Momentum Business Applications to Develop Eight New Application Software Products for PeopleSoft

Business Wire, May 11, 2000

Business Editors/High-Tech Writers

PLEASANTON, Calif.--(BUSINESS WIRE)--May 11, 2000

Net Incremental Project Expenditure Commitments of $15 Million

Momentum Business Applications, Inc. (Nasdaq:MMTM) (Momentum), today announced that it has executed another series of anticipated amendments to the existing Development and License Agreement with PeopleSoft, whereby PeopleSoft will provide development resources and project management oversight, and Momentum will fund a net of approximately $15 million of incremental software application development projects.

Momentum and PeopleSoft will collaborate on eight new projects, which will span from one to three years and encumber nearly $55 million of the available funds as defined under the Development and License Agreement. Projects to be undertaken include industry-specific applications for the staffing industry and the professional services industry, e-business applications including benefits communities, travel communities, e-procurement, and the creation of Internet based application extensions to PeopleSoft's recently acquired Vantive CRM application suite. Momentum will also fund the development of Campaign Management, a closed loop analytic and transaction management application product targeted to support marketing professionals in a variety of industries.

During the quarter, PeopleSoft and Momentum also agreed to reallocate approximately $40 million in funds initially slated for two industry-specific application development projects that PeopleSoft decided not to pursue. An aggregate of approximately $2 million had been spent on these projects, and the parties agreed that the expended funds would be credited toward the expenditure based royalty formula of an alternate active project. We are pleased with the progress Momentum and PeopleSoft have recently made toward the initiation of new development projects promising more exciting families of application products," said Momentum's CEO Ron Codd. "In addition," he continued, "the reallocation of project funds from two very large projects to several smaller projects clearly reduces Momentum's downside in the event of the failure of any individual project. The two companies are presently evaluating additional projects and anticipate making further announcements of product development efforts in the next quarter or two. The commitment to selected projects and associated expenditure of substantially all of the Available Funds over a period of between two and one half and three and one half years from the company's inception continues to be an important goal of Momentum," he added.

Of note among the new projects, Momentum will fund the development of PeopleSoft's recently announced Global Staffing Solution. To that end, Momentum has executed with Prairie Development Inc. a Software License and Development Agreement under which Prairie will provide source code to its front office staffing applications products. The Agreement also calls for Momentum and Prairie to work together to create a 100 percent Internet version tightly integrated with PeopleSoft's enterprise applications backbone.

In addition to the new projects, Momentum and PeopleSoft already are collaborating on seven other existing projects including Enterprise Performance Management and eStore. The Enterprise Performance Management Project involves the development of a suite of analytic applications that will encompass nine individual software products and additional workbench modules. eStore is an end-to-end e-commerce application that will be integrated with PeopleSoft's e-business backbone.

Momentum now has committed approximately $160 million of its Available Funds to the various projects underway with PeopleSoft.

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:

    --  Momentum may not successfully select or develop a significant
        number of 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, product functionality,
        and the underlying technology 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. Specifically, during the past quarter, the
        two companies agreed to terminate development efforts
        associated with two industry-specific application development
        projects, and to reallocate the funds to other development
        projects.

    --  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, thereby obviating any need to exercise the purchase
        option on the Company's Common Stock.