacturers and
applications vendors that often compete with one another. The Company
believes that its cross-platform standard will continue to be an advantage in
providing a widely-adopted MDE software solution.
DEVELOP MULTIPLE PRODUCTS FROM CORE TECHNOLOGIES. The Company intends to
leverage its core technologies and engineering experience to expand the
breadth of its software product offerings. By leveraging its advanced
content-aware DSX data synchronization and IR connectivity technologies, Puma
plans to continually broaden its IntelliSync product family. In addition, as
innovative new mobile computing devices are introduced into the market, Puma
will leverage its engineering expertise, core technologies and relationships
with market-leading OEMs to develop new advanced MDE software products that
support these devices.
EXPAND AND LEVERAGE STRATEGIC RELATIONSHIPS. Puma currently has OEM,
marketing or technology relationships with more than 70 hardware and software
vendors worldwide including 3COM/U.S. Robotics, Acer, AST, AT&T Wireless,
Canon, Casio, DEC, Ericsson, Fujitsu, Geoworks, HP, IBM, Intel, Lotus,
Motorola, NEC, Novell, Oracle, Seiko Epson, Sharp, Texas Instruments, Toshiba
and Unwired Planet, and
5
plans to develop additional relationships with other computer and mobile
computing device manufacturers as well as other software application vendors.
These relationships generally enable Puma to receive product prototypes from
hardware manufacturers and software vendors prior to their market
introduction. The Company believes it is thereby in a strong position to
launch complementary product offerings shortly after the commercial release
of these companies' new hardware and software products.
EXPAND DISTRIBUTION CHANNELS. The Company has developed significant
brand-name recognition with its customers by licensing its products to many
of the world's leading computer and mobile computing device manufacturers.
Puma seeks to leverage this brand name recognition in order to license its
products to additional OEMs and to increase sales through major distributors,
resellers, computer dealers, retailers and mail-order companies. In addition,
Puma plans to continue to expand its co- and joint-marketing programs,
channel promotions and bundling arrangements.
INCREASE PENETRATION OF INTERNATIONAL MARKETS. The Company has established
an international distribution network by forming overseas relationships in
South Africa, Asia, Australia, Europe and Canada. Puma intends to further
develop its international distribution network by forming additional
distribution partnerships and offering translations of its product family in
several additional languages. The Company believes its growing international
distribution network will further its competitive advantage over potential
entrants into a market.
CUSTOMERS. Puma's current customer base consists principally of large OEMs
in the PC market. In fiscal 1997, Toshiba accounted for approximately 21% of
the Company's revenue. In fiscal 1996, Toshiba and NEC accounted for
approximately 18% and 13% of the Company's revenue, respectively. In fiscal
1995, NEC, Toshiba and Canon accounted for approximately 16%, 15% and 14% of
the Company's revenue, respectively. No other customer accounted for greater
than 10% of the Company's revenue in fiscal 1997, fiscal 1996 or fiscal 1995.
The Company licensed its products to more than 50 OEM customers in fiscal
1997. The following is a list of customers from whom the Company recognized
more than $100,000 in revenue in fiscal 1997:
Apple Matsushita
Compaq NEC
Ericsson Olivetti
Fujitsu Samsung
GVC Sharp
Gateway Texas Instruments
Hitachi Toshiba
IBM
PRODUCTS
Puma offers a wide range of software products to both the OEM and retail
markets. These products allow users to wirelessly connect computing devices
as well as exchange and synchronize information across a diverse set of
hardware platforms, operating systems and applications. By combining its
advanced data synchronization and IR connectivity technologies, the Company
is able to develop a number of products designed for a specific application,
operating system or hardware platform.
PRODUCT NAME DESCRIPTION INTRODUCTION DATE
- ------------ ----------- -----------------
IntelliSync for Notebooks/IntelliSync 97 Sold through both OEM and retail channels, this September 1997
product provides PC-to-PC file transfer and
synchronization including PIM-to-PIM
synchronization over wireless IR, wired connection,
and network connections.
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PRODUCT NAME DESCRIPTION INTRODUCTION DATE
- ------------ ----------- -----------------
IntelliSync for PDA product family Content-aware data synchronization among PC-based August 1996
applications and mobile computing devices. The
IntelliSync for PDA family include support for the
PalmPilot, Windows CE, Sharp Organizers, TI
Organizers, Nokia 9000 Communicator, and AT&T
PocketNet Service.
IntelliSync Gold Designed for the corporate market, IntelliSync Gold October 1997
includes several IntelliSync-supported products in a
single package.
TranXit OEM product for file transfer, synchronization and October 1994
wireless printing over IR connections
TranXit Pro Retail version, including SyncPro automatic
synchronization, delta file transfer and long file May 1996
name support for Windows 95
TranXit Pro Connectivity Kit TranXit Pro plus IR-adapter hardware for the May 1996
desktop PC
TranXit for DOS File transfer and synchronization over IR connections December 1996
for DOS
IntelliLink-Registered Trademark- Data "import" and "export" among PC-based applications September 1993
and mobile computing devices
INTELLISYNC FOR NOTEBOOKS (INITIALLY INTELLISYNC 97 FOR WINDOWS). IntelliSync
for Notebooks, the successor to the TranXit product family, is a native
32-bit Windows 95/Windows NT PC-to-PC synchronization product that provides
file transfer and synchronization as well as direct PIM-to-PIM
synchronization (incorporating Puma's DSX technology) between two PCs, or
between a PC and a network server. It supports IR, cable, and network
connections. IntelliSync for Notebooks will replace TranXit in the OEM
channel, and will also be sold in the retail channel.
INTELLISYNC FOR PDA PRODUCT FAMILY. The IntelliSync for PDA product family
provides content-aware data synchronization, including complete conflict
resolution, between a broad range of PC-based PIMs, contact management and
scheduling applications, as well as a number of mobile computing devices
including the PalmPilot, Windows CE, Sharp Organizers, TI Organizers, Nokia
9000 Communicator and AT&T PocketNet Service. Based upon the Company's
patented DSX technology, IntelliSync allows users to automatically
synchronize their mobile computing devices directly with various PC
applications in a single step, eliminating the need for intermediate
conversions or translations.
INTELLISYNC GOLD. IntelliSync Gold is designed for the corporate market, and
combines many of the individual IntelliSync products in a single package.
IntelliSync Gold will be sold primarily as a volume purchase product to the
corporate market, and provides increased flexibility to corporate users by
including support for a wide variety of mobile devices in a single product.
TRANXIT. TranXit is the leading software solution for wireless file
transfer, synchronization and printing, specifically designed to operate over
convenient IR connections. Directed at the OEM market, TranXit is currently
shipped on the vast majority of all IR-enabled notebook PCs shipped
worldwide. TranXit operates under Windows for Workgroups, Windows 3.1 and
Windows 95, offering users broad operating system interoperability. TranXit
has been significantly enhanced since its original release and each new
version of TranXit is backward compatible with all previous versions.
TRANXIT PRO. TranXit Pro is the retail version of the OEM TranXit software
product. Sold as both an upgrade for TranXit to existing users and as a
separate solution to new users, TranXit Pro adds additional features such as
SyncPro for enhanced and automatic data synchronization, a virtual Windows
clipboard for collaborative processing between two PCs, delta file transfer
for enhanced performance and long file-name support for Windows 95.
TRANXIT PRO CONNECTIVITY KIT. The TranXit Pro Connectivity Kit combines
TranXit Pro with an IrDA compliant serial IR adapter for a desktop PC. A
complete solution for an IR notebook user, the TranXit Pro Connectivity Kit
provides convenient notebook-to-desktop wireless IR connectivity.
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TRANXIT FOR DOS. Much of the horizontal computing market has migrated to
graphical user interface operating systems, such as Windows for Workgroups,
Windows 3.1 and Windows 95. There are, however, a large number of vertical
market hardware devices, such as those used for data collection or factory
automation, that remain based upon the DOS operating system. TranXit for DOS
provides the necessary connectivity and file transfer capabilities that
allows these devices to interoperate with PCs. TranXit for DOS is
interoperable with all other versions of the TranXit family.
INTELLILINK. IntelliLink provides data "import" and "export" between a broad
range of PC-based contact management and scheduling applications, and a
number of mobile computing devices.
FUTURE PRODUCTS
INTELLISYNC FOR PDA PRODUCT FAMILY. Puma will continue to broaden the
IntelliSync for PDA product family by providing support for new mobile
devices, including smart phones and smart pagers as they reach the market. In
addition, Puma will expand the application support provided with this family
of products to include additional applications, particularly groupware
applications.
INTELLISYNC FOR SERVERS. Part of Puma's strategy is to bring synchronization
solutions to the server level, both for enterprise and Internet environments.
Puma's acquisition of Real World Solutions, along with its existing core
technologies, will help Puma develop, and work with other partners to
develop such solutions.
TECHNOLOGY
Puma's software products allow the exchange and synchronization of data
across diverse platforms, operating systems and applications. The Company has
developed two complementary proprietary technologies for mobile data
exchange: DSX technology for content-aware data synchronization and IR
connectivity. These complementary technologies, taken individually and
together, enable Puma to provide comprehensive solutions that meet the
market's growing needs for convenient, accurate, easy to use data exchange,
synchronization and connectivity.
CONTENT-AWARE DATA SYNCHRONIZATION. The Company's content-aware DSX data
synchronization technology operates at both the file and record level to
synchronize data among different software applications and hardware platforms
during data transfer. With DSX technology, Puma's products allow users to
synchronize not only files, but also the data within those files, and to
synchronize databases by field or record, not just copy one database file
from one to another. This advanced data synchronization technology is
composed of three main components that collectively work to enable the
effective transfer of data across supported applications and platforms:
SYNCHRONIZATION ENGINE. Puma's proprietary synchronization engine is
the central component responsible for controlling the flow of data
throughout the entire synchronization process. It directs translator
modules to retrieve, add, delete, change and distribute data records or
fields on demand.
INTERMEDIATE DATA REPRESENTATION. Puma's synchronization technology
makes extensive use of modularity to maximize reusability for the
translator modules. The synchronization engine communicates with all
translator modules using a common "dialect," referred to as intermediate
data representation. Intermediate data representation stipulates rules
for exchanging common types of data imposing restrictions on data content
(i.e., the number and type of fields in each application). The existence
of a common data representation makes it possible for a new translator to
immediately synchronize with any supported application or mobile
computing device.
TRANSLATORS. Each translator module is responsible for interfacing with
one application or mobile computing device. When operating under Windows,
a translator is packaged as a separate Dynamic Link Library ("DLL") for
maximum reusability. The development of new translators (as well as the
maintenance of existing modules) is greatly eased by the existence of the
translator framework, a
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collection of powerful C++ classes which supply software engineers with
the necessary abstractions to quickly and easily develop translator
modules to meet expanding market needs.
IR CONNECTIVITY. Puma's IR connectivity software enables the wireless
transfer of data among notebook and desktop PCs, printers and mobile
computing devices. IntelliSync for Notebooks and the TranXit family are
designed to support IrDA standards, with TranXit being the first file
exchange and synchronization software to incorporate the new Fast IR standard
(IrDA-2) for 4.0 Mbps connectivity.
COMMUNICATIONS ARCHITECTURE. The Company's software is based upon an
extensive, proprietary, network and device independent communications
architecture, enabling access to a variety of mobile computing devices
through a flexible and simple application program interface ("API") that
speeds the development of new features. A layered, modular design allows
the architecture to leverage existing published data transfer protocols
(IrDA, Windows Sockets), when available, and to create proprietary data
transfer protocols to provide connectivity to a broad range of devices
without extensive modification of the software.
The Company's IR communications architecture isolates hardware
implementation details from the rest of the protocol stack, enabling quick
support of new IR hardware implementations and fast adoption of new IR
standards and extensions. The architecture supports multiple vendors'
implementation of IrDA protocol stacks for migration to new operating systems
and platforms.
Puma's communication protocols are designed to operate across a variety
of network and operating system environments, enabling mobile data exchange
among them. Puma software currently supports data transfer among Windows for
Workgroups, Windows 3.1 and Windows 95. Puma has also worked with Microsoft
to ensure that the Microsoft IR driver supports Mobile Data Exchange among
operating systems and IR devices.
SALES AND MARKETING
Puma primarily sells its products through more than 50 OEM customers and
strategic partners worldwide. In fiscal 1997, Toshiba accounted for
approximately 21% of the Company's revenue. In fiscal 1996, Toshiba and NEC
accounted for approximately 18% and 13% of the Company's revenue,
respectively. In fiscal 1995, NEC, Toshiba and Canon accounted for
approximately 16%, 15% and 14% of the Company's revenue, respectively.
Puma strives to be both a marketing and a technology partner with its OEM
customers and its strategic partners. Puma's sales and marketing organization
sells the Company's products directly to its OEM partners, and then works
with them on joint marketing and channel programs. Puma works closely with
OEM partners on their new hardware products by providing technical input to
the OEM, thereby helping to ensure that Puma's software products will work
successfully with the OEM's hardware products. Puma also trains and educates
the OEM's sales and marketing organizations on Puma's products, allowing them
to act as Puma's "virtual" sales force to their channels and direct
customers. In addition, Puma works closely with its hardware and software
strategic partners to develop effective marketing programs designed to
increase sales.
Puma distributes its retail products through several distribution
channels both domestically and internationally. In the United States, Puma's
sales organization works directly with major distributors, resellers,
computer dealers, retailers and mail order companies to distribute its retail
packaged products. In order to further develop its brand name recognition,
Puma plans to continue to expand its joint marketing programs, marketing
channel promotions and bundling arrangements with its strategic partners. See
"Business Risks-Risks Associated with Development of Retail Distribution
Channel."
Revenue from OEMs was approximately 74%, 89% and 95% of revenue in fiscal
1997, fiscal 1996 and fiscal 1995, respectively. In fiscal 1997, Toshiba
accounted for approximately 21% of the Company's revenue. Although several
OEMs are subject to certain contractual minimum purchase obligations, there
can
9
be no assurance that any particular OEM will satisfy the minimum obligations.
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. See "Business Risks-
Dependence on OEMs."
International revenue represented approximately 54%, 67% and 71% in
fiscal 1997, fiscal 1996 and fiscal 1995, respectively. Puma markets and
sells through selected distributors and republishers that focus on specific
geographic and market segment areas. These international partners operate as
an extension of Puma's marketing and sales organizations, developing the
appropriate sales channels in their regions. They also work with local
resellers as well as local offices of Puma's OEM customers to develop
specific marketing and channel promotions for their regions. As of July 31,
1997, the Company was represented by approximately 26 distributors and
resellers in Africa, Asia, Australia, Canada and Europe and is continuing to
expand its international reach as appropriate distributors or republishers
are found. See "Business Risks-Risks Associated with International
Operations."
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 Traveling Software, Chapura, and DataViz. 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 operating
systems software, thereby potentially reducing the need for OEMs to include
Puma'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. See "Risk Factors-Competition."
The principal competitive factors affecting the market for the Company's
software are compatibility, functionality, reliability, OEM relationships and
price. The Company believes it competes favorably overall with respect to
these factors.
The Company believes that users will want to be able to utilize IR
connectivity and data synchronization functionality with a wide variety of
mobile computing devices and software applications, and that its
standards-based approach will continue to allow it to compete favorably with
larger companies whose products may not be able to support such a degree of
interoperability. Puma's strategic relationships with hardware and software
vendors enable it to provide interoperability among a broader range of
applications than many of its current and potential competitors.
10
CUSTOMER SUPPORT
The Company's service and support organization provides secondary
technical support to OEMs, primary technical support to retailers and end
users and education and training services to OEMs and retailers. The
Company's current OEMs typically have software maintenance agreements with
the Company that provide for one or more of the following services:
TECHNICAL SUPPORT. The Company offers technical support to OEM customers who
have entered into agreements to license the Company's products. The Company
provides service and support through its internal technical support
organization. Technical support includes the maintenance of the Company's
products in accordance with specifications contained in the Company's guide
for such products, as well as access to technical support personnel by
telephone, fax and e-mail. Customers under license agreements are typically
entitled to certain minor product updates and modifications, primarily bug
fixes. The Company's OEMs and some of its retail channel partners provide
telephone and initial support to end users.
RESEARCH AND DEVELOPMENT
The Company seeks to capitalize on its expertise in data synchronization
and IR connectivity technology by developing products for new applications
and increasing the functionality of existing products. The Company believes
its core DSX and IR technologies are widely applicable, and it plans to
continue to develop new products based on its core technologies.
As of July 31, 1997, the Company's engineering group consisted of 77
full-time employees and full-time equivalent consultants who were engaged in
product development. Product maintenance and customer support
responsibilities are shared by engineering group employees on an as-needed
basis. In fiscal 1997, fiscal 1996 and fiscal 1995 research and development
expenses were $6.2 million, $3.0 million and $1.8 million, respectively.
The markets for Puma'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 for research
and development based on planned product introductions and enhancements;
however, actual expenditures may significantly differ from budgeted
expenditures. Inherent in the product development process are a number of
risks. The development of new, technologically advanced software products is
a complex and uncertain process requiring high levels of innovation, as well
as the accurate anticipation of technological and market trends. The
introduction of new or enhanced products also requires the Company to manage
the transition from older products in order to minimize disruption in
customer ordering patterns, avoid excessive levels of older product
inventories and ensure that adequate supplies of new products can be
delivered to meet customer demand. There can be no assurance that the Company
will successfully develop, introduce or manage the transition to new
products. The Company has in the past, and may in the future, experienced
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. See "Risk Factors-Risks Associated with Product Development and Timely
Introduction of New and Enhanced Products."
11
PROPRIETARY RIGHTS
Puma 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 three issued United States patents that
expire in 2012, 2014 and 2015, respectively, and has six patent applications
pending. In addition, the Company has certain corresponding international
patent applications pending under the Patent Cooperation Treaty in countries
to be designated at a later date. There can be no assurance that 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. In addition, the laws of some
foreign countries 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. The Company
has entered into source code escrow agreements with a limited number of its
customers and resellers requiring release of source code in certain
circumstances. Such agreements generally provide that such parties will have
a limited, non-exclusive right to use such code in the event that there is a
bankruptcy proceeding by or against the Company, if the Company ceases to do
business or if the Company fails to meet its support obligations. The Company
also provides its source code to foreign language translation service
providers and consultants to the Company in limited circumstances. The
provision of source code may increase the likelihood of misappropriation by
third parties.
The Company is not aware that it is infringing any proprietary rights of
third parties. There can be no assurance, however, that third parties will
not claim infringement by the Company of their intellectual property rights.
The Company expects that software product developers will increasingly be
subject to infringement claims as the number of products and competitors in
the Company's industry segment grows and the functionality of products in
different industry segments overlaps and as patent protection for software
becomes increasingly popular. Any such claims, with or without merit, could
be time consuming to defend, result in costly litigation, divert management's
attention and resources or cause product shipment delays. In addition, such
claims could require the Company to discontinue the use of certain software
codes or processes, to cease the manufacture, use and sale of infringing
products, to incur significant litigation costs and expenses and to develop
non-infringing technology or to obtain licenses to the alleged infringing
technology. There can be no assurance that the Company would be able to
develop alternative technologies or 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. See "Risk
Factors-Proprietary Rights, Risks of Infringement and Source Code Release."
12
EMPLOYEES
As of July 31, 1997, the Company had 136 employees and full-time
equivalent consultants, including 38 in sales and marketing, 77 in
engineering and 21 in operations, finance and administration. All of the
Company's employees are located in the United States and none are represented
by a labor union. The Company has experienced no work stoppages and believes
its relationship with its employees is good.
Competition for qualified personnel in the Company's industry is intense.
The Company believes that its future success will depend in part on its
continued ability to hire, train and retain qualified personnel.
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.
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
13
portion of its revenue from the licensing of its TranXit IR connectivity
software. Although additional products are currently being sold and
potential products are currently under development, the Company believes that
the TranXit and IntelliSync for Notebooks product families may continue to
account for a substantial portion of the Company's revenue for the
foreseeable future. The life cycle of TranXit and IntelliSync for Notebooks
is difficult to estimate because of, among other factors, the emerging nature
of the MDE software market and the possibility of future competition. As a
result, the Company's future operating results, particularly in the near
term, are dependent upon the continued market acceptance of TranXit and
IntelliSync for Notebooks. There can be no assurance that TranXit will
continue to meet with market acceptance or that the Company will be
successful in developing, introducing or marketing new or enhanced products.
A decline in the demand for TranXit, as a result of competition,
technological change or other factors, and the failure to successfully
develop, introduce or market new or enhanced products would have a material
adverse effect on the Company's business, financial condition and results of
operations.
The market for MDE software is still emerging, and there can be no assurance
that it will continue to grow or that, even if the market does grow, TranXit
or IntelliSync for Notebooks will be adopted. Moreover, although demand for
TranXit and its successor product IntelliSync for Notebooks has grown in
recent years with the Company's OEM customers, the Company has no accurate
method of determining the extent that end-users utilize TranXit or
IntelliSync for Notebooks. The Company's success in generating significant
revenue in these evolving markets will depend, among other things, on its
ability to educate potential OEMs, retail partners and end users about the
benefits of the Company's IR technology, to maintain and enhance its
relationships with leading OEMs and to develop effective retail distribution
channels. The inability of the Company to continue to penetrate the existing
market for MDE products or the failure of current markets to grow or new
markets to develop or be receptive to the Company's products would have a
material adverse effect on the Company's business, operating results and
financial condition. The emergence of markets for the Company's MDE products
will also be affected by a variety of factors beyond the Company's control.
In particular, the Company's products are designed to conform to certain
standard IR and data communications specifications, many of which have not
been adopted as industry standards. There can be no assurance that these
specifications will be widely adopted or that competing specifications will
not emerge which will be preferred by OEMs. The emergence of markets for the
Company's products is also critically dependent upon continued expansion of
the market for mobile computing devices and the timely introduction and
successful marketing and sale of notebook and desktop personal computers
("PCs"), personal electronic organizers, smart phones and smart pagers. In
addition, there can be no assurance that IR technology itself will be adopted
as the standard or preferred technology for MDE or that manufacturers of
personal computers will elect to bundle IR technology in their products.
There can be no assurance that these or other factors beyond the Company's
control will not adversely affect the development of markets for the
Company's products.
DEPENDENCE ON OEMS. Revenue from OEMs was a substantial portion of the
Company's revenue during fiscal 1997, fiscal 1996 and fiscal 1995. Weakening
demand from any key OEM and the inability of the Company to replace revenue
provided by such OEM could have a material adverse effect on the Company's
business, operating results and financial condition. The Company maintains
individually significant receivable balances from major OEMs. If these OEMs
fail to meet their payment obligations, the Company's operating results could
be materially adversely affected.
RISKS ASSOCIATED WITH DEVELOPMENT OF RETAIL DISTRIBUTION CHANNEL. The Company
intends to distribute its products through distributors, major computer and
software retailing organizations, consumer electronics stores, discount
warehouse stores and other specialty retailers. The Company often sells on a
purchase order basis, and there are often no minimum purchase obligations on
behalf of any principal distributor or retailer. Distribution and retailing
companies in the computer industry have from time to time experienced
significant fluctuations in their businesses, and there have been a number of
business failures among these entities. The insolvency or business failure
of any significant distributor or retailer of the Company's products could
have a material adverse effect on the Company's business, operating results
and financial condition. Further, certain mass market retailers have
established exclusive relationships under which such retailers will buy
customer software only from one or two intermediaries. In such instances,
the price or other terms on which the Company sells to such retailers may be
materially adversely affected by
14
the terms imposed by such intermediaries, or the Company may be unable to
sell to such retailers on the terms which the Company deems acceptable.
Retailers of the Company's products typically have a limited amount of shelf
space and promotional resources, and there is intense competition among
consumer software producers for adequate levels of shelf space and
promotional support from retailers. The Company expects that, as the number
of consumer multimedia and software products and computer platforms
increases, this competition for shelf space will intensify. Due to increased
competition for limited shelf space, retailers and distributors are
increasingly in a better position to negotiate favorable terms of sale,
including price discounts, price protection and product return policies.
Retailers often require software publishers to pay fees or provide other
accommodations in exchange for shelf space. The Company's products
constitute a relatively small percentage of each retailer's sales volume, and
there can be no assurance that retailers will continue to purchase the
Company's products or provide the Company's products with adequate shelf
space and promotional support.
UNCERTAINTIES ASSOCIATED WITH ACQUISITIONS. The Company has been involved in
two acquisitions. These acquisitions have been motivated by many factors
including the desire to obtain new technologies, the desire to expand and
enhance the Company's product lines and the desire to attract key personnel.
In July 1997, the Company acquired substantially all of the assets of Real
World Solutions, Inc. (RWS), a developer of client/server solutions. As a
result of the acquisition 4 new employees joined the Company. RWS has
incurred a cumulative loss through its acquisition by Puma on July 17, 1997
of approximately $1.3 million on cumulative revenue of $0.5 million.
In April 1996, the Company acquired IntelliLink Corp. As a result of the
acquisition the Company acquired two additional product families, as well as
other technologies. In addition, more than 20 new employees joined the
Company. IntelliLink had incurred a cumulative net loss through its
acquisition by Puma on April 30, 1996 of approximately $2.5 million on
cumulative revenue of approximately $4.2 million.
In connection with both acquisitions, the Company's personnel have dedicated
and will continue to dedicate substantial resources in order to achieve the
anticipated technological benefits and operating efficiencies from
integrating the two companies. Difficulties encountered in integrating the
two companies' technologies and operations could adversely affect the
Company's business, operating results and financial condition. Accordingly,
the increased operating expenses associated with the acquired businesses
could have a material adverse effect on the Company's business, operating
results and financial condition.
MANAGEMENT OF GROWTH. The Company is currently experiencing growth and rapid
change which has placed, and will continue to place, a significant strain on
its administrative, operational and financial resources and increased demands
on its systems and controls. This growth has resulted in a continuing
increase in the level of responsibility for both existing and new management
personnel. The Company anticipates that its continued growth will require it
to recruit, hire, train and retain a substantial number of new engineering,
managerial, sales and marketing personnel. The Company's ability to manage
its growth successfully will also require the Company to continue to expand
and improve its operational, management and financial systems and controls on
a timely basis. For example, the Company is currently in the process of
implementing a new management information system which will support the
current and anticipated needs in the business. There can be no assurance
that the Company will be able to successfully implement such a system on a
timely basis. If the Company's management is unable to manage growth
effectively, the Company's business, operating results and financial
condition will be materially adversely affected.
15
DEPENDENCE ON STRATEGIC BUSINESS RELATIONSHIPS; RISKS ASSOCIATED WITH
THIRD-PARTY SERVICES. The Company believes that its success is largely
dependent on its strategic relationships with key participants in the PC and
mobile computing device industries, including Compaq, IBM, Intel, Microsoft,
NEC, Sharp, Texas Instruments, Toshiba and 3COM. These relationships
generally enable the Company to receive prototypes from hardware
manufacturers and software vendors prior to their market introduction. The
Company is thereby in a stronger position to launch complementary product
offerings shortly after the commercial release of these companies' new
hardware and software products. The loss of any of these strategic
relationships or any other significant partner could materially adversely
affect the Company's product development efforts, its business, operating
results and financial condition and its ability to realize its strategic
objective to be the technological leader in its industry. In addition, the
Company relies significantly on third-party services. In particular,
third-party services translate the Company's products into 13 different
native languages. The Company has generally been able to obtain translated,
functional versions of its products in a timely manner. However, any
significant delays by such third parties could delay new or existing
shipments of products and have a material adverse effect on the Company's
business, operating results and financial condition.
COMPETITION. The Company expects the market for MDE software, including data
synchronization and IR connectivity software, to the extent it develops, to
become intensely competitive. The Company currently faces direct competition
with respect to a number of its individual products from several private
companies, including DataViz, Chapura and Traveling Software. In addition to
direct competition, the Company faces indirect competition from existing and
potential customers that provide internally developed solutions. As a
result, the Company must educate prospective customers as to the advantage of
the Company's products versus internally developed solutions. The Company
currently faces limited direct competition from major applications and
operating systems software vendors who may choose to incorporate data
synchronization and IR connectivity functionality into their software,
thereby potentially reducing the need for OEMs to include the Company's
products in their notebook and desktop PCs. For example, Microsoft's
inclusion of certain features permitting data synchronization and IR
connectivity between computers utilizing the Windows 95 operating system may
have the effect of reducing revenue from the Company's software if users of
Windows 95 perceive that their data synchronization and IR connectivity needs
are adequately met by Microsoft. Certain of the companies with which the
Company competes or may in the future compete, including internal software
development groups of its current and potential customers, have substantially
greater financial, marketing, sales and support resources and may have more
"brand-name" recognition than the Company. There can be no assurance that the
Company will be able either to develop software comparable or superior to
software offered by its current or future competitors or to adapt to new
technologies, evolving industry standards and changes in customer
requirements. In addition, the PC and mobile computing device markets
experience intense price competition, and the Company expects that, in order
to remain competitive, it may have to decrease its unit royalties on certain
products.
DEPENDENCE ON KEY PERSONNEL. The Company's success depends to a significant
degree upon the continuing contributions of its engineering, management,
sales and marketing personnel. The Company has few employment contracts with
its key personnel and does not maintain any key person life insurance
policies. The loss of key management or technical personnel could adversely
affect the Company. The Company believes that its future success will depend
in large part upon its ability to attract and retain highly-skilled
engineering, management, sales and marketing personnel. Failure to recruit,
hire, train and retain key personnel could have a material adverse effect on
the Company's business, operating results and financial condition.
PROPRIETARY RIGHTS, RISKS OF INFRINGEMENT AND SOURCE CODE RELEASE. The
Company relies on a combination of patent, copyright and trademark laws,
trade secrets, confidentiality procedures and contractual provisions to
protect its proprietary rights. The Company also believes that factors such
as the technological and creative skills of its personnel, new product
developments, frequent
16
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 three issued United States patents that expire in 2012, 2014,
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 and practices of some foreign countries in which the Company does
business, in particular Taiwan, do not ensure that the Company's means of
protecting its proprietary rights in the United States or abroad will be
adequate or that competition will not independently develop similar
technology. There can be no assurance that the Company will not distribute
its software products in the future to countries where the enforcement of
proprietary rights may be equally or more uncertain. The Company has also
entered into source code escrow agreements with a limited number of its
customers requiring release of source code in certain circumstances. Such
agreements generally provide that such parties will have a limited,
non-exclusive right to use such code in the event that there is a bankruptcy
proceeding by or against the Company, if the Company ceases to do business or
if the Company fails to meet its support obligations. The Company also
provides its source code to foreign language translation service providers
and consultants to the Company in limited circumstances. The provision of
source code may increase the likelihood of misappropriation by third parties.
The Company is not aware that it is infringing any proprietary rights of
third parties. There can be no assurance, however, that third parties will
not claim infringement by the Company of their intellectual property rights.
In particular, because patent applications are kept confidential by the
Patent and Trademark Office, the Company has no means by which to monitor
patent applications filed by its competitors, which could result in future
infringement claims against the Company. The Company expects that software
product developers will increasingly be subject to infringement claims as the
number of products and competitors in the Company's industry segment grows
and the functionality of products in different industry segments overlaps and
as patent protection for software becomes increasingly popular. Any such
claims, with or without merit, could be time-consuming to defend, result in
costly litigation, divert management's attention and resources or cause
product shipment delays. In addition, such claims could require the Company
to discontinue the use of certain software codes or processes, to cease the
manufacture, use and sale of infringing products, to incur significant
litigation costs and expenses and to develop non-infringing technology or to
obtain licenses to the alleged infringing technology. There can be no
assurance that the Company would be able to develop alternative technologies
or obtain such licenses or, if a license were obtainable, that the terms
would be commercially acceptable to the Company.
In the event of a successful claim of product infringement against the
Company and failure or inability of the Company to license the infringed or
similar technology, the Company's business, operating results and financial
condition would be materially adversely affected.
DEPENDENCE ON LICENSED TECHNOLOGY. The Company licenses technology on a
non-exclusive basis from several companies for use with its products and
anticipates that it will 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-
17
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 1997,
fiscal 1996 and fiscal 1997. The Company expects that international revenue
will continue to account for a significant portion of its future revenue.
Revenue from the Company's international operations is subject to certain
inherent risks, including unexpected changes in regulatory requirements and
tariffs, difficulties in staffing and managing foreign operations, longer
payment cycles, problems in collecting accounts receivable and potentially
adverse tax consequences. In addition, sales in Europe and certain other
parts of the world typically are adversely affected in the summer months of
each year when many customers and users reduce their business activities.
These seasonal factors may have a material adverse effect on the Company's
business, operating results and financial condition. Although the Company's
revenue is currently denominated in U.S. dollars, fluctuations in currency
exchange rates could cause the Company's products to become relatively more
expensive to customers in a particular country, leading to a reduction in
sales or profitability in that country. Furthermore, future international
activity may result in foreign currency denominated sales, particularly if
international revenue from distributors increases. Consequently, gains and
losses on the conversion to U.S. dollars of accounts receivable and accounts
payable arising from international operations may contribute to fluctuations
in the Company's operating results. Royalty income by the Company from
customers in certain countries, such as Japan and Taiwan, is subject to
withholding income taxes. The amount and mix of the Company's income derived
from such customers will impact the Company's provision for income taxes.
Differences in the amount and mix of the Company's income actually derived
from customers subject to foreign withholding taxes as compared to the
amounts forecasted by the Company may adversely impact the Company's income
tax rate.
POTENTIAL VOLATILITY OF STOCK PRICE. The trading price of the Company's
Common Stock is likely to be highly volatile and may be significantly
affected by factors such as actual or anticipated fluctuations in the
Company's operating results; announcements of technological innovations; new
products or new contracts by the Company or its competitors; developments
with respect to patents; copyrights or proprietary rights; conditions and
trends in the software and other technology industries; adoption of new
accounting standards affecting the software industry; changes in financial
estimates by securities analysts; general market conditions and other
factors. In addition, the stock market has from time to time experienced
significant price and volume fluctuations that have particularly affected the
18
market prices for the common stocks of technology companies. These broad
market fluctuations may materially adversely affect the market price of the
Company's Common Stock.
DEPENDENCE ON YEAR 2000 COMPLIANCE OF THIRD-PARTY PRODUCTS. The Company's
synchronization software products operate as a conduit for data from handheld
devices to personal information manager software ("PIMs"). The Company has
no control as to whether the hardware devices and PIMs that the Company's
software supports will accurately process date and time data from, into and
between the 20th and 21st centuries. The Company and its business may be
adversely affected should the third-party products with which the Company's
software functions fail to accommodate the change in date from December 31,
1999 to January 1, 2000.
ITEM 2. PROPERTIES
The Company's principal administrative, engineering, manufacturing,
marketing and sales facilities total approximately 31,952 square feet and are
located in a single building in San Jose, California under a lease that
expires in June 2006. The Company also leases approximately 11,980 square
feet in a single building in Nashua, New Hampshire under a lease that expires
in May 2002.
Management believes that its current facilities are adequate for its
needs through the next twelve months, and that, should it be needed, suitable
additional space will be available to accommodate expansion of the Company's
operations on commercially reasonable terms.
ITEM 3. LEGAL PROCEEDINGS
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of security holders of the Company
subsequent to the Company's initial public offering in December 1996.
EXECUTIVE OFFICERS AND DIRECTORS
The executive officers and directors of the Company are as follows:
NAME AGE POSITION
- ------------------------------------------------------------------------------
Bradley A. Rowe 37 President, Chief Executive Officer and Director
Stephen A. Nicol 37 Senior Vice President, Sales and Director
M. Bruce Nakao 53 Senior Vice President, Finance and Administration,
and Chief Financial Officer
Michael M. Clair 49 Chairman of the Board
Tyrone F. Pike 43 Director
Robert D. Rutner, DDS 39 Director
MR. ROWE co-founded the Company in August 1993 and has served as President
since October 1993 and Chief Executive Officer since March 1995. He has also
served as a Director of the Company since August 1993. Prior to founding the
Company, from January 1991 to July 1993, he held various management positions
at SystemSoft Corporation, a PC system software supplier, including Vice
President of Worldwide Sales and General Manager of Desktop Computing. In
June 1988, Mr Rowe co-founded Extar Technologies, a manufacturer's
representative of PC products, where he held a number of management
positions, including Vice President of Sales and President until December
1990. From November 1983 to June 1988, Mr. Rowe served in various sales
positions at Western Digital Corporation, a storage
19
management company, including Director of Western Area Sales. Mr. Rowe holds
a B.S. degree in engineering and management science from Princeton University.
MR. NICOL co-founded the Company in August 1993 and has served as Senior Vice
President, Sales since its establishment. He has also served as a Director
since August 1993. Prior to founding the Company he served in several
capacities at SystemSoft Corporation, including as Director of Sales for
Japan and Asia Pacific from July 1992 to July 1993 and as Sales Manager for
the Eastern United States from November 1991 to July 1992. Mr. Nicol
co-founded Extar Technologies in June 1988 where he served until November
1991 as Vice President of Sales. Previously, Mr. Nicol served as OEM Manager
for Western Digital and computer sales representative for Hewlett-Packard. He
holds an A.B. degree in political science from Princeton University.
MR. NAKAO joined the Company in June 1996 as Chief Financial Officer and
Senior Vice President, Finance and Administration. Prior to joining the
Company, from May 1986 to June 1996, he served in several capacities at Adobe
Systems Incorporated, a software company, most recently as its Senior Vice
President, Finance and Administration, Chief Financial Officer and Treasurer.
He holds a B.A. degree in business and economics from the University of
Washington and an M.B.A. degree from Stanford University.
MR. CLAIR became a Director of the Company in November 1994 and has served as
Chairman of the Board since March 1995. Mr. Clair was a founder of SynOptics
Communications (now Bay Networks), a computer networking company, and from
January 1987 to November 1992, served as Vice President Sales and Marketing
and then as Senior Vice President of Sales and Customer Service of SynOptics.
Mr. Clair has more than 25 years' experience in data processing, data and
voice communications and local area networking. He spent the early part of
his career with Tymshare, a computer time-sharing company, and ROLM, a
manufacturer of digital PBX equipment, in a variety of sales and marketing
positions. He holds a B.S. degree in business and an M.B.A. degree from the
University of Buffalo. Mr. Clair is a director of several private companies
in Silicon Valley.
MR. PIKE became a Director of the Company in October 1996. Since March 1993,
Mr. Pike has served as a Director of Citrix Systems, a supplier of multi-user
application server products. In August 1996 Mr. Pike founded Switchsoft
Systems, a supplier of open virtual network management software for switches
and routers and has served as Chairman of the Board and Chief Executive
Officer since its inception. From January 1994 to August 1996, Mr. Pike
served in various positions at UB Networks, a computer networking company,
including Senior Vice President and Chief Technical Officer. Prior to joining
UB Networks, Mr. Pike served as a partner of Pike Associates from September
1992 to January 1994. From March 1992 to September 1992, Mr. Pike served as
President and Chief Executive Officer of Global Village Communications, a
networking communications company. From May 1991 to June 1992 he served as
Manager, Strategic Planning & Business Development of Intel Corporation, a
semiconductor company. From April 1983 to May 1991, Mr. Pike served as
Founder, Chairman of the Board and President of LANSystems, a computer
networking company, of which he served as a Director until February 1994. Mr.
Pike holds an A.B. degree in architecture from Princeton University.
DR. RUTNER became a Director of the Company in October 1993. He has practiced
dentistry since August 1985 as proprietor of the Serra Park Dental Group. He
holds a B.S. degree in biochemistry from the University of California at
Davis, an M.S. degree in biochemistry from the University of California at
Davis and a D.D.S. degree from Georgetown University. Dr. Rutner is a
director of several private companies in Silicon Valley.
20
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS
The Company completed its initial public offering of Common Stock in
December 1996, at $9.50 per share, and the Common Stock of the Company began
trading in the over-the-counter market on the Nasdaq National Market on
December 5, 1996, under the symbol "PUMA." The following table sets forth
the high and low closing prices for the Company's Common Stock as reported on
the Nasdaq National Market from December 5, 1996 through July 31, 1997.
These prices reflect inter-dealer prices, without retail mark-up, mark-down
or commission, and may not necessarily represent actual transactions.
1997 HIGH LOW
---- ---- ---
Period from December 5, 1996 to January 31, 1997 $19.25 $ 9.50
Third fiscal quarter (February 1, 1997 to April 30, 1997) 16.25 5.75
Fourth fiscal quarter (May 1, 1997 to July 31, 1997) 11.25 7.63
As of September 25, 1997, there were approximately 125 stockholders of
record of the Company's Common Stock and 12,086,823 shares of common stock
outstanding.
The Company has never paid dividends on its capital stock. The Company
currently intends to retain any future earnings for use in its business and
does not anticipate paying any cash dividends in the foreseeable future.
ITEM 6. SELECTED FINANCIAL DATA
The selected financial data for the four years ended July 31, 1997, which
appears on page 13 in the Registrant's Annual Report to Stockholders for the
fiscal year ended July 31, 1997 under the caption "Selected Financial Data",
is incorporated herein by reference.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The information required by this Item is set forth on pages 14-19 of the
Registrant's Annual Report to Stockholders for the fiscal year ended July 31,
1997 under the caption "Management's Discussion and Analysis", which is
incorporated herein by reference.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The financial statements, together with the report thereon of Price
Waterhouse LLP dated August 25, 1997, appearing on pages 20-35 of the
Registrant's Annual Report to Stockholders for the fiscal year ended July 31,
1997 are incorporated by reference in this Form 10-K Annual Report.
21
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
There were no disagreements with accountants on accounting and financial
disclosure.
PART III
ITEM 10. EXECUTIVE OFFICERS AND DIRECTORS OF THE REGISTRANT
Information relating to the directors and executive officers of the
Company is set forth in Part I Item 4 of this report under the caption
"Executive Officers and Directors of the Registrant."
ITEM 11. EXECUTIVE COMPENSATION
The information required by this Item is incorporated by reference from
the definitive proxy statement for the Company's 1997 annual meeting of
stockholders to be filed with the Commision pursuant to Regulation 14A no
later than 120 days after the end of the fiscal year covered by this Form
(the "Proxy Statement") under the caption "Executive Compensation and Other
Matters."
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
The information required by this Item is incorporated from the Proxy
Statement under the captions "Stock Ownership of Certain Beneficial Owners
and Management."
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information required by this Item is incorporated from the Proxy
Statement under the captions "Certain Relationships and Related Transactions"
and "Executive Compensation and Other Matters - Compensation Committee
Interlocks and Insider Participation in Compensation Decisions."
22
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON
FORM 8-K
(a) 1. Financial Statements.
The following consolidated financial statements of the Company included
in the Company's Annual Report to Stockholders for the fiscal year ended
July 31, 1997 are filed as part of this report:
Report of Independent Accountants.
Consolidated Balance Sheets at July 31, 1997 and 1996.
Consolidated Statements of Operations for the three
fiscal Years Ended July 31, 1997.
Consolidated Statements of Stockholders' Equity for the
three fiscal Years Ended July 31, 1997.
Consolidated Statements of Cash Flows for the three
fiscal Years Ended July 31, 1997.
Notes to Consolidated Financial Statements.
2. Supplemental Schedules.
Report of Independent Accountants on Financial Statement Schedule.
Schedule II - Valuation and Qualifying Accounts.
Financial Statement Schedules, other than the schedule listed
above, have been omitted because the required information is
contained in the Consolidated Financial Statements and the Notes
thereto, or because such schedules are not required or applicable.
3. Exhibits
(b) 1. Reports on Form 8-K
On July 31, 1997, the Company filed a report on Form 8-K (the "Form 8-K")
relating to a definitive Asset Acquisition Agreement (the "Agreement")
dated July 16, 1997 between the Company and Real World Solutions, Inc.
("RWS"), whereby the Company acquired substantially all of the assets and
assumed all of the liabilities of RWS on such date.
(c) Exhibits. The exhibits listed on the accompanying index to exhibits
immediately preceding the financial statement schedules are filed as part
of, or incorporated by reference into, this Form 10-K.
(d) Financial Statement Schedules. See Item 14 (a) above.
23
EXHIBIT NUMBER EXHIBIT TITLE
1.1 1 Form of Underwriting Agreement (draft dated November 8, 1996).
2.1 1 Agreement and Plan of Merger by and between Puma Technology,
Inc., a California corporation, and Puma Technology, Inc., a
Delaware corporation.
3.1 1 Articles of Incorporation of Puma Technology, Inc., a
California corporation.
3.2 1 Certificate of Incorporation of Puma Technology, Inc., a
Delaware corporation.
3.3 1 Bylaws of Puma Technology, Inc., a California corporation.
3.4 1 Bylaws of Puma Technology, Inc., a Delaware corporation.
4.1 1 Specimen Stock Certificate of the Registrant.
5.1 1 Opinion of Gray Cary Ware & Freidenrich, A Professional
Corporation.
10 1 Agreement and Plan of Merger dated April 30, 1996 among the
Company, IntelliLink Corp. and certain holders of
IntelliLink Corp.
10.1 1 1993 Stock Option Plan and forms of stock option agreements
used thereunder.
10.2 1 Puma Technology, Inc. 1996 Employee Stock Purchase Plan and
form of notice of exercise used thereunder.
10.3 1 Lease Agreement dated October 18, 1995, between the Company
and Photonics Corporation.
10.4 1 Form of Indemnity Agreement for directors and officers.
10.5+ 1 Software License Agreement dated as of May 30, 1995, between
the Company and Toshiba Corporation.
10.6+ 1 Software License Agreement dated as of September 14, 1995,
between the Company and NEC Technologies, Inc. and Amendment
No. 1 thereto dated October 25, 1995 and Amendment No. 2
thereto dated January 10, 1996.
10.7+ 1 Software License Agreement dated as of May 23, 1995, between
the Company and NEC Corporation and Amendment No. 1 thereto
dated February 19, 1996.
10.8+ 1 Software License Agreement dated as of May 20, 1996 between
the Company and NEC Corporation.
10.9 1 IntelliLink Corp. 1992 Incentive Stock Option Plan and forms
of stock agreements used thereunder.
11.1 2 Statement regarding Computation of Net Income Per Share.
13.1 2 Portions of the Annual Report to Stockholders for the fiscal
year ended July 31, 1997 expressly incorporated by reference
herein.
21.1 1 Subsidiaries of the Registrant.
23.1 2 Consent of Price Waterhouse LLP, Independent Accountants.
24.1 2 Power of Attorney (reference page 27 of this Form 10-K)
27.1 2 Financial Data Schedule (filed in EDGAR format only).
+ Confidential treatment has been granted for portions of this exhibit.
1. Incorporated by reference to identically numbered Exhibit to the
Company's Registration Statement on Form S-1.
2. Filed herewith.
24
REPORT OF INDEPENDENT ACCOUNTANTS ON FINANCIAL STATEMENT SCHEDULE
To the Board of Directors of Puma Technology, Inc.
Our audits of the consolidated financial statements referred to in our report
dated August 25, 1997 appearing in the 1997 Annual Report to Stockholders of
Puma Technology, Inc. (which report and consolidated financial statements are
incorporated by reference in this Annual Report on Form 10-K) also included
an audit of the Financial Statement Schedule listed in Item 14(a) of this
Form 10-K. In our opinion, this Financial Statement Schedule presents
fairly, in all material respects, the information set forth therein when read
in conjunction with the related consolidated financial statements.
Price Waterhouse LLP
San Jose, California
August 25, 1997
25
SCHEDULE II
PUMA TECHNOLOGY, INC.
VALUATION AND QUALIFYING ACCOUNTS
(IN THOUSANDS)
PERIOD/ BALANCE AT CHARGED TO DEDUCTIONS END OF
YEAR ENDED BEGINNING OF COSTS AND PERIOD/YEAR
JULY 31 PERIOD/YEAR EXPENSES
Allowance for Doubtful 1995 $ - $ - $ - $ -
Accounts and Sales Returns
Allowance for Doubtful 1996 $ - $184 $ - $184
Accounts and Sales Returns
Allowance for Doubtful 1997 $184 $948 $ 455 $677
Accounts and Sales Returns
26
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this Form 10-K to be
signed on its behalf by the undersigned thereunto duly authorized, on this
28th day of October, 1997.
Puma Technology, Inc.
Date: October 28, 1997 By: /s/ M. Bruce Nakao
--------------------------
M. Bruce Nakao
Senior Vice President and
Chief Financial Officer
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below hereby constitutes and appoints Bradley A. Rowe and M. Bruce
Nakao, and each of them acting individually, as his attorney-in-fact, each
with full power of substitution, for him in any and all capacities, to sign
any and all amendments to this Form 10-K, and to file the same, with exhibits
thereto and other documents in connection therewith, with the Securities and
Exchange Commission, hereby ratifying and confirming all that each said
attorneys-in-fact or his substitute or substitutes, may do or cause to be
done by virtue hereof.
Pursuant to the requirements of the Securities Exchange Act of 1934,
this Form 10-K has been signed below by the following persons in the
capacities and on the dates indicated:
SIGNATURE TITLE DATE
- --------------------------------------------------------------------------------------
/s/ BRADLEY A. ROWE President, Chief Executive October 28, 1997
- ----------------------------- Officer and Director
Bradley A. Rowe (PRINCIPAL EXECUTIVE OFFICER)
/s/ STEPHEN A. NICOL Senior Vice President, October 28, 1997
- ----------------------------- Sales and Secretary
Stephen A. Nicol
/s/ M. BRUCE NAKAO Senior Vice President and, October 28, 1997
- ----------------------------- Chief Financial Officer
M. Bruce Nakao
/s/ MICHAEL M. CLAIRE
- ----------------------------- Chairman of the Board October 28, 1997
Michael M. Claire
/s/ TYRONE F. PIKE Director October 28, 1997
- -----------------------------
Tyrone F. Pike
/s/ Dr. ROBERT A. RUTNER, DDS Director October 28, 1997
- -----------------------------
Dr. Robert A. Rutner, DDS
27