Form 10-Q

                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                              --------------------

           [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

                  For the quarterly period ended April 30, 2001

                                       OR

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

                     For the transition period from      to
                              --------------------

                         Commission File Number 0-21709

                                 PUMATECH, INC.

           Incorporated Pursuant to the Laws of the State of Delaware

                              --------------------

                  IRS Employer Identification Number 77-0349154

               2550 North First Street, San Jose, California 95131

                                 (408) 321-7650
                              --------------------

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by  Section  13 or 15(d)  of the  Securities  Exchange  Act of 1934,
during the preceding 12 months (or for such shorter  period that the  registrant
was  required  to file such  reports),  and (2) has been  subject to such filing
requirements for the past 90 days.
       Yes   X   No
           -----    ------

Indicate the number of shares  outstanding  of each of the  issuer's  classes of
common stock, as of May 31, 2001:
44,499,523


<PAGE>

<TABLE>
                                             PUMATECH, INC.

                                              10-Q REPORT

                                                 INDEX
<CAPTION>

                                                                                                        Page
                                                                                                       Number
                                                                                                       ------
<S>                          <C>                                                                          <C>
PART I - FINANCIAL INFORMATION                                                                             2

              Item 1.        Unaudited Condensed Consolidated Financial Statements                         2

                                    Condensed Consolidated Balance Sheets                                  2
                                    Condensed Consolidated Statements of Operations                        3
                                    Condensed Consolidated Statements of Cash Flows                        4

                             Notes to Unaudited Condensed Consolidated Financial Statements                5

              Item 2.        Management's Discussion and Analysis of
                             Financial Condition and Results of Operations                                15

              Item 3.        Quantitative and Qualitative Disclosures About Market Risk                   42


PART II - OTHER INFORMATION  43

              Item 1.        Legal Proceedings                                                            44

              Item 2.        Changes in Securities and Use of Proceeds                                    44

              Item 3.        Defaults Upon Senior Securities                                              44

              Item 4.        Submission of Matters to a Vote of Security Holders                          44

              Item 5.        Other Information                                                            44

              Item 6.        Exhibits and Reports on Form 8-K                                             44


SIGNATURE                                                                                                 45

EXHIBIT 10.1 - LOAN AND SECURITY AGREEMENT                                                                46

</TABLE>

                                                   1

<PAGE>


<TABLE>
                                                PUMATECH, INC.

                                        PART I - FINANCIAL INFORMATION

                         Item 1. Unaudited Condensed Consolidated Financial Statements

                                     CONDENSED CONSOLIDATED BALANCE SHEETS
                                     (In thousands, except per share data)
                                                  (Unaudited)
<CAPTION>
                                                                                April 30,           July 31,
                                                                                  2001                2000
                                                                                ---------           ---------
<S>                                                                             <C>                 <C>
Assets
Current assets:
   Cash and cash equivalents............................................        $  28,388           $  54,492
   Short-term investments...............................................           24,590              30,768
   Accounts receivable, net of allowance for doubtful accounts of $1,015
      at April 30, 2001 and $1,210 at July 31, 2000....................             6,358               6,350
   Inventories, net.....................................................              228                 235
   Other current assets.................................................            2,208               1,732
                                                                                ---------           ---------
      Total current assets..............................................           61,764              93,585

Property and equipment, net............................................             7,665               4,828
Intangible assets, net..................................................           24,894              17,109
Other assets............................................................            4,156               3,133
                                                                                ---------           ----------
          Total assets..................................................        $  98,479           $ 118,655
                                                                                =========           ==========
Liabilities and Stockholders' Equity
Current liabilities:
   Accounts payable.....................................................        $   1,882           $   2,601
   Accrued liabilities..................................................            3,525               4,036
   Current portion of long-term notes payable...........................              259                 259
   Deferred revenue.....................................................            3,850               6,372
                                                                                ---------           ---------
      Total current liabilities.........................................            9,516              13,268

Long-term notes payable.................................................              108                 310
                                                                                ---------           ---------
      Total liabilities.................................................            9,624              13,578
                                                                                ---------           ---------
Commitments and contingencies

Stockholders' equity:
   Preferred stock, $0.001 par value; 2,000 shares authorized and no
      shares issued and outstanding at April 30, 2001 and July 31, 2000.                -                   -
   Common stock,  $0.001 par value;  80,000 shares  authorized and 44,477 shares
      issued and  outstanding  at April 30, 2001;  60,000 shares  authorized and
      42,307 shares issued and outstanding at July 31, 2000.............               44                  42
   Additional paid-in capital...........................................          148,426             146,051
   Receivable from stockholders.........................................             (330)               (330)
   Deferred stock compensation..........................................           (1,029)             (3,114)
   Accumulated deficit..................................................          (58,417)            (37,589)
   Other comprehensive income...........................................              161                  17
                                                                                ---------           ---------
      Total stockholders' equity........................................           88,855             105,077
                                                                                ---------           ---------
          Total liabilities and stockholders' equity....................        $  98,479          $  118,655
                                                                                =========           =========
<FN>
            See accompanying notes to unaudited condensed consolidated financial statements.
</FN>
</TABLE>

                                                      2

<PAGE>

<TABLE>
                                                PUMATECH, INC.

                                CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                                     (In thousands, except per share data)
                                                  (Unaudited)
<CAPTION>

                                                                       Three Months Ended    Nine Months Ended
                                                                           April 30,             April 30,
                                                                      --------------------  --------------------
                                                                        2001        2000     2001        2000
                                                                      ---------  ---------  ---------- ---------
<S>                                                                 <C>         <C>         <C>         <C>
Revenue
   License ......................................................   $  8,209    $  7,065    $ 26,253    $ 19,612
   Services .....................................................      2,136         949       5,326       2,175
                                                                    --------    --------    --------    --------
        Total revenue ...........................................     10,345       8,014      31,579      21,787
                                                                    --------    --------    --------    --------
Cost and operating expenses:
   Cost of revenue ..............................................      2,873         882       7,332       2,524
   Research and development (includes non-cash stock compensation
     of $61, $105, $134 and $308) ...............................      6,090       4,897      18,675      11,693
   Sales and marketing (includes non-cash stock compensation of
     $185, $147, $405 and $510) .................................      5,702       4,794      16,418      11,617
   General and administrative (includes non-cash stock
     compensation of $46, $213, $194 and $508) ..................      1,720       1,458       4,685       3,765
   In-process research and development ..........................       --          --          --         4,218
   Amortization of intangibles ..................................      2,157         824       5,853       1,733
   Merger costs .................................................       --         6,322        --         6,322
   Severance and facilities costs ...............................        583        --           583        --
                                                                    --------    --------    --------    --------
       Total cost and operating expenses ........................     19,125      19,177      53,546      41,872
                                                                    --------    --------    --------    --------
Operating loss ..................................................     (8,780)    (11,163)    (21,967)    (20,085)
Other income, net ...............................................        766       1,309       2,617       3,549
Other-than-temporary impairment of direct investments ...........     (1,180)       --        (1,180)       --
                                                                    --------    --------    --------    --------
Loss before income taxes ........................................     (9,194)     (9,854)    (20,530)    (16,536)
Provision for income taxes ......................................        (80)       (159)       (298)       (517)
                                                                    --------    --------    --------    --------
Net loss ........................................................     (9,274)    (10,013)    (20,828)    (17,053)

Accretion of mandatorily redeemable convertible preferred stock
   to redemption value ..........................................       --          (577)       --        (3,877)
                                                                    --------    --------    --------    --------
Net loss attributable to common stockholders ....................   $ (9,274)   $(10,590)   $(20,828)   $(20,930)
                                                                    ========    ========    ========    ========
Basic and diluted net loss per share ............................   $  (0.21)   $  (0.26)   $  (0.48)   $  (0.62)
                                                                    ========    ========    ========    ========
Shares used in computing basic and diluted net loss per share ...     44,220      39,995      43,510      33,678
                                                                    ========    ========    ========    ========
<FN>
               See accompanying notes to unaudited condensed consolidated financial statements.
</FN>
</TABLE>

                                                      3

<PAGE>

<TABLE>
                                                PUMATECH, INC.

                                CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                                (In thousands)
                                                  (Unaudited)
<CAPTION>
                                                                                        Nine Months Ended
                                                                                            April 30,
                                                                               --------------------------------
                                                                                     2001            2000
                                                                               ---------------- ---------------
<S>                                                                            <C>                  <C>
  Cash flows from operating activities:
     Net loss...........................................................       $  (20,828)          $  (17,053)
     Adjustments to reconcile net loss to net cash used in operating
     activities:
        Purchased in-process research and development...................                -                 4,218
        Costs of consolidating facilities...............................              402                     -
        Other-than-temporary impairment of direct investments...........            1,180                     -
        Allowance for doubtful accounts and sales returns...............              890                 1,009
        Depreciation and amortization...................................            7,765                 2,777
        Non-cash stock compensation.....................................              733                 1,326
        Realized loss on sale of short-term investments.................              284                (2,182)
     Changes in operating assets and liabilities:
        Accounts receivable.............................................             (998)               (4,881)
        Inventories.....................................................                7                   (11)
        Other current assets............................................             (375)               (1,334)
        Accounts payable................................................             (719)                  558
        Accrued liabilities.............................................             (725)                1,521
        Deferred revenue................................................           (2,522)                1,395
        Other assets....................................................             (636)               (1,263)
                                                                               ---------------- ---------------
  Net cash used in operating activities.................................          (15,542)              (13,920)
                                                                               ---------------- ---------------
  Cash flows from investing activities:
     Purchase of property and equipment.................................           (4,324)               (2,167)
     Maturities/sales short-term investments, net.......................            6,054                 3,404
    Purchase of investments.............................................           (1,054)                    -
    Acquisitions of businesses..........................................          (12,570)                    -
                                                                               ---------------- ---------------
  Net cash provided by (used in) investing activities...................          (11,894)                1,237
                                                                               ---------------- ---------------
  Cash flows from financing activities:
     Principal payments on notes payable................................             (202)                    -
     Loan to related party..............................................             (235)                    -
     Notes advances to stockholders, net................................                -                    (1)
     Proceeds from line of credit, net..................................                -                   313
     Proceeds from exercise of warrants.................................                2                     -
     Proceeds upon exercise of stock options, net.......................              946                   957
     Proceeds from newly issued common stock, net.......................              821                77,280
     Payments to settle acquired liabilities............................                -                  (764)
                                                                               ---------------- ---------------
  Net cash provided by financing activities.............................            1,332                77,785
                                                                               ---------------- ---------------

  Net increase (decrease) in cash and cash equivalents..................          (26,104)               65,102
  Cash and cash equivalents at beginning of period......................           54,492                16,639
                                                                               ---------------- ---------------
  Cash and cash equivalents at end of period............................       $   28,388           $    81,741
                                                                               ================ ===============
  Supplemental disclosure of cash flow information:
     Interest paid......................................................       $       45           $        40
                                                                               ================ ===============
     Income taxes paid..................................................       $      345           $       486
                                                                               ================ ===============
     Common stock issued in connection with business acquisition........       $    1,572           $    14,787
                                                                               ================ ===============
     Non-cash stock compensation (recovery) charge, net.................       $   (1,352)          $       968
                                                                               ================ ===============
     Accretion of redeemable convertible preferred stock................       $        -           $     3,877
                                                                               ================ ===============
<FN>
               See accompanying notes to unaudited condensed consolidated financial statements.
</FN>
</TABLE>

                                                      4

<PAGE>


                                 PUMATECH, INC.

         NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


Note 1  Basis of Presentation

The accompanying condensed  consolidated financial statements of Pumatech,  Inc.
(Pumatech or the Company) for the three and nine months ended April 30, 2001 and
2000 are unaudited and reflect all normal  recurring  adjustments  which are, in
the  opinion  of  management,  necessary  for  their  fair  presentation.  These
condensed  consolidated  financial statements should be read in conjunction with
the Company's  consolidated  financial  statements and notes thereto included in
the  Company's  Annual  Report on Form 10-K for the  fiscal  year ended July 31,
2000.  The  condensed  consolidated  balance  sheet as of July 31, 2000 has been
derived from the audited financial  statements at that date but does not include
all of the information and footnotes required by generally  accepted  accounting
principles for complete financial statements.  Certain prior period amounts have
been reclassified to conform to the current period's  presentation.  The results
of operations  for the interim  period ended April 30, 2001 are not  necessarily
indicative of results to be expected for the full year.


Note 2  Recently Issued Accounting Pronouncement

Derivative Instruments and Hedging Activities

In June 1998, the Financial  Accounting  Standards Board (FASB) issued Statement
of Financial  Accounting  Standards  (SFAS) No. 133,  "Accounting for Derivative
Instruments and Hedging Activities," which establishes  accounting and reporting
standards  for  derivative  instruments  and  hedging  activities.  SFAS 133 was
amended  by SFAS 138 in June  2000.  SFAS  133 and 138  require  that an  entity
recognize all  derivatives  as either assets or liabilities on the balance sheet
and  measure  those  instruments  at  fair  value.  The  Company  adopted  these
statements  on August 1,  2000.  Since the  Company  does not  engage in hedging
activities and does not buy or sell derivative instruments, the adoption of SFAS
133 and 138 had no impact on the consolidated financial statements.

Revenue Recognition and Financial Statements

In December 1999, the Securities and Exchange  Commission (SEC) issued SEC Staff
Accounting   Bulletin   (SAB)  No.  101,   "Revenue   Recognition  in  Financial
Statements." SAB 101 summarized certain of the SEC's views in applying generally
accepted accounting  principles to revenue recognition in financial  statements.
SAB 101 must be  implemented  by the Company no later than its fourth quarter of
fiscal 2001. The Company is reviewing the  requirements of SAB 101 and currently
believes that its revenue  recognition policy is consistent with the guidance of
SAB 101.


                                       5

<PAGE>

<TABLE>
Note 3  Balance Sheet Components

Inventories, net, consist of the following:
<CAPTION>
                                                                                 April 30,        July 31,
                                                                                   2001             2000
                                                                              -------------- ----------------
                                                                                      (In thousands)
<S>                                                                             <C>            <C>
Raw materials...............................................................    $     125      $      173
Finished goods and work-in-process..........................................          149             149
                                                                              -------------- ----------------
                                                                                      274             322
Less: Inventory reserves...................................................           (46)            (87)
                                                                              -------------- ----------------
    Inventories, net........................................................    $     228      $      235
                                                                              ============== ================

Property and equipment, net, consist of the following:

                                                                                April 30,        July 31,
                                                                                  2001             2000
                                                                              --------------  ---------------
                                                                                      (In thousands)
 Computer equipment and software...........................................     $  10,436      $    5,977
 Furniture and office equipment............................................         2,535           2,313
 Leasehold improvements....................................................         1,074           1,006
                                                                              --------------  ---------------
                                                                                   14,045           9,296
 Less: Accumulated depreciation and amortization...........................        (6,380)         (4,468)
                                                                              --------------  ---------------
    Property and equipment, net.............................................    $   7,665      $    4,828
                                                                              ==============  ===============

Intangible assets, net, consist of the following:

                                                                                April 30,        July 31,
                                                                                  2001             2000
                                                                              --------------  ---------------
                                                                                      (In thousands)
 Intangible assets:
    Goodwill...............................................................    $   24,719      $   14,130
    Developed technology....................................................        7,229           5,711
    Acquired workforce-in-place............................................         2,231             900
    Existing contracts......................................................          200               -
                                                                              --------------  ---------------
                                                                                   34,379          20,741
    Less: Accumulated amortization..........................................       (9,485)         (3,632)
                                                                              --------------  ---------------
        Intangible assets, net..............................................   $   24,894      $   17,109
                                                                              ==============  ===============
</TABLE>

Additions to intangible assets arose from the asset acquisitions of The Windward
Group  and  SwiftTouch  Corporation.  See  Note 10 for more  information  on the
acquisitions.  Additions to goodwill  also include an  adjustment of $142,000 to
goodwill relating to the acquisition of Dry Creek Software in fiscal 2000.


Note 4  Related Party Transaction

In April 2001, the Company loaned its Chief Financial  Officer $235,000 which is
repayable on or before April 16, 2002. The interest rate is 6% per annum. In the
event that the officer's  employment with the Company is terminated,  any unpaid
principal and interest shall be due on the 185th day from the termination, or on
the due date, whichever is sooner.


                                       6

<PAGE>

Note 5  Long-Term Investments

The  Company is a limited  partner in a venture  capital  fund and also  invests
directly  for  business  and  strategic   purposes  in  equity   instruments  of
privately-held  companies,  which include a number of its strategic partners who
are  both  customers  and  vendors.  These  investments  are  included  in other
long-term  assets  and are  accounted  for under the cost  method as none of the
investments  represents over 5% ownership in the respective  companies,  and the
Company  does  not have the  ability  to  exercise  significant  influence  over
operations. These investments consist of the following (in thousands):

                                                        April 30,    July 31,
                                                           2001         2000
                                                      -----------  -----------
Azure Venture Partners, LLP.......................... $   2,250    $   1,250
YadaYada, Inc. (fka Free Communications, Inc.).......         -          750
If & Then, Inc.......................................         -          330
PulseMD Corporation (fka 7th Street, Inc.)...........         -          100
Others...............................................        56            2
                                                      -----------  -----------
       Long-term investments......................... $   2,306    $   2,432
                                                      ===========  ===========

The  Company  regularly   reviews  the  assumptions   underlying  the  operating
performance  and cash flow  forecasts of its investees in assessing the carrying
values of the investments.  The Company identifies and records impairment losses
when events and circumstances indicate that such assets might be impaired.

As of the end of the third quarter of fiscal 2001,  the Company  concluded  that
the investments  associated with YadaYada,  If & Then, and PulseMD were impaired
as such  investments were deemed not to be recoverable.  These  investments were
fully  impaired  due to changes in capital  structure  impacting  the  Company's
investment preferences,  thin capitalization,  dilution due to dramatic declines
in  valuation  and overall lack of  persuasive  evidence  that would  indicate a
future  ability or intent of these  entities  that would  support  the  historic
carrying value of the Company's  investments.  As a result, the Company recorded
other-than-temporary impairment charges aggregating $1,180,000 for the three and
nine months ended April 30, 2001.


Note 6  Cost Reduction Plan

During the three  months ended April 30, 2001,  the Company  implemented  a cost
reduction  plan.  The Company's  primary cost reduction  initiatives  included a
reduction in workforce and facilities  consolidation.  The workforce  reduction,
which  was   completed   during   April   2001,   represented   a  reduction  of
approximately  20% of the Company's  then total  workforce or  approximately  57
full-time  equivalent  positions  including  20  contractors  and  37  permanent
employees,  the majority  holding  positions in  engineering  and in support for
engineering  related  projects.  The  associated  severance  costs incurred were
approximately $181,000.

The Company also incurred additional  restructuring charges aggregating $402,000
for  consolidating  facilities with space located in Santa Cruz,  California and
Nashua, New Hampshire. The costs of consolidating facilities include $174,000 of
future lease payments and $228,000 for accelerated  depreciation of property and
equipment, which consisted primarily of leasehold improvements, office equipment
and furniture and fixtures, to be disposed or removed from operations.


                                       7

<PAGE>

<TABLE>
A summary of the  severance  and  facilities  costs is  outlined  as follows (in
thousands):
<CAPTION>
                                            Total      Noncash                  Accrued Liabilities
                                           Charges     Charges   Cash Payments   at April 30, 2001
                                         ----------  ----------  -------------  --------------------
<S>                                      <C>           <C>         <C>                 <C>
Workforce reduction..................... $   181       $    -      $   181             $    -
Consolidation of excess facilities......     402          402            -                402
                                         ----------  ----------  -------------  --------------------
     Total.............................. $   583       $  402      $   181             $  402
                                         ==========  ==========  =============  ====================
</TABLE>

Amounts related to the net lease expense due to the  consolidation of facilities
will be paid over the respective lease terms through November 2001.


Note 7  Net Income (Loss) Per Share

Basic net income  (loss) per share is  computed by  dividing  net income  (loss)
available to common stockholders by the weighted average number of common shares
outstanding  for the period.  Diluted net income (loss) per share is computed by
dividing net income (loss) by the weighted average number of dilutive  potential
common shares that were outstanding during the period.  Diluted weighted average
shares reflect the dilutive effect,  if any, of potential common shares based on
the treasury stock method.
<TABLE>
Basic and diluted net loss per share were calculated as follows during the three
and nine months ended April 30, 2001 and 2000, respectively:
<CAPTION>
                                                                     Three Months Ended             Nine Months Ended
                                                                          April 30,                     April 30,
                                                                ---------------------------     ---------------------------
(In thousands, except per share amounts)                            2001            2000             2001          2000
                                                                ------------- -------------     ------------- -------------
<S>                                                             <C>              <C>            <C>              <C>
Numerator:
Net loss attributable to common stockholders................    $ (9,274)        $ (10,590)     $ (20,828)       $ (20,930)
                                                                ============= ============      ============= =============
Denominator:
Weighted average shares outstanding used to compute basic
    and diluted net loss per common share...................      44,220            39,995         43,510           33,678
                                                                ============= ============      ============= =============
Basic and diluted net loss per share........................    $  (0.21)        $   (0.26)     $   (0.48)       $   (0.62)
                                                                ============= ============      ============= =============
</TABLE>

All common shares that were held in escrow, totaling approximately 140,000 as of
April  30,  2001,  were  excluded  from  basic  and  diluted  net loss per share
calculations. See Note 10 for more information on common shares held in escrow.

Potential common shares attributable to mandatorily  redeemable preferred stock,
stock options, and warrants of 4,925,370 and 8,484,236 were outstanding at April
30, 2001 and 2000, respectively.  However, as a result of a net loss incurred by
the  Company in the three and nine months  ended  April 30,  2001 and 2000,  the
corresponding  weighted  average  outstanding  shares (using the treasury  stock
method)  were   antidilutive   and  were   excluded  from  net  loss  per  share
calculations.


                                       8

<PAGE>

Note 8  Comprehensive Income / (Loss)
<TABLE>
Accumulated  other  comprehensive  income (loss) on the  condensed  consolidated
balance  sheets  consists of  unrealized  gains  (losses) on available  for sale
investments and foreign currency  translation  adjustments.  Total comprehensive
loss for the three and nine months ended April 30, 2001 and 2000,  respectively,
is presented in the following table:
<CAPTION>

                                                         Three Months Ended       Nine Months Ended
(In thousands)                                               April 30,                April 30,
                                                      ---------------------     ---------------------
                                                          2001        2000        2001        2000
                                                      ---------- ----------     ---------- ----------
<S>                                                   <C>         <C>           <C>         <C>
Net loss ..........................................   $ (9,274)   $(10,013)     $(20,828)   $(17,053)
Other comprehensive income/(loss):
    Change in unrealized gain/(loss) on investments         39        (506)          160        (910)
    Change in currency translation adjustments ....          8          60           (16)         24
                                                      ---------- ----------     ---------- ----------
        Total other comprehensive income/(loss) ...         47        (446)          144        (886)
                                                      ---------- ----------     ---------- ----------
Total comprehensive loss ..........................   $ (9,227)   $(10,459)     $(20,684)   $(17,939)
                                                      ========== =========      ========== ==========
</TABLE>

The balance of unrealized gain on investments at April 30, 2001 consisted of net
unrealized  gain for our  holdings of  Amazon.com  common  stock and  government
bonds. The balance of unrealized loss on investments at April 30, 2000 consisted
entirely of unrealized loss from our holdings of Amazon.com common stock.


Note 9  Purchased In-Process Research and Development

The Company  expensed  purchased  in-process  research and development  costs of
$4,218,000 as a result of the ProxiNet, Inc. (ProxiNet) acquisition in the first
quarter of fiscal 2000.

The  ProxiNet  acquisition  has been  accounted  for as a  purchase.  The  total
purchase price of  approximately  $17,384,000  was assigned to the fair value of
the assets acquired, including the following (in thousands):

Tangible assets, net, acquired................   $     676
In-process research and development...........       4,218
Developed technology..........................       3,092
Acquired workforce-in-place...................         286
Goodwill......................................       9,112
                                                 ---------
                                                   $17,384
                                                 =========

As of the acquisition date, technological feasibility of the in-process research
and development  had not been  established and the technology had no alternative
future  use.  Therefore,  the  Company  expensed  the  in-process  research  and
development in the first quarter of fiscal year 2000.  The remaining  intangible
assets are being  amortized  using the  straight-line  method over the estimated
useful life of the assets ranging from 18 months to 5 years.

The value  assigned to this acquired  in-process  research and  development  was
determined by  identifying  research  projects in areas for which  technological
feasibility had not been  established as of the acquisition  date. These include
projects for ProxiWare(TM) and ProxiWeb(TM) technology. The value was determined
by estimating the revenue  contribution and the percentage of completion of each
of these


                                       9

<PAGE>

projects.  The  projects  were  deemed  to  be  55%  complete  on  the  date  of
acquisition.  The net cash  flows  were then  discounted  utilizing  a  weighted
average cost of capital of 27.5%,  which,  among other related  assumptions,  we
believe to be fairly accurate.  This discount rate takes into  consideration the
inherent uncertainties  surrounding the successful development of the in-process
research and development,  the expected profitability levels of such technology,
and the uncertainty of technological  advances that could potentially impact the
estimates  described  above.  Revenues were  projected to be generated in fiscal
2000 for the products in development at the acquisition date.

To date, actual results have been consistent, in all material respects, with our
assumptions at the time of the acquisition. The assumptions primarily consist of
an expected  completion  date for the in-process  projects,  estimated  costs to
complete the  projects,  and revenue and expense  projections  once the products
have entered the market. The projects for ProxiWare and ProxiWeb technology that
is currently branded as the Browse-it(TM)  product were completed,  as expected,
in the fourth quarter of fiscal 2000 and are now generating revenue.  Failure to
achieve the expected  levels of revenue and net income from this product  during
its entire life cycle will negatively  impact the return on investment  expected
at the time  that the  acquisition  was  completed  and  potentially  result  in
impairment of any other assets related to the development activities.


Note 10  Acquisitions

The Windward Group

In October 2000, the Company signed and closed an asset purchase  agreement with
Vanteon Corporation (Vanteon), of Rochester,  New York to acquire certain assets
and assume certain liabilities of The Windward Group (Windward),  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
in cash and placed  171,026  shares of Pumatech  common  stock in escrow.  These
shares will be valued upon  release  from escrow  based on the fair value of the
common stock on the release date and as a result, the amount of goodwill arising
from  the transaction may increase upon release of these shares. The shares will
be  released  in equal  installments  to  Vanteon  based on the  achievement  of
quarterly  performance  milestones through the first quarter of fiscal 2002. The
performance  milestones  set for the second quarter of fiscal year 2001 were met
and therefore 42,757 shares, valued at approximately $204,000, were released for
the quarter  ended January 31, 2001. As of the date of this Report on Form 10-Q,
no  additional  shares were released for the quarter ended April 30, 2001 as the
Company  had  not  yet  assessed  whether the performance milestones set for the
third quarter had been met. The agreement also provided for a rent reimbursement
from Vanteon for the Los Gatos  facility over the remaining  term of the related
lease   which   has  been  assumed  by  the  Company.   Approximately  $611,000,
representing  the  present  value  of  the  rent reimbursement, was treated as a
reduction of the purchase price.


                                       10

<PAGE>

The  Windward  acquisition  has  been  accounted  for  as  a  purchase  business
combination. The condensed consolidated financial statements include the results
of   operations  of  Windward   since  the  date  of   acquisition.   The  total
purchase  price of approximately $12,234,000 (including liabilities of $191,000,
acquisition  costs  of  $200,000,  and  released shares from escrow of $204,000)
was  assigned  to the fair value of net assets acquired, including the following
(in thousands):

Tangible assets acquired, net..............   $      406
Existing contracts.........................          200
Acquired workforce-in-place................        1,281
Goodwill...................................       10,347
                                              ----------
                                              $   12,234
                                              ==========

The  intangible  assets  acquired are being  amortized  using the  straight-line
method over the estimated  useful life of the assets.  The estimated useful life
of the existing  contracts is the  remaining  term of the  respective  contracts
ranging   from  one  to  four   months.   The  useful   life  of  the   acquired
workforce-in-place  and  goodwill  is  estimated  to be 18  months  and 5 years,
respectively.
<TABLE>
The following unaudited pro-forma  consolidated  financial  information reflects
the results of operations for the three and nine months ended April 30, 2001 and
2000, as if the acquisition of Windward had occurred on August 1, 1999 and after
giving effect to purchase accounting adjustments.  These pro- forma results have
been prepared for comparative  purposes only and do not purport to be indicative
of what  operating  results would have been had the  acquisition  actually taken
place on August 1, 1999.  In  addition,  these  results are not intended to be a
projection  of future  results and do not reflect  any  synergies  that might be
achieved from the combined operations.
<CAPTION>
                                                   Three Months Ended      Nine Months Ended
                                                        April 30,               April 30,
                                                 --------------------- -----------------------
                                                    2001        2000        2001       2000
                                                 ---------- ---------- ------------ ----------
                                                     (In thousands, except per share data)
<S>                                              <C>         <C>         <C>         <C>
Pro-forma revenue ............................   $ 10,345    $  9,949    $ 33,192    $ 28,042
Pro-forma net loss ...........................   $ (9,274)   $(12,222)   $(22,202)   $(24,495)
Pro-forma basic and diluted net loss per share   $  (0.21)   $  (0.30)   $  (0.51)   $  (0.72)
</TABLE>

SwiftTouch Corporation

In  November 2000, the Company signed and closed an asset purchase  agreement to
acquire certain intellectual property and other assets of SwiftTouch Corporation
(SwiftTouch) of Bedford, Massachusetts, a provider of Web-based Universal Access
Solutions.  Under the terms of the asset  purchase  agreement,  the Company paid
$320,000 in cash and issued 100,000 shares of the Company's common stock, 12,000
of which were held in escrow to be  released  in fiscal  2002.  The shares  were
valued at  approximately  $1,368,000,  using the average  price of the Company's
common stock,  net of a 2.5%  discount,  for the period ended around the date of
acquisition.


                                       11

<PAGE>

The  SwiftTouch   acquisition  has been  accounted  for as a  purchase  business
combination. The condensed consolidated financial statements include the results
of operations of SwiftTouch  since the date of  acquisition.  The total purchase
price of  approximately  $1,688,000 was assigned to the fair value of the assets
acquired, including the following (in thousands):

Tangible assets acquired...................    $      20
Developed technology.......................        1,518
Acquired workforce-in-place................           50
Goodwill...................................          100
                                               ---------
                                               $   1,688
                                               =========

The  intangible  assets  acquired are being  amortized  using the  straight-line
method over the estimated  useful life of the assets ranging from 18 months to 5
years.


Note 11  Business Segments

Operating  segments are  identified as  components of an enterprise  about which
separate  discrete  financial  information is available that is evaluated by the
chief operating decision maker or decision-making  group to make decisions about
how to allocate resources and assess performance.  The Company's chief operating
decision maker is the chief executive officer.  To date the Company has reviewed
its operations  principally in a single segment.  The chief  operating  decision
maker assesses performance based on the gross profit generated by this segment.

The Company operates in a single industry segment  encompassing the development,
marketing and support of mobile data exchange software.  The Company markets its
products to customers primarily in North America, Asia and Europe. The Company's
customer  base   consists   primarily  of  corporate   organizations,   business
development  organizations,   industry  associations,  resellers,  international
system  integrators,  large OEMs in the PC market and selected  distributors  in
North America,  Africa, Asia,  Australia,  Europe, New Zealand and South America
which primarily market to the retail channel.
<TABLE>
Revenue information by geographic region is as follows:
<CAPTION>
                                                                Three Months Ended                    Nine Months Ended
                                                                     April 30,                            April 30,
                                                           -------------------------------    --------------------------------
                                                                2001              2000               2001           2000
                                                           -------------- ----------------    --------------- ----------------
                                                                                      (In thousands)
<S>                                                          <C>              <C>               <C>             <C>
 North America.........................................      $   8,303        $    6,024        $  24,353       $  15,552
 Japan..................................................         1,042             1,695            4,212           5,198
 Other International....................................         1,000               295            3,014           1,037
                                                             ---------        ----------        ---------       ---------
   Total revenue........................................     $  10,345        $    8,014        $  31,579       $  21,787
                                                             =========        ==========        =========       =========
</TABLE>
Substantially all of the Company's long-lived assets are in the United States.


                                       12

<PAGE>

<TABLE>
Revenue information by product family is as follows:
<CAPTION>
                                                                 Three Months Ended                   Nine Months Ended
                                                                      April 30,                            April 30,
                                                         ------------------------------------ -------------------------------------
                                                                2001               2000              2001                2000
                                                         -----------------  ----------------- ------------------  -----------------
                                                                                      (In thousands)
<S>                                                      <C>                 <C>               <C>                 <C>
 Notebook royalty revenues.............................. $       388         $    1,209        $    1,748          $    3,942
 Enterprise.............................................       4,467              3,658            14,698               9,864
 MAP....................................................       3,354              2,198             9,807               5,806
 Service................................................       2,136                949             5,326               2,175
                                                         -----------------  ----------------- -------------------------------------
   Total revenue........................................ $    10,345         $    8,014         $  31,579           $  21,787
                                                         =================  ================= =====================================
</TABLE>

Note 12  Stock Option Cancellation/Regrant

In January 2001,  the Company's  compensation  committee  approved a proposal to
offer its  employees,  officers and  directors the  opportunity  to cancel stock
options  granted to them  between  December  1999 and October  2000 for an equal
number of new options to be granted in the future, on a date at least six months
after  the  date  of  cancellation  of  the  original  options.   The  company's
compensation committee determined that existing options eligible under the terms
of the proposal no longer have sufficient value to motivate and retain employees
in a tight labor market.

The  exercise  price of the new options  will be 85% of the market price on July
30,  2001,  the date of the new grant.  The new grants will have the same terms,
vesting start date and vesting schedule as those cancelled.  In order to receive
the new options, the employees must remain employed by the Company until the new
grant date.

Holders of options exercisable for approximately  3,358,000 shares with exercise
prices of $15 or greater were given the  opportunity to cancel their options and
holders of options  exercisable for approximately  2,694,000 million shares, net
of the effect of recent  terminations,  elected  to cancel  their  options.  The
cancelled  options had exercise  prices  ranging  from $18.31 to $83.50,  with a
weighted  average  exercise  price of $31.93.  The  cancelled  options  had been
granted under the Puma Technology,  Inc. Amended and Restated 1993 Plan, NetMind
Technologies,   Inc.  1997  Stock  Plan  and  the  Puma  Technology,  Inc.  2000
Supplemental Stock Option Plan.

In   connection  with  the  regrant,  the  Company  expects  to  incur  a  stock
compensation  charge upon the  reissuance  of the options in the amount equal to
the 15% difference  between the exercise price of the new options and the market
value of the  underlying  shares at July 30,  2001.  The  portion  of the charge
relating to options that are deemed  vested as of July 31, 2001 will be expensed
in the fourth  quarter of fiscal 2001.  The rest of the charge will be amortized
over the remaining vesting period. In addition,  stock compensation  charges for
4,000 of the new options are expected to be subject to variable plan  accounting
until their expiration or exercise.

Note 13  Commitment

On  March 29, 2001, the Company entered into another loan and security agreement
with a commercial bank under which it can borrow up to $10 million. The loan and
security  agreement  matures in March 2002.  Borrowings under the agreement bear
interest at a rate  equal to the prime rate or LIBOR as  selected by the Company
and are  secured by cash  deposits,  receivables,  inventories,  equipment,  and
intangibles.  The loan and security agreement  contains covenants  requiring the
Company to  maintain a minimum  level of  tangible  net worth and meet a certain
quick ratio. The agreement also contains certain restrictive covenants

                                       13

<PAGE>

including   but not  limited to  limitations  on  indebtedness,  limitations  on
didvidends  and other  restrictions  on payments  (including  repurchases of our
common  stock),  limitations on  transactions  with  affiliates,  limitations on
liens, limitations on disposition of proceeds of asset sales, and limitations on
investments  and  mergers,  among  others.  At April  30,  2001,  there  were no
outstanding borrowings under the agreement.

                                       14

<PAGE>

Item 2.  Management's Discussion and Analysis of Financial Condition and Results
         of Operations

The  following  information  should be read in  conjunction  with the  condensed
consolidated  financial  statements and the notes thereto contained elsewhere in
this Form 10-Q and in conjunction with the consolidated financial statements and
management's  discussion  and  analysis of  financial  condition  and results of
operations  in our  Form  10-K.  This  quarterly  report  on Form  10-Q,  and in
particular  management's  discussion  and  analysis of financial  condition  and
results of operations,  contains  forward-looking  statements  regarding  future
events or our future  performance  that involve certain risks and  uncertainties
including those discussed in "Factors That May Affect Future Operating  Results"
below.  In this Form  10-Q,  the  words  "anticipates",  "believes",  "expects",
"intends", "future" and similar expressions identify forward-looking statements.
All statements that address operating  performance,  events or developments that
we expect or anticipate will occur in the future,  including statements relating
to planned product releases and composition of revenue, both in terms of segment
and geographical  source, are forward-looking  statements.  Such forward-looking
statements are based on  management's  current views and  assumptions  regarding
future events and operating  performance,  and speak only as of the date hereof.
We  undertake no  obligation  to publicly  update or revise any  forward-looking
statements  whether as a result of new information,  future events or otherwise.
Actual  events or our  actual  future  results  may differ  materially  from any
forward looking statements due to the risks and uncertainties outlined below.


Management's discussion and analysis includes:

   o     Business overview.

   o     A comparison  of our results of operations in the three and nine months
         ended April 30, 2001 with the  results in the  corresponding  period in
         fiscal 2000.

   o     A discussion of our operating liquidity and capital resources.

   o     A discussion of factors that may affect our future operating results.


Business Overview

Pumatech,  Inc.  (Pumatech or the Company) was  incorporated  in  California  in
August 1993 and  reincorporated in Delaware in November 1996 under the name Puma
Technology,  Inc.  We  develop,  market  and  support  synchronization,   change
detection/notification,   and  Web  rendering/browsing   software  that  enables
consumers,  mobile professionals and information  technology officers to harness
the full  capabilities  of handheld  organizers/computers,  Web-enabled-cellular
phones, pagers and other wireless/wireline personal communications platforms. We
provide a mobile solution that addresses several scenarios for  synchronization,
complete  customization  of  device-based   applications,   centralized  backup,
security,  information  flow control,  notification,  e-commerce and browsing of
intranet and Internet-based information. Our software is designed to improve the
productivity of business  professionals  and  corporations  who are increasingly
relying  on  mobile  computing  devices  to  address  their  growing  needs  for
accessible, up-to-date information, whether in or out of the office. Our product
families,  which  include  Intellisync(R),  Intellisync  Anywhere(R),  Satellite
Forms(R),  Browse-it(TM),  Mind-it(TM) and Sync-it(TM) software, are designed to
connect  mobile  devices  to  essential  information  anytime,   anywhere.   The
Intellisync platform lets users synchronize the critical connection between both
wired and wireless  handheld devices and the vast stores of information found in
corporate databases, the Internet and individuals' PC applications.  Intellisync
Anywhere  keeps users  current with remote and


                                       15
<PAGE>

LAN-based data  synchronization  between groupware servers and handheld devices.
Satellite Forms provides the tools needed to create custom applications for Palm
OS(R)  handheld  devices and the ability to integrate  those  applications  with
desktop or network  databases.  Browse-it enables users to view Web pages online
or  offline  on their  Palm OS  handhelds  in a secure,  conventional  and quick
manner. Mind-it technology provides user-driven personalization,  enabling users
to track specific Web information and be notified when that information changes.
Based on our Intellisync synchronization software, Sync-it solution allows users
to perform true,  multi-point,  Web-based  synchronization of calendar,  e-mail,
contacts,  and tasks  between their Palm OS handheld and their home PC, work PC,
and Internet PIM (Personal Information Management), using a network, dial-up, or
wireless connection to the Internet.

Browse-it,  Mind-it  and Sync-it  form the  essential  components  of our Mobile
Application Platform (MAP) offering.  MAP is the common server platform on which
we are  building  our new mobile and  wireless  solutions.  Designed for maximum
scalability  and  performance,  MAP empowers both  Internet  access and wireless
access to mobile devices. This differs markedly from the PC-centric connectivity
solutions  that enable  Internet  access  only while  tethered to a PC. MAP will
provide  ubiquitous access to mobile devices over both wired and wireless media,
and will not require the PC to act as a gateway to the network.  MAP is deployed
inside the firewalls of major  corporations.  In addition,  MAP is hosted in the
public Internet space through our Intellisync.comSM Web service.

We license our software products directly to enterprise  corporations,  original
equipment manufacturers (OEMs) and business development organizations worldwide.
In addition,  we sell our retail products through several distribution  channels
both domestically and internationally,  including major distributors, resellers,
computer dealers,  retailers and mail-order companies.  Internationally,  we are
represented by over 20 distributors  and resellers in Africa,  Asia,  Australia,
Canada, Europe, New Zealand, and South America.

Many  of  our  customers  have  been  successful  in  implementing  our  various
technology initiatives without further technical service provision.  However, we
believe that building up a strong  relationship  with our customers,  as well as
future growth in our product sales,  depends on our ability to provide them with
adequate  support,  training and consulting when necessary.  We therefore remain
committed  to  continuously  improving  the  various  services  we  offer to our
customers,  which include providing  contract support services upon the purchase
or use of our products and performing non-recurring engineering service projects
for software development.  To implement this commitment,  we have established an
in-house  professional  services  organization.  Created  in July  2000 with the
acquisition  of Dry  Creek  Software  (Dry  Creek),  our  professional  services
organization provides business application  experience,  technical expertise and
product knowledge to complement our MAP  infrastructure and to provide solutions
to  customers'  business  requirements.  The major  types of  services  provided
include software  consulting,  integration and hosting services which allow more
rapid and  customer-unique  end-to-end  deployments.  Our acquisition in October
2000  of  certain  assets  and  liabilities  of The  Windward  Group  (Windward)
including our hiring of approximately 40 employees from Windward,  represented a
threefold expansion of our professional services organization, which now focuses
on delivering  customized  solutions based on our MAP  infrastructure  to target
customers   such  as  wireless   carriers,   ISPs,  Web  portals  and  corporate
enterprises.

In October 2000, we signed and closed an asset  purchase  agreement with Vanteon
Corporation  (Vanteon),  of Rochester,  New York to acquire selective assets and
assume  cetain  liabilities  of Windward,  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. Also on November 7,
2000,  we  signed  and  closed  a  definitive   agreement  to  acquire   certain
intellectual property and other assets of SwiftTouch Corporation (SwiftTouch) of
Bedford, Massachusetts, a provider of Web-based Universal Access Solutions. Both
transactions were accounted for

                                       16

<PAGE>

as  a purchase. See Note 10 of the notes to the unaudited condensed consolidated
financial statements for more information on the acquisitions.

During  the three months ended April 30, 2001,  the Company  implemented  a cost
reduction  plan.  The Company's  primary cost reduction  initiatives  included a
reduction  in  workforce  and  facilities   consolidation   as  described  under
"Severance and Facilities" within the "Results of Operations" section below:

Results of Operations
<TABLE>
The following table sets forth certain consolidated statement of operations data
as a percentage of revenue for the periods indicated:
<CAPTION>
                                                              Three Months Ended  Nine Months Ended
                                                                  April 30,          April 30,
                                                              ------------------  -----------------
                                                                2001     2000      2001      2000
                                                              -------- ---------  -------- --------
<S>                                                           <C>       <C>       <C>       <C>
Revenue
   License ..............................................      79.4%     88.2%     83.1%     90.0%
   Services .............................................      20.6      11.8      16.9      10.0
                                                              -------- ---------  -------- --------
        Total revenue ...................................     100.0     100.0     100.0     100.0
                                                              -------- ---------  -------- --------
Cost and operating expenses:
   Cost of revenue ......................................      27.8      11.0      23.2      11.6
   Research and development .............................      58.9      61.1      59.2      53.7
   Sales and marketing ..................................      55.1      59.8      52.0      53.3
   General and administrative ...........................      16.6      18.2      14.8      17.3
   In-process research and development ..................        --        --        --      19.4
   Amortization of intangibles ..........................      20.9      10.3      18.5       7.9
   Merger costs .........................................        --      78.9        --      29.0
   Severance and facilities costs .......................       5.6        --       1.9        --
                                                              -------- ---------  -------- --------
       Total cost and operating expenses ................     184.9     239.3     169.6     192.2
                                                              -------- ---------  -------- --------
Operating loss ..........................................     (84.9)   (139.3)    (69.6)    (92.2)
Other income, net .......................................       7.4      16.3       8.3      16.3
Other-than-temporary impairment of direct investments ...     (11.4)       --      (3.7)       --
                                                              -------- ---------  -------- --------
Loss before income taxes ................................     (88.9)   (123.0)    (65.0)    (75.9)
Provision for income taxes ..............................      (0.8)     (2.0)     (0.9)     (2.4)
                                                              -------- ---------  -------- --------
Net loss ................................................     (89.7)   (125.0)    (65.9)    (78.3)
Accretion of mandatorily redeemable convertible preferred
   stock to redemption value ............................        --      (7.2)       --     (17.8)
                                                              -------- ---------  -------- --------
Net loss attributable to common stockholders ............     (89.7)%  (132.2)%   (65.9)%   (96.1)%
                                                              ======== =========  ======== ========
</TABLE>

Revenue. We derive revenue from two primary sources:  software licenses and fees
for  service.  Revenue in the three and nine  months  ended  April 30,  2001 was
$10,345,000   and   $31,579,000,   respectively,   compared  to  $8,014,000  and
$21,787,000, respectively, for the corresponding periods in fiscal 2000. The 29%
and 45%  revenue  growth in the  three and nine  months  ended  April 30,  2001,
respectively,  resulted from higher revenues from our MAP licensing,  Enterprise
products, and services. This increase in revenue more than offset the decline in
our legacy notebook  business--Intellisync  for Notebook and TranXit(R)  product
royalty revenue.  Revenue in the three and nine months ended April 30, 2001 from
our core  business,  excluding  all revenue from our legacy  notebook  business,
increased 46% to $9,957,000 and 67% to  $29,831,000,  respectively,  compared to
$6,805,000  and  $17,845,000,  respectively,  for the  corresponding  periods in
fiscal 2000.

                                       17


<PAGE>

OEM  revenue  continues to represent a significant  portion of our revenue.  OEM
revenue in the three and nine months ended April 30, 2001,  was  $2,251,000,  or
22% of revenue,  and $7,750,000,  or 25% of revenue,  respectively,  compared to
$3,288,000, or 41% of revenue, and $9,320,000, or 43% of revenue,  respectively,
in the  corresponding  periods in fiscal  2000.  The decrease in OEM revenue was
primarily  due to the decline in  Intellisync  for Notebook and TranXit  product
royalty  revenue,  partially  offset by an  increase in  platform  licensing  of
Software  Development  Kits (SDK).  No customer  accounted  for more than 10% of
total  revenue  in the  three and nine  months  ended  April 30,  2001 and 2000.
Although   several  OEMs  agreements   contain   contractual   minimum  purchase
obligations, there can be no assurance that any particular OEM will satisfy such
obligation.  In addition, we believe that the percentage of revenue derived from
OEMs may  fluctuate  in future  periods  since the revenue  associated  with the
distribution  channels  we use both  domestically  and  internationally  for our
existing  and future  products  are  subject to change.  Further,  we expect the
notebook  and PC OEM  portion  of this  revenue to  continue  to  decrease  as a
percentage of our overall revenue throughout fiscal 2001.

International  revenue  continues  to  represent  a  significant  portion of our
revenue.  International  revenue in the three and nine  months  ended  April 30,
2001, was  $2,310,000,  or 22% of revenue,  and  $8,067,000,  or 26% of revenue,
respectively,  compared to $2,040,000, or 25% of revenue, and $6,494,000, or 30%
of revenue,  respectively,  in the  corresponding  periods in fiscal  2000.  Our
international  revenue in absolute terms increased for the three and nine months
ended April 30, 2001 due to our  continued  efforts to expand our  international
presence  and  sales  efforts.  This  increase  was  partially  offset  by lower
international notebook and PC OEM royalties.  International revenue decreased as
a  percentage  of total  revenue  due to the  substantial  increase  in our U.S.
revenue. We expect,  however, our international  revenue to continue to increase
in absolute  dollars in future  periods as we continue to expand our  operations
worldwide,  particularly  in Europe.  We believe  that  continued  growth  would
require further  expansion in international  markets.  We have utilized and will
continue to utilize  substantial  resources  to expand  existing  and  establish
additional  international  operations.  International  revenue may be subject to
certain  risks  not  normally  encountered  in  domestic  operations,  including
exposure to tariffs,  various trade  regulations  and  fluctuations  in currency
exchange rates. See "Factors That May Affect Future Operating Results."

     o   License  Revenue.  License  revenue is earned  from the sale and use of
         software products and royalty  agreements with OEMs. License revenue in
         the  three  and nine  months  ended  April 30,  2001  increased  16% to
         $8,209,000 and 34% to $26,253,000, respectively, compared to $7,065,000
         and $19,612,000,  respectively, for the corresponding periods in fiscal
         2000.  The  increase  in license  revenues  reflected  an  increase  in
         revenues  of  MAP   products   and   Enterprise   products,   primarily
         Intellisync,  Satellite Forms and Intellisync  Anywhere.  This increase
         was  offset by  declining  revenue  received  for our  legacy  notebook
         business--the  Intellisync for Notebook and TranXit  products.  Revenue
         from our Enterprise  products  increased due to the market's  continued
         widespread  adoption of our Enterprise product  offerings.  MAP revenue
         increased  due to an increase in the number of  licensing  arrangements
         entered into by the Company  during the first three  quarters of fiscal
         2001.  Notebook revenue decreased as its revenue stream has matured and
         as we continue to deemphasize the resources and effort  associated with
         this revenue segment.  Accordingly,  we expect that our legacy notebook
         business  revenue in  subsequent  quarters  will  be flat or moderately
         lower.
                                       18
<PAGE>

     o   Service  Revenue.  Service  revenue is derived from fees for  services,
         including time and materials for professional  services,  non-recurring
         engineering service projects for software development,  amortization of
         maintenance  contract  programs,  hosting and advertising fees. Service
         revenue in the three and nine months  ended  April 30,  2001  increased
         125% to $2,136,000  and 145% to $5,326,000,  respectively,  compared to
         $949,000 and $2,175,000, respectively, for the corresponding periods in
         fiscal  2000.  The  increase  in  service  revenue  was  brought  about
         primarily  by  increased   personnel  in  our   professional   services
         organization primarily as a result of our acquisitions of Dry Creek and
         Windward.  The  increase  was also due to an  increase  in  maintenance
         contract programs.  This increase was partially offset by a decrease in
         advertising  fees and in revenue  resulting  from  fewer  non-recurring
         engineering service projects.

Deferred  revenue was  $3,850,000  and $6,372,000 at April 30, 2001 and July 31,
2000,  respectively.   The  40%  decrease  in  deferred  revenue  was  primarily
attributable  to the recognition of revenue on certain license contracts related
to our MAP components, Intellisync Gold and Intellisync Anywhere products.

The United  States  economy  has  experienced  a rapid and  increasingly  severe
downturn during the first three quarters of fiscal 2001 which has had an adverse
effect on demand for our  products.  While we expect this  economic  downturn to
continue well into the fourth quarter of fiscal 2001,  there can be no certainty
as to the  severity  or duration of this  downturn.  We also cannot  predict the
extent and timing,  if any, of the impact of the economic downturn in the United
States on  economies  in other  countries  and  geographic  regions  in which we
conduct  business.  If the economic  conditions in the United States continue or
worsen  or if wider or global  economic  slowdowns  occur,  the  demand  for our
products  and  services may be reduced.  Not only may these  economic  slowdowns
reduce our customers' and prospects' budgets for our products and services,  but
also they may adversely  affect our  customers'  ability to pay for our products
and services.  Accordingly, these economic slowdowns may have a material adverse
impact on our business, operating results and financial condition.

Cost of Revenue.  Cost of revenue  consists of license costs and service  costs.
License  costs  include  product  packaging costs  including  product  media and
duplication,  manuals,  packing  supplies,  shipping  expenses  and  in  certain
instances,   royalties  paid  to  third-party  vendors.  Service  costs  include
personnel  related  costs  associated  with work  performed  under  professional
services contracts,  non-recurring  engineering agreements and hosting costs for
online  services  associated  with the hosting of MAP to both  partners  and end
users via  Intellisync.com.  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 and  depreciation  of computer  equipment  associated  with the hosting
service.

In general,  license costs are a far smaller  percentage of license revenue than
service  costs,  which have a much  higher cost  structure  as a  percentage  of
service  revenue.  Additionally,  license  costs  tend to be  variable  based on
license  revenue  volumes where  service  costs tend to be fixed within  certain
service  revenue  volume  ranges.  We would  expect  that an increase in service
revenue as a percentage of our total revenue would  generate lower overall gross
margins as a percentage of total revenue.  Also,  given the high amount of fixed
costs associated with the professional  services and online services,  inability
to  generate  revenue  sufficient  to absorb  these  fixed  costs  could lead to
negative service margins.

Cost of  revenue  in the  three  and nine  months  ended  April  30,  2001,  was
$2,873,000, or 28% of revenue, and $7,332,000, or 23% of revenue,  respectively,
compared to  $882,000,  or 11% of revenue,  and  $2,524,000,  or 12% of revenue,
respectively,  in the corresponding periods in fiscal 2000. The increase in cost
of revenue in absolute  dollars and as a percentage of revenue was primarily due
to an  increase  in  service  costs due to  increased  headcount  in our  online
services and  professional  services  organization  and increased  hosting costs
associated with our online service offerings.

                                       19
<PAGE>

Research and Development. Research and development expenses consist primarily of
salaries and other related expenses, including non-cash stock compensation,  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.
Research and  development  expenses in the three and nine months ended April 30,
2001, were $6,090,000,  or 59% of revenue,  and $18,675,000,  or 59% of revenue,
respectively, compared to $4,897,000, or 61% of revenue, and $11,693,000, or 54%
of revenue,  respectively,  in the  corresponding  periods in fiscal  2000.  The
increase in absolute  research and  development  spending was  primarily  due to
increased personnel that we acquired in connection with our recent acquisitions,
planned  higher  spending  for  the integration of various MAP technologies on a
common,  modular  platform,  and increased costs  associated with the production
launch of Intellisync.com.

We  believe that the cost  reduction plan we implemented in the third quarter of
fiscal  2001,  which  included  resizing  of our  engineering  organization  and
reducing  discretionary  expenses,  will have a fairly significant impact on our
operating  expense  structure,  primarily  in research and  development,  moving
forward.  We expect absolute spending in research and development to decrease in
the fourth  quarter of fiscal  2001 from the  $6,090,000  reported  in the third
quarter of fiscal 2001 as a result of the reduction in workforce.

All of our  research  and  development  costs have been  expensed  as  incurred.
Statement   of   Financial   Accounting   Standards   (SFAS)  No.  86   requires
capitalization  of  certain  software   development  costs  once   technological
feasibility is established. We define establishment of technological feasibility
at the point that product  reaches beta.  Software  development  costs  incurred
subsequent to the establishment of technological  feasibility through the period
of general market availability of the product are capitalized,  if material.  To
date,  all of these  software  development  costs  have been  insignificant  and
expensed as incurred.

In March 2000,  the  Emerging  Issues Task Force  (EITF)  reached a consensus on
Issue 00-2,  "Accounting  for the Costs of  Developing  a Web Site." In general,
EITF 00-2 states that the costs of developing a Web site should be accounted for
under the  provisions of Statement of Position (SOP) 98-1,  "Accounting  for the
Costs of Computer Software  Developed or Obtained for Internal Use." It requires
that costs incurred during the Web application and  infrastructure  and graphics
development stages of development  should be capitalized.  We adopted EITF 00-2.
The  application  of EITF 00-2 did not have a material  impact on our  financial
position or results of operations.

Sales and Marketing. Sales and marketing expenses consist primarily of salaries,
commissions, promotional expenses and other related expenses, including non-cash
stock compensation,  of sales, marketing and technical support personnel.  Sales
and marketing  expenses in the three and nine months ended April 30, 2001,  were
$5,702,000, or 55% of revenue, and $16,418,000, or 52% of revenue, respectively,
compared to $4,794,000,  or 60% of revenue, and $11,617,000,  or 53% of revenue,
respectively,  in the corresponding  periods in fiscal 2000. Sales and marketing
expenses  increased  in  absolute  terms  primarily  due to an increase in sales
personnel  to expand our US and  international  sales and  business  development
organizations,  and an  increase in  corporate  marketing  resources,  corporate
branding  and  marketing  headcount  for our online  services  group.  Sales and
marketing expenses  decreased,  however, as a percentage of total revenue due to
overall  revenue  growth.  We expect  that  sales and  marketing  expenses  will
continue to increase in absolute dollars throughout the remainder of fiscal 2001
as we continue to expand our direct sales force,  particularly in Europe, and as
we selectively  invest in demand  generation  programs for existing products and
formally launch Intellisync.com.

General  and  Administrative.   General  and  administrative   expenses  consist
primarily of salaries  and other  related  expenses,  including  non-cash  stock
compensation,  of  administrative,  executive and financial  personnel and other
outside professional fees. General and administrative  expenses in the three and
nine months  ended  April 30,  2001,  were  $1,720,000,  or 17% of revenue,  and
$4,685,000, or 15% of revenue,

                                       20

<PAGE>

respectively,  compared to $1,458,000, or 18% of revenue, and $3,765,000, or 17%
of revenue,  respectively,  in the  corresponding  periods in fiscal  2000.  The
increase in absolute general and administrative spending was primarily due to an
increased  provision for bad debts  allowance and, to a much lesser extent,  the
addition of personnel  and increased  fees for  professional  services,  such as
legal,  accounting,  and other consulting services,  to support the expansion of
our infrastructure, and the consolidation and assimilation of the ProxiNet, Inc.
(ProxiNet),  NetMind Technologies (NetMind),  Dry Creek, Windward and SwiftTouch
businesses.

Non-Cash  Stock  Compensation.  Non-cash  stock  compensation,  included in each
appropriate  operating  expense  category,  relates to stock  options  that were
deemed to have been granted at a price below  market  value.  These  charges are
amortized on a straight-line  basis over the vesting period of the options.  The
aggregate non-cash stock compensation charge, net of the effect of terminations,
in the three and nine months  ended April 30, 2001 was  $292,000  and  $733,000,
respectively,  compared  to  $465,000  and  $1,326,000,   respectively,  in  the
corresponding  periods in fiscal 2000. The non-cash  compensation expense in the
three and nine months ended April 30, 2001 and 2000 relates to options that were
granted  by  NetMind  prior  to  our  acquisition  of  NetMind.   The  aggregate
amortization  expense is expected to be approximately  $1,837,000,  $839,000 and
$765,000 in fiscal 2001, 2002 and 2003,  respectively,  which includes estimated
charges  of  approximately  $832,000,  $430,000,  and  $430,000,   respectively,
associated  with the stock option  regrant  program taking place at July 2001 as
discussed below.  Future  amortization  expense would be reduced if any employee
terminates employment prior to the expiration of the option vesting period.

In  connection with the stock option regrant program, we expect to incur a stock
compensation  charge upon the  reissuance  of the options in the amount equal to
the 15% difference  between the exercise price of the new options and the market
value of the  underlying  shares at July 30,  2001.  The  portion  of the charge
relating to options that are deemed  vested as of July 31, 2001 will be expensed
in the fourth  quarter of fiscal 2001.  The rest of the charge will be amortized
over the remaining vesting period. In addition,  stock compensation  charges for
4,000 of the new options are expected to be subject to variable plan  accounting
until their  expiration  or exercise.  See Note 12 of the notes to the unaudited
condensed  consolidated financial statements for more information on the regrant
program.

Purchased In-Process Research and Development.  We expensed purchased in-process
research  and  development  costs  of  $4,218,000  as a result  of the  ProxiNet
acquisition in the first quarter of fiscal 2000.

The  ProxiNet  acquisition  has been  accounted  for  as a  purchase.  The total
purchase  price  of   approximately   $17,384,000   (including   liabilities  of
$2,070,000),  was assigned to the fair value of the assets  acquired,  including
$676,000  to tangible  assets  acquired,  $3,378,000  to  identified  intangible
assets,  $4,218,000 to in-process  research and  development,  and $9,112,000 to
goodwill.   The  in-process   research  and  development  was  expensed  at  the
acquisition  date. The value assigned to this acquired  in-process  research and
development was determined by identifying  research  projects in areas for which
technological  feasibility had not been established as of the acquisition  date.
These include projects for ProxiWare(TM) and ProxiWeb(TM) technology.  The value
was  determined by estimating  the revenue  contribution  and the  percentage of
completion  of each of  these  projects.  The  projects  were  deemed  to be 55%
complete  on the date of  acquisition.  The net cash flows were then  discounted
utilizing  a  weighted  average  cost of capital of 27.5%,  which,  among  other
related  assumptions  (discussed below), we believe to be fairly accurate.  This
discount rate takes into  consideration the inherent  uncertainties  surrounding
the  successful  development  of the in-process  research and  development,  the
expected  profitability  levels  of  such  technology,  and the  uncertainty  of
technological  advances that could  potentially  impact the estimates  described
above.  Revenues were  projected to be generated in fiscal 2000 for the products
in development at the acquisition date.

To date, actual results have been consistent, in all material respects, with our
assumptions at the time of the acquisition. The assumptions primarily consist of
an expected  completion  date for the in-process

                                       21

<PAGE>

projects,  estimated  costs  to complete the  projects,  and revenue and expense
projections  once the  products  have  entered  the  market.  The  projects  for
ProxiWare  and ProxiWeb  technology  that is currently  branded as the Browse-it
product was completed, as expected, in the fourth quarter of fiscal 2000 and are
now generating  revenue.  Failure to achieve the expected  levels of revenue and
net income from this product during its entire life cycle will negatively impact
the return on investment expected at the time that the acquisition was completed
and  potentially  result  in  impairment  of any  other  assets  related  to the
development activities.

Amortization of Intangibles.  Amortization of acquired  intangibles in the three
and nine months ended April 30, 2001,  was  $2,157,000,  or 21% of revenue,  and
$5,853,000,  or 19% of revenue,  respectively,  compared to $824,000,  or 10% of
revenue, and $1,733,000,  or 8% of revenue,  respectively,  in the corresponding
periods in fiscal 2000. The increase in  amortization  of  intangibles  resulted
from our  acquisitions  of SwiftTouch  and Windward in fiscal 2001 and Dry Creek
and ProxiNet in fiscal 2000.

Merger Costs. During the quarter ended April 30, 2000, we incurred $6,322,000 in
acquisition costs for the transaction with NetMind.  These costs included direct
transaction  costs primarily for financial  advisory  services and  professional
services costs associated with the merger.

Severance   and  Facilities   Costs.  We  incurred  total  charges  of  $583,000
associated  with the cost  reduction plan  implemented  during the quarter ended
April  30,  2001.  Our  cost  reduction  initiatives  included  a  reduction  in
workforce,  representing  a  reduction  of  approximately  20% of our then total
workforce.  The associated severance costs incurred were approximately $181,000.
We also  incurred  additional  restructuring  charges  aggregating  $402,000 for
consolidating  facilities  with space  located  in Santa  Cruz,  California  and
Nashua, New Hampshire. The costs of consolidating facilities include $174,000 of
future lease payments and $228,000 for accelerated  depreciation of property and
equipment, which consisted primarily of leasehold improvements, office equipment
and furniture and fixtures, to be disposed or removed from operations.

<TABLE>
A summary of the  severance  and  facilities  costs is  outlined  as follows (in
thousands):
<CAPTION>
                                             Total     Noncash      Cash      Accrued Liabilities
                                            Charges    Charges     Payments    at April 30, 2001
                                           --------- ----------- ------------ -------------------
<S>                                          <C>        <C>         <C>            <C>
Workforce reduction.....................     $ 181      $   -       $ 181          $   -
Consolidation of excess facilities......       402        402           -            402
                                           --------- ----------- ------------ -------------------
Total...................................     $ 583      $ 402       $ 181          $ 402
                                           ========= =========== ============ ===================
</TABLE>

Amounts related to the net lease expense due to the  consolidation of facilities
will be paid over the respective lease terms through November 2001.

Other  Income,  Net. Other income,  net,  represents interest earned on cash and
short-term investments and realized gains on miscellaneous  investments,  offset
by interest expense on long-term debt and capitalized  leases and  miscellaneous
bank fees and  charges.  Other  income,  net, in the three and nine months ended
April 30, 2001 of $766,000 and $2,617,000,  respectively, consisted primarily of
interest earned on cash and short term investments, offset by realized losses of
$103,000 and $300,000,  respectively,  from the sale of PG&E  commercial  paper.
Other  income,  net,  in the  three and nine  months  ended  April  30,  2000 of
$1,309,000 and $3,549,000,  respectively, consisted primarily of interest earned
on  cash  and  short  term  investments  and  realized  gains  of  $634,000  and
$2,221,000, respectively, from the sales of Amazon.com securities.

                                       22

<PAGE>

Other-Than-Temporary  Impairment  of  Direct  Investments.  As of the end of the
third quarter of fiscal 2001, we concluded that the investments  associated with
our  direct  investments  --  YadaYada,  Inc.,  If &  Then,  Inc.,  and  PulseMD
Corporation were impaired as such investments were deemed not to be recoverable.
These  investments  were fully  impaired  due to  changes  in capital  structure
impacting  our  investment  preferences,  thin  capitalization,  dilution due to
dramatic  declines in valuations  and overall lack of  persuasive  evidence that
would  indicate a future  ability or intent of these entities that would support
the  carrying  value of our  investments.  As a result,  we recorded  impairment
charges  aggregating  $1,180,000  for the three and nine months  ended April 30,
2001.


Provision for Income Taxes. The provision for income taxes primarily  represents
foreign  withholding  taxes on royalties earned from certain foreign  customers.
Provision for income taxes in the three and nine months ended April 30, 2001 was
$80,000  and  $298,000,   respectively,   compared  to  $159,000  and  $517,000,
respectively, in the corresponding periods of fiscal 2000.

Accretion of Mandatorily  Redeemable  Convertible  Preferred Stock to Redemption
Value.  During fiscal 1999,  NetMind  issued  approximately  4 million shares of
Series B Preferred Stock which converted into  approximately  3.4 million shares
of Pumatech common stock upon completion of the NetMind merger in February 2000.
Under the terms of the original issuance, the Series B shares were redeemable in
September 2003 and 2004, at the higher of their original issue price or the fair
value of the  stock at the  dates of  redemption.  The  difference  between  the
issuance price and the fair value of the Series B stock was accreted by NetMind.
Such  accretion  aggregated  to $577,000  and  $3,877,000  in the three and nine
months ended April 30, 2000.

Liquidity and Capital Resources

We ended the third  quarter  of fiscal  2001 with $53.0  million  in cash,  cash
equivalents and short-term  investments.  Cash and cash equivalents decreased by
$26.1 million during the first three quarters of fiscal 2001 to $28.4 million at
April 30,  2001.  Short-term  investments  decreased  by $6.2  million  to $24.6
million during the same period.

Net cash used in operations of $15.5 million  during the nine months ended April
30,  2001,  was  comprised of the net loss  adjusted for non-cash  items of $9.6
million and net change in operating assets and liabilities of $5.9 million.  Net
cash used in operations of $13.9 million  during the nine months ended April 30,
2000,  was comprised of the net loss adjusted for non-cash items of $9.9 million
and net change in operating assets and liabilities of $4.0 million.

Net cash used in investing  activities of $11.9  million  during the nine months
ended April 30,  2001,  resulted  from $12.6  million of cash paid for the asset
purchases of Windward and SwiftTouch,  $4.3 million for capital expenditures and
$1.1 million for other long-term  investments,  partially offset by net sales of
short  term  investments  of  $6.1  million.  Net  cash  provided  by  investing
activities  of $1.2  million  during the nine  months  ended  April 30, 2000 was
primarily for net sales of  short-term  investments  of $3.4 million,  partially
offset by capital expenditures of $2.2 million.

Net cash provided by financing activities of $1.3 million during the nine months
ended April 30,  2001  resulted  primarily  from $1.7  million of proceeds  from
issuance  of  common  stock,  partially  offset  by $0.2  million  of  principal
repayments  on notes  payable and $0.2 million of loan to a related  party.  Net
cash provided by financing  activities  of $77.8 million  during the nine months
ended April 30, 2000,  resulted from $78.3 million of proceeds  primarily from a
private  placement  in March  2000 and $0.3  million  of  proceeds  from line of
credit,  partially  offset by $0.8 million of payments  made to settle  acquired
liabilities.

                                       23

<PAGE>

On  March 29, 2001,  we entered into a loan and security  agreement  with a bank
under which we can borrow up to $10  million.  The loan and  security  agreement
matures in March 2002.  Borrowings  under the agreement  bear interest at a rate
equal to the prime rate or LIBOR as  selected  by the Company and are secured by
cash deposits,  receivables,  inventories,  equipment, and intangibles. The loan
and security agreement  contains covenants  requiring that we maintain a minimum
level of tangible net worth and meet a certain quick ratio.  The agreement  also
contains certain restrictive  covenants including but not limited to limitations
on  indebtedness,  limitations on dividends and other  restrictions  on payments
(including  repurchases of our common stock),  limitations on transactions  with
affiliates,  limitations  on liens,  limitations  on  disposition of proceeds of
asset sales, and limitations on investments and mergers,  among others. At April
30, 2001, there were no outstanding borrowings under the agreement.

We also maintain another loan and security  agreement that provides a $1,000,000
revolving  credit  line and a  $750,000  equipment  line.  Borrowings  under the
revolving  credit line bear interest at a per annum rate equal to the prime rate
plus one half of one percent.  Borrowings under the equipment line bear interest
at a per annum rate equal to the prime rate plus one percent. Equipment acquired
is pledged as collateral.  The loan and security  agreement  contains  covenants
requiring  that we maintain a minimum level of equity and meet certain quick and
liquidity  ratios.  The agreement also contains  certain  restrictive  covenants
including  but not  limited  to  limitations  on  indebtedness,  limitations  on
dividends and other  restricted  payments  (including  repurchases of our common
stock),  limitations on transactions  with affiliates,  limitations on liens and
limitations  on  disposition  of proceeds of asset sales,  among others.  We are
currently in compliance with all of the aforementioned covenant obligations.  At
April 30, 2001,  $367,000 was  outstanding  on the equipment  line and we had no
outstanding balance drawn on the revolving credit line.

In  October  2000,  in  connection  with our  acquisition  of Windward,  we used
$12,250,000  of cash and  issued  171,026  shares of  Pumatech  common  stock to
Vanteon Corporation. For additional information regarding the acquisition, refer
to  Note  10  of  the  notes  to  unaudited  condensed   consolidated  financial
statements.

In November  2000,  in  connection  with our  acquisition  of certain  assets of
SwiftTouch,  we used  $320,000  of cash and issued  100,000  shares of  Pumatech
common stock. For additional  information  regarding the  acquisition,  refer to
Note 10 of the notes to unaudited condensed consolidated financial statements.

In April 2001, in connection with the implementation of our cost reduction plan,
we used $181,000 of cash for severance  costs  associated  with the reduction in
our workforce.  For additional  information  regarding the cost reduction  plan,
refer  to Note 6 of the  notes to  unaudited  condensed  consolidated  financial
statements.

We believe that our current cash,  cash  equivalents  and short-term  investment
balances, including the credit lines and cash generated from operations, if any,
will be sufficient to meet our working capital and other cash  requirements  for
at least the next 12 months.

In the future,  we may seek to raise cash through the issuance of debt or equity
securities.  There can be no assurance that such financing would be available to
us at all or on terms favorable to us.

                                       24

<PAGE>

Factors That May Affect Future Operating Results

There  are  many  factors  that  affect  our  business  and the  results  of our
operations, some of which are beyond our control. The following is a description
of some of the  important  factors  that may cause  the  actual  results  of our
operations in future periods to differ materially from those currently  expected
or desired.

We are exposed to recent unfavorable economic conditions.

The  United States has seen a rapid and increasingly  severe downturn during the
first three quarters of fiscal 2001.  While we expect this economic  downturn to
continue well into the fourth quarter of fiscal 2001,  there can be no certainty
as to the  severity  or duration of this  downturn.  We also cannot  predict the
extent and  timing,  if any,  of the impact of  economic  downturn in the United
States on  economies  in other  countries  and  geographic  regions  in which we
conduct  business.  If the economic  conditions in the United States continue or
worsen  or if wider or global  economic  slowdowns  occur,  the  demand  for our
products  and  services may be reduced.  Not only may these  economic  slowdowns
reduce our customers' and prospects' budgets for our products and services,  but
also they may adversely  affect our  customers'  ability to pay for our products
and services.  Accordingly, these economic slowdowns may have a material adverse
impact on our business, operating results and financial conditions.

We  derive a portion  of our  revenue  from a number of thinly  capitalized  and
early-stage customers such as dot-com companies.

We  have derived,  and believe that we will continue to derive, a portion of our
revenues from small and early-stage companies including dot-coms. Recently, many
of these  dot-com  and other  small  companies  have  been  closing  down  their
operations.  As a result of such failures, many similarly situated customers and
potential  customers may be  experiencing  difficulty  in their capital  raising
activities and may not be able to continue  operations.  The  composition of our
customer base exposes us to additional  risks,  including  longer payment cycles
and collection problems. We have implemented policies and procedures to identify
and mitigate our exposure to such risks, but allure of these thinly  capitalized
companies to be successful  in their  operations  could have a material  adverse
effect on our business, results of operations and financial condition.

The  recent  economic  downturn  may  severely  affect  a number  of our  thinly
capitalized  customers,  as well as  vendors,  which may  subsequently  harm our
business and results of operations.

Economic downturns could cause our thinly capitalized  customers to reduce their
IT spending or cease their  investment  in products,  services and  technologies
such as those we  provide.  Any  decrease  in the  demand for our  products  and
services could adversely affect our operating  results and financial  condition.
Our operating results and financial  condition may also be adversely affected by
difficulties  we  may  encounter  in  collecting  our  accounts  receivable  and
maintaining our profit margins during an economic downturn.

Economic  downturns  may also  affect our  various  vendors on which we rely for
certain integral services used to support our operations.  Our operating results
and  financial  condition  may be adversely  affected in the event that a vendor
were to  experience  financial or  operational  difficulties  that resulted in a
reduction or interruption in services it provides us.

The failure of the market for mobile  devices to develop as expected  would harm
our revenues.

The emergence of markets for our software is critically dependent upon the rapid
expansion  of  the  market  for  mobile  devices   including   personal  digital
assistants,  handheld computers,  smart phones, pagers and other mobile devices.
This market has only  recently  emerged  and is rapidly  growing.  This  growth,
however,  may

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<PAGE>

not  continue.  Any  slowdown in the growth of adoption of mobile  devices would
likely reduce the demand for our software and services,  causing our  enterprise
license and service revenues to fall.

Hosting  our  Mobile  Application   Platform  on  Intellisync.com   may  not  be
successful;  and, if  successful,  may divert our  attention  from our  existing
product  license  business,  which  could  result  in lower  revenue  from  such
business.

In January 2001,  Intellisync.com  became available as a public web site. By the
end of the third  quarter of calendar  year 2001,  we intend to announce the fee
structure  for the  premium  services  that we plan to offer on  Intellisync.com
service.  An unsuccessful  launch of  Intellisync.com  for the public may have a
negative effect on our revenue and results of operations.  Our customers may not
choose to use MAP through  Intellisync.com  for their applications for a variety
of reasons,  including the actual or perceived reduction in security protections
of mobile  solutions  hosted on the  Internet;  the  possible  reluctance  to be
dependent on a third party to host important  information and infrastructure and
to perform basic support and other functions;  and the possible inability of MAP
to be able to support many users in an enterprise-wide environment.  Although we
expect  to  derive  a  significant  portion  of  our  future  revenue  from  our
Intellisync.com  subscription  offering,  we  just  recently  have  commercially
introduced it and, therefore, do not have a proven expense and revenue model for
it.  Intellisync.com  may not be commercially  viable if our expense and revenue
model  is not  acceptable  to our  customers.  This  would  seriously  harm  our
business,  particularly  if the  failure of  Intellisync.com  and MAP to achieve
market acceptance  negatively  affects sales of our other products and services.
In addition, if our customers adopt the MAP offering through Intellisync.com, we
may experience a decline in the growth of our existing product license business.

We  may not  achieve  profitability  if we are unable to  maintain,  improve and
develop  Intellisync.com.  Our services will have to achieve market  acceptance,
maintain  technological  competitiveness and meet an expanding range of customer
requirements.  As a result of the complexities  inherent in  synchronization  of
corporate ad other data over various wired and wireless platforms,  new services
and  enhancements  may require  long  development  and testing  periods.  We may
experience  difficulties that could delay or prevent the successful development,
introduction or marketing of new services or enhancements. Such new services and
enhancements may not achieve market acceptance and we may not be able to recover
the costs of development or attain profitability.

Because we have had limited  Internet  operating  history,  it is  difficult  to
evaluate our business and we may face various risks,  expenses and  difficulties
associated with early stage companies.

Historically, we have licensed our products and technology primarily to PC OEMs,
corporations  and to end users  through  our  channels of  distribution.  In the
second  quarter of fiscal 2000,  we  announced  our  Internet  initiative.  This
initiative has required us to add additional resources and to develop and market
our  Intellisync.com  service destination site and the products and technologies
we obtained in the  ProxiNet  and  NetMind  acquisitions.  We plan to market and
license our new  Web-based  products  and  solutions to wireless  carriers,  Web
portals and individual  consumers.  We also plan to offer these new products and
solutions to corporations.  We expect to incur significant costs in implementing
our Internet initiative.

Our  overall  operating  results  have  changed  significantly  as a  result  of
developing and bringing to market our new Internet products.  It is important to
understand that our historical financial statements include operating results of
our recently  launched  Internet  initiative  only to the extent that  NetMind's
historical  operating  results have been  reflected  under  pooling-of-interests
accounting.  As a result of our  Internet  initiative,  we expect  our  combined
results  to  reflect  an  operating  loss for at least the next  several  fiscal
quarters.  There can be no assurance  that we will be able to achieve or sustain
profitability.

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<PAGE>

Since we just launched our Internet  initiative,  there is little information on
which to evaluate our business and prospects as an Internet company. An investor
in our common stock should consider the risks,  expenses and  difficulties  that
young companies frequently encounter in the new and rapidly evolving markets for
Internet products and services. These risks to us include:

     o   our evolving new business model;

     o   our need and ability to manage growth; and

     o   rapid evolution of technology.

To address these risks and uncertainties, we must take several steps, including:

     o   creating and maintaining strategic relationships;

     o   expanding sales and marketing activities;

     o   integrating existing and acquired technologies;

     o   expanding our customer base and retaining key clients;

     o   introducing  and  expanding new  services,  including our  professional
         services organization;

     o   managing  rapidly  growing  operations,  including new  facilities  and
         information technology infrastructure;

     o   competing in a highly competitive market; and

     o   attracting, retaining and motivating key employees.

We may not be successful in implementing  any of our strategies or in addressing
these  risks and  uncertainties.  We expect  that our  operating  expenses  will
continue  to  increase,  primarily  as a  result  of our  investment  in our new
Internet product initiative.  Moreover, even if we accomplish our objectives, we
still may not achieve sustainable profitability in the future.

We  have  invested   substantial   amounts  in  technology  and   infrastructure
development and development of our professional services organization. We expect
to continue to invest  substantial  financial and other resources to develop and
introduce  new Internet and wireless  products and  services,  and to expand our
sales and  marketing  organizations,  our  professional  services  organization,
strategic relationships and operating infrastructure. We expect that our cost of
revenue, sales and marketing expenses, operations and customer support expenses,
and depreciation and amortization  expenses may continue to increase in absolute
dollars  and  may  increase  as a  percent  of  revenue.  If  revenue  does  not
correspondingly increase, our operating results and financial condition could be
negatively affected.

Our business and  prospects  depend on demand for and market  acceptance  of the
Internet, wireless devices and mobile computing devices.

The increased use of the Internet, wireless devices and mobile computing devices
for  retrieving,   sharing  and  transferring   information   among  businesses,
consumers, suppliers and partners, and for Internet personalization services has
only begun to develop in recent years.  Our success will depend in large part on
continued  growth  in the  use of the  Internet,  wireless  devices  and  mobile
computing  devices.  Critical  issues  concerning  the  commercial  use  of  the
Internet,  wireless devices and mobile computing  devices,

                                       27

<PAGE>

including  security,  reliability,  cost,  ease  of access  and use,  quality of
service,   regulatory   initiatives   and   necessary   increases  in  bandwidth
availability,  remain unresolved and are likely to affect the development of the
market for our  services.  The adoption of the  Internet,  wireless  devices and
mobile computing  devices for information  retrieval and exchange,  commerce and
communications  generally  will  require  the  acceptance  of a  new  medium  of
conducting business and exchanging information. Demand for and market acceptance
of the Internet,  wireless devices and mobile computing devices are subject to a
high level of uncertainty and are dependent on a number of factors, including:

     o   the  growth in  access  to and  market  acceptance  of new  interactive
         technologies;

     o   emergence   of  a  viable   and   sustainable   market   for   Internet
         personalization services;

     o   the   development   of   technologies   that   facilitate   interactive
         communication between organizations; and

     o   increases in bandwidth for data transmission.

If the market for Internet  personalization  services or the Internet,  wireless
devices and mobile computing devices as a commercial or business medium does not
develop,  or develops  more  slowly  than  expected,  our  business,  results of
operations and financial condition will be seriously harmed.

Specifically,  even if an Internet personalization services market does develop,
services  that we  currently  offer or may offer in the future  may not  achieve
widespread  market  acceptance.  Failure of our current and planned  services to
operate  as  expected  could  delay or  prevent  their  adoption.  If our target
customers do not adopt, purchase and successfully deploy our current and planned
services,  our revenue will not grow significantly and our business,  results of
operations and financial  condition will be seriously  harmed. We have not taken
any steps to mitigate the risks  associated with reduced demand for our existing
Internet personalization services.

The  emergence  of a dominant  platform  for  mobile  devices  could  reduce our
customer base and revenues.

The  marketplace  for mobile devices is currently  characterized  by a number of
competing   Internet  systems  and  standards  for  mobile  computing   devices.
Currently,  our customers and potential  customers often use a variety of mobile
devices with multiple  connectivity  options. One of the primary benefits of our
products is their ability to operate  across a wide variety of  platforms.  If a
dominant  platform for mobile devices  emerges,  the demand for our platform and
products may diminish.

The size of the mobile computing market cannot be accurately  predicted,  and if
our  market  does  not  grow  as we  expect,  our  revenue  will  be  below  our
expectations and our business and financial results will suffer.

We are  focusing on  expanding  into the mobile  computing  market,  an unproven
market. Accordingly,  the size of this market cannot be accurately estimated and
therefore we are unable to accurately  determine  the  potential  demand for our
products and  services.  If our customer base does not expand or if there is not
widespread  acceptance of our products and services,  our business and prospects
will be harmed.  We believe  that our  potential to grow and increase the market
acceptance of our products depends principally on the following factors, some of
which are beyond our control:

     o   the effectiveness of our marketing strategy and efforts;

     o   our product and service differentiation and quality;

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<PAGE>

     o   our ability to provide timely, effective customer support;

     o   our distribution and pricing strategies as compared to our competitors;

     o   growth in the sales of handheld  devices  supported by our software and
         growth in wireless  network  capabilities  to match end user demand and
         requirements;

     o   our industry reputation; and

     o   general  economic  conditions  such as  downturns  in the  computer  or
         software markets.

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

The market for our services is  characterized  by rapidly  changing  technology,
evolving industry standards and frequent new service  introductions.  Our future
success  will depend to a  substantial  degree on our ability to offer  services
that 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. You should be aware that:

     o   our technology or systems may become obsolete upon the  introduction of
         alternative technologies;

     o   we may  not  have  sufficient  resources  to  develop  or  acquire  new
         technologies  or to introduce  new services  capable of competing  with
         future technologies or service offerings; and

     o   the price of the  services we provide is expected to decline as rapidly
         as the cost of any competitive alternatives.

We may not be able to effectively  respond to the technological  requirements of
the  changing  market.  To the extent we  determine  that new  technologies  and
equipment are required to remain competitive,  the development,  acquisition and
implementation  of such  technologies  and  equipment  are likely to continue to
require  significant  capital  investment by us.  Sufficient  capital may not be
available  for  this  purpose  in  the  future,  and  even  if it is  available,
investments  in  new  technologies   may  not  result  in  commercially   viable
technological  processes and there may not be commercial  applications  for such
technologies.  If we do not develop and  introduce new products and services and
achieve  market  acceptance in a timely  manner,  our business and prospects may
suffer.

There are risks  associated  with our long-term  investments  that may adversely
affect our results of operations.

Historically,  we  have made direct or indirect  investments  in privately  held
companies.  Additionally,  we entered into a commitment  with a venture  capital
firm and invested in some of our strategic partners, both customers and vendors,
that we  believe  have  the  potential  to  grow,  and we may  continue  to make
strategic  investments  in the  future.  There can be no  assurance  that  these
investments  will bring us a return on  investment.  In  addition,  because  the
strategic investments tend to be in small, start-up technology companies,  which
are at risk for financial failure especially during an economic downturn,  there
is a greater risk that the investments might be impaired. For example, as of the
end of the third  quarter of fiscal  2001,  we  concluded  that the  investments
associated with our direct investments -- YadaYada,  If & Then, and PulseMD were
impaired  as  such  investments  were  deemed  not  to  be  recoverable.   These
investments  were fully impaired due to poor historical  financial  performance,
changes  in  capital  structure  impacting  our  investment  preferences,   thin
capitalization,

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<PAGE>

dilution  due to dramatic  declines in valuations and overall lack of persuasive
evidence that would  indicate a future  ability or intent of these entities that
would support the carrying value of our  investments.  As a result,  we recorded
impairment  charges  aggregating  $1,180,000 for the three and nine months ended
April 30, 2001. See Note 5 of the notes to the unaudited condensed  consolidated
financial statements for more details. Any impairment of such investments in the
future could have a material  adverse  effect on our results of  operations  and
financial condition.

Operating results may fluctuate significantly and may be difficult to predict.

Our operating results have fluctuated in the past, and with our Internet product
initiative,  the ProxiNet,  NetMind and Dry Creek  acquisitions and the Windward
and SwiftTouch asset purchases,  our operating results are likely to continue to
fluctuate  significantly.  A number of factors, many of which are outside of our
control, are likely to cause fluctuations in operating results,  including,  but
not limited to:

     o   the demand for our products and services;

     o   our  success  in  developing  new  products  and  integrating  acquired
         technologies;

     o   the timing of new product introductions by us and our competitors;

     o   market acceptance of our new and enhanced products and services;

     o   market acceptance of handheld devices generally, and those supported by
         our products and services;

     o   the emergence of new industry standards;

     o   the timing of customer orders;

     o   the mix of products and services sold;

     o   product life cycles;

     o   competition;

     o   the mix of distribution channels employed;

     o   seasonal trends;

     o   the timing and magnitude of our capital  expenditures,  including costs
         relating to the expansion of operations;

     o   the evolving and  unpredictable  nature of the markets for our products
         and mobile computing devices generally;

     o   the rate of growth of the Internet and the personal  computer market in
         general; and

     o   general economic conditions.

In addition,  we typically  operate with a relatively small order backlog.  As a
result,  quarterly sales and operating  results depend in part on the volume and
timing of orders received and fulfilled within the quarter,  which are difficult
to forecast.  A significant  portion of our expense levels are fixed in advance,

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<PAGE>

based in large part on our resource  requirements  to meet  planned  product and
customer  requirements.  If revenue is below  expectations in any given quarter,
the adverse impact of the shortfall on operating results may be magnified by our
inability to adjust  spending to  compensate  for the  shortfall.  Therefore,  a
shortfall  in actual  revenue as compared  to  estimated  revenue  would have an
immediate  adverse  effect on our  business,  operating  results  and  financial
condition that could be material.

Due to our ongoing efforts to expand into retail and reseller  channels,  we are
focusing  our  efforts on  licensing  our server and  personal  applications  to
corporations  and  licensing  our Software  Development  Kits (SDKs) to software
developers and mobile computing device manufacturers.  SDKs provide the complete
solution for adding  intelligent  synchronization  to  enterprise  applications,
mobile devices and Web-based services. With intelligent  synchronization,  users
can keep their  critical  information  up-to-date  and in sync  across  multiple
applications and mobile devices. As a result, we expect that our notebook and PC
OEM revenue will decrease as a percentage of our overall revenue. This new sales
strategy has the following risks:

     o   sales into  these  channels  are  harder to predict  and may have lower
         margins than sales in other channels;

     o   we have a very  limited  history in  penetration  and support for these
         channels;

     o   the average transaction size and sales cycle vary significantly, making
         forecasting difficult;

     o   smaller transactions may have relatively higher administrative costs;

     o   any  significant  deferral of  purchases  of our  products by customers
         could jeopardize our operating results in any particular quarter;

     o   to the extent that  significant  sales  occur  earlier  than  expected,
         operating results for subsequent quarters may be adversely affected;

     o   products  that  are  accepted  in the OEM  market  may  not be  readily
         accepted by corporations;

     o   we  may  incur   increased   costs   related   to  new   infrastructure
         requirements; and

     o   planned marketing strategy may require significant expenditures but may
         not have immediate or future beneficial effect on sales.

Our gross  margin on service  revenue,  particularly  non-recurring  engineering
service and  professional  service revenue,  is  substantially  lower than gross
margin  on  license  revenue.  We have  recently  acquired  Dry  Creek  and,  in
connection  with the  acquisition of assets from Windward,  we hired a number of
employees of Windward,  which forms the basis of our professional service group,
and, consequently,  professional service revenue increased  significantly in the
last two  quarters  and we expect  that it will  continue  to increase in future
quarters.  Until we are able to fully utilize all employees in the  professional
service  group,  our gross  margin  will  continue  to be low.  Any  increase in
non-recurring  engineering service and professional service revenue would have a
corresponding  increase in cost of revenue  and would have an adverse  effect on
our gross  margins as a percent of total  revenue.  We may also change prices or
increase   spending  in  response  to   competition  or  to  pursue  new  market
opportunities.

The operating results of many software  companies reflect seasonal  fluctuation.
For example, sales in Europe and certain other countries typically are adversely
affected in the summer months when business activity is reduced. Our revenue and
operating results may be adversely affected by diminished demand for products on
a seasonal basis.

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<PAGE>

Period-to-period  comparisons of operating  results are not a good indication of
future performance. It is likely that operating results in some quarters will be
below  market  expectations.  In this  event,  the price of our common  stock is
likely to decline.

If we  fail to  maintain  our  existing  relationships  or  enter  into  new key
relationships  with original  equipment  manufacturers and business  development
organizations,  our brand  awareness  and the use of our  products  and services
would suffer.

The success of our product and service offerings depends,  in large part, on our
ability  to  develop  and  maintain   relationships   with  original   equipment
manufacturers and business  development  organizations  that help distribute our
products and promote our services. We depend on these relationships to:

     o   distribute our products to purchasers of mobile devices;

     o   increase usage of our MAP components;

     o   build brand awareness through product marketing; and

     o   cooperatively market our products and services.

Also,  because we depend on equipment  manufacturers  and  business  development
organizations  to help  distribute  our products and promote our  services,  the
growth of our  operations  is  dependent  in part  upon  their  success.  If the
products that these  companies  sell, or the operating  systems upon which these
products  are  based,  were to lose  popularity,  or if any of  these  equipment
manufacturers or business development organizations cease to utilize our product
and service offerings in significant volumes, our business would suffer.

Rapid growth in our business  could strain our  resources  and harm our business
and financial results.

The  planned  expansion  of our  Internet  initiative  as well as  growth in our
existing  enterprise business will place a significant strain on our management,
financial controls, operations systems, personnel and other resources. If we are
successful in implementing our marketing strategy, we also expect the demands on
our  technical  support  resources  to  grow  rapidly,  and  we  may  experience
difficulties  responding  to  customer  demand for our  services  and  providing
technical support in accordance with our customers' expectations. We expect that
these  demands will require not only the addition of new  management  personnel,
but  also  the  development  of  additional  expertise  by  existing  management
personnel and the  establishment  of long-term  relationships  with  third-party
service vendors.  Additionally,  we have recently opened an additional office in
the United Kingdom and intend to open new offices  elsewhere in Europe and other
international   locations.   We  may  encounter   difficulties   in  integrating
information and communications systems in multiple locations. We may not be able
to keep pace with growth,  successfully  implement and maintain our  operational
and  financial  systems  or  successfully  obtain,  integrate  and  utilize  the
employees,  facilities,   third-party  vendors  and  equipment,  or  management,
operational  and  financial  resources  necessary  to  manage a  developing  and
expanding business in our evolving and increasingly  competitive industry. If we
are  unable to  manage  growth  effectively,  we may lose  customers  or fail to
attract new customers and our business and financial results will suffer.

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<PAGE>

Because tracking Internet-based information across the entire worldwide Web is a
highly  complex  process,  our  products and services may have errors or defects
that could seriously harm our business.

The tracking of Internet-based  information across the entire worldwide Web is a
highly complex process. We and our customers have, from time to time, discovered
errors and  defects in our  software.  In the  future,  there may be  additional
errors and defects in our software  that may  adversely  affect our products and
services.  If we are unable to efficiently fix errors or other problems that may
be identified, we could experience:

     o   loss of or delay in revenue and loss of market share;

     o   loss of customers;

     o   failure to attract new customers or achieve market acceptance;

     o   diversion of development resources;

     o   loss of reputation and credibility;

     o   increased service costs; and

     o   legal actions by our customers.

If we are unable to successfully expand our professional services  organization,
customer satisfaction and demand for our products will suffer.

We believe that successful implementation of our technology by our customers and
future  growth  in our  product  sales  depend on our  ability  to  provide  our
customers with professional  services,  including  customer  support,  training,
consulting and initial  implementation  and deployment of our products.  We have
developed an in-house  professional services organization with employees who can
perform these tasks and who also educate  third-party systems integrators in the
use of our products so that they can

provide these services to our customers.  Competition for qualified professional
services  personnel is intense due to the limited  number of people who have the
requisite  knowledge and skills.  As a result,  we may not be able to attract or
retain a sufficient number of qualified  professional services personnel.  If we
are  unable  to  develop  sufficient   relationships  with  third-party  systems
integrators and our  professional  services  organization is  under-staffed,  we
could be unable to  complete  implementations  in a timely  manner,  which would
cause delays in revenue recognition.  In addition, if we do not provide adequate
customer  support,  consulting  and  training for our  customers,  we could face
customer dissatisfaction,  damage to our reputation and decreased overall demand
for our products.

Acquisitions  we have made and may make in the future could disrupt our business
or not be successful and harm our financial condition.

We have in the past acquired or made investments in, and intend in the future to
acquire or make  investments  in other  complementary  companies,  products  and
technologies.  We have acquired  certain  assets of Windward and  SwiftTouch and
acquired  Dry  Creek,  NetMind,  ProxiNet,   SoftMagic  Corporation,   RealWorld
Solutions,  Inc.  and  IntelliLink  Corporation.  In the  event  of  any  future
acquisitions or investments, we could:

     o   issue  stock  that  would  dilute the  ownership  of our then  existing
         stockholders;

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<PAGE>

     o   incur debt;

     o   assume liabilities;

     o   face the Securities  and Exchange  Commission  (SEC)  challenges to the
         accounting  treatment of these acquisitions which may result in changes
         to our financial  statements  and cause us to incur charges to earnings
         over time that we did not expect;

     o   incur  amortization  expenses  related to goodwill and other intangible
         assets; or

     o   incur large and immediate write-offs.

These acquisitions and investments also involve numerous risks, including:

     o   problems integrating the operations, technologies or products purchased
         with those we already have;

     o   unanticipated costs and liabilities;

     o   diversion of management's attention from our core business;

     o   adverse effects on existing business  relationships  with suppliers and
         customers;

     o   risks  associated with entering  markets in which we have no or limited
         prior experience; and

     o   potential  loss of key  employees,  particularly  those of the acquired
         organizations.

We have  anti-takeover  defenses  that could  delay or  prevent a takeover  that
stockholders may consider favorable.

Certain provisions of our certificate of incorporation and bylaws and provisions
of Delaware law could have the effect of delaying,  deferring or  preventing  an
acquisition of us. These provisions  include a

classified  board of directors and limitations on actions by our stockholders by
written consent.  In addition,  our board of directors has the right to issue up
to  2,000,000  shares of  "blank  check"  preferred  stock  without  stockholder
approval,  which  could be used to dilute  the stock  ownership  of a  potential
hostile acquirer.  The preferred stock we issue could have mandatory  redemption
features,  liquidation preference and other rights that are senior to the rights
of common  stockholders.  Delaware law also imposes some restrictions on mergers
and other business  combinations between us and any holder of 15% or more of our
outstanding  common stock.  Although we believe these provisions  provide for an
opportunity  to  receive  a  higher  bid by  requiring  potential  acquirers  to
negotiate with our board of directors,  these provisions apply even if the offer
may be considered beneficial by some stockholders.

In addition,  our  stockholders  may not take actions by written consent and our
stockholders  are  limited in their  ability to make  proposals  at  stockholder
meetings.

Our  common  stock  will  likely be  subject  to  substantial  price and  volume
fluctuations due to a number of factors, some of which are beyond our control.

The trading  price of our common  stock has been and is likely to continue to be
highly volatile.  Our stock price is subject to wide fluctuations in response to
a variety of factors including:

     o   quarterly variations in operating results;

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     o   announcements of technological innovations;

     o   announcements of new software or services by us or our competitors;

     o   changes in financial estimates by securities analysts; or

     o   other events beyond our control.

In  addition,  the stock  market has  experienced  significant  price and volume
fluctuations  that  have  particularly  affected  the  trading  prices of equity
securities of many high technology companies. These fluctuations have often been
unrelated or disproportionate  to the operating  performance of these companies.
Any negative change in the public's  perception of Internet or Internet software
companies or companies in the wireless  communications  market could depress our
stock price regardless of our operating results.

Recently,  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.  The lawsuit could also divert the time and attention of
our management.

We expect that our future operating  results could fluctuate  significantly as a
result of  numerous  factors  including,  but not limited to, the demand for our
products,  our success in  developing  new  products,  the timing of new product
introductions by us and our competitors,  the timing of releases of new handheld
devices by our customers,  market  acceptance of our new and enhanced  products,
the emergence of new industry standards,  the timing of customer orders, the mix
of products sold,  competition,  the mix of distribution channels employed,  the
evolving  and  unpredictable  nature of the markets for our  products and mobile
computing devices generally,  the rate of growth of the personal computer market
in general and general economic conditions.

We may require additional capital, which we may not be able to obtain.

The expansion and development of our business may require  additional capital in
the future to fund our  operating  losses,  working  capital  needs and  capital
expenditures.  Historically we have relied on the capital  markets,  including a
private  placement  in March 2000 to raise  money for our  working  capital  and
capital  expenditure needs. The capital markets are very volatile and we may not
be able to obtain future equity or debt financing in the future on  satisfactory
terms or at all.  Our  failure to generate  sufficient  cash flows from sales of
products  and services or to raise  sufficient  funds may require us to delay or
abandon some or all of our development  and expansion plans or otherwise  forego
market opportunities. Our inability to obtain additional capital on satisfactory
terms may delay or prevent the expansion of our business,  which could cause our
business, operating results and financial condition to suffer.

Our working  capital is  primarily  comprised of cash,  short-term  investments,
accounts receivable,  inventory, other current assets, accounts payable, accrued
expenses,  deferred revenue and current portion of notes payable. The timing and
amount of our future capital  requirements may vary  significantly  depending on
numerous   factors,   including   our  financial   performance,   technological,
competitive and other developments in our industry.  These factors may cause our
actual revenue and costs to vary from expected  amounts,  possibly to a material
degree,   and  such   variations   are  likely  to  affect  our  future  capital
requirements.

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We are dependent on our  international  operations for a significant  portion of
our revenues.

Our  international  activities  expose  us to  additional  risks.  International
revenue,  primarily  from  customers  based in Japan,  accounted  for 26% of our
revenue in the nine months ended April 30, 2001,  27% of revenue in fiscal 2000,
and 40% of revenue in fiscal 1999. A key component of our strategy is to further
expand our international  activities.  As we continue to expand internationally,
we  are  increasingly  subject  to  risks  of  doing  business  internationally,
including:

     o   unexpected changes in regulatory requirements and tariffs;

     o   export  controls  relating to  encryption  technology  and other export
         restrictions;

     o   political and economic instability;

     o   difficulties in staffing and managing foreign operations;

     o   reduced protection for intellectual property rights in some countries;

     o   longer payment cycles;

     o   problems in collecting accounts receivable;

     o   potentially adverse tax consequences;

     o   seasonal  reductions in business  activity  during the summer months in
         Europe and certain other parts of the world;

     o   fluctuations in currency exchange rates that may make our products more
         expensive to international customers;

     o   gains  and  losses  on the  conversion  to  U.S.  dollars  of  accounts
         receivable and accounts payable arising from  international  operations
         due to foreign currency denominated sales;

     o   nonrefundable  withholding  taxes on royalty  income from  customers in
         certain countries, such as Japan and Taiwan; and

     o   an adverse effect on our provision for income taxes based on the amount
         and mix of income from foreign customers; and

     o   exposure to risk of non-payment by customers in foreign  countries with
         highly inflationary economies.

Any of these risks could harm our international  operations.  For example,  some
European  countries  already  have  laws  and  regulations  related  to  content
distributed on the Internet and technologies  used on the Internet that are more
strict  than  those  currently  in  force in the  United  States.  The  European
Parliament has recently adopted a directive  relating to the reform of copyright
in the European  Community  that will,  if made into law,  restrict  caching and
mirroring. Any or all of these factors could cause our business and prospects to
suffer.

Our  international  sales  growth will be limited if we are unable to  establish
additional foreign operations, expand international sales channel management and
support,  hire additional  personnel,  customize  products for local markets and
develop  relationships  with international  service providers,  distributors and

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<PAGE>

device  manufacturers.  Even if we are able to successfully expand international
operations,  we  cannot  be  certain  that we will  succeed  in  maintaining  or
expanding international market demand for our products.

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

To date,  the  majority  of our  customers  have paid for our  services  in U.S.
dollars.  Through the first three quarters  fiscal 2001 and for the fiscal years
2000 and 1999, 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  begin  opening  offices  in  Europe  and  other   countries.
Fluctuations in the value of the Yen, Euro or other foreign currencies may cause
our business and prospects to suffer.  We will also be exposed to increased risk
of  non-payment  by our customers in foreign  countries,  especially  those with
highly  inflationary  economies.  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,  our international  revenues are currently
subject  to the risks of  foreign  currency  fluctuations  and such  risks  will
increase as our international revenues increase.

Regulations or consumer  concerns  regarding privacy on the Internet could limit
market acceptance of our products and services.

Our  products and services  will allow our customers to develop and maintain Web
user profiles to tailor content to specific users.  Profile development involves
both  data  supplied  by the user  and data  derived  from the  user's  Web site
behavior.  Privacy concerns may cause users to resist providing personal data or
to avoid Web sites  that  track  user  behavior.  In  addition,  legislative  or
regulatory requirements may heighten consumer concerns if businesses must notify
Web site users that user  profile data may be used to direct  product  promotion
and advertising to users.  Other countries and political  entities,  such as the
European  Economic  Community,  have  adopted  such  legislation  or  regulatory
requirements.  The United States may do so in the future. If privacy legislation
is  enacted  or  consumer  privacy  concerns  limit  the  market  acceptance  of
personalization  software,  our  business,  financial  condition  and  operating
results could be harmed.

We use  cookies to  provide  users  convenient  access to the Web sites they are
minding and to track demographic  information and user preferences.  A cookie is
information  keyed to a specific user that is stored on a computer's hard drive,
typically without the user's knowledge.  Cookies are generally  removable by the
user,  although removal could affect the content available on a particular site.
A number of governmental bodies and commentators in the United States and abroad
have urged passage of laws limiting or  abolishing  the use of cookies.  If such
laws are  passed  or if users  begin to delete  or  refuse  cookies  as a common
practice, market demand for our products and services could be reduced.

Increasing  government  regulation  could  cause  demand  for our  products  and
services to grow more slowly or to decline.

We are subject not only to regulations  applicable to businesses generally,  but
also to laws and regulations directly applicable to the Internet. Demand for our
products in certain  countries,  and our ability to meet this demand, is subject
to export controls on hardware and on the encryption software  incorporated into
our products. In addition, state, federal and foreign governments may adopt laws
and regulations governing any of the following issues:

     o   user privacy;

     o   taxation of electronic commerce;

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<PAGE>

     o   the online distribution of specific material or content; and

     o   the characteristics and quality of online products and services.

One or more states or the federal  government could enact  regulations  aimed at
companies like us, which provide  software that  facilitates  e-commerce and the
distribution  of content over the Internet.  The  likelihood of the enactment of
regulation in these areas will increase as the Internet  becomes more  pervasive
and  extends to more  people's  daily  lives.  Any  legislation,  regulation  or
taxation of or  concerning  electronic  commerce  could dampen the growth of the
Internet and decrease its acceptance as a communications  and commercial medium.
If a  reduction  in growth  occurs as a result of these  events,  demand for our
Internet service and other products could decline significantly.

Actions by major Web site  providers  to block our software  from minding  their
sites could limit market acceptance of our products.

One of the primary  benefits  of our  products  and  services is that they bring
users  back to a Web site  through  click-throughs  on links  within  our change
notifications.  This is generally very beneficial to Web site  providers.  These
providers do, however,  have the ability to detect our monitoring of their sites
and could block our access to their site. Widespread blocking by major Web sites
could seriously limit market acceptance of our products.

There are many companies providing competing products and services.

There are few  substantial  barriers  to entry  and we expect  that we will face
additional  competition from existing competitors and new market entrants in the
future.

We currently face direct  competition  with respect to Satellite  Forms, MAP and
its individual  elements--Sync-it,  Browse-it and Mind-it,  and Intellisync.com.
Satellite Forms faces competition from Aether

Systems' ScoutBuilder, AppForge, Inc., iConverse, Inc., Metrowerks Code Warrior,
mPortal,  Inc., and Pendragon Software  Corporation.  MAP  infrastructure  faces
competition  from  Aether,  Hewlett  Packard's  Bluestone  Software,  Inc.,  IBM
Corporation,  iConverse, Microsoft Corporation,  mPortal, Openwave Systems, Inc.
and Sun Microsystems,  Inc. Sync-it's  synchronization features face competition
from Aether,  AvantGo,  Inc., Chapura,  Inc., Extended Systems, Inc., FusionOne,
Inc.,  Infowave  Software,  Motorola,  Inc.,  Synchrologic,  Inc.  and  Wireless
Knowledge,  Inc.  Browse-it's  transformation  and mobile  content  distribution
features  face  competition  from  AlterEgo  Networks,   AvantGo,  4thpass  LLC,
Handspring's Bluelark Systems, Neomar, Inc., Qualcomm, Inc., ThinkersGroup, Inc.
and Wireless Knowledge.  In the area of alerts,  change detection and analytics,
Mind-it faces competition from Adeptra,  Inc.,  Alerts.com,  Inc.,  BroadVision,
Inc.,  Categoric  Software  Corporation,   Connotate   Technologies,   Inc.  and
MicroStrategy, Inc. Intellisync.com faces competition from FusionOne, InfoSpace,
Inc.,   Palm  Inc.'s   my.palm.com,   Synchrologic's   ReadySyncGo,   and  Visto
Corporation.  In addition to direct  competition  noted above,  we face indirect
competition  from existing and potential  customers that may provide  internally
developed solutions to each of the elements of MAP.

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  connection  with their  Internet  systems and network  solutions,  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  than  us 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.

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<PAGE>

Increased competition could result in:

     o   price and revenue reductions and lower profit margins;

     o   loss of customers or failure to obtain additional customers; and

     o   loss of market share.

Any one of these could materially and adversely  affect our business,  financial
condition and results of operations.

The  integration of key new employees and officers into our management  team has
interfered, and will continue to interfere, with our operations.

We may, in the near future,  hire a number of key employees to our  professional
services  organization,  research and development,  administrative and sales and
marketing  groups.  To integrate  into our company,  new employees  must spend a
significant amount of time learning our business model and management system, in
addition to performing their regular duties. Accordingly, the integration of new
personnel  has resulted and will  continue to result in some  disruption  to our
ongoing  operations.  If we fail to complete  this  integration  in an efficient
manner, our business and financial results will suffer.

We must  retain  and  attract  key  employees  or  else  we may  not  grow or be
successful.

We are highly dependent on key members of our management and engineering  staff.
The loss of one or more of these  officers  or key  employees  might  impede the
achievement of our business  objectives.  Furthermore,  recruiting and retaining
qualified  technical  personnel to perform  research,  development and technical
support is critical to our success.  If our business grows, we will also need to
recruit a significant  number of management,  technical and other  personnel for
our business.  Competition for employees in our industry and geographic location
is intense.  We may not be able to  continue  to attract and retain  skilled and
experienced personnel on acceptable terms.

Our  failure  to  adequately   protect  our  proprietary  rights  may  harm  our
competitive position.

We rely on a combination  of patents,  copyrights,  trademark,  service mark and
trade  secret  laws  and  contractual  restrictions  to  establish  and  protect
proprietary rights in our products and services. However, we will not be able to
protect our  intellectual  property if we are unable to enforce our rights or we
do not detect unauthorized use of our intellectual property.

Although  we  currently  have  14  issued  United  States  patents  and  have an
additional  12 patent  applications  pending,  we cannot  be  certain  that such
patents and patent  applications  will provide an adequate level of intellectual
property  protection.  In addition,  we have corresponding  international patent
applications  pending  under the Patent  Cooperation  Treaty in  countries to be
designated  at a later  date.  We cannot be certain  that any  pending or future
patent applications will be granted, that any pending or future patents will not
be  challenged,  invalidated or  circumvented,  or that rights granted under any
patent that may be issued will provide competitive advantages to us.

We have also  provided  our source code under escrow  agreements  and to foreign
translators  which may  increase the  likelihood  of  misappropriation  by third
parties.

We have applied for  trademarks  and service  marks on certain terms and symbols
that we believe are important for our business. However, the steps we have taken
to protect our  technology  or  intellectual

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<PAGE>

property   may  be  inadequate.   Our  competitors  may  independently   develop
technologies that are substantially equivalent or superior to ours. Moreover, in
other regions where we do business, such as in Africa,  Asia-Pacific and Europe,
there may not be effective  legal  protection  of patents and other  proprietary
rights that we believe are important to our business.

As a matter of company  policy,  we enter into  confidentiality  and  assignment
agreements with our employees,  consultants and vendors.  We also control access
to  and   distribution  of  our  software,   documents  and  other   proprietary
information.  Notwithstanding  these  precautions,  it  may be  possible  for an
unauthorized  third party to copy or  otherwise  obtain and use our  software or
other  proprietary  information or to develop  similar  software  independently.
Policing unauthorized use of our products is difficult, particularly because the
global  nature of the  Internet  makes it  difficult  to  control  the  ultimate
destination  or security of software  and other  transmitted  data.  The laws of
other  countries  may  afford  us  little  or no  effective  protection  of  our
intellectual  property.  The steps we have taken to prevent  misappropriation of
our  technology,  including  entering  into  agreements  for that purpose may be
insufficient.  In addition, litigation may be necessary in the future to enforce
our intellectual property rights, to protect our trade secrets, to determine the
validity  and scope of the  proprietary  rights  of others or to defend  against
claims of infringement or invalidity.  Such  litigation,  whether  successful or
unsuccessful, could result in substantial costs and diversions of our management
resources, either of which could harm our business.

We may be  unable to  license  necessary  technology  and it may be  subject  to
infringement claims by third parties.

Our  commercial  success  will  also  depend  in  part  on  not  infringing  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  technology  or to alter our products or
processes,  obtain  licenses or cease  activities that infringe on third party's
intellectual  property rights. If any such licenses are required,  we may not be
able to obtain such licenses on  commercially  favorable  terms,  if at all. Our
failure  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 and validity of third party proprietary
rights.

We are dependent on non-exclusive  licenses for certain  technology  included in
our products.

We  depend on  development  tools  provided  by a limited  number of third party
vendors.  Together with application developers,  we rely primarily upon software
development  tools provided by companies in the PC and mobile  computing  device
industries.  If any of  these  companies  fail  to  support  or  maintain  these
development  tools, we will have to support the tools ourselves or transition to
another vendor.  Any maintenance or our support of the tools or transition could
be time consuming,  could delay product  release and upgrade  schedule and could
delay the development and availability of third party  applications  used on our
products.  Failure to procure the needed software development tools or any delay
in availability of third party  applications could negatively impact our ability
and the ability of third party application developers to release and support our
products or they could  negatively  and  materially  affect the  acceptance  and
demand for our products, business and prospects.

The risks associated with such non-exclusive third party licenses:

     o   If we are unable to continue to license  the  technology  or to license
         other necessary  technologies for use with our products or if there are
         substantial  increases in royalty payments under third-party  licenses,
         it could jeopardize our operating results.


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<PAGE>

     o   The  effective   implementation   of  our  products  depends  upon  the
         successful   operation  of  these  licenses  in  conjunction  with  our
         products,  and therefore any  undetected  errors in products  resulting
         from such  licenses  may  prevent  the  implementation  or  impair  the
         functionality  of our  products,  delay new product  introductions  and
         injure our  reputation.  Such  problems  could have a material  adverse
         effect on our business, operating results and financial condition.

     o   Although we are  generally  indemnified  against  claims that the third
         party technology we license infringes the proprietary rights of others,
         this   indemnification  is  not  always  available  for  all  types  of
         intellectual  property  rights (for  example,  patents may be excluded)
         and, in some cases, the scope of such indemnification is limited.  Even
         if we receive broad  indemnification,  third party  indemnitors are not
         always  well-capitalized  and may not be  able to  indemnify  us in the
         event of infringement,  resulting in substantial  exposure to us. There
         can be no assurance that infringement or invalidity claims arising from
         the incorporation of third party technology in our products, and claims
         for  indemnification  from our customers  resulting  from these claims,
         will not be asserted or prosecuted  against us. These  claims,  even if
         not  meritorious,  could  result  in  the  expenditure  of  significant
         financial  and  managerial  resources in addition to potential  product
         redevelopment costs and delays, all of which could materially adversely
         affect our business, operating results and financial condition.

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

Our products may contain  undetected errors or failures when first introduced or
as new  versions  are  released,  which can result in loss of or delay in market
acceptance  and could  adversely  impact  future  operating  results.  We do not
currently maintain product liability insurance.  Although our license agreements
contain provisions  limiting our liability in the case of damages resulting from
use of the software,  in the event of such damages,  we may be found liable, and
in such event such  damages  could  materially  affect our  business,  operating
results and financial condition.

System failures or accidental or intentional security breaches could disrupt our
operations,  cause us to incur significant expenses,  expose us to liability and
harm our reputation.

Our  operations  depend upon our ability to  maintain  and protect our  computer
systems,  which are located at our offices in California and New Hampshire.  Our
systems are vulnerable to damage from break-ins, unauthorized access, vandalism,
fire, floods, earthquakes,  power loss,  telecommunications failures and similar
events.  Although we maintain insurance against break-in,  unauthorized  access,
vandalism,  fires, floods,  earthquakes and general business interruptions,  the
amount of  coverage  may not be adequate in any  particular  case,  and will not
likely  compensate us for all the damages caused by these or similar events.  We
may be unable to prevent  computer  programmers or hackers from  penetrating our
network  security  from time to time. A breach of our security  could  seriously
damage our  reputation,  which would harm our business.  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.


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<PAGE>


Item 3. Quantitative and Qualitative Disclosures About Market Risk

We are  exposed to a variety of risks,  including  changes  in  interest  rates,
foreign  currency  fluctuations,  marketable  equity  security prices and market
values of our  investments  which  could  impact our results of  operations  and
financial   condition.   We  currently  do  not  utilize  derivative   financial
instruments to hedge such risks.

At April 30, 2001,  we had an  investment  portfolio of fixed income  securities
excluding those classified as cash and cash equivalents and securities available
for sale of $24,575,000.  These securities,  like all fixed income  instruments,
are  subject to  interest  rate risk and will fall in values if market  interest
rates  increase.  If market  interest  rates were to  increase  immediately  and
uniformly by 10% from levels as of April 30, 2001, the decline of the fair value
of the  portfolio  would  be  immaterial.  Our  fixed  income  investments  have
maturities  of less  than one year.  While we have the  intent to hold our fixed
income  investments  until  maturity to avoid  recognizing  an adverse impact in
income or cash flows in the event of an increase in market interest rates, there
can be no assurance that we will be able to do so.

Due to the recent energy crisis in California  that has caused a dramatic change
in the  financial  position  of PG&E  Corporation,  PG&E  has  defaulted  on the
interest  and  principal  payments  of its  commercial  paper  obligations.  Our
investment  portfolio  includes  the  PG&E  commercial  paper.  Accordingly,  we
recorded an  adjustment of  approximately  $103,000 and $300,000 to the value of
our PG&E  commercial  paper for the impairment of this security in the three and
nine months ended April 30, 2001, respectively.  This adjustment is reflected in
"Other income, net" in Condensed  Consolidated  Statements of Operations for the
three and nine months  ended  April 30,  2001.  In April 2001,  we sold our PG&E
commercial paper for the remaining book value of $700,000.

To date,  substantially  all of our recognized  revenue has been  denominated in
U.S.  dollars and generated  primarily from customers in the United States,  and
our exposure to foreign currency exchange rates has been immaterial.  We expect,
however,  that  more  product  and  service  revenue  may also be  derived  from
international  markets and may be  denominated in the currency of the applicable
market in the future.  As a result,  our operating results may become subject to
significant  fluctuations  based  upon  changes  in  exchange  rates of  certain
currencies in relation to the U.S. dollar.  We will also be exposed to increased
risk of non-payment by our customers in foreign  countries,  especially those of
highly  inflationary  economies.  Furthermore,  to the extent  that we engage in
international sales denominated in U.S. dollars, an increase in the value of the
U.S. dollar relative to foreign  currencies could make our products and services
less competitive in international markets.  Although we will continue to monitor
our exposure to currency fluctuations,  and, when appropriate, may use financial
hedging  techniques in the future to minimize the effect of these  fluctuations,
we cannot be assured that exchange rate  fluctuations  will not adversely affect
our financial results in the future.

We are subject to equity price risks on the marketable portion of investments in
publicly traded equity securities.  These investments are generally in companies
having  operations or technology in areas within our strategic  focus. We do not
attempt to reduce or eliminate our market exposure on these securities. At April
30, 2001,  the fair value of these  investments  is  approximately  $16,000.  We
believe  that a decline in the  investments'  fair  values  would not  adversely
impact our results of operations.

We are a limited partner in a venture capital fund and invest directly in equity
instruments of privately-held companies, which include a number of our strategic
partners  who are  both  customers  and  vendors,  for  business  and  strategic
purposes.  These  investments  are  included in other  long-term  assets and are
accounted  for under the cost method as  ownership is less than 5% and we do not
have the ability to exercise significant influence over operations. At April 30,
2001, these investments amounted to $2,306,000.  (See Note 5 of the notes to the
unaudited  condensed  consolidated  financial  statements for more details.) For
these investments,  we regularly review the assumptions underlying the operating


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performance  and cash flow  forecasts  in  assessing  the  carrying  values.  We
identify and record  impairment  losses when events and  circumstances  indicate
that such assets might be impaired.

As of the end of the  third  quarter  of  fiscal  2001,  we  concluded  that the
investments  associated  with  YadaYada,  Inc.,  If & Then,  Inc.,  and  PulseMD
Corporation were impaired as such investments were deemed not to be recoverable.
These  investments  were fully  impaired  due to  changes  in capital  structure
impacting  our  investment  preferences,  thin  capitalization,  dilution due to
dramatic  declines in valuations  and overall lack of  persuasive  evidence that
would  indicate a future  ability or intent of these entities that would support
the  carrying  value of our  investments.  As a result,  we recorded  impairment
charges  aggregating  $1,180,000  for the three and nine months  ended April 30,
2001.

Although we will continue to assess the carrying values of our  investments,  we
cannot be assured that a decline in value of our current and future  investments
will not  adversely  affect our  financial  results in the future.  Furthermore,
given the recent  economic  downturn and its effect on the capital  markets,  we
cannot be assured that any other investments we have can be fully recouped if at
all.


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<PAGE>


                                 PUMATECH, INC.

                           PART II - OTHER INFORMATION


Item 1.     Legal proceedings - Not Applicable


Item 2.     Changes in securities and use of proceeds - Not Applicable


Item 3.     Defaults upon senior securities - Not Applicable


Item 4.     Submission of matters to a vote of security holders - Not Applicable


Item 5.     Other information - Not Applicable


Item 6.     Exhibits and reports on Form 8-K

            (a)  Exhibits

                         10.1  Loan and  Security  Agreement,  dated  March  29,
                               2001, by and between  Imperial Bank and Pumatech,
                               Inc.

            (b)  Reports on Form 8-K  - Not Applicable


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<PAGE>

                                    SIGNATURE


Pursuant  to the  requirements  of the  Securities  Exchange  Act of  1934,  the
Registrant  has duly  caused  this  report  to be  signed  on its  behalf by the
undersigned hereunto duly authorized.


                                                  PUMATECH, INC.
                                                   (Registrant)




Date:  June 13, 2001                    By:    /s/ KELLY J. HICKS
                                           --------------------------------
                                           Kelly J. Hicks
                                           Vice President of Operations and
                                              Chief Financial Officer (Principal
                                              Financial and Accounting Officer)



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