~~Table~~UNITED ~~of Contents~~STATES

~~UNITED~~SECURITIES ~~STATES~~AND EXCHANGE COMMISSION

~~SECURITIES~~Washington, D.C. ~~AND EXCHANGE COMMISSION~~ 20549

~~Washington, D.C. 20549~~ FORM 10-K

~~FORM~~x ANNUAL REPORT ~~10-K~~PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

xFor the ~~ANNUAL~~fiscal ~~REPORT~~year ~~PURSUANT~~ended TOJuly 31, ~~SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934~~2005

~~For the fiscal year ended July 31, 2003~~ OR

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

¨For the ~~TRANSITION~~transition ~~REPORT~~period ~~PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934~~from to

~~For~~Commission File ~~the~~Number ~~transition period from to~~ 0-21709

~~Commission~~INTELLISYNC ~~File Number 0-21709~~ CORPORATION

~~PUMATECH,~~(Exact ~~INC.~~name of registrant as specified in its charter)

(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
San Jose, California		95131
(Address of principal executive offices)		(ZIP Code)
(408) 321-7650
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act: None

Delaware		77-0349154
Securities registered pursuant to Section 12(g) of the Act:	Common Stock, $.001 par value
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)
	Preferred Stock Purchase Rights
2550 North First Street, Suite 500 San Jose, California		95131 (ZIP Code)
	(Title of class)
(Address of principal executive offices)

Indicate by check mark whether the registrant (~~408~~1) has ~~321-7650~~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 o

~~(Registrant~~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, ~~telephone~~in ~~number,~~definitive ~~including~~proxy ~~area~~or ~~code)~~information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. x

~~Securities~~Indicate ~~registered~~by ~~pursuant~~check tomark whether ~~Section~~the 12Registrant is an accelerated filer (b)as defined in Rule 12b-2 of the Act:). Yes x No o

~~None~~Indicate by checkmark whether the registrant is a shell company (as defined in Exchange Act Rule 12b-2). Yes o No x

~~Securities registered pursuant to Section 12(g)~~ The aggregate market value of the ~~Act:~~ voting stock held by non-affiliates of the registrant was approximately $129,158,201 at January 31, 2005 the registrant’s most recently completed second fiscal quarter.

~~Common~~The ~~Stock,~~number of the registrant’s $0.001 par value; ~~Preferred~~Common Stock ~~Purchase~~outstanding ~~Rights~~as of October 10, 2005, was 67,255,129 shares of Common Stock.

~~(Title~~DOCUMENTS ofINCORPORATED ~~class)~~ BY REFERENCE:

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 90Part ~~days. Yes x No ¨~~ III

~~Indicate~~Certain bysections ~~check mark if disclosure~~ of ~~delinquent~~the ~~filers~~proxy ~~pursuant~~statement tofor ~~Item~~registrant’s 2005 ~~405~~Annual Meeting of ~~Regulation~~Stockholders ~~S-K~~tentatively isscheduled ~~not~~for ~~contained herein~~December 2, ~~and~~2005 ~~will~~to ~~not~~ be ~~contained,~~filed towith the ~~best~~Commission ofpursuant ~~registrant’s~~to ~~knowledge,~~Regulation in14A ~~definitive~~no ~~proxy~~later orthan 120 days ~~information~~after ~~statements~~the ~~incorporated~~fiscal byyear ~~reference~~ended ~~in Part III of this Form 10-K or any amendment to this Form~~July ~~10-K. ¨~~31, 2005.

~~Indicate~~TABLE byOF ~~check mark whether the Registrant is an accelerated filer (as defined in Rule 12b-2 of the Act). Yes ¨ No x~~ CONTENTS

The aggregate market value of the voting stock held by non-affiliates of the registrant was approximately $47,986,910 at January 31, 2003, the registrant’s most recently completed second fiscal quarter.

				Page
PART I			1
ITEM 1.	Business		1
		Overview	1
		Available Information	1
		Industry Background	2
		Our Technology Solutions	3
		Products	4
		Our Strategy	7
		Sales And Marketing	8
		Customer Support	10
		Seasonality	10
		Competition	10
		Research and Development	11
		Professional Services Group	12
		Acquisitions	12
		Proprietary Technology and Intellectual Property	12
		Employees	13
		Risk Factors	13
		Executive Officers and Directors of the Registrant	28
ITEM 2.	Properties		32
ITEM 3.	Legal Proceedings		33
ITEM 4.	Submission of Matters to a Vote of Security Holders		33
PART II			34
ITEM 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities		34
ITEM 6.	Selected Financial Data		35
ITEM 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		37
ITEM 7A.	Quantitative and Qualitative Disclosures about Market Risk		72
ITEM 8.	Financial Statements and Supplementary Data		73
ITEM 9.	Changes In and Disagreements With Accountants on Accounting and Financial Disclosure		73
ITEM 9A.	Controls and Procedures		73
ITEM 9B.	Other Information		75
PART III			76
ITEM 10.	Directors and Executive Officers of the Registrant		76
ITEM 11.	Executive Compensation		76
ITEM 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters		76
ITEM 13.	Certain Relationships and Related Transactions		76
ITEM 14.	Principal Accountant Fees and Services		76
PART IV			77
ITEM 15.	Exhibits, Financial Statement Schedules		77
SIGNATURES			82
POWER OF ATTORNEY			83
INDEX TO FINANCIAL STATEMENTS			F-1

~~The number of the registrant’s $0.001 par value Common Stock outstanding as of September 30, 2003, was 49,648,504 shares of Common Stock.~~ PART I

~~DOCUMENTS~~ITEM ~~INCORPORATED BY REFERENCE:~~ 1. BUSINESS

~~Part~~This ~~III~~Annual Report on Form 10-K contains certain forward-looking statements that involve risks and uncertainties. Words such as “anticipates,” “believes,” “expects,” “future,” “plan,” “intends,” “should,” and similar expressions are used to identify forward-looking statements. These statements are only projections based on current assumptions made by management. The actual results that we achieve 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,” “Risk Factors” and elsewhere in this Form 10-K. We undertake 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 review and consider carefully the various disclosures made by us in this report and our reports filed with the Securities and Exchange Commission that inform interested parties about the risks and factors that may affect our business.

The registrant intends to file a definitive joint proxy statement/prospectus for its annual meeting of stockholders within 120 days of the end of the fiscal year ended July 31, 2003. Portions of such joint proxy statement/prospectus are incorporated by reference into Part III of this Form 10-K. OVERVIEW

~~Table~~Intellisync Corporation develops, markets and supports desktop, enterprise and mobile carrier-class software that enables consumers, business executives and information technology professionals to extend the capabilities of ~~Contents~~enterprise groupware and vertical applications, data-enabled mobile devices and other personal communication platforms. The primary software applications we developed and marketed include push-email, data synchronization and systems management software. Our software also enables organizations to search, find, match and synchronize identity data within their computer systems and network databases.

Intellisync was incorporated in California on August 27, ~~TABLE~~1993 OFand ~~CONTENTS~~was subsequently reincorporated in Delaware on November 27, 1996. Our principal executive offices are located at 2550 North First Street, Suite 500, San Jose, California 95131, and our Web address is www.intellisync.com. The information posted on our website is not incorporated into this Annual Report on Form 10-K.

		Page
PART I		1
ITEM 1.	Business	1
	Overview	1
	Available Information	2
	Industry Background	2
	Our Technology Solutions	3
	Products	5
	Sales and Marketing	8
	Customer Support	9
	Seasonality	9
	Competition	9
	Research and Development	11
	Professional Services Group	12
	Acquisitions	12
	Proprietary Technology and Intellectual Property	13
	Employees	15
	Risk Factors	16
	Executive Officers and Directors of the Registrant	30
ITEM 2.	Properties	33
ITEM 3.	Legal Proceedings	33
ITEM 4.	Submission of Matters to a Vote of Security Holders	34
PART II		35
ITEM 5.	Market for Registrant’s Common Equity and Related Stockholder Matters	35
ITEM 6.	Selected Financial Data	37
ITEM 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	39
ITEM 7A.	Quantitative and Qualitative Disclosures About Market Risk	64
ITEM 8.	Financial Statements and Supplementary Data	65
ITEM 9.	Changes In and Disagreements With Accountants on Accounting and Financial Disclosure	65
ITEM 9A.	Controls and Procedures	65
PART III		66
ITEM 10.	Directors and Executive Officers of the Registrant	66
ITEM 11.	Executive Compensation	66
ITEM 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	66
ITEM 13.	Certain Relationships and Related Transactions	66
ITEM 14.	Principal Accountant Fees and Services	66
PART IV		67
ITEM 15.	Exhibits, Financial Statement Schedules, and Reports on Form 8-K	67
SIGNATURES		71
POWER OF ATTORNEY		71
INDEX TO FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULE		F-1

We have organized our operations into a single operating segment encompassing the development, marketing and support of software and services that provide synchronization, wireless messaging, mobile application development, application/device management, real-time remote information access, secure VPN and identity searching/matching/screening capabilities. For further discussion of financial information related to our operating segment, as well as geographic areas, refer to note 15 to consolidated financials statements set forth in Part IV of this Annual Report on Form 10-K.

~~Table~~We oflicense ~~Contents~~our software products directly to corporations, mobile carriers, original equipment manufacturers, or OEMs, and business development organizations worldwide. In addition, we sell our retail products through several distribution channels both in the United States and internationally, including major distributors, resellers, computer dealers, retailers and mail-order companies. Internationally, we are represented by distributors, resellers and retailers in North America, Europe, the Asia-Pacific region, South America and Africa. We also allow individuals and organizations to utilize our software directly by hosting our products and charging a subscription fee.

AVAILABLE ~~PART I~~ INFORMATION

All reports we filed electronically with the United ~~ITEM~~States 1Securities and Exchange Commission, or the SEC, including our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and proxy statements, and other information and amendments to those reports filed electronically (if applicable), are accessible at no cost on our Web site at www. ~~BUSINESS~~intellisync.com. They are also available by contacting our Investor Relations at invrel@intellisync.com or 408-321-7650. These filings are also accessible on the SEC’s Web site at www.sec.gov. The public may read and copy any materials we filed

This Annual Report on Form 10-K contains certain forward-looking statements that involve risks and uncertainties. Words such as “anticipates,” “believes,” “expects,” “future,” “plan,” “intends,” “should,” and similar expressions are used to identify forward-looking statements. These statements are only projections based on current assumptions made by management. The actual results that we achieve 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,” “Risk Factors” and elsewhere in this Form 10-K. We undertake 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 review and consider carefully the various disclosures made by us in this report and our reports filed with the Securities and Exchange Commission that inform interested parties about the risks and factors that may affect our business. 1

with the SEC at the SEC’s ~~Overview~~Public Reference Room at 100 F Street, NE, Washington, DC 20549. The public may obtain information for the Public Reference Room by calling the SEC at 1-800-SEC-0330.

~~Pumatech,~~We ~~Inc. develops,~~have ~~markets~~adopted ~~and~~an ~~supports~~ethics ~~synchronization,~~policy ~~mobile-application~~for ~~development,~~all ~~and~~of ~~mobile-application management/device management software that enables consumers~~our employees, ~~business~~as ~~professionals~~well ~~and~~as ~~information~~a ~~technology~~code ~~professionals~~of toethics ~~extend~~for ~~the capabilities~~our ofprincipal ~~enterprise~~officers ~~groupware~~ and ~~vertical~~financial professionals. ~~applications,~~Copies ~~handheld~~of ~~organizers/computers,~~the ~~Web-enabled~~ethics ~~cellular~~policy ~~phones, pagers~~ and ~~other~~code ~~wireless~~of orethics ~~wireline~~are ~~personal communications platforms. Designed to connect people with essential~~also ~~information,~~available ~~anytime~~on ~~and anywhere,~~ our ~~product~~Web ~~family includes the following offerings:~~ site.

•Our ~~Intellisync®,~~Web ~~Enterprise~~site ~~Intellisync®,~~and ~~Enterprise~~the information ~~Intellisync~~contained ~~Server~~therein ~~and~~or ~~Satellite~~incorporated ~~Forms®~~therein ~~software;~~are not intended to be incorporated into this Annual Report on Form 10-K or our other filings with the SEC.

~~• TrueSync® software developed by our new wholly owned subsidiary, Starfish Software, Inc.;~~INDUSTRY BACKGROUND

•Significant ~~Intellisync~~advancements ~~for~~in ~~Oracle~~miniaturization, ~~software;~~visual displays, long-life batteries and portable communications in the 1990’s have led to the introduction of many innovative mobile computing devices today. In addition, with the increasing mobility of work-forces, as well as additional competitive pressures, business professionals and enterprises are continuously seeking ways to improve productivity and, as a result, are increasingly using the growing number of these mobile computing devices. These highly portable devices allow users to work and communicate while they are away from the office and have fueled the significant growth of mobile computing. From laptops to handheld devices and now to smart phones, a variety of computing devices have found their way into most organizations.

•Laptop ~~Intellisync~~computers ~~goAnywhere~~and ~~(formerly~~mobile ~~known~~handheld devices such as PDAs ~~LoudPC™~~and smartphones are carried by a high percentage of corporate employees. Laptops provide enough power to support almost any application a user wants to run, with the added benefit of being the standard platform for almost all application development. Then, in the past few years, we have seen a significant increase in the deployment of handheld devices within corporations. These devices are used for a variety of reasons including email and personal information management, (PIM) ~~software~~access ~~recently~~and ~~acquired~~mobile ~~from~~applications. ~~Loudfire~~The form factor of these devices makes them ideal for certain tasks where a laptop may be ineffective. Today’s popular handheld devices are mostly based on Palm, ~~Inc~~Symbian or Windows Mobile operating systems.;

•The ~~our~~use of mobile devices has increased tremendously as these devices have achieved wide acceptance and become more advanced and increasingly capable of running complex applications. Recent developments in mobile technology ~~licensing~~and ~~software:~~wireless ~~the~~infrastructure ~~Intellisync~~are ~~Software~~enabling ~~Development~~mobile ~~Kit~~devices ~~(Intellisync~~to exchange ~~SDK)~~an immense amount of both personal and ~~our~~corporate ~~new~~information, ~~Application~~and ~~Data~~they are ~~Synchronization~~therefore ~~platform;~~now widely used for an extensive range of both data and voice applications.

•Mobile ~~Synchrologic~~device manufacturers, ~~Mobile~~corporate ~~Suite~~enterprises ~~enterprise~~and ~~server~~application ~~platform,~~developers ~~resulting~~face ~~from~~constant pressure ~~the~~to ~~definitive~~provide ~~merger~~increased ~~agreement~~mobile ~~signed~~functionality. byMany ~~Pumatech~~of these manufacturers, enterprises and developers seek to ~~acquire~~incorporate ~~Synchrologic~~mobile data communication, ~~Inc~~exchange and synchronization capabilities to enhance existing services or expand into new markets. AEnabling mobile ~~licensing~~devices ~~agreement~~to ~~gives~~intelligently uscommunicate, ~~the~~exchange ~~ability~~and synchronize information is a complex and challenging task and has historically been cumbersome and expensive because it may have required combining products from multiple companies to ~~sell~~arrive ~~Synchrologic’s~~at ~~Mobile~~a ~~Suite~~mobile ~~beginning~~solution. ~~September~~Simply 14facilitating synchronization or data messaging requires data-level, or ~~2003~~content-aware, synchronization technology to maintain complete, up-to-date and accurate information. ~~Should~~In order to manage information effectively, mobile device users need convenient connectivity and synchronization solutions for the specific ~~acquisition~~combination ~~fail~~of networks, devices and applications that they use. These software solutions must allow these users to ~~occur~~synchronize information maintained separately on multiple devices (for example, ~~the~~contact ~~licensing~~databases ~~will~~maintained ~~continue~~by ~~through~~a mobile professional using a handheld computer in the ~~end~~field ofand by a support colleague using a desktop personal computer, or PC, in the ~~three~~office). A software solution that links such different devices must address multiple hardware architectures, operating systems, communications architectures and application-~~year~~specific ~~term~~data offormats ~~the~~and ~~agreement~~structures.

Pumatech was incorporated in California in August 1993 as Puma Technology, Inc. and we reincorporated in Delaware in November 1996. Our principal executive offices are located at 2550 North First Street, Suite 500, San Jose, California 95131, and our Web address is www.pumatech.com. The information posted on the Web address is not incorporated into this Annual Report on Form 10-K. 2

WeOUR ~~have~~TECHNOLOGY organized our operations into a single operating segment encompassing the development, marketing and support of software and services that provide synchronization, mobile application development, application/device management, real-time remote information access, and secure Virtual Private Network (sVPN™—obtained from our acquisition of substantially all of the assets of Spontaneous Technology, Inc. on September 17, 2003). For further discussion of financial information related to our operating segment, as well as geographic areas, refer to note 16 to Consolidated Financials Statements set forth in Part IV of this Annual Report on Form 10-K. SOLUTIONS

We ~~license~~provide enterprises, ~~our~~network operators, mobile device manufacturers and software providers with a complete mobility platform. Our products ~~directly~~are tobranded ~~corporations~~and marketed under several names for specific markets or needs; these include our award-winning Intellisync family, ~~original~~the ~~equipment~~Intellisync ~~manufacturers~~Mobile ~~and~~Suite™, ~~business~~the ~~development~~Intellisync ~~organizations~~Mobile ~~worldwide.~~Suite for Carrier, Inthe ~~addition~~Intellisync SyncML platform, Identity Search server and Intellisync IM (formerly VeriChat). Encompassing all aspects of mobility, we provide ~~sell~~the ~~our~~critical ~~retail~~technology ~~products~~solutions ~~through~~needed ~~several~~for ~~distribution~~businesses to realize the full potential of smart devices and advanced wireless networks. Our mobility offerings include:

1· Wireless Messaging: Email/PIM synchronization and instant messaging solutions connect mobile devices to consumer and corporate industry standard email servers like Microsoft Exchange, Novell Groupwise and Lotus Domino, simplifying the process for business professionals to access their email, messages, calendar, contacts, and tasks.

~~Table~~· PIM Synchronization: Desktop-PDA (personal digital assistant) synchronization offerings include Intellisync® Handheld Edition for Enterprise and Intellisync Handheld Edition, supporting the synchronization needs of ~~Contents~~a mobile workforce. For independent software vendors, or ISVs, and internet service providers, or ISPs, we offer the PIM Platform.

· File Distribution: File ~~channels~~synchronization ~~both~~capabilities inautomate the ~~United~~process ~~States~~of ~~and~~distributing ~~internationally, including major distributors, resellers, computer dealers, retailers and mail-order companies in the~~information ~~United~~throughout ~~States.~~an ~~Internationally, we are represented by over 100 distributors and resellers in North America, Europe, the Asia-Pacific region, South America and Africa~~organization.

· Device Management: Device management ~~Available~~provides ~~Information~~a robust platform for mobile carriers to configure, update, and provision leading mobile devices for their customers and offers a mechanism for remotely maintaining and securing mobile devices.

~~All reports~~· Application weMobilization: We ~~filed~~allow organizations ~~electronically~~to ~~with~~mobilize ~~the~~a ~~Securities~~wide ~~and~~range ~~Exchange~~of ~~Commission~~enterprise ~~(SEC),~~applications ~~including our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K~~ and ~~proxy~~data ~~statements, and other information and amendments~~ to ~~those~~ reports filed electronically (if applicable), are accessible at no cost on our Web site at www.pumatech.com. They are also available by contacting our Investor Relations at invrel@pumatech.com or 408-321-7650. These filings are also accessiblea onwide ~~the~~variety ~~SEC’s~~of ~~Web~~devices ~~site at www.sec.gov. The public may read~~ and ~~copy any materials we filed with the SEC at the SEC’s Public Reference Room at 450 Fifth Street, NW, Washington, DC 20549~~platforms. ~~The public may obtain information for the Public Reference Room by calling the SEC at 1-800-SEC-0330.~~

· Services: We provide professional and maintenance ~~Industry~~services ~~Background~~to support the evaluation, purchase, installation and use of our products.

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 while they are away from the office and have fueled the significant growth of mobile computing. The growth of the mobile computing industry began with the widespread adoption of notebook computers, which provided mobility and an extension of corporate enterprise data. This was followed by the emergence of handheld devices to which personal information was delivered locally from a desktop personal computer (PC). Today, in this period of “anytime, anywhere” access, the mobile computing industry is capitalizing on both wired and wireless access to information that can reside on a PC, an intranet/corporate server or even on the Internet. This information or content is often highly customized, based on distinct user preferences. 3

As a result of an increase in worldwide use of mobile communications, the mobile computing market has been on a steady growth path since the mid-1990s. Smart electronic consumer devices, such as personal digital assistants (PDAs, also known as “handhelds”), smart phones and pagers, have become more broadly available and adopted, and other mobile communications services have become more widely accessible and affordable, providing data storage and information management capabilities to the mobile business professional. Today’s popular handheld devices include Palm OS®-based solutions from Palm, Inc., Sony Corporation, Handspring, Inc. and Symbol Technologies; Pocket PC/Windows CE -based devices from Hewlett-Packard Company, Toshiba America, Inc., Dell, Inc. and others; Symbian-based handhelds from companies like Psion PLC; and BlackBerry devices from Research in Motion. Despite a decline in sales of traditional PDAs in the last two years, as an effect of the overall soft economy, sales are growing for smartphones and other wireless mobile devices. According to a recent report from industry analyst eTForecasts, when smartphones are included in PDA sales, the worldwide PDA demand in 2002 did not decline, but instead it reflected a small sales increase. In addition, industry analyst International Data Corporation (IDC) projects that, even though 2002 was a challenging economic year worldwide, anticipated improvement of economic conditions in the later part of 2003 and 2004 and the momentum of increased activity and larger deployments of wireless and mobile solutions are expected to bring forth increased volume and revenue growth to the market. IDC expects that worldwide revenue for the mobile computing middleware market will increase over the next few years with a compound annual growth rate (CAGR) of 36.5% through 2007. IDC forecasts that the market will increase from $333 million in 2002 to $1.58 billion by 2007. PRODUCTS

AsWe ~~more~~provide ~~types~~individuals ofand organizations ~~new~~with a complete mobile ~~computing~~platform ~~devices~~featuring ~~become~~a ~~available~~comprehensive tosuite of ~~business~~software ~~professionals~~products and ~~enterprises,~~services ~~users~~that ~~are~~synchronizes ~~faced with~~and ~~the~~distributes ~~difficulty of exchanging~~ critical information ~~among~~to ~~these~~employees, ~~various~~customers ~~devices~~or partners. ~~This~~Our ~~problem~~solutions ofare ~~interoperability~~designed isto support ~~caused~~continued by innovation—the ~~need~~growing tonumber ~~exchange~~of ~~information~~devices, ~~among~~access ~~different~~points ~~hardware~~and data ~~devices,~~sources ~~operating~~utilized ~~systems~~by ~~and~~the ~~applications.~~typical ~~Hardware~~mobile ~~platforms~~worker ~~range~~in today’s enterprise—allowing ~~from~~businesses ~~high-speed~~of ~~Pentium~~all ~~PCs~~sizes ~~with~~to ~~hundreds~~maximize ofproductivity ~~megabytes~~while minimizing complexity and cost.

Product Name	Description	Introduction Date
*Intellisync Mobile Suite for the Enterprise*	Designed to extend an organization’s existing technology infrastructure to mobile and remote staff, delivering access to enterprise applications, file content, email and PIM data, intranet sites, and Web content and provide tools for remotely managing mobile devices.
· Intellisync Wireless Email	Provides Wireless Push Email and PIM Synchronization, enabling users to receive email, calendar, contacts, and other updates from all the leading groupware/email servers, including Microsoft Exchange and Lotus Domino, on nearly any mobile device, including Palm OS, Pocket PC, and Windows Mobile-based devices. XML (Extensible Markup Language) Platform opens Wireless Email to easy access to CRM (customer relationship management), SFA (Sales Force Automation), and collaboration software.	December 2003
· Intellisync Data Sync	Provides Mobilized Enterprise Applications, extending any of corporate data or applications to mobile workers, on handheld devices as well as laptop and tablet PCs. Data Sync is used by enterprises to deliver large-scale, high-ROI (return on investment) mobile applications to several users.	December 2003
· Intellisync File Sync	Provides an Efficient File and Web-content Distribution as it automates distribution of any file or intranet content on a network to mobile devices, keeping them up-to-date and relevant.	December 2003
· Intellisync Mobile Systems Management	Provides a Comprehensive Security and Device Management, enabling users to manage every aspect of a mobile solution through an easy-to-use administrative console. With features that drive administrative efficiency and security, such as over-the-air deployment and automatic device backups, Systems Management helps minimize the IT (information technology) resources required for a mobile solution.	December 2003
Wireless Email Express	An easy-to-install, subscription version of Intellisync Wireless Email, ideal for the smaller enterprise deployment, or small to medium businesses.	August 2005

~~Table of Contents~~4

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 2000, Windows XP, Windows NT, Pocket PC/Windows CE, DOS, Palm OS, Symbian and others, and utilize an even greater range of information management applications, databases and data formats. Enabling these devices to communicate, exchange and synchronize information is a complex and challenging task. Simply facilitating synchronization 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 Palm OS handheld with Microsoft Outlook on a desktop PC or Lotus Notes on a 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.

*Intellisync Mobile Suite for the Carrier*	A full-featured mobile data middleware platform that provides operators with a single platform they can use to deliver wireless email, device management, and data access solutions to their customers. The Intellisync Mobile Suite for Carrier delivers the following modules:
· Intellisync Wireless Email	See product description under Intellisync Mobile Suite.	December 2003
· Intellisync Consumer Email	Designed to provide simple, secure, and affordable email access on BREW-enabled mobile devices that operators choose to deploy. The solution supports POP3 email from a variety of sources including AOL, Hotmail, Yahoo, and MSN. The solution can also be configured to provide access to a user’s corporate email via an IMAP4 connection into the user’s Microsoft Exchange or Lotus Domino mail server.	March 2005
· Intellisync Device Management	Provides mobile operators with device management capabilities that can be offered to enterprises as either a hosted solution or a behind-the-firewall solution. This offering includes capabilities for Device Security, Asset Management, Software Management, Device Troubleshooting, Network Optimization, and Device Configuration.	March 2003
· Intellisync File Sync	See product description under Intellisync Mobile Suite.	December 2003
· Intellisync Data Sync	See product description under Intellisync Mobile Suite.	December 2003
*Intellisync SyncML Platform*	Provides over-the-air (OTA) push of PIM data, OTA synchronization services for custom data types, and hosted Web PIM services. It works on a broad range of mobile devices, making it the perfect fit for operators needing to deploy a variety of consumer devices. Intellisync SyncML Platform offers mobile consumers on-demand pull and push access to their PIM data, email and files, and makes vital data portable and accessible wherever consumers may go. It allows on-demand synchronization and scheduled push for any data type, including email with attachments and PIM data, such as contacts, calendar events, memos, and tasks. It also provides Web PIM services, allowing consumers to remotely access their data online, provision mobile devices, backup and restore PIM data, retrieve files and bookmarks and more.	March 2003

With the increasing mobility of work forces, as well as additional competitive pressures, business professionals and enterprises 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. These software solutions must allow users to synchronize information maintained separately on multiple devices (for example, 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. 5

Our Technology Solutions

*Intellisync Carrier ASP Service*	Intellisync offers mobile carriers a wide range of deployment options for delivering wireless data solutions. Carriers can, in turn, offer these same options to their customers, giving them the ultimate in flexibility. Carrier can choose to:	May 2004
	· Host the Intellisync Mobile Suite for Carrier inside their network—this gives the operator total control over the environment and enables them to deliver a hosted service to their customers, easing the customers’ installation and support burden.
	· Have Intellisync host the solution—this will enable the mobile operators to deploy wireless data solutions quickly with minimal delay. Intellisync integrates this hosted solution with the carriers’ authentication and billing systems to insure that user accounts are valid and properly billed.
	· Have the customer host the solution behind the firewall—this option enables companies that want to control their corporate data to do so by having the infrastructure behind their firewall.
*Intellisync OEM Licensing*	Provides all-in-one corporate-licensing solution to enable inter-operability for all of the PIM software, handheld devices, and desktop operating systems that Intellisync Handheld Edition supports.
· Wireless to Server	PIM Platform-Wireless to Server (W2S) extends application data via wireless email and PIM “push” to the leading mobile devices. It offers rapid integration to the widest possible customer base.	February 1998
· Server to Server	With Intellisync’s server development solution, Intellisync PIM Platform-Server to Server (S2S), developers can integrate their application’s server-based data with leading groupware servers such as Microsoft Exchange and Lotus Domino.	August 2003
· Client to Server	To synchronize data to client PIM applications and cradled devices, Intellisync PIM Platform-Client to Server (C2S) offers cost-effective integrations through “connectors.”	February 1998
*Identity Search Server*	Designed to provide solutions that significantly enhance an organization’s ability to search, find, match, and group identity data within their computer systems and network databases. Identity Systems software is an “out of the box” solution for searching and matching names, addresses, and identity data for Oracle, DB2/UDB, and SQL Server.	March 2004

We provide enterprise-level software solutions, anchored by the award-winning Intellisync family, the Synchrologic Mobile Suite enterprise server platform (resulting from our licensing agreement with Synchrologic dated September 14, 2003), Satellite Forms software, TrueSync Server platform, secure Virtual Private Network (sVPN) technology (obtained from our acquisition of substantially all of the assets of Spontaneous Technology, Inc. on September 17, 2003) and our technology licensing offering—the Intellisync Software Development Kit (Intellisync SDK). Our infrastructure solutions are designed to increase productivity for the enterprise by allowing users to access, exchange and synchronize easily information stored on a variety of different computing devices. Our solutions enable the enterprise to be a place where the most current information is rapidly available and accessible. Our technologies and products allow users to access information with easy-to-use applications, saving time and money. 6

We also work closely with companies to embed our technologies into new and existing applications by combining off-the-shelf products and custom-built applications. By operating on multiple platforms and streamlining delivery of information from common repositories such as intranets, the World Wide Web, corporate PIM (personal information management) applications and databases, we extend information to the companies’ points of business.

*Intellisync Handheld Edition*	Designed to provide robust, secure client synchronization solutions capable of extending information and mission-critical data beyond the confines of the desktop. It provides organizations of all sizes and needs with cost-effective, easy-to-administer solutions for sharing email, PIM, file, and application data with a wide range of mobile devices and platforms.
· Intellisync Handheld Edition for Enterprise	Designed specifically for the high-demand corporate environment, Intellisync Handheld Edition for Enterprise software makes it easy and affordable to support the desktop synchronization needs of a mobile workforce, no matter which handheld devices or software they use.	June 2001
· Intellisync Handheld Edition	Designed to keep a user constantly current with direct, two-way synchronization between his/her PC and Palm OS, Pocket PC or Windows Mobile-based Smartphone device.	August 1996
· Intellisync Lite Upgrades	Upgrade to the full version of Intellisync—special offers for Sony, NEC, Group Sense, Garmin, Panasonic, and PI Tech customers.	June 2001
Intellisync IM (formerly VeriChat)	An always-on, unified Instant Messaging (IM) application for PalmOS devices. On a smartphone, such as a Treo 600, Intellisync IM works with the user’s persistent (GPRS/CDMA 1xRTT) or CSD wireless data connection, providing an “always-on” presence on the Yahoo!, ICQ, MSN & AOL chat networks.	June 2005

•OUR Intelligent, content-aware data synchronization: our solutions enable up-to-the-minute e-mail, PIM and database information to be reflected across all devices utilized in the enterprise—from desktop and notebook personal computers (PCs) to handhelds, phones and pagers. Our multi-patented synchronization technology provides content-aware data synchronization among this growing number of mobile devices and essential PC applications such as Microsoft Outlook, Lotus Notes and Novell GroupWise. Our 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 connectors to accommodate new devices and applications. With the Intellisync SDK, we have enabled independent software vendors, device original equipment manufacturers and Internet-based services to build synchronization solutions for their products based on the Intellisync platform, further enhancing our standard product range, and have lowered our own development costs.STRATEGY

3Our strategy is to be a leading developer and marketer of innovative wireless software solutions for the global mobile communications market by leveraging our engineering, technology and domain expertise and executing on a plan to broaden our market reach through distribution agreements and partnerships with leading enterprises, mobile carriers, device manufacturers, and software providers. We believe that our strategy will allow us to deepen relationships with our existing customers, attract new customers and further diversify our revenue streams.

~~Table~~Our ofstrategy ~~Contents~~includes the following key elements:

•Extend ~~Anytime,~~Technology ~~anywhere~~and ~~handheld~~Product ~~access~~Leadership. We tobelieve that ~~corporate~~we ~~applications:~~currently ~~With~~have and are enhancing one of the ~~Synchrologic~~broadest ~~Mobile~~and ~~Suite~~most comprehensive ~~enterprise~~mobile ~~server~~and ~~platform,~~wireless weinfrastructure ~~are~~enterprise ~~providing~~solutions. aWe intend ~~single~~to ~~resource~~continue ~~for~~to ~~synchronizing~~invest ~~PIM,~~in ~~e-mail,~~research and ~~custom~~development ~~database~~and ~~information,~~remain ~~both~~involved with ~~locally~~new and ~~remotely,~~developing ~~between~~industry ~~desktop~~standards. ~~PCs,~~We ~~servers~~also intend to increase the performance, functionality and ease of use of our solutions by supporting new mobile devices, and developing new ways for ~~managing~~our ~~handheld~~products ~~software~~to be marketed and ~~devices~~supported by ~~from~~service ~~one~~providers ~~centralized~~and ~~location~~our strategic partners.

•Maintain ~~Centralized~~and ~~management:~~Strengthen ~~Through~~Strategic ~~the~~Relationships. We depend ~~Synchrologic~~on ~~Mobile~~and ~~Suite~~have ~~platform~~strategic ~~solution,~~relationships ~~and~~with ~~through~~service ~~our~~providers, ~~Enterprise~~systems integrators, ~~Intellisync~~mobile ~~(desktop)~~carriers, independent software resellers, weand ~~enable~~other ~~information~~types of technology ~~(IT)~~providers ~~managers~~ to ~~use~~build aapplications ~~centralized~~based ~~administrator~~on ~~console~~our toinfrastructure platform ~~deploy quickly~~ and ~~easily~~technologies. ~~software~~We ~~licenses,~~plan ~~configure~~to ~~applications~~continue ~~based~~building onthese ~~user~~relationships ~~needs,~~as well ~~establish~~as ~~security~~forming ~~privileges,~~new ~~and~~partnerships ~~troubleshoot~~to ~~software~~increase byvisibility ~~receiving~~ and ~~viewing~~distribution ~~detailed~~of ~~user logs~~our solutions.

•Increase ~~Extending~~Brand ~~core~~Awareness ~~applications~~and toMarketing ~~handheld~~Efforts. We ~~devices:~~intend ~~Our~~to increase ~~Satellite~~customer ~~Forms~~awareness ~~MobileApp Designer software enables development~~ of ~~custom~~our ~~applications~~products, ~~that~~technologies ~~operate on handheld devices~~ and ~~integrate~~services. ~~with~~We ~~both~~plan to ~~server~~enhance ~~and~~awareness ~~desktop~~of ~~databases,~~the ~~thereby~~Intellisync ~~extending~~brand ~~mission-critical~~by ~~corporate~~increasing ~~data to employees, when and where they need it.~~

• Carrier-class synchronization: TrueSync Server software—developed by our wholly owned subsidiary, Starfish Software—is a highly scalable synchronization engine that provides multi-tier over-the-air and wireline synchronization between a heterogeneous mix of devices, applications and services. The TrueSync Server is SyncML 1.1 certified and supports a wide variety of platforms, databases, applications, protocols and transports, for broad interoperability. Its distributed architecture allows for scalability, high availability and redundancy for millions of users, making it an ideal solution for carriers.7

•our ~~Real-time,~~marketing activity ~~secure,~~and ~~remote~~furthering ~~information~~our ~~access:~~image ~~Our Intellisync goAnywhere (formerly known~~ as ~~“LoudPC”)~~a ~~technology,~~high-quality ~~acquired~~provider ~~from Loudfire, Inc. on July 22, 2003, allows anyone~~ with ana comprehensive ~~Internet~~offering ~~browser~~of ortechnology ~~Web-enabled phone to enjoy real-time access to email and PIM data located in either Microsoft Outlook or Outlook Express~~solutions. ~~The product also provides secure access to pre-specified files residing on a host PC.~~

•Expand ~~Secure~~Our ~~VPN~~Worldwide ~~solutions:~~Presence. We ~~our~~believe that ~~secure,~~international ~~carrier-grade~~markets ~~enterprise~~present ~~sVPN~~a ~~technology—obtained~~substantial ~~from~~growth ~~our~~opportunity ~~acquisition~~for ofus ~~substantially~~as the ~~all~~worldwide ofmarket ~~the~~for ~~assets~~mobile ofand ~~Spontaneous~~wireless ~~Technology~~products oncontinues ~~September~~to ~~17,~~grow. ~~2003—is~~We ~~designed~~are currently toselling ~~provide~~our ~~remote~~products in Canada, ~~secure~~Europe, the ~~access~~Asia-Pacific toregion, ~~corporate~~South ~~applications~~America ~~from~~and ~~any~~Africa, ~~wireless~~and ~~device~~plan orto ~~operating~~expand our ~~system~~sales, ~~such~~marketing asand ~~Microsoft~~support ~~(NT~~functions &in ~~Pocket~~those ~~PC),~~areas ~~SUN~~by ~~(Solaris,~~expanding ~~Java,~~our direct ~~J2ME)~~sales force, ~~Palm™~~improving our customer service capabilities and ~~Symbian,~~developing relationships ~~without~~with ~~requiring~~international ~~infrastructure~~resellers, ~~changes~~distributors, bycarriers ITand OEMs.

•Further ~~Network~~Enhance ~~and~~Customer ~~device~~Satisfaction. We ~~independent~~are committed ~~solutions~~to ~~for~~providing ~~broad interoperability: Our products provide connectivity and synchronization among industry~~world-~~leading~~class ~~PCs~~technical ~~and~~support, ~~mobile computing devices~~training, ~~operating~~consulting ~~systems~~ and professional ~~applications.~~services ~~Our~~and ~~products~~view ~~operate~~building ~~with~~long-term ~~major~~customer PCrelationships ~~operating systems for Windows 98, Windows 2000, Windows XP, Windows Me, and Windows NT,~~ as ~~well~~a critical ascomponent ~~several~~of ~~proprietary~~growing ~~operating~~our ~~systems~~business. We ~~also~~believe ~~provide~~servicing ~~interoperability~~our ~~across~~existing customer abase ~~wide~~will ~~range~~allow ofus ~~industry~~to more easily up-~~standard~~sell and ~~vendor~~cross-~~specific~~sell ~~applications~~additional products, byfeatures ~~supporting~~and ~~multiple~~customer ~~data~~service ~~formats~~offerings.

4Build Value Through Strategic Acquisitions. We have acquired and integrated core technologies from Spontaneous Technology, Inc., Synchrologic, Inc., Identity Systems (formerly Search Software America, or SSA), Tourmaline Networks, Inc. and PDAapps. We are willing to acquire, when appropriate, additional businesses and technologies that will expand and add functionality to our product offerings, augment our distribution channels, expand our market opportunities or broaden our customer base.

~~Table~~Continue ofRevenue ~~Contents~~Growth and Improve Operating Efficiencies. We maintain a disciplined commitment to increasing our quarterly revenue. Together with our other strategies listed above, we plan to improve revenue by continuing to develop new and current products, services and technologies. We intend to capitalize on the continued growth in demand for wireless services and the related infrastructure required, including hosting, application and other related services, to support that growth. We also actively seek to improve our operational efficiency and reduce our costs throughout our operations, removing administrative complexities, eliminating redundancies, and integrating acquired businesses.

~~Products~~SALES AND MARKETING

We ~~offer~~market and sell our products through a ~~wide~~direct ~~range~~sales force and several third party distribution ofchannels ~~software~~in ~~technologies~~the United States and ~~services~~internationally, toincluding wireless carriers, retail, the Internet, value-added resellers, distributors, software providers and system integrators. We have also historically developed partnerships with original equipment manufacturers, (or OEMs), ~~enterprise~~service providers, ~~retail~~mobile carriers and ~~online~~other ~~markets.~~enterprises ~~These~~around ~~offerings~~the ~~allow~~world ~~users~~ to ~~synchronize~~market ~~critical~~or ~~information~~to ~~between~~create ~~both~~marketing opportunities ~~wired~~for ~~and~~our ~~wireless~~applications. ~~handheld~~We ~~devices~~depend ~~and~~on these ~~the~~partners to ~~vast~~help ~~stores~~us ofdeliver ~~information~~world ~~found~~class inmobility ~~corporate~~solutions ~~databases,~~and ~~intranets,~~we ~~the~~believe ~~Internet~~that ~~and~~by ~~individuals’~~working together ~~personal~~we ~~computer~~combine ~~(PC)~~the ~~applications.~~strengths Weof ~~also~~our ~~provide~~broad mobility platform with the expertise, tools ~~needed~~and tonetworks ~~create~~of ~~custom~~our ~~handheld~~technology ~~applications,~~and ~~manage~~distribution ~~mobile~~partners ~~software applications~~to ~~and~~create ~~devices~~substantial value, ~~remotely~~not ~~access~~only ~~Outlook~~for ~~and~~our PCcustomers, ~~files~~but inalso ~~real~~for ~~time,~~both our partners and ~~provide~~our ~~secure~~company. ~~Virtual~~Intellisync ~~Private~~Corporation’s ~~Network~~Partner ~~(sVPN—obtained~~Program ~~from~~is ~~our~~designed to ~~acquisition~~provide oforganizations ~~substantially~~a ~~all~~variety of ~~the~~tools, ~~assets~~information, oftraining ~~Spontaneous~~and resources ~~Technology,~~needed ~~Inc.~~to onsuccessfully ~~September~~sell ~~17,~~our ~~2003)~~products ~~access~~and tosolutions. We work with ~~corporate~~these ~~applications~~organizations ~~from~~to ~~any~~train ~~wireless~~certain ~~device~~of ortheir ~~operating~~sales ~~system.~~forces and collaborate with them in joint marketing programs.

Product Name	Description	Introduction Date
Desktop-based Solutions
• Intellisync®	Enables direct synchronization of calendars, e-mail, contacts, memos, and tasks between Palm OS, Pocket PC 2002, Pocket PC/Windows CE or Symbian Release 5.0-compatible handhelds and the leading PC-based PIM (personal information management), contact management and groupware messaging applications. With its patented Data Synchronization Extensions (DSX) Technology engine, Intellisync provides simultaneous synchronization of handheld organizer data with multiple PC applications such as Microsoft Outlook (including Outlook 2002) and Outlook Express, Lotus Notes and Organizer, Novell GroupWise, ACT!, and others.	August 1996
• Enterprise Intellisync® (with integrated Administrator’s Console)	Enterprise Intellisync software provides compatibility with all of the PIM software, handheld devices, and desktop operating systems that Intellisync supports. In addition, an integrated Administrator’s Console enables preconfiguration, deployment, management, and troubleshooting of Intellisync software from a single, centralized location. Enterprise Intellisync automatically synchronizes calendar, e-mail, contacts, memos, and tasks with PIM, contact management and groupware applications, including Microsoft Outlook (including Outlook 2002/XP), Lotus Notes and Organizer, ACT!, and Novell GroupWise. Enterprise Intellisync can be used in conjunction with Microsoft Systems Management Server or other systems management software to distribute configured and licensed copies of Intellisync.	June 2001
• Intellisync for Oracle	Provides direct, two-way synchronization of calendar, contacts, and tasks between Oracle E-Business Suite and both Microsoft Outlook and Palm OS handhelds.	November 2002
• Intellisync: Phone Edition	Software which enables two-way synchronization of contacts between Microsoft Outlook and popular mobile phones from Nokia, Inc., Motorola, Inc., Samsung Electronics, Inc., and LG Electronics, Inc. Intellisync: Phone Edition synchronizes contacts directly between the user’s default Outlook Contacts folder and its mobile phone. It also automatically notifies the user when the number of contacts it is about to synchronize exceeds the storage available on its phone.	October 2003

Through ongoing communications with OEMs, enterprises and carrier sales and marketing organizations, we match our application portfolio with the strategic needs of the carrier and the preferences of their subscribers. We have sales and marketing offices located in San Jose, California; Greenwich, Connecticut; Alpharetta, Georgia; Sydney, Australia; Cologne, Germany; Reading, United Kingdom; and Tokyo, Japan and a number of sales representatives working from their homes in the United States, Italy and Germany, to cover local territories.

5Our active participation in multi-channel sales, marketing and service of the enterprise, carrier, retail, and OEM mobile middleware markets provides a significant business opportunity for our partners. Our customers continue to expand and optimize their deployments of Intellisync software products. As a result,

~~Table of Contents~~8

Product Name	Description	Introduction Date
• Intellisync goAnywhere (formerly known as “LoudPC”—recently rebranded and repackaged)	Technology acquired from Loudfire, Inc., Intellisync goAnywhere is designed to provide real-time, secure remote access to Microsoft Outlook and PC data files from any device equipped with a Web browser—PCs, Mac OS computers, Palm OS/Pocket PC handhelds, or cellular phones.	July 2003 (acquired)
Server-based Solutions
• Synchrologic Mobile Suite platform (Pumatech has a licensing agreement with Synchrologic to begin selling these solutions immediately, as part of Pumatech’s definitive agreement to purchase Synchrologic, Inc.)	Designed to extend an organization’s existing technology infrastructure to mobile and remote staff, delivering access to enterprise applications and databases, file content, email and PIM data, intranet sites, and Web content. It is also designed to provide tools for remotely managing mobile devices. Synchrologic Mobile Suite is composed of four core products: Synchrologic Email Accelerator, Synchrologic Data Sync, Synchrologic File Sync and Synchrologic Systems Management.	September 2003 (three-year licensing agreement with Synchrologic)
• Enterprise Intellisync Server	Provides a single solution for synchronizing both PIM and custom database information—locally and remotely—between servers and mobile devices.	August 2002
• TrueSync Server	TrueSync Server Products and Solutions provide multi-tier over-the-air and wireline synchronization between a heterogeneous mix of devices, applications and services. The server platform features a flexible and extensible component-based architecture using open standards such as SyncML, Java and XML (Extensible Markup Language).	March 2003 (acquired)
• SyncML Device Management Solutions	SyncML device management encompasses technologies utilized by wireless operators and corporate IT departments to perform complex remote configuration of mobile devices on behalf of end users. Device management solutions enable over-the-air customization, personalization and servicing of wireless handsets and PDAs. The Open Mobile Alliance (OMA), an organization chartered with developing mobile standards, has initiated a technology track to build a SyncML DM protocol as the open, universal industry standard for remote device management of networked devices. Starfish Software, Pumatech’s wholly owned subsidiary, was the first company to certify and deploy commercially SyncML-enabled server solutions.	March 2003 (acquired)
• Spontaneous Technology’s secure Virtual Private Network (sVPN) technology	Designed to enable secure, carrier-grade enterprise VPN solutions that extend existing corporate applications to any wireless device and operating system, including Microsoft (NT & Pocket PC), SUN (Solaris, Java, J2ME), Palm and Symbian. This technology is designed to allow carriers’ enterprise customers the freedom to deploy new applications quickly and affordably—without the need for massive new infrastructure and investment.	September 2003 (acquired)

Intellisync’s customer base presents a ready market for complementary products, services, and solutions from our partners.

6In addition, Intellisync is the mobile platform of choice for some of the largest mobile carriers and operators in the world. From wireless messaging to device management to mobile applications, we are helping carriers in their efforts to reduce churn, increase average revenue per user (ARPU), penetrate enterprise accounts and increase mobile data profits.

~~Table~~We strive to be both a technology and marketing partner with our OEM and strategic customers. Our sales and marketing organization sells our products directly to our OEM partners, distributors and end users. We work closely with OEM partners on their new hardware products by providing them with technical input, thereby helping to ensure that our software products will work successfully with the OEM’s hardware products. We also train and educate the OEM’s sales and marketing organizations on our products, allowing them to act as our “virtual” sales force to their channels and direct customers. In addition, we work closely with our hardware and software strategic partners to develop effective marketing programs designed to increase sales. Refer to the discussion below under the caption “Risk Factors—If we fail to maintain our existing relationships or enter into new relationships with OEM and business development organizations, or if products offered by our OEM partners fail to achieve or maintain market acceptance, our brand awareness, the sales of ~~Contents~~our products and use of our services would suffer.”

Product Name	Description	IntroductionDate
Development Solutions
• Satellite Forms MobileApp Designer	A rapid application development (RAD) tool for Palm OS and Pocket PC 2002-based handhelds, Satellite Forms MobileApp Designer lets developers quickly create and deploy custom handheld applications that can be integrated with desktop or network databases, including Oracle, DB2, and Microsoft Access, or directly with server-based data via the Synchrologic Mobile Suite (available separately).	July 1998 (acquired)
• Intellisync Software Development Kit (Intellisync SDK)	Provides a solution for adding intelligent synchronization to enterprise applications, mobile devices and Web-based services.	February 1998
• Intellisync for Web Toolkit	A synchronization solution for Intellisync SDK licensees who wish to synchronize their Web-based PIM applications with leading PIMs and devices, including Microsoft Outlook, Palm OS handhelds and many others. Intellisync for Web includes a pre-built, customizable Intellisync desktop client and Connector.	July 2000 (acquired)
• Application Data Synchronization Platform	Our Application Data Synchronization Platform addresses a major issue facing corporate IT management—that of enterprise data synchronization and integration—as corporations today are faced with expensive applications and systems that do not work together effectively, making it important to have solutions that synchronize not just mobile devices, but also with PC- and server-based applications. The platform is built upon standard synchronization protocols such as XML that produce flexible solutions tailored to the enterprise specific needs. Application Data Synchronization solutions can be either desktop-based or server-to-server. A desktop-based solution offers the ability to synchronize appointments, contacts, memos, tasks and email between a vertical enterprise application and Microsoft Outlook, Lotus Notes and Novell GroupWise on the desktop, or Palm OS and Pocket PC handhelds via cradle-based synchronization. A server-to-server solution enables direct, server-based synchronization of appointments, contacts, tasks and email between a vertical enterprise application, like CRM (customer relationship management), and both Microsoft Exchange and Lotus Domino.	May 2003

We manage a content-rich web site to facilitate the sale and support of our products and engage in electronic marketing through email, newsletter and white paper postings to drive awareness and sales leads. Over the years, we have built a substantial database of users who have opted to receive information about enterprise mobile computing. In addition, we participate in a number of industry conferences and trade shows both independently and with strategic partners.

7In the United States, our sales organization works directly with major distributors, resellers, computer dealers, retailers, mail-order companies and Web stores to distribute our retail packaged products. Internationally, we market and sell through selected distributors and resellers that focus on specific geographic and market segment areas. These international partners operate as an extension of our marketing and sales organizations, developing the appropriate sales channels in their regions. They also work with local resellers as well as local offices of our OEM customers to develop specific marketing and channel promotions for their regions. As of July 31, 2005, we were represented by over 150 distributors, resellers and retailers in North America, Europe, Asia Pacific, South America and Africa, and are continuing to expand our international reach as appropriate distributors or resellers are found. Also, refer to the discussion below under the caption “Risk Factors—We are dependent on our international operations for a significant portion of our revenue.”

~~Table~~Consistent with industry practice, we provide our distributors with stock balancing and price protection rights. These rights permit our distributors to return slow-moving products to us for credit and to receive price adjustments for inventories of ~~Contents~~our products held by distributors if we lower the price of those products. We recognize revenues on products shipped to distributors at the time the merchandise is sold by the distributor; as a result, the immediate effect of returns and adjustments on our quarterly operating results has been minimal to date. Also, to date, we have not experienced any significant returns or price protection adjustments.

No customers, distributor ~~Sales~~or otherwise, accounted for more than 10% of our total revenue during fiscal 2005 and ~~Marketing~~2004. During fiscal 2003, Ingram Micro US accounted for 10% of our total revenue.

WeIn ~~market and~~order ~~sell~~to develop further our ~~products~~brand ~~through~~name ~~several~~recognition, ~~channels~~we inplan ~~the~~to ~~United~~continue ~~States~~to ~~and~~expand ~~internationally,~~our ~~including~~joint marketing ~~retail~~programs, ~~the~~marketing ~~Web,~~channel ~~value-added~~promotions ~~resellers,~~and ~~system~~bundling ~~integrators,~~arrangements ~~original~~with our ~~equipment~~strategic ~~manufacturers~~partners. ~~(OEMs)~~We also plan to continue to leverage our relationships with industry leaders and ~~directly~~to expand and diversify our own sales and marketing initiatives to ~~enterprise~~increase ~~customers~~our sales to mobile carriers and enterprises. Hence, we anticipate that sales and marketing expenses will increase in fiscal 2006.

In the United States, our sales organization works directly with major distributors, resellers, computer dealers, retailers, mail-order companies and Web stores to distribute our retail packaged products. Internationally, we market and sell through selected distributors and republishers that focus on specific geographic and market segment areas. These international partners operate as an extension of our marketing and sales organizations, developing the appropriate sales channels in their regions. They also work with local resellers as well as local offices of our OEM customers to develop specific marketing and channel promotions for their regions. As of July 31, 2003, we were represented by over 100 distributors and resellers in North America, Europe, Asia Pacific, South America, and Africa, and are continuing to expand our international reach as appropriate distributors or republishers are found. For further discussion of risks from our international operations, see the discussion below under the caption “Risk Factors—We are dependent on our international operations for a significant portion of our revenues.” 9

~~Consistent with industry practice, we provide our distributors with stock balancing and price protection rights. These rights permit our distributors to~~CUSTOMER return slow-moving products to us for credit and to receive price adjustments for inventories of our products held by distributors if we lower the price of those products. We recognize revenues on products shipped to distributors at the time the merchandise is sold by the distributor; as a result, the immediate effect of returns and adjustments on our quarterly operating results has been minimal to date. SUPPORT

~~One~~Our ~~distributor~~service and support organization provides secondary technical support to OEMs, ~~Ingram~~primary ~~Micro~~technical support USto enterprises, ~~accounted~~retailers ~~for~~and ~~10%~~end users, ~~17%~~and education and ~~14%~~training services to enterprises, OEMs and retailers. We also utilize an outsourced vendor to provide first line technical support related to the majority of our retail ~~total~~products. ~~revenue~~Our ~~during~~current ~~fiscal~~OEMs ~~2003~~typically have software maintenance agreements with us. These agreements provide for technical support and include maintenance of our products in accordance with specifications contained in our guidelines for such products, ~~2002~~as well as access to technical support personnel by telephone, fax and ~~2001~~e-mail. Customers under license agreements are typically entitled to certain product updates and modifications, primarily bug ~~respectively~~fixes. Our OEMs and some of our retail channel partners provide telephone and initial support to end-users.

We strive to be both a technology and marketing partner with our OEM and strategic customers. Our sales and marketing organization sells our products directly to our OEM partners, distributors, and end users. We work closely with OEM partners on their new hardware products by providing them with technical input, thereby helping to ensure that our software products will work successfully with the OEM’s hardware products. We also train and educate the OEM’s sales and marketing organizations on our products, allowing them to act as our “virtual” sales force to their channels and direct customers. In addition, we work closely with our hardware and software strategic partners to develop effective marketing programs designed to increase sales. 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 to replace revenue provided by such an OEM could have a material adverse effect on our business, operating results and financial condition. We maintain individually significant receivable balances from major OEMs. If these OEMs fail to meet their payment obligations, our operating results could be materially and adversely affected. SEASONALITY

~~Our~~Typically, ~~agreements~~our ~~with OEMs,~~products ~~distributors,~~ and ~~resellers~~services ~~generally~~experience ~~are~~seasonal ~~nonexclusive~~variations ~~and~~in ~~may be terminated on short notice by either party without cause. Furthermore~~demand, ~~our~~with ~~OEMs,~~weaker ~~distributors,~~revenue in July and August because ~~resellers~~of ~~are~~reduced ~~not~~corporate ~~within~~buying ~~our~~patterns ~~control,~~during ~~are~~the ~~not obligated to purchase products from~~vacation ~~us,~~season. ~~and~~This ~~may~~seasonality ~~represent~~is ~~other~~especially ~~lines~~notable ofin ~~products, including competing products~~Europe. AOverall, ~~reduction~~we experience fluctuations in ~~sales~~the ~~effort~~demand orfor ~~discontinuance of sales of~~ our products ~~by our OEMs, distributors,~~ and ~~resellers~~services ~~could~~consistent with ~~lead~~the tofluctuations ~~reduced~~experienced ~~sales~~in ~~and~~the ~~could~~industry ~~materially~~as ~~adversely affect~~a ~~our operating results~~whole.

Increasingly, we are also distributing our software products directly to corporate customers through our enterprise licensing programs of Enterprise Intellisync, Intellisync for Oracle, Satellite Forms and Synchrologic Mobile Suite (a licensing agreement gives us the ability to sell Synchrologic’s Mobile Suite beginning September 14, 2003). Our software products have been licensed by, and embedded into solutions offered by over 200 companies. Additionally, our Intellisync synchronization technology has a presence in virtually all of Fortune 1000 companies. COMPETITION

8The market for our software remains intensely competitive and is characterized by rapid technological changes and evolving standards. Although we believe we compete favorably in this market, we also believe that this market is likely to become more competitive as the demand for wireless and mobile date solutions continues to increase. We believe that our products and services support a broad range of mobile devices and services, allowing us to compete favorably with other companies with no similar platform or whose mobile solutions are highly fragmented. We also believe that users demanding synchronization functionality with a wide variety of mobile computing devices and software applications will view our products favorably compared to those of larger companies whose products may not be able to support such a degree of interoperability. In addition, our strategic relationships with hardware and software vendors enable us to provide interoperability among a broader range of applications than many of our competitors. To maintain or increase our competitive advantage, we will need to continually enhance and expand our current product, service and technology offerings and our professional service capabilities.

~~Table~~The ofprincipal competitive ~~Contents~~factors affecting the market for our software are:

~~We have sales and marketing offices located in~~ · the ~~San Jose~~ compatibility, ~~California~~functionality and ~~Tokyo,~~reliability ~~Japan and a number~~ of ~~sales~~ ~~representatives working from their homes in~~ the ~~United~~products ~~States, the United Kingdom, Netherlands~~ and ~~Germany, to cover local territories.~~ services provided;

~~In order to develop further our~~ · brand ~~name~~ recognition, weand ~~plan~~reputation tofor ~~continue~~providing totrusted ~~expand~~products ~~our joint marketing programs, marketing channel promotions~~ and ~~bundling~~ ~~arrangements with our strategic partners.~~ services;

· the ~~Customer~~level ~~Support~~of security of the products and services provided;

~~Our service and~~· the ~~support~~price organization provides secondary technical support to OEMs, primary technical support to enterprises, retailers and end users, and education and training services to enterprises, OEMs and retailers. We also use an outsourced vendor to provide first line technical support related to the majority of our retail products. Our current OEMs typically have software maintenance agreements with us. These agreements provide for ~~technical~~which ~~support and include maintenance of our~~ products ~~in accordance with specifications contained in our product guidelines, as well as access to technical support personnel by telephone, fax~~ and ~~e-mail.~~services ~~Customers under license agreements~~ are ~~typically entitled to certain product updates and modifications, primarily bug fixes. Our OEMs and some of our retail channel partners provide telephone and initial support to end-users.~~ offered;

· convenience ~~Seasonality~~and breadth of products and services offered;

~~Typically,~~ · the ~~market~~quality ~~for our products~~ and ~~services~~market ~~experience~~acceptance ~~a slight degree~~ of ~~seasonal~~new ~~variations~~enhancements into demand, with weaker revenue in July and August because of reduced corporate buying patterns during the vacation season. This seasonality is especially notable in Europe. Retail sales can also be weak in the months of January and February following typically stronger sales in the November-December time frame. We experience fluctuations in the demand for our ~~products~~current ~~and~~ services ~~consistent with the~~and ~~fluctuations~~features; ~~experienced in the industry overall.~~ and

· OEM ~~Competition~~relationships and other strategic arrangements with third parties.

~~The market for our software remains intensely competitive and characterized by rapid technological changes and evolving standards.~~ We ~~expect~~are ~~competition~~subject to ~~intensify as~~ current ~~competitors expand their product offerings~~ and ~~more~~potential ~~and~~competition with ~~more~~respect ~~competitors enter the market~~ to explore significant future business opportunities in the wireless market in realization that wireless is rapidly replacing wired infrastructure and becoming a pervasive technology. To maintain or increase our ~~competitive~~Intellisync ~~advantage~~Handheld Edition, weIntellisync ~~will~~Handheld Edition ~~continually~~for ~~need to enhance our current product~~Enterprise, ~~service~~Intellisync ~~and~~Mobile ~~technology offerings~~Suite, ~~introduce~~Intellisync ~~new~~SyncML ~~product~~Server ~~features~~ and Identity ~~enhancements,~~Systems ~~and expand our professional service capabilities~~products.

~~The~~We ~~principal~~also ~~competitive~~face ~~factors~~indirect ~~affecting~~competition ~~the~~from ~~market~~existing and potential customers that may provide internally developed solutions for each of our ~~software~~technology ~~are:~~licensing components. We currently face limited direct

~~• the level of quality, reliability and compatibility of the products and services provided;~~10

•competition from major applications and operating systems software vendors who may in the future choose to incorporate data synchronization functionality into their operating systems software, thereby potentially reducing the need for OEMs to include our products in their devices. For example, Microsoft’s inclusion of certain features permitting data synchronization between computers utilizing the Windows Mobile and ~~functionality~~Exchange operating system may have the effect of reducing revenue from our software if users of these operating systems perceive that their messaging and synchronization needs are adequately met by Microsoft. Furthermore, current or potential competitors have established or may establish financial and strategic relationships among themselves or with existing or potential customers or other third parties to increase the ability of their products; to address the needs of customers. Accordingly, it is possible that new competitors or alliances among competitors could emerge and rapidly acquire significant market share, which would harm our business.

•Also, ~~brand~~refer ~~recognition~~to ~~and~~the discussion ~~reputation~~below under the caption “Risk Factors—We face intense competition in the market for ~~providing~~mobile ~~trusted~~computing ~~products~~synchronization products and services;, which could reduce our market share and revenue.”

•RESEARCH AND ~~the level of security of the products and services provided;~~DEVELOPMENT

•The ~~price;~~markets for our products are characterized by rapidly changing technologies, evolving industry standards, frequent product introductions and short product life cycles. As a result, our research and development activities are critical to our continued growth. Employees in our engineering group are engaged in both product research and development as well as localization efforts for existing products. Product maintenance and customer support responsibilities are shared by engineering group employees on an as-needed basis. In developing new products or enhancements, we work closely with current and prospective customers, as well as with industry experts, to ensure that our products address current problems and emerging requirements. We believe that such collaboration is critical to develop and improve our products and services. Our engineering group also works closely with our sales and marketing and professional services groups to develop products that meet real customer needs.

•We ~~convenience~~also complement our engineering capacity with a number of software development engineers located in our research and development ~~breadth~~facilities in Sofia, Bulgaria and Cluj-Napoca, Romania. These European facilities were established to take advantage of ~~products~~the considerable local knowledge and ~~services~~expertise ~~offered;~~in the areas of information technology and software programming, and to offer extensive development, support and management for our current projects and potential software solutions. In addition, the companies we acquired from our recent acquisitions have given us expanded research and development capabilities with employees that have extensive knowledge and experience in the synchronization and mobile infrastructure software solutions.

•As ~~the~~part ~~quality~~of ~~and~~our ~~market~~strategic ~~acceptance~~plan, our engineering group, strengthened by our recent acquisitions, is currently aiming their efforts at expanding support for synchronization of ~~new~~wireless ~~enhancements~~messaging, data sync, device management and application mobilization for wireless handhelds, smartphones, laptops and tablet. We are extending our core synchronization technology to increase scalability and extensibility, and at supporting next-generation wireless technology and device platforms. We also continue efforts on enhancing our ~~current~~data ~~services~~synchronization platform and ~~features;~~other technology solutions to provide further value to our wireless carrier and enterprise customers. We will continue to develop our platforms to mobilize and synchronize vertical enterprise applications, such as customer relationship management, or CRM, software with corporate groupware either on the device, desktop or via server-to-server connectivity.

•In ~~OEM~~fiscal ~~relationships~~2005, 2004 and 2003, ~~other~~research ~~strategic~~and ~~arrangements~~development ~~with~~expenses ~~third~~were ~~parties~~$14.6 million, $11.5 million and $7.4 million, respectively. Research and development is important to our future success, and we expect that research and development expenses will increase in future periods. Although we plan our budget for research and development based on planned product introductions and enhancements, actual expenditures

9 11

~~Table~~may significantly differ from budgeted expenditures. In addition, a number of ~~Contents~~risks are inherent in the product development process. Refer to the discussion below under the caption “Risk Factors—Our market changes rapidly due to evolution in technology and industry standards. If we do not adapt to meet the sophisticated needs of our customers, our business and prospects will suffer.”

WePROFESSIONAL SERVICES ~~believe we compete favorably overall with respect to these factors.~~ GROUP

We believe that ~~users~~delivering ~~will~~quality ~~want~~professional services toprovides beus ~~able~~with toa ~~license~~significant ~~solutions~~opportunity ~~from~~to adifferentiate ~~single~~ourselves ~~vendor~~in tothe ~~address~~marketplace. ~~their~~The ~~complete~~members ~~needs,~~of ~~and~~our ~~that~~professional ~~our~~services ~~software~~group ~~components~~are ~~will~~experts in ~~support~~the fields of synchronization and mobility, with a ~~broad~~proven ~~range~~track record of delivering carrier-grade solutions for mobile devices, desktop applications and databases. ~~services~~Our toprofessional ~~allow~~services usgroup tospecializes ~~compete~~in ~~favorably~~producing ~~with~~software that ~~other~~delivers ~~companies~~a ~~with~~measurable nocompetitive ~~similar~~advantage ~~platform~~for orcustomers ~~whose~~deploying ~~mobile~~and integrating our solutions ~~are~~with ~~highly fragmented.~~a wide variety of applications and systems.

WeBy ~~believe~~transforming ~~that~~emerging technologies ~~users~~into ~~will~~robust, ~~want~~reliable, torevenue-producing beproducts ~~able~~and toservices, ~~utilize~~our ~~synchronization~~professional ~~functionality~~services ~~with~~group ahas ~~wide~~the ~~variety~~expertise ofto ~~mobile~~develop ~~computing~~enterprise solutions ~~devices~~that ~~and~~combine ~~software~~handheld, ~~applications~~mobile, ~~and~~wireless, ~~that~~desktop, ~~our~~internet, ~~standards~~synchronization, back-~~based~~office ~~approach~~applications ~~will~~and ~~continue~~database totechnologies. ~~allow~~Our usprofessional toservices team ~~compete~~works ~~favorably~~across ~~with~~multiple ~~larger~~phases ~~companies~~of ~~whose~~development ~~products~~projects: ~~may~~business ~~not be~~analysis ~~able~~and tostrategic ~~support~~technology ~~such~~consulting, aproject ~~degree~~management, ofdesign, ~~interoperability.~~engineering, quality ~~Our~~assurance, ~~strategic~~software ~~relationships~~testing, ~~with~~localization ~~hardware~~ and ~~software~~technical ~~vendors~~writing. ~~enable~~The group’s usclients tohave ~~provide~~included ~~interoperability~~America ~~among~~Online, Inc., aMerck & ~~broader~~Co., Inc., Oracle/PeopleSoft, Inc., ~~range~~Pfizer, Inc. ~~of applications than many of our current~~ and ~~potential~~Verizon ~~competitors~~Wireless.

We currently face direct competition with respect to our Intellisync, Enterprise Intellisync, Synchrologic Mobile Suite, Intellisync goAnywhere, Satellite Forms, Intellisync: Phone Edition, TrueSync and Spontaneous Technology’s secure Virtual Private Network (sVPN) products. Intellisync retail and enterprise products face competition from Sybase, Inc.’s iAnywhere, Chapura, Inc.’s Pocket Mirror, Common Time’s Cadenza mNotes, Extended Systems, Inc.’s OneBridge Mobile Groupware, IBM Corporation’s Lotus Software EasySync Pro, Microsoft, Inc’s ActiveSync, Palm Desktop from Palm and others. Satellite Forms faces competition from Adobe Systems, Inc., Aligo, Inc., AppForge, Inc., Covigo, Inc., iConverse, Inc., Metrowerks Code Warrior, mPortal, Inc., Pencel Corporation, Pendragon Software Corporation, Penright Corporation’s MobileBuilder and others. Our server-based Mobile Suite software faces competition from Aether Systems, CommonTime, Extended Systems, FusionOne, Inc., InfoSpace, Inc., Infowave Software, JP Mobile, Inc., Microsoft, Openwave, Inc., Sybase, Inc., Synchrologic, Inc. (up until the closing date of the planned acquisition), Wireless Knowledge, Inc., XcelleNet, Inc. and others. Intellisync goAnywhere technology competes with offerings from Symantec Corporation (pcAnywhere) and Expertcity, Inc. (GoToMyPC) and others. Our Intellisync: Phone Edition faces competition from FutureDial, Inc.’s SnapSync and Susteen, Inc.’s DataPilot and others. TrueSync and sVPN face competition from Visto Corporation, Seven Networks, Inc. and others. ACQUISITIONS

InThe ~~addition~~markets toin ~~direct~~which ~~competition noted above,~~ we ~~face~~compete ~~indirect~~require ~~competition from existing and potential customers that may provide internally developed solutions for each of our technology licensing components. As~~ a ~~result,~~wide ~~we must educate~~variety ~~prospective customers as to the advantage~~ of ~~our~~technologies, products, ~~versus~~and ~~internally developed solutions~~capabilities. WeOur ~~currently~~strategy ~~face~~of ~~limited~~acquiring ~~direct~~assets or ~~competition~~businesses ~~from~~with ~~major~~complementary ~~applications~~products, technologies and ~~operating~~engineering resources ~~systems~~has ~~software~~resulted ~~vendors who may~~ in the ~~future~~completion ~~choose~~of toa ~~incorporate data~~number ~~synchronization~~of ~~functionality into their operating systems software~~acquisitions, ~~thereby potentially reducing~~ including the ~~need~~transfer ~~for~~of ~~OEMs~~workforce tofrom ~~include~~SoftVision ~~our~~SRL ~~products in their notebook~~ and ~~desktop~~the ~~personal~~acquisition ~~computers~~of ~~(PCs). For example~~PDAapps, ~~Microsoft’s inclusion of~~ ~~certain features permitting data synchronization between computers utilizing the Windows 98~~Tourmaline, ~~Windows~~Identity ~~2000~~Systems, ~~Windows~~Synchrologic ~~Me,~~and ~~Windows~~Spontaneous NTTechnology. orWe ~~Windows XP operating system~~ may make ~~have~~additional ~~the~~acquisitions ~~effect~~as part of ~~reducing revenue from~~ our ~~software~~growth ~~if users of these operating systems perceive that their data synchronization needs are adequately met by Microsoft~~strategy.

~~Furthermore,~~The ~~current~~acquisition orof high-technology ~~potential~~companies ~~competitors~~is ~~have~~inherently ~~established~~risky. orThese ~~may~~risks ~~establish~~are ~~financial~~more ~~and~~fully discussed ~~strategic~~in ~~relationships~~the ~~among~~risk ~~themselves~~factors orbelow ~~with~~under ~~existing~~the orcaptions “Our recent and any potential ~~customers~~acquisitions orcould ~~other~~require ~~third~~significant ~~parties~~management toattention ~~increase~~and ~~the~~prove difficult ~~ability~~to ofintegrate ~~their~~with ~~products~~our tobusiness, ~~address~~which ~~the~~could ~~needs~~distract ofour ~~customers.~~management, disrupt ~~Accordingly~~our business, itdilute isstockholder ~~possible~~value ~~that~~and ~~new~~adversely ~~competitors~~affect orour operating ~~alliances~~results.” ~~among~~Refer ~~competitors~~to ~~could~~the ~~emerge~~discussions ~~and~~under ~~rapidly~~the ~~acquire~~caption ~~significant market~~“Acquisitions” ~~share~~set forth in Item 7, ~~which~~Part II ~~would~~of ~~harm~~this Annual ~~our~~Report ~~business.~~on Form 10-K for more information on the acquisitions.

~~In addition,~~PROPRIETARY ~~certain~~TECHNOLOGY ~~companies~~AND ~~with~~INTELLECTUAL whom we compete or may compete in the future, including internal software development groups of our current and potential customers, have substantially greater financial, marketing, sales and support resources and may have more “brand-name” recognition than we do. There can be no assurance that we will be able to either develop software comparable or superior to software offered by our current or future competitors or to adapt to new technologies, evolving industry standards and changes in PROPERTY

10Our success depends significantly upon our proprietary technology. We rely on a combination of patent, copyright and trademark laws, trade secrets, confidentiality procedures, contractual provisions and other measures to protect our proprietary rights. We also believe that factors such as the technological and creative skills of our personnel, new product developments, frequent product enhancements and name recognition are essential to establishing and maintaining a technology leadership position. We seek to protect our software, documentation and other written materials under trade secret and copyright laws, which afford only limited protection. We currently have 59 issued United States patents and have 68 patent applications pending in areas covering push email and data synchronization for both wireless and wired communications.

~~Table~~We ofhave ~~Contents~~designed, developed and sold synchronization products since the early 1990s. It is in this area that we were awarded our first patent. From this activity, we believe we have learned a great deal about what it takes to build a robust synchronization product to deal with the many subtleties presented by the

customer requirements. In addition, the PC and mobile computing device markets experience intense price competition, and we expect that in order to remain competitive, we may have to decrease our unit royalties on certain products. 12

~~Also,~~wide ~~refer~~range toof ~~the~~capabilities among ~~discussion below under~~ the ~~caption~~various ~~“Risk~~PDAs, ~~Factors—We~~Mobile ~~face~~Devices, ~~fierce~~PIMs, ~~competition~~enterprise inapplications ~~the market for mobile computing synchronization products~~ and ~~services,~~data bases ~~which~~that ~~could~~must ~~reduce~~be ~~our market share and revenues~~mobilized.”

We believe that the defense of our intellectual ~~Research~~property ~~and~~is ~~Development~~an important portion of our overall IP strategy. However, we cannot be certain that our patents will not be invalidated, circumvented or challenged, that the rights granted thereunder will provide competitive advantages to us or that any of our 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 us, if at all. Furthermore, we cannot be certain that others will not develop technologies that are similar or superior to our technology or design around the patents owned by us.

We ~~seek~~ also subject to ~~capitalize~~claims onby ~~our~~third ~~expertise~~parties inalleging that ~~data~~our ~~synchronization~~products ~~and~~infringe ~~mobile~~proprietary ~~infrastructure~~rights ~~technology~~held by ~~developing~~them. ~~products~~We ~~for~~expect ~~new~~that software ~~applications~~product ~~and~~developers ~~increasing~~will increasingly be subject to infringement claims as the ~~functionality~~number of ~~existing~~ products. Weand ~~plan~~competitors toin ~~continue~~our toindustry ~~develop~~segment ~~new~~grows, ~~products and~~the ~~expand~~functionality ~~our~~of ~~technology~~products ~~licensing~~in ~~components~~different ~~with~~industry ~~additional~~segments ~~mobile~~overlaps, ~~solutions~~and ~~based~~as patent onprotection ~~our~~for ~~existing~~software ~~and~~becomes ~~acquired~~increasingly ~~technologies~~popular.

~~The markets for our products are characterized by rapidly changing technologies~~Also, ~~evolving~~refer ~~industry~~to ~~standards, frequent product introductions and short~~the ~~product~~discussion ~~life~~below ~~cycles.~~under ~~Our~~the ~~future~~captions ~~success~~“Risk ~~will~~Factors—We ~~depend~~may be unable to aadequately ~~substantial~~protect ~~degree upon~~ our ~~ability~~proprietary torights;” ~~enhance~~“Risk our 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. Factors—We ~~plan our budget for research and development based on planned product introductions and enhancements. However, actual expenditures~~ may ~~significantly differ from budgeted expenditures. A~~be ~~number~~subject ofto ~~risks~~intellectual ~~are~~property ~~inherent~~infringement ~~in the product development process. The development of new~~claims, ~~technologically~~which ~~advanced~~are ~~software~~costly ~~products is a complex and uncertain process requiring high levels of innovation, as well as accurate anticipation of~~to ~~technological~~defend and ~~market~~could ~~trends.~~limit ~~The~~our ~~introduction~~ability ~~of new or enhanced products also requires us~~ to ~~manage~~use ~~the~~certain ~~transition~~technologies ~~from older products~~ in ~~order~~the ~~to minimize disruption in customer ordering patterns, avoid excessive levels of older product~~future” ~~inventories~~ and ~~ensure~~“Risk ~~that adequate supplies of new products can be delivered to meet customer demand. There can be no assurance that we will successfully develop, introduce or manage the transition to new products.~~ Factors—We have ~~in the past~~been, are and may in ~~the~~ ~~future, experience delays in~~ the ~~introduction of our products, due to both internal and external factors. Any~~ future ~~delays~~be ininvolved ~~the introduction or shipment of new or enhanced products, the inability of such products to gain market acceptance or~~in ~~problems~~litigation ~~associated~~that ~~with new product transitions~~ could ~~adversely~~result ~~affect~~in ~~our~~significant ~~operating~~costs ~~results, particularly on a quarterly basis. Also, refer~~ to ~~the discussion below under the caption “Risk Factors—Our market changes rapidly due to changing technology and evolving industry standards~~us. ~~If we do not adapt to meet the sophisticated needs of our customers, our business and prospects will suffer.~~”

Employees in our engineering group are also 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 developing new products or enhancements, we work closely with current and prospective customers, as well as with industry experts, to ensure that our products address current problems and emerging requirements. We believe that such collaboration is critical to develop and improve our products and services. Our engineering group also works closely with our sales and marketing and professional services groups to develop products that meet real customer needs. We also complement our engineering capacity with a number of European software development partners performing certain product engineering-related projects and other engineering requirements that may arise. EMPLOYEES

WeAs ~~opened our~~of ~~new~~July 31, ~~research~~2005, ~~and~~we ~~development~~had ~~facility~~a intotal ~~Sofia~~of 456 full-time employees, ~~Bulgaria~~including ~~during~~279 ~~fiscal~~in ~~2003.~~engineering, ~~The~~professional ~~facility~~services ~~was~~and customer ~~established~~support, to122 ~~take~~in ~~advantage~~sales ofand ~~the~~marketing ~~considerable~~and ~~local~~55 ~~knowledge~~in operations, finance and administration. ~~expertise~~201 inof our employees are located outside the ~~areas~~United ofStates, including ~~information~~98 ~~technology~~in ~~and~~Romania, ~~software~~33 ~~programming~~in Bulgaria, ~~cost efficiencies~~29 ~~and~~in toother ~~offer~~parts ~~extensive~~of ~~development~~Europe, ~~support~~31 in Asia-Pacific and ~~management~~10 ~~for~~in Japan. None of our ~~current~~employees ~~projects~~is ~~and~~represented ~~potential~~by ~~software~~a ~~solutions~~labor union. We have experienced no work stoppages.

~~Furthermore,~~Many of our ~~recent~~current ~~acquisitions~~key personnel ofhave ~~Starfish~~substantial ~~Software,~~experience ~~Inc.~~in our industry and ~~substantially~~would ~~all~~be ofdifficult ~~the~~to replace. ~~assets~~Competition offor ~~Loudfire,~~qualified ~~Inc.~~personnel ~~and~~in ~~Spontaneous~~our ~~Technology,~~industry ~~Inc~~is intense. We ~~allow~~believe usthat our future success will depend in part on our continued ability to hire, ~~leverage~~train and retain qualified personnel. Also, refer to the ~~significant~~discussion ~~technologies~~below under wethe ~~acquired.~~caption “Risk Factors—We ~~expect~~depend on key employees in a competitive market for skilled personnel.”

11 RISK FACTORS

~~Table~~The following risks and uncertainties may have a material and adverse effect on our business, financial condition or results of operations. ~~Contents~~You should carefully consider these risks and uncertainties, together with all of the other information included or incorporated by reference in this Annual Report on Form 10-K. If any of the material risks or uncertainties we face were to occur, the trading price of our securities could decline.

We have ~~that~~historically ~~the~~incurred ~~integration~~losses ofand ~~these~~we ~~acquired~~expect ~~technologies~~these ~~will~~losses ~~accelerate our ability~~ to ~~meet~~continue ~~new~~in ~~product~~the ~~requirements and enhancements~~future. ~~The acquisitions have also~~ ~~given~~We usmay ~~expanded~~not ~~research~~be ~~and~~able ~~development~~to ~~capabilities~~sustain ~~with~~consistent ~~employees~~future ~~that~~revenue ~~have~~growth ~~extensive~~on ~~knowledge~~a ~~and~~quarterly or ~~experience~~annual inbasis, ~~the~~or ~~synchronization~~achieve ~~and~~or ~~mobile~~maintain ~~infrastructure software solutions~~profitability.

InWe have not been profitable since fiscal ~~2003~~1998. Although we have reported record revenue for fiscal 2005, ~~2002~~we ~~and~~cannot ~~2001~~be certain that our revenue will continue to grow, ~~research~~that we ~~and~~will ~~development~~produce ~~expenses~~sufficient ~~were~~revenue to achieve profitability or that our revenue will not decline in the future. We have experienced losses of $713.4 million, $159.25 million and $237.7 million for fiscal 2005, 2004 and 2003, respectively. At July 31, 2005, we had an accumulated deficit of $144.5 million. To become profitable and sustain profitability, we will need to generate additional revenues to offset ~~respectively~~our expenses. We may not achieve or sustain revenue growth and our losses may continue or increase in the future. The synchronization market is evolving, and as a result we cannot accurately predict either the future growth rate, if any, or the ultimate size of the market for our

As part of our strategic plan, with our recent acquisitions, our engineering group is currently aiming their efforts at expanding focus from cabled synchronization to synchronization for wireless handhelds, smartphones, laptops and tablets, at extending our core synchronization technology to increase scalability and extensibility, and at supporting next-generation wireless technology and device platforms. We also continue efforts on enhancing our Application Data Synchronization platform to provide further value to our enterprise customers. We will continue to develop this platform to integrate and synchronize vertical enterprise applications, such as CRM (customer relationship management) software, with corporate groupware, either on the desktop or via server-to-server connectivity. 13

products ~~Professional~~and ~~Services~~services. ~~Group~~Because our operating expenses are relatively fixed in the short term, any shortfalls in revenues would materially affect our results of operations.

WeOur quarterly ~~believe~~revenue ~~that~~and ~~delivering~~operating ~~quality~~results ~~professional~~are ~~services~~subject ~~provides~~to ~~us with a~~ significant ~~opportunity to differentiate ourselves in the marketplace. Whether companies are creating a new enterprise infrastructure or customizing a current one~~fluctuations, and our ~~professional~~stock ~~services~~price ~~organization~~ may ~~assist~~decline ~~them~~if ~~with~~we ~~all~~do ~~phases~~not ofmeet the ~~project.~~expectations ~~This~~of ~~team~~investors ~~specializes in producing software that delivers a measurable competitive advantage for customers deploying our solutions, as well as applications from other~~and ~~software developers~~analysts.

ByOur ~~transforming~~quarterly ~~emerging technologies into robust, reliable,~~ revenue~~-producing~~ ~~products~~ and ~~services,~~operating ~~our~~results ~~professional~~are difficult ~~services organization has the expertise~~ to ~~develop~~predict ~~enterprise~~and ~~solutions~~have ~~that~~and ~~combine~~may ~~handheld,~~in ~~mobile,~~the ~~wireless,~~future ~~desktop,~~fluctuate ~~Internet, synchronization, back-office~~significantly ~~applications~~from ~~and~~quarter ~~database~~to ~~technologies.~~quarter ~~The~~due ~~Professional~~to ~~Services~~a ~~team~~number ~~works across multiple phases~~ of ~~development projects: business analysis and strategic technology consulting~~factors, ~~project~~many ~~management,~~of ~~design,~~which ~~engineering,~~are ~~quality assurance, software~~outside ~~testing,~~our ~~localization and technical writing~~control. ~~The~~These ~~organization’s~~factors ~~clients have included America Online~~include, ~~Inc.,~~but ~~NEC~~are ~~Corporation,~~not ~~International~~limited Business Machines Corporation, and Panasonic Mobile Communications Company Limited. Our professional services group recently delivered innovative and flexible PIM synchronization technologies as part of MSN’s (Microsoft Network) version 8 launch, and is currently working to ~~provide America Online users with a host of new capabilities leveraging the power of Intellisync.~~ :

· growth ~~Acquisitions~~in the market for enterprise synchronization applications and our ability to successfully address this market;

The markets in which we compete require a wide variety of technologies, products, and capabilities. Our strategy of acquiring assets or businesses with complementary products, technologies and engineering resources has resulted in the completion of a number of acquisitions as described below. We expect these acquisitions and future acquisitions will enhance · our ~~ability to develop new technologies, expand our core technological capabilities and provide additional resources for enhancing and developing new~~ ~~products~~reliance ~~and~~on ~~solutions~~international ~~with~~sales ~~broad market applications. Mergers~~ and acquisitions of high-technology companies are inherently risky. No assurance can be given that our previous or future acquisitions will be successful or will not materially adversely affect our financial condition or operating results. The risks associated with acquisitions are discussed below under the caption “Our recent and planned future acquisitions could require significant management attention and prove difficult to integrate with our business, which could distract our management, disrupt our business, dilute stockholder value and adversely affect our operating results.” growth;

In· our ability ~~September 2003, we announced that we have entered into a definitive merger agreement dated as of September 14, 2003,~~ to ~~acquire~~ ~~Synchrologic,~~penetrate ~~Inc.~~the ~~headquartered~~international ~~in Alpharetta, Georgia. Synchrologic’s product~~ market;

12· market acceptance of products in which our software is integrated by original equipment manufacturers, or OEMs;

~~Table~~· our ability ofto ~~Contents~~realize our goals with respect to recent and potential future acquisitions;

· our ~~line~~need ~~provides~~and ~~mobile~~ability ~~access~~ to ~~enterprise~~generate ~~applications, email~~ and ~~PIM data, file content, intranet sites, and Web content, while giving information technology the tools to~~ manage ~~mobile devices remotely.~~ growth;

In· rapid ~~September~~evolution ~~2003, we acquired substantially all~~ of the assets of Spontaneous Technology, Inc. of Salt Lake City, Utah. Spontaneous Technology is a provider of enterprise secure Virtual Private Network (sVPN) software designed to extend existing corporate applications to most wireless devices. technology;

~~In July 2003,~~· our weevolving ~~acquired~~business substantially all of the assets of Loudfire, Inc. of Tulsa, Oklahoma, developer of LoudPC software (recently rebranded and repackaged and now called “Intellisync goAnywhere”). Intellisync goAnywhere allows anyone with an Internet browser or Web-enabled phone to enjoy real-time access to email and PIM data located in either Microsoft Outlook or Outlook Express. The product also provides secure access to files or folders residing on a host personal computer. model;

In March 2003, we acquired all of the capital stock of Starfish Software, Inc., a wholly owned subsidiary of Motorola, Inc. of Schaumburg, Illinois. Starfish, headquartered in Scotts Valley, California, is a provider of end· litigation-~~to-end mobile infrastructure solutions based on integrated platforms composed of~~related ~~server, desktop and device software for mobile data synchronization, wireless connectivity and device management.~~ expenses;

~~In November 2000, we acquired certain intellectual property and other assets of SwiftTouch Corporation of Bedford, Massachusetts, a provider of Web-based~~· fluctuations ~~Universal~~in ~~Access~~gross ~~Solutions.~~ margins;

~~In October 2000, we acquired~~· the ~~select~~seasonal ~~assets~~nature ~~and assumed certain liabilities~~ of ~~The~~the ~~Windward~~market ~~Group,~~for asome ~~wholly owned subsidiary~~ of ~~Vanteon~~our Corporation, of Rochester, New York. Windward, headquartered in Los Gatos, California, is a professional services company specializing in creating consumer and enterprise solutions that combine mobile, wireless, desktop, Internet and database technology. products;

~~Refer~~· changes in to the ~~discussions~~market ~~under the caption “Acquisitions” set forth in Item 7, Part II of this Annual Report on Form 10-K~~ for ~~more information~~mobility onand ~~the~~identity ~~acquisitions.~~search/screening software;

· introduction ~~Proprietary~~of ~~Technology~~new products and ~~Intellectual~~services ~~Property~~by us or our competitors;

Our success depends significantly upon our proprietary technology. We rely on a combination of patent, copyright and trademark laws, trade secrets, confidentiality procedures, contractual provisions and other measures to protect our proprietary rights. We also believe that factors such as · the ~~technological and creative skills of our personnel, new product developments, frequent product enhancements and name recognition are essential to establishing and~~ ~~maintaining~~recent adecline ~~technology~~in leadership position. We seek to protect our software, documentation and other written materials under trade secret and copyright laws, which afford only limited protection. We therefore have established an intellectual property (IP) group to manage our copyrights, trademarks, patent prosecution, patent litigation, and IP licensing. The group is committed to the ~~development,~~market ~~licensing,~~for ~~and~~traditional ~~monetization~~personal ofdigital ~~our innovation. We currently have 50 issued United States patents that expire in 2012 through 2021 and have 58 patent applications pending. We also license seven patents from third parties.~~ assistants;

~~Pumatech IP. We have been in the business of designing, developing and selling synchronization products since the early to~~· changes ~~mid ‘90s. It is~~ in ~~this area that we were awarded~~ our ~~first~~mix patent. We have been awarded 14 patents and have 19 more pending. From this activity, we believe we have learned a great deal about what it takes to build a robust synchronization product to deal with the many subtleties presented by the wide range of ~~capabilities~~sources ~~among the various PDAs, PIMs, enterprise applications and data bases that must be synchronized. Some~~ of ~~these~~revenue; ~~are:~~ and

~~• Matching differing syntax~~ · entrenched and ~~semantics~~substantial ~~of comparable fields in different data sets—field type, length, and encoding~~competition.

•Additionally, ~~Tracking~~we ofgenerally derive ~~changed~~our ~~records—some~~technology ~~data~~licensing ~~sets~~revenue ~~mark~~from ~~records~~multi-year contracts with enterprise and other customers that frequently include license fees, professional services fees, royalty payments and maintenance. We typically earn both the license fees and the professional services in the initial one or two quarters subsequent to the signing of a contract. We periodically have ~~been~~large professional ~~modified~~services implementations that individually contribute as much as 5% or more to quarterly revenue. Combined with related license revenue, ~~while~~total revenue ~~others~~from individual customers in the initial quarters of a contract may exceed the revenue we earn during subsequent periods covered by the contract. To the extent that we do not secure additional contracts with the same customer or secure comparably sized commitments from other customers, we may not be able to sustain or grow our revenue.

13We may incur significant stock-based compensation charges related to certain stock options and restricted stock in future periods.

~~Table~~The Financial Accounting Standards Board (FASB) issued in December 2004 Statement of ~~Contents~~Financial Accounting Standards (SFAS) No. 123R, “Share-Based Payment, an amendment of FASB Statements

~~• Record accessing—some data sets use unique record identifiers, some do not.~~14

•Nos. 123 and ~~Number~~95,” ofthat ~~fields~~addresses inthe aaccounting ~~record—servers~~treatment for employee stock options and other share-based payment transactions. The statement eliminates the ability to account for share-based compensation transactions using Accounting Principles Board (APB) Opinion No. 25, “Accounting for Stock Issued to Employees,” and generally requires ~~have~~that such transactions be accounted for using a ~~large~~fair-value-based method ~~number~~and ofrecognized ~~fields~~as expenses. The statement and the change in aaccounting treatment ~~contact~~will ~~record~~result in our reporting increased operating expenses beginning for our next fiscal quarter ending October 31, ~~but~~2005, ~~only~~which awould ~~small~~decrease any ~~subset~~reported ~~may~~net beincome ~~available~~or inincrease aany ~~PDA~~reported net loss, and could adversely affect the market price of our common stock.

•We ~~Memory~~face ~~availability—a~~intense competition ~~server~~in ~~has~~the ~~relatively~~market ~~unlimited~~for ~~memory~~mobile tocomputing ~~store~~synchronization ~~large~~products ~~number~~and services, ofwhich ~~records,~~could ~~but~~reduce aour ~~PDA~~market ~~does~~share ~~not~~and revenue.

•Our ~~Communications~~market ~~bandwidth—the~~contains ~~volume~~few ofsubstantial ~~data~~barriers to beentry. We ~~synced~~believe ~~may~~we bewill ~~excessive~~face ~~for~~additional competition from existing competitors and new market entrants in the ~~available~~future. ~~bandwidth~~We ~~leading~~are subject to ~~long~~current and~~/or~~ ~~expensive~~potential competition ~~syncs~~with respect to our Intellisync Handheld Edition, Intellisync Handheld Edition for Enterprise, Intellisync Mobile Suite, Intellisync SyncML and Identity Search Servers.

•· Intellisync Mobile ~~Communications~~Suite enterprise ~~medium~~server software—~~the~~CommonTime, ~~sessions~~Good ~~for~~Technology, Inc., Research ~~cabled~~In ~~connections~~Motion ~~are~~Limited, ~~more~~Sybase ~~robust~~Inc.’s ~~than OTA (over-the-air) ones~~iAnywhere, ~~where session interruptions~~ and ~~disconnects are more frequent~~others.

~~NetMind IP. We~~· Intellisync ~~acquired~~Mobile ~~NetMind~~Suite and ~~Technologies,~~Intellisync ~~Inc.~~SyncML ~~in February 2000. NetMind~~ software ~~monitors Web sites~~ for ~~changes~~mobile ~~specified~~carriers—Good Technology, Inc., byResearch ~~individual~~In ~~users~~Motion toLimited, beSeven ~~relevant and notifies the user when such changes occur~~Networks, Inc., Visto ~~NetMind~~Corporation, ~~technology is protected by five patents~~ and ~~two more pending~~others.

~~Starfish Software~~· Intellisync ~~IP. We~~consumer ~~acquired~~and ~~Starfish~~enterprise ~~Software,~~desktop sync products—Chapura, Inc.’s inPocket Mirror, ~~March~~CommonTime’s ~~2003.~~Cadenza ~~This~~mNotes, ~~acquisition~~IBM ~~significantly~~Corporation, ~~strengthened~~Microsoft ~~our synchronization position through the Starfish software products and the number of related issued and pending patents.~~Corporation ~~Starfish~~ActiveSync, ~~has~~Palm ~~been~~Desktop ~~issued~~from ~~28 patents~~PalmSource, Inc., ~~many~~Sybase ofInc.’s ~~them relating to synchronization~~iAnywhere, and ~~has 12 more pending~~others.

~~Loudfire~~· Identity Search ~~IP. We~~Server—Ascential, ~~acquired~~Dataflux, ~~the~~Firstlogic, ~~assets of Loudfire~~Group1, ~~Inc.~~IBM ~~in July 2003 to provide a significant piece of our wireless~~Corporation, ~~remote~~ ~~access~~Intelligent ~~strategy.~~Search ~~The~~Technology, ~~LoudPC~~Language ~~software~~Analysis ~~(recently~~Systems, ~~rebranded~~Trillium ~~and repackaged and now called “Intellisync goAnywhere”) we acquired from Loudfire is designed to allow anyone with an Internet browser or Web-enabled phone to access information on a~~Software, ~~remote computer stored in Outlook or Outlook Express~~ and~~/or~~ ~~selected files~~others. ~~Loudfire software is based on patent-pending technology.~~

~~Spontaneous~~In ~~Technology~~addition ~~IP. Our~~to ~~recent~~the ~~acquisition~~direct ofcompetition ~~the~~noted ~~assets~~above, ofwe face ~~Spontaneous~~indirect ~~Technology~~competition infrom ~~September~~existing ~~2003~~and ~~provided~~potential uscustomers ~~with~~that may aprovide ~~significant~~internally ~~piece~~developed ofsolutions ~~wireless,~~for ~~remote~~each ~~access~~of ~~strategy~~our technology licensing components. ~~Spontaneous~~As ~~Technology’s~~a ~~secure~~result, ~~Virtual~~we ~~Private~~must ~~Network~~educate ~~(sVPN)~~prospective ~~technology~~customers ~~allows~~as ~~enterprise~~to ~~applications~~the advantage of our products compared to beinternally ~~securely~~developed ~~accessed~~solutions. We currently face limited direct competition from ~~outside~~major ~~the~~applications ~~firewall~~and ~~using~~operating systems ~~standard~~software ~~HTTP~~vendors ~~(Hyper~~who ~~Text~~may in the future choose to incorporate data ~~Transfer~~synchronization ~~Protocol)~~functionality ~~and~~into ~~enterprise~~their ~~ports~~operating systems software, thereby potentially ~~providing~~reducing ~~additional~~the ~~wireless,~~need ~~remote~~for ~~access~~OEMs to ~~corporate~~include ~~applications~~our ~~from~~products ~~Internet~~in ~~browsers~~their devices. ~~and~~For ~~web~~example, ~~enabled~~Microsoft’s ~~phones.~~inclusion ~~sVPN~~of iscertain ~~patent~~features ~~protected.~~permitting ~~Spontaneous~~data synchronization ~~Technology~~between ~~has~~computers ~~been~~utilizing ~~issued~~the ~~three~~Windows ~~patents~~Mobile and Exchange ~~has~~operating 24systems, ~~more~~or ~~pending~~the ~~which~~Exchange ~~are~~2003 ~~related~~platform, tomay ~~sVPN~~have asthe ~~well~~effect asof reducing ~~viral~~revenue ~~marketing~~from ~~technology.~~our software if users of these operating systems perceive that their data synchronization needs are adequately met by Microsoft.

~~Licensed~~Many IPof our competitors have substantially greater financial, technical and marketing resources, larger customer bases, longer operating histories, greater brand recognition and more established relationships in the industry than we do. We ~~also~~Our ~~license~~larger ~~patents~~competitors ~~from~~may ~~third~~be ~~parties~~able to provide customers with additional benefits in connection with their products and ~~presently~~costs, ~~count~~including ~~seven~~reduced ~~such~~communications ~~patents~~costs. As a result, ~~some~~these ofcompanies may ~~them~~be ~~related~~able to ~~synchronization~~price their products and services more competitively than we can and respond more quickly to new or emerging technologies and changes in customer requirements. If we are unable to compete successfully against our current or future competitors, we may lose market share, and our business and prospects would suffer.

~~There~~Consolidation ~~can~~in ~~be no assurance that our patents will not be invalidated,~~wireless ~~circumvented~~messaging orand ~~challenged,~~mobile ~~that~~computing ~~the~~synchronization ~~rights~~industry ~~granted~~may ~~thereunder~~strengthen ~~will provide competitive advantages to us or that any of~~ our ~~pending or future patent applications, whether or not being currently challenged by applicable governmental patent examiners,~~ ~~will~~competitors’ beposition ~~issued~~in ~~with the scope of the claims sought by us, if at all. Furthermore, there can be no assurance that others will not develop technologies that are similar or superior to~~ our ~~technology or design around the patents owned by us~~market. ~~Despite our~~Consolidation ~~efforts to protect our proprietary rights, unauthorized parties may attempt to copy aspects~~ of our ~~products~~competitors ~~or to obtain and use information that we regard as proprietary. Policing unauthorized use of our products is difficult, and while we are~~has ~~unable to determine the extent to which piracy of our software products exists~~occurred, software piracy can be expected to be a persistent problem. In addition, the laws of some countries do not ensure that our means of protecting our proprietary rights in the United States or abroad will be adequate or that competition will not independently develop similar technology. We have entered into source code escrow agreements with a limited number of our 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 us, if we ~~cease~~expect toit do business or if we fail to meet our support obligations. We also provide our source code to foreign language translation service providers and to consultants in limited circumstances. The provision of source code to such parties may increase the likelihood of misappropriation by third parties.

14 15

~~Table~~to continue ofto ~~Contents~~occur in the foreseeable future. Acquisitions may further strengthen our competitors’ financial, technical and marketing resources.

~~Litigation~~If ~~may~~we befail ~~necessary~~ to ~~enforce our intellectual property rights or to protect our trade secrets~~ ordevelop trademarks. For instance, in the outstanding patent infringement suit against Extended Systems, Inc. filed in the United States District Court for the Northern District of California (the “Court”), we allege that Extended Systems’ server and ~~desktop~~sell products ~~infringe~~designed on eight of our synchronization-related patents. We are seeking relief from the Court, including an injunction against any further sale, use, importation, or production of the infringing Extended Systems’ products, an injunction against further infringement of our trademarks, an injunction against further interference with our customers, treble damages for ~~infringement of the patents~~OEMs, ~~damages~~enterprises ~~sufficient to compensate us for the trademark infringement~~ and ~~interference,~~mobile ~~and payment of attorneys’ fees. Extended Systems filed an answer and counterclaim in response to our complaint in which Extended Systems denied our charges~~carriers, ~~raised a number of affirmative defenses and requested a declaration~~ ~~from the court that~~ our ~~synchronization~~revenue ~~software patents are invalid~~ and ~~not~~operating ~~infringed~~results bywill ~~our~~be ~~products.~~adversely affected.

~~During~~We ~~fiscal~~have ~~2003,~~recently wemade substantial ~~also~~investments ~~filed~~to adevelop ~~patent~~and ~~infringement~~offer ~~suit~~an ~~against~~expanded ~~Synchrologic~~range of enterprise synchronization applications, ~~Inc.~~including inour ~~the~~acquisition ~~United~~of ~~States~~PDAapps, ~~District~~Tourmaline, Synchrologic ~~Court~~and ~~for~~Identity Systems. Our operating plans assume revenue growth from the ~~Northern~~enterprise ~~District~~market. Enterprise sales present a variety of challenges ~~California~~that are different from those inherent in our historical licensing and consumer business model, ~~alleging~~and ~~that~~we ~~Synchrologic’s~~have ~~server~~limited experience addressing these challenges. For example, enterprise sales typically involve large up-front license fees, which can result in lengthy sales cycles and ~~desktop~~uncertainties ~~products~~as ~~infringe~~to ~~six~~the timing of ~~our~~sales driven ~~synchronization-related~~by ~~patents~~customers’ budgetary processes. InAs ~~September~~a ~~2003~~result, we ~~entered~~generally have less visibility into afuture ~~definitive~~enterprise ~~merger~~sales ~~agreement~~than tois ~~acquire~~typically ~~Synchrologic~~the case in our royalty-based technology licensing business. ~~Upon~~In ~~the~~addition, ~~execution~~while ofenterprise sales ~~the~~generally result in ongoing maintenance revenue and may lead to follow-on ~~definitive~~purchases ~~agreement~~or upgrades, we are typically dependent on sales to new customers for a significant portion of our enterprise revenue in a given quarter. If our product and ~~Synchrologic~~service ~~agreed~~offerings fail to ~~dismiss~~achieve ~~the~~market ~~litigation~~acceptance, ~~with~~or ~~prejudice~~if enterprise sales fail to meet our expectations in a particular quarter, ~~thereby~~our revenue ~~permanently~~and ~~ending~~operating ~~this~~results ~~specific~~may ~~suit.~~be materially and adversely affected.

WeOur ~~are~~business not aware that we infringe on proprietary rights of any third party. There can be no assurance, however, that third parties will not claim infringement by us of their IP rights. We expect that software product developers will increasingly be subject to infringement claims as the number of products and ~~competitors in our industry segment grows, the functionality of products in different~~ ~~industry~~prospects ~~segments overlaps~~depend, ~~and as patent protection for software becomes increasingly popular. Any such claims, with or without merit, could be time consuming~~ to ~~defend,~~a resulting in costly litigation, divert our attention and resources or cause product shipment delays. In addition, such claims could require us 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 we would be able to develop alternative technologies or to obtain such licenses ordegree, ifon ademand ~~license~~for ~~were~~wireless ~~obtainable, that the terms would be commercially acceptable to us. In the event of a successful claim of product infringement against us~~ and ~~our subsequent failure or inability to license the infringed or similar technology, our business, operating results and~~other ~~financial~~mobile ~~condition~~computing ~~would be materially adversely affected~~devices.

~~For~~The ~~further~~use ~~discussion~~ of ~~risks~~wireless ~~related~~and toother ~~intellectual~~mobile ~~property~~computing devices for retrieving, ~~see~~sharing ~~below~~and ~~under~~transferring ~~the~~information ~~caption~~among ~~“Risk~~businesses, consumers, ~~Factors—~~suppliers and partners has begun to develop only in recent years. Our success will depend in large part on continued growth in the use of wireless and ~~ability~~other tomobile ~~compete~~computing ~~depends~~devices, ~~upon~~including ~~our~~handheld ~~ability~~computers, smart tophones, ~~secure~~pagers and ~~protect~~other ~~patents~~mobile devices. In addition, ~~trademarks~~our markets face critical unresolved issues concerning the commercial use of wireless and other ~~proprietary~~mobile ~~rights~~computing devices, including security, reliability, cost, ease of access and use, quality of service, regulatory initiatives and necessary increases in bandwidth availability.” Demand for, and market acceptance of, wireless and other mobile computing devices which require our products and services are subject to a high level of uncertainty and are dependent on a number of factors, including:

· growth ~~Employees~~in sales of handheld devices, smart phones and other mobile computing devices supported by our software and growth in wireless network capabilities to match end-user demand and requirements;

As · emergence of ~~July 31, 2003, we had~~ a ~~total~~viable ~~of 118 full-time, including 54 in engineering~~ and ~~professional~~sustainable ~~services,~~market 50for inwireless ~~sales~~ and ~~marketing~~mobile ~~and~~computing 14 in operations, finance and administration. The increase in our number of employees from the beginning of fiscal 2003 resulted from the added headcount from the acquisition of Starfish Software, as well as from the opening of our engineering facility in Sofia, Bulgaria. services;

~~All but 28 of~~ · our ~~employees are located in the United States. The remainder are located in either Bulgaria, Germany, Japan, the Netherlands or the United~~ ~~Kingdom.~~product ~~None~~and ofservice ~~these~~differentiation ~~employees~~and ~~is represented by a labor union. We have experienced no work stoppages.~~ quality;

~~Furthermore, on September 17, 2003, 11 engineering and customer support employees, all in~~ · the development ~~United States, were added to our workforce as part~~ of ~~our recent~~technologies ~~asset~~that ~~acquisition~~facilitate ofinteractive ~~Spontaneous~~communication ~~Technology, Inc.~~ between organizations;

~~Many~~· our ofdistribution ~~our current key personnel have substantial experience in our industry~~ and ~~would~~pricing bestrategies ~~difficult~~as tocompared ~~replace.~~with ~~Competition~~those ~~for~~of ~~qualified personnel in~~ our ~~industry is intense. We believe that our future success will~~ competitors;

15· the growth in access to, and market acceptance of, new interactive technologies;

~~Table~~· increases in ofbandwidth ~~Contents~~for data transmission;

· the ~~depend~~effectiveness inof ~~part on~~ our ~~continued~~marketing ~~ability~~strategy ~~to hire, train~~ and ~~retain qualified personnel. Also, refer to the discussion below under the caption “Risk Factors—We depend on key employees in a competitive market for skilled personnel.”~~ efforts;

· our ~~Risk~~industry ~~Factors~~reputation; and

~~The following~~· general ~~risks~~industry and ~~uncertainties~~economic ~~may~~conditions ~~have~~such aas ~~material~~slowdowns ~~and~~in ~~adverse effect on our business, financial condition or results of operations. You should carefully consider these risks and uncertainties, together with all of~~ the ~~other~~computer ~~information included~~ or software ~~incorporated~~markets ~~by reference in this Annual Report on Form 10-K. If any of the material risks~~ or ~~uncertainties we face were to occur,~~ the ~~trading~~economy ~~price~~in ~~of our securities could decline~~general.

We have historically incurred losses and these losses may continue in the future. We may not be able to sustain consistent future revenue growth on a quarterly or annual basis, or achieve or maintain profitability. 16

WeIf ~~have not been profitable since fiscal 1998. Although we have reported sequential revenue growth over~~ the last four quarters, we cannot be certain that this growth will continue at the same rate, or that our revenues will not decline in the future. We have experienced losses of $7.7 million, $34.5 million and $41.8 million for fiscal 2003, 2002 and 2001, respectively. At July 31, 2003, we had an accumulated deficit of $121.7 million. To become profitable and sustain profitability, we will need to generate additional revenues to offset our expenses. We may not achieve or sustain our revenue or profit goals and our losses may continue in the future. Because the synchronization market ~~is new and evolving, we cannot accurately predict either the future growth rate, if any, or the ultimate size of the market~~ for ~~our~~wireless ~~products~~ and ~~services. For example, while the market for smartphones and~~ other ~~wireless~~ mobile computing devices ~~has~~as ~~experienced growth recently, the market for traditional personal data assistants (PDA) has declined. This decline in traditional PDA sales had~~ a ~~direct~~commercial ~~impact on sales of our Intellisync products through the retail and online channels, where sales of our synchronization software typically occur at the same time a PDA is purchased,~~ or ~~shortly~~business ~~thereafter.~~medium ~~This~~does ~~decline has had a negative impact on our revenues and we expect that the decline in this market may continue. The increase in demand for smartphones and other such devices may~~ not ~~offset~~develop, ~~the decline in traditional PDA sales. If we cannot achieve profitability~~ or ~~positive~~develops ~~cash flows from operating activities, we may be unable to meet our working~~more ~~capital~~slowly ~~and~~than ~~other payment obligations~~expected, ~~which would have a material adverse effect on~~ our business, ~~financial condition and~~ results of operations and ~~the~~financial condition ~~price~~will ofbe ~~our~~seriously ~~common stock~~harmed.

~~Our~~Even ~~quarterly~~if ~~revenues~~the wireless and mobile ~~operating~~computing ~~results~~services ~~are~~market ~~subject~~does todevelop, ~~significant~~our ~~fluctuations~~products and services may not achieve widespread market acceptance. If our target customers do not adopt, purchase and successfully deploy our ~~stock~~other ~~price~~current ~~may~~and ~~decline~~planned products and ifservices, weour dorevenue will not ~~meet~~grow ~~the~~significantly ~~expectations~~and ofour ~~investors~~business, results of operations and ~~analysts.~~financial condition will be seriously harmed.

~~Our~~We ~~quarterly revenues and operating results~~ are ~~difficult~~exposed to potential ~~predict~~risks and ~~have~~we ~~and~~will ~~may~~continue ~~in the future fluctuate significantly from quarter~~ to ~~quarter~~incur ~~due~~increased tocosts as a ~~number~~result of the ~~factors,~~internal ~~many~~control oftesting ~~which~~and ~~are~~evaluation ~~outside~~process ~~our~~mandated ~~control.~~by ~~These~~Section ~~factors~~404 ~~include,~~of ~~but~~the ~~are~~Sarbanes-Oxley ~~not~~Act ~~limited~~of ~~to:~~ 2002.

•Although awe ~~decline~~have innow completed the ~~market~~documentation and testing of the effectiveness of our internal control over financial reporting for ~~traditional~~fiscal ~~personal~~2005, ~~data~~as ~~assistants;~~required by Section 404 of the Sarbanes-Oxley Act of 2002, we expect we will have to incur continuing costs, including increased accounting fees and increased staffing levels, in order to maintain compliance with that section of the Sarbanes-Oxley Act. In the future, if we fail to complete the Sarbanes-Oxley 404 evaluation in a timely manner, or if our independent registered public accounting firm cannot attest in a timely manner to our evaluation, we could be subject to regulatory scrutiny and a loss of public confidence in our internal controls. In addition, any failure to implement required new or improved controls, or difficulties encountered in their implementation, could harm our operating results or cause us to fail to meet our reporting obligations.

•Also, if our ~~need~~efforts to ~~realize~~comply ~~our~~with ~~goals~~new ~~with~~or ~~respect~~changed laws, regulations and standards differ from the activities intended by regulatory or governing bodies due to ~~recent~~ambiguities ~~and~~related ~~potential~~to ~~future~~our ~~acquisitions;~~practices, our reputation may be harmed or we may be subject to litigation.

•Future acquisitions of companies, some of which may have operations outside the United States, may provide us with challenges in implementing the required processes, procedures and controls in our ~~need~~acquired operations. Acquired companies may not have disclosure controls and ~~ability~~procedures or internal control over financial reporting that are as thorough or effective as those required by securities law in the United States. Although we intend to ~~generate~~devote substantial time and ~~manage~~incur substantial ~~growth;~~costs, as necessary, to ensure ongoing compliance, we cannot be certain that we will be successful in complying with Section 404.

•We ~~rapid~~are ~~evolution~~placing increasing emphasis on our hosting services, of ~~technology;~~which potential growth may be difficult to manage effectively, and, as a result, our results of operations could be adversely affected.

•We are increasingly focusing our ~~evolving~~sales and marketing and engineering efforts on hosting services. This focus may cause increased business ~~model;~~risks associated specifically with our ability to manage the level of complexity involved in executing successfully our strategies to provide superior services for mobile carriers. The rapid growth of our hosting business may place a significant strain on our management, operations and resources. Our future performance and profitability will depend on our ability to:

•· increase our capital investments and further build our ~~reliance~~infrastructure onto ~~international~~meet ~~sales~~the ~~and~~demands of ~~growth~~our carrier customers;

•· maintain technical ~~our~~capabilities ~~ability~~ to ~~penetrate~~compete effectively in the ~~European~~hosting ~~market~~business; and

•· effectively oversee aand ~~decline~~manage inour ~~gross~~outsourced ~~margins;~~hosting center.

•There ~~the~~can ~~seasonal~~be ~~nature~~no assurance that our systems, procedures and controls will be adequate to support rapid expansion of ~~the~~our ~~market;~~hosting services. If we are unable to manage such growth successfully, our business and results of operations could be harmed.

16 17

~~Table~~Revenue from hosting services may carry lower gross margins and an overall increase in such revenue as a percentage of ~~Contents~~total revenue could have an adverse impact on our business.

•Our ~~changes~~commitment to providing quality services to our enterprise and mobile carrier customers may result in our hosting service revenue having a lower gross margin than other services and license revenue. Due to the ~~market~~lower ~~for~~margin, ~~synchronization;~~an increase in the hosting service revenue as a percentage of total revenue could have a detrimental impact on our overall gross margins and could adversely affect operating results. In addition, a change in the mix between services that are provided by our own employees and those services provided by third-party vendors may negatively affect our gross margins.

•System ~~introduction~~failures ofor accidental ~~new~~or ~~products~~intentional ~~and~~security ~~services~~breaches bycould disrupt our operations, cause us orto ~~our~~incur ~~competitors;~~significant expenses, expose us to liability and harm our reputation.

•Our ~~changes~~operations, including hosting services, depend upon our ability to maintain and protect our computer systems and core business applications, which are located at our offices, as well as hosted by third-party vendors. Although we are taking various precautions to maintain and protect our systems, they could still be vulnerable to damage from break-ins, unauthorized access, vandalism, fire, floods, earthquakes, power loss, telecommunications failures and similar events. We maintain insurance against break-in, unauthorized access, vandalism, fires, floods, earthquakes and general business interruptions. The amount of coverage, however, may not be adequate in any particular case, and will not likely compensate us for all the damages caused by these or similar events. In addition, while we put various security measures in place to detect any unauthorized access to our ~~mix~~computers and computer networks, we may be unable to prevent computer programmers or hackers from penetrating our network security or creating viruses to sabotage or otherwise attack our computer networks from time to time. A breach of ~~sources~~our security could seriously damage our operations or reputation. In addition, because a hacker who penetrates our network security could misappropriate proprietary information or cause interruptions in our services, we might be required to expend significant resources to protect against, or to alleviate, problems caused by hackers. We might also face liability to persons harmed by misappropriation of ~~revenues;~~secure information if it is determined that we did not exercise sufficient care to protect our systems.

•Systems ~~the~~failure ~~long-term~~or ~~effect~~damage could cause an interruption of our ~~reduction~~services and result in loss of customers, difficulties in attracting new customers and could adversely impact our operating ~~expenses;~~results. In addition, if the number of customers who purchase our hosting services increases over time, our systems must be able to accommodate increased usage. If we are unable to increase our capacity to accommodate growth in usage, we could encounter system performance issues, which could harm our relationships with customers and our reputation.

•We ~~entrenched~~expect ~~and~~that ~~substantial~~we may ~~competition;~~become ~~and~~increasingly dependent on mobile carriers for the success of our wireless software.

•The ~~continued~~success ~~difficult~~of ~~political~~our wireless business strategy is increasingly becoming dependent on our ability to establish new relationships and ~~economic~~build ~~conditions~~on our existing relationships with domestic and international mobile carriers. We cannot assure you that we will be successful in establishing new relationships or advancing existing relationships with mobile carriers or that these mobile carriers will act in a manner that will promote the success of our wireless products. Factors that are largely within the control of mobile carriers but which are important to our success, include:

Additionally, we generally derive our technology licensing revenues from multi-year contracts with customers that frequently include license fees, professional services fees, royalty payments and maintenance. We typically earn both · the ~~license fees and the professional services in the initial one or two quarters subsequent to the signing of a contract. We periodically have large professional~~ ~~services~~degree ~~implementations that individually contribute as much as 5% or more~~ to ~~quarterly~~which ~~revenue.~~mobile ~~Combined~~carriers ~~with~~facilitate ~~related license revenues, total revenue from individual customers in~~ the ~~initial~~introduction ~~quarters~~ of aand ~~contract may exceed the revenues we earn~~actively ~~during subsequent periods covered by the contract. To the extent that we do not secure additional contracts with the same customer or secure comparably sized commitments from other customers~~promote, wedistribute ~~may~~and ~~not~~resell ~~be able to achieve~~ our ~~revenue forecasts for future quarters.~~ products;

~~There can be no assurance that we will~~· testing ~~generate sufficient revenue to meet expenses or to operate profitably in the future. Our losses today and the risk~~ of ~~future losses present significant risks to~~ our ~~stockholders.~~products If we cannot achieve profitability or positive cash flows from operating activities, we may be unable to meet our working capital and other payment obligations, which would have a material adverse effect on ~~our~~mobile ~~business,~~carriers’ ~~financial condition and results of operations and the price of our common stock.~~ networks;

~~Our market changes rapidly due to evolution in~~· quality ~~technology~~ and ~~industry~~coverage ~~standards.~~area Ifof wewireless doservices ~~not~~offered ~~adapt~~by ~~to meet~~ the ~~sophisticated~~mobile ~~needs of our customers, our business and prospects will suffer.~~ carriers;

The market for our products and services is characterized by rapidly changing technology, evolving industry standards and frequent new product and service introductions. The traditional personal data assistant market, appears to be declining and may continue to do so, just as sales in competing markets, such as smartphones and other multi-function mobile phones may be increasing. Our future success will depend to a substantial degree on our ability to offer products and services that adapt to these changing markets, incorporate leading technology, address the increasingly sophisticated and varied needs of our current and prospective customers and respond to technological advances and emerging industry standards and practices on a timely and cost-effective basis. Our rapidly evolving market makes it more likely that: 18

•· the extent ~~our~~to ~~technology~~which ormobile ~~products~~carriers ~~may~~require ~~become~~specific ~~obsolete~~hardware ~~upon~~and ~~the~~software ~~introduction~~features on ofour ~~alternative~~products ~~technologies~~to be used on their networks;

•· contractual terms weand ~~may~~conditions ~~not~~imposed ~~have~~on ~~sufficient~~us ~~resources~~by tomobile ~~develop~~carriers orthat, ~~acquire~~in ~~new~~some circumstances, ~~technologies~~could orlimit our ability to ~~introduce~~make ~~new~~similar products oravailable through ~~services~~competitive ~~capable~~carriers ofin ~~competing~~some ~~with~~market ~~future technologies or service offerings~~segments; and

•· mobile carriers’ wepricing ~~may not be able to respond effectively to the technological~~ requirements ofand ~~the~~subsidy ~~changing market~~programs.

ToMobile ~~the~~carriers ~~extent~~have wesignificant ~~determine~~bargaining ~~that~~power ~~new~~as we ~~technologies~~negotiate ~~and~~agreements ~~equipment~~with ~~are~~them. ~~required~~They tocould ~~remain~~require ~~competitive,~~contract ~~the~~terms ~~development,~~that are ~~acquisition~~difficult ~~and~~for ~~implementation~~us ofto ~~these~~meet ~~technologies~~ and ~~equipment~~could ~~are~~result ~~likely~~in tohigher ~~continue~~costs to ~~require~~complete certification ~~significant~~requirements ~~capital~~and ~~investment~~negatively byimpact usour results of operations and financial condition. ~~Moreover,~~Mobile ~~there~~carriers ~~can~~also beplace nosignificant ~~assurances~~conditions ~~that~~on weour ability ~~can~~to develop, ~~market~~ and ~~deliver~~launch ~~new~~ products ~~and~~for ~~technology~~use on ~~a timely~~their ~~basis~~wireless networks. ~~Sufficient~~If we ~~capital~~fail ~~may~~to ~~not~~address bethe ~~available~~needs ~~for~~of ~~this~~mobile ~~purpose~~carriers, inidentify ~~the~~new ~~future,~~product and service ~~even~~opportunities ifor itmodify isor ~~available,~~improve ~~investments~~our products in ~~new~~response ~~technologies~~to ~~may~~changes in ~~not~~technology, ~~result~~industry instandards ~~commercially~~or ~~viable~~mobile ~~technological~~carrier ~~processes~~requirements, ~~and~~our ~~there~~products could ~~may~~rapidly ~~not~~become beless ~~commercial applications~~competitive ~~for~~or ~~such technologies~~obsolete. If we dofail ~~not~~to timely develop, products ~~acquire~~that ~~and~~meet ~~introduce~~carrier ~~new~~product ~~products~~planning ~~and~~cycles ~~services~~or ~~and~~fail ~~achieve~~to ~~market~~deliver sufficient ~~acceptance~~quantities of products in a timely manner to mobile carriers, those carriers may choose to offer similar products from our ~~business~~competitors and ~~prospects~~thereby reduce ~~may~~their ~~suffer.~~focus on and cease offering our products which would have a negative impact on our business, results of operations and financial condition.

17In addition, the potential rapid growth of our business, as we become more dependent on mobile carriers, may place a strain on our management, operations, employees, or resources. We may not be able to maintain a rapid growth rate, effectively manage our expanding operations, or achieve planned growth on a timely or profitable basis. If we are unable to manage our growth effectively, we may experience operating inefficiencies, and our net income may be materially adversely affected.

~~Table~~Most sales with mobile carriers and enterprises have a long sales cycle process, which increases the cost of ~~Contents~~completing sales and renders completion of sales less predictable.

~~Our~~The ~~recent~~sales ~~and~~cycle ~~planned~~process with ~~future~~mobile ~~acquisitions~~carriers could ~~require~~be ~~significant~~long, ~~management~~making ~~attention~~it difficult to predict the quarter in which we may recognize revenue from a sale, if at all. The general length of the sales cycle increases our costs and ~~prove~~may cause license revenue and other ~~difficult~~operating results to ~~integrate~~vary ~~with~~significantly from period to period. Our products or technology often are part of significant strategic decisions by our ~~business~~customers regarding their information systems. Accordingly, ~~which~~the ~~could~~decision ~~distract~~to license our products ~~management,~~typically ~~disrupt~~requires significant pre-purchase evaluation. We spend substantial time providing information to prospective customers regarding the use and benefits of our ~~business~~products. During this evaluation period, ~~dilute~~we ~~stockholder~~may ~~value~~expend significant funds in sales and ~~adversely~~marketing ~~affect~~efforts. If anticipated sales from a specific customer for a particular quarter are not realized in that quarter, our operating results. may be adversely affected.

AsOur ~~part~~stock ofprice ~~our strategy, we intend to continue to make investments in complementary companies, products or technologies. We~~has ~~recently~~historically ~~acquired~~been ~~Starfish Software, Inc. (in March 2003)~~ and ~~substantially~~may ~~all~~continue ~~of the assets of Loudfire, Inc. (in July 2003) and Spontaneous Technology, Inc. (in September 2003). We have also recently announced our intention~~ to ~~acquire Synchrologic,~~be ~~Inc. We may not realize benefits from any of these acquisitions~~volatile, orwhich ~~from any acquisition we~~ may ~~have~~cause inyou ~~the future. If we fail~~ to ~~integrate successfully our past and future acquisitions, or the technologies associated with such~~lose ~~acquisitions,~~money ~~into our company, the revenue~~ and ~~operating results of the combined company~~ could ~~decline.~~lead ~~Any integration process will require significant time and resources, and we may not be able~~ to ~~manage~~costly ~~the~~litigation ~~process~~against ~~successfully.~~us Ifthat ~~our customers are uncertain about our ability to operate on a combined basis, they~~ could ~~delay~~divert ~~or cancel orders for~~ our ~~products. We may not successfully be able to evaluate or utilize the acquired technology and accurately forecast the financial impact of an~~ ~~acquisition transaction, including accounting charges~~resources. ~~Acquisitions involve a number of difficulties and risks to our business, including, but not limited to, the following:~~

•Stock ~~potential~~markets ~~adverse~~have ~~effects~~recently onexperienced ~~our~~dramatic price and volume fluctuations, particularly for shares of technology companies. These fluctuations can be unrelated to the operating ~~results;~~performance of these companies. Broad market fluctuations may reduce the market price of our common stock and cause you to lose some or all of your investment. These fluctuations may be exaggerated if the trading volume of our common stock is low. In addition, due to the technology-intensive nature and growth rate of our business and the mobile computing synchronization market, the market price of our common stock has in the past and may in the future rise and fall in response to:

•· quarterly variations ~~failure~~in tooperating ~~integrate acquired technologies with our existing products and technologies~~results;

•· seasonal fluctuations ~~failure~~on toproduct ~~integrate management information systems, personnel, research and development and marketing,~~ sales ~~and support operations~~;

~~• potential loss of key employees from the acquired company;~~19

~~• diversion~~ · announcements of ~~management’s~~technological ~~attention from other business concerns~~innovations;

•· announcements of ~~disruption~~new ofsoftware ~~our~~or ~~ongoing~~services ~~business~~by us or our competitors;

•· acquisitions or ~~potential~~strategic ~~loss~~alliances ofby ~~the~~us ~~acquired~~or ~~company’s~~by ~~customers~~our competitors;

~~• failure to realize the potential financial~~ · commencement or ~~strategic~~outcome ~~benefits~~ of ~~the~~litigation ~~acquisition~~involving us;

~~• failure to develop further the acquired company’s technology successfully, resulting~~ · changes in ~~the~~financial ~~impairment~~estimates ofby ~~amounts~~securities ~~capitalized as intangible assets~~analysts; and

•· other events ~~unanticipated~~beyond ~~costs~~our ~~and~~control, ~~liabilities;~~including general market conditions.

•Furthermore, ~~incur~~our ~~amortization~~operating results ~~expenses~~and ~~related~~prospects from time to ~~intangible~~time ~~assets~~may ~~(other~~be ~~than~~below ~~goodwill);~~the expectations of public market analysts or investors. Any negative change in the public’s perception of companies in the wireless communications market could depress our stock price regardless of our operating results. Recently, companies experiencing high volatility or significant drops in their stock prices have faced securities class action lawsuits when the market price of a stock has been volatile. Holders of that stock have often instituted securities class action litigation against the company that issued the stock when such stock declines. If any of our stockholders brought such a lawsuit against us, we could incur substantial costs defending the lawsuit. We maintain some level of insurance for such matters however we cannot guarantee that such insurance will be available or will cover the amount of any award. The lawsuit could also divert the time and attention of our management. Further, any settlement of such a lawsuit could adversely affect us.

•We ~~incur~~may ~~impairment~~be ~~charges~~unable ~~under~~to adequately ~~Statement~~protect ofour ~~Financial~~proprietary ~~Accounting Standards (SFAS) No~~rights. ~~142, “Goodwill and Other Intangible Assets” and SFAS No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets,”~~

~~Further,~~The rights we ~~have~~rely ~~issued~~upon ~~common~~to protect ~~stock~~our intellectual property underlying our products and ~~paid~~services ~~cash~~may ~~for~~not be ~~recent~~adequate, ~~acquisitions~~which could enable third parties to use our technology and ~~may~~would reduce ~~have~~our ability to ~~pay~~compete ~~cash~~in the market. To protect our proprietary rights, we ~~incur~~rely ~~debt~~on ora ~~issue~~combination ~~equity~~of ~~securities~~patent, trademark, copyright and trade secret laws, confidentiality agreements with our employees and third parties, and protective contractual provisions. These efforts to ~~pay~~protect ~~for~~our ~~any~~intellectual ~~future~~property rights ~~acquisition~~may not be effective in preventing misappropriation of our technology. These efforts also may not prevent others from developing products or technologies similar to, ~~each~~competitive with, or superior to those we develop. Any of ~~which~~these results could ~~affect~~reduce the ~~market~~value ~~price~~ of our ~~common~~intellectual ~~stock~~property. We may be ~~The~~forced ~~sale~~to oflitigate ~~additional~~to ~~equity~~enforce or ~~convertible~~defend ~~debt~~our ~~could~~intellectual ~~result~~property inrights ~~dilution~~and to protect our ~~stockholders~~trade secrets. ~~The~~Any ~~incurrence~~such oflitigation ~~indebtedness~~could ~~would~~be ~~result~~very incostly ~~increased fixed obligations~~ and could distract ~~also~~our ~~include~~management ~~covenants~~from orfocusing ~~other~~on ~~restrictions~~operating ~~that~~our ~~would~~business. ~~impede~~Moreover, our ~~ability~~business tocould ~~manage~~be harmed if our ~~operations.~~patents were determined to be invalid.

IfWe wemay ~~are~~be ~~unable to~~subject ~~consummate the acquisition of Synchrologic or~~ to ~~make~~intellectual ~~additional~~property ~~future~~infringement ~~acquisitions~~claims, ofwhich ~~mobile~~are ~~computing-related~~costly ~~technology~~to ~~companies,~~defend weand could ~~may~~limit beour ~~unable~~ability to ~~compete~~use ~~successfully~~certain technologies in the ~~enterprise synchronization market~~future.

~~Our~~Third ~~business~~parties ~~strategy~~may isassert infringement ~~dependent~~or ~~upon~~other ~~making~~intellectual ~~additional~~property ~~acquisitions~~claims ofagainst us. From time to ~~mobile~~time, ~~computing-related~~we ~~technology~~receive ~~companies~~notices from third parties alleging that our products or services infringe proprietary rights held by them. For example, ~~our~~as ~~planned~~we ~~acquisition~~announced in August 2004, NCR Corporation filed a complaint alleging patent infringement in the U.S. District Court for the Southern District of ~~Synchrologic~~Ohio Western isDivision ~~intended~~(Dayton). toIn bethe ancomplaint, ~~important~~NCR ~~addition~~alleged tothat certain of our products ~~technological~~infringe ~~ability~~upon tothree ~~serve~~of ~~enterprise~~NCR’s ~~customers~~patents. ~~Future~~That ~~acquisition~~case ~~candidates~~was ~~may~~settled beand dismissed ~~few~~by mutual agreement in ~~number~~ ~~and~~July 2005. Our customers may ~~attract~~receive notices ~~offers~~of patent or other infringement from ~~companies~~third ~~with~~parties ~~greater~~and ~~financial~~ask ~~resources~~for indemnification ~~than~~in usthe future. We ~~can~~cannot ~~provide~~predict nowhether third parties will assert claims of infringement against us, or whether any past, present or future claims will prevent us from offering products or operating our business as planned.

18Due to the inherently uncertain nature of intellectual property protection and the competitive area in which we operate our business, it is possible that some or all of our products and services could be found to be infringing on the intellectual property of others. We may have to pay substantial damages, including

~~Table of Contents~~20

treble ~~assurance~~damages, ~~that~~for wepast ~~will~~infringement beif ~~able~~it tois ~~locate~~ultimately ~~other~~determined ~~suitable~~that ~~acquisition~~our ~~targets~~ products or ~~that~~services weinfringe ~~will~~a bethird ~~able~~party’s toproprietary ~~complete additional acquisitions~~rights. IfWe wemay ~~are~~have ~~unable~~ to comply ~~acquire~~with ~~Synchrologic~~injunctions, ~~and~~or ~~make~~stop ~~additional~~distributing ~~future~~our ~~acquisitions~~products ofand ~~mobile~~services ~~computing~~while we re-~~related~~engineer them or seek licenses to necessary technology, ~~companies~~which ormight ~~build~~not ~~similar~~be available ~~technologies~~on ~~in-house~~reasonable terms, weor ~~may~~at all. We could also be ~~unable~~subject to ~~implement~~claims for indemnification resulting from infringement claims made against our customers, ~~business~~which ~~plan~~could ~~and~~increase our ~~ability~~defense tocosts ~~compete~~and inpotential ~~the~~damages. ~~enterprise~~Even ~~synchronization~~if ~~market~~the claims are without merit, defending a lawsuit takes significant time, may be ~~adversely~~expensive ~~affected.~~and may divert management’s attention from other business concerns.

~~Our investment~~We inhave ~~goodwill~~been, are and ~~other~~may ~~intangibles~~in ~~resulting~~the ~~from~~future ~~our~~be ~~acquisitions~~involved in litigation that could ~~become~~result ~~impaired.~~in significant costs to us.

AsIn oforder ~~July~~to ~~31,~~protect ~~2003,~~ our proprietary ~~goodwill~~rights, ~~and~~we ~~other~~may ~~intangibles~~decide ~~amounted~~ to ~~$5,500,000,~~sue ~~net~~other ofcompanies. ~~accumulated amortization and reflective of newly acquired~~Litigation ~~intangibles~~proceedings ~~from~~are ~~Starfish~~inherently uncertain, and ~~Loudfire.~~we Wemay ~~ceased~~not toprevail ~~amortize~~in our ~~existing~~defenses ~~goodwill upon our adoption of SFAS No~~or claims. ~~142~~In inaddition, ~~the~~such ~~beginning~~litigation ofis ~~fiscal~~expensive ~~2003.~~and ~~We will amortize approximately $781~~time-consuming,~~000,~~ ~~$739,000, $666,000~~ and management ~~$548,000~~has ofbeen ~~other intangibles~~ in ~~fiscal~~ ~~2004,~~the ~~2005,~~past ~~2006~~ and ~~2007,~~may ~~respectively,~~in ~~based on~~ the ~~acquisitions~~future ~~completed~~be asrequired ofto ~~July~~spend significant ~~31,~~time ~~2003.~~in ~~We expect, however, that amortization expense will increase significantly as a result of~~ the ~~acquisition~~prosecution of ~~various~~such ~~intangibles~~suits. ~~from~~If ~~Spontaneous Technology~~we ~~and~~do ~~the~~not ~~pending~~prevail ~~acquisition of Synchrologic~~ in ~~fiscal~~our claims, ~~2004. To the extent~~ we domight ~~not~~be ~~generate~~forced ~~sufficient cash flows~~ to ~~recover~~accept ~~the~~an ~~net~~unfavorable ~~amount~~settlement ofor ~~any~~judgment ~~investment~~and even inbe ~~goodwill~~required ~~and~~to reimburse other ~~intangibles~~companies ~~recorded,~~in ~~the~~a ~~investment~~suit ~~could~~for betheir ~~considered~~legal ~~impaired~~expenses ~~and~~in ~~subject~~defending tothe ~~earlier write-off~~suit. ~~These~~An ~~impairments~~unfavorable ofsettlement ~~goodwill~~ or ~~other~~judgment ~~intangible~~could also ~~assets~~materially ~~could~~harm ~~have~~our aability ~~negative~~to ~~impact~~use onexisting ~~our~~intellectual ~~results~~property ofand severely ~~operations~~harm inour ~~any~~business ~~given~~as ~~period.~~a result.

~~Our~~Future ~~business~~sales ~~was~~of ~~harmed~~our common bystock, ~~the~~including ~~recent slowdown in~~ the ~~economy~~shares ~~generally~~underlying ~~and in~~ the ~~information~~convertible ~~technology~~senior ~~sector~~notes inwe ~~particular.~~recently ~~As a result~~issued, ~~we have reduced our total operating expenses to a lower level in fiscal 2003 compared with those in fiscal 2002. Continued or worsened conditions~~ may ~~directly~~depress ~~harm~~ our ~~business~~stock ~~and could result in additional actions to reduce operating expenses, which could harm our business and future prospects further~~price.

~~Our~~If ~~revenue~~our ~~declined~~current ~~sequentially~~stockholders insell ~~the~~substantial ~~six~~amounts of ~~quarters~~common ~~before~~stock in the ~~first~~public ~~quarter of fiscal 2003~~market, ~~largely~~the asmarket aprice ~~result~~ of ~~recent~~our ~~unfavorable~~common ~~economic~~stock ~~conditions~~could ~~that~~fall. ~~caused~~In ~~our customers to delay~~addition, ~~decrease~~these ~~or cancel corporate information technology spending. The~~ sales of ~~our~~common ~~products~~stock ~~and~~could ~~services~~adversely isaffect ~~largely dependent~~ the trading ~~state~~price of ~~the~~our ~~general~~recently ~~economy~~issued ~~and~~convertible ~~upon~~senior ~~the~~notes ~~condition~~and ofimpede ~~the mobile~~our ~~computing-synchronization~~ability ~~markets. We may be unable~~ to ~~offset~~raise ~~the~~funds ~~harm caused by continued or increasing weakness~~ in ~~demand~~the ~~with~~future ~~additional~~at ~~reductions~~an inadvantageous ~~operating~~price, ~~expenses~~or ~~without~~at ~~significantly~~all, through ~~harming~~another ~~our~~sales ~~business.~~of securities.

~~Our~~As ~~success~~of July 31, 2005, we had approximately 66,639,299 shares of common stock outstanding. Assuming that the maximum number of shares and ~~ability~~options toare ~~compete~~issued ~~depends~~and ~~upon~~registered by us in connection with all of our ~~ability~~recent acquisitions and assuming that all shares subject to ~~secure~~vested options ~~and~~to ~~protect~~purchase ~~patents~~common stock under our stock plans are issued, ~~trademarks~~additional shares of our common stock could become issued or issuable and ~~other~~freely ~~proprietary~~tradeable ~~rights.~~in the public market through approximately July 31, 2006, as follows:

~~Our~~· approximately 360,000 ~~success~~shares ~~depends~~of on our ~~ability~~common tostock ~~protect our proprietary rights to the technologies used in our products and services. In the event~~ that amay ~~third~~be ~~party~~issued ~~breaches the confidentiality provisions or other obligations~~ in ~~one~~August 2005 or more of our agreements or misappropriates or infringes on our intellectual property or the intellectual property licensed to us by third parties, our business would be seriously harmed. To protect our proprietary rights, we rely on a combination of trade secrets, confidentiality and other contractual provisions and agreements, and patent, copyright and trademark laws, which afford us only limited protection. Third parties may independently discover or invent competing technologies or reverseFebruary 2006 ~~engineer~~under our ~~trade~~employee ~~secrets,~~stock ~~software~~purchase orplan; other technology. Furthermore, laws in some countries may not protect our proprietary rights to the same extent as the laws of the United States. Therefore, the measures we take to protect our proprietary rights may not be adequate. and

~~Despite our efforts to protect our~~· approximately ~~proprietary rights and technologies~~6,350,000 ~~unauthorized~~shares ~~parties~~issuable ~~may~~upon ~~attempt~~exercise ~~to copy aspects~~ of ~~our~~outstanding ~~products~~options ~~or to obtain and use trade secrets or other information~~ that wewill ~~regard as proprietary. Policing unauthorized use of our products is difficult, and~~be ~~while~~vested weby ~~are unable to determine the extent to which piracy of our software products exists~~July 31, ~~software piracy can be expected to be a persistent problem~~2006. ~~Embedded software products, like those we offer, can be especially susceptible to software piracy.~~

19In addition, conversion of some or all of the $60,000,000 aggregate principal amount of convertible subordinated notes that we issued in March 2004 will dilute the ownership interests of investors. Any sales in the public market of the common stock issuable upon such conversion could adversely affect prevailing market prices for our common stock.

~~Table~~If we fail to maintain our existing relationships or enter into new relationships with OEM and business development organizations, or if products offered by our OEM partners fail to achieve or maintain market acceptance, our brand awareness, the sales of ~~Contents~~our products and use of our services would suffer.

WeOur ~~are~~revenue ~~and~~from ~~may~~technology licensing depends, in large ~~the~~part, ~~future~~on beour ~~subject~~ability to ~~litigation~~develop and maintain relationships with OEMs and business development organizations that ~~could~~help ~~result~~distribute inour ~~significant~~products ~~costs~~and promote toour usservices. We depend on these relationships to:

~~Litigation has been and may in the future be~~· distribute ~~necessary to enforce~~ our ~~proprietary~~products ~~rights or~~ to ~~protect~~purchasers ~~our~~of ~~trade~~mobile secrets or trademarks. These legal proceedings may also divert our management’s attention from growing our business. Failure to enforce and protect our intellectual property successfully would substantially harm our business. devices;

For instance, on April 19, 2002, we filed a patent infringement suit against Extended Systems, Inc. in the United States District Court for the Northern District of California. In this suit, we allege that Extended System’s server and desktop products infringe on eight of our synchronization-related patents. We are seeking an injunction against future sales of infringing server and desktop products, as well as monetary damages for past sales of the infringing products, of Extended Systems. Extended Systems has denied our charges, raised a number of affirmative defenses to our claims, and requested a declaration from the Court that our eight patents are invalid and not infringed. Litigation is inherently uncertain, and we may not prevail in our claims or defenses. In addition, our litigation against Extended Systems is expensive and time-consuming, and management has been and may in the future be required to spend significant time in the defense of the suit. We incurred approximately $1,200,000 of legal costs relating to all litigation including against Extended Systems during fiscal 2003 and believe that we will continue to incur significant amount of legal costs during fiscal 2004 as a result of any on-going litigation. Extended Systems has no claims or counterclaims against us in this case. However, if we do not prevail in our claims, we might be forced to accept an unfavorable settlement or judgment which could require us to pay a substantial amount of Extended Systems’ legal fees in settlement or upon the determination of these claims. An unfavorable settlement or judgment could also materially harm our ability to use existing intellectual property and severely harm our business as a result. 21

~~On December 5, 2002, we filed a patent infringement~~· increase ~~suit against Synchrologic, Inc. in~~ the ~~United~~use ~~States District Court for the Northern District~~ of ~~California, alleging that Synchrologic’s server and desktop products infringe six of~~ our ~~synchronization-related~~technology ~~patents.~~licensing On September 14, 2003, we entered into a definitive agreement to acquire Synchrologic. Upon the execution of the definitive agreement, we and Synchrologic agreed to dismiss the litigation with prejudice as of September 17, 2003, thereby permanently ending this specific suit. components;

~~In order to protect our proprietary rights in the future, we~~· build ~~may~~brand ~~decide~~awareness tothrough ~~sue~~product ~~additional~~marketing; ~~parties. Any litigation, whether brought by or against us, could cause us to incur significant expenses~~ and could divert a large amount of management time and effort. A claim by us against a third party could, in turn, cause a counterclaim by the third party against us, which could impair our intellectual property rights and harm our business.

~~If we are forced to defend against third-party infringement claims, whether they are with or without merit or are determined in~~ · market our ~~favor,~~products ~~we could face expensive~~ and ~~time-consuming~~services ~~litigation, which could distract technical and management personnel, or result in product shipment delays~~cooperatively. If an infringement claim is determined against us, we may be required to pay monetary damages or ongoing royalties. Further, as a result of infringement claims either against us or against those who license technology to or from us, we may be required to develop non-infringing intellectual property or enter into costly royalty or licensing agreements. Such royalty or licensing agreements, if required, may be unavailable on terms that are acceptable to us, or at all. If a third party successfully asserts an infringement claim against us and we are required to pay monetary damages or royalties or we are unable to develop suitable non-infringing alternatives or license the infringed or similar intellectual property on reasonable terms on a timely basis, it could significantly harm our business.

If ~~our~~the ~~intellectual~~products ~~property~~that ~~were~~these toequipment bemanufacturers ~~found~~or business development organizations sell, or if the operating systems upon which these products are based, fail to beachieve ~~infringing~~or sustain market acceptance, or if ~~otherwise~~any ~~invalid~~of these companies cease to use our product and service offerings in significant volumes, our ~~business~~product sales would bedecline ~~harmed~~and our business would suffer. For example, if growth in the number of devices sold by our OEM partners is delayed or did not occur, our business would suffer.

~~Our~~Although several OEMs are subject to certain ~~business~~contractual isminimum ~~heavily~~purchase ~~dependent~~obligations, onwe ~~our~~cannot ~~intellectual~~be ~~property.~~certain ~~Our~~that ~~patents~~any particular ~~are~~OEM anwill ~~especially~~satisfy ~~important~~its ~~part~~minimum ofobligations. ~~our~~Weakening ~~intellectual~~demand ~~property~~from any key OEM and ~~our~~the ~~business.~~inability ~~Third~~to ~~parties~~replace ~~may~~revenue ~~assert~~provided ~~infringement~~by orsuch ~~unfair~~an ~~competition~~OEM ~~claims~~could ~~against~~have a ~~us.~~material Inadverse ~~the~~effect ~~past~~on our business, weoperating results and financial ~~have~~condition. ~~received~~We ~~notices~~maintain individually significant receivable balances from ~~third~~major OEMs. If ~~parties~~these ~~alleging~~OEMs ~~that~~fail ~~our~~to ~~product~~meet ~~offerings~~their ~~infringe~~payment obligations, our operating results could be materially and adversely affected.

20Our agreements with OEMs, distributors, and resellers generally are nonexclusive and may be terminated on short notice by either party without cause. Furthermore, our OEMs, distributors and resellers are not within our control, are not obligated to purchase products from us, and may represent other lines of products, including competing products. A reduction in sales effort or discontinuance of sales of our products by our OEMs, distributors, and resellers could lead to reduced sales and could materially adversely affect our operating results.

~~Table~~Our market changes rapidly due to evolution in technology and industry standards. If we do not adapt to meet the sophisticated needs of ~~Contents~~our customers, our business and prospects will suffer.

~~proprietary~~The ~~rights~~market ~~held~~for byour ~~them.~~products Weand ~~have~~services ~~also~~is characterized ~~received~~by arapidly ~~notice~~changing ~~from~~technology, aevolving ~~customer~~industry tostandards ~~which~~and frequent wenew ~~may~~product ~~have~~and ~~indemnification~~service ~~obligations~~introductions. ~~under~~For ~~some circumstances~~example, the traditional ~~informing~~personal usdigital ~~that~~assistant itmarket, ~~had~~is ~~received~~declining aand ~~notice~~may ~~from~~continue ato ~~third~~do ~~party~~so. ~~alleging~~Our future ~~that~~success ~~the~~will ~~customer’s~~depend ~~product~~to ~~infringes~~a ~~the~~substantial ~~third~~degree ~~party’s~~on ~~proprietary~~our ~~rights.~~ability Weto oroffer products ~~our~~and ~~customers~~services ~~may~~that ~~receive~~adapt ~~other~~to ~~similar~~these ~~notices~~changing ~~from~~markets, ~~third~~incorporate ~~parties~~leading technology, inaddress the ~~future.~~increasingly ~~We cannot~~sophisticated ~~predict~~and ~~whether~~varied ~~third~~needs ~~parties~~of ~~will~~our current ~~assert~~and ~~claims~~prospective ofcustomers ~~infringement~~and ~~against~~respond ~~us,~~to ortechnological ~~whether~~advances ~~any~~and emerging ~~past,~~industry ~~present~~standards orand ~~future~~practices ~~claims~~on ~~will~~a ~~prevent~~timely usand ~~from~~cost-effective ~~offering~~basis. Our ~~products~~rapidly orevolving ~~operating~~market ~~our~~makes ~~business~~it asmore ~~planned.~~likely that:

~~Due to the inherently uncertain nature of intellectual property protection and the extremely competitive area in which we operate~~ · our ~~business, it is possible that some or all of our intellectual property could be found to be infringing on the intellectual property of others or that our patents could be determined to be~~ ~~invalid~~technology ~~in the future, despite our efforts to ensure otherwise. Should some~~ or ~~all~~products ofmay ~~our~~become ~~intellectual~~obsolete ~~property~~upon ~~be found to be infringing on~~ the ~~intellectual~~introduction ~~property~~ of ~~others, our business would be severely harmed because we would not be able to~~alternative ~~sell our products and we may incur fees, expenses or be forced to pay damage awards. In addition, our business would be harmed if our patents were determined to be invalid.~~ technologies;

We· we may ~~face~~not ~~fierce~~have ~~competition~~sufficient inresources ~~the~~to ~~market~~develop ~~for~~or ~~mobile~~acquire ~~computing~~new ~~synchronization~~technologies or to introduce new products ~~and~~or services, ~~which~~capable ~~could~~of competing with future ~~reduce~~technologies ~~our~~or ~~market~~service ~~share~~offerings ~~and~~of ~~revenues.~~other companies; and

~~Our market~~· we ~~contains~~may ~~few~~not ~~substantial~~have ~~barriers~~sufficient resources to ~~entry.~~develop Weor ~~believe~~acquire ~~we will face additional competition from existing competitors and~~ new ~~market~~technologies ~~entrants~~or ~~in the future. We currently face direct competition with respect~~ to ~~our Intellisync, Enterprise Intellisync,~~ ~~Synchrologic~~introduce ~~Mobile~~new ~~Suite, Intellisync goAnywhere, Satellite Forms, Intellisync: Phone Edition, TrueSync and Spontaneous Technology’s secure Virtual Private Network (sVPN)~~ products. ~~Intellisync~~or ~~retail~~services ~~and~~capable enterprise products face competition from Sybase Inc.’s iAnywhere, Chapura, Inc.’s Pocket Mirror, Common Time’s Cadenza mNotes, Extended Systems, Inc.’s OneBridge Mobile Groupware, IBM Corporation’s Lotus Software EasySync Pro, Microsoft, Inc’s ActiveSync, Palm Desktop from Palm and others. Satellite Forms faces competition from Adobe Systems, Inc., Aligo, Inc., AppForge, Inc., Covigo, Inc., iConverse, Inc., Metrowerks Code Warrior, mPortal, Inc., Pencel Corporation, Pendragon Software Corporation, Penright Corporation’s MobileBuilder and others. Our server-based Mobile Suite software faces competition from Aether Systems, CommonTime, Extended Systems, FusionOne, Inc., InfoSpace, Inc., Infowave Software, JP Mobile, Inc., Microsoft, Openwave, Inc., Sybase, Inc., Synchrologic, Inc. (up until the closing date of ~~the~~competing ~~planned acquisition), Wireless Knowledge, Inc., XcelleNet, Inc. and others. Intellisync goAnywhere technology competes~~ with ~~offerings from Symantec Corporation~~future ~~(pcAnywhere)~~technologies ~~and~~or ~~Expertcity,~~service ~~Inc.~~offerings (GoToMyPC) and others. Our Intellisync: Phone Edition faces competition from FutureDial, Inc.’s SnapSync and Susteen, Inc.’s DataPilot and others. In addition to direct competitors like these, we face indirect competition from existing and potential customers that may provide internally developed solutions to each of ~~our~~other ~~technology licensing components~~companies. ~~TrueSync and sVPN face competition from Vista Corporation, Seven Networks, Inc. and others.~~

InTo ~~addition~~the toextent ~~direct competition noted above,~~ we ~~face~~determine ~~indirect~~that ~~competition~~new ~~from~~technologies ~~existing~~ and ~~potential~~equipment ~~customers~~are ~~that~~required ~~may~~to ~~provide~~remain ~~internally~~competitive, ~~developed~~the development, ~~solutions~~acquisition ~~for~~and ~~each~~implementation of ~~our~~these ~~technology~~technologies ~~licensing~~and ~~components.~~equipment are Aslikely ato ~~result,~~continue ~~we must educate prospective customers as~~ to ~~the~~require ~~advantage~~significant ofcapital ~~our~~investment ~~products compared~~by ~~to internally developed solutions~~us. Moreover, Wewe ~~currently~~cannot ~~face~~be ~~limited~~certain ~~direct~~that ~~competition~~we ~~from~~can ~~major~~develop, ~~applications~~market and ~~operating~~deliver ~~systems~~new products ~~software~~and ~~vendors~~technology ~~who~~on ~~may~~a intimely ~~the~~basis. ~~future~~Sufficient ~~choose~~capital tomay ~~incorporate~~not ~~data synchronization functionality into their~~be ~~operating~~available ~~systems software, thereby potentially reducing the need~~ for ~~original~~this ~~equipment~~purpose ~~manufacturers to include our products~~ in ~~their~~the ~~notebook~~future, and ~~desktop~~even ~~personal~~if ~~computers.~~it ~~For~~is ~~example~~available, ~~Microsoft’s inclusion of certain features permitting~~investments ~~data~~in ~~synchronization~~new ~~between~~technologies ~~computers~~may ~~utilizing~~not ~~the~~result ~~Windows~~in ~~98,~~commercially ~~Windows~~viable ~~2000,~~technological processes ~~Windows~~and ~~Me,~~there ~~Windows~~may NTnot orbe ~~Windows~~commercial XPapplications ~~operating~~for ~~system~~such ~~may~~technologies. If ~~have~~we ~~the~~do ~~effect~~not ofdevelop, ~~reducing~~acquire ~~revenue~~and ~~from~~introduce ~~our~~new ~~software~~products ifand ~~users~~services ofand achieve ~~these~~market ~~operating~~acceptance ~~systems~~in ~~perceive~~a ~~that~~timely ~~their data~~manner, ~~synchronization~~our ~~needs~~business ~~are~~and ~~adequately~~prospects ~~met by Microsoft~~will suffer.

Many of our competitors have substantially greater financial, technical and marketing resources, larger customer bases, longer operating histories, greater name recognition and more established relationships in the industry than we do. Our larger competitors may be able to provide customers with additional benefits in 22

21If we fail to maintain an effective system of internal controls, we may not be able to detect fraud or report our financial results accurately, which could harm our business.

~~Table~~Effective internal controls are necessary for us to provide reliable financial reports and to detect and prevent fraud. We periodically assess our system of ~~Contents~~internal controls, and the internal controls of service providers upon which we rely, to review their effectiveness and identify potential areas of improvement. These assessments may conclude that enhancements, modifications or changes to our system of internal controls are necessary. In addition, from time to time we acquire businesses, many of which have limited infrastructure and systems of internal controls. Performing assessments of internal controls, implementing necessary changes, and maintaining an effective internal controls process is expensive and requires considerable management attention, particularly in the case of newly acquired entities. Internal control systems are designed in part upon assumptions about the likelihood of future events, and all such systems, however well designed and operated, can provide only reasonable, and not absolute, assurance that the objectives of the system are met. Because of these and other inherent limitations of control systems, there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions, regardless of how remote. If we fail to implement and maintain an effective system of internal controls or prevent fraud, we could suffer losses, could be subject to costly litigation, investors could lose confidence in our reported financial information and our brand and operating results could be harmed, which could have a negative effect on the trading price of our common stock.

~~connection~~We with their products and costs, including reduced communications costs. As a result, these companies may be able to price their products and services more competitively than we can and respond more quickly to new or emerging technologies and changes in customer requirements. If we are ~~unable~~dependent ~~to compete successfully against~~ on our ~~current~~international oroperations ~~future~~for ~~competitors,~~a wesignificant ~~may~~portion ~~lose~~of ~~market share, and~~ our ~~business and prospects would suffer~~revenue.

~~Our business~~International revenue, primarily from customers based in Europe and ~~prospects~~Asia ~~depend~~Pacific, onaccounted for 31%, to33% aand ~~significant~~36% ~~degree,~~of ~~demand~~our ~~for~~revenue ~~wireless~~in fiscal 2005, 2004 and ~~other~~2003, ~~mobile~~respectively. In ~~computing~~the ~~devices~~future, we may further expand our international presence. As we continue to expand internationally, we are increasingly subject to risks of doing business internationally, including:

~~The use of wireless and other mobile computing devices for retrieving, sharing and transferring information among businesses, consumers, suppliers and~~· longer ~~partners~~payment ~~has~~cycles ~~begun to develop only in recent years. Our success will depend in large part on continued growth in the use of wireless~~ and ~~other~~problems mobile computing devices including personal data assistants, handheld computers, smart phones, pagers and other mobile devices. In addition, our markets face critical unresolved issues concerning the commercial use of wireless and other mobile computing devices, including security, reliability, cost, ease of access and use, quality of service, regulatory initiatives and necessary increases in ~~bandwidth~~collecting ~~availability.~~accounts Demand for, and market acceptance of, wireless and other mobile computing devices which require our products and services are subject to a high level of uncertainty and are dependent on a number of factors, including: receivable;

•· seasonal reductions in business activity during the ~~growth~~summer months in ~~access~~Europe ~~to,~~ and ~~market~~certain other ~~acceptance~~parts of, ~~new~~the ~~interactive technologies~~world;

•· unexpected changes ~~growth~~ in ~~sales~~regulatory ofrequirements ~~handheld devices, smart phones~~ and ~~other mobile computing devices, supported by our software and growth in wireless network capabilities to match end-user demand and requirements~~tariffs;

•· export controls ~~emergence~~relating ofto aencryption ~~viable~~technology and ~~sustainable~~other ~~market~~export ~~for wireless and mobile computing services~~restrictions;

•· reduced protection ~~our~~for ~~product~~intellectual ~~and~~property ~~service~~rights ~~differentiation~~in ~~and~~some ~~quality~~countries;

•· fluctuations in ~~the~~currency ~~development~~exchange ofrates, ~~technologies~~against ~~that~~which ~~facilitate~~we ~~interactive~~do ~~communication~~not ~~between~~currently ~~organizations~~hedge;

~~• increases~~ · difficulties in ~~bandwidth~~staffing ~~for~~and ~~data~~managing ~~transmission~~international operations; and

•· an adverse effect on our ~~distribution~~provision ~~and~~for ~~pricing~~income ~~strategies~~taxes asbased ~~compared~~on ~~with~~the ~~those~~amount and mix of income ~~our~~from ~~competitors;~~international customers.

•Our international sales growth will be limited if we, in the ~~effectiveness~~future, ofare ~~our~~unable ~~marketing~~to ~~strategy~~expand international sales channel management and ~~efforts;~~support, customize products for local markets, and develop relationships with international service providers, distributors and device manufacturers. For example, in recent quarters we have invested substantially in expanding sales operations, and these investments may not generate offsetting increases in revenue. Even if we are able to expand international operations successfully, we cannot be certain that we will succeed in maintaining or expanding international market demand for our products.

~~• our industry reputation; and~~23

•Geographic ~~general~~expansion ~~industry~~ and ~~economic~~growth, ~~conditions~~including ~~such~~the establishment asof ~~slowdowns~~new insales ~~the~~or ~~computer~~engineering oroperations, ~~software~~may ~~markets~~negatively oraffect ~~the~~our overall ~~economy~~operations inand ~~general~~cause us to incur significant additional costs and expenses.

IfWe ~~the~~have ~~market~~an ~~for~~engineering facility ~~wireless~~in Delhi, India, gained through our acquisition of PDAapps, and we established engineering facilities in Sofia, Bulgaria and Cluj-Napoca, Romania. In the future, we may further expand our engineering or sales operations to other ~~mobile~~geographic ~~computing~~areas ~~devices~~within asthe United States and internationally. Our expansion may cause us to incur various costs and expenses, and may place a significant ~~commercial~~strain upon our operating and financial systems and resources that orcould materially adversely affect our financial results following such an expansion. We also face significant business ~~medium~~risks ~~does~~related ~~not~~to ~~develop~~the difficulty in assimilating new operations and the diversion of management’s attention from other business. Additionally, orif ~~develops~~we ~~more~~fail ~~slowly~~to ~~than~~align ~~expected~~employee skills and populations with revenue and market requirements, it may have a material adverse impact on our business, and operating results. ofMoreover, these newly established operations ~~and~~may ~~financial~~not ~~condition~~contribute ~~will~~significantly beto ~~seriously~~our ~~harmed.~~sales or earnings.

~~Even~~Foreign ifexchange ~~the~~fluctuations ~~wireless~~could ~~and~~decrease ~~mobile computing services market does develop,~~ our ~~products and services may not achieve widespread~~ ~~market~~revenue ~~acceptance.~~or Ifcause ~~our~~us ~~target~~to ~~customers~~lose ~~do not adopt~~money, ~~purchase~~especially ~~and~~since ~~successfully~~we ~~deploy~~do ~~our other current and planned products and services, our revenue will~~ not ~~grow~~hedge ~~significantly and our business, results of operations and financial condition~~against ~~will~~currency ~~be seriously harmed~~fluctuations.

22We believe that in the future, an increasing portion of our costs will be denominated in foreign currencies as we increase operations in Europe and open offices in other countries. We currently do not engage in foreign exchange hedging activities and, although we have not yet experienced any material losses due to foreign currency fluctuation, a portion of our international revenue are currently subject to the risks of foreign currency fluctuations, and these risks will increase as our international revenue increases.

~~Table~~Our ofrecent ~~Contents~~and any potential acquisitions could require significant management attention and prove difficult to integrate with our business, which could distract our management, disrupt our business, dilute stockholder value and adversely affect our operating results.

IfAs part of our strategy, we ~~fail~~intend to ~~maintain~~continue ~~our~~to ~~existing~~make ~~relationships~~investments in complementary companies, products or ~~enter~~technologies. ~~into~~We ~~new~~recently ~~relationships~~acquired ~~with~~PDAapps, Inc. ~~original~~(June 2005), ~~equipment~~Tourmaline ~~manufacturers~~Networks, Inc. ~~business~~(in ~~development~~March 2005), ~~organizations~~SoftVision SRL’s workforce (through a transfer in June 2004), Identity Systems (in March 2004), Synchrologic, Inc. (in December 2003) and ~~sales~~Spontaneous ~~distribution~~Technology, Inc. (in ~~channels~~September 2003). We may not realize future benefits from any of these acquisitions, or from any acquisition we may make in the future. If we fail to integrate successfully our ~~brand~~past ~~awareness~~and future acquisitions, or the ~~sales~~technologies associated ofwith such acquisitions, into our ~~products~~company, the revenue and ~~use~~operating results of the combined company could be adversely affected. Any integration process will require significant time and resources, and we may not be able to manage the process successfully. If our ~~services~~customers ~~would~~are ~~suffer~~uncertain about our ability to operate on a combined basis, they could delay or cancel orders for our products. We may not successfully evaluate or utilize the acquired technology and accurately forecast the financial impact of an acquisition transaction, including accounting charges.

~~Our~~Acquisitions involve ~~product~~a ~~and~~number ~~service~~of ~~offerings~~additional ~~depend,~~difficulties inand ~~large~~risks ~~part,~~to on our ~~ability to develop and maintain relationships with original~~business, ~~equipment~~including, ~~manufacturers~~but ~~and~~not ~~business~~limited ~~development~~to, ~~organizations~~the ~~that help distribute our products and promote our services. We depend on these relationships to~~following:

•· failure to ~~distribute~~integrate ~~our~~management ~~products~~information tosystems, ~~purchasers~~personnel, ofresearch ~~mobile~~and development ~~devices~~and marketing, sales and support operations;

•· potential loss ~~increase~~of ~~the~~key ~~use~~employees offrom ~~our~~Intellisync ~~technology~~or ~~licensing~~the ~~components~~acquired company;

•· disruption of ~~build~~our ~~brand~~ongoing ~~awareness through product marketing~~business; ~~and~~

•· potential loss ~~market~~of ~~our~~the ~~products~~acquired ~~and~~company’s ~~services cooperatively.~~customers;

If· failure to ~~the~~develop ~~products~~further ~~that~~the ~~these~~acquired ~~equipment~~company’s ~~manufacturers~~technology ~~or business development organizations sell~~successfully, orresulting in the ~~operating~~potential ~~systems~~impairment ~~upon which these products are based, were to lose popularity, or if any~~ of ~~these~~amounts ~~companies~~capitalized ~~cease~~as tointangible ~~use~~assets ~~our~~under ~~product and service offerings in significant volumes~~SFAS No. 142, ~~our~~“Goodwill ~~product sales would decline~~ and ~~our~~Other ~~business would suffer.~~

We have developed with sales distribution channels and other resellers that allow us to offer our products and services to a much larger customer base than we would otherwise be able to reach through our own direct sales and marketing efforts. Ingram Micro US is our largest distributor and accounted for 10%, 17% and 14% of our total revenue during fiscal 2003, 2002 and 2001, respectively. There are also a significant number of our customers that purchase our products and services through other resellers, and we anticipate they will continue to do so as we expand our product offerings. Because we often sell indirectly through these sales distribution channels and resellers, we cannot control our relationships with end customers. This may diminish our ability to sell our directly to our customers. Our sales, therefore, could also be negatively affected by disruptions in our relationships with resellers or disruptions in the relationships between our resellers and customers. Resellers may also choose not to emphasize our products to their customers. Any of these occurrences could diminish the effectiveness of our distribution channel and lead to decreased sales. 24

WeIntangible ~~are~~Assets” and ~~dependent~~SFAS onNo. 144, ~~our~~“Accounting ~~international operations~~ for athe Impairment ~~significant~~or ~~portion~~Disposal of ~~our~~Long-Lived ~~revenues.~~ Assets;”

~~International revenue, primarily from customers based in Japan and Europe,~~· unanticipated ~~accounted~~costs ~~for 36%, 31%~~ and ~~26% of our revenue in fiscal 2003~~liabilities, ~~2002~~including ~~and~~those ~~2001,~~that ~~respectively.~~may ~~The~~arise ~~increase in our international annual revenues~~ from ~~fiscal~~disputes ~~2002~~over tothe earnout ~~fiscal~~provision ~~2003 accounted for 92%~~ of ~~our total annual revenue increase for fiscal 2003. In~~ the ~~future,~~acquisition weagreement; ~~may further expand our international presence. As we continue to expand internationally, we are increasingly subject to risks of doing business internationally, including:~~ and

•· amortization expenses ~~longer~~related ~~payment~~to ~~cycles~~intangible ~~and~~assets ~~problems~~(other inthan ~~collecting accounts receivable;~~goodwill).

•Further, ~~seasonal~~we ~~reductions~~have inissued common ~~business~~stock ~~activity~~and ~~during~~paid cash for recent acquisitions and may have to pay cash, incur debt or issue equity securities to pay for any future acquisition, each of which could affect our financial condition or the ~~summer~~market ~~months~~price of our common stock. The sale of additional equity or debt to finance such future acquisitions could result in ~~Europe~~dilution to our stockholders. The incurrence of indebtedness would result in increased fixed obligations and ~~certain~~could also include covenants or other ~~parts~~restrictions ofthat ~~the~~would ~~world;~~impede our ability to manage our operations.

•Goodwill ~~unexpected~~and ~~changes~~other intangibles inresulting ~~regulatory~~from ~~requirements~~our ~~and~~acquisitions ~~tariffs;~~could become impaired.

•As ~~export~~of ~~controls~~July 31, ~~relating~~2005, our goodwill, developed and core technology and other intangibles amounted to $94,420,000, ~~encryption~~net of accumulated amortization. We ceased to amortize our existing goodwill upon our adoption of SFAS No. 142 in the beginning of fiscal 2003. We will amortize approximately $8,616,000, $7,980,000, $4,404,000, $2,190,000 and $2,756,000 for fiscal 2006, 2007, 2008, 2009 and thereafter, respectively, of developed and core technology and other ~~export~~intangibles. ~~restrictions;~~We expect, however, that amortization expense may increase significantly as a result of any future acquisitions. To the extent we do not generate sufficient cash flows to recover the net amount of any investment in goodwill and other intangibles recorded, the investment could be considered impaired and subject to write-off. We expect to record further goodwill and other intangible assets as a result of any future acquisitions we may complete. Future amortization of such other intangible assets or impairments, if any, of goodwill would adversely affect our results of operations in any given period.

•We ~~reduced~~depend ~~protection~~on ~~for~~key employees ~~intellectual~~in ~~property~~a ~~rights~~competitive inmarket ~~some~~for ~~countries;~~skilled personnel.

•The ~~political~~success of our business will continue to depend upon certain key technical and ~~economic~~senior management ~~instability~~personnel, including ~~continuing~~our ~~military~~president ~~conflicts~~and chief executive officer, chief operating officer, chief marketing officer, chief financial officer and other key senior executives, many of whom would be extremely difficult to replace. Competition for such personnel is intense, and we cannot be certain that we will be able to retain our existing key managerial, technical, or sales and marketing personnel. The loss of these officers and other or key employees in the ~~Middle~~future ~~East~~might adversely affect our business and ~~potential~~impede ~~health~~the ~~epidemics;~~achievement of our business objectives. We believe our ability to achieve increased revenue and to develop successful new products and product enhancements will depend in part upon our ability to attract and retain highly skilled sales and marketing and qualified product development personnel. In addition, competition for employees in our industry and geographic location could be intense. We may not be able to continue to attract and retain skilled and experienced personnel on acceptable terms. Our ability to hire and retain such personnel will depend in part upon our ability to raise capital or achieve increased revenue levels to fund the costs associated with such personnel. Failure to attract and retain key personnel may adversely affect our business.

•If ~~difficulties~~we inare ~~staffing~~unable to provide satisfactory and ~~managing~~high ~~international~~quality ~~operations;~~services through our professional services group, customer satisfaction and demand for our products will suffer.

•Many ~~fluctuations~~of our customers have been successful in ~~currency~~implementing ~~exchange~~our ~~rates,~~various ~~which~~technology initiatives without further provision of technical service. However, we dobelieve ~~not~~that ~~hedge~~building strong ~~against;~~relationships with our customers, as well as future growth in our product sales, depends on our ability to provide our customers with professional services, including customer support, training, consulting and initial

23 25

~~Table~~implementation and deployment of ~~Contents~~our products when necessary. We have an in-house professional services group and use international software development partners with a workforce that can perform these tasks and that also educates third-party systems integrators in the use of our products so that these systems integrators can provide these services to our customers. If we are unable to develop sufficient relationships with third-party systems integrators and other customers, unable to complete product implementations in a timely manner, or unable to provide customers with satisfactory and quality support, consulting, maintenance and other services, we could face customer dissatisfaction, damage to our reputation, decreased overall demand for our products and loss of revenue.

•We ~~potentially~~may ~~adverse~~have ~~tax~~to spend ~~consequences;~~substantial funds on sales and marketing in the future.

•To ~~nonrefundable~~increase ~~withholding~~awareness ~~taxes~~for our onnew ~~royalty~~and ~~income~~existing ~~from~~products, ~~customers~~technology and services, we may have to spend significantly more on sales and marketing in the future. We also plan to continue to leverage our relationships with industry leaders and to expand and diversify our sales and marketing initiatives to increase our sales to mobile carriers and enterprises. If our marketing strategy is unsuccessful, we may not be able to recover these expenses or even generate any revenue. We will be required to develop a marketing and sales campaign that will effectively demonstrate the advantages of our products, technology and services. We may also elect to enter into agreements or relationships with third parties regarding the promotion or marketing of our products, technology and services. We cannot be certain ~~countries~~that we will be able to establish adequate sales and marketing capabilities, that we will be able to enter into marketing agreements or relationships with third parties on financially acceptable terms, or that any third parties with whom we enter into such asarrangements ~~Japan~~will be successful in marketing and ~~Taiwan;~~promoting the products, technology and services offered by us.

•Our anproducts ~~adverse~~may contain ~~effect~~errors onthat ~~our~~could ~~provision~~subject ~~for~~us ~~income~~to ~~taxes~~product-related ~~based on the amount and mix of income from international customers; and~~claims.

•Our ~~exposure~~products may contain undetected errors or failures, which can result in loss of or delay in market acceptance and could adversely impact future operating results. Our insurance may not cover us for certain claims related to ~~risk~~product failures. Although our license agreements contain provisions limiting our liability in the case of damages ~~non-payment~~resulting byfrom ~~customers~~use of the software, in ~~other~~the ~~countries~~event ~~with~~of ~~highly~~such ~~inflationary~~damages, ~~economies~~we may be found liable, and in such event, such damages could materially affect our business, operating results and financial condition.

Our ~~international~~revenue from consumer sales ~~growth~~is ~~will~~subject beto ~~limited~~risks ifassociated ~~we,~~with in the ~~future,~~declining ~~are~~wired ~~unable to expand international sales channel~~PDA ~~management~~market and ~~support,~~reliance ~~customize~~on ~~products~~sales ~~for~~distribution ~~local markets, and develop relationships with international service providers, distributors and device manufacturers~~channels. ~~Even if we are able to expand international operations successfully, we cannot be certain that we will succeed in maintaining or expanding international market demand for our products.~~

~~Geographical~~While ~~expansion~~the market for converged mobile devices or smartphones and other wireless mobile devices has experienced growth recently, ~~including~~ the ~~establishment~~market for traditional personal digital assistants, or PDAs, has declined. The decline in traditional PDA sales had a direct impact on sales of ~~new~~our Intellisync products through the consumer and online channels, where sales orof ~~engineering~~our ~~operations~~synchronization software typically occur at the same time a PDA is purchased, or shortly thereafter. The increase in demand for smartphones and other such devices may ~~negatively~~not ~~affect~~offset the decline in traditional PDA sales. Our consumer sales are also dependent upon distribution and marketing channels outside our ~~engineering~~control. There are also a significant number of ~~operations~~our customers that purchase our products and ~~cause~~services usthrough other resellers, and we anticipate they will continue to ~~incur~~do ~~significant~~so ~~additional~~as ~~costs~~we expand our product offerings. Our sales, therefore, could also be negatively affected by disruptions in our relationships with resellers or disruptions in the relationships between our resellers and ~~expenses~~customers. Resellers may also choose not to emphasize our products to their customers. If we are unable to offset declining revenue from PDA-related software, or if we experience disruption in, or reduced selling efforts from, our distribution channels, our revenue derived from consumer sales would be adversely affected.

We recently established an engineering facility in Sofia, Bulgaria and in the future we may further expand our engineering or sales operations to other geographical areas within the United States and internationally. Our expansion may cause us to incur various costs and expenses, and may place a significant strain upon our operating and financial systems and resources that could materially adversely affect our financial results following such an expansion. We also face significant business risks related to the difficulty in assimilating new operations and the diversion of management’s attention from other business. Additionally, if we fail to align employee skills and populations with revenue and market requirements, it may have a material adverse impact on our business and operating results. Moreover, these newly established operations may not contribute significantly to our sales or earnings. 26

We may ~~become~~need ~~dependent~~to raise ~~upon~~additional ~~engineers~~capital ~~and~~in ~~other~~the ~~development~~future ~~partners located~~resulting in ~~other~~dilution ~~countries.~~to our stockholders.

We ~~established~~may aneed ~~global software development program~~ to ~~assist~~raise additional usfunds infor ~~the~~our ~~implementation~~business ofoperations ~~custom software~~ and ~~other~~to ~~technology~~execute ~~applications. We have shifted the composition of~~ our ~~engineering team to include several international software development partners, the largest~~business ~~of which is Romania-based SoftVision, Inc~~strategy. ~~Our~~We ~~future engineering development efforts~~ may ~~depend~~seek ~~on our ability~~ to ~~maintain~~sell ~~strategic~~additional ~~relationships~~equity ~~with~~or ~~these~~debt ~~international~~securities ~~partners.~~or ~~Our~~to ~~business relationships often consist of cooperative~~obtain ~~engineering~~an ~~programs,~~additional ~~joint~~credit ~~business seminars and cooperation in product development~~facility. ~~Many~~The sale of ~~these~~additional ~~relationships~~equity ~~may not be contractual and may depend on the continued voluntary cooperation. Divergence in strategy~~ or ~~change in focus by any of our~~convertible ~~partners~~debt ~~may~~securities ~~interfere~~could ~~with~~result ~~our ability to develop and support our products, which~~ in ~~turn~~additional ~~could~~dilution ~~harm~~to our ~~business~~stockholders. ~~Further,~~If additional iffunds ~~our~~are ~~partners~~raised ~~enter~~through ~~into~~the ~~strategic~~issuance ~~alliances~~of ~~with~~debt ~~other companies~~securities, ~~they~~these securities could ~~reduce~~have ~~their~~rights ~~support~~that ofare ~~our~~senior ~~products.~~to Weholders ~~may jeopardize~~of ~~our~~common ~~existing~~stock ~~relationships~~and could ifcontain wecovenants ~~enter~~that ~~into~~would ~~alliances~~restrict ~~with competitors of~~ our ~~strategic partners~~operations. ~~One~~Any oradditional financing ~~more of our partners~~ may ~~use~~not ~~the information they gain from their relationship with us to develop competing products. In addition, our operations could~~ be ~~adversely~~available ~~affected if any of these international partners is affected by volatile economic, political or military conditions~~ in ~~its~~amounts ~~country~~ or byon ~~various~~terms ~~restrictions~~acceptable ~~imposed~~to ~~by its country regarding the transfer of technology~~us, ~~the~~if ~~mobile computing industry and business in general~~at all.

We ~~are~~may ~~exposed~~not tohave sufficient ~~the~~cash ~~risk~~flow ofto ~~product~~make ~~returns~~payments ~~and~~on ~~rotations~~any ~~from~~debt ~~our~~we ~~distributors~~may ~~and value-added resellers, which are estimated and recorded by us as a reduction in sales~~incur.

~~Although~~Our weability ~~attempt~~ to ~~monitor~~pay principal and ~~manage~~interest ~~the~~on ~~volume~~our ofexisting ~~our~~and ~~sales~~any future indebtedness and to fund ~~distributors~~our planned capital expenditures depends on our future operating performance. Our future operating performance is subject to a number of risks and uncertainties ~~resellers,~~that ~~overstocking~~are byoften beyond our ~~distributors~~control, including general economic conditions and ~~resellers~~financial, orcompetitive ~~changes~~and inregulatory ~~their~~factors. ~~inventory~~Consequently, ~~level~~we cannot ~~policies~~assure oryou ~~practices~~that ~~may~~we ~~require~~will have sufficient cash flow to meet our liquidity needs, including making payments on existing and any future indebtedness.

24The fundamental change redemption rights in our outstanding convertible senior notes could discourage a potential acquirer.

~~Table~~If we engage in any transaction or event in connection with which all or substantially all of ~~Contents~~our common stock is exchanged for, converted into, acquired for or constitutes solely the right to receive, consideration which is not all or substantially all common stock listed on a United States national securities exchange or approved for quotation on the Nasdaq National Market or any similar United States system of automated dissemination of quotations of securities prices, or, if for any reason, our common stock is no longer listed for trading on a United States national securities exchange nor approved for trading on the Nasdaq National Market (a “fundamental change”), we may be required to redeem all or part of the notes and this could discourage a potential acquirer. However, this redemption feature is not the result of management’s knowledge of any specific effort to obtain control of us by means of a merger, tender offer or solicitation, or part of a plan by management to adopt a series of anti-takeover provisions. The term “fundamental change” is limited to specified transactions and may not include other events that might adversely affect our financial condition or business operations. Our obligation to offer to redeem the notes upon a fundamental change would not necessarily afford you protection in the event of a highly leveraged transaction, reorganization, merger or similar transaction involving us.

usWe ~~to accept returns above historical levels. In addition, the risk of product returns~~ may ~~increase~~not ifhave the ~~demand for new products we introduce is lower than~~ ~~what~~ability weto ~~anticipate~~raise at the ~~time~~funds ofnecessary introduction. Although we believe that we provide an adequate allowance for sales returns, actual sales returns could exceed our estimated recorded allowance. Any product returns in excess of recorded allowances could result in a material adverse effect on net revenues and operating results. As we introduce more products, timing of sales to ~~end~~finance ~~users~~the ~~and~~fundamental ~~returns to us of unsold products by distributors and resellers become more difficult to predict and~~change ~~could~~redemption ~~result~~option inassociated ~~material~~with ~~fluctuations~~our inoutstanding ~~quarterly~~convertible ~~operating~~senior ~~results~~notes.

If we ~~are~~engage ~~unable~~in any transaction or event in connection with which all or substantially all of our common stock is exchanged for, converted into, acquired for or constitutes solely the right to ~~provide~~receive ~~satisfactory~~consideration ~~and~~which ~~high~~is ~~quality~~not ~~services~~all ~~through~~or substantially all common stock listed on a United States national securities exchange or approved for quotation on the Nasdaq National Market or any similar United States system of automated dissemination of quotations of securities prices, or, if for any reason, our ~~professional~~common ~~services~~stock ~~group~~is no longer listed for trading on a United States national securities exchange nor approved for trading on the Nasdaq National Market, ~~customer~~we ~~satisfaction~~may ~~and~~be ~~demand~~required to redeem all or part of the notes. We may not have enough funds to pay the redemption price for all tendered notes. In addition, any credit agreement or other agreements relating to our ~~products~~indebtedness ~~will~~may contain ~~suffer~~provisions prohibiting redemption of the notes under certain circumstances, or expressly prohibit our redemption of the notes upon a designated event or may provide that a designated event constitutes an event of default under that agreement. Our failure to redeem tendered notes would constitute an event of default under the indenture, which might also constitute a default under the terms of our other indebtedness.

Many of our customers have been successful in implementing our various technology initiatives without further provision of technical service. However, we believe that building strong relationships with our customers, as well as future growth in our product sales, depends on our ability to provide our customers with professional services, including customer support, training, consulting and initial implementation and deployment of our products when necessary. We have an in-house professional services group and use international software development partners with a workforce that can perform these tasks and that also educates third-party systems integrators in the use of our products so that these systems integrators can provide these services to our customers. If we are unable to develop sufficient relationships with third-party systems integrators and other customers, unable to complete product implementations in a timely manner, or unable to provide customers with satisfactory and quality support, consulting, maintenance and other services, we could face customer dissatisfaction, damage to our reputation, decreased overall demand for our products and loss of revenue. 27

~~Future~~Our ~~sales~~certificate of incorporation, our ~~common stock~~bylaws, ~~including~~Delaware ~~the~~law ~~shares~~and ~~we intend to offer in connection with~~ our ~~proposed~~stockholder ~~acquisition~~rights ofplan ~~Synchrologic,~~contain provisions ~~may~~that ~~depress~~could ~~our~~discourage ~~stock~~a ~~price~~takeover.

IfProvisions of our certificate ~~current stockholders sell substantial amounts~~ of ~~common~~ ~~stock in the public market~~incorporation, ~~the market price of~~ our ~~common stock could fall. In addition~~bylaws, ~~these~~Delaware ~~sales~~law ofand ~~common stock could impede~~ our ~~ability~~stockholder rights toplan ~~raise~~contain ~~funds~~provisions atthat anmay ~~advantageous price~~discourage, delay or atprevent ~~all,~~a ~~through the sale of securities. We have~~merger ~~recently~~or ~~issued~~acquisition ~~shares~~or ofother ~~our~~change ~~common stock in connection with our acquisitions~~ of ~~the~~control ~~assets~~that ofa ~~Loudfire~~stockholder ~~and~~may ~~Spontaneous Technology, and we intend to issue additional shares of our common stock in our proposed merger with Synchrologic~~consider favorable.

~~As of September 30, 2003, we had approximately 49,648,504 shares of common~~EXECUTIVE ~~stock~~OFFICERS ~~outstanding.~~AND ~~Assuming~~DIRECTORS ~~that~~OF ~~that~~THE the maximum number of shares and options are issued and registered by us in connection with all of our recent acquisitions and our planned acquisition of Synchrologic, and assuming that all options to purchase common stock issuable under our stock plans are issued, an aggregate of approximately 28,432,000 additional shares of our common stock will become issued or issuable and freely tradeable within approximately 9 months following the closing of the proposed acquisition of Synchrologic, and an aggregate of 1,227,000 additional shares of our common stock will become issued or issuable and freely tradeable by the end of the 18 month period following such closing. Based on these assumptions, the following is an approximate list of the shares that could become freely tradeable and sold in the public market as a result of option exercises or stock issuances in connection with acquisitions during the first 9 months following the proposed acquisition: REGISTRANT

•The executive ~~3,643,000~~officers ~~shares~~and ~~immediately~~directors ~~upon~~of ~~exercise~~Intellisync as of ~~outstanding~~October 17, ~~option~~2005, are ~~grants;~~as follows:

• 1,121,000 additional shares on or about the effective date of the registration statements for the shares issuable in connection with the Spontaneous Technology and Loudfire transactions;

Name	Age	Position
Woodson Hobbs	58	President, Chief Executive Officer and Director
David P. Eichler	56	Chief Financial Officer
Clyde Foster	44	Chief Operating Officer
Robert Gerber	42	Chief Marketing Officer
Blair Hankins	51	Senior Vice President of Technology, Client Development
Scott Hrastar	41	Senior Vice President of Technology, Servers and Hosted Services
J. Keith Kitchen	42	Chief Accounting Officer and Principal Accounting Officer
Michael M. Clair	57	Chairman of the Board, the Compensation Committee and the Nomination and Governance Committee and Member of the Audit Committee and the Special Strategy Committee
Richard W. Arnold	57	Director, Chairman of the Audit Committee and the Special Strategy Committee and Member of the Nomination and Governance Committee
Kirsten Berg-Painter	45	Director and Member of the Compensation Committee
Keith A. Cornell	45	Director and Member of the Compensation Committee
Said Mohammadioun	58	Director
Terrence Valeski	58	Director and Member of the Audit Committee and the Nomination and Governance Committee

•Mr. Hobbs 3became the president and chief executive officer of the Company in June 2002. He has also served as a director of the Company since joining the company. Prior to joining the Company,~~786~~ Mr. Hobbs served as a consulting executive for the venture capital community,~~000~~ ~~additional~~and ~~shares~~as ona orstrategic ~~about~~systems consultant to large corporations. From 1995 to 2002, Mr. Hobbs held the ~~closing~~position of interim chief executive officer at the ~~proposed~~following ~~Synchrologic~~companies: ~~acquisition~~FaceTime Communications, a provider of instant messaging network-independent business solutions; Tradenable, Inc., an online escrow service company; BigBook, Inc., a pioneer in the online yellow pages industry; and I/PRO Corporation, a leader in quantitative measurement of Web site usage. From 1993 to 1994, Mr. Hobbs served as chief executive officer of Tesseract Corporation, a human resources outsourcing and software company. Mr. Hobbs spent the early part of his career with Charles Schwab Corporation, a securities brokerage and financial service company, as chief information officer and with Service Bureau, a division of International Business Machines Corporation, or IBM, the world’s largest information technology company, as one of the developers and the director of operations of Online Focus, an online credit union system that ultimately served over 20 million members.

• 2,000,000 additional shares in each of the first 8 months following the closing of the proposed acquisition, such that an aggregate of approximately 16 million additional shares would become freely tradeable in the 8 month period following such acquisition; and28

•Mr. Eichler 3became the chief financial officer of the Company in October 2005. Prior to joining the Company,~~882~~ Mr. Eichler was vice president of finance and chief financial officer of SiNett Corporation,~~000~~ ~~additional~~an ~~shares~~integrated atchip and software company in the wireless ~~end~~network market from September 2004 to October 2005. From October 2002 to September 2004, Mr. Eichler was vice president of ~~the~~finance ~~9th~~and chief ~~month~~financial ~~following~~officer of Tripath Technology, Inc. a fabless semiconductor company. Mr. Eichler was vice president of finance, chief financial officer and corporate secretary with Gadzoox Networks, Inc., a supplier of storage area networking equipment and software, from March 2001 to May 2002, vice president of finance and administration and chief financial officer with Alliance Semiconductor Corporation, a provider of memory and analog and mixed signal products, from December 1999 to March 2001 and vice president of finance and chief accounting officer with Adobe Systems, Inc., a maker of graphics and publishing software, from December 1997 through December 1998. Mr. Eichler is a certified public accountant and received his BS degree in Accounting from Northeastern University and MBA degree from the ~~proposed~~University ~~acquisition~~of California Los Angeles.

25Mr. Foster became the chief operating officer of the Company in July 2004 overseeing corporate operations and the sales of the Company’s products to leading enterprises, OEMs, and wireless operators. Mr. Foster previously served as senior vice president of sales and marketing since joining the Company in September 2002. From July 1999 to September 2002, Mr. Foster served as president and chief executive officer of eConvergent, Inc., a next-generation customer data integration software company. Prior to founding eConvergent, Mr. Foster established and led the Global Solutions Services division of Aspect Communications Corporation, a provider of business communications solutions from April 1996 to June 1999. Previously, Mr. Foster held a variety of sales and professional services management positions during his 14 years at IBM. Mr. Foster holds a BS degree in Mathematics from North Carolina State University.

~~Table~~Mr. Gerber became the chief marketing officer, overseeing all marketing, strategy, and e-commerce operations, of ~~Contents~~the Company in April 2004. Most recently, prior to joining the Company, Mr. Gerber served as managing director and group vice president of Carlson Marketing Group, a relationship marketing company. Mr. Gerber also held a variety of management and consulting positions at Digitas, Inc., an integrated marketing agency, from 2001 to 2004; Deloitte Consulting, a global management consulting firm, from 1992 to 1995; and American Express Company, a diversified worldwide travel, financial, and network services company, from 1987 to 1990. Mr. Gerber is the founder of and led @once, Inc., a private email messaging company, from 1995 to 2000. Previously, Mr. Gerber, served as chief marketing and strategy officer of Commtouch Software Limited, an email infrastructure company. Mr. Gerber holds a BS in engineering degree from the University of Virginia and an MBA degree from Harvard University.

WeMr. Hankins ~~may~~became ~~incur~~the ~~significant~~senior ~~stock-based~~vice ~~compensation~~president ~~charges~~of technology, ~~related~~client development, of the Company in October 2005 responsible for ensuring Intellisync’s wireless messaging products offer the best possible user experience for mobile professionals worldwide. Mr. Hankins previously served as vice president of engineering for Witness Systems, Inc, a leading provider of call center workforce optimization software from August 2004 to ~~certain~~September 2005. ~~stock~~From ~~options~~January 2003 to August 2004, Mr. Hankins was co-founder and served as chief technology officer of Ascendant Technology, ~~restricted~~LLC, ~~stock~~a inprovider ~~future~~of ~~periods~~industry-specific portal based solutions. From September 1989 to December 2002, Mr. Hankins served as a director of messaging solutions division of IBM Corporation. Mr. Hankins holds a BA degree in mathematics from Ohio State University and an MA degree in mathematics from University of Maryland.

~~Based~~Mr. Hrastar onbecame ~~certain accounting~~the ~~standards~~senior ~~involving~~vice ~~stock~~president ~~compensation~~of technology, weservers ~~have incurred~~ and ~~will~~hosted ~~continue~~services, toof ~~incur~~the ~~noncash~~Company ~~accounting~~in ~~charges~~August 2005. Mr. Hrastar ~~related~~previously toserved ~~stock~~as ~~options,~~chief ~~including~~technical ~~those~~officer ~~associated~~and ~~with~~vice president ~~our~~of ~~cancellation/regrant~~engineering ~~programs~~for ~~and~~AirDefense, ~~certain unvested~~Inc, ~~restricted shares exercised with~~ a ~~full~~wireless ~~recourse~~LAN ~~note.~~security ~~Those~~software ~~standards~~vendor ~~require~~from usOctober 2001 to ~~remeasure~~August 2005. From ~~compensation~~October 2000 ~~costs~~to ~~for~~October 2001, ~~such~~Mr. Hrastar ~~options~~was ~~each~~vice president ~~reporting~~of ~~period~~engineering ~~based~~with onLancope, Inc., ~~changes~~a innetwork ~~the~~security ~~market~~intrusion ~~value~~detection ofsoftware ~~the underlying common stock~~developer. ~~Depending~~From ~~upon movements in the market~~September 1997 ~~value~~to ~~of our common stock~~September 2000, ~~the~~Mr. Hrastar ~~variable~~served ~~accounting~~as ~~treatment~~vice president of ~~those~~research and ~~stock~~advanced ~~options~~technology ~~may~~division ~~result~~of ~~in significant additional non-cash compensation costs in future periods.~~

In addition, there has been increasing public debate about the proper accounting treatment for employee stock options. Although we are not currently required to record any compensation expense in connection with option grants that have an exercise price at or above fair market value, it is likely that future laws or regulations will require us to treat stock options as a compensation expense. Any such change in accounting treatment could result in our reporting increased operating expenses, which would decrease any reported net income or increase any reported net loss. 29

~~Geopolitical~~Pathfire, Inc., ~~economic~~a digital television distribution software-maker. Mr. Hrastar also served in a variety of engineering positions at Scientific-Atlanta, Inc., a provider of DVR and ~~military~~high-definition ~~conditions~~set-tops, ~~including~~from ~~terrorist attacks~~1993 to 1997 and Hitachi-Telecom ~~other~~(USA), Inc., ~~acts~~a developer and manufacturer of ~~war~~access systems, ~~may~~high-speed ~~materially~~optical networking equipment and ~~adversely~~customer ~~affect~~premises products for the ~~markets~~U.S. onmarket, ~~which~~from ~~our~~1998 ~~common~~to ~~stock~~1993. ~~trades,~~Mr. Hrastar ~~the~~holds ~~markets~~a B.S. degree in electrical ~~which~~engineering wefrom ~~operate,~~Ohio ~~our~~State ~~operations~~University and ~~our~~earned ~~profitability~~both M.S. and Ph.D. degrees in electrical engineering from the Georgia Institute of Technology.

~~Terrorist~~Mr. Kitchen became ~~attacks~~chief ~~and~~accounting ~~other~~officer ~~acts~~ of ~~war~~the Company upon his resignation as chief financial officer, ~~and~~effective ~~any~~upon ~~response~~the appointment of his successor. Mr. Kitchen has agreed to ~~them,~~remain ~~may~~with ~~lead~~the Company as the Company’s principal accounting officer for an undetermined amount of time following the appointment of his successor in order to ~~armed~~provide ~~hostilities~~transition services to the Company and ~~such~~the ~~developments~~newly appointed ~~would~~chief ~~likely~~financial ~~cause~~officer. ~~instability~~Mr. Kitchen inserved as chief financial officer ~~markets~~of the Company from July 2004 to October 2005. ~~Armed~~Mr. Kitchen also ~~hostilities~~served as vice president of finance and ~~terrorism~~administration ~~may~~and ~~directly~~chief accounting ~~impact~~officer ~~our~~from ~~facilities,~~August 2002 ~~personnel~~to July 2004 and ~~operations~~also ~~which~~as corporate ~~are~~controller ~~located~~since injoining the ~~United~~Company ~~States~~in ~~and~~February 2000 ~~other~~with ~~countries,~~the asCompany’s ~~well~~acquisition asof ~~those~~NetMind ofTechnologies, Inc., ~~our~~a ~~clients~~venture capital-funded Internet software company. ~~Furthermore,~~Mr. Kitchen ~~severe~~joined ~~terrorist~~NetMind ~~attacks~~in orJanuary 1999 as ~~acts~~its controller and later became its vice president of ~~war~~finance ~~may~~and administration ~~result~~from July 1999 to February 2000. Mr. Kitchen also served in ~~temporary~~a ~~halts~~variety of ~~commercial~~financial ~~activity~~management inpositions ~~the~~at ~~affected~~Intellect ~~regions~~Electronics, Inc., a ~~may~~provider ~~harm~~of ~~our~~electronic ~~reseller~~commerce ~~relationships~~and smart card solutions, from March 1997 to December 1998, and ~~may~~at ~~result~~Bausch & inLomb, Inc., ~~reduced~~a ~~demand~~global technology ~~for~~based ~~our~~healthcare company, from July 1990 to March 1997. Previously, ~~products~~Mr. Kitchen ~~These~~served ~~developments~~as ~~could~~certified ~~have~~public accountant with Ernst & Young LLP, a ~~material~~professional ~~adverse~~services ~~effect~~organization. onMr. Kitchen ~~our~~holds a bachelor of science in business administration degree from Bucknell University and ~~the~~is ~~trading~~a ~~price~~graduate of ~~our~~Northwestern ~~common~~University’s ~~stock.~~Kellogg Graduate School of Management.

~~There~~Mr. Mohammadioun ~~are~~became ~~risks~~a ~~associated~~director ~~with~~of ~~our~~the Company ~~long~~in December 2003 and most recently served as the Company’s chief technology officer from December 2003 to October 2005. From October 1996 to December 2003, Mr. Mohammadioun served as chief executive officer of Synchrologic, Inc., a provider of mobile infrastructure solutions, which was acquired by Intellisync in December 2003. Previously, Mr. Mohammadioun served as vice-~~term~~president ~~investments~~of ~~that~~Lotus ~~may~~Development Corporation, ~~adversely~~a ~~affect~~provider ~~our~~of ~~results~~knowledge management solutions, from 1990 to 1995. From 1983 to 1990, he was the chief executive officer of ~~operations~~Samna Corporation, a word-processing software company founded by Mr. Mohammadioun in 1983. Samna was sold to Lotus Development Corporation in 1990. Mr. Mohammadioun holds a master degree in electrical engineering from Georgia Institute of Technology and an MBA degree from Georgia State University.

~~Historically~~In October 2005, weMr. Mohammadioun ~~have made direct and indirect investments in privately held~~gave ~~companies.~~notice ~~We may continue~~ to ~~make strategic investments in~~ the ~~future.~~Company ~~There~~of ~~can~~his beintention noto ~~assurance~~resign ~~that~~as ~~our investments will bring us~~ a ~~return~~member onof ~~investment. In addition, because~~ the ~~strategic investments tend to be in small, start-up technology~~Company’s ~~companies~~Board ~~that~~of ~~are at risk for financial failure especially during an economic slowdown~~Directors, ~~there~~effective isas aof ~~greater risk that~~ the ~~investments~~end ~~might~~of behis ~~impaired.~~current ~~In fiscal 2003~~term, ~~for~~which ~~instance, we sold our limited partnership interest in a venture capital fund~~is ~~company~~scheduled ~~at a loss. The sale of the interest allowed us~~ to ~~avoid~~expire ~~commitments~~at ~~for further investments in equity instruments of various privately-held companies made through~~ the ~~venture~~Company’s ~~capital~~2005 ~~fund,~~annual ~~many~~meeting of ~~which had not generated adequate returns~~stockholders.

26Mr. Clair became a director of the Company in December 1994 and has served as chairman of the board of the Company since March 1995. Since June 1995, Mr. Clair has served as an independent financial consultant. Mr. Clair was a founder of SynOptics Communications (now Nortel Networks), a computer networking company, and from January 1987 to November 1992, served as vice president of sales and marketing and then as senior vice president of sales and customer service of SynOptics. Mr. Clair has more than 30 years of experience in data processing, data and voice communications and local area networking, as well as various wireless technologies. He spent the early part of his career with Tymshare, Inc., a computer time-sharing company, and ROLM, a manufacturer of digital PBX equipment, in a variety of sales and marketing positions. He holds a BS degree in business and an MBA degree from the University of Buffalo. Mr. Clair is a director of several private companies.

~~Table~~Mr. Arnold became a director of ~~Contents~~the Company in May 2004. Since June 2001, Mr. Arnold has served as founding partner of Committed Capital Proprietary Limited, a private equity investment company based in

~~Our stock price has historically been and may continue to be volatile, which may cause you to lose money and could lead to costly litigation against us that could divert our resources.~~ 30

~~Stock~~Sydney, ~~markets~~Australia. ~~have~~From ~~recently~~August 1999 to ~~experienced~~May 2001, ~~dramatic~~Mr. Arnold ~~price~~served ~~and~~as ~~volume~~executive ~~fluctuations,~~director ~~particularly for shares~~ of ~~technology~~Consolidated Press ~~companies.~~Holdings ~~These~~Limited, ~~fluctuations~~also ~~can~~a beprivate ~~unrelated~~investment tocompany ~~the~~based ~~operating~~in ~~performance of these companies~~Sydney. Previously, ~~Broad~~Mr. Arnold ~~market~~served ~~fluctuations~~as ~~may~~managing ~~reduce~~director ~~the market price~~ of ~~our~~TD ~~common~~Waterhouse ~~stock~~Australia, ~~and~~a ~~cause~~securities dealer; ~~you~~as tochief ~~lose~~executive ~~some~~officer orof ~~all~~Integrated ofDecisions ~~your~~and ~~investment~~Systems, Inc., an ~~These~~application ~~fluctuations~~software ~~may~~company; beas ~~exaggerated~~managing ifdirector ~~the trading volume~~ of ~~our~~Eagleroo ~~common stock is low. In addition~~Proprietary Limited, ~~due~~a tocorporate ~~the technology-intensive~~advisor ~~nature~~company; and ~~growth~~in ~~rate~~various ofcapacities ~~our~~with ~~business~~Charles Schwab & ~~and~~Company., Inc., ~~the~~a ~~mobile~~securities ~~computing~~and ~~synchronization~~financial ~~market~~services brokerage, ~~the~~including ~~market~~serving ~~price~~as ofchief ~~our~~financial ~~common~~officer ~~stock~~and ~~has~~as inexecutive ~~the~~vice president—Strategy ~~past~~ and ~~may~~Corporate inDevelopment. ~~the~~Mr. Arnold ~~future~~holds ~~rise~~a ~~and~~BS ~~fall~~ degree in ~~response~~psychology ~~to:~~from Stanford University.

•Ms. Berg-Painter ~~quarterly~~became ~~variations~~a director of the Company in ~~operating~~August 2001. ~~results;~~Since November 2000, Ms. Berg-Painter has served as an independent marketing consultant. From July 1998 to October 2000, Ms. Berg-Painter served as senior vice president of worldwide marketing at Clarify, Inc., an enterprise customer relationship management, or CRM, company. From 1989 to 1998, Ms. Berg-Painter served in various capacities with Aspect Communications Corporation, a provider of customer relationship portals, last serving as general manager and vice president of one of its product divisions. Previously, Ms. Berg-Painter served as director of product marketing for AST Research, Inc., a personal computer manufacturer, and as director of marketing for Syntellect, Inc., a provider of call-center technology and hosted service solutions. Ms. Berg-Painter began her career at IBM where she held various systems engineering and marketing positions. She holds a BA degree in business and economics from University of California, Los Angeles and attended business school at Norges Handelshøyskolen in Bergen, Norway.

•Mr. Cornell is ~~seasonal~~a ~~fluctuations~~UK onchartered ~~product~~director ~~sales;~~and became a director of the Company in May 2005. Since 2002, Mr. Cornell has served as chief executive officer of Empower Interactive Ltd., a private specialized messaging platform company working globally with mobile operators. From 2001 to 2002, Mr. Cornell served as president of British Telecom Wireless plc., a mobile telecommunications company, for its Europe operations and in the same position in its spin-off, O2. Between May and October 2001, he served as interim chief executive officer for British Telecom’s Viag Intercom unit in Germany. From 1999 to 2001, Mr. Cornell worked for Firstmark Communications, a Pan-European broadband company, as a senior vice president of business development. From 1995 to 1999, Mr. Cornell served in various capacities including as executive director and vice president of international operations with Vodafone Airtouch International, Ltd. Previously, Mr. Cornell served as director or senior manager for various companies including Airtouch Communications, Inc., a wireless communications company, and Marakon Associates, a value-based strategy consultancy firm. He holds a BS degree in engineering from Harvey Mudd College and an MBA degree from Carnegie Mellon University.

•Mr. Valeski became ~~announcements~~a director of ~~technological~~the ~~innovations~~Company in May 2005. From 2000 to 2005, Mr. Valeski served as chief executive officer and managing director of Eurotel Praha, a leading provider of wireless voice and data services in the Czech Republic. From 1997 to November 2000, Mr. Valeski served in various capacities with British Telecommunications plc (BT), a United Kingdom telecommunications company, as director for mobile marketing outside UK and later as chief operating officer and chief marketing officer for BT’s other divisions or joint ventures such as Telfort, Blu and BT Wireless in Holland and Italy. From 1994 to 1997, Mr. Valeski worked for Pacific Bell Mobile Services, a diversified telecommunications company, as a senior vice president and later as president and general manager. Previously, Mr. Valeski served as senior vice president of sales and marketing for various companies including Atari Corporation, a manufacturer of video games; Mattel, Inc., the world’s largest toy company; Teledyne WaterPik, Inc., a diversified manufacturing company; and J. Walter Thompson Company, a New York-based advertising agency. He holds an EA degree in liberal arts from the University of Arizona. Mr. Valeski is a director of several private companies.

~~• announcements of new software or services by us or our competitors;~~31

•ITEM ~~acquisitions~~2. ~~or strategic alliances by us or by our competitors;~~PROPERTIES

•At ~~changes~~July 31, 2005, inwe ~~financial~~leased ~~estimates~~the byfacilities ~~securities~~described ~~analysts; and~~below:

• other events beyond our control, including general market conditions.

Location	Function	Square Feet		Lease Expiration Date
*United States*
San Jose, CA	Corporate headquarters, administrative offices, engineering and sales and marketing	33,821	(1)	June 2006
Los Gatos, CA		15,000	(2)	August 2005
Santa Cruz, CA		20,924	(3)	May 2006
Solano Beach, CA	Administrative offices and sales and marketing	2,776		May 2006
Greenwich, CT	Administrative offices and sales and marketing	4,276		January 2008
Alpharetta, GA	Administrative offices, engineering, professional services and sales and marketing	22,409		December 2008
Salt Lake City, UT	Engineering	5,717		April 2006
*Europe*
Sofia, Bulgaria	Engineering and professional services	15,200		April 2007
Cologne, Germany	Sales	2,949		June 2007
Cluj-Napoca, Romania	Engineering and professional services	8,611		May 2009
Reading, United Kingdom	Sales	1,429		August 2007
*Asia-Pacific*
Canberra, Australia	Engineering	3,014		August 2008
Sydney, Australia	Administrative offices and sales and marketing	2,626		June 2006
Delhi, India	Engineering	5,656		July 2008
Tokyo, Japan	Administrative offices and sales and marketing	3,024		July 2006

~~The~~(1) 6% ~~stock market has experienced significant price and volume fluctuations that have particularly affected the trading prices~~ of ~~equity~~property ~~securities of many~~is ~~high~~subleased ~~technology companies. These fluctuations have often been unrelated or disproportionate~~ to ~~the~~a ~~operating~~third-party ~~performance~~for ~~of these companies. Furthermore, our operating results and prospects from time to time may be below~~ the ~~expectations~~duration of ~~public market analysts and investors. Any negative change in~~ the ~~public’s~~lease ~~perception of companies in the wireless communications market could depress our stock price regardless of our operating results~~term.

~~Recently,~~(2) Subleased ~~companies~~to ~~experiencing high volatility or significant drops in~~a ~~their~~third-party ~~stock~~for ~~prices have faced securities class action lawsuits when~~ the ~~market~~duration ~~price~~ of ~~a stock has been volatile. Holders of that stock have often instituted securities class action litigation against~~ the ~~company~~lease ~~that issued the stock when such stock declines~~term. If any of our stockholders brought such a lawsuit against us, we could incur substantial costs defending the lawsuit. The lawsuit could also divert the time and attention of our management. Further, any settlement of such a lawsuit could adversely affect us.

We(3) Available ~~depend on key employees in a competitive market~~ for ~~skilled personnel~~sublease.

The ~~success~~ ofproperties ~~our~~located ~~business~~in ~~will~~Solano ~~continue to depend upon certain key technical and senior management personnel~~Beach, ~~including~~California ~~our president~~ and ~~chief executive officer~~ Delhi, ~~Woodson~~India ~~Hobbs;~~were ~~senior~~leased ~~vice~~in ~~president~~May 2006 ~~of sales~~ and ~~marketing,~~July 2006 ~~Clyde~~for ~~Foster;~~the ~~chief~~employees ~~technology officer, John Stossel; vice president~~ of ~~finance~~our ~~and~~newly ~~chief~~acquired ~~accounting~~subsidiaries ~~officer, J. Keith Kitchen;~~ Tourmaline and ~~senior vice president of products and services~~PDAapps, ~~Mehdi Maghsoodnia, many of whom would be extremely difficult to replace~~respectively. ~~Following~~We ~~our proposed~~believe ~~acquisition of Synchrologic, we expect~~ that ~~Said~~these ~~Mohammadioun~~facilities ~~will~~are ~~become~~adequate ~~a key employee of Pumatech. Competition for such personnel is intense, and there can be no assurance that we will be able~~ to ~~retain our existing key managerial,~~ ~~technical,~~meet orthe ~~sales~~present and ~~marketing personnel. The loss of these officers and other or key employees in the~~ future ~~might~~operational ~~adversely~~requirements ~~affect our business and impede the achievement~~ of our ~~business~~newly ~~objectives~~acquired subsidiaries.

We ~~believe~~lease ~~our~~space ~~ability~~in toLos ~~achieve~~Gatos ~~increased revenues~~ and toSanta ~~develop~~Cruz, California ~~successful~~for ~~new~~offices ~~products~~that were closed as a result of the restructuring and ~~product~~cost reduction ~~enhancements~~plans ~~will~~we ~~depend~~implemented in ~~part~~previous ~~upon~~fiscal ~~our~~years. ~~ability~~Refer to ~~attract~~the discussions ~~and~~under ~~retain~~the ~~highly~~caption ~~skilled~~“Restructuring ~~sales~~ and ~~marketing~~Other Charges” ~~and~~set ~~qualified~~forth ~~product~~in ~~development~~Item ~~personnel.~~7, InPart II ~~addition,~~of ~~competition~~this Annual Report on Form 10-K for ~~employees~~more ininformation ~~our~~on ~~industry~~the ~~and geographic~~restructure ~~location~~charges ~~could~~related beto ~~intense~~these facilities. We have ~~may~~secured ~~not~~tenants befor ~~able~~some toof ~~continue~~our tovacated ~~attract~~facilities and ~~retain~~are ~~skilled~~actively marketing ~~and~~to sublet the remainder. We have experienced ~~personnel~~difficulties, onhowever, in ~~acceptable~~subletting ~~terms.~~our ~~Our~~vacated ~~ability~~office toin ~~hire~~Santa ~~and~~Cruz, ~~retain~~California ~~such~~because ~~personnel~~of ~~will~~the continuing ~~depend~~deterioration ~~upon~~of ~~our~~the ~~ability~~real toestate ~~raise~~markets ~~capital~~in orthat location.

27We believe that our existing facilities are sufficient to meet our present and future foreseeable needs. We do not anticipate difficulty in renewing existing leases as they expire or in finding alternative facilities.

~~Table of Contents~~32

~~achieve~~ITEM ~~increased revenue levels to fund the costs associated with such personnel~~3. ~~Failure~~LEGAL ~~to attract and retain key personnel will adversely affect our business.~~ PROCEEDINGS

~~Increasing~~On ~~government~~October 5, ~~regulation~~2005, ~~could~~Plaintiff ~~cause~~Spontaneous ~~demand~~Technology, Inc. served the Company with a complaint filed in the Third Judicial District Court, of Salt Lake County, State of Utah. In the Complaint, Plaintiff asserts a cause of action for ~~our~~breach ~~products~~of ~~and~~contract ~~services~~related to ~~grow~~the calculation ~~more~~of ~~slowly~~an orearnout topayment ~~decline~~in the Asset Purchase Agreement entered into between the parties on July 30, 2003. Plaintiff seeks compensatory damages in the amount of $673,750 and recovery of its attorneys’ fees and costs. We believe the action has no merit and are vigorously defending against it. We cannot estimate any possible loss at this time.

We are ~~subject~~party ~~not~~to ~~only~~various tolegal ~~regulations~~proceedings ~~applicable~~and toclaims, either ~~businesses~~asserted ~~generally~~or unasserted, ~~but~~which ~~also~~arise toin ~~laws~~the ordinary course of business, including proceedings and ~~regulations~~claims ~~directly~~that ~~applicable~~relate to ~~wireless~~acquisitions ~~and~~we ~~other~~have ~~mobile~~completed or ~~computing~~to ~~devices.~~companies ~~One~~we orhave ~~more~~acquired, ~~states~~commercial, oremployment ~~the~~and ~~federal~~other matters. While the ~~government~~outcome ~~could~~of ~~enact~~these ~~regulations~~matters ~~aimed~~cannot atbe ~~companies~~predicted ~~like~~with uscertainty, ~~which~~we ~~provide~~do ~~software~~not believe that ~~facilitates~~the ~~e-commerce~~outcome ~~and~~of ~~wireless~~any ~~communications.~~of ~~The~~these ~~likelihood~~claims or any of the ~~enactment~~above ofmentioned ~~regulation~~legal matters inwill ~~these~~have ~~areas~~a ~~will~~material ~~increase~~adverse aseffect ~~wireless~~on ~~and~~our ~~other~~consolidated ~~mobile~~financial ~~devices~~position, ~~become~~results ~~more~~of ~~pervasive~~operations or cash flow. ~~Any~~In ~~legislation~~accordance with generally accepted accounting principles, we ~~regulation~~make ora ~~taxation~~provision offor ~~electronic~~a ~~commerce~~liability ~~could~~when ~~dampen~~it is both probable that a liability has been incurred and the ~~growth~~amount of ~~wireless~~the ~~and~~loss ~~other~~can ~~mobile~~be ~~computing~~reasonably ~~devices~~estimated. IfThese provisions aare ~~reduction~~reviewed inat ~~growth~~least ~~occurs~~quarterly asand aadjusted ~~result~~to reflect the impacts of ~~these~~negotiations, ~~events~~settlements, ~~demand~~rulings, ~~for~~advice ~~our services,~~of ~~technologies~~legal counsel, and other information ~~products~~and ~~could~~events ~~decline~~pertaining ~~significantly.~~to ~~The~~a ~~adoption~~particular ofcase. ~~new~~Litigation ~~laws~~is inherently orunpredictable. ~~the~~However, ~~application~~we ofbelieve ~~existing~~that ~~laws~~we ~~may~~have ~~expose~~valid usdefenses with respect to ~~significant~~the ~~liabilities~~legal ~~and~~matters ~~additional~~pending ~~operational~~against ~~requirements~~Intellisync. It is possible, nevertheless, ~~which~~that ~~could~~our ~~decrease~~consolidated ~~the~~financial ~~demand~~position, ~~for~~cash flows or results ~~our~~of ~~services~~operations ~~and~~could ~~increase~~be ~~our~~affected ~~cost~~by the resolution of ~~doing~~one ~~business.~~or more of these contingencies.

~~We are~~Refer ~~dependent~~to onthe ~~non-exclusive~~discussion set ~~licenses~~forth ~~for~~in ~~certain~~Item ~~technology~~1 ~~included~~under inthe ~~our~~caption ~~products.~~“Risk Factors—We may be unable to ~~license~~adequately ~~such~~protect ~~technology~~our orproprietary itrights;” “Risk Factors—We may be subject to intellectual property infringement claims, bywhich ~~third~~are ~~parties.~~costly to defend and could limit our ability to use certain technologies in the future” and “Risk Factors—We have been, are and may in the future be involved in litigation that could result in significant costs to us.”

WeITEM ~~depend on development tools provided by a limited number of third-party vendors~~4. ~~Together~~SUBMISSION ~~with~~OF ~~application~~MATTERS ~~developers,~~TO weA ~~rely~~VOTE ~~primarily~~OF ~~upon~~SECURITY software development tools provided by companies in the PC and mobile computing device industries. If any of these companies fails to support or maintain these development tools, we will have to support the tools ourselves or transition to another vendor. Such maintenance or support of the tools or transition could be time consuming, could delay the product release and upgrade schedule and could delay the development and availability of third-party applications used in our products. If we fail to procure the needed software development tools or there is any delay in availability of third-party applications our ability to release, support and promote adoption of our products would be harmed. HOLDERS

~~Our~~No ~~commercial~~matters ~~success~~were ~~will~~submitted ~~also depend~~to ina ~~part~~vote onof ~~not infringing upon~~ the proprietary rights of others and not breaching technology licenses that cover technology used in our products. It is uncertain whether any third-party patents will require us to develop alternative technologies or to alter our products or processes, obtain licenses or cease activities that infringe on a third-partyCompany’s ~~intellectual property rights. If any such licenses are required, we may not be able to obtain such licenses on commercially~~ ~~favorable~~security ~~terms,~~holders ifduring atthe ~~all.~~fourth ~~Our~~quarter ~~failure~~of to obtain a license to any technology that we may require to commercialize our products and services could cause our business and prospects to suffer. Litigation may also be necessary to enforce any patents issued or licensed to us or to determine the ~~scope~~fiscal ~~and~~year ~~validity~~ended ~~of third-party proprietary rights~~July 31, 2005.

~~Our restructurings could result in customer and employee uncertainty and management distractions.~~ 33

We have undergone a number of restructurings in fiscal 2003, 2002, and 2001 involving, among other things, a substantial reduction in our worldwide workforce. Such reductions could result in customers or prospective customers deciding to delay or cancel their purchases of our products and services due to perceived uncertainty caused by the restructurings. There can be no assurance that we will not reduce or otherwise adjust our workforce again in the future or that the related transition issues associated with such reductions will not adversely affect our operations or customer perceptions in the future. This uncertainty could result in a lack of focus and reduced productivity by our remaining employees, including those directly responsible for revenue generation, which in turn may affect our revenue in the future. In addition, employees directly affected by the reductions may seek future employment with our business partners, customers, or even our competitors. Although all employees are required to sign a confidentiality agreement with us at the time of hire, there can be no assurances that the confidential nature of our proprietary information will be maintained in the course of such future employment. PART II

28ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

~~Table~~Intellisync’s common ofstock ~~Contents~~began trading on the Nasdaq National Market on December 5, 1996, under the symbol “PUMA.” We changed our name to Intellisync Corporation on February 17, 2004, at which time our ticker symbol changed to “SYNC.” The following table sets forth the high and low closing prices for our common stock as reported on the Nasdaq National Market from August 1, 2003, through July 31, 2005.

Our products may contain product errors that could subject us to product liability claims.

	High		Low
*Fiscal 2004*
First fiscal quarter (August 1, 2003 to October 31, 2003)	$	6.99	$	3.05
Second fiscal quarter (November 1, 2003 to January 31, 2004)	$	7.51	$	3.98
Third fiscal quarter (February 1, 2004 to April 30, 2004)	$	4.65	$	2.26
Fourth fiscal quarter (May 1, 2004 to July 31, 2004)	$	3.35	$	1.64
*Fiscal 2005*
First fiscal quarter (August 1, 2004 to October 31, 2004)	$	3.05	$	1.75
Second fiscal quarter (November 1, 2004 to January 31, 2005)	$	2.31	$	1.77
Third fiscal quarter (February 1, 2005 to April 30, 2005)	$	3.66	$	2.06
Fourth fiscal quarter (May 1, 2005 to July 31, 2005)	$	3.07	$	2.43

~~Our~~As ~~products~~of ~~may~~October 10, ~~contain~~2005, ~~undetected~~there ~~errors~~were orapproximately ~~failures~~433 ~~when~~stockholders ~~first~~of ~~introduced~~record orof asour ~~new~~common ~~versions~~stock ~~are~~and ~~released~~67,255,129 ~~which~~shares ~~can result in loss~~ of orcommon stock ~~delay in market acceptance and could adversely impact future operating results~~outstanding. WeAdditionally, doon ~~not~~such ~~currently~~date ~~maintain~~the ~~product~~last ~~liability~~reported ~~insurance.~~closing ~~Although our~~sale ~~license~~price ~~agreements~~of ~~contain provisions limiting~~ our ~~liability~~common instock, ~~the~~as ~~case~~reported ofby ~~damages resulting from use of~~ the ~~software,~~Nasdaq inNational ~~the event of such damages~~Market, wewas ~~may be found liable, and in such event, such damages could materially affect our business,~~$4.27 ~~operating~~per ~~results and financial condition~~share.

We ~~may~~have ~~need to~~never ~~raise~~paid ~~additional~~dividends on our capital instock. ~~the~~We currently intend to retain any future ~~resulting~~earnings infor ~~dilution~~use toin our ~~stockholders.~~business and do not anticipate paying any cash dividends in the foreseeable future.

WeThe ~~may~~disclosure ~~need~~required toby Item ~~raise~~201(d) of ~~additional~~Regulation ~~funds~~S-K ~~for~~is ~~our~~incorporated ~~business~~by ~~operations~~reference ~~and~~ to ~~execute~~the ~~our~~definitive proxy ~~business~~statement ~~strategy.~~for Weour ~~may~~2005 ~~seek~~Annual toMeeting ~~sell~~of ~~additional~~Stockholders ~~equity or debt securities or~~ to ~~obtain~~be anfiled ~~additional credit facility. The sale of~~with ~~additional~~the ~~equity~~SEC orpursuant ~~convertible debt securities could result in additional dilution~~ to ~~our~~Regulation ~~stockholders.~~14A Ifno ~~additional~~later ~~funds~~than ~~are~~120 ~~raised~~days ~~through~~after the ~~issuance~~end of ~~debt~~the fiscal ~~securities,~~year ~~these~~covered ~~securities~~by ~~could~~this ~~have~~form ~~rights~~under ~~that~~the ~~are~~caption ~~senior to holders of common~~“Equity ~~stock~~Compensation ~~and~~Plan ~~could contain covenants that would restrict our operations~~Information. ~~Any additional financing may not be available in amounts or on terms acceptable to us, if at all.~~ ”

~~Foreign exchange fluctuations could decrease our revenues or cause us to lose money, especially since we do not hedge against currency fluctuations.~~ 34

ToITEM ~~date, the majority of our customers have paid for our products and services in United States dollars~~6. ~~For~~SELECTED ~~fiscal~~FINANCIAL years 2003, 2002 and 2001, costs denominated in foreign currencies were nominal and we had minimal foreign currency losses during those periods. However, we believe that in the future an increasing portion of our costs will be denominated in foreign currencies as we increase operations in Europe and open offices in other countries. We currently do not engage in foreign exchange hedging activities and, although we have not yet experienced any material losses due to foreign currency fluctuation, a small portion of our international revenues are currently subject to the risks of foreign currency fluctuations, and these risks will increase as our international revenues increase. DATA

~~System~~The ~~failures~~following orselected consolidated financial data are ~~accidental~~derived orfrom ~~intentional~~our ~~security~~consolidated ~~breaches~~financial ~~could~~statements. ~~disrupt~~Historical results should not be taken as indicative of the results that may be expected for any future period. This summary of our ~~operations,~~consolidated ~~cause~~financial usinformation for fiscal years 2001 to ~~incur~~2005 ~~significant~~should ~~expenses~~be read along with our audited consolidated financial statements contained in this Annual Report on Form 10-K. The summarized financial information, ~~expose~~other usthan tothe ~~liability~~statements of operations data for fiscal 2001 and ~~harm~~2002 ~~our~~and ~~reputation.~~the balance sheets data at July 31, 2001, 2002 and 2003, was taken from these financial statements.

~~Our~~This ~~operations~~summary ~~depend~~of ~~upon~~consolidated ~~our~~financial ~~ability to maintain and protect our computer systems and core business applications, which~~statements ~~are~~includes ~~located~~the ataccounts our offices, as well as hosted by third-party vendors. Although we are taking various precautions to maintain and protect our systems, they could still be vulnerable to damage from break-ins, unauthorized access, vandalism, fire, floods, earthquakes, power loss, telecommunications failures and similar events. We also maintain insurance against break-in, unauthorized access, vandalism, fires, floods, earthquakes and general business interruptions. The amount of ~~coverage, however,~~Intellisync ~~may~~Corporation ~~not be adequate in any particular case,~~ and ~~will not likely compensate us for all the damages caused by these or similar events. In addition, while we put various security measures in place to detect any unauthorized access to~~ our ~~computers~~ ~~and~~wholly computer networks, we may be unable to prevent computer programmers or hackers from penetrating our network security or creating viruses to sabotage or otherwise attack our computer networks from time to time. A breach of our securityowned ~~could seriously damage our reputation, which would harm our business~~subsidiaries. In addition, because a hacker who penetrates our network security could misappropriate proprietary information or cause interruptions in our services, we might be required to expend significant resources to protect against, or to alleviate, problems caused by hackers. We might also face liability to persons harmed by misappropriation of secure information if it is determined that we did not exercise sufficient care to protect our systems.

29In addition to the effect of acquisitions, there were a number of other items that affected the comparability of this information:

~~Table~~· The results of ~~Contents~~operations for fiscal year 2005 include the effects of charges recorded during the fourth quarter of fiscal 2005, including $505,000 for the settlement of NCR Corporation’s patent infringement claim, which is more fully described in note 9 to the consolidated financial statements set forth under Part IV, Item 15 of this Annual Report on Form 10-K., and various legal costs. The results of operations for fiscal 2005 also include $220,000 for purchased in-process research and development in connection with the acquisition of PDAapps, Inc. We also recorded a $25,000 recovery of non-cash stock compensation during fiscal 2005 in connection with certain stock options accounted for using variable accounting.

~~Future~~· The results ~~changes~~of operations for fiscal year 2004 include the effect of charges including $600,000 for facilities cost adjustment relating to restructuring actions implemented in ~~accounting~~a ~~standards~~prior oryear, ~~our~~$253,000 ~~interpretation~~for severance costs, and $76,000 for operating expenses relating to a potential acquisition that was subsequently abandoned. We recorded a charge of ~~current~~$3,667,000 ~~standards~~for purchased in-process research and development in connection with the acquisitions of Spontaneous Technology, Inc., ~~particularly~~and acquisition of Synchrologic, Inc., ~~changes~~and ~~affecting~~Identity ~~revenue~~Systems ~~recognition~~(formerly Search Software America Pty. Ltd., ~~could~~or ~~cause~~SSA). ~~unexpected~~An additional ~~revenue~~charge ~~fluctuations~~of $745,000 was incurred in connection with certain stock options accounted for using variable accounting. A net gain of $1,576,000 which resulted from the settlement of patent litigation with Extended Systems was also recorded in fiscal 2004.

~~Future~~· The results ~~changes~~of inoperations ~~accounting~~for ~~standards~~fiscal oryear ~~our~~2003 ~~interpretation~~include the effect of ~~current~~charges including ~~standards~~$379,000 ~~particularly~~for ~~those~~operating ~~affecting~~expenses ~~revenue~~relating ~~recognition~~to a potential acquisition that was subsequently abandoned, ~~could~~$257,000 ~~require~~for usseverance and separation costs, and $159,000 for facilities cost adjustment relating to ~~change~~restructuring ~~our~~actions implemented ~~accounting~~in ~~policies~~the prior year. ~~These~~We ~~changes~~also ~~could~~recorded ~~cause~~a $60,000 recovery of lease ~~deferral~~payments deemed uncollectible in the prior year. Additional charges incurred in fiscal 2003 include an other-than-temporary impairment of ~~revenue~~investments ~~recognized~~of $2,394,000, non-cash stock compensation expense of $1,585,000 in ~~current~~connection with ~~periods~~certain stock options and restricted stock accounted for using variable accounting and $157,000 in connection with the options granted by NetMind Technologies, Inc. prior to ~~subsequent~~our ~~periods~~acquisition orof ~~accelerate~~NetMind, ~~recognition~~and purchased in-process research and development of ~~deferred~~$406,000 ~~revenue~~in toconnection ~~current~~with ~~periods.~~our acquisition of Starfish Software, Inc.

~~Corporate~~· The results ~~governance~~of ~~scandals~~operations for fiscal year 2002 include the effect of charges including $5,595,000 for severance and ~~new~~separation ~~legislation~~costs, ~~could~~facilities consolidation ~~increase~~and assets held for disposal associated with the cost reduction program implemented during the third and fourth quarters of fiscal 2002 and $5,249,000 for write-downs of impaired intangibles and assets related to our terminated online operations. We recorded a charge for impairment of certain excess software development tools, a provision for rent reimbursement deemed uncollectible and an other-than-temporary impairment of investments of approximately $580,000, $330,000 and $380,000, respectively. Non-cash stock

As a result of recent corporate governance scandals and the legislative and litigation environment resulting from those scandals, the costs of being a public company in general are expected to increase in the near future. New legislation, such as the recently enacted Sarbanes-Oxley Act of 2002, will have the effect of increasing the burdens and potential liabilities of being a public reporting company. This and other proposed legislation may increase the fees of our professional advisors and our insurance premiums. 35

~~Our~~compensation ~~certificate~~expense of ~~incorporation~~ $367,000 ~~our~~was ~~bylaws,~~also ~~Delaware~~recorded ~~law~~in ~~and~~connection ~~our stockholder~~with ~~rights~~the ~~plan~~options ~~contain~~granted ~~provisions~~by ~~that~~NetMind prior ~~could~~to ~~discourage~~our aacquisition ~~takeover.~~of NetMind.

~~Provisions~~· The results of ~~our~~operations for ~~certificate~~fiscal year 2001 include the effect of ~~incorporation~~a $1,417,000 ~~our~~charge ~~bylaws~~for severance costs, ~~Delaware~~facilities ~~law~~consolidation and ~~our~~assets ~~stockholder~~held ~~rights~~for ~~plan~~disposal ~~contain~~associated ~~provisions~~with the ~~that~~cost ~~may~~reduction ~~discourage,~~programs ~~delay~~implemented orin ~~prevent~~the athird ~~merger~~and orfourth ~~acquisition~~quarters orof fiscal 2001. Additional charges were incurred for write-downs of impaired intangibles and other ~~change~~assets of ~~control~~$10,614,000 ~~that~~and direct investments of a$1,180,000, ~~stockholder~~and ~~may~~non-cash ~~consider~~stock ~~favorable.~~compensation expense of $1,058,000 in connection with the options granted by NetMind prior to our acquisition of NetMind and the stock option regrant program implemented in July 2001.

Condensed ~~Executive~~Consolidated ~~Officers~~Statements ~~and~~of ~~Directors~~Operations ofData ~~the~~(in ~~Registrant~~thousands, except per common share data)

The executive officers and directors of Pumatech as of September 30, 2003, are as follows:

	Year Ended July 31,
	2005			2004			2003			2002			2001
Revenue	$	59,498		$	42,308		$	24,860		$	22,940		$	38,202
Net loss	$	(13,414	)	$	(9,455	)	$	(7,736	)	$	(34,518	)	$	(41,818	)
Basic and diluted net loss per common share	$	(0.20	)	$	(0.16	)	$	(0.17	)	$	(0.77	)	$	(0.96	)

Name	Age	Position
Woodson Hobbs	56	President, Chief Executive Officer and Director
Clyde Foster	42	Senior Vice President of Sales and Marketing
J. Keith Kitchen	40	Vice President of Finance and Administration and Chief Accounting Officer
Mehdi Maghsoodnia	37	Senior Vice President of Products and Services
Charles E. Runge	63	Vice President of Intellectual Property Development
John W. Stossel	39	Chief Technology Officer
Michael M. Clair	55	Chairman of the Board and Compensation Committee and Member of the Audit Committee
Kirsten Berg-Painter	43	Director and Member of the Audit Committee and Compensation Committee
Michael J. Praisner	57	Director, Chairman of the Audit Committee and Member of the Compensation Committee

Condensed Consolidated Balance Sheets Data (in thousands)

Mr. Hobbs became the president and chief executive officer of Pumatech in June 2002. He has also served as a director of Pumatech since joining the company. Prior to joining Pumatech, Mr. Hobbs served as a consulting executive for the venture capital community, and as a strategic systems consultant to large corporations. From 1995 to 2002, Mr. Hobbs held the position of interim chief executive officer at the following companies: FaceTime Communications, a provider of instant messaging network-independent business solutions; Tradenable, Inc., an online escrow service company; BigBook, Inc., a pioneer in the online yellow pages industry; and I/PRO Corporation, a leader in quantitative measurement of Web site use. From 1993 to 1994, Mr. Hobbs served as chief executive officer of Tesseract Corporation, a human resources outsourcing and software company. Mr. Hobbs spent the early part of his career with Charles Schwab Corporation, a securities brokerage and financial service company, as chief information officer and with Service Bureau, a division of

	July 31,
	2005		2004		2003		2002		2001
Cash, cash equivalents and short-term investments	$	38,852	$	53,648	$	27,159	$	34,431	$	48,908
Working capital	$	38,068	$	51,848	$	25,173	$	28,099	$	44,489
Total assets	$	160,793	$	170,354	$	41,167	$	47,312	$	78,934
Long-term obligations	$	60,880	$	61,229	$	921	$	1,991	$	—
Total stockholders’ equity	$	82,211	$	94,391	$	31,796	$	34,884	$	68,192

30Summary Condensed Quarterly Data (unaudited, in thousands, except per common share data)

	Three Months Ended
	July 31,			April 30,			Jan 31,			Oct 31,			July 31,			April 30,			Jan 31,			Oct 31,
	2005			2005			2005			2004			2004			2004			2004			2003
Revenue	$	15,703		$	15,237		$	16,256		$	12,302		$	13,282		$	11,007		$	10,003		$	8,016
Cost of revenue	3,833			3,723			3,693			3,497			3,490			3,227			2,197			1,787
Gross profit	11,870			11,514			12,563			8,805			9,792			7,780			7,806			6,229
Operating expenses	15,723			15,315			13,104			12,013			11,148			11,396			11,148			8,509
Operating loss	$	(3,853	)	$	(3,801	)	$	(541	)	$	(3,208	)	$	(1,356	)	$	(3,616	)	$	(3,342	)	$	(2,280	)
Net loss	$	(4,573	)	$	(4,361	)	$	(973	)	$	(3,506	)	$	(1,758	)	$	(2,184	)	$	(3,252	)	$	(2,261	)
Basic and diluted net loss per common share	$	(0.07	)	$	(0.07	)	$	(0.01	)	$	(0.05	)	$	(0.03	)	$	(0.03	)	$	(0.06	)	$	(0.05	)
Shares used in computing basic and diluted net loss per common share	66,635			66,523			65,076			64,418			64,070			63,859			54,475			48,266

International Business Machines Corporation, the world’s largest information technology company, as one of the developers and the director of operations of Online Focus, an online credit union system that ultimately served over 20 million members. 36

~~Mr.~~ITEM ~~Foster became the senior vice president of sales and marketing of Pumatech in September 2002~~7. ~~From~~MANAGEMENT’S ~~July~~DISCUSSION ~~1999~~AND toANALYSIS ~~September~~OF ~~2002,~~FINANCIAL ~~Mr.~~CONDITION ~~Foster~~AND ~~served~~RESULTS asOF president and chief executive officer of eConvergent, Inc., a next-generation customer data integration software company. Prior to founding eConvergent, Mr. Foster served in a variety of management positions at Aspect Communications Corporation, a provider of business communications solutions, from April 1996 to June 1999, last serving as a corporate officer and vice president of its Global Solutions Services division. Previously, Mr. Foster held a variety of sales and professional services management positions during his 14 years at IBM. Mr. Foster holds a BS degree in Mathematics from North Carolina State University. OPERATIONS

~~Mr.~~The ~~Kitchen~~following ~~became~~discussion ~~the~~includes ~~vice~~a ~~president~~number of forward-looking ~~finance and administration and chief accounting officer of Pumatech in August 2002~~statements. ~~Mr.~~You ~~Kitchen~~should ~~previously~~read ~~served~~this assection ~~corporate controller since joining Pumatech~~ in ~~February~~ ~~2000~~conjunction with the ~~Pumatech’s~~cautionary ~~acquisition~~language ofapplicable ~~NetMind~~to ~~Technologies,~~such ~~Inc., a venture~~forward-looking ~~funded~~statements ~~Internet~~described above ~~software company. Mr. Kitchen joined NetMind~~ in ~~January~~Item ~~1999~~1 asfound ~~its controller and later became its vice president of finance and administration from July 1999 to February 2000. Mr. Kitchen also served~~ in aPart I ~~variety~~ of ~~financial~~this ~~management~~Annual ~~positions~~Report aton ~~Intellect Electronics, Inc~~Form 10-K., You ashould ~~provider~~not ofplace ~~electronic~~undue ~~commerce~~reliance ~~and~~on ~~smart~~these ~~card~~forward-looking ~~solutions~~statements, ~~from March 1997 to December 1998, and at Bausch &~~which ~~Lomb,~~speak ~~Inc.,~~only ~~a global technology based healthcare company, from July 1990 to March 1997. Previously, Mr. Kitchen served~~ as ~~certified~~of ~~public~~the ~~accountant~~date ~~with~~of ~~Ernst~~this &Annual ~~Young~~Report ~~LLP,~~on ~~a professional services organization~~Form 10-K. ~~Mr.~~We ~~Kitchen holds a bachelor of~~undertake ~~science~~no inobligation ~~business~~to ~~administration~~release ~~degree~~publicly ~~from~~any ~~Bucknell~~revisions ~~University~~to ~~and~~the isforward-looking statements aor ~~graduate~~reflect ofevents ~~Northwestern~~or ~~University’s~~circumstances ~~Kellogg~~after ~~Graduate~~the ~~School~~date of ~~Management.~~this document.

~~Mr.~~Business Maghsoodnia became the senior vice-president of products and services of Pumatech, directing Pumatech’s product marketing, product development and solution services in North America, Europe and Asia, in April 2003. From January 1999 to April 2003, Mr. Maghsoodnia served as chief operating officer and chief technical officer of FaceTime Communications. Prior to FaceTime, Mr. Maghsoodnia held a variety of executive management positions in the areas of product development, product marketing, professional services, information technology and operations in companies such as Presidio Systems, Inc., a leading provider of distributed clinical data-collection systems (later acquired by Domain Pharma/ClinSoft Corporation), Metaphor Computer Systems, Inc., a business intelligence and data warehousing firm (later acquired by IBM), Diba, Inc., a leading supplier of information appliance technology (later acquired by Sun MicroSystems, Inc.) and AT&T Corporation, a voice and data communications service provider. Mr. Maghsoodnia received his degree in Electrical Engineering and Computer Science from University of California, Berkeley. Overview

~~Mr.~~We ~~Runge~~develop, ~~became the~~market ~~vice~~and ~~president~~support ofdesktop, ~~intellectual~~enterprise ~~property~~and mobile ~~development~~carrier-class ofsoftware ~~Pumatech~~that inenables ~~December 2002~~consumers, ~~responsible~~business ~~for~~executives ~~collaborating~~and information ~~with~~technology ~~standards~~professionals ~~bodies~~ to ~~help~~extend ~~drive~~the ~~interoperability~~capabilities of ~~Pumatech software with other mobile and wireless technologies; broadening~~enterprise ~~Pumatech’s~~groupware ~~extensive portfolio of technology patents;~~ and ~~establishing~~vertical ~~relationships~~applications, ~~with~~data-enabled ~~independent~~mobile ~~software~~devices ~~vendors (ISVs), corporations,~~ and ~~standards bodies for incorporating Pumatech’s patents into their technologies. Prior to~~other ~~Pumatech,~~personal ~~since~~communication ~~1987, Mr~~platforms. ~~Runge~~The ~~served~~primary assoftware ~~principal~~applications ofwe developed ~~Certes Group, a product management consulting~~ and ~~interim~~marketed ~~executive~~include ~~management service firm. Mr. Runge also served as vice~~push-~~president~~email, ofdata ~~marketing~~synchronization ~~for~~and ~~Ryan McFarland Corporation (now part of~~systems ~~Liant~~management ~~Software Corporation), a~~ software. ~~firm~~Our ~~specializing in~~ software ~~development~~also ~~tools,~~enables ~~from~~organizations ~~1985~~ to ~~1987; was director of software development at both ONYX + IMI~~search, ~~Inc.~~find, match ~~one~~and ofsynchronize ~~the~~identity ~~first~~data ~~manufacturers~~within oftheir ~~UNIX~~computer systems, ~~from 1981 to 1985;~~ and ~~was a~~network ~~founder of National Semiconductor’s Systems Division, a pioneer in supermarket scanning systems, from 1971 to 1981~~databases. Previously, Mr. Runge held various management positions with Fairchild Systems Technology, a manufacturer of leading edge semiconductor device testers, and the US Atomic Energy Commission, a predecessor agency to the US Department of Energy. Mr. Runge holds a BS degree from Iowa State University.

31We have organized our operations into a single operating segment encompassing the development, marketing and support of software and services that provide synchronization, wireless messaging, mobile application development, database application/device management, real-time remote information access, secure VPN, and identity synchronization capabilities.

~~Table~~We oflicense ~~Contents~~our software products directly to corporations, mobile carriers, original equipment manufacturers, or OEMs, and business development organizations worldwide. In addition, we sell our retail products through several distribution channels both in the United States and internationally, including major distributors, resellers, computer dealers, retailers and mail-order companies. Internationally, we are represented by over 150 distributors, resellers and retailers in North America, Europe, the Asia-Pacific region, South America and Africa.

~~Mr.~~One ~~Stossel~~component ~~became chief technology officer~~ of ~~Pumatech~~our inbusiness ~~April~~strategy ~~2003.~~is ~~Mr.~~to ~~Stossel most~~enhance ~~recently~~stockholder ~~served~~value asthrough ~~vice~~the ~~president~~acquisition of ~~professional~~companies ~~services from July 2000 to February 2002~~ and ~~also~~technologies asthat ~~vice~~we can ~~president~~leverage ~~of engineering from February 2002~~ to ~~April~~improve ~~2003.~~our ~~From~~strategic ~~February~~market ~~1999~~position ~~to July 2000, Mr. Stossel served as founder~~ and ~~president~~growth ~~of Dry~~potential ~~Creek Software LLC, a mobile computing professional services firm he founded~~ in both ~~February~~emerging ~~1999~~and ~~which~~established ~~was acquired by Pumatech in July 2000~~technologies. ~~Prior~~Our torecent ~~founding Dry Creek~~acquisitions, ~~Mr. Stossel served as vice president of engineering of Pumatech from July~~together ~~1997~~with toour ~~January~~internal ~~1999.~~development ~~Mr.~~efforts, ~~Stossel~~have ~~was~~been ~~also~~aimed ~~founder~~at ~~and~~expanding ~~chief~~our ~~executive officer~~ focus from ~~January~~cabled ~~1994~~synchronization to ~~July~~synchronization ~~1997~~for ofwireless ~~RealWorld~~handhelds, smartphones, ~~Solutions~~laptops ~~which provided enterprise class software enabling handheld devices to access data over the Internet~~ and ~~wireless networks. RealWorld was acquired by Pumatech in July 1997. Previously~~tablets, ~~Mr.~~where ~~Stossel held~~ a ~~variety~~number of ~~management~~industry ~~and~~analysts, ~~engineering~~such ~~positions~~as International atData ~~Apple Computer~~Corporation, ~~Inc.,~~or ~~a personal computing company~~IDC, ~~and~~predict ~~Charles~~future ~~Schwab & Co~~growth., ~~Inc.,~~For andetails ~~online brokerage~~on ~~firm.~~our ~~Mr.~~recent ~~Stossel~~acquisitions, isrefer ato ~~dual-degree graduate of~~ the ~~University~~discussion ofunder ~~Pennsylvania and holds a BS degree in Economics from~~ the ~~Wharton~~caption ~~School~~“Acquisitions” ~~along~~set ~~with~~forth aunder ~~BAS~~Liquidity and ~~concentrating~~Capital inResources ~~Electrical Engineering~~below.

~~Mr.~~We ~~Clair~~intend ~~became~~to acapitalize ~~director~~on ofthe ~~Pumatech~~continued ingrowth ~~December 1994 and has~~in ~~served~~demand asfor ~~chairman~~wireless ofservices and the ~~board~~related ofinfrastructure ~~Pumatech~~required, ~~since~~including hosting, ~~March~~application ~~1995.~~and ~~Since~~other ~~June~~related ~~1995~~services, ~~Mr.~~to ~~Clair~~support ~~has~~that ~~served~~growth. asAs such, anmaintaining ~~independent~~and ~~financial~~cultivating ~~consultant.~~relationships ~~Mr.~~with ~~Clair~~mobile ~~was~~carriers ais currently ~~founder~~one of ~~SynOptics~~the ~~Communications~~critical ~~(now~~focus ~~Nortel~~areas ~~Networks),~~of aour ~~computer~~research ~~networking~~and ~~company,~~development and ~~from January 1987 to November 1992, served as vice president of~~ sales and marketing ~~and~~groups. ~~then~~We asbelieve ~~senior~~that ~~vice~~wireless ~~president~~services ofwill ~~sales~~continue ~~and~~to be ~~customer~~one ~~service~~ of ~~SynOptics.~~the ~~Mr.~~fastest ~~Clair~~growing ~~has~~segments ~~more than 30 years~~ of ~~experience~~the intelecommunications ~~data~~industry ~~processing, data~~ and ~~voice~~ ~~communications~~that ~~and~~mobile ~~local~~carriers ~~area~~will ~~networking,~~be asunder ~~well~~increasing ascompetitive ~~various wireless technologies~~pressure. HeAs ~~spent the early part of his career with Tymshare, Inc.,~~ a ~~computer time-sharing company~~ result, ~~and~~we ~~ROLM,~~believe athere ~~manufacturer~~will ofbe ~~digital~~significant ~~PBX~~opportunities ~~equipment,~~to inprovide amobile carriers ~~variety~~with ofservices ~~sales and~~that ~~marketing~~enable ~~positions.~~them Heto ~~holds~~focus ainternal BSresources ~~degree~~on intheir core business ~~and~~activities anwhile ~~MBA~~increasing ~~degree~~revenues, ~~from~~improving ~~the~~service ~~University~~quality and ofreducing ~~Buffalo~~costs. ~~Mr. Clair is the chairman of the board of Cranite Systems, Inc.~~

~~Ms.~~We ~~Berg-Painter~~expect ~~became~~to acontinue ~~director~~to implement ofour ~~Pumatech~~business indevelopment ~~August~~strategy ~~2001.~~in ~~Since~~fiscal ~~November 2000, Ms~~2006. ~~Berg-Painter~~To ~~has~~increase ~~served as an~~market ~~independent marketing consultant. From July 1998 to October 2000~~share, ~~Ms.~~we ~~Berg-Painter~~may ~~served~~also asattempt ~~senior vice president of worldwide marketing at Clarify, Inc., an enterprise CRM (customer relationship management) company. From 1989~~ to ~~1998,~~acquire ~~Ms. Berg-Painter~~or ~~served~~seek inalliances ~~various capacities~~ with ~~Aspect~~key ~~Communications Corporation, a provider of customer relationship portals, last serving as general manager and vice president of one of its product divisions. Previously, Ms. Berg-Painter served as~~competitors ~~director of product marketing for AST Research, Inc., a personal computer manufacturer,~~ and asother ~~director~~companies ofthat ~~marketing~~may ~~for~~have ~~Syntellect,~~important ~~Inc.,~~products ~~a provider of call-center technology~~ and ~~hosted~~synergies ~~service~~with ~~solutions. Ms. Berg-Painter began her career at IBM~~our ~~where~~existing ~~she~~operations ~~held various systems engineering~~ and ~~marketing positions~~products. ~~She holds a BA degree in business and economics from University of California, Los Angeles and attended business school at Norges Handelshøyskole in Bergen, Norway.~~

Mr. Praisner became a director of Pumatech in April 2001. Prior to his retirement, from April 1998 to October 1999, Mr. Praisner served as vice president of finance and administration and chief financial officer of Beyond.com Corporation, an online software resale company. From 1995 to 1997, Mr. Praisner served as vice president, finance and administration, chief financial officer, and secretary of Silicon Storage Technology, Inc., a supplier of flash memory devices. From 1994 to 1995, Mr. Praisner served as vice president, finance and chief financial officer of MicroModule Systems, Inc., a manufacturer of multichip modules for computer and telecommunications applications. From 1992 to 1993, Mr. Praisner served as vice president, finance and chief financial officer of Electronics for Imaging, Inc., a manufacturer of color desktop publishing computer systems. During part of 1991, Mr. Praisner served as vice president, finance and chief financial officer of Digital Link Corp., a computer communications equipment company. From 1989 to 1991, Mr. Praisner served as corporate controller of Applied Materials Inc., a manufacturer of semiconductor wafer fabrication equipment. He holds a BA degree in liberal arts and MBA degree from Southern Methodist University and is a Certified Public Accountant. 37

32Estimates, Assumptions and Critical Accounting Policies

~~Table~~The following discussion and analysis of ~~Contents~~financial condition and results of operations are based on our consolidated financial statements and notes thereto set forth in Part IV of this Annual Report on Form 10-K. Our consolidated financial statements are prepared in accordance with generally accepted accounting principles, or GAAP, in the United States of America. These accounting principles require us to make certain estimates, judgments and assumptions, which we review with our audit committee. We believe that the estimates, judgments and assumptions upon which we rely are reasonable based upon various factors and information available to us at the time that these estimates, judgments and assumptions are made. These factors and information may include, but are not limited to, history and prior experience, experience of other enterprises in the same industry, new related events, current economic conditions and information from third party professionals. The estimates, judgments and assumptions we make can affect the reported amounts of assets and liabilities as of the date of the financial statements, as well as the reported amounts of revenues and expenses during the periods presented. To the extent there are material differences between these estimates, judgments or assumptions and actual results, our financial statements will be affected.

We use ~~ITEM~~estimates 2in accounting for, among other things, various revenue contracts, returns, recoverability of long-lived assets and investments, in-process research and development, restructuring accruals, contingencies, allowances for uncollectible receivables, depreciation and amortization and valuation of income taxes. ~~PROPERTIES~~ The significant accounting policies that we believe are the most critical to aid in fully understanding and evaluating our reported financial results include the following:

At· License ~~July~~and ~~31,~~services ~~2003,~~revenue ~~we leased the facilities described below:~~ recognition.

Location	Function	Square Feet		Lease Expiration Date
California
San Jose, CA	Corporate headquarters, administrative offices, engineering and sales and marketing	33,821	(1)	June 2006
Santa Cruz, CA	Engineering and professional services	20,924	(2)	May 2006
Los Gatos, CA		15,000	(3)	August 2005
Emeryville, CA		6,753	(4)	August 2003
Campbell, CA		5,500	(3)	August 2003
New Hampshire
Nashua, NH		19,938	(5)	December 2004
		9,006	(3)	October 2003
International
Sofia, Bulgaria	Engineering and professional services	7,534		April 2004
Tokyo, Japan	Sales and marketing and administrative offices	3,024		July 2004
Farnham, United Kingdom		1,037	(4)	February 2004

Revenue from license fees is recognized when persuasive evidence of an arrangement exists, delivery of the product has occurred, no significant Company obligations with regard to implementation or integration exist, the fee is fixed or determinable and collectibility is probable. Arrangements for which the fees are not deemed probable for collection are recognized upon cash collection. If we were to assess the collectibility of fees differently, the timing and amount of our revenue recognition might differ substantially from previously estimated or reported.

~~(1)~~Services ~~38%~~revenue ofprimarily comprises ~~property~~revenue from consulting fees, maintenance contracts and training. Services revenue from consulting and training is ~~subleased~~recognized ~~until~~as ~~December~~the ~~2003~~service is performed. Maintenance contracts include the right to unspecified upgrades and ongoing support. Maintenance revenue is deferred and recognized ratably as services are provided over the maintenance period. If we were to allocate more or less value to the unspecified upgrades and ongoing support, the timing of our revenue recognition might differ substantially from that previously reported.

For contracts with multiple elements, and for which vendor-specific objective evidence of fair value for the undelivered elements exists, revenue is recognized for the delivered elements based upon the residual contract value as prescribed by the American Institute of Certified Public Accountants in Statement of Position (2SOP) ~~72%~~No. 98-9. We have accumulated relevant information from contracts to use in determining the availability of ~~property~~vendor-specific isobjective evidence ~~available~~and believe that such information complies with the criteria established in SOP No. 97-2, “Software Revenue Recognition” which provides guidance on generally accepted accounting principles for ~~sublease~~recognizing revenue on software transactions. If we were to allocate the respective fair values of the aforementioned elements differently, the timing of our revenue recognition might differ substantially from that previously estimated or reported.

~~(3)~~License ~~Subleased~~and ~~for~~services revenue associated with contracts that involve significant implementation of customization of services, which are essential to the ~~duration~~functionality of the software, ~~lease~~is ~~term~~recognized over the period of each engagement, primarily using the percentage-of-completion method. Costs

~~(4) Available for sublease.~~38

~~(5)~~incurred ~~29%~~are generally used as the measure of ~~property~~progress towards completion as prescribed by SOP No. 81-1, “Accounting for Performance of Construction-Type and Certain Product-Type Contracts.” Revenue for these arrangements is classified ~~subleased~~as ~~until~~license ~~December~~revenue ~~2004~~and services revenue based upon estimates of fair value of each element, and ~~71%~~the ~~available~~revenue is recognized based on the percentage-of-completion ratio for ~~sublease~~the arrangement. Recognized revenue is subject to revisions as the engagement progresses to completion. Revisions in estimates or estimated losses on engagements are made in the period in which the loss becomes probable and can be reasonably estimated. Considerable judgment, such as the scope of work and reliance on the customer or other vendors to fulfill some tasks, may be required in determining estimates to complete an engagement. If we were to make different judgments or utilize different estimates of the total amount of work required to complete the engagement, the timing of our revenue recognition from period to period, as well as the related margins, might differ substantially from that previously estimated or reported. We consider a project completed at the go-live date. When we sell additional licenses, we recognize revenue after the go-live date if the products or seats have been delivered and no remaining obligations exist.

InWe ~~addition,~~license asrights ofto ~~September~~use 17our intellectual property portfolio, ~~2003~~whereby licensees, weparticularly ~~assumed~~OEMs, typically pay a ~~lease~~non-refundable license ~~agreement~~fee ~~for~~in aone ~~5,717~~or more installments and on-~~square~~going ~~foot~~royalties ~~facility~~based inon ~~Salt~~their sales ~~Lake~~of ~~City~~products incorporating our intellectual property. Revenue from OEMs under minimum guaranteed royalty arrangements, ~~Utah~~which are not subject to future obligations, is recognized when such royalties are earned and become payable. Royalty revenue is recognized as aearned ~~result~~when reasonable estimates of ~~our~~such ~~acquisition~~amounts ofcan be ~~Spontaneous~~made. ~~Technology,~~Royalty ~~Inc~~revenue that is subject to future obligations is recognized when such obligations are fulfilled. ~~The~~Royalty ~~lease~~revenue ~~expires~~that exceeds minimum guarantees is recognized in ~~April~~the ~~2006~~period earned. WeIf ~~expect~~we were to ~~keep~~assess ~~this~~the collectibility ~~facility~~of ~~for~~royalties ~~our~~differently ~~engineering~~or make different judgments or utilize different estimates, ~~support~~the timing and ~~professional~~amount ~~services~~of ~~workforce.~~our revenue recognition might differ substantially from previously estimated or reported.

We· Channel ~~lease~~inventory ~~space in Los Gatos, Santa Cruz, Emeryville,~~ and ~~Campbell, California,~~product ~~as well as in Nashua, New Hampshire, for offices that were closed as a result of the restructuring and cost reduction plans we implemented in fiscal 2002, 2001, and 1999~~returns. Refer to the discussions under the caption “Restructuring and Other Charges” set forth in Item 7, Part II of this Annual Report on Form 10-K for more information on the restructure charges related to these facilities. We have secured tenants for some of our vacated facilities and are actively marketing to sublet the remainder. We have experienced difficulties, however, in subletting other vacated offices because of the continuing deterioration of the real estate markets in those locations.

WeThe ~~believe~~primary ~~that~~sales channel into which we sell our ~~existing~~retail ~~facilities~~products ~~are~~is ~~sufficient~~a tonetwork ~~meet~~of distributors and value-added resellers in North America, Europe, Asia Pacific, South America and Africa. Agreements with our ~~needs~~distributors and resellers contain specific product return privileges for stock rotation and obsolete products that are generally ~~the~~limited ~~foreseeable~~to contractual amounts. Reserves for estimated future returns are provided for upon revenue recognition. Product returns are recorded as a reduction of revenues. Accordingly, we have established a product returns reserve composed of 100% of product inventories held at our distribution partners, as well as an estimated amount for returns from customers of our distributors and other resellers as a result of stock rotation and obsolete products, among others.

We evaluate our product ~~ITEM~~returns 3reserve on a quarterly basis. ~~LEGAL~~ ~~PROCEEDINGS~~In estimating our product returns reserve, we evaluate the following factors:

On· our demand ~~December~~forecast 5,by ~~2002,~~product ~~we filed a patent infringement suit against Synchrologic, Inc.~~ in ~~the~~each ~~United~~of ~~States~~our ~~District~~principal ~~Court~~geographic ~~for the Northern District of California~~markets, ~~alleging that Synchrologic’s server and desktop~~which ~~products~~is ~~infringe~~affected ~~six~~by of our ~~synchronization-related~~product ~~patents.~~release ~~On September 14~~schedule, ~~2003,~~seasonal ~~we entered into a definitive merger agreement to acquire Synchrologic. Upon the execution of the definitive agreement~~trends, we and ~~Synchrologic agreed to dismiss the~~analyses ~~litigation~~developed ~~with~~by ~~prejudice~~our asinternal ofsales ~~September~~and ~~17,~~marketing ~~2003, thereby permanently ending this specific suit.~~ group;

~~On April 19, 2002, we filed a patent infringement suit against Extended Systems, Inc. in the United States District Court for the Northern District of~~· historical ~~California~~product ~~(the~~returns ~~“Court”). We alleged that Extended Systems’ server~~ and ~~desktop~~inventory ~~products~~levels ~~infringe~~ on ~~seven~~a ofproduct ~~our~~by ~~synchronization-related~~product ~~patents. We seek an injunction against~~ basis;

33· current inventory levels and sell through data on a product by product basis as reported to us by our major distributors worldwide on a monthly basis;

~~Table~~· risk associated ofwith ~~Contents~~recognizing revenue on individual customers, based on facts and circumstances; and

· general ~~future~~economic ~~sales of Extended Systems’ infringing server and desktop products, as well as monetary damages for past sales of the infringing products~~conditions. We further alleged that Extended Systems’ infringement of the eight synchronization patents was willful and deliberate, entitling us to an award of treble damages, costs and reasonable attorneys’ fees. On May 28, 2002, we filed an amended complaint in the lawsuit, adding claims of trademark infringement, unfair competition and interference with contract, all in connection with Extended Systems’ use of our Satellite Forms® trademark. On December 11, 2002, we again amended our complaint to add another claim for infringement of an eighth synchronization-related patent. Extended Systems has denied our charges, raised a number of affirmative defenses to our claims, and requested a declaration from the Court that our eight patents are invalid and not infringed. On August 1, 2003, the Court issued its Claim Construction Order, interpreting the scope of the patent claims from the July 2, 2003 Claims Construction hearing. Extended Systems has requested that three of the patents in dispute be re-examined by the Patent and Trademark Office (PTO). The PTO has issued initial Office Actions, rejecting some of the claims under the three patents. We are responding to these Office Actions. On August 22, 2003, the Court heard and rejected Extended Systems’ request to stay the case with respect to the three patents involved in reexamination proceedings. The Court encouraged the parties to maintain the April 12, 2004 trial schedule. Fact discovery was completed on September 26, 2003; fact witness depositions ended on October 14, 2003; expert depositions will end on December 23, 2003; and preparation for the trial will continue through April 2004.

Litigation is inherently uncertain, and we may not prevail in our claims or defenses. In addition, our litigation against Extended Systems is expensive and time-consuming, and management has been and may in the future be required to spend significant time in the defense of the suit. We incurred approximately $1,200,000 of legal costs relating to all litigation including against Extended Systems during fiscal 2003 and believe that we will continue to incur significant amount of legal costs during fiscal 2004 as a result of any on-going litigation. Extended Systems has no claims or counterclaims against us in this case. However, if we do not prevail in our claims, we might be forced to accept an unfavorable settlement or judgment which could require us to pay a substantial amount of Extended Systems’ legal fees in settlement or upon the determination of these claims. An unfavorable settlement or judgment could also materially harm our ability to use existing intellectual property and severely harm our business as a result. 39

WeIn ~~are~~general, ~~also~~we ~~subject~~would expect product returns to increase ~~legal~~following ~~proceedings~~the ~~and~~announcement ~~claims~~of ~~that~~new ~~arise~~or upgraded versions of our products or in anticipation of such product announcements, as our distributors and resellers seek to reduce their inventory levels of the ~~normal~~prior version of a ~~course~~product in advance of ~~business~~receiving the new version. WeSimilarly, ~~believe~~we would expect that product inventory held by our distributors and resellers would increase following the ~~ultimate~~successful ~~resolution~~introduction of ~~such~~new ~~matters~~or ~~will~~upgraded ~~not~~products, ~~have~~as athese resellers ~~material~~stock ~~adverse~~the ~~affect~~new onversion ~~our~~in ~~financial~~anticipation ~~position~~of ordemand. ~~results~~In assessing the appropriateness of ~~operations;~~product ~~however,~~inventory ~~such~~levels ~~litigation~~held ~~could~~by inour resellers and the impact ~~future~~on ~~result~~potential inproduct ~~substantial~~returns, ~~costs~~we may limit sales to our distributors and ~~diversion~~resellers ofin order to maintain inventory levels deemed by management ~~resources~~to be appropriate. ~~Such~~We ~~litigation~~generally ~~could~~estimate ~~also~~and ~~result~~provide inproduct ~~payment~~returns ofreserve ~~monetary~~based ~~damages~~on anticipated level of returns and ~~could~~the ~~harm~~criteria noted above. Accordingly, actual product returns may differ from our ~~financial~~estimates ~~condition~~and may have a material adverse effect on our revenues and consolidated results of operations. in future periods due to factors including, but not limited to, market conditions and product release cycles.

~~Refer~~· Provision tofor ~~the~~doubtful ~~discussion set forth in Item 1 under the caption “Risk Factors—Our success and ability to compete depends upon our ability to secure and protect patents, trademarks and other proprietary rights~~accounts.”

Our provision for doubtful accounts relates to ~~ITEM~~customer 4accounts receivable. ~~SUBMISSION~~ OFThe ~~MATTERS~~provision TOfor Adoubtful ~~VOTE~~accounts OFis ~~SECURITY~~an estimate ~~HOLDERS~~prepared by management based on identification of the collectibility of specific accounts and the overall condition of the receivable portfolios. We specifically analyze customer receivables, as well as analyze the aging of our accounts receivable, historical bad debts, customer credits, customer concentrations, the financial condition of the customers and their credit-worthiness, changes in payment terms, current economic trends, our historical write-off experience and other assumptions, when evaluating the adequacy of the provision for doubtful accounts. If the financial condition of our customers were to deteriorate, resulting in an impairment of their ability to make payments, additional allowances may be required. Likewise, should we determine that we would be able to realize more of our receivables in the future than previously estimated, an adjustment to the allowance would increase income in the period such determination was made. The provision for doubtful accounts is reviewed on a quarterly basis and adjustments are recorded as deemed necessary.

No· Valuation ~~matters were submitted to a vote~~ of ~~Pumatech’s~~goodwill, ~~security~~other ~~holders~~intangibles, ~~during~~investments ~~the~~and ~~fourth~~other long-lived ~~quarter of fiscal year 2003~~assets.

34We have accumulated over the years a significant amount of goodwill, other intangible assets, long-term and other long-lived assets as a result of our investments and acquisitions.

~~Table~~Goodwill represents the excess of ~~Contents~~the purchase price of acquired businesses over the fair value of the identifiable net assets acquired and is tested for impairment at July 31 of each year and written down only when impaired. Identifiable intangible assets result from the application of the purchase method of accounting for our acquisitions. Our identifiable intangible assets as of July 31, 2005, were composed of our unamortized developed and core technology, patents, trademark, customer base, covenant not-to-compete, customer contracts and acquired workforce (not accounted as a business combination). Developed and core technology, patents and customer base are amortized over the period of benefit, generally three to seven years. Trademarks are amortized over the period of benefit of two or three years. Covenants not-to-compete, customer contracts and acquired workforce are amortized over the period of benefit, ranging from nine months to three years.

The ongoing evaluation for ~~PART~~impairment IIof certain identifiable intangibles, investments and long-lived assets requires significant management estimation and judgment. We evaluate the carrying value of these assets for impairment, when events and circumstances indicate that the carrying amount of the underlying asset may not be recoverable as defined in the respective literature. In addition, SFAS No. 142, “Goodwill and Other Intangible Assets,” requires us to test goodwill annually using a two-step process. The first step is to identify a potential impairment. The second

~~ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS~~ 40

~~Pumatech’s~~step ~~common~~measures ~~stock~~the ~~began~~amount of ~~trading~~the onimpairment loss, if any. Intangible assets with indefinite lives are tested for impairment using a one-step process that compares the ~~Nasdaq~~fair ~~National~~value ~~Market~~to the oncarrying ~~December~~amount 5of the asset. Changes in the manner of use of the acquired assets, ~~1996~~changes in overall business strategy, ~~under~~negative industry or economic trends, and decline in stock price and market capitalization may trigger an impairment review for certain intangibles. Poor operating results of underlying investments or adverse changes in market conditions may result in losses or an inability to recover the ~~symbol~~carrying ~~“PUMA~~value of investments.” ~~The~~Changes ~~following~~in ~~table~~market ~~sets~~value ~~forth~~of the ~~high~~assets, physical changes and ~~low~~continuing ~~closing~~operating ~~prices~~or cash-flow losses associated with assets used to generate revenue may suggest problems of recoverability for ~~our~~certain ~~common~~long-lived ~~stock~~assets. asIn ~~reported~~assessing onpotential impairment, we also make significant estimates and assumptions regarding the discounted ~~Nasdaq~~future ~~National~~cash ~~Market~~flows ~~from~~of ~~August~~our 1reporting units to determine each unit’s fair value. Such estimates include, ~~2001~~but are not limited to, ~~through~~projected ~~July~~future operating 31results, ~~2003~~working capital ratios, cash flow, terminal values, market discount rates and tax rates. Whenever the evaluation demonstrates that the carrying amount of an intangible, investment or any other long-lived asset is not recoverable, an impairment charge may be required.

	High		Low
Fiscal 2002
First fiscal quarter (August 1, 2001 to October 31, 2001)	$	2.65	$	1.11
Second fiscal quarter (November 1, 2001 to January 31, 2002)	$	3.68	$	2.06
Third fiscal quarter (February 1, 2002 to April 30, 2002)	$	2.09	$	0.99
Fourth fiscal quarter (May 1, 2002 to July 31, 2002)	$	1.00	$	0.43
Fiscal 2003
First fiscal quarter (August 1, 2002 to October 31, 2002)	$	0.49	$	0.22
Second fiscal quarter (November 1, 2002 to January 31, 2003)	$	1.55	$	0.36
Third fiscal quarter (February 1, 2003 to April 30, 2003)	$	3.30	$	1.13
Fourth fiscal quarter (May 1, 2003 to July 31, 2003)	$	4.08	$	2.31

As of July 31, 2005, our total goodwill amounted to $68,474,000. The annual impairment review for goodwill was completed on July 31, 2005, and did not identify any impairment. As of July 31, 2005, other intangibles amounted to $25,946,000, net of accumulated amortization. We expect to amortize approximately $8,616,000, $7,980,000, $4,404,000, $2,190,000 and $2,756,000 of our other intangibles in fiscal 2006, 2007, 2008, 2009 and thereafter, respectively, based on our acquisitions completed as of July 31, 2005. To the extent we do not generate sufficient cash flows to recover the net amount of our investment in goodwill, intangibles and other long-lived assets recorded, the investment could be considered impaired and subject to earlier write-off.

As· In-Process ofResearch ~~September 30, 2003, there were approximately 444 stockholders of record of our common stock~~ and ~~49,648,504 shares of common stock outstanding~~Development. ~~Additionally, on such date the last reported closing sale price of our common stock, as reported by the Nasdaq National Market, was $4.76 per share.~~

We ~~have~~value ~~never~~tangible ~~paid~~and ~~dividends~~intangible onassets acquired through our ~~capital~~business ~~stock~~acquisitions, including in-process research and development, or IPR&D, at fair value. We ~~currently~~determine ~~intend~~IPR&D tothrough established ~~retain~~valuation ~~any~~techniques ~~future~~for ~~earnings~~various projects for ~~use~~the indevelopment ~~our~~of new ~~business~~products and dotechnologies and expenses IPR&D when technical feasibility is not ~~anticipate~~reached. ~~paying~~The ~~any~~value of IPR&D is determined using the income approach, which discounts expected future cash ~~dividends~~flows from projects under development to their net present value. Each project is analyzed and estimates and judgments are made to determine the technological innovations included; the utilization of core technology; the complexity, cost and time to complete development; the appropriate discount rates; any alternative future use or current technological feasibility; and the stage of completion. During fiscal 2005, 2004 and 2003, we expensed approximately $220,000, $3,667, 000 and $406,000, respectively, in IPR&D charges primarily related to the ~~foreseeable~~various acquisitions we had because the technological feasibility of certain products under development had not been established and no future alternative uses existed. If we acquire other companies with IPR&D in the future, we will value the IPR&D through established valuation techniques and will incur future IPR&D charges if those products under development have not reached technical feasibility.

On· Restructuring ~~July 22, 2003, we issued 134,445 shares of common stock in connection with the acquisition of substantially all of the assets of Loudfire, Inc~~accruals., developer of LoudPC™ software (recently rebranded and repackaged and now called “Intellisync goAnywhere”). The issuance of these shares was exempt from registration under Section 4(2) of the Securities Act of 1933 as the issuance was made to a single purchaser in a private offering in which the purchaser agreed that it would not subsequently sell the shares except pursuant to a validly, fully effective registration statement. The resale of these shares is the subject of a pending Registration Statement on Form S-3 filed with the Securities and Exchange Commission on September 9, 2003.

35In recent years, we implemented several cost-reduction plans as part of our continued effort to streamline our operations to properly size ongoing operating expenses. These plans resulted in restructuring charges related to, among others, the consolidation of excess facilities. These charges relate to facilities and portions of facilities we no longer utilize and either seek to terminate early or sublease. Lease termination costs for the abandoned facilities were estimated for the remaining lease obligations and brokerage fees offset by estimated sublease income. Estimates related to

~~Table of Contents~~41

~~Equity~~sublease ~~Compensation~~costs ~~Plan~~and ~~Information~~income asare ofbased ~~July~~on 31assumptions regarding the period required to locate and contract with suitable sub-lessees and sublease rates which can be achieved using market trend information analyses provided by a commercial real estate brokerage retained by us. Each reporting period we review these estimates and to the extent that these assumptions change due to continued negotiations with landlords or changes in the market, ~~2003~~the ultimate restructuring expenses for these abandoned facilities could vary by material amounts.

Plan Category	Number of securities to be issued upon exercise of outstanding options, warrants and rights(1)	Weighted average exercise price of outstanding options, warrants and rights(1)		Number of securities remaining available for future issuance
Equity compensation plans approved by security holders:
• 1993 Stock Option Plan(2)	3,633,563	$	1.54	715,934
• 2002 Stock Option Plan	—		—	2,275,000
• Employee Stock Purchase Plan	—		—	484,362	(3)
Equity compensation plans not approved by security holders:
• 2000 Supplemental Stock Option Plan	1,663,393	$	1.20	1,241,576
• Restricted Stock Grant Agreement	975,000	$	0.59	—
Total	6,271,956	$	1.30	4,716,872

· Loss contingencies.

~~(1)~~We ~~Does~~are ~~not~~subject ~~include~~to anthe ~~aggregate~~possibility of ~~56,449~~various ~~shares~~loss contingencies ofarising ~~common~~in ~~stock~~the toordinary becourse ~~issued~~of ~~upon~~business. We consider the likelihood ~~exercise~~of the incurrence of ~~outstanding~~a ~~option~~liability ~~grants,~~as ~~with~~well aas ~~weighted~~our ~~exercise~~ability ~~price~~to estimate reasonably the amount of $0loss in determining loss contingencies.26 ~~per~~An ~~share,~~estimated loss ~~assumed~~contingency byis ~~Pumatech~~accrued in accordance with SFAS No. 5, ~~Inc~~“Accounting for Contingencies.” inSFAS ~~connection~~No. 5 ~~with~~requires ~~various~~that we ~~acquisitions~~record an estimated loss from a loss contingency when information available prior to the issuance of our financial statements indicates that it is probable that a liability has been incurred on the date of the financial statements and the amount of the loss can be reasonably estimated. ~~The~~Accounting ~~option~~for contingencies ~~plans~~such ~~relating~~as legal matters requires us to use our judgment. While we believe that our accruals for such ~~outstanding~~matters ~~options~~are ~~were~~adequate, ~~approved~~if bythe actual loss from a loss contingency is significantly different than the ~~respective~~estimated ~~security~~loss, ~~holders~~our results of ~~the~~operations ~~acquired~~may ~~companies~~be overstated or understated. We regularly evaluate current information available to us to determine whether such accruals should be adjusted.

~~(2)~~· Income ~~The 1993 Stock Option Plan expires in October 2003.~~Taxes

~~(3)~~As ~~Represents~~part ~~shares~~of the process of preparing ~~common~~consolidated ~~stock~~financial ~~remaining~~statements, ~~available~~we asare required to estimate income taxes in each of ~~July~~the 31jurisdictions in which we operate. This process involves estimating our actual current tax exposure together with assessing temporary differences resulting from differing treatment of items, ~~2003~~such as deferred revenue, for tax and accounting purposes. These temporary differences result in deferred tax assets and liabilities, which are included within our consolidated balance sheet. We then assess the likelihood that our deferred tax assets will be recovered from future ~~issuance~~taxable ~~under~~income ~~Pumatech’s~~and, ~~Employee~~to ~~Stock~~the ~~Purchase~~extent ~~Plan~~we believe that recovery is not likely, aswe ~~amended~~establish a valuation allowance. ~~During~~To the ~~fiscal~~extent ~~year~~that we ~~ended~~establish ~~July~~or 31increase a valuation allowance in a period, ~~2003~~the change is included as an expense within the tax provision in the consolidated statement of income. Significant management judgment is required in determining our provision for income taxes, ~~employees~~our ~~purchased~~deferred tax assets and liabilities, and any valuation allowance recorded against our net deferred tax assets. Based on our estimates concerning future results of operation, we have recorded a valuation allowance for net operating losses and for foreign tax credits. In the event that actual results differ from these estimates or we adjust these estimates in future periods, we may need to establish an ~~aggregate~~additional valuation allowance, which could materially impact our financial position and results of ~~522~~operations. In addition,~~003~~ ~~shares~~the estimation of ~~common~~our ~~stock~~tax atliabilities involves dealing with uncertainties in the ~~weighted~~application ~~average~~of ~~exercise~~complex ~~price~~tax regulations in all the jurisdictions in which we do business. We recognize liabilities for anticipated tax audit issues based on our estimate of $0the possibility that additional taxes will be due.32 ~~per~~If ~~share~~we ultimately determine that payment of additional amounts is unnecessary, we reverse the associated liabilities and recognize a tax benefit in the period in which this determination is made. If we determine that our recorded tax liability is less than we expect the ultimate assessment to be, we record an additional charge in our provision for taxes in the period in which this determination is made.

Refer to note 11 to consolidated financial statements set forth in Part IV of this Annual Report on Form 10-K for more information on the equity compensation plans not approved by security holders: 2000 Supplemental Stock Option Plan and Restricted Stock Grant Agreement. 42

36Results of Operations

~~Table~~The following table sets forth items included in the consolidated statements of operations ~~Contents~~(Part IV of this Annual Report on Form 10-K) as a percentage of revenue for the periods indicated.

ITEM 6. SELECTED FINANCIAL DATA

	Years Ended July 31,
	2005		2004		2003
Revenue:
License	66.0	%	66.9	%	77.1	%
Services	34.0		33.1		22.9
Total revenue	100.0		100.0		100.0
Cost of revenue:
Cost of license revenue	2.7		4.9		4.8
Cost of services revenue	14.2		14.0		11.7
Amortization of developed and core technology	7.9		6.4		2.5
Total cost of revenue	24.8		25.3		19.0
Gross profit	75.2		74.7		81.0
Operating expenses:
Research and development	24.5		27.1		29.7
Sales and marketing	46.3		39.1		46.1
General and administrative	15.2		18.0		23.3
In-process research and development	0.4		8.7		1.6
Amortization of other intangible assets	7.1		4.6		0.4
Restructuring and other charges	0.9		2.2		3.2
Total operating expenses	94.4		99.7		104.3
Operating loss	(19.2	)	(25.0	)	(23.3	)
Other income (expense)
Interest income	1.8		1.5		3.3
Interest expense	(2.3	)	(0.6	)	(0.0	)
Litigation settlement gain, net	—		3.7		—
Other, net	(1.5	)	(0.8	)	(0.3	)
Other-than-temporary impairment of investments	—		—		(9.6	)
Total other income (expense)	(2.0	)	3.8		(6.6	)
Loss before income taxes	(21.2	)	(21.2	)	(29.9	)
Provision for income taxes	(1.3	)	(1.1	)	(1.2	)
Net loss	(22.5	)%	(22.3	)%	(31.1	)%

~~The~~Fiscal ~~following~~Year ~~selected~~Ended ~~consolidated~~July 31, ~~financial~~2005 ~~data are derived from our consolidated financial statements. Historical results should not be taken~~ as ~~indicative~~Compared ~~of the results that may be expected for any future period. This summary of our consolidated financial information for fiscal years 1999~~ to ~~2003 should be read along with our audited consolidated financial statements contained in this Annual Report on Form 10-K. The summarized financial information,~~ ~~other~~Fiscal ~~than~~Year ~~the~~Ended ~~statements of operations data for fiscal 1999 and 2000 and the balance sheets data at~~ July 31, ~~1999, 2000 and 2001, was taken from these financial statements. Certain amounts in prior periods have been reclassified to conform to the current presentation.~~ 2004

~~This summary of consolidated financial statements includes the accounts of Pumatech and our wholly and majority owned subsidiaries.~~ Revenue

A number of items affect the comparability of this information:

	Year Ended July 31,
	2005		Percent Change			2004
	(In thousands, except percentage)
Total revenue	$	59,498		40.6	%	$	42,308

•We ~~The~~derive ~~results~~revenue offrom ~~operations~~two ~~for~~primary ~~fiscal~~sources: ~~year~~software licenses ~~2003~~and ~~include~~fees ~~the~~for ~~effect~~services. ofFiscal ~~charges~~2005 ~~recorded~~reflected ~~during~~record ~~the~~revenue ~~fourth~~for Intellisync ~~quarter~~primarily due from revenue contributions of ~~fiscal~~Synchrologic ~~2003,~~and Identity ~~including~~Systems ~~$379~~product sales,~~000~~ ~~for~~both ~~operating~~of ~~expenses~~which ~~relating~~we toacquired aduring ~~potential~~fiscal ~~acquisition~~2004. ~~that~~The revenue increase was ~~subsequently~~also ~~abandoned,~~brought ~~$257,000~~about ~~for~~by ~~severance~~new ~~and~~revenue ~~separation~~streams ~~costs,~~as ~~and~~we ~~$159,000~~launched new ~~for~~wireless ~~facilities~~products ~~cost~~and ~~adjustment~~ramped ~~relating~~up toour ~~restructuring~~wireless ~~actions~~messaging ~~implemented~~solution inwith ~~prior~~the global ~~year.~~wireless Wemarket, ~~also~~as ~~recorded~~well aas ~~$60,000~~by ~~recovery~~an ofincrease ~~lease~~in ~~payments~~our ~~deemed~~sales ~~uncollectible~~and inmarketing efforts, ~~prior~~both ~~year~~domestically and internationally.

Additional charges incurred in fiscal 2003 include an other-than-temporary impairment of investments of $2,394,000, non-cash stock compensation expense of $1,585,000 in connection with certain stock options and restricted stock accounted for using variable accounting and $157,000 in connection with the options granted by NetMind Technologies, Inc. prior to our acquisition of NetMind, and purchased in-process research and development of $406,000 in connection with our acquisition of Starfish Software, Inc. 43

•While ~~The~~the ~~results~~market ~~of operations~~ for ~~fiscal~~smartphones ~~year~~and ~~2002~~other ~~include~~wireless mobile ~~the~~devices ~~effect~~has ofgrown ~~charges~~recently, ~~including~~the ~~$5,595,000~~market for ~~severance~~wired ~~and~~or ~~separation~~traditional ~~costs~~personal digital assistants, ~~facilities~~or ~~consolidation~~PDAs, ~~and~~has ~~assets~~continued ~~held~~to ~~for~~face ~~disposal~~challenges. ~~associated~~The ~~with~~overall decline ~~the~~in ~~cost~~traditional ~~reduction~~PDA ~~program~~sales ~~implemented~~has ~~during~~had ~~the~~a ~~third~~direct ~~and~~impact ~~fourth~~on ~~quarters~~sales of ~~fiscal~~our Intellisync ~~2002,~~products ~~and~~through ~~$5,249,000~~the ~~for~~consumer ~~write-downs of impaired intangibles~~ and ~~assets related to our terminated~~ online ~~operations.~~channels, Wewhere ~~recorded~~sales ~~a charge for impairment~~ of our ~~certain~~synchronization ~~excess~~ software ~~development~~typically ~~tools,~~occur aat ~~provision~~the ~~for~~same ~~rent~~time ~~reimbursement~~a ~~deemed~~PDA ~~uncollectible~~is purchased, ~~and~~or anshortly ~~other-than-temporary~~thereafter. ~~impairment~~Due ofto ~~investments~~this ~~of approximately $580~~decline,~~000,~~ ~~$330,000~~our ~~and~~retail ~~$380~~revenue,~~000,~~ which ~~respectively.~~consists ~~Non-cash stock compensation expense~~ of ~~$367,000~~sales ~~was~~to ~~also~~distributors ~~recorded~~and indirect ~~connection~~sales ~~with the options granted by NetMind prior~~ to ~~our~~end-users, decreased ~~acquisition~~during offiscal ~~NetMind~~2005.

•Our ~~The~~acquisitions ~~results~~ of ~~operations~~Spontaneous ~~for~~Technology, ~~fiscal~~Synchrologic, Identity ~~year~~Systems, ~~2001~~and, ~~include the effect of a $1~~recently,~~417,000~~ ~~charge~~Tourmaline ~~for~~and ~~severance~~PDAapps ~~costs,~~have ~~facilities~~provided ~~consolidation~~ and ~~assets~~are expected ~~held~~to ~~for~~further ~~disposal~~provide ~~associated~~us with ~~the~~access ~~cost~~to ~~reduction~~new ~~programs~~technology ~~implemented~~capabilities, potential inaccess ~~the~~to ~~third~~new markets and ~~fourth~~customers ~~quarters of fiscal 2001. Additional charges were incurred for write-downs of impaired intangibles~~ and other ~~assets~~revenue-generation opportunities. ofWe ~~$10,614,000~~expect ~~and~~revenue ~~direct investments of $1,180,000,~~ and ~~non-cash~~operational ~~stock~~benefits ~~compensation~~over ~~expense~~time ofthrough synergies ~~$1,058,000~~ in ~~connection~~technology, ~~with~~product ~~the~~development ~~options granted by NetMind prior to our acquisition of NetMind~~ and ~~the stock option regrant program implemented in July 2001~~operations.

• The results of operations for fiscal year 2000 include charges of $6,322,000 for merger related expenses, $3,877,000 was incurred for accretion of redeemable convertible preferred stock and $2,002,000 for non-cash stock compensation expense incurred in connection with the acquisition of NetMind. An additional charge of $4,218,000 was incurred for purchased in-process research and development in connection with the acquisitions of ProxiNet, Inc.· License Revenue

• The results of operations for fiscal year 1999 include charges of $4,238,000 for accretion of redeemable convertible preferred stock in connection with the acquisition of NetMind, $768,000 associated with the restructuring program implemented for the purpose of consolidating the majority of our engineering and development work at existing facilities in Nashua, New Hampshire, and $410,000 for non-cash stock compensation expense incurred in connection with our initial offering of shares of common stock to the public.

	Year Ended July 31,
	2005			Percent Change			2004
	(In thousands, except percentage)
License revenue	$	39,244			38.7	%	$	28,292
As percentage of total revenue	66.0		%				66.9		%

37License revenue is earned from the sale and use of software products (including our technology licensing components) and royalty agreements with original equipment manufacturers, or OEMs. The increase in license revenue in absolute dollars for fiscal 2005 as compared with that for fiscal 2004 reflected an increase in revenue of approximately $10,000,000 from licensing to our enterprise customers and $3,800,000 from our mobile carrier customers. A significant portion of the increase in enterprise revenue was contributed by sales of Intellisync Mobile Suite and other products from Synchrologic (acquired in December 2003) and products from Identity Systems (acquired in March 2004). The increase in license revenue was partially offset by a $3,500,000 decrease in our retail revenue as a result of overall decline in sales of wired or traditional PDAs. We expect that the decreasing revenue from PDAs will continue as more consumers move to smartphones and other wireless mobile devices.

~~Table of Contents~~· Services revenue

Condensed Consolidated Statements of Operations Data

	Year Ended July 31,
	2005			Percent Change			2004
	(In thousands, except percentage)
Services revenue	$	20,254			44.5	%	$	14,016
As percentage of total revenue	34.0		%				33.1		%

	Year Ended July 31,
	2003			2002			2001			2000			1999
	(In thousands, except per common share data)
Revenue	$	24,860		$	22,940		$	38,202		$	30,512		$	20,543
Net loss	$	(7,736	)	$	(34,518	)	$	(41,818	)	$	(22,199	)	$	(5,828	)
Accretion of mandatorily redeemable convertible preferred stock to redemption value		—			—			—			(3,877	)		(4,238	)
Net loss attributable to common stockholders	$	(7,736	)	$	(34,518	)	$	(41,818	)	$	(26,076	)	$	(10,066	)
Basic and diluted net loss per common share	$	(0.17	)	$	(0.77	)	$	(0.96	)	$	(0.74	)	$	(0.34	)

Service revenue is derived from fees for services, including fixed-price and time-and-materials professional services arrangements, amortization of maintenance contract programs and hosting fees. The increase in service revenue for fiscal 2005 as compared with that for fiscal 2004 resulted from a total increase of approximately $9,000,000 brought about by an increase in amortization of our maintenance contract programs relating to the increase in license revenue, as well as revenue from our hosting services. This increase was offset by a decrease of approximately $2,200,000 in professional service revenue associated with our technology licensing partners.

~~Condensed~~In ~~Consolidated~~any ~~Balance~~period, service revenue from time and materials ~~Sheets~~contracts ~~Data~~is dependent, among other things, on license transactions closed during the current and preceding quarters and customer decisions regarding implementations of licensed software.

	July 31,
	2003		2002		2001		2000		1999
	(In thousands)
Cash, cash equivalents and short-term investments	$	27,159	$	34,431	$	48,908	$	85,260	$	28,516
Working capital	$	25,173	$	28,099	$	44,489	$	80,317	$	24,896
Total assets	$	41,167	$	47,312	$	78,934	$	118,655	$	37,122
Long-term obligations	$	921	$	1,991	$	—	$	310	$	—
Total stockholders’ equity	$	31,796	$	34,884	$	68,192	$	105,077	$	18,201

~~Summary~~Revenue ~~Condensed~~by ~~Quarterly~~Customer ~~Data~~ Group

	Three Months Ended
	Year Ended July 31,
	July 31, 2003				April 30, 2003				Jan 31, 2003			Oct 31, 2002			July 31, 2002			April 30, 2002			Jan 31, 2002			Oct 31, 2001
	2005			Percent Change				2004
	(In thousands, except per common share data)
	(In thousands, except percentage)
Revenue	$	7,304			$	6,725			$	5,821		$	5,010		$	4,404		$	5,722		$	6,163		$	6,651
Enterprise and retail	$	33,800			56.7	%		$	21,564
Cost of revenue		1,292				1,156				822			824			911			1,423			2,012			2,250
As percentage of total revenue	56.8		%					51.0		%
Gross profit		6,012				5,569				4,999			4,186			3,493			4,299			4,151			4,401
OEMs	$	16,028			(18.4	)%		$	19,631	%
Operating expenses		7,927				7,111				5,837			5,685			15,768			13,618			10,450			11,414
As percentage of total revenue	27.0		%					46.4		%
Operating loss	$	(1,915	)		$	(1,542	)		$	(838	)	$	(1,499	)	$	(12,275	)	$	(9,319	)	$	(6,299	)	$	(7,013	)
Mobile carriers	$	9,670			768.8	%		$	1,113
Net loss	$	(1,800	)		$	(3,813	)		$	(747	)	$	(1,376	)	$	(12,367	)	$	(9,330	)	$	(6,138	)	$	(6,683	)
As percentage of total revenue	16.2		%					2.6		%
Basic and diluted net loss per common share	$	(0.04	)		$	(0.08	)		$	(0.02	)	$	(0.03	)	$	(0.27	)	$	(0.21	)	$	(0.14	)	$	(0.15	)
Total revenue	$	59,498						$	42,308
Shares used in computing basic and diluted net loss per common share		47,071				46,106				45,764			45,383			45,193			44,831			44,821			44,629

38Our enterprise and retail products revenue includes sales to retail distribution channels, as well as direct sales of our personal and server products licensed to corporations for internal use. The increase in revenue from enterprise and retail for fiscal 2005 as compared with that for fiscal 2004 resulted from the full-year revenue from products of Synchrologic and Identity Systems, both acquired during fiscal 2004. Revenue from such products increased by approximately $13,500,000. The increase in revenue from enterprise and retail for fiscal 2005 was also due to approximately $2,100,000 in revenue from amortization of support and maintenance based on a higher license revenue base. This increase was offset by a decrease of approximately $3,500,000 in revenue from retail sales of our Intellisync software. Enterprise sales frequently involve large up-front license fees, which can result in lengthy sales cycles and uncertainties as to the timing of sales driven by customers’ budgetary processes. As a result, we generally have less visibility into future enterprise sales than is typically the case with OEMs in our royalty-based technology licensing business. In addition, while enterprise sales generally result in ongoing maintenance revenue and may lead to follow-on purchases or upgrades, we are typically dependent on sales to new customers for a significant portion of our enterprise revenue in a given quarter.

~~Table~~Fiscal 2005 reflected a full-year revenue from our mobile carrier business. The revenue increase from mobile carriers also reflected increased business volume from existing customers and increased number of ~~Contents~~new contracts signed during the fiscal year.

~~ITEM~~The 7growth in revenue from enterprise and retail and mobile carriers was partially offset by a decline in royalty revenue from our OEM customers. ~~MANAGEMENT’S~~This ~~DISCUSSION~~decrease ~~AND~~was ~~ANALYSIS~~primarily OFa ~~FINANCIAL~~result ~~CONDITION~~of declining ~~AND~~demand ~~RESULTS~~for OFthe ~~OPERATIONS~~products of our OEM customers.

~~The~~International following discussion includes a number of forward-looking statements. You should read this section in conjunction with the cautionary language applicable to such forward-looking statements described above in Item 1 found in Part I on this Form 10-K. You should not place undue reliance on these forward-looking statements, which speak only as of the date of this Annual Report on Form 10-K. We undertake no obligation to release publicly any revisions to the forward-looking statements or reflect events or circumstances after the date of this document. Revenue

Management’s discussion and analysis includes:

	Year Ended July 31,
	2005			Percent Change			2004
	(In thousands, except percentage)
International revenue	$	18,409			31.6	%	$	13,992
As percentage of total revenue	30.9		%				33.1		%

•International revenue ~~Business~~continues ~~overview~~to represent a significant portion of our revenue. The year-over-year increase in our international revenues accounted for 26% of our total revenue increase for fiscal 2005. Our international revenue growth, in absolute dollars, was a result of a number of factors including an increase in the number of our international technology licensing partners, particularly in Europe; the full-year revenue effect of Identity Systems during fiscal 2005; an increase in the number of sales people worldwide; and the effect of foreign exchange fluctuation. Our sales of Intellisync Mobile Suite particularly in United Kingdom and Italy were stronger than usual for the first half of fiscal 2005. This increase in international revenue was offset by a decrease in revenue from Japan primarily from the delay in closing of certain

~~• A discussion of estimates and assumptions affecting the application of our critical accounting policies.~~45

•contracts associated Awith ~~comparison~~our ofnew ~~our~~products. ~~results~~The slight decrease in international revenue as a percentage of ~~operations~~total revenue for fiscal ~~2003~~2005 ~~with~~was primarily due to increased revenue from our newer offerings in the ~~results~~United ~~for~~States. ~~fiscal~~We ~~2002~~expect that Synchrologic, Identity Systems and ~~the~~our ~~results~~other acquisitions will further strengthen our revenue, as well as our presence in Europe and Asia-Pacific. We believe, however, that international revenue will fluctuate on a quarter to quarter basis as we periodically enter into new agreements for ~~fiscal~~professional services ~~2002~~and ~~with~~new ~~those~~international partner contracts for ~~fiscal~~technology ~~2001~~licensing. International revenue may be subject to certain risks not normally encountered in operations in the United States, including exposure to tariffs, various trade regulations, fluctuations in currency exchange rates, as well as international software piracy as described more fully in “Factors That May Affect Future Operating Results” set forth below. We believe that continued growth will require further expansion in international markets. We have utilized and will likely continue to utilize substantial resources both to expand and establish international operations in the future.

•Top ~~Recently issued accounting pronouncements.~~Customers

•No Acustomers ~~discussion~~accounted for more than 10% of our ~~liquidity~~total ~~and~~revenue ~~capital~~during ~~resources~~fiscal 2005 and 2004.

~~Business~~Cost ~~Overview~~of Revenue

Pumatech, Inc. was incorporated in California in August 1993 and reincorporated in Delaware in November 1996. We develop, market and support synchronization, mobile-application development, and mobile-application management/device management software that enables consumers, business professionals and information technology (IT) professionals to extend the capabilities of enterprise groupware and vertical applications, handheld organizers/computers, Web-enabled cellular phones, pagers and other wireless or wireline personal communications platforms. Designed to connect people with essential information, anytime and anywhere, our product family includes the following offerings:

	Year Ended July 31,
	2005			Percent Change			2004
	(In thousands, except percentage)
Total cost of revenue	$	14,745			37.8	%	$	10,701
As percentage of total revenue	24.8		%				25.3		%

•Cost ~~Intellisync®~~of revenue consists of license costs, ~~Enterprise~~service costs ~~Intellisync®~~and the amortization of developed and core technology. License costs comprise product-packaging expenses such as product media and duplication, manuals, ~~Enterprise~~packing ~~Intellisync~~supplies, ~~Server~~and shipping costs, as well as third party royalty fees. Service costs include the following types of costs: personnel-related expenses such as salaries and ~~Satellite~~other ~~Forms®~~related ~~software~~costs associated with work performed under professional service contracts and non-recurring engineering agreements; post-sales customer support costs and hosting costs associated with our technology licensing partners and end users. Hosting costs include expenses related to bandwidth for hosting, tape backup, security and storage, third-party fees and internal personnel costs associated with logistics and operational support of the hosting services. Service costs can be expected to vary significantly from period to period depending on the mix of services we provide.

•In ~~TrueSync®~~general, ~~software~~license revenue ~~developed~~costs byrepresent a smaller percentage of license revenue when compared with services revenue costs as a percentage of services revenue; this is due to the high cost structure of services revenue. Additionally, license costs tend to be variable based on license revenue volumes, whereas service costs tend to be fixed within certain services revenue volume ranges. We would expect that an increase in services revenue as a percentage of our ~~new~~total revenue ~~wholly~~would ~~owned~~generate ~~subsidiary~~lower overall gross margins as a percentage of total revenue. Also, ~~Starfish~~given ~~Software~~the high level of fixed costs associated with the professional services group and our hosting operations, ~~Inc~~our inability to generate revenue sufficient to absorb these fixed costs could lead to low or negative service gross margins.;

•· Cost ~~Intellisync~~of License ~~for Oracle software;~~Revenue

• Intellisync goAnywhere (formerly known as LoudPC™) software recently acquired from Loudfire, Inc.;

	Year Ended July 31,
	2005			Percent Change			2004
	(In thousands, except percentage)
Cost of license revenue	$	1,585			(23.0	)%	$	2,059
As percentage of license revenue	4.0		%				7.3		%

~~• our technology licensing software: the Intellisync Software Development Kit (Intellisync SDK) and our new Application Data Synchronization platform;~~46

•The ~~Synchrologic~~decrease ~~Mobile~~in ~~Suite~~cost ~~enterprise~~of license ~~server~~revenue ~~platform,~~in ~~resulting~~fiscal ~~from~~2005 ~~the~~was ~~definitive~~attributed ~~merger agreement signed by Pumatech~~ to ~~acquire~~lower ~~Synchrologic,~~packaging ~~Inc.~~and distribution Acosts ~~licensing~~due ~~agreement gives us the ability~~ to ~~sell~~decrease ~~Synchrologic’s~~in ~~Mobile~~overall ~~Suite~~revenue ~~beginning~~from ~~September~~retail ~~14, 2003~~products. ~~Should the acquisition fail to occur, the licensing will continue through the end of the three-year term of the agreement.~~

We· Cost ~~have organized our operations into a single operating segment encompassing the development, marketing and support~~ of software and services that provide synchronization, mobile application development, application/device management, real-time remote information access, and secure Virtual Private Network (sVPN™ -obtained from our acquisition of substantially all of ~~the~~Services ~~assets of Spontaneous Technology, Inc. on September 17, 2003).~~ Revenue

We license our software products directly to corporations, original equipment manufacturers (OEMs) and business development organizations worldwide. In addition, we sell our retail products through several distribution channels both in the United States and internationally, including major distributors, resellers,

	Year Ended July 31,
	2005			Percent Change			2004
	(In thousands, except percentage)
Cost of services revenue	$	8,478			42.5	%	$	5,949
As percentage of services revenue	41.9		%				42.4		%

39The increase in cost of services revenue in absolute dollars reflected the effect of planned increases of $1,100,000 in mobile hosting and $800,000 in post-sales support infrastructure and $600,000 in other related expenses. In future periods, cost of revenue may further fluctuate from quarter to quarter due to potential changes in the infrastructure and other requirements of our hosting operations to meet carriers demand. These changes, which may be costly, are difficult to forecast. In addition, our cost of revenue is primarily driven by our expectation for different margin characteristics within and between license and service revenue as well as the expected mix between products and channels.

~~Table~~ · Amortization of ~~Contents~~Developed and Core Technology

computer dealers, retailers and mail-order companies. Internationally, we are represented by over 100 distributors and resellers in North America, Europe, the Asia-Pacific region, South America and Africa.

	Year Ended July 31,
	2005			Percent Change			2004
	(In thousands, except percentage)
Amortization of developed and core technology	$	4,683			73.9	%	$	2,693
As percentage of total revenue	7.9		%				6.4		%

~~Part~~Developed ofand ~~our mandate~~core istechnology amounted to ~~enhance shareholder value through an acquisition strategy that targets companies where our management~~$14, ~~shareholders~~ 552,000 and ~~corporate~~$15,867,000, ~~structure~~net ~~can~~of beaccumulated ~~leveraged~~amortization, toas ~~improve~~of ~~strategic~~July 31, ~~market~~2005 ~~position~~ and ~~growth potential in both emerging and~~ ~~established~~2004, ~~technologies~~respectively. ~~Our~~We ~~recent~~continue ~~acquisitions, together with our internal development efforts, have been aimed at expanding our focus from cabled synchronization~~ to ~~synchronization~~amortize ~~for~~other ~~wireless~~intangible ~~handhelds~~assets, ~~smartphones, laptops and tablets, where~~review ~~a number of industry analysts,~~ such asassets ~~International~~for ~~Data~~impairment ~~Corporation~~under ~~(IDC),~~SFAS ~~predict important growth in the near future~~No. 144, ~~With~~“Accounting for the ~~acquisition~~Impairment ofor ~~Starfish,~~Disposal ~~asset purchase~~ of ~~Loudfire~~Long-Lived ~~and~~Assets,” ~~Spontaneous~~reassess ~~Technology and planned acquisition of~~their ~~Synchrologic,~~useful welives ~~believe our management~~ and ~~employee~~make ~~efforts~~any ~~should~~necessary ~~continue to aid in our growth and development~~adjustments.

WeAmortization of ~~expect~~purchased totechnology ~~continue~~is tocomputed ~~implement~~over ~~our~~the ~~development~~estimated ~~strategy~~useful inlives ~~fiscal~~of ~~2004~~the respective assets, generally three to seven years. ToThe increase ~~market~~in ~~share,~~the amortization weof ~~may~~developed ~~also~~and ~~attempt~~core totechnology ~~acquire~~for orfiscal ~~seek~~2005 ~~alliances~~were primarily ~~with~~due ~~key~~to ~~competitors~~the ~~and~~impact ~~other~~of ~~companies~~developed ~~that~~and ~~may~~core ~~have~~technology ~~important~~acquired ~~products~~from Spontaneous Technology, Synchrologic and ~~synergies~~Identity ~~with~~Systems ~~our~~during ~~existing~~fiscal ~~operations~~2004 and ~~products~~Tourmaline and PDAapps during fiscal 2005. Based on acquisitions completed as of July 31, 2005, we expect the future amortization expense of developed and core technology is as follows (in thousands):

Acquisitions

Fiscal year ending July 31,
2006	$	4,992
2007	4,872
2008	2,568
2009	1,195
2010	733
Thereafter	192
	$	14,552

InWe ~~July~~expect ~~2003,~~that we ~~signed~~may ~~and closed an agreement to~~ acquire ~~substantially~~additional ~~all~~developed ~~of the assets of Loudfire, Inc. of Tulsa, Oklahoma, developer of LoudPC~~and ~~software~~core ~~(recently~~technology ~~rebranded~~in ~~and~~connection ~~repackaged and now called “Intellisync goAnywhere”). Intellisync goAnywhere is designed to allow anyone~~ with anany ~~Internet~~acquisitions ~~browser~~we ormay ~~Web-enabled~~complete ~~phone to enjoy real-time access to email and PIM (personal information management) data located~~ in ~~either Microsoft Outlook or Outlook Express. The product also provides secure access to pre-specified files residing on a host personal computer. Under~~ the ~~terms of the asset purchase agreement, we paid~~ ~~$1,000,000 in cash and issued 134,445 shares of our common stock~~future. ~~Additionally,~~As ~~depending~~a ~~upon our revenues associated with sales of our products including certain technology of Loudfire during the 12 months following the closing of the asset purchase~~result, we may befurther ~~required~~increase ~~to pay Loudfire additional consideration of up to $3,500,000 in cash or, at~~ our ~~election,~~amortization ~~shares~~expense of developed ~~our~~and ~~common~~core ~~stock~~technology.

In March 2003, we signed and closed a purchase agreement with Motorola, Inc. of Schaumburg, Illinois to acquire all of the capital stock of Starfish Software, Inc., a wholly owned subsidiary of Motorola headquartered in Scotts Valley, California. Starfish is a provider of end-to-end mobile infrastructure solutions based on integrated platforms composed of server, desktop and device software for mobile data synchronization, wireless connectivity and device management. Under the terms of the stock purchase agreement, we paid an aggregate amount of $1,402,000 in cash, net of $277,000 cash acquired. 47

InResearch ~~November 2000, we signed~~ and closed an agreement to acquire certain intellectual property and other assets of SwiftTouch Corporation of Bedford, Massachusetts, a provider of Web-based Universal Access Solutions. Under the terms of the asset purchase agreement, we paid $320,000 in cash and issued 100,000 shares of our common stock. Development

In October 2000, we signed and closed an asset purchase agreement with Vanteon Corporation, of Rochester, New York, to acquire select assets and assume certain liabilities of The Windward Group, a wholly owned subsidiary of Vanteon headquartered in Los Gatos, California. Windward is a professional services company specializing in creating consumer and enterprise solutions that combine mobile, wireless, desktop, Internet and database technology. Under the terms of the asset purchase agreement, we paid $12,250,000 and issued 42,757 shares of our common stock to Vanteon for certain assets of Windward.

	Year Ended July 31,
	2005			Percent Change			2004
	(In thousands, except percentage)
Research and development	$	14,604			27.4	%	$	11,467
As percentage of total revenue	24.5		%				27.1		%

~~Subsequent~~Research ~~Events~~and development expenses consist primarily of salaries and other related costs for research and development personnel, quality assurance personnel, product localization, fees to outside contractors and the cost of facilities and depreciation of capital equipment. We invest in research and development both for new products and to provide continuing enhancements to existing products. Our engineering group is currently focused on developing new functionality for wireless handhelds, smartphones, laptops and tablets, on extending our core synchronization technology to increase scalability and extensibility, and on supporting next generation wireless technology and device platforms. The increase in research and development spending in absolute dollars was due to the added headcount due to the acquisition of approximately 25 engineers from acquisitions of Tourmaline and PDAapps during the second half of fiscal 2005 and 71 additional engineers from the acquisitions of Spontaneous Technology, Synchrologic and Identity Systems during the first three quarters of fiscal 2004. The decrease in research and development expense as a percentage of revenue was due to the overall increase in total revenue. We expect that research and development expenses will increase in absolute dollars as we continue to increase associated costs to pursue additional new product development opportunities, but such expenses will fluctuate as a percentage of revenue due to changes in sales volume.

OnSales ~~September~~and ~~17, 2003, we consummated the acquisition of substantially all of the assets of Spontaneous Technology, Inc. of Salt Lake City, Utah, a provider of enterprise secure Virtual Private Network (sVPN)~~ Marketing

	Year Ended July 31,
	2005			Percent Change			2004
	(In thousands, except percentage)
Sales and marketing	$	27,551			66.6	%	$	16,540
As percentage of total revenue	46.3		%				39.1		%

~~Table~~Sales and marketing expenses consist primarily of salaries, ~~Contents~~commissions, promotional expenses (marketing and sales literature and presentations), marketing programs (trade shows, public relations) and other costs relating to sales and marketing employees. Sales and marketing expenses also include costs relating to technical support personnel associated with pre-sales activities such as building brand awareness, performing product and technical presentations and answering customers’ product and service inquiries. Sales and marketing expenses increased year-over-year due to an increase in number of sales people worldwide as we increased our selling efforts in the Mobile Carrier sales channel. We also added 22 new sales and marketing employees from the acquisitions of Synchrologic and 11 sales and marketing personnel from Identity Systems. The added personnel costs resulted in an increase of approximately $6,094,000 in fiscal 2005.

~~software~~The ~~designed~~increase toin ~~extend~~sales ~~existing~~and ~~corporate~~marketing ~~applications~~expenses towas ~~most~~also due ~~wireless~~to ~~devices.~~an ~~Under~~increase ~~the~~in ~~terms~~marketing ofprograms ~~the agreement, we issued a total of 1,093,676 shares of Pumatech’s common stock~~ and ~~assumed~~other ~~certain~~related ~~liabilities~~activities of ~~Spontaneous Technology in the aggregate amount of~~ approximately $13,~~344~~627,000. ~~The~~to ~~shares~~support ~~were~~increased ~~calculated~~revenue ~~using~~activities ~~the~~driven ~~average~~by ~~price of~~ our recent ~~common~~acquisitions ~~stock~~and ~~for~~establishing ~~ten~~strategic ~~consecutive~~relationships ~~trading~~with ~~days~~our existing ~~ended~~and ~~three~~prospective ~~business~~enterprise ~~days prior the date of acquisition~~customers. WeIncreased ~~expect~~sales toand ~~incur~~marketing-related travel aincreased ~~total~~by of approximately $~~300~~1,290,000 ~~direct transaction costs~~. ~~Additionally,~~We ~~depending~~intend ~~upon~~to ~~our~~increase ~~revenues~~awareness and ~~associated~~market ~~with~~presence ~~sales~~ of our existing and new products, ~~including~~services ~~certain~~or technology of ~~Spontaneous~~over ~~Technology during the period ending September 30~~time, ~~2004,~~which we may berequire ~~required~~us to ~~pay~~substantially ~~Spontaneous~~increase ~~Technology additional consideration of up to $7,000,000 in shares of Pumatech’s common stock. We plan to integrate~~ the ~~new~~amount ~~technologies~~ we spend ~~obtain~~on ~~from~~sales ~~this~~and ~~acquisition~~marketing ~~into~~in ~~our~~future ~~existing product lines~~periods. We ~~believe~~expect that ~~the~~our ~~new~~sales ~~products resulting from the combination of the Spontaneous Technology’s sVPN~~ and marketing ~~our~~expenses ~~Enterprise Intellisync Server~~ will ~~enable~~continue ~~our enterprise customers~~ to ~~provide~~ ~~mobile~~increase ~~device~~in ~~users~~terms ~~with~~of ~~access~~absolute todollars ~~corporate~~as ~~data~~we increase and ~~applications~~expand ~~securely~~our sales and ~~efficiently~~marketing ~~through~~efforts ~~existing corporate network infrastructure~~worldwide.

As a result of achieving certain revenue and cash flow goals established by our board of directors in September 2002, certain outstanding options to purchase our common stock issued to executive officers were accelerated in August 2003. 48

OnGeneral ~~September 14, 2003, we entered into a definitive merger agreement to purchase all of the issued~~ and outstanding stock of Synchrologic, Inc. headquartered in Alpharetta, Georgia. Under the terms of the agreement, each share of Synchrologic capital stock will be converted into the right to receive the number of shares (or the fraction of a share) of Pumatech common stock corresponding to the exchange ratio applicable to the class and series of Synchrologic capital stock being converted. The total number of shares of Pumatech common stock to be issued in the merger will be determined by dividing $60,000,000 by the average closing price of the shares of Pumatech common stock for the thirty consecutive trading days ending on the last complete trading day immediately preceding the closing date of the merger (which amount is subject to adjustment based on the transaction expenses incurred by Synchrologic in connection with the merger), provided that the number of shares of Pumatech common stock shares shall not exceed 19,800,000 or be fewer than 16,200,000 (in each case subject to adjustment based on the transaction expenses incurred by Synchrologic in connection with the merger). We will also assume certain liabilities equaling approximately $5,093,000 and incur direct transaction costs of approximately $650,000. Further, upon the execution of the definitive agreement, we and Synchrologic agreed to dismiss our outstanding litigation against Synchrologic with prejudice as of September 17, 2003, thereby permanently ending this specific suit. Completion of the acquisition is subject to approval by our and Synchrologic’s shareholders, as well as customary regulatory approvals and other closing conditions. We anticipate completion of the transaction by the end of the calendar year 2003. Synchrologic’s product line provides mobile access to enterprise applications, email and PIM data, file content, intranet sites, and Web content. We expect the transaction to generate operational savings and positive cash flow for us. A licensing agreement signed by both companies enables us to market and sell Synchrologic’s Mobile Suite platform as our server-based synchronization solution for enterprise customers beginning September 14, 2003. Should the acquisition fail to occur, the licensing agreement will continue through the end of the three-year term of the agreement. We expect to maintain and enhance Synchrologic’s Mobile Suite platform, which will form the cornerstone of our server-based enterprise synchronization offering. We believe that the acquisition of Synchrologic will enhance our enterprise offerings, while also serving to bolster our position, patent portfolio and technology leadership in the synchronization and mobile infrastructure software arenas. Administrative

On September 30, 2003, the board of directors approved change of control agreements with Messrs. Kitchen, Foster, and Mahgsoodnia that provide for 12 months acceleration of vesting of each individual’s options held at the time of the change of control. In addition, the company granted these individuals options to purchase an aggregate of an additional 425,000 shares of the company’s common stock. As of the date of grant, the option shares will vest over four years, with 25% vesting after one year and then 1/48th vesting monthly thereafter.

	Year Ended July 31,
	2005			Percent Change			2004
	(In thousands, except percentage)
General and administrative	$	9,036			18.3	%	$	7,639
As percentage of total revenue	15.2		%				18.0		%

OnGeneral ~~August~~and 1,administrative expenses consist primarily ~~2003~~of salaries and other costs relating to administrative, ~~the~~executive ~~United~~and ~~States~~financial personnel ~~District~~and ~~Court~~outside professional fees. The increase in general and administrative spending for fiscal 2005 was due to an increase in audit and consulting fees of approximately $1,200,000 which were related to complying with the ~~Northern~~new ~~District~~reporting requirements under The Sarbanes-Oxley Act of ~~California~~2002, (plus the ~~“Court”)~~cost ~~issued~~of three additional employees and other expenses amounting to approximately $1,761,000. This increase was partially offset by a ~~Claim~~$675,000 reduction ~~Construction~~in ~~Order~~non-cash variable accounting charges associated with certain outstanding stock options and a reduction of outside legal costs of $889,000, which ~~interpreting~~was ~~the~~due ~~scope~~to a settlement of ~~the~~a patent ~~claims~~infringement welawsuit. ~~made~~The ~~against~~decrease ~~Extended~~in general and administrative expense as a percentage of revenue for fiscal 2005 was due to the overall increase in overall revenue.

41In December 2004, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards (SFAS) No. 123R, “Share-Based Payment, an amendment of FASB Statements Nos. 123 and 95,” that requires the recognition of compensation cost relating to share-based payment transactions in financial statements. That cost will be measured by the fair value of the equity or liability instruments issued as of the grant date, based on the estimated number of awards that are expected to vest. SFAS 123(R) covers a wide range of share-based compensation arrangements including share options, restricted shares, restricted share units performance-based awards, and employee share purchase plans. Statement 123(R) replaces FASB Statement No. 123, “Accounting for Stock-Based Compensation,” and supersedes Accounting Principles Board (APB) Opinion No. 25, “Accounting for Stock Issued to Employees.” Statement 123(R), as amended, is effective for our fiscal year 2006. As a result, we will be required to implement SFAS 123R in the quarter ending October 31, 2005. We are presently studying SFAS No. 123R and have not yet determined which method we will select for our adoption of SFAS No. 123R. We expect that the adoption of SFAS No. 123 will have a material impact on our annual earnings.

~~Table~~In-Process ofResearch ~~Contents~~and Development

Systems from the July 2, 2003 Claims Construction hearing. Extended Systems has requested that three of the patents in dispute be re-examined by the Patent and Trademark Office (PTO). The PTO has issued initial Office Actions, rejecting our claims under the three patents. We are responding to the Patent Office Actions. On August 22, 2003, the Court heard and rejected Extended Systems’ request to stay the case with respect to the three patents involved in reexamination proceedings. The Court encouraged the parties to maintain the April 12, 2004 trial schedule. Fact discovery was completed on September 26, 2003; fact witness depositions ended on October 14, 2003; expert depositions will end on December 23, 2003; and preparation for the trial will continue through April 2004.

	Year Ended July 31,
	2005			Percent Change			2004
	(In thousands, except percentage)
In-process research and development	$	220			(94.0	)%	$	3,667
As percentage of total revenue	0.4		%				8.7		%

~~Estimates~~The purchase price of our recent acquisition of PDAapps was assigned to the fair value of the assets acquired, ~~Assumptions~~including the in-process research and ~~Critical~~development. ~~Accounting~~As ~~Policies~~of the acquisition date, technological feasibility of the in-process technology had not been established and the technology had no alternative future use and , therefore, we expensed the in-process research and development of $220,000 at the date of the acquisition.

The ~~following~~amount ~~discussion and analysis~~ of ~~financial~~the ~~condition~~purchase ~~and~~price ~~results~~allocated ~~of operations are based on our consolidated financial statements and notes~~to ~~thereto set forth~~ in ~~Part IV of this Annual Report on Form 10~~-K.process ~~Our~~research consolidated financial statements are prepared in accordance with generally accepted accounting principles (GAAP) in the United States. These accounting principles require us to make certain estimates, judgments and ~~assumptions,~~technology ~~which~~was ~~we review with our audit committee. We believe that the estimates, judgments and assumptions upon which we rely are reasonable~~ based ~~upon~~on ~~various~~established ~~factors and information available to us at the~~valuation ~~time~~techniques ~~that~~used ~~these estimates, judgments and assumptions are made. These factors and information may include, but are not limited to, history and prior experience, experience of other enterprises~~ in the ~~same~~high-technology ~~industry,~~software ~~new related events, current economic conditions and information from third party professionals~~industry. The ~~estimates,~~fair ~~judgments~~value assigned ~~and~~to ~~assumptions we make can affect~~ the ~~reported~~acquired ~~amounts~~in-process ofresearch ~~assets~~ and ~~liabilities~~development aswas ~~of the date of the financial statements, as well as the reported~~determined ~~amounts~~using ~~of revenues and expenses during~~ the ~~periods~~income ~~presented. To the extent there are material differences between these estimates~~approach, ~~judgments~~which ~~or assumptions and actual results, our financial statements will be affected.~~

We use estimates in accounting for, among other things, various revenue contracts, returns, recoverability of long-lived assets and investments, restructuring accruals, contingencies, allowances for uncollectible receivables, and depreciation and amortization. The significant accounting policies that we believe are the most critical to aid in fully understanding and evaluating our reported financial results include the following: 49

•discounts ~~License~~expected ~~and~~future cash ~~service~~flows to present value. The key assumptions used in the valuation include, among others, expected completion date of the in-process projects identified as of the acquisition date, estimated costs to complete the projects, revenue contributions ~~recognition~~and expense projections assuming the resulting product has entered the market, and discount rate based on the risks associated with the development life cycle of the in-process technology acquired. The discount rate used in the present value calculations is normally obtained from a weighted-average cost of capital analysis, adjusted upward to account for the inherent uncertainties surrounding the successful development of the in-process research and development, the expected profitability levels of such technology, and the uncertainty of technological advances that could potentially impact the estimates. We assume the pricing model for the resulting product of the acquired in process research and technology to be standard within its industry. We, however, did not take into consideration any consequential amount of expense reductions from integrating the acquired in-process technology with other existing in-process or completed technology. Therefore, the valuation assumptions do not include significant anticipated cost savings.

~~Revenue~~The ~~from~~key ~~license~~assumptions ~~fees~~underlying ~~is recognized when persuasive evidence of an arrangement exists, delivery of~~ the ~~product~~valuation ~~has occurred, no significant company~~of ~~obligations~~acquired ~~with~~in-process ~~regard~~research ~~to implementation or integration exist, the fee is fixed or determinable~~ and ~~collectibility~~development isfrom ~~probable.~~PDAapps ~~Arrangements for which the fees~~ are ~~not~~as ~~deemed~~follows ~~probable for collection are recognized upon cash collection. Arrangements for which the fees are not deemed fixed or determinable are recognized~~ (in ~~the period they become due. If we were to assess the collectibility of fees differently~~ thousands, ~~the~~except ~~timing~~percentage): ~~and amount of our revenue recognition might differ substantially from previously estimated or reported.~~

~~Services~~Project ~~revenue~~names: ~~primarily~~Enhanced ~~comprises~~version ~~revenue~~of ~~from~~VeriChat ~~consulting~~product—to ~~fees,~~feature ~~maintenance~~J2ME ~~contracts~~(Java ~~and~~2 ~~training.~~Platform, ~~Services~~Micro ~~revenue from consulting~~ Edition) and ~~training~~IMode issupport, ~~recognized~~presence asmanager ~~the~~(uses ~~service~~phone isstate ~~performed.~~to ~~Maintenance~~dictate ~~contracts include~~ the ~~right~~status ~~to unspecified upgrades and ongoing support.~~of ~~Maintenance~~a ~~revenue~~user isso ~~deferred~~others ~~and~~can ~~recognized~~decide ~~ratably~~if asthey ~~services~~should ~~are~~send ~~provided~~an ~~over~~instant ~~the~~messaging, ~~maintenance~~or ~~period.~~IM, ~~If we were to allocate more~~ or place ~~less~~a ~~value~~call), tosecure ~~the~~enterprise ~~unspecified~~chat ~~upgrades~~ and ~~ongoing~~carrier ~~support,~~branded ~~the timing of our revenue recognition might differ substantially from that previously reported.~~ chat

~~For~~Percent ~~contracts~~completed with multiple elements, and for which vendor-specific objective evidence of fair value for the undelivered elements exists, revenue is recognized for the delivered elements based upon the residual contract value as ~~prescribed by the American Institute~~ of ~~Certified~~acquisition ~~Public~~date: ~~Accountants in Statement of Position (SOP) No. 98~~30-9, “Modification of SOP No. 97-2 with Respect to Certain Transactions.” We have accumulated relevant information from contracts to use in determining the availability of vendor-specific objective evidence and believe that such information complies with the criteria established in SOP No. 97-2, “Software Revenue Recognition” which provides guidance on generally accepted accounting principles for recognizing revenue on software transactions. If we were to allocate the respective fair 50%

42Estimated costs to complete technology at acquisition date: $900

~~Table~~Risk-adjusted discount ofrate: ~~Contents~~25%

~~values~~First ofperiod ~~the~~expected ~~aforementioned~~revenue: ~~elements~~2nd ~~differently, the timing~~ quarter of ~~our~~calendar ~~revenue~~year ~~recognition might differ substantially from that previously estimated or reported.~~ 2006

~~License~~The ~~and~~development ~~service revenue associated with contracts that involve significant implementation~~ of ~~customization~~the ofabove ~~services,~~technology ~~which~~remains ~~are~~highly dependent ~~essential~~on to the ~~functionality~~remaining ofefforts ~~the~~to ~~software,~~achieve istechnical ~~recognized over the period of each engagement~~viability, ~~primarily using the percentage-of-completion method. Labor~~rapidly ~~hours~~changing ~~incurred~~customer ismarkets, ~~generally~~uncertain ~~used~~standards asfor ~~the~~a ~~measure~~new ofproduct, ~~progress~~and significant ~~towards~~competitive ~~completion~~threats asfrom ~~prescribed~~several ~~by SOP No~~companies. ~~81-1,~~The ~~“Accounting~~nature ~~for Performance~~ of ~~Construction-Type and Certain Product-Type Contracts.” Revenue for these arrangements is~~the ~~classified~~efforts asto ~~license~~develop ~~revenue~~this ~~and~~technology ~~service~~into ~~revenue~~a ~~based~~commercially ~~upon~~viable ~~estimates~~product ofconsists primarily ~~fair value~~ of ~~each~~planning, ~~element~~designing, experimenting, and ~~the~~testing ~~revenue is recognized based on the percentage-of-completion ratio for the arrangement. Recognized revenue is subject to revisions as the~~activities ~~engagement~~necessary ~~progresses~~ to ~~completion.~~determine ~~Revisions~~that ~~in estimates or estimated losses on engagements are made in~~ the ~~period~~technology incan ~~which~~meet ~~the~~market ~~loss~~expectations, including ~~becomes~~functionality ~~probable~~ and ~~can~~technical ~~be reasonably estimated~~requirements. ~~Considerable~~Failure ~~judgment,~~to ~~such~~bring as the ~~scope of work and reliance~~ onproduct ~~the customer or other vendors~~ to ~~fulfill~~market ~~some tasks, may be required~~ in ~~determining~~a ~~estimates~~timely tomanner ~~complete~~could anresult ~~engagement.~~in Ifa weloss ~~were to make different judgments or utilize different estimates~~ of ~~the~~market ~~total~~share ~~amount of work required to complete the~~or ~~engagement,~~a ~~the~~lost ~~timing~~opportunity ~~of our revenue recognition from period~~ to ~~period,~~capitalize ason ~~well~~emerging ~~as the related margins~~markets, ~~might~~and ~~differ~~could ~~substantially~~have ~~from that previously estimated or reported. We consider~~ a ~~project completed at the go-live date. When we sell~~material ~~additional~~adverse ~~licenses,~~impact weon ~~recognize~~our ~~revenue~~business ~~after the go-live date if the products or seats have been delivered~~ and nooperating ~~remaining obligations exist~~results.

•Subsequent ~~Channel~~to ~~inventory~~the acquisition of PDAapps, there have been no significant developments related to the current status of the acquired in-process research and ~~product~~development ~~returns~~project that would result in material changes to the assumptions.

~~The~~In ~~primary~~fiscal ~~sales~~2004 ~~channel into which~~ we ~~sell~~recorded ~~our products is~~ a ~~network~~charge of ~~distributors and value-added resellers in North America~~$3, ~~Europe~~667,000 ~~Asia Pacific,~~for ~~South~~in-process ~~America~~research and ~~Africa.~~development ~~Agreements~~associated with ~~our~~the ~~distributors~~acquisitions ~~and~~of Spontaneous ~~resellers~~Technology, ~~contain~~Synchrologic ~~specific product return privileges for stock rotation~~ and ~~obsolete~~Identity ~~products~~Systems. ~~that~~For ~~are~~more ~~generally~~details, refer ~~limited~~ to ~~contractual~~the ~~amounts.~~discussion ~~Reserves~~under ~~for~~the ~~estimated~~caption ~~future returns are~~“Fiscal ~~provided~~Year ~~for~~Ended ~~upon~~July 31, ~~revenue~~2004 ~~recognition. Product returns are recorded~~ as aCompared ~~reduction~~to ofFiscal ~~revenues.~~Year ~~Accordingly,~~Ended ~~we have established a product returns reserve composed of 100% of product inventories held at our distribution partners~~July 31, ~~as well as an~~ ~~estimated~~2003” ~~amount~~set ~~for~~forth ~~returns from customers of our distributors and other resellers as a result of stock rotation and obsolete products, among others~~below.

WeIf ~~evaluate~~all the above in-process research and development projects are not successfully developed, our ~~product~~future ~~returns~~revenues ~~reserve~~and onprofitability amay ~~quarterly~~be ~~basis~~adversely affected. InFailure ~~estimating~~to achieve ~~our~~the ~~product~~expected ~~returns~~levels ~~reserve,~~of werevenue ~~evaluate~~and net income from these products will negatively impact the ~~following~~return ~~factors:~~on investment expected at the time that the acquisitions were completed and may result in impairment charges. Additionally, the value of other intangible assets acquired may become impaired.

• our demand forecast by product in each of our principal geographic markets, which is affected by our product release schedule, seasonal trends, and analyses developed by our internal sales and marketing group;50

•Amortization ~~historical~~of ~~product~~Other Intangible ~~returns and inventory levels on a product by product basis;~~Assets

• current inventory levels and sell through data on a product by product basis as reported to us by our major distributors worldwide on a monthly basis;

	Year Ended July 31,
	2005			Percent Change			2004
	(In thousands, except percentage)
Amortization of other intangible assets	$	4,239			116.39	%	$	1,959
As percentage of total revenue	7.1		%				4.6		%

•Other ~~risk~~intangible ~~associated~~assets, ~~with~~excluding ~~recognizing~~developed ~~revenue~~and oncore technology, ~~individual~~amounted ~~customers~~to $11,394,000 ~~based~~and on$13,961,000, ~~facts~~net of accumulated amortization, as of July 31, 2005 and ~~circumstances;~~2004, respectively. We continue to amortize other intangible assets, review such assets for impairment under SFAS No. 144, reassess their useful lives and make any necessary adjustments.

•Amortization of ~~timing~~other intangible assets is computed over the estimated useful lives of ~~planned~~the respective ~~stock~~assets, ~~rotation;~~generally nine months to seven years. The increase in the amortization of other intangible assets in fiscal 2005 was primarily due to the impact of acquired intangibles from Spontaneous Technology, Synchrologic, Identity Systems, Tourmaline and PDAapps. Based on acquisitions completed as of July 31, 2005, we expect the future amortization expense of other intangible assets is as follows (in thousands):

• general economic conditions.

Fiscal year ending July 31,
2006	$	3,624
2007	3,108
2008	1,836
2009	995
2010	705
Thereafter	1,126
	$	11,394

InWe ~~general, we would~~ expect ~~product~~that ~~returns~~we tomay acquire ~~increase~~additional ~~following~~intangible ~~the~~assets ~~announcement~~associated ofwith ~~new~~any oracquisitions ~~upgraded~~we ~~versions~~may complete ~~of our products or~~ in ~~anticipation of such product announcements, as our distributors and resellers seek to reduce their inventory levels of~~ the ~~prior~~future. ~~version~~As of a ~~product in advance of receiving the new version. Similarly~~result, we ~~would~~may ~~expect~~further ~~that~~increase ~~product inventory held by~~ our ~~distributors and~~amortization ~~resellers~~expense ~~would increase following the successful introduction~~ of ~~new~~other orintangible ~~upgraded products, as these resellers stock the new version in anticipation of demand~~assets. ~~In assessing the appropriateness of product inventory levels held by our resellers and the impact on potential product returns, we may limit sales to our distributors~~

43Restructuring and Other Charges.

	Year Ended July 31,
	2005			Percent Change	2004
	(In thousands, except percentage)
Restructuring charges:
Severance costs		$	—		$	253
Facilities costs		—			600
Restructuring charges		$	—		$	853
Other charges:
Litigation settlement and related costs		$	355		$	—
Costs relating to potential acquisitions		150			76
Other charges		$	505

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