PUMA TECHNOLOGY INC - 10-K Annual Report

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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, 1998

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 common equity held by non-affiliates
of the registrant as of October 14, 1998, was approximately $17,451,619.

The number of the registrant's $0.001 par value Common Stock outstanding as of
October 14, 1998, was 12,678,401 shares of Common Stock.

DOCUMENTS INCORPORATED BY REFERENCE:

Certain sections of the Proxy Statement for registrant's 1998 PART III
Annual Meeting of Stockholders to be held on December 9, 1998
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 PARTS II & IV
for fiscal year ended July 31, 1998.

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......................................20

PART II.................................................................................................22

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS...................22
ITEM 6. SELECTED FINANCIAL DATA.................................................................22
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS....22
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK...............................22
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA..............................................22
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.....23

PART III................................................................................................23

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.......................................23
ITEM 11. EXECUTIVE COMPENSATION...................................................................23
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT...........................23
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS...........................................23

PART IV.................................................................................................23

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.........................23

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 Universal Synchronization
Solutions(TM) software ("USS"), 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 software is designed to improve the productivity of
business professionals and corporations 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 current Intellisync(R) and
recently announced Intellisync Anywhere(TM) product families allow local, LAN,
and remote "content-aware" data synchronization between a wide range of mobile
computing devices and PC and server-based applications. Puma's original
TranXit(R) product family ("TranXit") is a leading software solution
specifically designed to utilize wireless infrared ("IR") connectivity
technology for file exchange, synchronization and printing.

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 estimated that this
percentage would 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 REX PC Companion are
examples of popular handheld mobile devices. Industry analysts, such as IDC,
project that purchases of handheld devices will grow from under 4 million units
in 1997 to 14 million by 2001, with worldwide cellular phone subscribers jumping
from 200 million to 600 million in the same time frame. With up to 25% of these
new phones and pagers potentially offering application intelligence, the overall
"smart device" market may be several times larger than that of PDAs (personal
digital assistants) alone.

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 98, Windows NT, DOS and
others, and utilize an even greater range of information management
applications, databases and data formats. Enabling these devices to

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communicate, 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 Microsoft Outlook on a desktop PC or Lotus Notes on
corporate server, 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 USS 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 approximately 21% in 1995 to 100% 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. USS 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 TECHNOLOGY SOLUTION

Puma's USS software products, anchored by its 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 and groupware servers by
virtue of Puma's patented DSX Technology(TM) engine (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 engine 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
Microsoft Outlook, Schedule+ and Exchange, Lotus Notes and Organizer, 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 synchronization engine, it can expand via
device and application-specific translators to accommodate new devices and
applications. With the Intellisync Software Development Kit ("SDK"), Puma
Technology is also enabling ISVs, device OEMs and Internet-based services to
build synchronization solutions for their products on the Intellisync platform,
further entrenching the Puma standard and lowering the Company's own development
costs.

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ANYTIME, ANYWHERE HANDHELD ACCESS TO CORPORATE APPLICATION STANDARDS. With its
upcoming Intellisync Anywhere product line, the Company will provide desktop,
remote and LAN-based synchronization between both Palm Computing platform
products and Windows CE-based handheld devices and corporate groupware
applications, including Microsoft Exchange and Lotus Notes. Using wired or
wireless connections, users will be able to synchronize email, calendar, contact
and to-do list information from virtually any location, starting during the
first calendar quarter of 1999.

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 for Windows 95, Windows 98 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.

STRATEGY

Puma's objective is to maintain its leadership position as a
worldwide provider of USS software, including advanced data synchronization
and wireless IR connectivity software, for business professionals. To achieve
this objective, Puma has adopted the following key strategies:

PROVIDE AN EXTENSIBLE, CROSS-PLATFORM INDUSTRY 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. While the Company's
own products target the leading high-volume, open platforms (such as the Palm
Computing and Windows CE platforms), its Intellisync technology can be used to
support mobile devices based on different operating systems, processor
architectures, communications architectures and applications. Beyond its own
products, the Company is increasingly enabling third party application
providers, mobile devices vendors and Internet-based service firms to
synchronize their products with other handheld devices and PC applications by
licensing to them the Intellisync Software Development Kit ("SDK"). The SDK will
help the Company to entrench the Intellisync platform as the de facto USS
industry standard.

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
Technology engine data synchronization and IR connectivity technologies, Puma
plans to continually extend its Intellisync and recently announced Intellisync
Anywhere product families. In addition, as innovative new mobile computing
devices are introduced into the market, Puma can leverage its engineering
expertise, core technologies and relationships with market-leading OEMs to
develop new advanced USS software products that support these devices.

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. In fiscal year 1998, this expansion led to the growth of
the Company's end-user (as opposed to OEM) software business to nearly 30% of
revenue. In addition, the Company also

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introduced its corporate site licensing program, Intellisync Gold, allowing
corporate volume purchasers to use any of the Intellisync products for PDA
for a single per seat cost.

INCREASE PENETRATION OF KEY 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 key languages.
The Company believes its growing international distribution network will further
its competitive advantage over potential entrants into a market.

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,
Corex, DEC, Ericsson, Fujitsu, Geoworks, HP, IBM, Intel, Lotus, Motorola, NEC,
Novell, Oracle, QUALCOMM, Research in Motion, SalesLogix, Seiko Epson, Sharp,
Texas Instruments, Toshiba and Unwired Planet, and many others. 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 potentially offer as
appropriate complementary product offerings shortly after the commercial release
of these companies' new hardware and software products.

CUSTOMERS. Puma's current customer base consists principally of large OEMs in
the PC market. In fiscal 1998 and 1997, Toshiba accounted for approximately 18%
and 21% of the Company's revenue, respectively. In fiscal 1996, Toshiba and NEC
accounted for approximately 18% and 13% of the Company's revenue, respectively.
No other customer accounted for greater than 10% of the Company's revenue in
fiscal 1998, fiscal 1997 or fiscal 1996.

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

Satellite Forms(TM) A rapid application development (RAD) July, 1998
tool, this products lets developers (acquire)
quickly create and deploy custom
handheld applications for Palm
Computing platform devices which can
be tightly integrated with
corporate databases
Intellisync for Notebooks Sold through both OEM and retail channels, September 1997
this product provides PC-to-PC file
transfer and synchronization including
PIM-to-PIM synchronization over
wireless IR, wired connection, and network
connections.
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, REX PC Companion, 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 May 1996
synchronization, delta file transfer and long file
name support for Windows 95
TranXit Pro Connectivity Kit TranXit Pro plus IR-adapter hardware for the desktop PC May 1996
TranXit for DOS File transfer and synchronization over IR connections December 1996
for DOS

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IntelliLink(R) Data "import" and "export" among PC-based applications September 1993
and mobile computing devices

SATELLITE FORMS. Added to the Puma Technology product line with the acquisition
of SoftMagic Corporation, Satellite Forms allows corporations and developers to
quickly create and deploy sophisticated custom applications for Palm Computing
platform devices that can be tightly integrated with information stored in
corporate databases, including Oracle, DB2, Microsoft Access and Lotus Notes.

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 engine) 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, REX PC Companion, Sharp Organizers, TI
Organizers, Nokia 9000 Communicator, AT&T PocketNet Service, and many others.
Based upon the Company's patented DSX Technology engine 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 is 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. Puma's original product line (later succeeded by Intellisync for
Notebooks), 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.

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.

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FUTURE PRODUCTS

INTELLISYNC ANYWHERE. A key component of Puma's strategy is to bring
synchronization solutions to the server level with its new Intellisync Anywhere
product line, announced in the fall of 1998 and expected to ship in the first
calendar quarter of 1999. An important extension to the Intellisync family of
synchronization software, Intellisync Anywhere empowers corporations worldwide
to adopt handheld computers such as the PalmPilot(TM) Connected Organizer and
Microsoft Windows CE-based Handheld PCs and palm-size PCs devices. Intellisync
Anywhere provides remote (dial-up, Internet) and LAN-based synchronization of
leading handheld devices with mission-critical enterprise groupware
applications, including Microsoft Exchange and Lotus Notes. By addressing this
pivotal requirement of mobile corporate users, Intellisync Anywhere lets
organizations give handheld users untethered, up-to-date information while at
their desks, on the road or just in the office down the hall.

SATELLITE FORMS PRODUCT LINE. Puma will continue the integration its new
Satellite Forms product line, providing desktop and remote integration of
handheld applications with back-end corporate database.

INTELLISYNC FOR PDA PRODUCT FAMILY. Puma will continue to enhance 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, such as
new versions of Lotus Notes and Microsoft Exchange.

TECHNOLOGY

Puma's software products allow the exchange and synchronization of data
across diverse platforms, operating systems and applications. The Company has
developed three complementary proprietary technologies for USS: The DSX
Technology engine for content-aware data synchronization, Notification Transport
Processing Technology (NXP Technology) 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 Technology
engine operates at both the file and record level to synchronize data among
different software applications and hardware platforms during data transfer.
With the DSX Technology engine, 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

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maintenance of existing modules) is greatly eased by the
existence of the translator framework, a 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.

NXP TECHNOLOGY(TM). A core technology underpinning the Intellisync Anywhere
product family of remote synchronization server solutions is NXP Technology. NXP
Technology optimizes performance for the increasingly common wireless
connections by automatically checking for and preparing for synchronization all
new information for each user, such as email and appointments, stored on
corporate servers. This process minimizes both end user remote synchronization
time and reduces the overhead on the corporate messaging server itself.

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 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. Increasingly, the Company is also distributing its software products
directly to corporate customers through the Intellisync Gold enterprise site
license program. 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."

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Revenue from OEMs was approximately 68%, 74% and 89% of revenue in
fiscal 1998, fiscal 1997 and fiscal 1996, respectively. Although several OEMs
are subject to certain contractual minimum purchase obligations, there can be no
assurance that any particular OEM will satisfy the 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."

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,
1998, the Company was represented by over 20 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 USS 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, DataViz, River Run, Randsoft,
and Starfish (recently acquired by Motorola). In the future, the Company will
also face competition relative to its upcoming products from vendors offering
server-based mobile device data exchange products and services, including
Advanced Systems, Riverbed, and Avant GO. 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 98 operating system may
have the effect of reducing revenue from the Company's software if users of
Windows 98 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 Technology engine and IR technologies are widely
applicable, and it plans to continue to develop new products based on its core
technologies.

As of July 31, 1998, the Company's engineering group consisted of 107
full-time employees and full-time equivalent consultants who were engaged in
product development and localization efforts for existing products. Product
maintenance and customer support responsibilities are shared by engineering
group employees on an as-needed basis. In fiscal 1998, fiscal 1997 and fiscal
1996 research and development expenses were $9.9 million, $6.2 million and $3.0
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."

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

11

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 five issued United States patents that expire in 2012, 2014 and
2015, respectively, and has ten 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."

EMPLOYEES

As of July 31, 1998, the Company had 176 employees and full-time
equivalent consultants, including 45 in sales and marketing, 107 in engineering
and 24 in operations, finance and administration. All of the Company's employees
are located in the United States with the exception of one which is located in
Japan. 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.

12

BUSINESS RISKS

LIMITED HISTORY OF OPERATIONS AND PROFITABILITY. The Company 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 eight quarters since
inception and incurred a loss in the quarter ended July, 31 1998. 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 ten of the twelve past fiscal quarters, such growth rates
have not been sustained in the past, were not sustained in the quarter ended
July 31, 1998 and may not be sustainable in the future 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, Intellisync for handheld devices in the first
quarter of fiscal 1997, and Intellisync for Notebooks in the first quarter of
fiscal 1998. As its product families mature, the Company expects that their
gross margins may decline. The Company's future success will depend to a
substantial degree upon its ability to enhance its existing products and to
develop and introduce, on a timely and cost-effective basis, new products and
features that meet changing customer requirements and emerging and evolving
industry standards. The Company budgets amounts to expend for research and
development based on planned product introductions and enhancements; however,
actual expenditures may significantly differ from budgeted expenditures.

Inherent in the product development process is a number of risks. The
development of new, technologically advanced software products is a complex and
uncertain process requiring high levels of innovation, as well as the accurate
anticipation of technological and market trends. The introduction of new or
enhanced products also requires the Company to manage the transition from older
products in order to minimize disruption in customer ordering patterns, avoid
excessive levels of older product inventories and ensure that adequate supplies
of new products can be delivered to meet customer demand. The Company is
continually required to recruit new engineering personnel to meet increased
engineering and testing requirements associated with patent development and
enhancement. There can be no assurance that the Company will successfully
develop, introduce or manage the transition to new products. Nor can there be
any 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, including particularly the development of server-based synchronization
and data-delivery solutions directly targeted at corporate enterprises, 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.

BUSINESS STRATEGY. The Company's current business strategy with respect to the
market for synchronization software for handheld devices has been to identify
multiple handheld solutions and software applications, and offer an array of
solutions in its Intellisync product family. In contrast, some of the Company's
direct competitors in this market focus its efforts on fewer devices and fewer
applications. The Company's success is highly dependent upon the market
acceptance of both the handheld devices and software applications supported by
its Intellisync products. Typically the Company must develop the software
supporting a particular device or application before it has been determined
whether that third-party product will gain market acceptance. Lack of market
acceptance of hardware or software products supported by the Company's
Intellisync product is largely outside of the Company's control and may have an
adverse effect on the results. Such lack of market acceptance for several
products being supported by the Company did in fact affect the Company's results
in the second half of fiscal 1998. And, because the

13

Company is focusing on a variety of products, the Company may be slower to
offer features that are specific to each individual handheld-to-PC solution.
The Company's failure to identify in advance the devices and applications
that may gain market dominance and to sufficiently focus on the most popular
solutions may adversely affect its results of operations.

The Company is currently in the process of shifting its business strategy to
focus its internal efforts on more widely adopted handheld platforms and
groupware and PIM applications with a large installed base. Lower volume device
and application vendors are encouraged to license the Company's SDK which allows
these companies to then develop synchronization capability through the Company's
synchronization engine.

COMPETITION. The Company expects the market for USS 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, DataViz, River Run, Randsoft,
and Starfish (recently acquired by Motorola). In the future, the Company will
also face competition relative to its upcoming products from vendors offering
server-based mobile device data exchange products and services, including
Advanced Systems, Riverbed, and Avant Go. 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 98 operating system may
have the effect of reducing revenue from the Company's software if users of
Windows 98 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.

PRODUCT CONCENTRATION; RISKS ASSOCIATED WITH NEW AND EVOLVING MARKETS. The
market for USS software, including wireless IR connectivity and advanced data
synchronization software, is new and evolving. To date, the Company has derived
a substantial portion of its revenue from the licensing of its TranXit IR
connectivity software. Although additional products are currently being sold and
potential products are currently under development, the Company believes that
the TranXit and Intellisync for Notebooks product families, although currently
accounting for a substantial portion of the Company's revenue, will decline in
overall revenue contribution in 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 USS 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. The Company anticipates
that the overall revenue contribution of the TranXit and Intellisync for
Notebooks business will decrease as a percentage of total revenue, since these
products are at a mature stage in their product life cycles. There can be no
assurance that TranXit will rebound from its decline or that the Company will be
successful in developing, introducing or marketing new or enhanced products. A
continued 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.

14

The market for USS 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, TranXit sales declined in mid-1998 and 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 OEM and to develop effective retail distribution
channels. The inability of the Company to continue to penetrate the existing
market for USS 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 USS 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 USS 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 1998, fiscal 1997 and fiscal 1996. OEM revenue as a
percentage of total revenue was 68%, 74% and 89% in fiscal 1998, fiscal 1997 and
fiscal 1996, respectively. 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
distributes its products through distributors, major computer and software
retailing organizations, consumer electronics stores, discount warehouse stores
and other specialty retailers. The Company often sells on a purchase order
basis, and there are often no minimum purchase obligations on behalf of any
principal distributor or retailer. Distribution and retailing companies in the
computer industry have from time to time experienced significant fluctuations in
their businesses, and there have been a number of business failures among these
entities. The insolvency or business failure of any significant distributor or
retailer of the Company's products could have a material adverse effect on the
Company's business, operating results and financial condition. Further, certain
mass-market retailers have established exclusive relationships under which such
retailers will buy customer software only from one or two intermediaries. In
such instances, the price or other terms on which the Company sells to such
retailers may be materially adversely affected by the terms imposed by such
intermediaries, or the Company may be unable to sell to such retailers on the
terms, which the Company deems acceptable.

Retailers of the Company's products typically have a limited amount of shelf
space and promotional resources, and there is intense competition among consumer
software producers for adequate levels of shelf space and promotional support
from retailers. The Company expects that, as the number of consumer multimedia
and software products and computer platforms increases, this competition for
shelf space will intensify. Due to increased competition for limited shelf
space, retailers and distributors are increasingly in a better position to
negotiate favorable terms of sale, including price discounts, price protection
and product return policies. Retailers often require software publishers to pay
fees or provide other accommodations in exchange for shelf space. The Company's
products constitute a relatively small percentage of each retailer's

15

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.

MANAGEMENT OF CHANGE. The Company is currently experiencing 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 change has resulted in a continuing increase in the
level of responsibility for both existing and new management personnel. As this
change continues, the Company may have difficulty recruiting, hiring, training
and retaining key personnel in engineering, management, sales and marketing. No
assurances can be given that the Company will be able to manage this change
successfully.

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 over ten
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.

DEPENDENCE ON KEY PERSONNEL. The Company's success depends to a significant
degree upon the continuing contributions of its engineering, management, sales
and marketing personnel. The Company has few employment contracts with its key
personnel and does not maintain any key person life insurance policies. The loss
of key management or technical personnel could adversely affect the Company. The
Company believes that its future success will depend in large part upon its
ability to attract and retain highly skilled engineering, management, sales and
marketing personnel. Failure to recruit, hire, train and retain key personnel
could have a material adverse effect on the Company's business, operating
results and financial condition.

PROPRIETARY RIGHTS, RISKS OF INFRINGEMENT AND SOURCE CODE RELEASE. The Company
relies on a combination of patent, copyright and trademark laws, trade secrets,
confidentiality procedures and contractual provisions to protect its proprietary
rights. The Company also believes that factors such as the technological and
creative skills of its personnel, new product developments, frequent product
enhancements and name recognition are essential to establishing and maintaining
a technology leadership position. The Company seeks to protect its software,
documentation and other written materials under trade secret and copyright laws,
which afford only limited protection. The Company currently has five issued
United States patents that expire in 2012, 2014, 2015 and has ten 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

16

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-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

17

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 1998 and in fiscal
1997. The Company expects that international revenue will continue to account
for a significant portion of its future revenue. Revenue from the Company's
international operations is subject to certain inherent risks, including
unexpected changes in regulatory requirements and tariffs, difficulties in
staffing and managing foreign operations, longer payment cycles, problems in
collecting accounts receivable and potentially adverse tax consequences. In
addition, sales in Europe and certain other parts of the world typically are
adversely affected in the summer months of each year when many customers and
users reduce their business activities. These seasonal factors may have a
material adverse effect on the Company's business, operating results and
financial condition. Although the Company's revenue is currently denominated in
U.S. dollars, fluctuations in currency exchange rates could cause the Company's
products to become relatively more expensive to customers in a particular
country, leading to a reduction in sales or profitability in that country.
Furthermore, future international activity may result in foreign currency
denominated sales, particularly if international revenue from distributors
increases. Consequently, gains and losses on the conversion to U.S. dollars of
accounts receivable and accounts payable arising from international operations
may contribute to fluctuations in the Company's operating results. Royalty
income by the Company from customers in certain countries, such as Japan and
Taiwan, is subject to withholding income taxes. The amount and mix of the
Company's income derived from such customers will impact the Company's provision
for income taxes. Differences in the amount and mix of the Company's income
actually derived from customers subject to foreign withholding taxes as compared
to the amounts forecasted by the Company may adversely impact the Company's
income tax rate.

UNCERTAINTIES ASSOCIATED WITH ACQUISITIONS. The Company has been involved in
three 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 1998, the Company acquired SoftMagic Corp. ("SoftMagic"). As a result of
the acquisition, three new employees and three new consultants joined the
Company. SoftMagic had incurred a cumulative loss through its acquisition by
Puma on July 30, 1998 of approximately $35,000 on cumulative revenue of
$331,000.

In July 1997, the Company acquired substantially all of the assets of Real World
Solutions, Inc. ("RWS"), a developer of client/server solutions. As a result of
the acquisition, four new employees joined the Company. RWS had incurred a
cumulative loss through its acquisition by Puma on July 17, 1997 of
approximately $1.3 million on cumulative revenue of $0.5 million.

In April 1996, the Company acquired IntelliLink Corp. ("IntelliLink"). As a
result of the acquisition, the Company acquired two additional product families,
as well as other technologies. In addition, more than 20 new employees joined
the Company. IntelliLink had incurred a cumulative net loss through its
acquisition by Puma on April 30, 1996 of approximately $2.5 million on
cumulative revenue of approximately $4.2 million.

POTENTIAL VOLATILITY OF STOCK PRICE. The trading price of the Company's Common
Stock is likely to be highly volatile and may be significantly affected by
factors such as actual or anticipated fluctuations in the Company's operating
results; announcements of technological innovations; new products or new
contracts by the Company or its competitors; developments with respect to
patents; copyrights or proprietary rights; conditions and trends in the software
and other technology industries; adoption of new accounting standards affecting
the software industry; changes in financial estimates by securities analysts;
general market conditions and other factors. In addition, the stock market has
from time to time experienced significant price and volume fluctuations that
have particularly affected the market prices for the common

18

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. Some computers,
software, and other equipment include programming code in which calendar year
data is abbreviated to only two digits. As a result of this design decision,
some of these systems could fail to operate or fail to produce correct
results if "00" is interpreted to mean 1900, rather than 2000. These problems
are widely expected to increase in frequency and severity as the year 2000
approaches, and are commonly referred to as the "Millennium Bug" or "Year
2000 Problem."

The Year 2000 Problem could affect computers, software, and other equipment
used, operated, or maintained by the Company. The Company believes that its
computer systems are Year 2000 compliant.

The Company believes that it has substantially identified and resolved all
potential Year 2000 Problems with any of the software products which it
develops and markets. However, management also believes that it is not
possible to determine with complete certainty that all Year 2000 Problems
affecting the Company's software products have been identified or corrected
due to the complexity of these products and the fact that these products
interact with other third party vendor products and operate on computer
systems which are not under the Company's control.

In addition to computers and related systems, the operation of office and
facilities equipment, such as fax machines, photocopiers, telephone switches,
security systems, elevators, and other common devices may be affected by the
Year 2000 Problem. The Company presently believes that its office and
facilities equipment are Year 2000 compliant.

The Company has limited or no control over the actions of third party
suppliers. Thus, while the Company expects that it will be able to resolve
any significant Year 2000 Problems with these systems, there can be no
assurance that these suppliers will resolve any or all Year 2000 Problems
with these systems before the occurrence of a material disruption to the
business of the Company or any of its customers. Any failure of these third
parties to resolve Year 2000 problems with these systems in a timely manner
could have a material adverse effect on the Company's business, financial
condition, and results of operation.

The Company expects to identify and resolve all Year 2000 Problems that would
materially adversely affect its business operations. However, management
believes that it is not possible to determine with complete certainty that
all Year 2000 Problems affecting the Company have been identified or
corrected. The number of devices that could be affected and the interactions
among these devices are simply too numerous. In addition, one cannot
accurately predict how many Year 2000 Problem-related failures will occur or
the severity, duration, or financial consequences of these perhaps inevitable
failures. As a result, management expects that the Company could likely
suffer the following consequences:

1. a significant number of operational inconveniences and
inefficiencies for the Company and its clients that may divert
management's time and attention and financial and human resources
from its ordinary business activities; and

2. a lesser number of serious system failures that may require
significant efforts by the Company or its clients to prevent or
alleviate material business disruptions.

The Company has not developed contingency plans.

The Company does not believe that the Year 2000 Problem will have a
material adverse effect on the Company's business or results of operations.

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 has two leases for approximately 11,980 square
feet and 9,006 square feet in two buildings in Nashua, New Hampshire under
leases that expires in May 2002 and July 2003, respectively. These facilities
primarily support the engineering, product marketing and technical support
functions for its Intellisync family of products.

In October 1998, the Company internally announced a restructure plan to
consolidate its East and West Coast facilities for its Intellisync family of
products. The company expects that the implementation of this plan, which is
intended to transition engineering resources from its West Coast to East Coast
facilities once completed, may create some excess capacity in its San Jose
location. The Company believes it may be able to sublease a portion of its San
Jose building near its current market rate of rent, but this will be dependent
on many factors including economic conditions.

Management believes that its current East Coast 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. Management expects it may
need to lease additional facilities in the upcoming year to support its sales
expansion in both Japan and Europe.

ITEM 3. LEGAL PROCEEDINGS

On February 6, 1998, in response to the Company's offer of a
royalty-bearing patent license, Dataviz, Inc. filed a lawsuit against the
Company in the U.S. District Court for the District of Connecticut

19

seeking a judgement that four of the Company's patents are invalid and not
infringed by Dataviz' software. The complaint seeks no monetary relief other
than an award of costs of the lawsuit and reasonable attorney's fees. The
complaint contains no allegation that the Company's software infringes any
third-party intellectual property rights. The Company has filed a response
denying all of Dataviz' allegations and asserting numerous affirmative
defenses. The Company has also filed counterclaims asserting that Dataviz'
software infringes two of the Company's patents. The parties have agreed to
narrow the case to include only those two patents and are currently engaged
in discovery.

The Company believes that Dataviz' claims have no merit and intends to
defend the action vigorously. The final resolution of the lawsuit is not
expected to have a material adverse effect on the results of operations or the
financial condition of the Company. It is too early in the litigation to
determine whether attorneys' fees and costs of the lawsuit may have an adverse
affect on the results of operations of the Company in any particular period.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

No matters were submitted to a vote of security holders of the Company
during the fourth quarter of the Company's fiscal year ended July 31, 1998.

EXECUTIVE OFFICERS AND DIRECTORS OF THE REGISTRANT

The executive officers and directors of the Company are as follows:

NAME AGE POSITION
- --------------------------------------------------------------------------------------------------------------------------------

Bradley A. Rowe 38 President, Chief Executive Officer and Director
Stephen A. Nicol 38 Senior Vice President, Sales and Director

M. Bruce Nakao 54 Senior Vice President, Finance and Administration, and Chief Financial Officer
Michael M. Clair 51 Chairman of the Board
Tyrone F. Pike 44 Director
Robert D. Rutner, DDS 40 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
management company, including Director of Western Area Sales. Mr. Rowe currently
serves as a Director of 7th Street Teleworks, Inc., a privately held company.
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 Director of Sales for Japan and Asia
Pacific from July 1992 to July 1993 and 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

20

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, 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 of 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 currently serves as 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 publicly-held
supplier of multi-user application server products. Mr. Pike also serves
as a director of Proxinet, a privately-owned company. 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. 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.

21

PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS

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 August 1,
1997, through July 31, 1998. These prices reflect inter-dealer prices, without
retail mark-up, mark-down or commission, and may not necessarily represent
actual transactions.

1998 HIGH LOW
---- ---- ---

First fiscal quarter (August 1, 1997 to October 31,1997) $8.375 $5.563
Second fiscal quarter (November 1, 1997 to January 31, 1998) $8.063 $5.563
Third fiscal quarter (February 1, 1998 to April 30, 1998) $7.313 $5.563
Fourth fiscal quarter (May1, 1998 to July 31, 1998) $8.375 $5.063

As of October 14, 1998, there were approximately 120 stockholders of
record of the Company's Common Stock and 12,678,401 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 five years ended July 31, 1998,
which appears on page 9 in the Registrant's Annual Report to Stockholders for
the fiscal year ended July 31, 1998 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 10-16 of
the Registrant's Annual Report to Stockholders for the fiscal year ended July
31, 1998 under the caption "Management's Discussion and Analysis," which is
incorporated herein by reference.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The information required by this Item is set forth on page 16 of the
Registrant's Annual Report to Stockholders for the fiscal year ended July 31,
1998, 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
PricewaterhouseCoopers LLP dated August 24, 1998, appearing on pages 17-31 of
the Registrant's Annual Report to Stockholders for the fiscal year ended July
31, 1998 are incorporated by reference in this Form 10-K Annual Report.

22

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. DIRECTORS AND EXECUTIVE OFFICERS 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 1998 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."

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, 1998 are filed as part of this report:

Report of Independent Accountants.

Consolidated Balance Sheets at July 31, 1998 and 1997.

Consolidated Statements of Operations for the three fiscal
Years Ended July 31, 1998.

23

Consolidated Statements of Stockholders' Equity for the three
fiscal Years Ended July 31, 1998.

Consolidated Statements of Cash Flows for the three fiscal
Years Ended July 31, 1998.

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 August 14, 1998, the Company filed a report on Form 8-K relating to
an Agreement and Plan of Reorganization (the "Agreement"), dated July
27, 1998, by and among the Company, PacificTech Acquisition
corporation, a Delaware corporation and wholly-owned subsidiary of the
Company ("PacificTech"), and SoftMagic Corp., a privately-held Florida
corporation ("SoftMagic"). Pursuant to the Agreement, the Company
completed an acquisition (the "Merger") of SoftMagic. Upon consummation
of the Merger, SoftMagic merged with and into PacificTech. The Company
acquired substantially all of the assets and assumed all of the
liabilities of SoftMagic pursuant to the Agreement.

(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 10K.

(d) Financial Statement Schedules. See Item 14 (a) above.

EXHIBIT NUMBER EXHIBIT TITLE

2.1 1 Agreement and Plan of Reorganization dated July 27, 1998, by and among the Company,
PacificTech Acquisition Corporation and SoftMagic Corp.
2.2 3 Asset Acquisition Agreement dated July 15, 1997, by and among the Company, Real World Solutions, Inc.
and John Stossel.
2.3 2 Agreement and Plan of Merger dated April 30, 1996, by and among the Company, IntelliLink Corp.
and certain shareholders of IntelliLink Corp.
3.1 2 Articles of Incorporation of Puma Technology, Inc., a California corporation.
3.2 2 Certificate of Incorporation of Puma Technology, Inc., a Delaware corporation.
3.3 2 Bylaws of Puma Technology, Inc., a California corporation.
3.4 2 Bylaws of Puma Technology, Inc., a Delaware corporation.
10.1 2 1993 Stock Option Plan and forms of stock option agreements used thereunder.
10.2 2 Puma Technology, Inc. 1996 Employee Stock Purchase Plan and form of notice of exercise used thereunder.
10.3 3 Office Lease dated March 20, 1997, between the Company and Catellus Development Corporation.
10.4 3 Standard Commercial Lease dated March 2, 1992, as amended, between IntelliLink, Inc. and Thomas J. Flatley
d/b/a The Flatley Company.
10.5 2 Form of Indemnity Agreement for directors and officers.

24

10.6 + 2 Software License Agreement dated as of May 30, 1995, between the Company and Toshiba Corporation.
10.7 2 IntelliLink Corp. 1992 Incentive Stock Option Plan and forms of stock
agreements used thereunder.
13.1 3 Portions of the Annual Report to Stockholders for the fiscal year ended July 31, 1998 expressly
incorporated by reference herein.
21.1 2 Subsidiaries of the Company.
23.1 3 Consent of PricewaterhouseCoopers LLP, Independent Accountants.
24.1 3 Power of Attorney (reference page 28 of this the Form-10K).
27.1 3 Financial Data Schedule (filed in EDGAR format only).
99.1 2 Agreement and Plan of Merger by and between Puma Technology, Inc. a California corporation,
and Puma Technology, Inc., a Delaware corporation.

+ Confidential treatment has been granted for portions of this exhibit.

1 Incorporated by reference to the Company's Report on Form 8-K filed
on August 14, 1998.

2 Incorporated by reference to the Company's Registration
Statement on Form S-1 (No. 333-011445) declared effective on
December 4, 1996.

3 Filed herewith.

25

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 24, 1998 appearing in the 1998 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.

PricewaterhouseCoopers LLP

San Jose, California
August 24, 1998

26

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 1996 $ - $184 $ - $184
Accounts and Sales
Returns

Allowance for Doubtful 1997 $184 $948 $ 455 $677
Accounts and Sales
Returns

Allowance for Doubtful 1998 $677 $733 $ 467 $943
Accounts and Sales
Returns

27

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 10th day of
November, 1998.

Puma Technology, Inc.

Date: November 11, 1998 By: /s/ M. Bruce Nakao
------------------

M. Bruce Nakao
Senior Vice President, Finance
and Administration 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 November 11, 1998
- ----------------------------- Officer and Director -----------------
Bradley A. Rowe (PRINCIPAL EXECUTIVE OFFICER)

/s/ Stephen A. Nicol Senior Vice President, November 11, 1998
- ----------------------------- Sales and Secretary -----------------
Stephen A. Nicol

/s/ M. Bruce Nakao Senior Vice President and November 11, 1998
- ----------------------------- Chief Financial Officer -----------------
M. Bruce Nakao

/s/ Michael M. Clair Chairman of the Board November 11, 1998
- ----------------------------- -----------------
Michael M. Clair

/s/ Tyrone F. Pike Director November 11, 1998
- ----------------------------- -----------------
Tyrone F. Pike

/s/ Dr. Robert D. Rutner, DDS Director November 11, 1998
- ----------------------------- -----------------
Dr. Robert D. Rutner, DDS

28