Digital River 2001 Annual Report Download - page 55

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53
No disclosure of segment information for 1999 has been presented as Software and Digital Commerce
Services represented substantially all operations in 1999. Segment information for 2001 and 2000 is as follows:
8. R elated-Party Transactions:
In February 1998, two stockholders, one of whom was a director for the Company at the time,
entered into an agreement with the Company whereby the stockholders helped establish and oversee
the international operations for the Company for a term of three years. As consideration for entering
into the agreement, the stockholders each received warrants to purchase 100,000 shares of Common
Stock, exercisable at $3.00 per share.The warrants were 100% vested at the date of grant and expire
in February 2003. At December 31, 2001, 100,000 warrants remain outstanding.The fair value of the
warrants granted in 1998, determined to be $360,000, was based upon the value of the services to be
provided. During the three years ended December 31, 2001, compensation expense of $20,000,
$120,000, and $120,000, respectively, was recognized related to these warrants.
9. Subsequent Events (unaudited):
Results of Operations
In February 2002, ePedas Sdn Bhd initiated an arbitration before the American Arbitration Association
against the Company.The demand for arbitration alleges breach of contract and tortious interference
claims against the Company.The prayer for relief requests R M 28,809,137.09 (R ingit Malaysia or
approximately US $7,581,150) plus pre-judgment interest, punitive damages, all legal costs and other
Notes to Consolidated Financial Statements December 31, 2001 and 2000
Digital River 2001 Annual Report
R evenue $44,914,000 $ 12,911,000 $ ,,,,,,,,,,,,- $ 57,825,000
Gross profit
(excludes depreciation and amortization expense) 36,214,000 8,701,000 ,,,,,,,,,,,,- 44,915,000
Income (loss) from operations 10,672,000 (9,139,000) (21,636,000) (20,103,000)
Net income (loss) 10,672,000 (9,139,000) (20,755,000) (19,222,000)
Total assets at December 31, 2001 20,858,000 9,159,000 48,209,000 78,227,000
Software and
Digital Commerce E-Business Unallocated
Services D ivision Services Division Corporate Items Consolidated
R evenue $ 25,221,000 $ 5,960,000 $ ,,,,,,,,,,,,- $ 31,181,000
Gross profit 18,119,000 3,718,000 ,,,,,,,,,,,,- 21,837,000
Loss from operations (5,611,000) (15,936,000) (18,565,000) (40,112,000)
Net loss (5,611,000) (15,936,000) (16,569,000) (38,116,000)
Total assets at December 31, 2000 16,256,000 7,051,000 46,096,000 69,403,000
Year Ended December 31, 2001
Year Ended December 31, 2000