Momentum Business Applications, Inc. Announces Agreements With Peoplesoft, Inc. to Develop New Application Software Products
PLEASANTON, Calif.--(BUSINESS WIRE)-- June 10, 1999--
Project expenditure commitments total nearly $140 million
Momentum Business Applications, Inc. (Nasdaq: MMTM; Momentum) today announced that it has executed a series of anticipated amendments to the existing Development and License Agreement with PeopleSoft, Inc., whereby PeopleSoft will provide development resources and project management oversight, and Momentum will fund approximately $140 million in various software application development projects.
Momentum and PeopleSoft will collaborate on eight specific projects, which will span approximately one to three years and encumber nearly $140 million of the available funds as defined under the Development and License Agreement. Projects to be undertaken include a suite of analytic applications, which encompass nine individual software products, and several industry-specific applications, including a comprehensive solution for the insurance industry and three projects targeted at the services industry, a market which includes consulting, engineering and temporary help companies. In addition, of note, Momentum will be funding the development of PeopleSoft's recently announced eMarketplace, an end-to-end e-commerce application that will be integrated with PeopleSoft's e-business backbone.
Momentum CEO Ron Codd said "We are pleased with the progress Momentum and PeopleSoft are making toward the development of new families of application products. We anticipate making additional announcements of product development efforts later in the calendar year."
Special Note
To the extent any statements made in this release pertain to information that is not historical, these statements are necessarily forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. The reader is cautioned not to rely on these forward-looking statements. Momentum expressly disclaims any intent or obligation to update these forward-looking statements. These forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those anticipated. Such risks and uncertainties include, but are not limited to the following: -0- *T
-- Momentum may not successfully select or develop products. The
development projects referenced herein are characterized by many
inherent risks, including but not limited to 1) it may be
difficult to staff such projects with qualified development
personnel who have sufficient domain expertise, 2) existing
PeopleSoft technology may not be suitable as a foundation for the
application software functionality, 3) development efforts in
general are complex, and such complexities create a risk that the
products may not be technologically feasible, and 4) constantly
changing and evolving customer demands for products and product
functionality may cause products to meet with limited market
acceptance. Consequently, such development efforts may not be
successful or result in a product that is accepted by the market.
-- Demand for Momentum's products may be highly sensitive to time to
market and/or first mover advantages. Any material delays in the
development project schedule may adversely affect demand for the
product, even if the development project is otherwise
successfully completed. Furthermore, competitors of PeopleSoft, and even PeopleSoft, may offer products that compete directly
with Momentum's products. Weakness in demand for a product will
translate into limited royalty income to Momentum, associated
limited product payment buy out proceeds, if any, and may
ultimately reduce PeopleSoft's interest in exercising its
purchase option.
-- Momentum and PeopleSoft are parties to various agreements which
limit Momentum's ability to take certain actions, establish
alternate channels of distribution for its products, and use
funds for other than designated product development and
administrative activities. Consequently, Momentum has few degrees
of freedom with which to generate revenues or otherwise
commercialize developed technology or products should PeopleSoft
elect not to utilize some or all of the developed products.
-- Momentum or PeopleSoft may cancel a development project at
anytime and for any reason or no reason at all. Accordingly, it
is possible that Momentum could incur significant expenditures
toward the development of a particular product, only to have the
project cancelled in the later stages of the schedule. There is
no recourse to PeopleSoft in the event of this occurrence.
-- If Momentum were not successful with a number of development
projects, PeopleSoft would be unlikely to exercise its option to
purchase the stock of Momentum. Even if Momentum is successful in
developing certain products, PeopleSoft may not exercise its
option to purchase the Common Stock of Momentum. For example, PeopleSoft has the right to buy out the ownership of selected
products under its product royalty buy out rights. Consequently, it could purchase the rights to certain products, without the
need to exercise the purchase option on the Company's Common
Stock.
-- Other risks which are detailed in the Company's filings with the
Securities and Exchange Commission, including, but not limited
to, the December 31, 1998 Second Amendment to the Information
Statement (Form 10) and the 1999 third quarter Report to
Shareholders (Form 10-Q) filed March 15, 1999. *T -0-
About Momentum
Momentum Business Applications, Inc. was created by PeopleSoft, Inc. in 1998 to select, develop and commercialize software products in the following three areas: 1) Analytic applications, 2) Industry specific applications, and 3) E-Business applications. PeopleSoft initially contributed $250 million in capital to Momentum, and under the development and licensing agreement between Momentum and PeopleSoft, these funds are specifically restricted to certain product development and administrative activities. Upon the completion of a development project, PeopleSoft has an option to license and exclusively distribute the resulting application products through its worldwide sales and marketing group. In addition, PeopleSoft has an option to purchase all of the Momentum Class A Common Stock at a price set according to a predetermined formula. Momentum's offices are located in Pleasanton.
CONTACT:
Momentum Business Applications, Inc.
Ronald E.F. Codd, 925/469-6129
ron-codd@mmtm.com |
