FORM 10-KSB
Amendment No.2
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON D.C., 20549
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the fiscal year ended December 31, 1999
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
Commission File Number 0-28452
MILLENNIUM SOFTWARE, INC.
Formerly Legal protection Services, Inc.
(Exact name of registrant as specified in its charter)
Nevada 93-1206546
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(State or other jurisdiction (IRS Employer
of Incorporation or organization) Identification No.)
2950 E. Flamingo Road, Suite G, Las Vegas, Nevada 89121
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(address of principal executive offices) (Zip code)
Issuer's telephone number: (702) 369-9614
Securities registered pursuant to Section 12(b) of the Exchange Act:
Title of each class Name of exchanges on which registered
(None) (None)
Securities registered pursuant to Section 12(g) of the Exchange Act: Common
Stock, par value $.004 per share.
Check whether the issuer (1) 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. [X] Yes [ ] No
Check if there is no disclosure of delinquent filers pursuant to Item 405 of
Regulation SB is not contained herein, and will not be contained, to the best of
registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-KSB or any amendment to
this Form 10-KSB. [X]
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PART I
ITEM 1. DESCRIPTION OF BUSINESS
GENERAL
Millennium Software, Inc. (the Company) is engaged in the development of an
Internet business to sell financial software products worldwide. To date it has
secured exclusive worldwide rights to copy, duplicate, sell, distribute and
sub-license software products known as CheckMy Banking 2000, CheckMy Loans 2000,
and CheckMy Mortgage 2000 together with Learning Guides (the Software). The
Software was in testing and proving trials at December 31st, 1999 and not
available for customer use. The intention is to make the Software available for
sale in the March-April 2000 period.
To date the Company has received no sales income since incorporation as ICS
(9612), Inc. in February 1996. The name of the Company was changed to Millennium
Software, Inc. in July 1997.
The Company entered into an Electronic Distribution Agreement with Digital
River, Inc., (Digital River') Eden Prairie, Minnesota on March 8th, 1999 whereby
Digital River will provide order processing and credit card authorization
services for the Company to enable delivery of the Software to customers by
electronic download, and in physical CD-ROM form. The agreement with Digital
River is for a period of two years, renewable by mutual consent. Digital River
is an independent third party company whose shares are traded on NASDAQ (Symbol
DRIV). The Internet site for Digital River, Inc. is located at
http://www.digitalriver.com.
It is intended that the Web Sites will provide information and
specifications of the Software, copies of Software reports and screens and
on-line ordering facilities. The Company has selected Digital River, Inc. as the
third party provider of electronic order processing, secure credit authorization
and deliverer of the Software. It is intended that on-line ordering links
situated within the Web Sites will provide Internet connections to an electronic
order processing web site created for the Company by Digital River. End Users
wishing to purchase the Software will be able to enter their purchase choices
and delivery address, pay by credit card and select either to have the Software
delivered electronically direct to their computer or in CD-ROM form through
postal mail or courier services organized by Digital River. On confirmed receipt
of each valid order, Digital River will advise the Company on a next working day
basis of the customer name and address, product(s) ordered and order value.
Digital River will also provide a secure on-line management reporting system for
the Company that will track the details of all orders placed and the accounting
records for payments due to the Company and Digital River. Digital River will
receive and hold payments from customers, deduct 20% as a service fee, and is
obligated under the terms of the Electronic Software Distribution Agreement to
pay the balances due to the Company within 30 days after the end of each
calendar monthly period. Digital River will be solely responsible for the
payment of all credit card transaction fees and the preparation and filing of
any sales or use tax returns, and the payments of any and all sales or use
taxes, together with any and all related interest and penalties. Payments due to
the Company from sales of Software less the processing fee of 20% deducted by
Digital River will be subject to adjustment by Digital River based on Software
Product returns and refunds paid to End Users.
At December 31st, 1999 the Web Sites were under construction and were not
available for customers to use.
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At December 31st, 1999 the Company had not delivered any software to Digital
River and no services had been provided by Digital River on behalf of the
Company.
The Company entered into a Software Licensing Agreement (the Licensing
Agreement) with Abacus Systems, Ltd., (Abacus) on December 8th, 1999, whereby
the Company has obtained exclusive worldwide rights to publish, copy, distribute
Software products and to sub-license reproduction and distribution rights of
Software products in return for future aggregate royalty payments of 15% of
sales of Software. Abacus Systems, Ltd is a company controlled and managed by
the President of the Company. At December 31st, 1999 the Software products are
not ready for release to the market. Further testing and proving trials are
required before they can be released for sale.
SOFTWARE PRODUCTS
The Company holds the exclusive worldwide marketing rights to three
financial software products, known as CheckMy Banking 2000, CheckMy Loans 2000,
and CheckMy Mortgage 2000 developed by Abacus Systems Ltd. All three products
are designed for personal and small business users. The Software is intended to
run on Windows 95 or 98 computer systems.
CheckMy Banking 2000 provides a software import feature for Quicken QIF
files. Quicken (Copyright: Intuit, Inc., Mountain View) is the leading software
product for the easy and efficient organization of personal and small business
financial records. There are believed to be several million users of Quicken
worldwide. CheckMy Banking 2000 calculates bank charges, interest and cleared
and net balances.
CheckMy Loans 2000 provides a new powerful personal and corporate loan
management system. The software updates monthly loan balances, interest due and
paid amounts and provides loan reports. It contains 25 software calculators for
various what-if possibilities, such as calculating interest savings with loan
consolidation, savings arising from early loan repayments, higher monthly
repayments. The software checks lenders loan interest and loan terms and finds
true values.
CheckMy Mortgage 2000 is a smart mortgage calculator that contains several
advanced new mortgage comparison and forecasts of property values features. The
software calculates mortgage amortization schedules, refinance balances and
total mortgage interest costs. The software provides compare mortgages, and
refinances sections which calculate alternative financial results from different
mortgages. The software is aimed at personal users who wish to keep watch on
their mortgage finances. Country settings screen will allow users to select US,
Canadian, or UK mortgage calculations routines.
The Software will provide calculation processes which will allow personal
and business users to check and verify interest charges, loan repayments,
mortgage repayments, bank charges, deposit clearing delays and also to calculate
ways to save money by more efficient arrangement of personal or corporate
finances.
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The Software will be delivered to customers either electronically directly
into their computers via electronic download or by physical delivery via a
CD-ROM.
METHODS OF DISTRIBUTION
The Company intends to use the Internet to market the Software products and
related User Guides.
The Company has two Web Sites under construction located at
http://www.mlnsoft.com and http://www.checkmy200.uk.com (The Web Sites). The
www.mlnsoft.com site is designed to addresses the US and Canadian markets for
the Software, the www.checkmy2000.uk.com site is designed to site the UK market
for the Software.
It is intended that the Web Sites will provide information and
specifications of the Software, copies of Software reports and screens and
on-line ordering facilities. The Company has selected Digital River, Inc. as the
third party provider of electronic order processing, secure credit authorization
and deliverer of the Software. It is intended that on-line ordering links
situated within the Web Sites will provide Internet connections to an electronic
order processing web site created for the Company by Digital River. End Users
wishing to purchase the Software will be able to enter their purchase choices
and delivery address, pay by credit card and select either to have the Software
delivered electronically direct to their computer or in CD-ROM form through
postal mail or courier services organized by Digital River. On confirmed receipt
of each valid order, Digital River will advise the Company on a next working day
basis of the customer name and address, product(s) ordered and order value.
Digital River will also provide a secure on-line management reporting system for
the Company that will track the details of all orders placed and the accounting
records for payments due to the Company and Digital River. Digital River will
receive and hold payments from customers, deduct 20% as a service fee, and is
obligated under the terms of the Electronic Software Distribution Agreement to
pay the balances due to the Company within 30 days after the end of each
calendar monthly period. Digital River will be solely responsible for the
payment of all credit card transaction fees and the preparation and filing of
any sales or use tax returns, and the payments of any and all sales or use
taxes, together with any and all related interest and penalties. Payments due to
the Company from sales of Software less the processing fee of 20% deducted by
Digital River will be subject to adjustment by Digital River based on Software
Product returns and refunds paid to End Users.
At December 31st, 1999 the Web Sites were under construction and were not
available for customers to use.
The Company incurred costs of $2,343 for the development of its Web
Sites to December 31st, 1999.
The Company intends to promote its Web Sites through inclusion in leading
search engines, through advertising in web site directories, through independent
editorial review of the Software products and through Internet linkages leading
visitors to the Company's Web Sites. Some listings may be obtained through paid
advertising.
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The Company also intends to promote its Web Sites through expanding its
network of third party Internet sites that lead visitors directly to the
Company's Web Sites. The Company intends to introduce a commission based sales
incentive for Internet marketing affiliates (Affiliates) which will provide a
30% sales commission on net sales income earned from buyers that originate from
third party Affiliates. Sales commissions due to Affiliates will be payable by
the Company within 30 days after the end of each monthly reporting period.
COMPETITION
CheckMy 2000 products intend to compete in the worldwide market for
personal, and small business financial software products that run on personal
Windows 95 and 98 computers. This market is extremely competitive and there are
many successful and well-established products within this market. There exists a
plethora of companies developing and selling financial software, many of which
have well-established operations and substantially greater financial resources
than the Company. The Software is unproven and completely new. The Company has
insufficient management resources and personnel to compete effectively in the
market for financial software. There is a risk that the Software may not appeal
to personal and business users. There is a risk of failure of the Web Sites to
perform properly.
Major competitors in the market for financial software include Intuit, Inc
(Mountain View, CA), Microsoft Corporation (Redmond, WA) and Sage Computing Ltd
(UK).
SUPPLIERS
The Company intends to copy, market, distribute and sub license Software
and User Guides developed and supplied by Abacus Systems Ltd. Abacus Systems
Ltd, is a private Bermuda company controlled by Anthony Bigwood, the President
of the Company. Abacus has 22 other shareholders, none of whom are related to
the President in any way. The Company has insufficient financial resources or
skilled personnel to undertake software development on its own. It has therefore
reached an agreement with Abacus whereby Abacus has developed Software at its
own cost and the Company has acquired the exclusive worldwide rights to copy,
reproduce, distribute the Software and sub-license rights to reproduction and
distribution of the Software in return for payments to Abacus of 10% royalties
of net revenue income received by the Company from sale of Software and User
Guides, and a 5% royalty fee for the provision of technical support to the
Company.
The provisions for termination of the Software Licensing Agreement are as
follows:
1. Abacus may terminate the License, at its sole discretion, if Royalty and
Fee payments due to Abacus, or any part thereof, become 120 days or more
overdue.
2. Abacus may terminate the License, at its sole discretion, if management
control of Millennium changes from the current arrangements.
3. Millennium may terminate this License, at its sole discretion, by giving
120 days written notice to Abacus.
4. The License will be terminated immediately upon written notice by Abacus if
the confidentiality provisions are breached by Millennium.
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The confidentiality provisions within the Licensing Agreement are that the
Company agrees to keep confidential all proprietary knowledge acquired about the
Products, promises not to divulge any such knowledge to any third party unless
prior written consent of Abacus and its representatives is provided. Failure to
abide by these confidentiality rules will cause an immediate cancellation of the
License.
The Company does not intend to engage in software development activities
except for the support and maintenance of its Web Sites. It may contract with
Abacus Systems Ltd for the design and development of future additional software
products to be provided at Abacus expense.
SEASONALITY
The Company's proposed business may be affected by a seasonal trend, with
stronger sales in the run up to Christmas period and weaker sales during the
summer months.
EMPLOYEES
The Company has no full-time employees at this time, however, the President
and Secretary of the Company work for and on behalf of the Company part-time
without paid remuneration at present.
ITEM 2. DESCRIPTION OF PROPERTY
The Company does not own or lease any real property at this time but is
using, without charge, office facilities of its President located at 2277 Lawson
Avenue, West Vancouver, BC, Canada. The telephone number is 604-926-5236.
The Company has registered the web domain name www.CheckMy2000.uk.com.
ITEM 3. LEGAL PROCEDINGS
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
There have been no matters submitted to a vote of security holders
during 1999.
PART II
ITEM 5. MARKET FOR COMPANY'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
The Company's stock trades on the OTC bulletin board with the stock symbol MLNS.
PRICE RANGE OF COMMON STOCK
Date Volume High/Ask Low/Bid Close
--------- ----------- ------------- ------------ ------
12/05/97 10,200 .60 .25 .25
03/05/98 7,000 .60 .25 .27
07/31/98 14,500 .40 .20 .40
09/30/98 1,000 .30 .30 .30
12/31/98 2,000 .30 .03 .05
03/31/99 3,800 .75 .365 .75
06/30/99 800 .875 .50 .50
09/30/99 3,674 .9375 .365 .365
12/31/99 1,200 .9375 .9375 .9375
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These quotations are over-the-counter quotations and reflect inter-dealer
prices, without retail mark-up, markdown or commission and may not represent
actual transactions.
In August of 1997 the Company approved a private placement of shares to
Asia Pacific Mining (Bermuda) Ltd., which is controlled by the Company
President. (Note: Asia Pacific Mining (Bermuda) changed its name to Abacus
Systems Ltd., in 1999). 1,180,500 shares at $.05 each were issued to raise
$59,250.
The Company issued 3,000,000 shares, in September 1999, to the President,
Dr. A. M. Bigwood (2,000,000 shares) and Abacus Systems Ltd (1,000,000), a
company controlled by the President, at $0.01 per share as compensation for
$30,000 owed by the Company to the President, previously provided as a
shareholder loan. The Company reduced the amount owed to the President by a
corresponding $30,000.
The Company authorized the issue of 50,000 shares, in lieu of monetary
compensation, to General Audit Systems, Inc., a Company controlled by the
President, for payment by General Audit Systems, Inc., on behalf of the Company
to the Company auditor, of $500 cash in September 1999 for audit expenses of
Millennium Software, Inc. These shares were issued in October 1999.
The Company issued 7,500 shares, in December 1999, in lieu of monetary
compensation to Abacus Systems Ltd, a company controlled by the President, at
$0.01 per share as compensation for $75.00 owed by the Company to the President,
previously provided as a shareholder loan. The Company reduced the amount owed
to the President by a corresponding $75.
1,000 shares were issued to Ms. D Stoute during July 1999 for provision of
web site software development services amounting to $10.00.
5,000 shares were issued by Private Placement to other parties during 1999
for $50 cash. 2,500 shares were issued to Peter and Susan Cassidy of London,
Ontario, Canada. The other 2,500 shares were issued to Mr. Steven Buist of
Hamilton, Ontario, Canada.
All of the above mentioned shares were offered pursuant to an exemption
from registration under Section 4(2) of the Securities Act of 1933.
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ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS
The Company is in a development stage and has earned no income since the
date of incorporation in February 1996. Since 1997 the Company's business
objectives are to market and distribute Windows 95/98 financial software
products through the Internet.
SELECTED FINANCIAL DATA
(In Dollars, except per share data)
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Dec 31, 1999 Dec 31, 1998 Dec 31, 1997
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Net sales ---- ----- ----
Operating Income (loss) (59,187) (6,245) (95,614)
Net Income (loss)
Earnings (loss) per share
- Basic (0.011) (0.003) (0.10)
- Diluted (0.011) (0.003) (0.10)
Total assets 6,867 9,854 15,089
Debt* 0 0 0
Shareholder loan 64,338 38,773 37,763
Shareholders equity (deficit) (57,471) (28,919) (22,767)
* Excluding shareholder loans
The Company received $56,140 in working capital finance from the President
and companies owned by the President during 1999 by provision of interest free
loans. $30,575 of the loan finance has been exchanged for 3,O57, 500 shares of
Company stock in lieu of cash repayment at December 31st, 1999. The total amount
of working capital loan finance provided by the President and companies
controlled by the President since the date of incorporation in 1996 to December
31st, 1999 has amounted to $94,913.
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The Company has inadequate financial resources with which to enter the
market for personal financial software. Its cash balances at 31st December 1999
amounted to $2,183. The potential marketing expenses required to enter the
market for personal and business software substantially exceeds the Companies
current cash resources. The Company does not anticipate any cash requirements
for purchase of significant equipment over the next twelve months. The Company
has no definite plans to raise additional capital during the next twelve months.
The Company is currently solely reliant on the President of the Company
continuing to provide interest free loan finance to maintain the Company=s day
to day operations. The annual operating expenses before marketing and
advertising costs amount to between $15,000 and $25,000 per annum. The President
has paid for expenses for development of the Company's Web Sites amounting to
$2,343. The Company has no known liabilities except for repayment of loans
provided by the President. These loans have been provided on an as needed basis
to the Company on an interest free basis, no specific repayment term, repayable
on demand. The Company currently has insufficient cash resources to repay these
loans. During the next twelve months any shortfall in cash requirements may be
provided through interest free loans provided to the Company by the President,
however this is not guaranteed. If the President is unable to provide
loan-bridging finance, the Company may have to discontinue its operations
entirely.
PLAN OF OPERATION
The business objective of the Company during the period from incorporation
until July 1997 was to acquire a small growth company in the network marketing
legal services provision sector.
The search for a suitable company continued for 15 months, during which
period discussions were held with several firms. The Company's investigations
failed to find a suitable acquisition candidate and the search in the network
legal services area was discontinued in July 1997.
In 1998, the Company requested the President to develop a business
strategy to enter the fast growing Internet business sector. Several business
models of Internet companies were examined and it was concluded that Internet
marketing software products was potentially promising opportunity. The Company's
current business objectives are to market and distribute Windows 95/98 financial
software products through the Internet.
The Company entered into an Electronic Distribution Agreement with Digital
River, Inc, (Digital River) Eden Prairie, Minnesota on March 8th, 1999 whereby
Digital River will provide order processing services for the Company to enable
delivery of the Software to customers by electronic download, and facilities for
warehousing and delivery of Software in physical CD-ROM form. Digital River is
an independent company whose shares are traded on NASDAQ (Symbol: DRIV). The
Internet address of Digital River is http://www.digitalriver.com. Digital River
has not commenced providing software delivery services for the Company as of
December 31st, 1999.
The Company is capable of delivering the Software to End Users in CD-ROM
form without services provided by Digital River, but is not able to deliver
Software by electronic download without the facilities provided by Digital River
or a similar supplier. Suppliers, such as Cybersource Corporation, Preview
Systems, and ShopNow.com are able to provide alternative sources of electronic
delivery of the Software. The agreement with Digital River is for a period of
two years from March 8th, 1999, renewable by mutual consent.
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The Company's Web Sites are intended to link directly to Digital River
computer servers. Software will be delivered to End Users by Digital River by
electronic download or in physical CD-ROM form.
The terms of the Electronic Distribution Agreement with Digital River
provide that Digital River will collect sales revenues from the Software
delivered by them in accounts controlled by them and they will deduct 20% of net
sales revenues obtained from End User customers processed by Digital River as a
Margin Payment for their facilities provided on behalf of the Company. The
Margin Payment to the Company shall be subject to adjustment by Digital River
based on Software returns and refunds paid to End Users. The terms of the
agreement are that Digital River will notify the Company within thirty days
after the end of each calendar month about payments processed during the
previous calendar month and will pay any net balances owing to the Company
within the said thirty days.
Digital River had not received copies of the Software at December 31st,
1999.
Clause 16, Term and Termination of the agreement with Digital River
contains the following provisions:
This Agreement will continue in effect for two (2) years from the date
hereof (March 8th, 1999). This Agreement will be automatically renewed for
successive additional one (1) year terms (each, a Renewable Term) unless
terminated by either party upon ninety (90) days written notice prior to the
expiration of the Initial Term or any Renewable Term.
The Agreement may be terminated by a party immediately by written notice to
the other party upon the occurrence of any of the following events: (i) If the
other party ceases to do business, or otherwise substantially terminates its
business operations; (ii) If the other party shall fail to promptly secure or
renew any license registration, permit authorization or approval for the conduct
of its business in the manner contemplated by the agreement or if any such
license, registration, permit, authorization or approval is revoked or suspended
and not reinstated within thirty (30) days; (iii) If the other party materially
breaches any provision of the agreement and fails to fully cure such breach
within thirty (30) days of written notice describing the breach; or (iv) If the
other party becomes insolvent or seeks protection under any bankruptcy laws,
creditors arrangements, composition or comparable proceedings, or if any respect
whatsoever affect a party's obligations to make payments top the other party in
connection with the distribution of Products that occurred prior to the
termination of the agreementpt
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The Company entered into a Software Licensing Agreement with Abacus Systems
Ltd., on December 8th, 1999, whereby the Company has obtained exclusive
worldwide rights to publish, copy distribute the Software, sub-license
reproduction and distribution rights to the Software developed by Abacus in
return for future royalty payments. Abacus expects to deliver Software to the
Company under the terms of the licensing agreement in March 2000. The Company
has agreed to pay Abacus 10% of royalties based on net revenues received from
the sale of Software licensed by Abacus to the Company plus a 5% royalty based
on net revenues received from the sale of Software licensed by Abacus to the
Company for technical support.
Abacus Systems Ltd is a company controlled and managed by the President of
the Company.
The Company has inadequate financial resources with which to enter the
market for personal financial software. Its cash balances at 31st December 1999
amounted to $2,154. The potential marketing expenses required to enter the
market for personal and business software substantially exceeds the Companies
current cash resources. The Company does not anticipate any cash requirements
for purchase of significant equipment over the next twelve months. The Company
has no definite plans to raise additional capital during the next twelve months.
The Company is currently solely reliant on the President of the Company
continuing to provide interest free loan finance to maintain the Company's day
to day operations. The annual operating expenses before marketing and
advertising costs amount to between $15,000 and $25,000 per annum. The President
has provided $2,343 for development and maintenance of the Company's Web Sites
to December 31st, 1999. The Company has no known liabilities except for
repayment of loans provided by the President. These loans have been provided on
an as needed basis to the Company on an interest free basis, no specific
repayment term, repayable in cash or by issuance of company stock. The Company
currently has insufficient cash resources to repay these loans. During the next
twelve months any shortfall in cash requirements may be provided through
interest free loans provided to the Company by the President, however this is
not guaranteed. If the President is unable to provide loan-bridging finance, the
Company may have to discontinue its operations entirely.
Sales of Software had not commenced at December 31st, 1999 and the Company
had received no income since incorporation.
There are substantial uncertainties and risks involved with the business
plans of the Company, and added substantial uncertainties and risk whether the
Company's cash resources will be sufficient to meet the demands placed on the
Company. There is substantial uncertainty whether the Company will be able to
generate sufficient revenues to maintain its operations over the next twelve
months without additional capital raised or additional interest free loans from
the president.
The Company has no history of marketing software products.
The Company has no history of using a third party such as Digital River to
deliver software electronically and there may be substantial risks involved in
delivering products by electronic download to End Users. There may be
substantial risks involved in the ability of Digital River to pay amounts owing
to the Company under the terms of the Electronic Software Distribution
Agreement. Digital River possessed cash resources in excess of $50 million at
December 31st, 1999 which may, or may not, be sufficient to continue its
operations for the remaining period of the agreement.
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If Digital River is unable to raise additional working capital, the Company
may be at risk from a withdrawal of services by Digital River that would impact
the Company's abilities to deliver to deliver products electronically. Other
companies such as Cybersource Corporation, Preview Systems, ShopNow.Com, Inc
provide similar services to Digital River. The Company is able to deliver
product in CD-ROM form and process payments without the facilities of Digital
River being available.
There are substantial risks involved in marketing new software products if
the software contains unknown software errors (Errors) that cause program
failures when in the hands of End Users. The Software may contain several
unknown Errors that may cause product to be returned and sales revenue
reimbursed to the End User. There is a risk of substantial returns if the
Software contains such Errors.
There are substantial risks involved in bringing the new Web Sites to
market and in the Company's ability to attract visitors to the Web Sites. There
are several hundreds of millions of web sites in existence, and many of them
compete strongly in securing prime Search Engine placements and in the amount
spent on marketing expenditures to attract visitors. The Company does not
possess sufficient financial resources to compete effectively in this market.
There are substantial risks involved in relying on Affiliates to bring
buyers to our Web Sites. Affiliates can remove the Company's banner from their
websites at any time without notice. Such action would cause sales of the
Software through Affiliates to cease from such sites.
There is no expected significant change in the number of employees during
the year 2000.
Y2K ISSUES
The Company may experience problems internally or externally when computer
clocks moved forward in to the year 2000. There is inadequate information
available to determine the extent to which Y2K problems may impact upon the
Company, its bankers, suppliers and other parties. No Y2K problems were
experienced to December 31st, 1999.
ITEM 7.Financial Statements
A. Summary of significant accounting policies.
In compliance with SOP 98-5 all organizational costs were fully expensed in
the December 31st, 1998 financial accounts.
In compliance with para 12 of SFAS 7 the nature of the Companies
development activities during the accounting periods have been as follows:
December 31st, 1997. The Company was engaged in negotiations with several
third party arms length companies in Canada and Singapore in pursuit of its
search for possible acquisition and merger. No suitable acquisition was found
and the Company terminated these negotiations. The Company was in its
development phase and did not earn any revenues during the period.
December 31st, 1998. The Company was engaged in laying plans to develop an
Internet based business. It was not engaged in any other commercial activities
during the current period. The Company was in a developmental phase and did not
earn any revenues during the period.
December 31st, 1999. The Company was engaged in developing an Internet
based business and commenced development of a web site. The Company entered into
an Electronic Software Distribution Agreement with Digital River, Inc. in March
1999. The Company entered into a software licensing agreement with Abacus
Systems Ltd, a company controlled by the President. The Company was in its
development phase and did not earn any revenues during the period.
The Company's accounting policy in regards to exchanging stock for services
rendered is to expense the cost and issue stock in lieu of cash payment.
The Company's accounting policy in regards to exchanging stock for
shareholder loans advanced to the Company is to issue stock in lieu of cash
repayment and reduce the shareholder loans by the value of stock issued.
The useful life of computer equipment is depreciated over five (5) years.
The Web Sites software development costs paid by the President and expensed
by the Company to December 31st, 1999 amounted to $2,343.
No compensation expense has been recognized in the financial statements for
1999 for the issue of incentive stock options to the President.
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MILLENNIUM SOFTWARE, INC.
(A DEVELOPMENT STAGE COMPANY)
FINANCIAL STATEMENTS
DECEMBER 31, 1999, AND
DECEMBER 31, 1998
TABLE OF CONTENTS
Page Number
INDEPENDENT ACCOUNTANT'S REPORT F-1
FINANCIAL STATEMENT
Balance Sheets F-2
Statements of Operations and Deficit
Accumulated During the Development Stage F-3
Statement of Changes in Stockholders' Equity. F-4
Statement of Cash Flows F-5
Notes to the Financial Statements F-6-9
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INDEPENDENT ACCOUNTANT'S REPORT
To the Board of Directors and Stockholders
of Millennium Software, Inc.
Las Vegas, Nevada
I have audited the accompanying balance sheets of Millennium Software, Inc. (a
development stage company) as of December 31, 1999, and December 31, 1998, and
the related statements of operations, cash flows, and changes in stockholders'
equity for the period from February 20, 1996, (date of inception) to December
31, 1999. These statements are the responsibility of Millennium Software, Inc's
management. My responsibility is to express an opinion on these financial
statements based on my audit.
I conducted an audit in accordance with generally accepted auditing standards.
Those standards require that I plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principle used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
I believe that my audit provides a reasonable basis for my opinion.
In my opinion, the accompanying financial statements present fairly, in all
material aspects, the financial position of Millennium Software, Inc. as of
December 31, 1999, and December 31, 1998, and the results of operations, cash
flows, and changes in stockholders' equity for the years then ended, as well as
the cumulative period from February 20, 1996, in conformity with generally
accepted accounting principles.
/s/David Coffey
David Coffey, C.P.A.
Las Vegas, Nevada
June 14, 2000
F-1
<PAGE>
MILLENNIUM SOFTWARE, INC.
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEETS
December 31
-------------------------------
1999 1998
------------ -------------
ASSETS
Cash $ 2,154 $ 2,884
Computers less accumulated depreciation
of $6,567 and $4,310, respectively 4,713 6,970
------- -------
Total Assets $ 6,867 $ 9,854
======= =======
LIABILITIES & STOCKHOLDERS' EQUITY
Loans from stockholders $ 64,338 38,773
------- -------
Total Liabilities 64,338 38,773
Stockholders' Equity Common stock,
authorized 25,000,000 shares at $.004 par
value, issued and outstanding 5,098,500
shares and 2,035,000 shares, respectively,
after giving effect to a 4 to 1 reverse split
Effective July 30, 1997 20,394 8,140
Additional paid-in capital
Deficit accumulated during the
Development stage (197,833)
(138,646) ------- --------
Total Stockholders' Equity (57,471) (28,919)
Total Liabilities and Stockholders' Equity $ 6,867 $ 9,854
============= =============
The accompanying notes are an integral part of these financial statements.
F-2
<PAGE>
MILLENNIUM SOFTWARE, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF OPERATIONS AND DEFICIT
ACCUMULATED DURING THE DEVELOPMENT STAGE
(With Cumulative Figures From Inception)
Twelve months ended December 31, From Inception,
-------------------------------- Feb.20, 1996 to
1999 1998 Dec.31, 1999
-------------- -------------- ---------------
Income $ 0 $ 0 $ 0
Expenses
Advertising 0 0 7,286
Amortization of
organizational costs 0 633 1,000
Auto expenses 0 0 2,416
Computer expenses 10 0 3,985
Consulting 0 0 1,000
Depreciation 2,257 2,256 6,567
Research and development 2,343 0 2,343
Internet expenses 801 0 12,801
Legal and professional fees 21,180 2,804 63,669
Office expenses 446 552 4,802
Telephone 1,991 0 4,800
Travel, meals, and lodgings 30,159 0 87,164
-------------- -------------- --------------
Total expenses 59,187 6,245 197,833
Net loss (59,187) (6,245) $ (197,833)
==============
Retained earnings,
beginning of period (138,646) (132,401)
-------------- --------------
Deficit accumulated during
the development stage $ (197,833) (138,646)
============== ==============
Earnings (loss) per share,
after giving effect
to a 4 to 1 reverse split
effective July 30, 1997:
Net loss, assuming no dilution $ (0.02) $ 0.00 $ (0.10)
============== ============== ==============
Net loss, assuming full dilution$ (0.02) 0.00 $ (0.10)
============== ============== ==============
Weighted average shares,
no dilution 3,055,625 2,035,000 2,024,881
============== ============== ==============
Weighted average shares,
fully diluted 3,105,625 2,035,000 2,041,548
============== ============== =============
The accompanying notes are an integral part of these financial statements.
F-3
<PAGE>
MILLENNIUM SOFTWARE, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE PERIOD FROM FEBRUARY 20, 1996, (Date
of Inception) TO December 31, 1999
Common Stock Additional
--------------------- Paid-In
Shares Amount Capital Total
--------- --------- ---------- ---------
Balance February 20, 1996 ---- $ ---- $ ---- $ ----
Issuance of common stock for
services, March, 1996 1,000,000 1,000 0 1,000
Issuance of common stock for
cash, March, 1996 1,000,000 1,000 0 1,000
May, 1996 1,418,000 1,418 69,482 70,900
Less offering costs 0 0 (22,198) (22,198)
Less net loss 0 0 0 (36,787)
---------- --------- ---------- ---------
Balance, December 31, 1996 3,418,000 3,418 47,284 13,915
Reverse stock split 4 to 1
on July 30, 1997 (2,563,500) 0 0 0
Issuance of common stock
for cash, August, 1997 1,180,500 3,418 54,303 59,025
Less net loss 0 0 0 (95,614)
---------- --------- ---------- ---------
Balance, December 31, 1997 2,035,000 8,140 101,587 (22,674)
Less net loss 0 0 0 (5,198)
---------- --------- ---------- ---------
Balance, September 30, 1998 2,035,000 8,140 101,587 (27,872)
Less net loss 0 0 0 (1,047)
---------- --------- ---------- ---------
Balance, December 31, 1998 2,035,000 8,140 101,587 (28,919)
Issuance of common stock
for cash, June, 1999 5,000 20 30 50
Issuance of common stock to
offset debt, September, 1999 3,050,000 12,200 18,300 30,500
Issuance of common stock for
services, June 1999 1,000 4 6 10
Issuance of common stock to
offset debt, December, 1999 7,500 30 45 75
Less net loss 0 0 0 (59,187)
---------- --------- ---------- ---------
Balance, December 31, 1999 5,098,500 $ 20,394 $ 119,968 $(57,471)
========== ========= ========== =========
The accompanying notes are an integral part of these financial statements.
F-4
<PAGE>
MILLENNIUM SOFTWARE, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CASH FLOWS
(With Cumulative Figures From Inception)
Twelve months ended Dec. 31, From Inception
--------------------------- Feb.20,1996 to
1999 1998 Dec.31,1999
-------- -------- --------------
CASH FLOWS PROVIDED BY
OPERATING ACTIVITIES
Net Loss $ (59,187) $ (6,244) $ (197,833)
Non-cash items included in net loss:
Issue of stock for services 10 0 1,010
Amort. of organizational costs 0 633 0
Depreciation 2,257 2,256 6,567
Adjustments to reconcile net loss
to cash used by operating activity:
Loans from stockholders 56,140 1,010 94,913
Stock issued to repay loans
From stockholders (30,575) 0 (30,575)
---------- ---------- -------------
NET CASH PROVIDED BY
OPERATING ACTIVITIES (31,355) (2,345) (125,918)
CASH FLOWS USED BY
INVESTING ACTIVITIES
Computers 0 0 11,280
---------- ---------- -------------
NET CASH USED BY INVESTING ACTIVITIES 0 0 11,280
CASH FLOWS PROVIDED BY
FINANCING ACTIVITIES
Issue of stock to offset
loans from stockholders 30,575 0 30,575
Sale of common stock 50 0 7,190
Paid-in capital 0 0 123,785
Less offering costs 0 0 (22,198)
---------- ---------- -------------
NET CASH PROVIDED BY
FINANCING ACTIVITIES 30,625 0 139,352
---------- ---------- ------------
NET INCREASE IN CASH (730) (2,345) $ 2,154
=============
CASH AT BEGINNING OF PERIOD 2,884 5,229
---------- ---------- -------------
CASH AT END OF PERIOD $ 2,154 $ 2,884
========== ========== =============
The accompanying notes are an integral part of these financial statements.
F-5
<PAGE>
MILLENNIUM SOFTWARE, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 1999, AND DECEMBER 31, 1998
NOTE A SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The Company was incorporated on February 20, 1996, under the laws of the
State of Nevada as Legal Protection Services, Inc. The business purpose was then
to sell prepaid legal services. On July 10, 1997, the shareholders approved a
change of name to Millennium Software, Inc. The Company is still in the
development stage and has not generated any revenue from operations. The Company
is engaged in the development of an Internet-based business and commenced
development of a web site. The Company entered into an Electronic Distribution
Agreement with Digital River, Inc. in March of 1999.
The Company adopted, effective December, 1998, SOP 98-5 issued by the
American Institute of Certified Public Accountants. SOP 98-5 specifies that all
organizational costs be expensed as incurred. Consequently, the unamortized
organizational cost balance was recognized as a December, 1998, expense.
The Company will adopt future accounting policies and procedures based upon
the nature of transactions.
NOTE B COMPUTER EQUIPMENT
Computer equipment is carried at cost. Expenditures for maintenance and
repairs are charged against operations. Renewals and betterments that materially
extend the life of the asset are capitalized. Expenditures for software
development, maintenance, and support of the Internet web site are charged
against operations as incurred.
Depreciation of the equipment is provided using the straight-line method
over the estimated useful lives fro both federal income taxes and financial
reporting. Computer equipment is depreciated over five years.
NOTE C LOANS FROM STOCKHOLDERS
The Company's President, or companies controlled by the Company's
President, have extended loans to the Company at no interest, payable on demand,
for working capital purposes. As of December 31, 1999, the Company had issued
3,057,500 shares of common stock, at $.01 per share, in repayment of $30,575 of
its loans from stockholders. The balance due after the issuance of shares was
$64,338 as of December 31, 1999.
F-6
<PAGE>
MILLENNIUM SOFTWARE, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 1999, AND DECEMBER 31, 1998
(continued)
NOTE D EARNINGS (LOSS PER SHARE)
Basic EPS is determined using net income divided by the weighted
average shares outstanding during the period. Diluted EPS is computed by
dividing net income by the weighted average shares outstanding, assuming that
stock options, convertible bonds, or similar instruments have been exercised.
NOTE E STOCK ISSUANCE
In June of 1999, the Company issued 5,000 shares of its common stock at
$.01 per share, for a total of $50 cash. Also in June of 1999, the Company
issued 1,000 shares of its common stock at $.01 per share for a total of $10, in
exchange for services. The policy of the Company is that, when it issues stock
for services, the assigned value of the stock is expensed in the Statement of
Operations.
In September of 1999, the Company issued 3,000,000 shares of its common
stock and approved the issue of another 50,000 shares, at $.01 per share, a
total of $30,500, in repayment of loans from stockholders. In December of 1999,
the Company issued 7,500 shares of common stock, at $.01 per share for a total
of $75, in repayment of loans from stockholders.
NOTE F REVERSE STOCK SPLIT
On July 10, 1997, the stockholders approved a 4 for 1 reverse stock split
to be effective July 30, 1997.
NOTE G CONTRACTS AND COMMITMENTS
The Company entered into an Electronic Software Distribution Agreement with
Digital River, Inc., Eden Prairie, Minnesota, in March of 1999. The agreement is
for a period of 24 months, expiring March 7, 2001, renewable for successive
one-year terms unless terminated by either party. Under the terms of the
agreement Digital River provides
F-7
<PAGE>
MILLENNIUM SOFTWARE, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 1999, AND DECEMBER 31, 1998
(continued)
NOTE G CONTRACTS AND COMMITMENTS (continued)
Computer facilities to deliver software purchased through the Company's web
site, electronically by downloading or by delivery of physical CD versions. The
Company's web site links directly to the Digital River order processing web
site. The Company has not yet delivered any software to Digital River. The
agreement provides for company indemnification of Digital River (and its
successors) against any and all liabilities, losses, damages and expenses
associated with or incurred as a result of any claims, action or proceeding
instituted against Digital River as a result of acts or failures to act on the
part of the Company. No known current or future liabilities exist under the
terms of the agreement with Digital River at the date of this financial
statement. Digital River is not a related third party as defined by SFAS 57.
The Company entered into a Software Licensing Agreement with Abacus
Systems, Ltd., on December 8, 1999, whereby the Company has obtained worldwide
rights to publish, copy distribute, and sub-license reproduction and
distribution rights to software products developed by Abacus in return for
future royalty payments. Abacus Systems, Ltd., is a private company controlled
by the President of the Company. The Company has agreed to pay a 10% royalty
based on net revenues from the sale of software licensed to Abacus to the
Company plus a 5% royalty based on net revenues received from the sale of
software licensed by Abacus to the Company for technical support.
NOTE H RELATED PARTY TRANSACTIONS
In September of 1999 the Company issued 3,000,000 shares of its common
stock and approved the issuance of another 50,000 shares, at $.01 per share, as
a reduction of $30,500 payable to the Company's President or companies
controlled by the Company's President. In December of 1999 the Company issued
another 7,500 shares of its common stock at $.01 per share for a similar debt
reduction of $75.
The Company's President has paid $2,343 for expenses for the development of
web sites on behalf of the Company. This amount is included in the loans from
stockholders balance of $64,338 as of December 31, 1999.
F-8
<PAGE>
MILLENNIUM SOFTWARE, INC.
( A DEVELOPMENT STAGE COMPANY)
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 1999, AND DECEMBER 31, 1998
(continued)
NOTE H RELATED PARTY TRANSACTIONS (continued)
The Company entered into a Software Licensing Agreement with Abacus
Systems, Ltd., on December 8, 1999, whereby the Company has obtained worldwide
rights to publish, copy distribute, and sub-license reproduction and
distribution rights to software products developed by Abacus in return for
future royalty payments. Abacus Systems, Ltd., is a private company controlled
by the President of the Company. The Company has agreed to pay a 10% royalty
based on net revenues from the sale of software licensed to Abacus to the
Company plus a 5% royalty based on net revenues received from the sale of
software licensed by Abacus to the Company for technical support. No sales have
been made and no royalty payments were due as of December 31, 1999.
NOTE I STOCK OPTION
On November 22, 1999, the Company issued an option to its President to
acquire 300,000 shares of its common stock at a price of $.01 per share, for
$3,000 cash. The terms of the Option are payment in cash within a three year
period ending November 21, 2002, after which date any outstanding options will
be canceled. The options can be converted into common shares upon full payment
in cash. Any number of options can be converted at any time during the
three-year period. Any and all options which remain unconverted to common shares
after November 21, 2002, and the attached right to convert to common shares will
be canceled.
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
The Company's financial accounts have been audited by D. Coffey CPA from
1996 to December 31st,1999. There have been no disputes or disagreements
with the auditor.
F-9
<PAGE>
PART III
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS:
The following table sets forth certain information with respect to each of
the Directors, Executive Officers of the Company, their ages, and all
positions with the company.
Name Age Position
--------------------------------------------------------------------------------
Anthony M. Bigwood 60 President and Director
Address
Address
Elizabeth J. Bigwood 58 Secretary/Treasurer and Director
--------------------------------------------------------------------------------
Anthony Michael Bigwood B.Sc., PhD., MBA (Sloan). President and Director.
Age 60, British citizen. Dr. Bigwood was educated in Britain where he attended
the University of Bristol studying natural sciences. He continued his studies
after his degree to earn a Ph.D. He was recruited by Unilever as management
trainee and held several management positions in Unilevers' chemical division.
He joined the mining finance group Rio Tinto Zinc Corporation as a financial
management consultant and was appointed Director of RTZ Consultants Ltd. within
three years of joining the firm. Dr. Bigwood was selected as "executive of the
year" by RTZ and selected to join the Sloan MBA Program at the London Business
School for one year where he studied banking, finance and management sciences.
On rejoining RTZ he became managing director of RTZ Computer Services, RTZ
Software and Rio Tinto Management Services (Toronto). He left RTZ to start his
own computer company which he ran successfully. He sold his shareholdings after
6 years. Thereafter Dr. Bigwood has continued to provide financial consulting
advisory services and has lead several negotiations with major banks to secure
financing for corporate acquisitions. Dr. Bigwood controls several private
companies including Abacus Corporation, Ltd., (Isle of Man, UK) and Abacus
Systems Ltd (Bermuda) and in addition is President of the following US
companies: Asia & Pacific Mining Ventures, Inc., Mid West Oil & Gas, Inc. and
General Audit Systems, Inc.
Elizabeth J. Bigwood MCSP, Company Secretary and director, age 58, British
citizen. Mrs. Bigwood was educated in Britain where she trained as a
physiotherapy nurse. She has worked in orthopedic hospitals and children
intensive care hospitals where she specialized in treating spinal deformities
and was responsible for running a special needs clinic for several years. She
has organizational and record keeping skills to which she applies to the
maintenance of company records.
Our executive officers have served since February of 1996. A director's
term of office is ten (10) years, renewable by mutual consent. The next renewal
date is February 1st, 2006.
FAMILY RELATIONSHIPS
Anthony M. Bigwood, President and Director, and Elizabeth J. Bigwood,
Secretary/Treasurer and director, are husband and wife.
ITEM 10. EXECUTIVE COMPENSATION
Any compensation received by officers or directors of the Company will be
determined from time to time by the Board of Directors. The company is currently
developing a new Internet business venture and has not paid any salaries or
executive compensation. The executive officers and directors will not receive
compensation until operations commence.
-13-
<PAGE>
Stock Options - The Company granted 300,000 incentive options (the Options)
on common shares to the President at an exercise price of $.01 per share on
November 22, 1999. The terms of the Options are payment in cash within a 3 year
period ending November 21st, 2002, after which date any outstanding Options will
be cancelled. The options can be converted into common shares upon full payment
in cash. No part payments are allowed. Any number of options may be converted at
any time within the three year period. Any and all options which remain
unconverted to common shares after November 21st, 2002 and the attached right to
convert to common shares will be cancelled.
The audited value of shareholders equity based on the financial statements
prepared by the Company's auditors was -0.01 (negative) per share on September
30, 1999.
OPTIONS/SAR GRANTS IN LAST FISCAL YEAR
-------------------------------------------------------------------------------
Number of Securities % of total
Underlying Options/SARs Options/SARs Execise/Base Exp.
Name Granted Granted in 1999 Price($/sh) Date
------- ---------------------- --------------- ----------- --------
Anthony Bigwood 300,000 100% $.01/sh 10/21/02
Market price of common stock at the date of the grant was $0.365.
None of these options have been exercised within the last fiscal year End.
ITEM 11 SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
In August of 1997 the Company approved a private placement of shares to
Asia Pacific Mining (Bermuda) Ltd., which is controlled by the Company
President. (Note: Asia Pacific Mining (Bermuda) changed its name to Abacus
Systems Ltd., in 1999). 1,180,500 shares at $.05 each were issued to raise
$59,250.
The Company issued 3,000,000 shares, in September 1999, to the President,
Dr. A. M. Bigwood (2,000,000 shares) and Abacus Systems Ltd (1,000,000), a
company controlled by the President, at $0.01 per share as compensation for
$30,000 owed by the Company to the President, previously provided as a
shareholder loan. The Company reduced the amount owed to the President by a
corresponding $30,000.
The Company authorized the issue of 50,000 shares, in lieu of monetary
compensation, to General Audit Systems, Inc., a Company controlled by the
President, for payment by General Audit Systems, Inc., on behalf of the Company,
of $500 in September 1999 for expenses. These shares were issued in October
1999.
-14-
<PAGE>
The Company approved the issued 7,500 shares, in December 1999, in lieu
of monetary repayment of debt, to Abacus Systems Ltd., a company controlled by
the President, for payment on behalf of the Company, of $75.00 for expenses paid
on behalf of the Company. The 7,500 shares of the Company so issued were
transferred in December 1999 to married children of the President, Richard
Bigwood (2,500 shares), Catherine Coelho (2,500 shares), and 2,500 shares were
transferred to Mr. James Bigwood, son of the President and Mrs. EJ Bigwood.
All of the above mentioned shares were offered pursuant to an exemption
from registration under Section 4(2) of the Securities Act of 1933.
The following table sets forth, as of December 31st, 1999, the outstanding
shares of common stock of the company owned of record or beneficially by each
person who owned of record, or was known by the Company to own beneficially,
more than 5% of the Company's Common Stock, and the name and share holding of
each officer and director and all officers and directors as a group.
-15-
<PAGE>
Title of
Class Name & Address Amount & Nature % of class
of beneficial owner of beneficial owner
-------------------------------------------------------------------------------
Common Abacus Systems Ltd 1,668,000 30.90
44 Church Street
Hamilton
Bermuda
Common Abacus Corporation Ltd (1) 1,994,750 36.95
Kissack Court
Ramsey
Isle of Man
United Kingdom
Common A.M. Bigwood (1) 4,344,750 (2) (4) 80.48
2277 Lawson Avenue
West Vancouver
BC V7V 2E3 Canada
Common E.J. Bigwood (1) 4,344,750 (3) 80.48
2277 Lawson Avenue
West Vancouver
BC V7V 2E3 Canada
Common Officers and Directors 4,344,750 80.48
Combined
(1) Abacus Corporation Ltd, is owned directly by Mr. Bigwood (50%) and Mrs.
Bigwood (50%). at December 31, 1999, Abacus Corporation Ltd owned 326,750 shares
directly plus 1,668,000 shares owned beneficially arising from its 96.825%
ownership of Abacus Systems Ltd. Abacus Systems Ltd owned 1,668,000 shares
directly. Mr & Mrs Bigwood are the indirect owners of the 1,668,000 shares held
by Abacus Systems Ltd through their controlling interest in Abacus Corporation
Ltd.
(2) The President currently has options to purchase 300,000 shares at $.01 which
are exercisable until November 21, 2002, and these options are included in share
totals in the table above.
(3) Mr. Bigwood's spouse, E J Bigwood, is the beneficial owner of 4,344,750
shares of common stock, from her ownership of Abacus Corporation Ltd (326,750
shares held directly), indirect ownership of Abacus Systems Ltd (1,668,000
shares held directly), ownership of General Audit Systems Ltd (50,000 shares
held directly) and beneficial interest in 2,000,000 shares held directly by Mr.
Bigwood and 300,000 share options owned by Mr. Bigwood.
(4) Mrs. Bigwood's spouse, A M Bigwood, is the beneficial owner of 4,344,750
shares of common stock, from 2,000,000 shares held directly, ownership of Abacus
Corporation Ltd (326,750 shares held directly), indirect ownership of Abacus
Systems Ltd (1,668,000 shares held directly), ownership of General Audit Systems
Ltd (50,000 shares held directly) and options to buy another 300,000 shares by
November 21, 2002.
Abacus Systems Ltd transferred 7,500 shares of the Company to the married
children of Mr. & Mrs. Bigwood (5,000 shares) in December 1999 and 2,500 shares
to James Bigwood, son of Mr. & Mrs. Bigwood also in December 1999.
The fully diluted number of shares issued at December 31, 1999 amounted to
5,098,500. This total excluded 300,000 options issued to the President.
5,098,500 shares plus 300,000 options (5,398,500 shares in total) are used as
the basis of calculations of % of Class in the table.
The Company's transfer agent at December 31st, 1999 is Interwest Transfer of
Salt Lake City, Utah. Interwest Transfer confirms that as of 12/31/99, there are
approximately 82 shareholders of record.
CHANGES IN CONTROL
There are currently no arrangements that will result in a change in control
of the Company.
-16-
<PAGE>
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Each of the officers and directors of the Company are engaged in other
businesses, either individually or through partnerships and corporations in
which they have an interest, hold an office or serve on boards of directors.
Certain conflicts of interest may arise between the Company and its officers and
directors. The primary conflict of interest is the amount of time that the
officers are able to devote to the Company as opposed to their other business
ventures. As the Company begins to procure revenues, more time will be devoted
to the Company. Another possible conflict of interest could arise from the fact
that the Company President, Anthony Bigwood, also controls Abacus Systems, Ltd.,
which is the sole supplier of the software products that the Company markets. A
contract exists (attached hereto as exhibit No. 10) which specifies the
relationship and various responsibilities of each party in this matter.
The Company will attempt to resolve any such conflicts of interest in favor
of the Company. The officers and directors of the company are accountable to it
and its shareholders as fiduciaries, which requires that such officers and
directors exercise good faith and integrity in handling the Company's affairs. A
Shareholder may be able to institute legal action on behalf of the Company or on
behalf of itself and all other similarly situated shareholders to recover
damages or for other relief in cases of the resolution of conflicts in any
manner prejudicial to the Company.
Abacus Systems Ltd, is a private Bermuda company controlled by Anthony
Bigwood, the President of the Company. Abacus has 22 other shareholders, none of
whom are related to the President in any way. The Company has insufficient
financial resources or skilled personnel to undertake software development on
its own. The Company has acquired the exclusive rights to copy, reproduce,
distribute and sub-license rights to reproduce and distribute CheckMy Banking
2000, CheckMy Loans 2000 and CheckMy Mortgage 2000 together with User Guides
(the Software) in return for payments to Abacus of 10% royalties of net revenue
income received by the Company from sale of the Software, and a 5% royalty fee
for the provision of technical support to the Company.
The provisions for termination of the Software Licensing Agreement are as
follows:
1. Abacus may terminate the License, at its sole discretion, if Royalty and
Fee payments due to Abacus, or any part thereof, become 120 days or more
overdue.
2. Abacus may terminate the License, at its sole discretion, if management
control of Millennium changes from the current arrangements.
3. Millennium may terminate this License, at its sole discretion, by giving
120 days written notice to Abacus.
4. The License will be terminated immediately upon written notice by Abacus if
the confidentiality provisions are breached by Millennium.
The confidentiality provisions within the Licensing Agreement are that the
Company agrees to keep confidential all proprietary knowledge acquired about the
Products, promises not to divulge any such knowledge to any third party unless
prior written consent of Abacus and its representatives is provided. Failure to
abide by these confidentiality rules will cause an immediate cancellation of the
License.
-17-
<PAGE>
The terms of the Software License agreement with Abacus are that Abacus has
developed the Software at its own expense and has granted an exclusive license
to the Software to the Company and provides technical and customer support for
the Company in exchange for future royalties payments of 15% in aggregate of
revenues obtained by the Company from sales of the Software.
The Company is satisfied that the terms of the License Agreement including
the royalty payments owed to Abacus, are on no less favorable terms to the
Company than terms that could be obtained from unrelated third parties under
similar license and royalty agreements.
The Company does not intend to engage in software development activities
except for the support and maintenance of its Web Sites. The Company incurred
costs of $2,343 on development of its Web Sites to December 31st, 1999, which
was paid on behalf of the Company by the President.
The Company may contract with Abacus Systems Ltd for the future design and
development of additional software products to be provided at Abacus expense.
In August of 1997 the Company approved a private placement of shares to
Asia Pacific Mining (Bermuda) Ltd., which is controlled by the Company
President. (Note: Asia Pacific Mining (Bermuda) changed its name to Abacus
Systems Ltd, in 1999). 1,180,500 shares at $.05 each were issued to raise
$59,250.
The Company issued 3,000,000 shares, in September 1999, to the President,
Dr. A. M. Bigwood (2,000,000 shares) and Abacus Systems Ltd (1,000,000), a
company controlled by the President, at $0.01 per share as compensation for
$30,000 owed by the Company to the President, previously provided as a
shareholder loan. The Company reduced the amount owed to the President by a
corresponding $30,000.
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<PAGE>
The Company authorized the issue of 50,000 shares, in lieu of monetary
compensation, to General Audit Systems, Inc., a Company controlled by the
President, for payment by General Audit Systems, Inc., on behalf of the Company
to the Company auditor, of $500 cash in September 1999 for audit expenses of
Millennium Software, Inc. These shares were issued in October 1999.
The Company issued 7,500 shares, in December 1999, to Abacus Systems Ltd, a
company controlled by the President, at $0.01 per share as compensation for
$75.00 owed by the Company to the President, previously provided as a
shareholder loan. The Company reduced the amount owed to the President by a
corresponding $75. Abacus Systems Ltd transferred 7,500 shares of the Company to
the married children of Mr. & Mrs. Bigwood (5,000 shares) in December 1999 and
2,500 shares to James Bigwood, son of Mr. & Mrs. Bigwood also in December 1999.
The Company granted 300,000 incentive options (the Options) on common
shares to the President at an exercise price of $.01 per share on November 22,
1999. The terms of the Options are payment in cash within a 3-year period ending
November 21st, 2002, after which date any outstanding Options will be cancelled.
The value of shareholders equity based on the financial statements prepared by
the Company's auditors was -0.01 (negative) per share on September 30, 1999.
The Company has received $94,913 interest free loan finance for working
capital since incorporation in 1996 to December 31, 1999 from the President and
companies owned by the President. $30,575 of the loan finance had been exchanged
for 3,057,500 shares of Company stock to December 31, 1999.
The Company owes Mr. Bigwood a balance of $64,338 at December 31, 1999.
The loans provided by Mr. Bigwood have been as follows:
Dates Loans Shares Reduction Loan balance
Advanced Issued in debt 0wing to
By Mr. Bigwood Mr. Bigwood
(1) (2)
-------------------------------------------------------------------------------
02/96 - 12/31/97 $ 37,763 $ 37,763
01/01/98 - 09/30/98 $ 1,010 $ 38,773
10/01/98 - 12/31/98 Nil $ 38,773
01/01/99 - 03/31/99 $ 27,996 $ 66,769
04/01/99 - 06/30/99 $ 4,607 $ 71,376
07/01/99 - 09/30/99 $ 13,537 3,050,000 $ 30,500 $ 54,413
10/01/99 - 12/31/99 $ 10,000 7,500 $ 75 $ 64,338
-------------------------------------------------------------------------------
Totals $ 94,913 3,057,500 $ 30,575 $ 64,338
(1) Loans advanced by AM Bigwood and companies controlled by him to the
Company.
(2) Shares listed in the table have been issued to Mr. Bigwood and to private
companies controlled by him.
The per share value of shares issued for services, repayment of shareholder
loans, cash, and incentive stock options during the period January - December
1999 was determined firstly by reference to whether the volume of stock
transactions during the immediately prior three month period on the OTC
represented 1% or greater of the total number of shares issued, to establish
fair market value. In the director's opinion, trading volume of less than 1% of
shares issued does not constitute a proper market for the purposes of
establishing fair market value. During each quarterly period during January 1st,
1999 - December 31st, 1999 the volume of shares traded on the OTC market
amounted to 0.187%, 0.04%, 0.181% and 0.024% of the total number of shares
issued, all of which fell below the threshold of 1% of shares issued. The per
share value of shares issued for services, repayment of shareholder loans, cash
and incentive stock options was then determined by reference to total
stockholders' equity value reported in the current period financial statement
divided by the number of shares issued, or $0.01 per share, whichever is the
greater value at the date of issuance of shares.
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DIVIDENDS
To date, the Company has not paid any dividends on its common stock. The
payment of dividends by the Company, if any in the future, rests within the
discretion of its Board of Directors and will depend among other things, upon
the Company's earning, its capital requirements and its financial condition, as
well as other relevant factors.
Description of Securities
The authorized capital stock of the Company consists of 25,000,000 Shares
of Common Stock. The holders of Common Stock
(i) have equal ratable rights to dividends from funds legally available
therefore, when, as and if declared by the Board of Directors of the Company;
(ii) are entitled to share ratably in all of the assets of the Company available
for distribution or winding up of affairs of the Company;
(iii) do not have preemptive subscription or conversion rights and there are no
redemption or sinking fund applicable thereto; and
(iv) are entitled to one non cumulative vote per share, on all matters which
shareholders may vote on at all meetings of shareholders. At this time there are
approximately 5,398,500 shares outstanding, including 300,000 Options granted to
the President.
NONCUMULATIVE VOTING
Holders of Shares of Common Stock of the Company do not have cumulative
voting rights which means that the holders of more than 50% of such outstanding
Shares, voting for the election of directors, can elect all of the directors to
be elected, if they so choose, and, in such event, the holders of the remaining
Shares will not be able to elect any of the Company's directors.
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PENNY STOCK REGULATION
The Securities Exchange Commission (the SEC) has adopted rules that
regulate broker dealer practices in connection with transactions in 'penny
stocks. Penny stocks generally are equity securities with a price of less than
$5.00 (other than securities registered on certain national securities exchanges
or quoted on the NASDAQ system, provided that current price and volume
information with respect to transactions in such securities is provided by the
exchange system.) The penny stock rules require a broker-dealer, prior to a
transaction in a penny stock not otherwise exempt from the rules, to deliver a
standardized risk disclosure document prepared by the SEC that provides
information about penny stocks and the nature and level of risks in the penny
stock market. The broker-dealer also must provide the customer with bid and
offer quotations for the penny stock, the compensation of the broker-dealer and
its salesperson in the transaction, and monthly account statements showing the
market value of each penny stock held in the customer's account. In addition,
the penny stock rules require that prior to a transaction in a penny stock not
otherwise exempt from such rules, the broker-dealer must make a special written
determination that a penny stock is a suitable investment for the purchase and
receive the purchaser's written agreement to the transaction. These disclosure
requirements may have the effect of reducing the level of trading activity in
any secondary market for a stock that becomes subject to the penny stock rules.
The Company's common stock is subject to the penny stock rules, and accordingly,
investors in this Offering may find it difficult to sell their shares, if at
all.
ITEM 13. EXHIBITS
13.1 CONTRACTS
13.1.1 Electronic Software Distribution Agreement
This agreement is made and entered into on March 8th, 1999 by and between
Digital River, Inc., its successors or assigns, 9625 West 76th Street Eden
Prairie, Minnesota 55344 ("DR") and the Millennium Software, Inc registered
office at 2950 East Flamingo Road, Suite G, Las Vegas, Nevada 89121 a
corporation, hereafter referred to as Vendor, with its principal office at 2277
Lawson Avenue, West Vancouver BC V7V 2E3 Canada.
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BACKGROUND
a. Vendor is the Owner of all rights (or has a license to sell) to the
Software as defined hereunder.
b. Vendor desires to enter into an Agreement with the DR to allow DR to
distribute the Software.
c. DR desires to obtain the right to distribute the Software.;
NOW THEREFORE, the parties hereby agree as follows:
1.DEFINITIONS
a. Software: the executable object code for the Vendor's software identified
on Exhibit A, including all subsequent versions thereof provided to the DR
pursuant to this Agreement.
b. Documentation: all computer readable and/or printed instructions, manuals
and other materials normally provided from time to time by Vendor to End
Users for use of the Software, and all subsequent versions thereof provided
to DR pursuant to this Agreement.
c. End-User License Agreement (EULA): the computer readable license agreement
provided by Vendor that governs the use of the Product by End Users, and
which is to be included with each copy of the Product sold by DR hereunder.
d. DR Materials: computer readable materials provided by DR for inclusion in
an electronic package containing the Software, Documentation, and EULA,
which materials have been approved by Vendor.
e. Product: a copy of the Software, Documentation, EULA and DR Materials , if
any, packaged in computer readable form together for electronic delivery on
www.digitalriver.com (or equivalent) and/or in tangible packaged form for
delivery in accordance with this Agreement, as identified on Exhibit A.
f. End User: person(s) or organization(s) that acquire a Product for use
rather than resale or distribution.
g. Vendor Trademarks: the trademarks, trade names and logos used by Vendor in
connection with the product.
h. Territory: all countries in the world except (i) countries to which export
or re-export of any Product, of the direct products of any Product is
prohibited by the United States law without first obtaining the permission
of the United States Office of Export Administration or its successors, and
(ii) countries that may be hereafter explicitly excluded pursuant to the
terms of this Agreement.
i. Dealer: person(s) or organization(s) that resell the Products.
j. Site: the Vendor's World Wide Web Site
k. Host Sales: sales of the Products originating from the Site.
l. Channel Sales: sales of the Product originating from a source other that
the Site.
Electronic Software Distribution Agreement
m. Transaction: the processing at one time of a payment made by an End User,
which processing of payment may include more than one (1) Product.
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2. LICENSE
a. Vendor hereby grants DR, within the Territory, a license and right to:
1. Reproduce and distribute the Product in computer readable form to the
End Users and/or Dealers;
2. Package the Product in a computer readable form reasonably specified
by Vendor.
3. Utilize the Vendor Trademarks in connection with the replication of
the Product, packaging and distribution of the Product, in a manner
reasonably specified by Vendor; and
4. Distribute in tangible form the Product to the End Users and/or
Dealers.
b. DR acknowledges that the Software and Documentation are the property of
Vendor or its licensors and that DR has no rights in the foregoing except
for encryption software supplied by DR, if any, and those expressly granted
by this Agreement.
c. Under no circumstances shall the provisions of this Agreement be deemed to
require DR to engage in any activities in connection with the distribution
of the Products that could, in the reasonable discretion of DR, result in a
financial loss to DR or result in an unacceptably small level of
profitability for DR.
3. VENDOR'S GENERAL OBLIGATIONS
a. Vendor shall deliver the current version of the Product to DR immediately
following execution of this Agreement. Vendor will provide DR with:
(i) copies of the Software on master diskettes,
(ii) Product specification information in a single file, self
extracting archive format, or in another mutually agreeable
computer readable form that can be reproduced by DR,
(iii)Documentation in a computer readable form mutually agreeable to
the parties that can be reproduced by DR, and (iv) all the items
and materials specified in the Requirements Checklist on Exhibit
B.
b. Vendor shall provide DR with computer readable copies and/or tangible
packaged Products containing all new releases, updates, or revisions of
the Software and Documentation within a reasonable time after each such
release is made generally available by Vendor. Vendor will notify DR of
its plans for each new release, update, or revision of the Product to DR
in sufficient quantities on or before the date it is offered to any other
distributor.
c. For Products are listed on Exhibit A as Host Sales, Vendor shall provide a
hypertext link to www.digitalriver.com (Or equivalent) on the Site (the
Link) where Product may be purchased by End-User from DR. Vendor agrees to
prominently display the Link and use readable efforts to promote the Link
on Site. Vendor agrees that no other hypertext link for sale of the
Products will be placed on the Site or elsewhere without the prior written
consent of DR.
d. If Vendor makes any modifications, updates, or enhancements (the
Improvements) to the Product, Vendor will offer the Improvements for
distribution by DR on terms substantially equivalent to those provided in
this Agreement. In the event that Vendor develops or acquires any new
products, Vendor agrees to give DR the right of first refusal for
distribution of these products on the Site and as provided for in this
Electronic Software Distribution Agreement
Agreement with respect to the Products.
e. Vendor shall furnish an EULA in computer readable form to DR which is to be
included with each copy of the Products sold by DR hereunder. Vendor's
linking of the Site to www.digitalriver.com (or equivalent) shall
constitute approval of the EULA DR is delivering as part of the Product.
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<PAGE>
f. Vendor shall provide all support and be fully responsible for all warranty
obligations relating to the Product. Such support and warranty shall be in
accordance with Vendor's then-current published software support policy,
or, in the absence of such a policy in a reasonable manner.
g. Vendor shall provide DR, without charge, such technological information,
current maintenance documentation, and telephone assistance as is necessary
to enable DR to effectively reproduce, electronically package, and
distribute the Products as provided for in this Agreement.
4. WARRANTIES
a. Vendor represents and warrants that it has the right and authority to enter
into this Agreement and to grant DR the rights to the Software and
Documentation granted in this Agreement.
b. Vendor represents and warrants to DR that the Vendor has all rights, title,
and interest in the software and Documentation or has obtained the right to
grant to DR the license set forth in this Agreement. As of the execution
date of this Agreement, Vendor represents and warrants that to the best of
Vendor's knowledge the Product does not infringe upon or misappropriate the
proprietary rights of any other person or organization.
c. DR represents and warrants that it has the right and authority to enter
into this Agreement.
d. DR represents and warrants that it will use its best efforts to accurately
replicate the Product.
e. DR represents and warrants that except for encryption software, if any,
supplied by DR, the products will not be altered by DR.
5. INITIALIZATION FEE
Vendor agrees to pay DR the Initialization Fee specified on Exhibit A.
Vendor agrees to allow DR to offset the unpaid Initialization Fee against any or
all other amounts owing to Vendor by DR under this Agreement. Product available
from Vendor will be installed on DR's server upon fulfillment of other
obligations pursuant to this Agreement. The Initialization Fee includes normal
price changes and version updates. All programming and other changes made after
initial site setup excluding normal price changes, product addition and version
updates will be charged to Vendor at One Hundred Dollars ($100.00) per hour
(Site Maintenance). Vendor agrees to pay the billed Site Maintenance charges
within thirty (30) days from the date of billing. In the event that Site
Maintenance is not paid for within thirty (30) days of billing, Vendor agrees to
allow DR to offset the unpaid Site Maintenance against any or all other amount
owing to Vendor by DR under this Agreement.
6. PROCESSING AND PAYMENTS
Sales activities shall be processed, and payments shall be made in
accordance with the provisions specified on Exhibit C.
7. ORDERS BY MEANS OTHER THAN FROM SITE
The Vendor shall be charged (written)($ . ) for each order taken for the
Products by means including, but not limited to, orders taken Electronic
Software Distribution Agreement by telephone, email, facsimile transmission or
by means other than from the Site, which amount shall, as applicable, be
invoiced to the Vendor by DR, or deducted from payments made by DR to the
Vendor.
8. RECORDS
DR and Vendor agree to maintain adequate books and records relating to the
distribution of the Products to end Users and Dealers, including without
limitation, books, records, and tax returns relating to returns, refunds, and
sales and use taxes. Such books and records shall be available at the principal
office of each party for inspection by the other party or its representative
during normal business hours, for the purpose of determining the accuracy of the
payments required to be made pursuant to the provisions of this Agreement. Each
party shall have the right to conduct such an audit upon twenty (20) days
advance written notice not more than twice each year. In the event that such an
audit discloses an underpayment which is greater than five percent (5%), then
the party responsible for the underpayment shall pay the underpayment and
reasonable costs of such audit, otherwise the party requesting the audit shall
pay the costs of such audit.
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9. DELIVERY OF PRODUCTS
As specified in Exhibit A, DR and/or Vendor shall be responsible for making
digital and/or tangible delivery of the Products as follows:
a. The following provisions shall apply to any Products listed on Exhibit A
for which digital delivery is to be made by DR:
1. Within twenty-four (24) hours after receipt of an order from an End
User, DR shall make digital delivery of the Products available to the
End User.
b. The following provisions will apply to any Products listed on Exhibit A for
which tangible delivery is to be made by DR:
1. The Vendor shall provide DR with an inventory of the Products to be
held on consignment and used by DR to fulfill orders for the Products.
DR shall be responsible for the delivery of the Products to the End
Users at the locations designed by the End User.
2. The Products shall be delivered to DR prepackaged and ready for
shipment and delivery to the End User. The Vendor shall be solely
responsible for the shipment of the Products to DR and shall be solely
responsible for all costs and expenses associated with any such
shipments. The Vendor shall bear the entire risk of loss or damage to
the Products during shipments to or from DR.
3. Within fifteen (15) days after the date of this Agreement, the Vendor
shall provide DR with such consigned quantities of the Products as may
be mutually agreed upon in writing by DR and the Vendor. On a periodic
basis, DR shall provide an inventory detail to Vendor showing the
current inventory of the Products, Periodically, DR will issue
consignment purchase orders for the estimated needs of the Product to
be tangibly delivered. The Vendor shall be responsible for making
prompt delivery of the Products to DR.
4. All Shipments of Product to DR will be clearly labeled with DR's
purchase order number on the outside of the box. If DR is tracking
serial numbers for the Products, Vendor will provide with each
shipment of the Product a complete list of the serial numbers of the
Product enclosed in the box.
5. DR shall have no liability of any kind whatsoever as a result of a
delay in the delivery of the Products by Vendor, or the delivery of
Products to DR in non-conforming condition, Upon the termination of
this Agreement, at the Vendor's sole cost and expense, the unsold
inventory of the Products shall be returned to the Vendor.
c. The following provisions shall apply to any Products listed on exhibit A
for which digital or tangible delivery is to be made by Vendor:
1. The Vendor shall maintain an inventory of the Products to be used by
Vendor to fulfill orders for tangible delivery of products.
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<PAGE>
2. On a daily basis, by electronic and/or facsimile transmission, DR
shall notify Vendor about the number of orders for the Products made
the previous day ( the Order Notification). The Order Notification
shall contain the names and delivery addresses (including, as
applicable, electronic delivery addresses) of the End Users; the
names, serial numbers, and quantity of the Products sold to particular
End Users; and the manner of the delivery to such End Users (whether
digital or tangible delivery).
3. Vendor shall be responsible for making digital or tangible delivery,
as applicable, of all Products to the End Users and Dealers identified
in the Order Notifications, and shall be responsible for all risk of
loss of, or damage to the Products during digital or tangible delivery
to the End Users. Vendor shall, as specified in the Order
Notification, make digital delivery or tangible shipment to the End
User of all the Products within twenty-four (24) hours after receipt
of the Order Notifications.
4. Vendor shall develop, establish, and maintain such delivery systems
and procedures as may, in the discretion of DR, be necessary ensure
that the Products are promptly and correctly delivered, and which
enable DR and Vendor to immediately determine the status of the
Products during delivery. On a daily basis, by electronic and/or
facsimile transmission, Vendor shall provide a report to DR which
provides information about the digital deliveries and tangible
shipments of the Products made the previous day (the Shipment
Reports). The Shipment Reports shall contain the names, and delivery
addresses (including, as applicable, electronic delivery addresses) of
the End Users or Dealers to whom the Products have been digitally
delivered or tangibly shipped; the form of delivery (whether digital
or tangible delivery); the name, address, and telephone number of
carriers (in case of tangible shipment); confirmation numbers; package
tracking information; and any other information that may from time to
time be requested by the Company.
10. MARKETING PAYMENTS
If Exhibit D has been initialed by the parties and attached to this
Agreement, Vendor, and DR agree to the marketing payments and marketing
activities provided for on Exhibit D.
11. CUSTOMER SERVICE
DR's policy is to provide End User's with a thirty (30) day right to return
Products for a refund of the purchase price paid by the End User, Returns and
refunds may be made in the discretion of DR. This policy is subject to
modification from time to time in the discretion of DR. To the extent the
Vendor's return policies are consistent with those of DR then in effect, DR
shall cooperate and assist the Vendor and End Users with respect to Product
Returns.
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12. CONFIDENTIALITY
a. Each party agrees that all binary code, inventions, algorithms, know-how
ideas, and all other business, technical and financial information it
obtains from the other party constitutes the confidential property of the
disclosing party (confidential Information). Except as expressly permitted
in this Agreement, the receiving party will hold in confidence and not use
or disclose any Confidential Information and shall similarly bind its
employee and agents. The receiving party shall not be obligated under this
Section with respect to information the receiving party can document that:
1. Is or has become readily available to the public through no fault of
the receiving party or its employees or agents; or
2. Is received without restriction from another person or organization
lawfully in possession of such information and lawfully empowered to
disclose such information;
3. Was rightfully in the possession of the receiving party without
restriction prior to its disclosure by the disclosing party; or
4. Is independently developed by the receiving party or its employees or
agents without access to the other disclosing party's similar
Confidential Information.
Each party's obligation with respect to Confidential Information shall
continue for the shorter of three (3) years from date of termination of this
Agreement or until one of the above enumerated conditions becomes applicable.
Each party acknowledges that its breach pf this Section would cause irreparable
injury to the other for which monetary damages are not adequate remedy.
Accordingly, a party will be entitled to injunctive relief and other equitable
remedies in the event of a breach of the terms of this Agreement. b. DR agrees
no to:
(i) disassemble, decompile, or otherwise reverse engineer the
Software, or otherwise attempt to learn the source code,
structure, algorithms or ideas underlying the Software; or
(ii) take any action contrary to EULA except as allowed under this
Agreement.
13. VENDOR TRADEMARKS
a. DR acknowledges that the Vendor Trademarks are trademarks owned or licensed
solely and exclusively by Vendor, DR agrees to use the Vendor Trademarks
only in the form and manner and with appropriate legends as prescribed by
Vendor. All use of Vendor Trademarks shall inure to the benefit of Vendor.
b. DR shall not remove, alter, cover, or obfuscate any copyright notice or
other proprietary rights notice placed in or on the Products by Vendor.
14. INDEMNIFICATION
a. Vendor shall defend, indemnify, and hold DR and its successors and assigns
harmless from and against any and all liabilities, losses, damages, costs,
and expenses (including without limitation, reasonable legal fees and
expenses) associated with or incurred as a result of any claim, action, or
proceeding instituted against DR and its successors and assigned arising
out of or relating to the acts or failure to act of the Vendor, or any of
its affiliated companies, agents, employees or other related parties under
this Agreement including, without limitation, action, claims, or
proceedings related to:
(i) Vendor's performance of its obligations under this Agreement,
(ii) the breach by Vendor of any pf the terms of this Agreement or any
of the representation and warranties contained herein;
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Electronic Software Distribution Agreement
(iii)the actual or alleged infringement of any proprietary rights
arising out of DR's duplication, sale, distribution, or other use
of the Product pursuant to this Agreement; or
(iv) in the event the Vendor is obligated to sales or use tax payments
pursuant to the provisions of Exhibit C, any obligation or
liability of DR and its successors and assigns to make use tax
payments in any state indicated in Exhibit C or otherwise.
b. DR shall indemnify and hold Vendor harmless from and against any and all
liabilities, losses, damages, costs, and expenses (including reasonable
legal fees and expenses) associated with or incurred as a result of any
claim action, or proceeding instituted against Vendor resulting from DR's
improper or unauthorized replication, packaging, marketing, distribution,
or installation of the Product, or the breach by DR of any of the terms of
this Agreement or any of the representations and warranties contained
herein.
c. If either Vendor or DR receives notice or knowledge of a claim as described
above, it will promptly notify the other party in writing and give the
other party all necessary information and assistance and the exclusive
authority to evaluate, defend, and settle such claim.
15. LIMITATION OF LIABILITY The total liability of DR (including its employees,
agents, and Dealers) for all claims, whether in contract, tort (including
negligence and product liability) or otherwise, arising out of, connected with,
or resulting from the distribution of the Products or the provisions of this
Agreement shall not exceed the net amount realized by DR hereunder. IN NO EVENT
SHALL DR BE LIABLE FOR ANY LOSS OF DATA, LOST PROFITS, OR INDIRECT, INCIDENTAL,
CONSEQUENTIAL, SPECIAL, OR EXEMPLARY DAMAGES, EVEN IF DR HAS BEEN ADVISED OF THE
POSSIBILITY OF SUCH DAMAGES AND NOTWITHSTANDING THE FAILURE OF ESSENTIAL PURPOSE
OF ANY LIMITED REMEDY PROVIDED HEREIN.
16. TERM AND TERMINATION
a. This Agreement will continue un effect for two (2) years from the date
hereof (Initial Term). This Agreement will be automatically renewed for
successive additional one (1) year terms (each, a Renewal Term) unless
terminated by either party upon ninety (90) days written notice prior to
the expiration of the Initial Term and Renewal Term.
b. This Agreement may be terminated by a party immediately by written notice
to the other party upon the occurrence of any of the following events: (i)
If the other party ceases to do business, or otherwise substantially
terminates its business operations; (ii) If the other party shall fail to
promptly secure or renew any license registration, permit, authorization or
approval for the conduct of its business in the manner contemplated by this
Agreement or if any such license, registration, permit, authorization or
approval is revoked or suspended and not reinstated within thirty (30)
days; (iii) If the other party materially breaches any provision of this
Agreement and fails to fully cure such breach within thirty (30) days of
written notice describing the breach; or (iv) If the other party becomes
insolvent or seeks protection under any bankruptcy laws, creditor's
arrangement, composition or comparable proceeding, or if any such
proceeding is instituted against the other and not dismissed within ninety
(90) days.
c. Upon termination of this Agreement for any reason, DR will immediately
cease distribution of the Product. The termination of this Agreement shall
not in any respect whatsoever affect a party's obligation to make payments
to the other party in connection with the distribution of Products that
occurred prior to the termination of this Agreement.
d. Termination by either party will not affect the rights of any End User
under the terms of the EULA.
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17. GENERAL PROVISIONS
a. This Agreement many not be assigned by Vendor or transferred by operation
of law to any other person or organization without the express written
approval of DR. DR shall be entitled to assign this Agreement in the event
of a merger, acquisition, joint venture, or a sale of substantially all of
its assets or business, or any similar transaction.
b. All notices and demands hereunder shall be in writing and shall be served
by personal delivery, nationally-recognized express courier, or by
certified mail at the address of the receiving party set forth in this
Agreement (or at such different address as may be designated by such party
by written notice to the other party). All notices and demands shall be
deemed given upon the earlier of receipt, two (2) days after deposit with a
nationally-recognized express courier; or five (5) days after deposit in
the mail.
c. This Agreement shall be governed by and construed in accordance with the
substantive laws of the state of Minnesota.
d. Each party is acting as an independent contractor and not as an agent,
partner, or joint venturer with the other party for any purpose. Except as
provided in the Agreement, neither party shall have the right, power, or
authority to act or to create any obligation, express or implied, on behalf
of the other.
e. The indemnification and confidentiality obligations set forth in the
Agreement and any other provision which by its sense and context is
appropriate, shall survive the termination of this Agreement by either
party for any reason.
f. The titles and headings of the various sections and paragraphs in this
Agreement are intended solely for convenience of reference and are not
intended for any other purpose whatsoever, or to explain, modify or place
any construction upon ir in any of the provisions of this Agreement.
g. All exhibits to this Agreement are incorporated herein by reference and
made part of this Agreement.
h. No provisions in either party's purchase orders, or in any other business
forms employed by either party will supersede the terms and conditions of
this Agreement, and no supplement, modification, or amendment of the
Agreement shall be binding, unless executed in writing by a duty authorized
representative of each party to this Agreement.
i. DR shall not be in breach of the Agreement in the event it is unable to
perform its obligations under this Agreement as a result of natural
disaster, was, emergency conditions, labor strike, the failure or
substantial failure of the Internet, or other reasons or conditions beyond
its reasonable control.
j. The parties have read this Agreement and agree to bound by its terms and
further agree that it constitutes the complete and entire agreement of the
parties and supersedes all previous communications, oral or written, and
all other communications between them relating to the license and to the
subject thereof. No representation or statements of any kind made by either
party, which are not expressly stated herein, shall be binding on such
party.
Electronic Software Distribution Agreement
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
set forth above.
DR: Vendor:
Digital River, Inc. Millennium Software, Inc.
Signature: Signature: /s/ Anthony Bigwood
---------------------- ---------------------
Name & Title: Name & Title: A.M. Bigwood, Pres. and CEO
------------------- ---------------------------
Date: 3/24/99 Date: March 8th 1999
--------------------------
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Electronic Software Distribution Agreement
EXHIBIT A Defined Terms
As used in this Agreement, the following terms shall have the meanings
ascribed to them below, and shall have application to the Products and DR and
the Vendor, as applicable, as indicated in the following table:
The term Advertised Price shall mean the price at which the product will be
initially sold for Host Sales.
The term Discount Percentage shall mean the percent by which the Advertised
Price is reduced.
The term Margin Payment shall mean the Dollar amount of the Discounted
Percentage, which, as applicable, shall be retained by or paid by DR.
The term Percentage Cost shall mean an amount equal to the Advertised Price
minus the Margin Payment, and which shall be payable by DR to Vendor for each
copy of a Product sold to an End User in a Host Sale.
The term Fee shall mean the amount indicated, which shall be payable to DR for
each Transaction.
The term Responsible for Delivery shall mean the party responsible for
delivering the Products to End Users.
The term Method of Delivery shall mean the manner in which the Products are
delivered to End Users, either digitally or tangibly.
The term Distribution Cost shall mean the amount indicated, which is the amount
DR shall pay Vendor for each Product sold in a Channel Sale and which shall not
in any event be an amount more than the amount for which the Vendor sells the
same Product to any other person or organization.
Electronic Software Distribution Agreement (continued)
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EXHIBIT A (continued)
Product Information
Please fill out the following template for each Product.
Product name (50 characters maximum): CHECKMYLOANS2000
Vendor Name (up to 36 characters): MILLENNIUM SOFTWARE, INC
If product is for tangible delivery by
DR, shipping weight: NOT GREATER THAN 75 GRAMS WEIGHT
Product Categories (up to 3) PERSONAL SOFTWARE
Does this Product include electronic
documentation? (Y/N) ON LINE FILES WILL BE RESIDENT ON
OUR WEB SITE
Does this Product include online help?
(Y/N) YES
What is the platform for this Product? Win95/98 & NT
What is the vendor part number of this
product? CL #1
Will DR distribute serial numbers? (Y/N) NO
Does this Product have an export ban? (Y/N) NO
If yes, to which countries is export
Restricted or banned? N/A
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Electronic Software Distribution Agreement (continued)
EXHIBIT C
Processing and Payments
For each copy of a product sold and delivered to an End User, DR shall be
responsible for the following processing of payments made by End Users
(including amounts for sales or use taxes). Amounts collected by DR shall be
deposited in an account established, owned, and maintained by DR. DR shall be
solely responsible for the payment of any and all credit card transaction fees.
DR shall be solely responsible for the preparation and filing of any sales or
use tax returns, and the payments of any and all sales or use taxes, together
with any and all related interest and penalties.
Within thirty (30) days after the end of each calendar month, by electronic
and/or facsimile transmission, DR shall contain the names and delivery addresses
of the End Users, and names, Vendor Product numbers, and quantity pf the
Products sold to particular End Users. Within thirty (30) days after the end of
each calendar month, DR shall, as indicated, in Exhibit A, pay Percentage Costs
and Distribution Costs to the Vendor based on the number of Products for which
DR processed payment during the immediately preceding calendar month. Any
payment or part of a payment hereunder, which is not paid when due shall bear
interest at the rate of 1.5% per month from its due date until paid.
DR acknowledges that it shall bear the risk associated with unauthorized
returns of Vendor products and credit card charge-backs in connection with the
distribution of the Vendors products as contemplated by this Agreement. Under no
circumstances shall DR be obligated to pay any Percentage Costs or Distribution
Costs in connection with any activities that are deemed to be fraudulent or
criminal. DR shall use its best efforts to screen for, detect, prevent and take
such other actions, as it deems reasonably necessary to prevent fraudulent
activity. The existence of fraud, or the possibility of the existence of fraud
shall be determined in the sole discretion of DR, and DR may, at it deems
appropriate under the circumstances. During the pendency of any such payment to
the Vendor of the Percentage Costs and Distribution Costs associated with such
inquiries and investigations. The payment of percentage Costs and Distribution
Costs shall be subject to adjustment by DR based on Product returns and refunds
paid to End Users.
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