Pumatech, Inc. announces fiscal third quarter 2002 results

SAN JOSE, CA (05/23/02) - Pumatech, Inc. (NASDAQ NM: PUMA), a leading provider of enterprise-level software products and services that deliver highly relevant information - wherever and whenever it's needed, today announced results for its third quarter of fiscal 2002 ended April 30, 2002. For the third fiscal quarter of 2002, Pumatech Inc. reported revenues of $5,722,000 compared to $6,163,000 reported last fiscal quarter and $10,213,000 reported in the third fiscal quarter of 2001. Revenue for the nine-month period ended April 30, 2002 was $18,536,000 compared to $31,232,000 reported in the same nine-month period last year.

Reported diluted loss per share this quarter was $(0.21), compared to $(0.14) reported last fiscal quarter and $(0.21) reported in the third fiscal quarter of 2001. Reported diluted loss per share for the first nine months of fiscal 2002 was $(0.49) compared to $(0.48) for the comparable period a year ago.

Pro-forma diluted loss per share excluding amortization of intangible assets, non-cash compensation charges, non-recurring severance and facilities costs and other than temporary impairment of investments was $(0.10) this quarter as compared to $(0.10) last fiscal quarter and $(0.11) in the third fiscal quarter of fiscal 2001. Pro-forma diluted loss per share for the first nine months of fiscal 2002 was $(0.31) compared to $(0.29) reported in the same nine-month period last year.

For the third quarter of fiscal 2002, revenue contribution from the Company's two core revenue segments was approximately 59% enterprise and 41% technology licensing. Enterprise revenue includes channel and direct sales of the Company's Intellisync®, Enterprise Intellisync and Satellite Forms® products licensed to corporations for internal use. Technology licensing revenue includes platform licensing and related professional services for corporations choosing to integrate or embed the Company's various technologies.

The Company ended the quarter with cash and short-term investments of approximately $37.3 million representing a cash value of approximately $0.82 per share and reported a current ratio of 3.4X with no long-term debt obligations. Deferred revenues within the quarter increased approximately $387,000 primarily as a result of increased maintenance renewals associated with existing enterprise customers and new technology licensing agreements signed within the quarter for which future obligations need to be performed.

EXPENSE MANAGEMENT
"This quarter's reported expenses excluding one-time charges were better than our original expectations and slightly better than last quarter's reported expenses since the majority of the recent restructuring activities occurred throughout the past three months," said Kelly Hicks, Pumatech's CFO and vice president of operations. "Looking ahead to fiscal Q4, we expect to see the majority of the financial benefits relating to both our California and New Hampshire facilities consolidations and to our streamlined domestic engineering workforce which is now supplemented by a dramatically larger, lower cost, offshore development team. In addition to increased gross margin percentages moving forward, we expect below the line expenses in aggregate to be reduced greater than $2.0 million next fiscal quarter and our quarterly net cash burn to be reduced to an estimated $2.0 million in fiscal Q4 from the $5.0 million we used this quarter. Our reported cash and tangible worth per share values as well as strong current and quick ratios illustrate our financial strength and liquidity. Our continued commitment to expense management in the current market environment continues to preserve our cash and ensure our staying power as we focus our attention to predictable and sustainable top-line growth moving forward."

Q3 SIGNALS A TURNING POINT FOR PUMATECH
"Q3 signaled a turning point for the Company, and I believe we're well-positioned to build momentum as the economy starts to rebound," said Brad Rowe, president and CEO of Pumatech. "Our technology-licensing group signed 11 new deals in Q3, up from three in the previous quarter. These deals included three server-to-server sync deals, which represents an exciting and potentially vast new marketplace for our core sync technology, considering the size and breadth of server-based groupware, CRM, and other enterprise application deployments worldwide. Additionally, direct licensing activity for our Intellisync products was strong as compared to the previous quarter, and we released two important new enterprise products. Enterprise Intellisync, Second Edition is an entirely new server-based product that provides centralized IT management as well as the ability to synchronize both PIM and custom database information among PCs, servers and mobile devices. Satellite Forms 5.0 leverages the same Enterprise Intellisync server technology to provide seamless integration with back-end corporate data from custom handheld applications on both Pocket PC and Palm OS-based devices, the only cross-platform solution of its kind.

"These important new product releases, combined with a redoubled focus on our core business and key channels and a corresponding emphasis on cost-containment, will lead to significantly improved bottom-line results, beginning next quarter, as we continue to work hard to re-establish revenue growth," Rowe added.

THIRD QUARTER HIGHLIGHTS

INVESTOR CONFERENCE CALL
Pumatech, Inc. will announce its fiscal third quarter 2002 results on Thursday, May 23, 2002. The announcement will begin at 2 p.m. Pacific / 5 p.m. Eastern. Management will discuss results and hold a question-and-answer session following the announcement. To participate, please dial the access number a few minutes prior to the conference call. A live webcast will be available on Pumatech's Web site at www.pumatech.com. If you are unable to participate, a replay will be available two hours after the call. The replay can be accessed for 48 hours, ending at 12 a.m. on Saturday, May 25, 2002. To access the replay, please dial 1-800-642-1687, or 706-645-9291 (International), reservation number 4136507. A replay of the conference call will also be available for 90 days via the Internet at www.pumatech.com.

ABOUT PUMATECH
Pumatech, Inc. (NASDAQ: PUMA) provides organizations with a comprehensive suite of enterprise-level software products and services that deliver highly relevant information - wherever and whenever it's needed. The Company's technology portfolio makes Pumatech a single resource, providing the infrastructure necessary to expand the boundaries of information. Organizations can choose to use Pumatech's ready-made enterprise offerings, or they can leverage Pumatech's professional services team to create custom solutions built upon Pumatech's core enterprise platform. Pumatech's customer and strategic partner base includes Global 2000 companies such as Siebel, Oracle, Yahoo!, NTT DoCoMo, Boeing, CNET and General Motors. The Company has headquarters in Silicon Valley, Tokyo and London. Pumatech offers more information on its products and services at www.pumatech.com.

The forward-looking statements above in this news release, including statements related to expense management and the benefits of such expense management including, improved financial results, the timing of improved financial results, the belief that synchronization is a core software solution, the benefits of new business partnerships and growth in sales are based on current expectations and beliefs and are subject to numerous risks and uncertainties that could cause actual results to differ materially. Factors that could cause actual results to differ materially include uncertainties related to the effect of continued weakness of general economic factors on the overall demand for our products and services, the timing of market adoption of wireless computing devices, the timely introduction, availability and acceptance of new products and upgrades, the impact of competitive products and pricing, consummation of binding agreements with prospective business partners, as well as additional risk factors, as discussed in the "Risk Factors" section of Pumatech's Annual Report on Form 10-K for the year ended July 31, 2001 and Pumatech's quarterly reports filed from time to time with the U.S. Securities and Exchange Commission. Pumatech disclaims any obligation to update any forward-looking statements as a result of developments occurring after the date of this press release.

Pumatech, the Pumatech logo, Intellisync, Satellite Forms and Enterprise Intellisync are trademarks of Pumatech, Inc., that may be registered in certain jurisdictions. Palm OS is a registered trademark of Palm, Inc. All other product and company names may be trademarks of their respective owners.


                            PUMATECH, INC.
       PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
         Excluding Amortization of Intangibles, Non-Cash Stock
           Compensation, Severance and Facilities Costs, and
            Other-Than-Temporary Impairment of Investments
                 (In thousands, except per share data)
                              (Unaudited)


                            THREE MONTHS ENDED     NINE MONTHS ENDED
                                 APRIL 30,             APRIL 30,
                            -------------------   -------------------
                              2002       2001       2002       2001
                            --------   --------   --------   --------
Revenue
   License                  $  4,862   $  8,077   $ 15,431   $ 25,906
   Services                      860      2,136      3,105      5,326
                            --------   --------   --------   --------
      Total revenue            5,722     10,213     18,536     31,232
                            --------   --------   --------   --------
Cost of revenues and
 operating expenses:
   Cost of revenue             1,449      2,873      5,680      7,332
   Research and development    4,312      6,029     11,829     18,541
   Sales and marketing         3,676      5,385     12,581     15,666
   General and administrative    930      1,674      3,137      4,491
                            --------   --------   --------   --------
      Total operating
       expenses               10,367     15,961     33,227     46,030
                            --------   --------   --------   --------
Operating loss                (4,645)    (5,748)   (14,691)   (14,798)
   Interest and other
    income, net                  258        766        956      2,617
                            --------   --------   --------   --------
Loss before income taxes      (4,387)    (4,982)   (13,735)   (12,181)
   Provision for income taxes    (74)       (80)      (281)      (298)
                            --------   --------   --------   --------
Net loss                    $ (4,461)  $ (5,062)  $(14,016)  $(12,479)
                            ========   ========   ========   ========
Net loss per share:
   Basic                    $  (0.10)  $  (0.11)  $  (0.31)  $  (0.29)
   Diluted                  $  (0.10)  $  (0.11)  $  (0.31)  $  (0.29)
Shares used in per share
 calculation:
   Basic                      44,831     44,220     44,764     43,510
   Diluted                    44,831     44,220     44,764     43,510


Note 1: The above pro forma condensed consolidated statements of
    operations include operational depreciation of $799, $777, $2,497
    and $1,912 and exclude the following items:

Amortization of intangibles $  1,251   $  2,157   $  4,077   $  5,853
Non-cash stock compensation
 (recovery)                     (145)       292        295        733
Severance and facilities
 costs                         3,568        583      3,568        583
Other-than-temporary
 impairment of investments       195      1,180        195      1,180
                            --------   --------   --------   --------
                            $  4,869   $  4,212   $  8,135   $  8,349
                            ========   ========   ========   ========

Note 2: Beginning the third quarter of fiscal 2002, in accordance with
    Emerging Issues Task Force No. 01-09, "Accounting for
    Consideration Given by a Vendor to a Customer or as Reseller of
    the Vendor's Products," of the Financial Accounting Standards
    Board, certain sales and marketing expenses were classified as a
    reduction of revenue. Such expenses from prior periods have been
    reclassified to conform to the current period's presentation.
    While pro forma earnings did not change, the reclassifications
    decreased previously reported revenue while reducing operating
    expenses.



                            PUMATECH, INC.
       PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
 Excluding Amortization of Intangibles and Non-Cash Stock Compensation
                 (In thousands, except per share data)
                              (Unaudited)


                            THREE MONTHS ENDED     NINE MONTHS ENDED
                                 APRIL 30,             APRIL 30,
                            -------------------   -------------------
                              2002       2001       2002       2001
                            --------   --------   --------   --------
Revenue
   License                  $  4,862   $  8,077   $ 15,431   $ 25,906
   Services                      860      2,136      3,105      5,326
                            --------   --------   --------   --------
      Total revenue            5,722     10,213     18,536     31,232
                            --------   --------   --------   --------

Cost of revenues and
 operating expenses:
   Cost of revenue             1,449      2,873      5,680      7,332
   Research and development    4,312      6,029     11,829     18,541
   Sales and marketing         3,676      5,385     12,581     15,666
   General and administrative    930      1,674      3,137      4,491
   Severance and facilities
    costs                      3,568        583      3,568        583
                            --------   --------   --------   --------
      Total operating
       expenses               13,935     16,544     36,795     46,613
                            --------   --------   --------   --------

Operating loss                (8,213)    (6,331)   (18,259)   (15,381)
   Interest and other
    income, net                  258        766        956      2,617
   Other-than-temporary
    impairment of investments   (195)    (1,180)      (195)    (1,180)
Loss before income taxes      (8,150)    (6,745)   (17,498)   (13,944)
   Provision for income taxes    (74)       (80)      (281)      (298)
                            --------   --------   --------   --------
Net loss                    $ (8,224)  $ (6,825)  $(17,779)  $(14,242)
                            ========   ========   ========   ========
Net loss per share:
   Basic                    $  (0.18)  $  (0.15)  $  (0.40)  $  (0.33)
   Diluted                  $  (0.18)  $  (0.15)  $  (0.40)  $  (0.33)
Shares used in per share
 calculation:
   Basic                      44,831     44,220     44,764     43,510
   Diluted                    44,831     44,220     44,764     43,510


Note 1: The above pro forma condensed consolidated statements of
    operations include operational depreciation of $799, $777, $2,497
    and $1,912 and exclude the following items:

Amortization of intangibles $  1,251   $  2,157   $  4,077   $  5,853
Non-cash stock compensation
 (recovery)                     (145)       292        295        733
                            --------   --------   --------   --------
                            $  1,106   $  2,449   $  4,372   $  6,586
                            ========   ========   ========   ========

Note 2: Beginning the third quarter of fiscal 2002, in accordance with
    Emerging Issues Task Force No. 01-09, "Accounting for
    Consideration Given by a Vendor to a Customer or as Reseller of
    the Vendor's Products," of the Financial Accounting Standards
    Board, certain sales and marketing expenses were classified as a
    reduction of revenue. Such expenses from prior periods have been
    reclassified to conform to the current period's presentation.
    While pro forma earnings did not change, the reclassifications
    decreased previously reported revenue while reducing operating
    expenses.


                            PUMATECH, INC.
            CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                 (In thousands, except per share data)
                              (Unaudited)


                            THREE MONTHS ENDED     NINE MONTHS ENDED
                                 APRIL 30,             APRIL 30,
                            -------------------   -------------------
                              2002       2001       2002       2001
                            --------   --------   --------   --------
Revenue
   License                  $  4,862   $  8,077   $ 15,431   $ 25,906
   Services                      860      2,136      3,105      5,326
                            --------   --------   --------   --------
      Total revenue            5,722     10,213     18,536     31,232
                            --------   --------   --------   --------

Cost of revenues and
 operating expenses:
   Cost of revenue             1,449      2,873      5,680      7,332
   Research and development    4,312      6,029     11,829     18,541
   Sales and marketing         3,676      5,385     12,581     15,666
   General and administrative    930      1,674      3,137      4,491
   Amortization of
    intangibles                1,251      2,157      4,077      5,853
   Non-cash stock
    compensation                (145)       292        295        733
   Severance and facilities
    costs                      3,568        583      3,568        583
                            --------   --------   --------   --------
      Total operating
       expenses               15,041     18,993     41,167     53,199
                            --------   --------   --------   --------

Operating loss                (9,319)    (8,780)   (22,631)   (21,967)
   Interest and other
    income, net                  258        766        956      2,617
   Other-than-temporary
    impairment of investments   (195)    (1,180)      (195)    (1,180)
                            --------   --------   --------   --------
Loss before income taxes      (9,256)    (9,194)   (21,870)   (20,530)
   Provision for income taxes    (74)       (80)      (281)      (298)
                            --------   --------   --------   --------
Net loss                    $ (9,330)  $ (9,274)  $(22,151)  $(20,828)
                            ========   ========   ========   ========

Net loss per share:
   Basic                    $  (0.21)  $  (0.21)  $  (0.49)  $  (0.48)
   Diluted                  $  (0.21)  $  (0.21)  $  (0.49)  $  (0.48)
Shares used in per share
 calculation:
   Basic                      44,831     44,220     44,764     43,510
   Diluted                    44,831     44,220     44,764     43,510


Note 1: Beginning the third quarter of fiscal 2002, in accordance with
    Emerging Issues Task Force No. 01-09, "Accounting for
    Consideration Given by a Vendor to a Customer or as Reseller of
    the Vendor's Products," of the Financial Accounting Standards
    Board, certain sales and marketing expenses were classified as a
    reduction of revenue. Such expenses from prior periods have been
    reclassified to conform to the current period's presentation.
    While reported earnings did not change, the reclassifications
    decreased previously reported revenue while reducing operating
    expenses.


                            PUMATECH, INC.
                 CONDENSED CONSOLIDATED BALANCE SHEETS
                            (In thousands)
                              (Unaudited)


                                          APRIL 30,     JULY 31,
                                            2002          2001
                                          ---------     ---------
ASSETS
Current assets:
   Cash and cash equivalents              $  10,585     $  18,837
   Short-term investments                    26,754        30,071
   Accounts receivable, net                   3,877         4,120
   Inventories, net                              85           233
   Other current assets                       1,767         1,970
                                          ---------     ---------
      Total current assets                   43,068        55,231
Property and equipment, net(1)                4,565         6,974
Intangible assets, net                        8,739        12,818
Restricted cash                                 407           686
Other assets                                  2,891         3,225
                                          ---------     ---------
      TOTAL ASSETS                        $  59,670     $  78,934
                                          =========     =========

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
   Accounts payable                       $   1,546     $   2,541
   Accrued liabilities                        5,744         4,639
   Notes payable                              2,000           302
   Deferred revenue                           3,258         3,260
                                          ---------     ---------
      Total current liabilities              12,548        10,742

Commitments and contingencies

Stockholders' equity:
   Preferred stock, $0.001 par value;
   2,000 shares authorized and no shares
   issued and outstanding at April 30, 2002
   and July 31, 2001                            --            --
   Common stock, $0.001 par value;
   80,000 shares authorized; 45,306 shares
   issued and outstanding at April 30, 2002
   and 44,555 shares issued and outstanding
   at July 31, 2001                              45            45

   Additional paid-in capital               149,221       148,479
   Receivable from stockholders                (330)         (330)
   Deferred stock compensation                 (328)         (706)
   Accumulated deficit                     (101,558)      (79,407)
   Other comprehensive income                    72           111
                                          ---------     ---------
      Total stockholders' equity             47,122        68,192
                                          ---------     ---------
         TOTAL LIABILITIES AND
           STOCKHOLDERS' EQUITY           $  59,670     $  78,934
                                          =========     =========

(1) Capital expenditures were $197, $98 and $235 for the three months
ended April 30, 2002, January 31, 2002 and October 31, 2001,
respectively.