Markethng §oftwarre orrn the Jr:nrteirll1!et~
`A 'VYhite Paper
`Digital River, Inc.
`9625 West 76th Street
`Eden Prairie, Minnesota 55344
`www. digitalriver. com
`1-800-207-2755
`
`Marketing Software on the Internet
`©Digital River, Inc. 1998
`Marketing Software on the Internet
`©Digital River, Inc. 1998
`
`Time Cha1Denges and! Alh.nu<e of Man·kethng Softwaue OnnH~rne
`
`Any company thinking about selling software products on the Internet mllst consider
`what kind of online experience to create for the user and what kind of offline partnering
`relationship the enterprise wiJI entail. Transferring the concerns of a traditional store to an
`online selling envirorunent includes transfening the thought involved in creating the
`customer's shopping experience. The other side of the online retail equation is the
`question of how best to implement today's teclmology to optimize opportunity for
`tomon-ow. In the Internet's evolving and expanding role as a worldwide market-
`place, Digital River's utilization of technology has created a framework for these new
`relationships.
`
`Computer software is currently being sold almost exclusively through traditional retail
`sales channels, principally retail stores and direct mail. The current system requires
`extensive inventories~ expensive packaging, and significant lead time development and
`introduction to the market. When faced with the choice of whether to build an e(cid:173)
`commerce solution or buy one, independent software vendors increasingly turn to Digital
`River's system of creating a satisfying experience for customers and a profitable
`experience for clients.
`
`The Market
`
`The exponential grow1h of personal computers and Internet usage has brought with it a
`rapid expansion in the distribution of software products. Online distribution is a logical
`channel for most digital products because it delivers the product directly to \Vhere the
`user needs it~ his home or office computer. This new mode for delivery eliminates disk or
`CD production. packaging, remrns and shipping expense and reduces the amount of time
`
`DDR Holdings, LLC - Ex. 2008
`Shopify, Inc. v. DDR Holdings, LLC
`IPR2018-01011
`
`

`

`needed to get a new product on the market. One master copy of a product sitting on a
`central server is used to fultill all sales of that product.
`
`As the number of Intemet users has grown this decade! so too have the num her of entities
`providing content. As the number of these web sites gt'O\VS: so too does the significant
`number of software developers who have an Intemet pr!!sence. Although there is a
`considerable amount of free softw·are available for do\vllloading. it remains difficult for
`.....
`independent software vendors to sell online. Creating web stores involves a prohibitive
`allocation and expenditure of resources, and secmity -- both of credit card transactions
`and the software itself-- is a considerable issue.
`
`As computer hardware prices have; plummeted and competition between cmmectivity
`providers have increased! access to the Internet has become more and more affordable.
`As bandwidth increases, greater comfort grows with the medium, and other baniers to
`consumers' entry are lowered, the number of types of products delivered-- including
`audio and video -- will drastically increase.
`
`Software applications and other digital products, such as images and fonts, are natural
`candidates for sales and delivery via the Intemet. Browser programs use the equipment
`and systems required for software programs. Software products can be reviewed and
`considered online. The sale transaction can be completed online and the delivery can
`happen where and when the buyer needs it. The natural situation of a web browser in use
`makes purchasing online easy and meets consumer needs with a unique immediacy. As
`market research is beginning to show, it's plausible that consumers would be more likely
`to purchase if they are offered software products through an· online purchase and delivery
`system.
`
`The market research firm IDC estimated that 5-7% of all software will be sold online by
`the year 2000 (PC Magazine, 5/28/96, pg. 36). If current trends continue, the year 2000
`should see the packaged software market over $1 0 billion and could well see industry
`online sales over $1 billion. Other research indicates that the cun·ent 35 million Internet
`users will grow to a population of 163 million by the 2000. Business-to-business
`commerce will also expand as the overall online commerce pie expands. Internet
`software sales will account for a large portion of the estimated totals. North American PC
`application software sales were over $9 billion in 199 5 and $10 billion in 1996, according
`to the Software Publishers Association. The sale of software over the Internet to
`businesses could become a $12 billion industry within the next three to five years.
`
`lLogistucal Conside!l"a11:ions
`
`There are nvo areas oflogistical consideration in the challenge of getting to the market.
`Using a technology based on open standards to sell digital products online means that one
`must-take into account well-publicized concern about security. At the same time, the data
`gathered must be put to use; information that can be refined to position products where
`they most likely "'"ill be bought must be put in place for the system to be effective. Digital
`
`Page 2
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`The SDivi accumtilates infonnation and leams about each user as it perfonns security
`profiling based on many discrete variables. So the more illegal attempts that are made,
`the more effectively the security system tln;o,'ans them. For example~ users have only a
`few tries to enter their access number coiTe::tly before they are instructed to call
`Customer Service.
`
`Similarly. a customer cannot do"nlond software more than a preset munber of times in a
`cet1ain period, or buy one copy of a product and then doYv11load 500 copies. These built(cid:173)
`in protections of the SDM also prevent spammers from shutting down the network ·with
`junk email. The SDivi continually takes netvvork "snapshots," matching all traffic against
`established rules and procedures. The SDM also includes internal safeguards, protecting
`the software products and the customer databases from unauthorized access from within
`Digital River.
`
`AvannabHD11:y
`
`When customers visiting one of the many "vVeb sites enhanced with Digital River
`functionality click on the product descriptions, they are transparently link.ed to the Digital
`River site. The connections to it are fast and reliable, designed to avoid frustrating delays.
`The software products themselves are kept on an Oracle database that is backed up daily
`to a safe second site, to ensure that the products are available for do·wnload 24 hours a
`day. Other redundant connections to credit card authorization sites assure that products
`are available for purchase 24 hours a day.
`·
`
`Besides protecting against hackers and thieves, the SDM offers security for the legitimate
`customers as well. For example, if a user's transmission is interrupted, or if a customer
`chooses to do the credit card part of the transaction offline, an "unlock code" option is
`presented to the user for reentry. The code matches the previous identification and aiiows
`further data exchanges.
`
`Tllne Consumer's Experie~mce
`
`Customers begin the process of buying on-line by hitting the purchase button on a client's
`page. There's no sensation of being suddenly hustled off to another location. Customers
`won't end up at some foreign-looking page where they have to hunt to find products.
`Prompts can be easily integrated for customers to purchase additional products, for
`instance printed manuals or more of your software. The entire transaction takes place in
`the selling environment created by the client, surrounded by the look and feel of the
`developer's or dealer's identity, 'V'.1.th products presented in a way to encourage sales; with
`no competition.
`
`Dioital River has eliminated the need for the customer to enter their credit card and
`pa;sword data more than once. Less advanced e-commerce systems ask customers to
`enter this data more than once -- an approach that is more burdensome to the customer
`and offers more opportunity to the hacker. When the customer data is entered; including
`
`Page 4
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`the credit card number, an extemal connection is established to validate the credit card
`number and authorize the transaction.
`
`It is imp011ant to ensure that your software sales site offers products to the consumer in
`an interesting: user-friendly mmmer. The design and flow of sites should facilitate the
`purchasing experience. For example~ "buy" buttons should be positioned and sized to
`make them easy to find. A shopping basket which will hold multiple products \Vill
`encourage multiple sales increasing average sale size. The online sales system should
`hold customer information so that the buyer does not have to complete several personal
`inf01mation and credit card screens during the purchase. These are just a few examples of
`how to optimize your site. While the look and feel of a particular site is in that client's
`control, the client also can benefit fi·om Digital River's considerable experience in setting
`up online retail environments.
`
`Software developers and dealers \Vho have developed online sales sites with Digital River
`have experienced substantial sales increases. For example, Rhode Island Software
`Systems credits their relationship with Digital River and the development of a
`comprehensive online sales and delivery system with doubling software sales from their
`website. Other large software developers and dealers have experienced even larger
`software sales increases, up to 400% of their pre~online sales and delivery business.
`
`Cross Mark.etnng
`
`Digital River maintains the information gathered from customers in separate databases.
`Software vendors can mine the data in the databases to which they have access to gain a
`better understanding of their customers, but other vendors cannot get at that infonnation
`except by mutual agreement. If two or more companies want to cross-sell or do some
`product integration, they can agree to unlock each other's database. A powerful data
`mining capability is matched by commensurate data security. Digital River notifies the
`independent software vendors or dealers of each sale by email. And the vendors can also
`receive graphical and statistical analysis of their commerce activity, which tums log data
`into useful sales information. This infom111tion too is surrounded by rich security features,
`so it is delivered to authorized vendors in real time at their discretion, while preventi'ng
`unauthorized access.
`
`Digital River greatly expands the number of stores where a software product can be sold.
`Instead of one site, there could be 500 sites, or more. Clients need to know that they
`retain control over how their products are displayed and described -- in short, over the
`user's initial experience with their products. Digital River enables that control with
`product information screens that clients design and alter they see fit. Again, matching this
`nev~· capability is commensurate security, to prevent unauthorized changes.
`.
`.
`Digital River also ties out credit card receipts \vith its own records. Each day the Sales
`Summary is matched to the Credit Card Report. Summary reconciled data is entered into
`Digital River's accounting system. That accounting information is then matched to the
`daUy credit card deposits on the company's bank statement. Digital River's system
`
`Page 5
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`The Internet provides a special opportunity to present a company's brand and develop the
`desired positioning through multiple exposures. Long-term value of the customer
`supports the use of brand advertising on the Intemet as well as the development of
`software and digital products sales sites.
`
`There are many risks and benefits involved in selling online. Not only must one be
`concerned with security and accounting~ but one must keep enough ahead of each
`incamation of the networked marketplace to act strategically.
`
`Digital River offers the best way to implement onHne selling such that customers are
`happy, the company is effective, and profits are maximized. Not only do the products go
`to market today but also the architecture for the growth that will surely come from selling
`those products is in place for tomon·ow. Digital River provides an unique opportunity for
`the software developer and dealer to reap the benefits of increased online sales and
`revenues while gaining the efficiencies of online delivery of products.
`
`Page 8
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`availability of the soft"vare products for sale and the availability of sales infmmation to
`clients.
`
`§ecu:ricy
`
`For both vendor and customer, security in an online transaction is paramount. Vendors
`selling electronically-transmittable items, such as software and music, need to be assured
`that their products are being paid for, the integrity of their systems are assured and their
`customers' data are not jeopardized. Consumers continue to rate security as their primary
`concern when it comes to transactions over the Intemet, far surpassing other
`considerations found in more traditional transactions, including p~ce, selection and
`customer service.
`
`Digital River's proprietary Central Host Management System uses both firewalls and a
`propiietary security program to safeguard both a vendor's business information and its
`products, providing stability and auditing functions. The system also addresses the
`customer's concerns over credit card. and personal information by using Secure Socket
`Layer, a public and private key encryption technology that protects data between the
`client and server.
`
`Digital River's proprietary Software Defense Mechanism uses multiple safeguards to
`restrict access to bona fide buyers. For example, a person's infom1ation such as e-mail
`address, mailing address, and credit card number are matched against a database of
`known fraud cases. A smart would-be thief might be able to spoof his IP address, but he
`would find it extremely difficult to counterfeit all the pieces of required identifying
`inf01mation. The SDM profiling accumulates infonnation and leams about each user as it
`perfonns security profiling based on many discrete variables, so the more illegal attempts
`that are made, the more effectively the security system thwarts them. For example, users
`have only a few tries to enter their access number con·ectly before they are instructed to
`call Customer Service. Similarly, a customer cannot download software more than a
`preset number of times in a certain period, or buy one copy of a product and then
`do\'..nload 500 copies. These built-in protections of the SDM also prevent spammers from
`shutting down the network with junk e-mail. The SDM continually takes network
`"snapshots," matching all traffic against established mles and procedures. The SDM also
`includes intemal safeguards, protecting the software products and the customer databas(cid:173)
`es from unauthorized access from within Digital River.
`
`Besides protecting against hackers and thieves, the SDM offers security for the legitimate
`customers as well. For example, if a user's transmission is interrupted, or if a customer
`chooses to do the credit card part of the transaction off-line, an "unlock code" option is
`presented to the user for reentry. The code matches the previous identification and allows
`further data exchanges.
`
`Page 10
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`customer understanding, and direct interaction with the customer. Prototype sites will be
`tested in a secure environmentand implemented only when the GUI and business
`functionalities have been precisely crafted.
`
`AnaBysns ~nd Repon-tilng
`
`Online stores give vendors unmatched power to analyze the behavior of their customers
`for future marketing initiatives. Running in conjunction with the commerce system,
`Digital River's proprietary Commerce Data \Varehousing System captures critical
`statistics not just of what items a customer buys, but also how they buy them. What items
`they saw and dismissed, how often and at \:v·hat times they shopped, and, of com·se, \Nhat
`products they actually purchased can all be used to create selling opp01tunities in the
`future. The warehoused data is run through the Commerce Information System to
`develop real-time, multi-dimensional views of the business, allowing vendors to instantly
`assess the effect of changes 'in pricing, marketing campaigns and interface, and examine
`every aspect of both completed and failed transactions.
`
`Digital River understands, however, that unlocking the tme value of infom1ation involves
`stepping beyond collecting and processing data, and the company's Intelligent Commerce
`Agent will result in a more customer-centric position. Communication, not inf01mation
`inundation, will drive technical development, allowing vendors to better understand
`how customers transmit their needs for products and services, as well as communicate to
`customers their product advantages, provide various kinds of literature, and offer 24-hour
`supp011 to their customers. Finally, as the Internet continues to gain conve11s abroad,
`Digital River's solution will give vendors tools to understand how communication
`extends across language and cultural boundaries.
`
`Integrated C .ross-Selnnng
`
`While vendors on the Digital River system have exclusive access to their customer
`information, safe from all other vendors, if two or more companies wanted to cross-sell
`or create product integration, they can agree to unlock each other's databases, developing
`even more powerful marketing opportunities.
`
`Combining a customer's history with the Digital River network of dealers and vendors
`allows parallel businesses to offer complementary products and coordinate special offers.
`Prooramming interfaces that utilize direct database-sharing connections as well as
`spe;ialized I~ternet (TCP/IP socket) connections are being developed to enhance product
`sharing. Related product sales will be automatically identified and clients offered
`bundled products and cross-sell promotions, helping ensure that the customer has all the
`necessary. products to properly perform their tasks.
`
`Unlike a traditional shopping mall: where each store operates independently of each
`other. Digital River's clients will be able to harness the vast amount of customer
`infon~ati'On available across the entire nen:vork of vendors.
`
`Page 12
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`Persol!1aHzmtion
`
`That data gathering will, in part~ also allo\v for a further personalized experience for the
`consumer. Versions of Digital River's system ctmently in development ·will employ
`intelligent agents, collaborative filtering and knowledge bases to create a one-to-one
`shopping experience. Collaborative filtering will take a customer's shopping history,
`match it against those of thousands of other customers, and create buying opportunities
`geared towards that person based on the pattems of others like them. Product offerings
`and advertising \vill be highly customized to each individual.
`
`Customers will search for products using agents that understand that person's tastes,
`needs and situation, akin to a personal shopper that knows the customer's wardrobe and
`can pick a tie to match the suits in that person's closet at a price with which the customer
`is comfortable. Purchasing histories will give vendors insight into what products a
`customer will want next, the likelihood that they will upgrade, and their need for updates,
`allowing vendors to present products that customers might not know they need. Also,
`customer service will be augmented ·with real-time or ddayed chat-type capabilities
`where the customer or agent communicated with Digital River representatives or directly
`with the software developers and vendors.
`
`Auditthng
`
`Vendors are assured of audited and accurate reporting of transactions by a series of steps,
`matches, and reconciliations perfonned every day at critical points. For example, the
`Daily Sales Report as generated from transactions, is matched with the Credit Card
`Repmt, which summarizes all charges. Duplicate orders and duplicate charges are voided.
`Orders for physical goods on backorder, such as manuals, are suppressed until receipt of
`the backordered inventory. The agreement of the Daily Sales Report with the Credit Card
`Report as adjusted is verified. Digital River also ties out credit card receipts with its own
`records. Each day the Sales Summary is matched to the Credit Card Repmt. Summary
`reconciled data is entered into Digital River's accounting system. That accounting
`information is then matched to the daily credit card deposits on the company's bank
`statement. Digital River's system ensures accuracy through the cross-footing of
`records from internal data such as server logs with external records like credit card
`transactions.
`
`Digital River's books are audited annua1ly by Arthur Andersen LLP. In addition, Digital
`River clients \Vishing to have their O\:vn audit of sales petfonned may do so according to
`the tenns of their contract. A typical audit would use sampling techniques to test
`transactions and trace the flow of infonnation among all the internal Digital River records
`as well as external sources such as bank statements and credit card processor statements.
`The auditors would then issue areport summarizing the procedures performed. In the
`unlikely event that sales are deemed by the auditors to have been inaccurately reported,
`outside the maximum established by the client contract, the auditors would proceed to
`quantify the difference. Digital River would then pay that difference to the client.
`
`Page 13
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`§urn mary
`
`Without appropriate attention to the unique technological concerns raised by electronic
`commerce~ an online store risks losing not only the efficiencies promised by digital
`technologies but the simple functionalities fotmd in traditional stores. Beyond the basic
`components .of a traditional store, such as inventory management, store design, and
`pricing, online stores need to pay particular attention to security; scalability, auditing
`procedures, and site management. As the technology develops, collaborative filtering,
`intelligent agents and extensive buying-pattem databases will bring us closer to the
`one-to-one marketing ideal where price and product bundling, cross-selling and
`relationship management are optimized.
`
`At the same time, ease of use and transparency to both the customer and the vendor are
`equally paramount to a successful online environment. Efficient site management
`requires intelligently designed templates and options that give each site a unique look and
`feel without sacrificing ease of use. A robust system allows for scalability to
`accommodate a diverse product line and demanding consumers.
`
`Digital River, with its network of dealers and developers, experience in business
`implementation and years of software technology development, has managed thousands
`of individual Intemet commerce sites in a scalable, seamless fashion. As the Intemet and
`electronic commerce evolves and matures, Digital River will develop new teclmologies to
`meet those challenges and wring fi.1rther efficiencies by taking advantage of more
`granular information about customers and creating more powerful site development tools.
`
`Page 14
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`DIGITAL RIVER INC /DE
`5-1/A filed on 08/11/1998
`
`Pr!rOerFrlan<!lyFamol
`
`Outline
`
`View Header
`
`<P~Z>
`
`~ FIL£D tilTH 'i'HE Go:uRITIE:S AtiD CXCHMSU COMMl!HiiO!J OU AUGUST 11. U9B
`
`REOISTRA'TION NO. lll-56787
`
`Cir:cuRJTIES A!lD £XCHANCZ CCIMMISS:IOU
`WASHinJTON, D.C. 20549
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`AMEllDMDn' uo. 4
`'1'0
`FORM S-1
`
`AIDICTRA'J"lO!l' Cl'A'lEMO'n"
`
`tr..tD£R
`
`THB SECUlUTICS ACT OF 1913
`
`DIOI'I'AL RIVER. UlC.
`
`(Exact. name of registrant. as specified in its ebart.or)
`
`<TADU>
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`iftalrpDrat:ion or orqaniuticnl
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`1l'J5
`(Prim:!ry Gtar..dard Industrial
`Classification Code Number)
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`41-1901640
`(I.R.S. Employer
`Ident i ticaticn
`!lumb•orl
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`5198 ~T 16TH to'lliEI:T
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`1612J 830·9042
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`(/uHccn-s. including z.ip code, ond t.ole:phono rtUrlbcr. including
`area code. of registrant •a principal executive offices I
`
`JOEL A. RO!nliOO
`CHICF EXCCU'l"IVB OFFICER
`DJOI~ RIVER, me.
`5198 tiES7 76TH .G'J'RZ:E"''
`EDINA, KtmU:SOTA 5St39
`(612t 8)0-9042
`
`u·.a:oo. ad:dre~!). tncludlcg dp code, and telephone number, including area code,
`of agent Cor service!
`
`COPIED 1'01
`
`JEFFREY S. ZIHZ<Wt, E:DQ.
`MICHAEL J. SULLIVAN, ESQ.
`LAltA R. HAWJtiHD. ESQ.
`COOLEY CODWARD LLP
`ODE MARITIME PLAZA, 20TH PLOOR
`SAH FRAr~ClSCO, CA 9U U
`€415} 693-2000
`
`Km:ARD 5. Zll:PRUN. ~.
`ROBERT 0. .DAY, ESQ.
`Wll.Ca:t GO:-l!llNl CUlODRtCH C. ROSATI
`PROFESSionAL CORPORATION'
`650 PAC£ MILt.. ROAD
`PALO AL'l'O. CA 94)04
`!650! 491-9300
`
`APPROXIMATE ImTZ OF COMMEr-l~ OF PRO~ED SALE TO THE FUBLIC 1
`AS Sootl AS PRACTICABLe APTER 1'HE R£Gln'l"RATION GTATEX.E:!n" m:col'!CD EFFECTI\IC.
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`It eny of tho securities being registered en thin Form arc to bo offcrC'd en
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`check the folltNing box. I
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`lf thin Form iB filed to register additional securities for an ofrcring
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`registration statement for the 6&IMt offering:. I
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`under the securities Act, check tho following bax and list t.bc .Get:Urities Ac:t
`reqlatretlon. statement nUl:lbcr of the eerlier etfectiv-e revistraticm statement
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`If deli-very of tho pro!:pect.uo io exp£:ctcd to be C'4do purauant to Rulo 4)4,
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`CALCULATIOl'J 07 RtciBTRA'l'lOU: F£:2
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`<TABLE>
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`TITLE (lP' eACH CLASS 0?
`SECURITIES 'rO BS R&QJ:STimED
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`Cl) A registrotion leo- in tho amount of $11.029 vao previounly paid.
`
`THE REGI!iTRAU'f HEREBY t.MFJmS 1'1US REQIGTRATJOH STATEHEUT OU GUCH DATE OR
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`PILE A FURTHER AMEUDMEN'l' THAT SPECIFICALLY STATE,G 'l"HA'l' THIS REGiti'l'RATlOIJ
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`SHALL BECOME EFFECTIVE ON SUCH DA1'E AS THE: COM!U!iSIOli~ ACTUIJ PURSUANT '1'0 GAlD
`SECTION 8(Al. MAY lmT&Rl!lNB.
`
`-
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`- --- -·------ -- ·- ---
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`Page 15
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`c:Po\C::>
`
`SUBJEC'l' 'TO COMPLETION
`AUGUST 11, U98
`
`lUi'ORMATIO!I COrlTAitfEO KERRIU to CUBJEX:"'J" TO CQHPL£1"10t-J Oa AMEt~DME»T. A
`JU:!)l&'fRATIOU CTATEME!iT RELATING TO THESI: SECURITies HAS BEEN FILED WITH 'l1iE
`Ct:t:URITlES AND E:XeiW1GB CO!IHISSION. THE!:& St:CURITICS KAT HOT BE SOLD NtlR HAY
`QYFER!; TO BUY BE ACCI:PTED PRIOR '1'0 THE 1'1MB THE REGISTRATION STA'l'EME!rl' BECOMES
`'I'HIS PROSPEC"iV3 SHALL tor ct:INS"i'ITUTB AN OFFER TO SELL OR
`'i'HE
`E:FFEC'TlVE.
`£0I.ICI7o\TION OF An OH'Ell 'i'C BUY NOR CHALI. 'mER& DB ANY SALE OF THESE SECURITIES
`IN ANY GTA'l'B IN WHICH SUCH OFFER, OOLICITATIOU OR SALE WOULD BB UNLAWFUL PRIOR
`TO Rf:GISTRATIO.N OR QUALIPICA'l'lOU WDE:R "i'"dB SECURl"f'IE:S LAWS OP ltJil'l SUC'H STATE.
`
`<PAGE>
`
`l.ooo.ooo SHARES
`
`ILCCOJ
`
`CCM.'tQ:; GTOCK
`
`All of tf:e 3.000,000 shores of Cca::mon Stock offered be:reby are being .sold by
`Digital River. Inc. ("Digital River• or the •company"). Prior to this offering.
`th~re hao been r.o public market tor the Ccamcn Stock. f'or factors considered in
`determlnir.g the initial publJe offering price. see '"Underwriting.· It is
`currently estimated that the initial public otfodng price of the Common Stock
`will be between $S.50 end $9.00 per sharo. The Cammon Stock bas been approved
`fer quct:atian en the Noadaq Uot.lonal Market under Ute s;rmbol '"PRIV,"
`
`Tim -c:mtH:tm .6TOCK OFFERED HEREBY IUVOLV&G A HIG!I DEGREE OF RISK.
`GEE: "RlllX VAt"rollS" BEOIUNING QN PAC& 6.
`
`THI:SB .GE"C'UFIITJE!i HAVE r;DT BEEN APPitOVED OR DISAPPROVED BY TKB" SECURITIES AllD
`EXOWJCI: CCHHJG!iiC!l CD ANY GTATE UECURITIES COMMJSGION NOR HAS TH£
`!itc\IRITlES 1\ND EXCHAnGB COHKICSION OR At."Y' G'l'A'I"e GIXURITIEG COMMISSION
`PASstD UPON 'fHB ACCURACY Oll ADEQUACY OY "nUB PROSPECTUS. AtJY
`EU;PR~EUTATIOH TO 'I'HR CON'J'RARY IS A CRIMINAL OFFE:flSE.
`
`<TADLD>
`<CAPTIQ!l>
`
`<G>
`
`PRICE
`ro
`PUBLIC
`
`<C>
`
`UNDERWRITING
`DlSCOIDrrS AND
`CCMMISSIONS(lJ
`<C>
`
`<C>
`
`=a~;~~:::::::::::::::::::::::::::::::::::::::::::::
`
`c/O:ADl.El>
`
`U I Cec "t:ndentrit:iftQ'" for infoncation relating to indennif:icat:ion of the
`underwriters.
`
`12"1 nefore de:!uctinv e~ses of the offering estimated at $700,000.
`
`Cl) 'Tho C'ol!'pa:'l)' Mt~t granted the undervritcru a JO-day option to pu-rchase up to
`4!0. COO cUltlcmt:l Eharcn of COMmOn Stoc:k solely to cover over-allotments,
`if any. Til' the extent tbot the option ie f'..Xereised. tbe Urtdenrdtera will
`offer thf! a~ittonal aharee at tho Price to Public sbovn above. If the
`eptlcn is exercised in full, t.he tot.al Price to Public, Underwriting
`Dlsecunta and Cauicsions and Proceeds t:o Co:npany will bo $
`• $
`and S
`• :respectively. nee •undenrrit.ing.•
`
`Tho shares of Ccmlmcm Stock ore offered by the covcral underwriters. oubjec:t
`to pxl-or sale. when. es and if delivered to and accepted ty them. and subject to
`tho dqht of the Undervrite-rs to roject any order in whole or in part. r:t ill
`expceted that delivery of the shares of Common Stock will be made at tho offices
`of B"'' Alex. Bra-m Incorporated. Baltimore, Maryland. on or Gbcut
`19:98.
`
`B1" ALEX. BRO\t.'U
`
`tlANCA..'i!:lilCA Rtmt:n'i""'...cm GTEFH~
`
`<PAGE>
`
`OEM. .GTEAruW -' CO. It:C,
`
`f'HE DATE OF THIS PRO!iPECTU!J IG
`
`• 1999
`
`PICT'ORIAL YLOWCHART DEPICTICIJ A PURCHASE OF CO~B
`THROOOH THE COMPANY• G CEliTRAL tlE'ftroRX SERVER
`r•CNS•). SHOWING THE TRARSA!:TUID PROCESStr.:;; AriD
`OTHER VALUZ-A.DDSD UERVICES PROV'IDZD BY "tHE CClMPAUY.
`
`I ILLUSTRATIONS)
`
`CERTAIN P&RSONS PAI\TICIPATIRG IN THIS OFFERlNO MAY t>NCAGS Ill 'l'RABSAC'TIOJO
`THAT GTABtt.I'ZE. HAlnT'AlN OR OTHERWISE AFFEC'I' 'nf£ PRICE OF 'nm COMM!Jlii GTOC'It lU
`cmmttTtOU WITH THB OFFERING,
`INCLUDIOO OVER•ALLOTMDrr, S'tABILIZING AnD CHO::IIT
`COVERING TRAllSACTIONS m SUOI SEC'URI'l"I&S AND THZ IHPOSI"l'JCN CP PEUALTY DlDS.
`fOR
`A DESCRlP'!'lON OF THESE ACTIVITII!S, SEE "UNDERWRITING. •
`
`Digital River ia a rcqistered trod~rk of Ute C~ny. All ot.hcr trodczarka
`or service marks appearing in this Prospectus arc tho property or tholr
`respective owners.
`
`<PAGE>
`
`PROGPECTUD GUl&'.AAY
`
`'l'HE FOLLOWING SUMMAJI:Y IS OUALIPJEO Itl ITS Em"IRE:'l'Y BY THE tro<'lS tn:TAILED
`lNFOIUiATION AND CONSOLIDATED FINANCIAL STATDIEU'T'G AND f«1''"EG THERETO APPEARING
`ELSEWHERE IN THIS PROSP£CTUS. THIB P205PECTUS CONTAINS CERTAIN GTA'l"DlENTD OP A
`FORWARD· tOOliNG NATURE RELATING TO PU'I'UR£ EVEU'l'S OR THE FVrURE PIHAUCIAL
`PERFORMANCE OF THE COHPAil't. PROSPECTIVE mVESTORS ARB CAUTIOHED THAT GUCH
`STATEMEN'I'S ARE OULY PREDICTIONS~ INVOLVE RISKS M..'"D mu:ERTAitrriES. A!'tD THA'I"
`ACTUAL £VENTS OR RESULTS HAY DIVF&R MTERIALLY. Ill EVALUATlUC SUCH STA'I'EHt:N'I'O,
`PROSPECTIVB ItNE:GTORS SHOULD SPECIFICALLY COr-~SlD~ 'l'HB VARIOUS F.\C'TORS
`IDENTIFI£1) IN THIS PROSPEC'TUS.
`INC"l.WIOO THE MATT&RS SET' FORTH UNDER 'I"HR CAPTl®
`•Rt.SX FACTORS,,_ WHICH COULD CAUSE ACTUAL RESULT3 'TO DIFPim MA'f'Cli.IALLY PROM 'l"HHCC
`INDICATED BY SUCH FORWARD-LOOKING STATDmm'S.
`
`THE COHPAllY
`
`Dlqital River. Inc. t"Digltal River• or the •Company"') in e lending provider
`of comprehensive e