Wednesday, December 28, 2005
Digital River Business Purchase Prices
Of course the summaries below do not include the intricacies of each deal. Nearly all of the purchases involved some level of non-compete agreement. In fact many of the earlier deals had complex earn-out periods and conditions. I would encourage anyone interested in the complete details to refer to the Securities and Exchange Commission website. The excerpts that I included are from the SEC website and are publicly available.
Date | Company Purchased | Stocks | Cash |
| 04/1999 | Maagnum | 88,809 | 2.5 Million |
| 04/1999 | Public Software Library | 161,842 |
|
| 06/1999 | Universal Commerce | 306,884 | 2 Million |
| 10/1999 | Walnut Creek CD ROM | 143,885 | 1 Million |
| 08/2000 | NetSales | 1,000,000 |
|
| 12/2001 | Freemerchant |
| 875 K |
| 12/2001 | RegSoft |
| 750 K + 2.5 Million |
| 11/2004 | GameZone |
| 1.1 Million with conditions + earnout options |
| 04/2004 | Element 5 |
| 120 Million |
| 04/2004 | FireClick | | 7.5 Million (+ earnout) |
The excerpts listed are from the Securities Exchange Commission websites and public filings.
April 1999
Maagnum Internet Group (aka Digibuy) -
In April 1999, pursuant to an Agreement and Plan of Merger by and among the Company, Maagnum Internet Group, a Connecticut corporation ("Maagnum"), and Cyrus Maaghul, the sole shareholder of Maagnum, Maagnum merged with and into the Company (the "Merger"). At the effective time of the Merger, Mr. Maaghul's shares of Maagnum common stock converted into the right to receive from the Company $2.5 million in cash, 88,809 shares of Common Stock of the Company, and up to an additional 320,161 shares of Common Stock that may be earned by Mr. Maaghul upon the achievement of certain business goals over the 24-month period following the closing date of the Merger.
In addition, pursuant to a Stock Purchase Agreement dated April 1, 1999 by and between the Company and Meiman Kentjana, a key employee of Maagnum, in consideration for Mr. Kentjana's agreement to waive certain rights with respect to Maagnum, the Company issued to Mr. Kentjana on the closing date of the Merger 22,841 shares of Common Stock and gave him the right to receive up to an additional 192,374 shares of Common Stock that may be earned by Mr. Kentjana upon the achievement of certain business goals over the 24-month period following the closing date of the Merger.
April 1999
Public Software Library (aka PSL)
Also in April 1999, pursuant to an Asset Purchase Agreement by and among the Company, Public Software Library Ltd., a Texas limited partnership ("Seller"), and the partners of Seller, the Company purchased substantially all of the assets and assumed certain liabilities of Seller in exchange for an aggregate of 161,842 shares of Common Stock of the Company.
June 1999
Universal Commerce (aka RegNow)
In June 1999, pursuant to an Agreement and Plan of Merger and Reorganization by and among the Company, Universal Commerce, Incorporated, a Delaware corporation ("RegNow"), certain stockholders of RegNow (the "Stockholders"), RegNow merged with and into the Company (the "RegNow Merger"). At the effective time of the RegNow Merger, the Stockholders received from the Company $2.0 million in cash and 306,884 shares of Common Stock of the Company in exchange for all outstanding RegNow shares. In addition, the Stockholders may receive additional shares of Common Stock upon the achievement of certain revenue goals over the 12-month period following the closing date of the RegNow Merger. In addition, certain individuals who are Stockholders are also eligible to receive up to an additional $2 million in cash if they remain employees of the Company for a period of 12 months following the closing date of the RegNow Merger.
October 1999
Walnut Creek CD ROM (aka Simtel)
On October 7, 1999, pursuant to an Asset Purchase Agreement dated October 7, 1999 by and among Digital River, Walnut Creek CDROM, Inc., a California corporation, and Robert Bruce, the sole shareholder of Walnut Creek, we purchased those assets of Walnut Creek related to its business of providing Internet downloads of its Windows and DOS-based software library, including the simtel.net archives. In exchange for these assets, we made a cash payment to Walnut Creek of $1.0 million and issued to Walnut Creek 143,885 shares of our common stock.
August 2000
NetSales, Inc.
On August 24, 2000, pursuant to an Asset Purchase Agreement dated as of August 24, 2000 (the "Purchase Agreement") by and between the Registrant and NetSales, Inc. ("NetSales"), in exchange for 1,000,000 shares of common stock, the Registrant purchased those assets and assumed those liabilities of NetSales related to NetSales' software services business. The Purchase Agreement includes a contingent earnout whereby NetSales can receive up to an additional 350,000 shares of common stock based on performance over the 180 day period following August 24, 2000. Of the 1,000,000 shares of common stock issued at closing, 100,000 shares were placed in escrow to secure certain indemnification obligations contained in the Purchase Agreement. Subject to outstanding claims, the escrow will terminate 9 months following the closing.
December 2001
Freemerchant.com
On December 28, 2001, pursuant to an asset purchase agreement dated as of December 28, 2001 among Digital River, Network Commerce Inc., and Freemerchant.com, Inc., we purchased certain assets and assumed certain liabilities of Network Commerce related to the Freemerchant.com business line in exchange for cash in the amount of $875,000. The asset purchase agreement includes a contingent earn-out whereby Network Commerce can receive additional cash earn-out payments of up to $870,000 based upon the revenue generated by the Freemerchant.com business over the 10 month period following the closing.
August 2001
RegSoft.com
On August 2, 2001, pursuant to a Stock Purchase Agreement dated as of August 2, 2001 by and among Digital River, RegSoft.com, Inc., a Georgia corporation ("RegSoft"), and the following individuals (collectively, the "RegSoft Selling Stockholders"): Jason Foodmen, Robert Verzera, Ken White (also serving as Stockholders' Agent), Charles Zino and Robert Zino, we purchased all of the issued and outstanding shares of RegSoft in exchange for $750,000 in cash and a note for $2,500,000 that is payable in full on February 2, 2002. The Stock Purchase Agreement includes a contingent earn-out whereby the RegSoft Selling Stockholders can receive up to an additional $2,100,000 in cash based upon the revenue generated by RegSoft over the 12 months following the closing, and up to an additional $650,000 based on the number of RegSoft clients converted to our platform on or before the fifteen month anniversary of the closing.
November 2003
GameZone, Inc.
In November 2003, we acquired substantially all of the assets and assumed certain liabilities of GameZone, Inc., a provider of computer gaming resources and download destination sites on the Web, for the purchase price of $1.1 million in cash, of which $934,000 has been paid as of December 31, 2003. Additional goodwill of $821,000 was recorded as a result of this acquisition. We will amortize other intangible assets acquired, consisting of non-compete agreements and technology/tradename, over a three-year period. The agreement also provides GameZone the opportunity for additional cash or stock earn-outs based on our achieving certain revenue metrics related to computer gaming resources and download destination sites on the Web over the course of the thirty-six months and, at our sole discretion, the sixty months following the close of the acquisition. Such earn-out amounts, if paid, will be recorded as goodwill as they are considered incremental to the purchase price.
April 2004
Element 5 AG (ShareIt)
On April 19, 2004 we announced that we signed a definitive agreement to acquire element 5 AG, a privately held company based in Germany. Under the terms of the agreement, we paid $120 million in cash to acquire all of the outstanding shares of capital stock of element 5. We also may pay up to an additional $2.5 million in cash based on element 5's operating performance over the first 24 months subsequent to the acquisition. Such earn-out amounts, if paid, will be recorded as goodwill as they are considered incremental to the purchase price. In the second quarter of 2004, in connection with our acquisition of element 5, we began implementation of a plan intended to eliminate duplication of resources within the consolidated company. The plan includes the elimination of customer service positions at element 5's Greenburg, Pennsylvania customer service center and the termination of the Greenburg facility lease by the end of third quarter 2004. As of June 30, 2004, we have included $0.9 million towards the acquisition cost of element 5 related to this plan.
June 2004
FireClick
On June 1, 2004, we announced that we acquired substantially all of the assets and assumed certain liabilities of Fireclick, Inc., a leading provider of Web-analysis solutions for online retailers. Under the terms of the agreement, we paid $7.5 million in cash. The agreement also provides Fireclick the opportunity for an earn-out based on our achieving certain revenue and profitability targets attributable to Fireclick over the course of the three years following the closing of the acquisition. Such earn-out amounts, if paid, will be recorded as goodwill as they are considered incremental to the purchase price.
Violence in Games
As a professional I understand the need for businesses to make money. The fact of the matter is violence, like sex, sells. Compare the revenues in the software industry of an educational software developer like Flix Products or Pharos Games to that of Duke Nukem, sadly you will find that regardless of the high quality software, violence outsells quality interactive educational tools every time. Why?
Is it the emphasis society places on gore, making it "cool", or is it the lack of emphasis on education that is creating a society where there is disdain for intelligence and celebration for violence.
Software developers in the entertainment sector face a difficult decision, do they morally and ethically write software that they value and believe in, but won't feed their families? Or do they turn to the darkside and embrace violent games with narcistic twists that allow players to personalize their warriors?
More and more products are emerging with war themes or behavior that any sane individual would find offensive. While adults, in most cases, can distinguish between reality and fantasy but with the technological advancements and graphical barbaric nature of games being released.
Now, I'm not really a fanatical person, or parent for that matter, unless of course you ask my children, but I have to wonder who is at fault? Is it the parents who complain about the violence in the games but have little interest in those with educational value? Let's face it in this equation in most cases it is the parents who pay for the violent games, often succumbing to peer pressure so that their child will not be ostracized. Is it the fault of the media that glorifies violence or is the fault of society that fails to speak up? In modern society there is a stigma associated with being smart, it is a heavy cross for any child to bear. It is so much easier for children to be cool and play Quake. What values are we are ultimately instilled in these children's? It the fault of the developers themselves who capitalize on the blood being spilled, constantly pushing the limits of what is socially acceptable?
About the Author:
Sharon Housley manages marketing for the NotePage and FeedForAll product lines.
Educated Consumers
Lets take a closer look at why educated consumers are better customers.
Less Technical Support.
1.) Educated consumers require less technical support. The reduced technical support results in lower overhead costs. Often educated consumers can further reduce the support burden by assisting or educating other customers or potential customers in forums, newsgroups, user groups or elsewhere in an industry community.
Often users with a strong technical background or understanding will often assist in the forums and provide users technical support. The result: an educated consumer is a happy and helpful customer.
Easier Sales.
2.) Generally speaking educated consumers have a better understanding of the technology, how it can be used and how it will benefit them. A customers understanding that an application will result in saved time, can easily justify the software's expense. Cost becomes less of an issue when long-term value is understood.
Reasonable Expectations.
3.) I hate to say it, but back in 1996 when we started out, consumer ignorance resulted in unrealistic expectations. Consumers purchased expecting that software would do their dishes and vacuum. Regardless of how well the software did what it was designed to do, if a customer expects it to do something else, they will not be a satisfied customer.
Educated consumers have realistic expectations and understanding of what can and cannot be accomplished.
Kinds of Consumer Education
1. Articles.
Educational articles not only propagate the success and understanding of a technology, but well written articles will often establish the writer as an industry expert.
Example http://www.feedforall.com/newsletter.htm (on the bottom)
2. White Papers.
Real world examples of how other users are using software to resolve problems or save time are often great illustrations of technology in action.
Example http://www.notepage.net/whitepapers.htm
3. PPT Demonstrations.
Power point presentations not only assist with user education, but also can be used by User Groups to further evangelize and educate potential users.
All in all, educated consumers result in a happier user with realistic expectations. Ignorance often results in dissatisfaction and unrealistic expectations while education leads to long term happy and helpful customers.
Sunday, December 25, 2005
New Years Predictions
Technology Predictions for 2006 and Reflections on 2005 - Technology is usually thought of as impersonal, but something needs to be recognized; without technology the personal elements of the 2005 tragedies would not likely have been conveyed to the extent and timeliness they were. Reflecting on 2005 and looking forward to 2006, technology will undoubtedly continue play a significant role in the future both on a personal and impersonal level.
2006 Year of Opportunity - The start of the year is traditionally the time for making lists of things that we won't do for very long. It's also the time of year when we re-arrange our homes and offices, look back over the year that was, and try to predict the year that lies ahead. 2005 was an interesting year for software marketing. The "try before you buy" concept continued to grow from strength to strength, PPC grew even more interesting, RSS flourished, and previously obscure words like "blog", "wiki" and "podcasting" started to become mainstream. 2006 also looks set to be an interesting year, so without further ado, my predictions for the year that lies to ahead, subject to alteration, amendment and selective amnesia.
Steve Rubel / Micro Persuasion Trends to Watch - One year from now, what will the state of the "feedospehere" look like? First, in order to look ahead we should look back.
Robin Good's New Media Predictions - If you stop looking for a second at the hundreds of interesting new tools and events happening online, what are the key trends you see? Where among the new emerging online media, should you be looking next when trying to understand where to invest your future energies and money?
PC World Winners and Losers of 2005 - What were the best and worst tech stories of the year? Our expert separates the good from the bad. In some cases, they're the same.
John Batelle's Predictions - This post marks my third year of making predictions for the coming year. I'm emboldened by not failing utterly in the past two years (well, for the most part), but I am sure this will only ensure that these prognostications will prove immeasurably off the mark.
Kevin Buron's 2006 Technology Predictions - What's going to happen in 2006? I don't know honestly but I have a few ideas.
Top 10 Tech Trends for 2006 - Once again, it's time for SiliconValley.com's annual look into a crystal ball for technology trends in 2006. Never mind that the smartest people in tech wouldn't dare make serious predictions about what innovations will catch fire next year. We make a humble try anyway.
Calacanis Predictions - Jason Calacanis predictions, Jason is the CEO of the blogging network Weblogs, Inc.
Top 10 Web Predictions for 2006 from Conversion Rater - My guesses at what some of the top web stories will be in 2006. Naturally, the real top 10 stories of 2006 will probably be ones that are impossible to predict, but that doesn't mean it isn't fun to try.
Corante Network Thinks about 2006 - Over the past couple of weeks, Corante Network contributors have been prognosticating about what they think is in store for 2006. Below is my effort to synthesize some of the larger themes articulated by my colleagues.
Scott Maxwell Now What? - 2005 is almost over, Now What?.Predictions for 2006
SEO Predictions - This started with a little list of things I thought had changed between 2005 and 2006 and turned into a large list of brainstormed ideas of things to keep in mind for the upcoming year. The first 30 I tried to compare the evolution somewhat. The rest didn't quite fit anything, and the whole thing turned out a bit random, but ended with the nice round number of 40.
Worst Tech Moments in 2005 - It was the year corporate and university data spills just kept coming, and the Supreme Court decided technology companies can be held responsible for the bad behavior of their users. Big firms lined up to help repressive governments; governments helped themselves to private phone calls and e-mail. A medical miracle transformed, overnight, into heartbreaking scandal.
More From Robin Good - Here are ten more disruptive and powerful changes that from my unique point of view, I see coming your way, whether you like it or not. I think there are still more key innovations and new technology changes that I am not yet covering here, but between my previous post and this, you can really get a broad and comprehensive idea of which are the web and the emerging new media technologies to master and watch in the coming months.
Big Stories in Search - from Danny Sullivan "Search caught fire last year, with new tools, services and virtually constant activity. Here's a look back at some of the most memorable themes and trends of the past year year."
ISE Predictions - It is that time of year again. Between the extra helpings of turkey soup and sandwiches, writers of every stripe are making lists of predictions for the coming twelve months. Last year, we got just over half our predictions correct. This year we hope to do as well or better but in an industry as dynamic and rapidly changing as the world of search, we couldn't expect to hit a home run on every prediction. The only thing that is certain is the idea 2006 will be as or more interesting than 2005.
Monday, December 12, 2005
Techie Gift Suggestion Bargains
 $ 5.96 | Mensa Number Puzzles - Some of Mensa's best math brains have set this range of fiendish number questions of all shapes and sizes for every level of ability. You'll find number grids, series problems, magic squares and much, much more -- but all you need to master these mind-teasers is a sense of fun, a methodical approach, common sense and patience. |
 $ 7.49 | Mensa Mind Busters - mental mind twisters and brain teasers. |
 $ 5.99 | Mensa : Secret Codes For Kids - The world of spies and secret codes is one that almost all children enjoy, both for its mystery and danger and its intellectual challenges. With this collection of messages encoded in puzzles, young Maigrets and Smileys can twist and turn their brain cells while honing their math and reading skills. Created as part of a series that stimulates children age nine and up in the mental arts, Robert Allen`s Mensa: Secret Codes for Kids even uses some of the most crucial secret messages of all time, artfully concealed in enjoyable puzzles for your young code-breaker. |
 $ 8.95 | Mensa Brain Bafflers - Now masterminds of all ages can stimulate their mental prowess with these portable boxes of mind benders, created by Mensa's puzzle experts. 4.8" x 3.2". 70-80 cards. |
 $ 11.95 | Vodoo Computer - You've tried logic, common sense and tech support. Now it's time to relate to your computer on its own terms: magic and voodoo. This 5-1/2" tall Voodoo "doll" comes with pins to help you cause or prevent such maddening glitches as Unimplimented Trap, Virus, Fatal Error, and What's That Smell? Show your computer who's boss once and for all. Includes 5 black pins and 5 white pins. Hand-stitched. |
 $ 8.95 | Tech Micro Tool - Features Model Number: BXB-1 Strong tempered steel Black Oxide finish Precision pliers Phillips screwdriver Flat screwdriver Wire cutter Shear Locks to a key ring |
 $ 24.95 | James Bonds Gadgets - An exclusive peek inside Q's lab highlights this look at the gadgets used by 007 in his famous films. |
 $ 11.21 | A Dilbert Treasury - What Do You Call a Sociopath in a Cubicle? Answer a Coworker. The former occupant of cubicle 4S700R at Pacific Bell seems to have made a go of this cartoon strip thing. What began as a doodling diversion that Scott Adams shared with his officemates has exploded into one of the most read cartoon strips worldwide. |
 $ 34.95 | Dilbert Zone Polo Shirt - Dress up (or down) with Dilbert Dilbert embroidered polo shirt will give you that certain "je ne sais quoi". Comfortable 100% cotton denim blue pique polo shirt is suitable for both office and weekend wear. |
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| Circuit Board Tie - Favorite circuit board tie Our most popular computer tie will add pizzazz to any attire. 100% polyester. |
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| Circuit Board Cube Clock - Add sophisticated flair to your office With this unconventional clock made from real recycled circuit boards. With its clockworks cleverly mounted on clear Lucite front, time appears to "float" on your desk! Varied colors and patterns. Enhances any office, computer den or home office decor. |
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| Pen Radio - ANothing gets better than the portable, hands free pen radio! With this pen radio you can scan your favorite FM stations with a single touch. The pen radio also has individual ear phones with a long cord for crisp FM sound including volume control!! Plus, it has a detachable ball point pen and clips easily to your clothing for hands free listening. |
 $ 29.95 | User Friendly Tie - This sharp looking tie with tehnobabble and computer icons printed all-over a navy background will be your favorite when you have to wear one. |
 $ 44.95 | User Friendly Books - Cartoon books keep you entertained One of the funniest, most off-beat, and original comic strips to come along in years, User Friendly tells the fictional story of Columbia Internet, "the friendliest, hardest-working, and most neurotic little Internet Service Provider in the world". |
 $ 9.71 | The Root of All Evil - It's back to Columbia Internet, the friendliest, hardest working, and most neurotic little Internet Service Provider in the the world. |
 $ 22.95 | Lord of the Rings 2 DVD Set - Frodo Baggins and the Fellowship continue their quest to destroy the One Ring in The Lord of the Rings: The Two Towers. This double-DVD set includes the PG-13 theatrical version of the film, and a second disc with over two hours of special features and extra content including a 10-minute preview of The Return of the King, the final installment of Peter Jackson's epic film trilogy |
 $ 19.95 | Lord of the Rings; Activity Studio - This specially created CD-ROM is an ideal film companion to The Lord of the Rings: The Two Towers and consists of 9 amazing sections. A Print Room allows you to print fantastic imagery from the Two Towers film including Posters, Flyers, Bookmarks, Greeting Cards, Calendars, Party Kits, and more. |
 $ 29.95 | Transforming Global Atomic Clock- You don't need to travel the world to find this incredible new alarm clock. For the first time ever you now have thtle accuracy of an atomic on a global scale. That's right. Not only does it stay in contact with the atomic clock in Colorado for accuracy that is 10 billionth of a second, it will also connect to other atomic clocks around the world. From Europe to Asia you'll be connected. |
 $ 39.95 | Motaka Bionic Ear - Stop straining to hear words when you're in the back of the room or watching TV with the sound on low--our high-powered hearing enhancer will clear things up for you! The Super Ear Wireless Listening Device is a real breakthrough in sound magnification technology; you'll hear spoken words clearly and distinctly. |
 $ 19.95 | Wireless Cellular Antenna - No more screaming on your cell phone while driving, "Can you hear me? Can you hear me now? How about now?!" Its not only annoying when you hit a spot of bad reception, it makes driving dangerous. With this quick-to-affix wireless glass mounted antenna, though, I can hear perfectly, and my blood pressure doesn't even rise. |
 $ 12.98 | Shocking Computer Mouse - Your spouse spending too much time shopping online? Here's a great way to get their attention without a lot of "static." Just replace their ordinary mouse our very special electric one when they're out of the room. When they come back, they get the shock of their lives! |
 $ 9.98 | Solar Engine Radiometer - No electricity! No batteries! No power except light! The brighter the light, the faster it turns. Runs up to 3000 rpm. Used in science classes for experiments. Partial vacuum in glass globe where 4 vanes spin on needlepoint bearing. Spins continuously from sun or light bulb. |
 $ 14.95 | Set of 6 Wooden Puzzles - Six interlocking puzzles in this handsome set are designed to test your skill, dexterity and patience. Their solid wood construction also makes them interesting display pieces. Range from easy to medium levels of difficulty. |
 $ 14.88 | Fireworks Kaleidescope - The coolest light show we've ever seen! Choose your volume then lay back and treat your senses to an explosion of bright colors and mind-blowing sound! Plug your personal headphones into the jack and listen to your personal show in stereo. |
| | Personal & Mini Desktop Water Dispenser - Fun and functional mini water dispenser. Just fill and chill the resealable 8-glass bottle with water, juice, iced tea, etc., and keep it handy on your desk or countertop. |
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| Electronic Christmas Tree - Fun This electronic X-mas Tree contains two astable flashing circuit. The led's flash randomly. Nice gadget |
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| 300 in 1 Electronics - Everything You Need to Build 300 Exciting Electronic Projects. |
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| Knight Invader Car - The future of toys has arrived. KNIGHT INVADER is a super race car that includes mini-construction projects, teaches the basic principles of electricity, and demonstrates three different modes of propulsion. This sleek super racer has it all and a little bit more. KNIGHT INVADER can blow a fierce force of air to propel it off the starting line and challenges any contender to try and keep up with it, when changed into Direct motor drive. |
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| Voice Changer - Change your voice from male to female or vice versa. Add a vibrato sound to voice like the sound used to protect witnesses or anonymous rats on TV. |
