-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, FdOix78oyXQ5m0GDmwB8cRyf0vJcgxM/ZYcPJZyWe8vfthG9kX2Vm5ddlEJ4sYzH 1ZgMQQuW98tmuJymY6AOpA== 0001266454-06-000439.txt : 20061013 0001266454-06-000439.hdr.sgml : 20061013 20061013153434 ACCESSION NUMBER: 0001266454-06-000439 CONFORMED SUBMISSION TYPE: 10KSB PUBLIC DOCUMENT COUNT: 23 CONFORMED PERIOD OF REPORT: 20060630 FILED AS OF DATE: 20061013 DATE AS OF CHANGE: 20061013 FILER: COMPANY DATA: COMPANY CONFORMED NAME: BROADCASTER INC CENTRAL INDEX KEY: 0000814929 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-PREPACKAGED SOFTWARE [7372] IRS NUMBER: 942862863 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10KSB SEC ACT: 1934 Act SEC FILE NUMBER: 000-15949 FILM NUMBER: 061144211 BUSINESS ADDRESS: STREET 1: 9201 OAKDALE AVENUE STREET 2: SUITE 200 CITY: CHATSWORTH STATE: CA ZIP: 91311 BUSINESS PHONE: (818) 206-0598 MAIL ADDRESS: STREET 1: 9201 OAKDALE AVENUE STREET 2: SUITE 200 CITY: CHATSWORTH STATE: CA ZIP: 91311 FORMER COMPANY: FORMER CONFORMED NAME: INTERNATIONAL MICROCOMPUTER SOFTWARE INC /CA/ DATE OF NAME CHANGE: 19920703 10KSB 1 broadcaster_10ksb-063006.htm ANNUAL REPORT

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-KSB

[X]	ANNUAL REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended June 30, 2006

[ ]	TRANSITION REPORT UNDER SECTION 13 OR 15(D) OF THE EXCHANGE ACT OF 1934

For the Transition Period from _____ to _____

Commission File No. 0-15949

BROADCASTER, INC.

(Name of Small business issuer in its charter)

CALIFORNIA	94-2862863
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

9201 Oakdale Avenue, Suite 200, Chatsworth, CA	91311
(Address of principal executive offices)	(Zip code)

(323) 988 0754
Issuer's telephone number

Securities registered pursuant to Section 12(b) of the Act: None

Securities registered pursuant to Section 12(g) of the Act: Common stock, no par value

Check whether the issuer is not required to file reports pursuant to Section 13 or 15(d) of the Exchange Act. [_]

Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ]

Check if there is no disclosure of delinquent filers in response to Item 405 of Regulation S-B contained in this form, and no disclosure will be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-KSB or any amendment to this Form 10-KSB. [ ]

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes[ ] No[X]

Issuer’s revenues for its most recent fiscal year: $8,203,000.

The aggregate market value of the voting and non-voting common stock held by non-affiliates computed by reference to the average bid and asked price of the common stock as of September 28, 2006 was approximately $25,447,566.

As of September 28, 2006, 63,531,009 Shares of Issuer’s common stock, no par value, were outstanding.

Documents incorporated by reference: None

Transitional small business disclosure format: Yes [ ] No [X]

BROADCASTER, INC.

FORM 10-KSB ANNUAL REPORT

FOR THE YEAR ENDED JUNE 30, 2006

Table of Contents

PART I	3

Item 1- Description of Business	3
Item 2- Description of Property	13
Item 3- Legal Proceedings	14
Item 4- Submission of Matters to a Vote of Security Holders	14


PART II	15

Item 5- Market for Common Equity and Related Stockholder Matters	15
Item 6- Management's Discussion and Analysis or Plan of Operation	16
Item 7- Financial Statements	27
Item 8- Changes In and Disagreements with Accountants on Accounting and Financial Disclosure	57
Item 8A- Controls and Procedures	57
Item 8B- Other Information	58


PART III	58

Item 9- Directors, Executive Officers, Promoters, and Control Persons; Compliance with Section 16(a) of the Exchange Act	58
Item 10- Executive Compensation	60
Item 11- Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	64
Item 12- Certain Relationships and Related Transactions	67
Item 13- Exhibits	68
Item 14- Principal Accountant Fees and Services	71


SIGNATURES	72


POWER OF ATTORNEY	73


INDEX TO EXHIBITS	74

PART I

Forward-Looking Information

This Annual Report of Broadcaster, Inc. (formerly International Microcomputer Software, Inc.) (“Broadcaster” or the “Company”) on Form 10-KSB contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 (the “Securities Act”) and Section 21E of the Securities and Exchange Act of 1934 (the “Exchange Act”). All statements in this Annual Report other than statements of historical fact are “forward-looking statements” for purposes of these provisions, including any statements of the plans and objectives for future operations and any statement of assumptions underlying any of the foregoing. Statements that include the use of terminology such as “may,” “will,” “expects,” “believes,” “plans,” “estimates,” “potential,” or “continue,” or the negative thereof or other and similar expressions are forward-looking statements. These forward-looking statements involve risks and uncertainties, and it is important to note that our actual results could differ materially from those projected or assumed in such forward-looking statements. Among the factors that could cause actual results to differ materially are the factors detailed under the headings “Legal Proceedings” and “Management’s Discussion and Analysis or Plan of Operation,” generally, and specifically therein under the captions “Liquidity and Capital Resources” as well as elsewhere in this Annual Report on Form 10-KSB.” All forward-looking statements and risk factors included in this document are made as of the date hereof, based on information available to us as of the date hereof, and we assume no obligation to update any forward-looking statement or risk factor. You should consult the risk factors listed from time to time in our Reports on Form 10-QSB.

Item 1- Description of Business

The Company

Our Business

We historically operated as a software company. Prior to the acquisition of AccessMedia Networks, Inc. (“AccessMedia”) on June 1, 2006, we operated in two business segments: (i) computer aided design and precision engineering (“Precision Design”) and (ii) house plans and architectural drawings (“Houseplans”). As discussed below, we subsequently disposed of Precision Design and, as a result, we now operate in two business segments, AccessMedia and Houseplans.

In 2004, we began exploring various ways to enhance shareholder value, including the further migration of Broadcaster from a traditional or packaged software company to offering downloadable media and content over the Internet. We believe that the growth and reach of the Internet coupled with the predictability of recurring revenues should lead to enhanced Broadcaster shareholder value. As such, during 2005 we began discussions with AccessMedia, a developer of a platform for delivering real-time and interactive media over the Internet through its unique “virtual set top box” technology. Concurrent with the completion of the acquisition of AccessMedia, we changed our name to Broadcaster, Inc.

We are now a global Internet entertainment network providing consumers with access to online entertainment that is fast, easy, safe, fun, and of great value. We offer a wide variety of on-demand programming including movies, music, television shows, viral videos, mobile media, games, news, sports, and other entertainment focused content, in one place that can be viewed or downloaded at anytime and on any device. Our proprietary virtual set-top box technology available at www.broadcaster.com puts Internet users in control of their entertainment experience allowing them to choose what, when and on which device they want to view media and content.

We provide users with delivery of both short and long form digital entertainment content − giving them the power to download content to their desktop computer, laptop, PSP, iPod or preferred mobile entertainment device. We enable consumers to easily find, organize, download and enjoy the growing volumes of high quality content available online. Our capabilities span our proprietary media library, media under license, and media readily available on the Internet. We are also in discussions with major studios, cable and television networks, music labels, and game producers to become a gateway for the direct delivery of first run movies, popular television shows, music and online games.

Our multi-channel Internet entertainment network redefines the user experience on the World Wide Web (the Web), putting more control into the hands of the user with the most advanced technologies including a Download Manager, Entertainment Meta Search, Content Manager, Mobile Transfer Capabilities, Peer-to-Peer Technology, Social Networking Tools and Parental Lock functionality, among others. In addition, our entertainment meta search is one of the most advanced available on the Web and is optimized for rich media content allowing for advanced identification and indexing of media and content.

In addition to our Internet entertainment network, we are also a leading on-line distributor of stock house plans. We have an extensive library of over 25,000 unique house plans and have more than 150,000 registered members. Our house plans are sold to developers, builders, architects and individuals allowing our customers to substantially reduce upfront planning and building costs.

International Operations

International operations comprise our Canadian subsidiary, Weinmaster Homes Limited (“Weinmaster”), which is part of the Houseplans segment. Weinmaster was acquired in July 2005.

The Merger

We completed the merger with AccessMedia (the “Merger”) on June 1, 2006 pursuant to which we issued 29,000,000 shares of our common stock and agreed to issue up to an additional 35,000,000 shares of our common stock upon achievement of certain revenue milestones to the former Stockholders of AccessMedia. In connection with the Merger, we changed our name from International Microcomputer Software, Inc. to Broadcaster, Inc.

AccessMedia is led by seasoned Internet entrepreneurs. This team has been one of the foremost innovators of technologies, marketing, and advertising strategies for Internet-based consumer media offerings, and until now this team has operated in a private company environment. Additionally, this team has been a leader in providing web site development, traffic, database management, and hosting for many of the largest worldwide media companies.

We believe that the Merger offers us a unique opportunity to enter into the highly scalable Internet media industry. The underlying growth in the Internet media industry, coupled with high margin product offerings, innovative marketing strategies, and exceptional management team, should combine to provide us with substantial growth and profit opportunities, creating significant shareholder value.

Sale of Precision Design

In June 2006, we sold Precision Design, our legacy software business, to position the company solely as an on-line business. We received a combination of $6.5 million in cash and an interest free note of $1.5 million which was paid in full on July 3, 2006. Included in the assets sold were the TurboCad and DesignCAD product lines as well as other design and personal productivity titles.

The sale of Precision Design is expected to reduce our operating expenses for fiscal year 2007 by approximately $5 million. Additionally, our increased cash positions us to grow our Internet entertainment business and to take advantage of future opportunities.

Competitive Business Conditions

The Internet industry is highly competitive and characterized by several key factors:

·	*Rapid changes in technology and customer requirement*: New opportunities for existing and new competitors can quickly render existing technologies less valuable.

·	*Relatively low barriers to entr*y: Start-up capital requirements for software companies can be very small, and distribution over the Internet is inexpensive and easily outsourced.

·	*Significant price competition*: Direct distribution of competing products over the Internet may cause prices and margins to decrease in traditional sales channels.

These factors could have a material adverse effect on our future operating results, including reduced profit margins and potential loss of market share.

Our main products and their primary competition are listed in the following table:

Broadcaster Product Group	Competitor

Houseplans	Hanley-Wood
	Move Inc.


AccessMedia	RealOne
	Vongo
	Blink.tv

Dependence on Major Customers

No single customer accounted for greater than 10% of our revenues in fiscal year 2006 or 2005.

Product Development

The majority of development costs relating to the Internet content segment relate to development of websites and databases to host the content. All of our Web development is internally developed.

Our research and development expenses consist primarily of salaries and benefits for research and development employees and payments to independent contractors. We spent approximately $218,000 and $68,000 on research and development in the years ended June 30, 2006 and 2005, respectively. We will continue to invest in existing and new products which reflects our commitment to developing our core products as well as maintaining strong relationships with our internal and contract development teams.

Proprietary Rights and Licenses

We use the following trademarks and service marks in our business: Houseplans, Homeplan, and Accessmedia.

Our ability to compete effectively depends in part on our ability to develop and maintain the proprietary aspects of our technology. We take certain steps to protect our technology including:

We rely on a combination of copyrights, patents, trademarks, trade secret laws, restrictions on disclosure, and transferring title and other methods.

We enter into confidentiality or license agreements with our employees and consultants, and control access to and distribution of our documentation and other proprietary information.

We provide our products to end users under non-exclusive licenses, which generally are non-transferable and have a perpetual term.

Software companies face a number of risks relating to proprietary rights and licenses. In particular, we have identified several factors that present the greatest technology risk to us:

We make source code available for some products. The provision of source code may increase the likelihood of misappropriation or other misuse of our intellectual property.

There can be no assurance that the steps taken by us will prevent misappropriation or infringement of our technology. In addition, litigation may be necessary to protect our trade secrets or to determine the validity and scope of the proprietary rights of others. Litigation presents several additional risk factors to us:

Litigation could result in substantial costs and diversion of resources that could have a material adverse effect on our business, operating results and financial condition.

As the number of software products in the industry increases and the functionality of these products further overlaps, software developers and publishers may increasingly become subject to infringement claims.

If any valid claims or actions were asserted against us, we might seek to obtain a license under a third party’s intellectual property rights. There can be no assurance, however, that under such circumstances a license would be available on commercially reasonable terms, or at all.

From time to time we have received, and may receive in the future, notice of claims of infringement of other parties’ proprietary rights. Although we investigate claims and respond as we deem appropriate and believe we do not infringe upon the intellectual property rights of others, there can be no assurance that infringement claims (or claims for indemnification resulting from infringement claims) will not be asserted or prosecuted against us.

Employees

As of June 30, 2006, we had 46 employees, of which 43 are full-time employees and 3 part-time employees. All employees are located in North America. None of our employees are represented by a labor union and we have experienced no work stoppages. Our success depends to a significant extent upon the performance of our executive officers, key technical personnel, and other employees.

RISK FACTORS

An investment in our common stock is highly speculative and invovles a high degree of risk. You should carefully consider the risks described below, together with the other information contained in this Annual Report, before making an investment decision. If any of the circumstances described in these risk factors actually occur, our business, financial condition or results of operations could be materially adversely affected. In that event, the trading price of our shares could decline, and you may lose part of all of your investment.

Our operating results may fluctuate in future periods, which may adversely affect our stock price.

Our operating results have been in the past, and will continue to be, subject to quarterly and annual fluctuations as a result of numerous factors. These factors include:

fluctuations in demand for our products and services;

price and product competition;

overall movement toward industry consolidation;

variations in sales channels, product costs, or mix of products sold;

fluctuations in our gross margins;

our ability to achieve cost reductions;

actual events, circumstances, outcomes, and amounts differing from judgments, assumptions, and estimates used in determining the values of certain assets (including the amounts of related valuation allowances), liabilities, and other items reflected in our condensed consolidated financial statements;

how well we execute on our strategy and operating plans;

changes in accounting rules, such as recording expenses for employee stock option grants and changes in tax accounting principles;

compliance expense including the costs of procedures required for Sarbanes-Oxley Section 404 reporting and the costs of procedure remediation, if any; and

merger and acquisition activity.

As a consequence, operating results for a particular future period are difficult to predict, and, therefore, prior results are not necessarily indicative of results to be expected in future periods. Any of the foregoing factors, or any other factors discussed elsewhere herein, could have a material adverse effect on our business, results of operations, and financial condition that could adversely affect our stock price.

The Selling Shareholders intend to sell their shares of common stock in the market over time, which sales may cause our stock price to decline.

We are seeking to register for sale 33,833,874 shares of our common stock which are owned by certain number of shareholders (the Selling Shareholders), along with 979,036 shares of additional common stock that may be issued upon exercise of outstanding warrants. Our Selling Shareholders have not engaged an underwriter in connection with this registration, and have indicated that they do not intend to do so. The three-month average daily volume of our stock is approximately 109,000 shares. The number of our shares available for resale in the public market as a result of this registration may therefore exceed the number of shares that purchasers wish to buy. This potential increase in the number of shares that may be available for public trading may dramatically reduce the price of our common stock on the basis of supply and demand alone.

Our revenue for a particular period is difficult to predict, and a shortfall in revenue may harm our operating results.

As a result of a variety of factors, our revenue for a particular quarter is difficult to predict. Our net sales may grow at a slower rate than in past periods, or may decline. Our ability to meet financial expectations could also be adversely affected by the timing and mix of individual sales.

We plan our operating expense levels based primarily on forecasted revenue levels. These expenses and the impact of long-term commitments are relatively fixed in the short term. A shortfall in revenue could lead to operating results being below expectations because we may not be able to quickly reduce these fixed expenses in response to short-term business changes.

We expect gross margin to vary overtime, and our recent gross margin may not be sustainable.

Our product gross margins may not be sustainable and may be adversely affected by numerous factors, including:

changes in customer, geographic, or product mix;

introduction of new products;

increased price competition;

changes in distribution channels;

how well we execute on our strategy and operating plans; and

inability to achieve targeted cost reductions.

We have made and expect to continue to make acquisitions that could disrupt our operations and harm our operating results.

Our growth depends upon market growth, our ability to enhance our existing products, and our ability to introduce new products on a timely basis. We intend to continue to address the need to develop new products and enhance existing products through acquisitions of other companies, product lines, technologies, and personnel. Acquisitions involve numerous risks, including the following:

difficulties in integrating the operations, technologies, products, and personnel of the acquired companies;

diversion of management’s attention from normal daily operations of the business;

potential difficulties in completing projects associated with in-process research and development;

difficulties in entering markets in which we have no or limited direct prior experience and where competitors in such markets have stronger market positions;

insufficient revenue to offset increased expenses associated with acquisitions; and

the potential loss of key employees of the acquired companies.

Acquisitions may also cause us to:

issue common stock that would dilute our current shareholders’ percentage ownership;

assume liabilities;

record goodwill and non-amortizable intangible assets that will be subject to impairment testing on a regular basis and potential periodic impairment charges;

incur amortization expenses related to certain intangible assets;

incur large and immediate write-offs and restructuring and other related expenses; and

become subject to intellectual property or other litigation.

Mergers and acquisitions of high-technology companies are inherently risky, and no assurance can be given that our previous or future acquisitions will be successful and will not materially adversely affect our business, operating results, or financial condition. Failure to manage and successfully integrate acquisitions could materially harm our business, operating results, or financial condition.

Adverse resolution of litigation may harm our operating results or financial condition.

We are a party to lawsuits in the normal course of our business. Litigation can be expensive, lengthy, and disruptive to normal business operations. Moreover, the results of complex legal proceedings are difficult to predict. An unfavorable resolution of a particular lawsuit could have a material adverse effect on our business, operating results, or financial condition. For additional information regarding certain of the lawsuits in which we are involved, see Item 3, “Legal Proceedings,” contained in Part I of this report.

System failures could damage our reputation and harm our business.

Continuous and uninterrupted performance of our systems is critical to our success. We must protect these systems against damage from fire, power loss, water damage, earthquakes, telecommunications failures, viruses, vandalism and other malicious acts, and similar unexpected adverse events. Our operations depend upon our ability to maintain and protect our computer systems, data centers and server locations. Our corporate headquarters, data center and primary operations are located in California, an area susceptible to seismic activity and possible power outages. We cannot eliminate the risk of downtime caused by factors such as natural disasters and other events. Further, individuals may attempt to breach our network security, such as hackers, which could damage our network. The occurrence of any of these events could harm our business, operating results and financial condition.

Our executive officers and key personnel are critical to our success, and our failure to retain a team of key personnel in a competitive marketplace may impair our ability to grow our business.

The success of the AccessMedia acquisition depends on our ability to retain our management team and to attract, assimilate and retain other highly qualified employees, including engineering, technology, marketing, sales and support personnel into a functional team achieving corporate goals. AccessMedia’s key employees are not bound by agreements that could prevent them from terminating their employment at any time. In addition, there is substantial competition for highly skilled employees. If we fail to attract and retain key AccessMedia employees, our business could be harmed.

We have incurred significant costs associated with the acquisition of AccessMedia.

We estimate that we have incurred in direct transaction costs of approximately $3,690,000 associated with the AccessMedia acquisition, including direct costs of the acquisition as well as liabilities to be accrued in connection with the acquisition. There is no assurance that we will not incur additional material charges in subsequent quarters to reflect additional costs associated with the acquisition. If the benefits of the acquisition do not exceed the costs of acquiring AccessMedia, our financial results may be adversely affected.

AccessMedia’s business model is unproven, which makes it difficult to evaluate its current business and future prospects.

Our business is substantially dependent upon AccessMedia’s ability to generate license revenue from users who have installed specialized media software on their personal computers. This is a relatively new industry and product which makes an evaluation of its current business and future prospects difficult. The revenue and income potential of this business is unproven.

We do not own the principal intellectual property used in our AccessMedia business nor do we have the sole right to exploit it.

The principal intellectual property that underlies AccessMedia’s “virtual set-top box” used in distributing online media content is not owned by us but is licensed from third parties, generally on a non-exclusive basis. The third party licensors are free to exploit the intellectual property themselves or license it to an unlimited number of other competitors. This competition could result in price reductions, fewer customers and orders, reduced gross margins and loss of market share, any of which would materially adversely affect the our business, operating results and financial condition. In addition, we are not in control of the protection or prevention of infringement of such intellectual property.

We generally do not have the right to modify the licensed technology used in our AccessMedia business or receive updates or upgrades.

We generally do not have the right to modify the licensed technology used in our AccessMedia business, nor do we have the right to receive updates or upgrades or to obtain a copy of the source code for such technology. In the limited circumstances where we have the right to modify the licensed technology, the licensor owns such modifications. In acquiring AccessMedia, we acquired limited rights to technology that we may not have the rights to improve in the future to maintain a competitive offering or support existing products or service offerings.

AccessMedia has incurred losses in the past and may not be able to achieve profitability in the future.

AccessMedia experienced startup losses in each quarterly and annual period from its inception through the first calendar quarter of 2006. AccessMedia may not be able to achieve or maintain profitability in the future. AccessMedia expects that its operating expenses will continue to increase. We cannot assure you that AccessMedia will be able to generate sufficient revenue to achieve profitability, which failure would have a materially adverse effect on our business.

We depend on a limited number of third parties for support, distribution and development services.

We depend on agreements with a limited number of third parties, particularly Alchemy Communications, Inc. (“Alchemy”), which is an affiliate of AccessMedia. Alchemy provides office and operating space, staffing, technical services and consulting, bandwidth and hosting, network infrastructure and other related services. Given the scope of the services provided by Alchemy, it is our most significant vendor relationship. If Alchemy is unable to provide appropriate levels of service as our business grows or our relationship does not prove workable, we will be forced to seek new providers and our ability to locate cost-effective relationships is not proven.

We depend on Internet advertising to promote our products and services.

We depend in part on the use of online advertisements to attract new users. We buy these advertisements from third parties to promote our products and services. We believe that our business will continue to rely on this method for attracting our audience. If we are unable to purchase these advertisements on cost-effective terms, this could limit our ability to attract users cost-effectively. If online advertising become less effective or more expensive, this method may not remain a useful means of attracting new users. If we were unable to continue to obtain Internet advertising on a cost-effective basis, our ability to attract new users would be impaired, which could harm our business.

If we fail to sustain and expand the number of users who install our software or fail to attract advertisers, we will not be able to sustain or increase revenue.

Advertising is currently a significant part of our proposed revenues. The success of our business depends in part on our ability to offer our advertising customers access to a large audience, comprised of users who have downloaded our software products. As a result, it is critical to our success that we continually add substantial numbers of new users. In addition, we must attract users who respond to our ads by clicking through to advertisers’ web pages or purchasing the advertisers’ products, because these click through and conversion rates are critical to our ability to maintain and grow our advertising rates. If fewer users download our software, we would not be able to maintain or expand the number of active users.

Our products and services may not perform as expected, which could harm our business.

If our services fail to perform properly, our customers and advertisers may discontinue their use of our products and services. Despite testing, our existing products or services may not perform as expected due to unforeseen problems. Any defects may cause us to incur significant expenses and divert the attention of our management and key personnel from other aspects of our business.

Negative perceptions and adverse publicity concerning our business practices could damage our reputation and harm our business.

The digital media distribution industry is vulnerable to negative public perception. Negative perception of our business practices or negative press reports linking our services to questionable business practices of other companies in our industry could damage our reputation, cause new users not to install or existing users to uninstall our software or cause consumers to use technologies that impede our ability to deliver ads. This negative perception could also lead to increased regulation of our industry or other regulations that adversely affect our business practices. Any of these events could reduce the demand for our services among advertisers and significantly harm our business.

Growth could strain our personnel and infrastructure resources, which could prevent us from successfully implementing our business plan.

We are currently expecting a period of rapid growth in our headcount and operations, which will place a significant strain on our management, administrative, operational and financial infrastructure. We anticipate that further growth will be required to increase our user and advertiser base. Our success will depend in part upon the ability of our senior management to manage this growth effectively. To manage the expected growth of our operations and personnel, we will need to continue to improve our operational, financial and management controls and our reporting systems and procedures. If we fail to successfully manage our growth, we will be unable to execute our business plan.

Our business substantially depends upon the continued growth of the Internet and Internet-based systems.

A substantial portion of our business and revenue depends on growth of the Internet and on the use of that as a sales and distribution mechanism. To the extent that the Internet does not support this activity whether through changes in its use, lowered reliability or other factors, we could experience material harm to our business, operating results, and financial condition.

Changes in industry structure and market conditions could lead to charges related to discontinuances of certain of our products or businesses and asset impairments.

In response to changes in industry and market conditions, we may be required to strategically realign our resources and consider restructuring, disposing of, or otherwise exiting businesses. Any decision to limit investment in or dispose of or otherwise exit businesses may result in the recording of special charges, such as technology-related write-offs, workforce reduction costs, charges relating to consolidation of excess facilities, or claims from third parties who were resellers or users of our products. Our estimates with respect to the useful life or ultimate recoverability of our carrying basis of assets, including purchased intangible assets, could change as a result of such assessments and decisions. Additionally, we are required to perform goodwill impairment tests on an annual basis and between annual tests in certain circumstances, and future goodwill impairment tests may result in a charge to earnings.

Our operating results and future prospects could be materially harmed by uncertainties or regulation of the Internet.

Currently, few laws or regulations apply directly to access or commerce on the Internet. We could be materially adversely affected by regulation of the Internet and Internet commerce in any country where we operate. Such regulations could include matters such as sales taxes on Internet product sales, and access charges for Internet service providers. The adoption of regulation of the Internet and Internet commerce could decrease demand for our products and, at the same time, increase the cost of selling our products, which could have a material adverse effect on our business, operating results, and financial condition.

AccessMedia operates in a very competitive environment.

The markets in which AccessMedia competes are intensely competitive, highly fragmented and characterized by rapidly changing technology and evolving standards. We expect that we will continue to experience vigorous competition from current competitors and new competitors, including Disney/ABC, NBC, CBS, Apple and others that may have significantly greater financial, technical, marketing and other resources than we do and may have large current customer bases and content agreements in place. Many other companies will compete in specific areas of our business. We expect additional competition as other established and emerging companies enter into our product market. This competition could result in price reductions, fewer customers and sales, reduced gross margins and loss of market share, any of which would materially adversely affect our business, operating results and financial condition.

We may be subject to intellectual property infringement claims, which could cause us to incur significant expenses, pay substantial damages and prevent service delivery.

The license agreements that permit AccessMedia to use the licensed technology contain only limited representations and warranties of the licensor and limited rights to indemnification for claims of infringement. Third parties may claim that our products or services infringe or violate their intellectual property rights. Any such claims could cause us to incur significant expenses and, if successfully asserted against us, could require that we pay substantial damages and prevent us from using licensed technology that may be fundamental to our business service delivery. Even if AccessMedia were to prevail, any litigation regarding its intellectual property could be costly and time consuming and divert the attention of our management and key personnel from our business operations. AccessMedia may also be obligated to indemnify its business partners in any such litigation, which could further exhaust our resources. Furthermore, as a result of an intellectual property challenge, AccessMedia may be prevented from providing some or all of its services unless it enters into royalty, license or other agreements. AccessMedia may not be able to obtain such agreements at all or on terms acceptable to us, and as a result, AccessMedia may be precluded from offering most or all of its products and services.

If such claims were to be filed and determined adversely to AccessMedia, AccessMedia could be enjoined from using licensed technology that may be fundamental to our business. AccessMedia could also be forced to pay substantial monetary damages. Any negative outcome against us could substantially harm our business and the value of AccessMedia could be substantially reduced.

We are much smaller than certain competitors in the media business.

Our AccessMedia business revenues, customer base and operations are much smaller than certain other providers of entertainment and media products and services. Very large media companies continue to view online media as a channel for distribution of their existing products or as an area in which to expand their business. These competitors have substantially more resources and could impact AccessMedia’s business.

Governmental regulation and legal uncertainties of the Internet may restrict our business or raise its costs.

There are currently few laws or regulations that specifically regulate communications or commerce on the Internet. Laws and regulations may be adopted in the future, however, that address issues including content, copyrights, distribution, antitrust matters, user privacy, pricing, and the characteristics and quality of products and services. An increase in regulation or the application of existing laws to the Internet could significantly increase our costs of operations and harm our business, particularly our AccessMedia business. For example, the Communications Decency Act of 1996 sought to prohibit the transmission of certain types of information and content over the Web. Additionally, several telecommunications companies have petitioned the Federal Communications Commission to regulate Internet service providers and online service providers in a manner similar to long distance telephone carriers and to impose access fees on these companies. Imposition of access fees could increase the cost of transmitting data over the Internet. Moreover, it may take years to determine the extent to which existing laws relating to issues such as property ownership, obscenity, libel and personal privacy are applicable to the Internet or the application of laws and regulations from jurisdictions whose laws do not currently apply to our business.

If the federal or state governments impose sales and use taxes on Internet sales, this could curtail the use of the Internet as a commerce channel. Due to the global nature of the Internet, it is possible that multiple federal, state or foreign jurisdictions might inconsistently regulate Internet activities. Any of these developments could harm our business.

The regulatory environment with respect to online media and data privacy practices is also evolving. Electronic privacy is a public and governmental concern in the United States. The Federal Trade Commission has increasingly focused on issues affecting online media, particularly online privacy and security issues.

Foreign legislation has been enacted, and there is federal and state legislation pending that is aimed at regulating the collection and use of personal data from Internet users. For example, the European Union has adopted directives to address privacy and electronic data collection concerns, which limit the manner in which the personal data of Internet users may be collected and processed. Our relationship with our customers will often involve the collection of personal data.

The enactment of new legislation, changes in the regulatory climate, or the expansion, enforcement or interpretation of existing laws could preclude us from offering some or all of our services or expose us to additional costs and expenses, require substantial changes to our business or otherwise substantially harm our business. Further, additional legislation or regulation could be proposed or enacted at any time in the future, which could materially and adversely affect our business.

Our market may undergo rapid technological change, and our future success will depend on our ability to develop and launch products and services of interest to consumers.

If new industry standards and practices emerge in the Internet and online media industry, our existing services, technology and systems may become obsolete. We cannot assure you that we will be able to address technological change in our industry in a timely fashion. Our AccessMedia products and services are relatively new in their current form and we cannot rely upon historical customer acceptance. Additionally, our technology which involves peer-to-peer networking may not be acceptable to consumers or, if accepted, may fall from favor and require us to develop new products and services.

Our operating results may be adversely affected by unfavorable economic and market conditions.

Certain of our products are associated with building starts and negative trends in those and other areas could harm our business, operating results, or financial condition.

Our stock price may be volatile.

Our common stock may experience price volatility. This can be prompted by reported results, market conditions and/or general economic and political conditions, and these factors may materially adversely affect the market price of our common stock in the future.

The public markets may not be receptive to our principal focus as an Internet based media company.

Achieving the benefits of the acquisition of AccessMedia will depend in part on the extent to which the public markets are receptive to our transformation from a software company to primarily an Internet media company and to AccessMedia’s management team, technology and media library, and the success of AccessMedia’s software. There can be no assurance that the public markets will be receptive to our new business or that the public will accept AccessMedia’s offerings.

Since our common stock will be subject to penny stock rules, you may experience substantial difficulty in selling them.

Our common stock is a penny stock. The SEC has established penny stock rules, which restrict the ability of brokers to solicit the sale of certain securities of companies whose assets, revenue and/or stock price fall below minimal thresholds. The penny stock rules limit the ability of a broker to solicit purchasers, which reduces liquidity. They also generally require a broker to deliver a standardized risk disclosure document prior to a transaction in a penny stock. The broker must also provide the customer with bid and offer quotations for the penny stock, the compensation of the broker and its salesperson in the transaction, and monthly account statements showing the market value of each penny stock held in the customer’s account. These additional requirements may hinder your ability to sell your common stock.

Because our common stock is not listed on a stock exchange, investors may be unable to resell their shares at publicly quoted prices.

Our common stock is quoted on the NASD’s Over-the-Counter Bulletin Board (“OTC”) which is less liquid than the New York Stock Exchange, the American Stock Exchange or The Nasdaq Stock Market. This may hinder your ability to sell your common stock and result in you receiving a lower price than the quoted price when you sell your shares. Accordingly, investors may lose money due to this lack of liquidity.

Item 2- Description of Property

Our principal offices are located in Chatsworth, California occupying approximately 14,650 square feet of office space. The lease term expires in September 2007. We also occupy approximately 10,000 square feet of lease office space in Novato, California, approximately 5,000 square feet of which is sub-leased to an unrelated third party on similar terms to those of the master lease. Our lease expires in March 2007.

We believe the space is adequate for our immediate needs. Additional space may be required as we expand our activities. We do not foresee any significant difficulties in obtaining any required additional facilities.

Item 3- Legal Proceedings

From time to time, we may be involved in litigation relating to claims arising out of our operations in the normal course of business.

The Company’s subsidiary Accessmedia Networks, Inc. was named as one of a number of co-defendants in a suit filed by the FTC in the Central District of California alleging a violation of Section 5 of the FTC Act arising from products known as Movieland.com, Moviepass.TV, and Popcorn.net. A U.S. district court judge denied the FTC's request to issue a temporary restraining order. Trial on the merits of the case will be scheduled for a later time. Management believes the claims are without merit and the Company intends to defend the actions vigorously. While management believes there is no legal basis for liability, due to the uncertainty surrounding the litigation process, no reasonable estimate of loss is available. Accessmedia Networks, Inc was also named as one of a number of co-defendants in a suit filed by the Washington State Attorney General alleging violations of the Washington Spyware Act and Consumer Protection Act arising from products known as Movieland.com, Moviepass.TV, and Popcorn.net. The Company intends to vigorously defend the allegations. While management believes there is no legal basis for liability, due to the uncertainty surrounding the litigation process, no reasonable estimate of loss is available.

In addition, we are subject to legal proceedings, claims, and litigation arising in the ordinary course of business. While the outcome of these matters is currently not determinable, we do not expect that the ultimate costs to resolve these matters will have a material adverse effect on our consolidated financial position, results of operations, or cash flows.

There are no proceedings in which any of our directors, officers or affiliates, or any registered or beneficial shareholder, is an adverse party or has a material interest adverse to our interest.

Item 4- Submission of Matters to a Vote of Security Holders

Set forth is information concerning each matter submitted to a vote at our Annual Meeting of Shareholders held on June 1, 2006.

Proposal No. 1: The shareholders elected each of the following persons as a director to hold office until the 2007 Annual Meeting of Shareholders or until earlier retirement, resignation or removal.

Director	Votes For	Votes Withheld
Bruce Galloway	27,148,988	1,649,323
Martin R. Wade, III	27,254,415	1,543,896
Donald Perlyn	27,867,665	930,646
Evan Binn	27,897,515	900,796
Robert S. Falcone	27,897,365	900,946
Richard J. Berman	27,228,548	1,569,763

Proposal No. 2: The Shareholders approved the Agreement and Plan of Merger, dated as of December 16, 2005, as amended as of March 24, 2006, by and among the company, AccessMedia Networks, Inc., ACCM Acquisition Corp., our wholly-owned subsidiary and the stockholders of our AccessMedia, and to approve the Merger pursuant to which IMSI may issue up to 64,000,000 shares of common stock to AccessMedia stockholders, and AccessMedia will become our wholly-owned subsidiary was by a vote of 19,635,852 affirmative votes, 929,408 negative votes, 1,853 votes abstaining and 8,231,198 broker non-votes.

Proposal No. 3: The shareholders approved the change of our name from International Microcomputer Software, Inc. to Broadcaster, Inc. with 27,851,930 million affirmative votes, 935,475 negative votes and 10,905 votes abstaining.

Proposal No. 4: The shareholders approved to amend the 2004 Incentive Stock Option Plan (the “Plan”) to increase the number of options to purchase our common stock to be issued pursuant to the Plan by an additional 6,500,000 shares with 17,497,719 affirmative votes, 2,218,793 negative votes, 850,601 votes abstaining and 8,231,198 broker non-votes.

Proposal No. 5: The shareholders authorized the Board of Directors to effectuate a 1-for-2 reverse stock split of our common stock with 26,760,715 affirmative votes, 2,020,275 negative votes and 17,320 votes abstaining.

Proposal No. 6: The shareholders ratified the appointment of Burr, Pilger & Mayer LLP as the Company’s independent registered public accounting firm for the fiscal year ended June 30, 2006 with 27,907,491 affirmative votes, 884,279 negative votes and 6,541 votes abstaining.

PART II

Item 5- Market for Common Equity and Related Stockholder Matters

Market for Common Stock

The Company’s common stock currently trades on the OTC Bulletin Board under the symbol “BCSR.” The following table sets forth the quarterly high and low sales prices of our common stock for fiscal years 2006 and 2005, as quoted on the OTC Bulletin Board. This information represents prices between dealers and does not include retail mark-ups, markdowns or commissions and may not represent actual transactions.

	High	Low

Fiscal Year 2005
First Quarter	$1.30	$0.90
Second Quarter	$1.21	$0.73
Third Quarter	$1.46	$1.01
Fourth Quarter	$1.50	$1.06

Fiscal Year 2006
First Quarter	$1.55	$0.90
Second Quarter	$1.19	$0.67
Third Quarter	$1.34	$0.95
Fourth Quarter	$1.99	$1.08

As of July 26, 2006, there were approximately 1,046 registered holders of record of the common stock. We believe that additional beneficial owners of our common stock hold shares in street names.

We have not paid any cash dividends on our common stock and do not plan to pay any such dividends in the foreseeable future. Our Board of Directors will determine our future dividend policy on the basis of many factors, including results of operations, capital requirements and general business conditions

Equity Compensation Plan Information

The following table summarizes the number of outstanding options granted to employees, service providers and directors, as well as the number of securities remaining available for future issuance, under the Company’s compensation plans as of the fiscal year ended June 30, 2005.

	Number of securities to be issued upon exercise of outstanding options, warrants and rights		Weighted-average exercise price of outstanding options, warrants and rights		Number of securities remaining available for future issuance under equity compensation plans (1)
Equity compensation plans approved by security holders (2)		4,565,318	$	1.14		540,622

Equity compensation plans not approved by security holders (3)		6,324,494	$	1.42		0

Total		10,889,812	$	1.30		540,622

1.	The amounts indicated in this column exclude securities listed in the column titled “Number of securities to be issued upon exercise of outstanding options, warrants and rights.”

2.	Consists of the Plan and the 1993 Incentive Option Plan.

Represents outstanding warrants which have been granted from time to time in conjunction with Board of Directors and employee compensation and consulting arrangements. These warrants generally vest, and are exercisable, over periods ranging from one to four years from the date of grant. The exercise price of the warrants granted generally is equal to the closing price of our common stock on the grant date.

Item 6- Management’s Discussion and Analysis or Plan of Operation

THE FOLLOWING DISCUSSION SHOULD BE READ TOGETHER WITH THE INFORMATION CONTAINED IN THE FINANCIAL STATEMENTS AND RELATED NOTES INCLUDED ELSEWHERE IN THIS FORM 10-KSB.

Overview

In 2004, we began exploring various ways to enhance shareholder value, including the further migration of Broadcaster from a traditional or packaged software company to offering downloadable media and content over the Internet. We believe that the growth and reach of the Internet coupled with the predictability of recurring revenues should lead to enhanced Broadcaster shareholder value. As such, during 2005 we began discussions with AccessMedia, a developer of a platform for delivering real-time and interactive media over the Internet through its unique “virtual set-top box” technology. Concurrent with the completion of the acquisition of AccessMedia, we changed our name to Broadcaster, Inc.

We are now a global Internet entertainment network providing consumers with access to online entertainment that is fast, easy, safe, fun, and of great value. We offer a wide variety of on-demand programming including movies, music, television shows, viral videos, mobile media, games, news, sports, and other entertainment focused content, in one place that can be viewed or downloaded at anytime and on any device. Our proprietary virtual set-top box technology available at www.broadcaster.com puts Internet users in control of their entertainment experience allowing users to choose what, when and on which device they want to view media and content.

Our multi-channel Internet entertainment network redefines the user experience on the Web, putting more control into the hands of the user with the most advanced technologies including a Download Manager, Entertainment Meta Search, Content Manager, Mobile Transfer Capabilities, Peer-to-Peer Technology, Social Networking Tools and Parental Lock functionality, among others. In addition, our entertainment meta search is one of the most advanced available on the Web and is optimized for rich media content allowing for advanced identification and indexing of media and content.

International Operations

International operations comprise our Canadian subsidiary, Weinmaster Homes Limited (“Weinmaster”), which is part of the Houseplans segment. Weinmaster was acquired in July 2005.

Strategy and Growth

We believe that consistent growth of both the revenues and operating earnings can be achieved through internally developed products and services, and through acquisition. Management believes that good value target companies are present in the marketplace and that business combinations with these entities would help us achieve our growth potential in addition to providing synergies that would improve profitability.

The Company had approximately $14.1 million cash or cash equivalents as of June 30, 2006. Our current cash and cash equivalents balance represents our largest balance on hand at the Company within the past two fiscal years. The statement of operations for both recent years reflect losses under generally accepted accounting principles but, since the expense contained significant non-cash amortization of past corporate transactions, these reported results may not fully represent the financial health of the business. We have a practice of engaging in acquisitions and, when favorable, divestures and these actions could cause our liquidity to vary substantially.

Acquisitions and Dispositions during the Year

The Weinmaster Homes, Ltd. Acquisition

On July 1, 2005, Houseplans, Inc, our wholly owned subsidiary, consummated the acquisition of all the stock of Weinmaster Homes, Ltd., pursuant to a stock purchase agreement between Weinmaster Homes, Ltd., Bruce Weinmaster and Janice Weinmaster and Houseplans, Inc. The purchase price of approximately $4.0 million consisted of $2.0 million in cash, $1.0 million in a promissory note and $1.0 million (based on the five trading days average immediately preceding and including June 28, 2005) in Broadcaster’s unregistered common stock, which the Company has committed to register with the SEC.

The Sale of Allume

On July 1, 2005, we sold all of the issued and outstanding capital stock of Allume to Smith Micro for an aggregate sales price of $12.8 million made up as follows:

(In millions)

Description	Amount

Cash	$	11.0
Fair value of 397,547 unregistered shares of our Smith Micro common stock		1.8
Total	$	12.8

The fair value of the common stock was based on the five-trading-day average price of Smith Micro’s common stock surrounding the date the business combination was announced.

At closing an indemnity escrow was established to secure certain representations and warranties included in our stock purchase agreement with Smith Micro. The following sale proceeds were deposited into the escrow.

(In millions)

Description	Amount

Cash	$	1.25
170,398 unregistered shares of our Smith Micro common stock		0.784
Total	$	2.034

The value of the common stock was based on the date of closing.

On November 2, 2005, we replaced the shares of Smith Micro common stock in escrow with cash, as permitted by the escrow agreement.

On November 10, 2005, we sold 100% of our holdings of Smith Micro shares at a gain of $923,000 which was shown in Other Income as Realized Gain on Securities in the December quarter.

Pursuant to the stock purchase agreement, Smith Micro released $500,000 plus interest of $7,000 and $750,000 plus interest of $26,000 of the escrowed cash to us in December 2005 and March 2006, respectively. These amounts, when released, added to our calculation of gain or loss on the sale.

As a result of this sale, we have categorized the assets, liabilities and operations of Allume as discontinued operations for the fiscal year ended June 30, 2005 and in the fiscal year ended June 30, 2006 we recorded a gain on the sale of discontinued operations of $776,000 representing the amount released from escrow on March 31, 2006 plus accrued interest. The gain on the sale of Allume totaled $302,000 as of March 31, 2006. This gain calculation does not consider the remaining cash held in escrow of approximately $0.3 million and is subject to change in future reporting periods depending upon the future release of cash from escrow.

The Acquisition of AccessMedia

We completed the merger with AccessMedia (the “Merger”) on June 1, 2006 pursuant to which we issued 29,000,000 shares of our common stock and agreed to issue up to an additional 35,000,000 shares of our common stock upon achievement of certain revenue milestones to the former shareholders of AccessMedia. In connection with the Merger, we changed our name to Broadcaster, Inc.

Sale of Precision Design

In June, 2006, we sold Precision Design, our legacy software business as part of our overall strategy to position the company solely as an on-line business. We received a combination of $6.5 million in cash and an interest free note of $1.5 million, which was paid in full on July 3, 2006. $0.5 million of the purchase price is deposited in an indemnity escrow to secure certain representations and warranties included in the asset purchase agreement. Included in the assets sold were the TurboCad and DesignCAD product lines as well as other design and personal productivity titles.

The sale of Precision Design will reduce our operating expenses for fiscal year 2007 by approximately $5 million. Additionally, our increased cash positions us to grow our Internet entertainment business and to take advantage of future opportunities.

Critical Accounting Policies

Those material accounting policies that we believe are the most critical to an investor’s understanding of our financial results and condition are discussed below.

Our significant accounting policies are more fully described in the notes to our consolidated financial statements. Four of these policies, discussed immediately below, are particularly important to the portrayal of our financial position and results of operations and require the application of significant judgment by our management to determine the appropriate assumptions to be used in the determination of certain estimates.

Revenue Recognition

Revenue is recognized in accordance with American Institute of Certified Public Accountants Statement of Position (“SOP”) 97-2, Software Revenue Recognition, and SOP 98-9, Modification of SOP 97-2, With Respect to Certain Transactions. Revenue is recognized when persuasive evidence of an arrangement exists (generally a purchase order), product or service has been delivered, the fee is fixed and determinable, and collection of the resulting account is probable.

Revenue from packaged product sales to resellers and end users is recorded at the time of the sale net of estimated returns.

Revenue from sales to distributors is recognized when the product sells through to retailers and end users. Sales to distributors permit limited rights of return according to the terms of the contract.

For software and content delivered via the Internet, revenue is recorded when the customer downloads the software, activates the subscription account or is shipped the content. For online media revenue when payment is collected

Revenue from post contract customer support (PCS) is recognized ratably over the contract period.

Subscription revenue is recognized ratably over the contract period.

We use the residual method to recognize revenue when a license agreement includes one or more elements to be delivered at a future date. If there is an undelivered element under the license arrangement, we defer revenue based on vendor-specific objective evidence (VSOE) of the fair value of the undelivered element, as determined by the price charged when the element is sold separately. If VSOE of fair value does not exist for all undelivered elements, we defer all revenue until sufficient evidence exists or all elements have been delivered.

Non-refundable advanced payments received under license agreements with no defined terms are recognized as revenue when the customer accepts the delivered software.

Revenue from software licensed to developers, including amounts in excess of non-refundable advanced payments, is recorded as the developers ship products containing the licensed software.

Revenue from minimum guaranteed royalties in republishing agreements is recognized ratably over the term of the agreement. Royalties in excess of the guaranteed minimums are recognized when collected.

Revenue from original equipment manufacturer (OEM) contracts is recognized upon completion of our contractual obligations.

Revenue related to the display of advertisements on its Internet properties as impressions (the number of times that an advertisement appears in pages viewed by users) are delivered, as long as no significant obligations remain at the end of the period. To the extent that significant obligations remain at the end of the period, the Company defers recognition of the corresponding revenue until the remaining guaranteed amounts are achieved.

Revenue from the display of text-based links to the websites of its advertisers is recognized as the click-throughs (the number of times a user clicks on an advertiser's listing) occur.

Reserve for returns, price discounts and rebates

Reserves for returns, price discounts and rebates are estimated using historical averages, open return requests, channel inventories, recent product sell-through activity and market conditions. Our allowances for returns, price discounts and rebates are based upon management’s best judgment and estimates at the time of preparing the financial statements. Reserves are subjective estimates of future activity that are subject to risks and uncertainties, which could cause actual results to differ materially from estimates.

Our return policy generally allows our distributors to return purchased products primarily in exchange for new products or for credit towards future purchases as part of stock balancing programs. These returns are subject to certain limitations that may exist in the contract with an individual distributor governing, for example, aggregate return amounts, and the age, condition and packaging of returned product. Under certain circumstances, such as terminations or when a product is defective, distributors could receive a cash refund if returns exceed amounts owed.

Impairment

Property, equipment, intangible and certain other long-lived assets are amortized over their useful lives. Useful lives are based on management’s estimates of the period that the assets will generate revenues. We account for the impairment and disposition of long-lived assets in accordance with SFAS 144, Accounting for the Impairment or Disposal of Long-Lived Assets. In accordance with SFAS 144, long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying value of an asset may not be recoverable. Recoverability of assets to be held and used is measured by comparison of the carrying amount of an asset to future net cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets.

In accordance with SFAS No. 142, Goodwill and Intangible Assets, goodwill is being assessed for impairment annually or more frequently if circumstances indicate impairment.

Income Taxes

Income taxes are accounted for using an asset and liability approach for financial reporting. We recognize deferred tax liabilities and assets for the expected future tax consequences of temporary differences between the financial statement carrying amount and the tax basis of assets and liabilities and net operating loss and tax credit carry forwards. Valuation allowances are established when necessary to reduce deferred tax assets to the amounts expected to be realized.

Stock Based Awards

We account for stock-based compensation plans in accordance with Accounting Principles Board (“APB”) Opinion No. 25, Accounting for Stock Issued to Employees, under which no compensation cost is recognized in the financial statements for employee stock arrangements when grants are made at fair market value. We have adopted the disclosure-only provisions of SFAS No. 123, “Accounting for Stock Based Compensation” as amended by SFAS No. 148, Accounting for Stock-Based Compensation-Transition and Disclosure.

Business Combinations

In accordance with business combination accounting, we allocate the purchase price of acquired companies to the tangible and intangible assets acquired and liabilities assumed based on their estimated fair values. We engage third-party appraisal firms to assist management in determining the fair values of certain assets acquired and liabilities assumed. Such valuations require management to make significant estimates and assumptions, especially with respect to intangible assets.

Forward Looking Statement

The following information should be read in conjunction with the consolidated financial statements and the notes thereto contained elsewhere in this report. This annual report on Form 10-KSB, and in particular this “Management’s Discussion and Analysis or Plan of Operations,” may contain forward-looking statements regarding future events or our future performance. These future events and future performance mentioned in forward-looking statements involve risks and uncertainties. Actual events or our actual future results could differ materially from those projected or assumed in such forward-looking statements. We assume no obligation to update these forward-looking statements to reflect actual results or changes in factors or assumptions affecting such forward-looking statements. This analysis is not intended to serve as a basis for projection of future events.

Our consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States (“GAAP”). These accounting principles require us to make certain estimates, judgments and assumptions. We believe that the estimates, judgments and assumptions upon which we rely are reasonable based upon information available to us at the time that these estimates, judgments and assumptions are made. These estimates, judgments and assumptions can affect the reported amounts of assets and liabilities as of the date of the financial statements as well as the reported amounts of revenues and expenses during the periods presented. Our financial statements would be affected to the extent there are material differences between these estimates and actual results. In many cases, the accounting treatment of a particular transaction is specifically dictated by GAAP and does not require management’s judgment in its application. There are also areas in which management’s judgment in selecting any available alternative would not produce a materially different result.

1 Continuing Operations

The following table sets forth our results of operations for the twelve months ended June 30, 2006 and 2005 in absolute dollars and as a percentage of net revenues. It also details the changes from the prior fiscal year in absolute dollars and in percentages.

(In Thousands)

	Fiscal Year ended June 30,
					$ Change from previous year
	2006		2005		$ Change from previous year
	$	As % of sales	$	As % of sales	Variance	%

Net revenues	$8,203	100%	$4,347	100%	$3,856	89%
Product cost	3,174	39%	1,824	42%	1,350	74%
Gross margin	5,029	61%	2,523	58%	2,506	99%

Operating expenses
Sales & marketing	2,944	36%	1,903	44%	1,041	55%
General & administrative	3,760	46%	925	21%	2,835	306%
Research & development	218	3%	68	2%	150	221%
Total operating expenses	6,922	85%	2,896	67%	4,026	139%

Operating loss	(1,893)	-24%	(373)	-9%	(1,520)	407%

Other income (expenses)
Interest and other, net	125	1%	(91)	-2%	216	-237%
Realized/unrealized gain (loss) on marketable securities	765	9%	(42)	-1%	807	-1,921%
Gain on sale of product line	(1)	0%	53	1%	(54)	-102%
Total other income	889	10%	(80)	-2%	969	-1211%

Loss before income tax	(1,004)	-14%	(453)	-11%	(551)	122%

Income tax provision	(11)	-1%	(25)	-1%	14	-56%

Loss from continuing operations	(1,015)	-15%	(478)	-12%	(537)	112%

(Loss) from discontinued operations, net of income tax	(2,971)	-36%	(3,311)	-76%	339	-10%
Gain (loss)from the sale of discontinued operations, net of income tax	4,834	59%	2,035	47%	2,799	138%

Net income (loss)	$848	8%	($1,754)	-39%	$2,602	-148%

Revenues by Business Segment

We have two business segments: AccessMedia and Houseplans.

AccessMedia: Although it was only recently commercially launched, AccessMedia generated revenue of $945,000 for the one month ended June 30, 2006. Revenue includes software sales, internet media advertising sales and the sale of text-based internet links. Sales of downloaded products are recognized ratably over the term of the license sold. Sales of advertisements are recognized upon the delivery of the impressions guaranteed. Sales of click throughs are recognized upon delivery of the click throughs guaranteed.

HousePlans: We acquired Houseplans Inc (formerly Planworks LLC) in November 2003, Abbisoft House Plans, Inc in September 2004 and Weinmaster Homes, Ltd in July 2005. We have grown this business to be the leading online seller of stock house plans, targeting general contractors, consumers and designers. Our websites include houseplans.com, homeplanfinder.com, houseplanguys.com, globalhouseplans.com and weinmaster.com.

Revenues generated by this segment grew substantially during the twelve months ended June 30, 2006 as compared to the same period in the previous fiscal year from $4,347,000 to $7,258,000 a 67% increase. Excluding the acquisition of Weinmaster, revenue grew from $4,347,000 to $5,021,000 a 15.6% increase.

Gross Profit

Our consolidated gross profit increased from $2,523,000 to $5,029,000 or 100.0% for the twelve months ended June30, 2005 and June30, 2006 respectively. Gross margin increased from 58.02% to 61.3%, primarily as a result of improvements in Houseplans gross profit discussed below.

AccessMedia’s cost of revenue consists of costs related to the products and services AccessMedia provides to customers. These costs include materials, salaries and related expenses for product support personnel, depreciation and maintenance of equipment used in providing services to customers and facilities expenses. The cost of revenue increased as a function of increasing activity over the periods and as result of amortization of assets acquired during 2005.

AccessMedia expects to become cash flow positive after a full product launch, when the overhead costs described above can be amortized over a larger revenue base. AccessMedia also expects its product offerings to expand and the mixture of sales to change. Because of its limited operating history, changes in revenue mix, recent exit from the development stage and evolving business model, AccessMedia believes that analysis of historical cost of revenue as a percentage of revenue is not meaningful.

Houseplans gross profits increased from $2,523,000 to $4,510,000, or 79.0% for the twelve months ended June 30, 2005 and June 30, 2006 respectively. Gross margin increased from 58.0% to 62.1%, primarily as a result of more competitive royalty rates with our vendors, an increased collection of proprietary royalty-free content and the successful integration of acquisitions.

Sales and Marketing

Sales and marketing expenses increased from $1,903,000 to $2,944,000, or 54.6% for the twelve months ended June 30, 2005 and June 30, 2006 respectively. This increase was principally due to the merger with AccessMedia and the acquisition of Weinmaster.

Sales and marketing expense for AccessMedia consists primarily of salaries and related expenses for sales, support and marketing personnel, commissions, costs and expenses for customer acquisition programs and referrals, a portion of facilities expenses and depreciation and amortization of equipment. AccessMedia’s expense levels have increased because of staffing and costs involved in testing and prototyping programs for selling its software, advertising and text-based links. AccessMedia anticipates that sales and marketing expense will continue to increase in absolute dollars as AccessMedia adds sales and marketing personnel and increases its customer acquisition activities.

Sales and marketing expenses for Houseplans increased during the twelve months ended June 30, 2006 as compared to the same period from the previous fiscal year. This increase was mainly the result of the additional sales and marketing expenses related to our newly acquired business (WHL), the increased direct marketing expenses, especially relating to advertising necessary to increase the traffic to our websites and to the increased payroll and related expenses from additional headcount. Despite the increase in sales and marketing expenses for this segment during the twelve months ended June 30, 2006 as compared to the same period from the previous fiscal year, we continue to integrate the acquisitions and we continue to implement savings and identify synergies among our business units.

General and Administrative

General and administrative expense consists primarily of salaries and related expenses for administrative, finance, legal, human resources and executive personnel, fees for professional services and costs of accounting and internal control systems to support its operations. Expenses have increased primarily due to the addition of headcount in management and administration to support the increasing activity levels and as a result of amortization of assets acquired during 2006.

AccessMedia anticipates that general and administrative expense will continue to increase in absolute dollars as AccessMedia builds its management team and hires additional administrative personnel and incurs increased costs such as professional fees. AccessMedia expects to secure a number of services from a related party at a market rate.

Research and Development

Our research and development expenses consist primarily of salaries and benefits for research and development employees and payments to independent contractors, mainly our third party contract development teams.

Interest and Other, Net

Interest and other, net, changed from a net expense of $121,000 to a net gain of $89,000 for the twelve months ended June 30, 2006 and June30, 2005 respectively. The change was principally due to an increase in cash balances and a reduction in debt obligations resulting from the deployment of proceeds from the sale of Allume.

Gain / (Loss) on Marketable Securities

Gain / (loss) on Marketable Securities increased from ($42,000 ) to $765,000 for the twelve months ended June 30, 2005 and June 30, 2006 respectively. The change was primarily due to the gain recorded on the sale of Smith Micro shares acquired as part of the consideration for the sale of Allume.

Provision for State and Federal Income Taxes

We recorded income tax expense of $11,000 and $25,000 for the twelve months ended June 30, 2006 and 2005, respectively. The tax expense for the twelve months ended June 30, 2006 primarily represented accrued federal and state income taxes resulting from the limitation of net operating loss carryforwards and accrued Canadian income taxes. The current tax provision was offset by a deferred tax benefit resulting from the amortization of certain purchased intangibles assets. The tax expense for the twelve months ended June 30, 2006 includes state income taxes accrued where we have operations.

We have not recorded a tax benefit for domestic tax losses because of the uncertainty of realization. We adhere to SFAS No. 109, Accounting for Income Taxes, which requires an asset and liability approach to financial accounting and reporting for income taxes. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized. Consistent with our past practice, we have recorded a full valuation allowance at June 30, 2006 as the realizeability of our net operating loss carry-forwards is not determinable.

2. Discontinued Operations

(Loss) from discontinued operations, net of income tax

Twelve months ended June 30, 2006: Sale of Allume

On July 1, 2005, we sold all of the issued and outstanding capital stock of Allume to Smith Micro for an aggregate sales price of $12.8 million made up as follows:

(In millions)

Description	Amount

Cash	$	11.0
Fair value of 397,547 unregistered shares of our Smith Micro common stock		1.8
Total	$	12.8

The fair value of the common stock was based on the five-trading-day average price of Smith Micro’s common stock surrounding the date the business combination was announced.

(In millions)

Description	Amount

Cash	$	1.25
170,398 unregistered shares of our Smith Micro common stock		0.784
Total	$	2.034

The value of the common stock was based on the date of closing.

On November 2, 2005, we replaced the shares of Smith Micro common stock in escrow with cash, as permitted by the escrow agreement.

On November 10, 2005, we sold 100% of our holdings of Smith Micro shares at a gain of $923,000 which was shown in Other Income as Realized Gain on Securities in the December quarter.

Twelve months ended June 30, 2006: Sale of Precision Design

On June 9, 2006 Broadcaster, Inc. (formerly, International Microcomputer Software, Inc.) sold substantially all of the assets used in the operation of the segment of our business referred to as the Precision Design Software Business. The assets were sold to IMSI Design, LLC, a California limited liability company (the "Purchaser") which was newly formed for the purpose of the acquisition.

In consideration for the transfer of the assets, the Purchaser paid $6,500,000 in cash, of which $500,000 was deposited in an escrow to back our representations and warranties in the sale Agreement, and the Purchaser delivered its promissory note, due July 3, 2006, in the principal amount of $1,500,000. In addition, the Purchaser assumed certain liabilities, and agreed to perform a number of contracts that were associated with the Precision Design Software Business.

As a result of this sale, we have categorized the assets, liabilities and operations of the Precision Design as discontinued operations for the twelve months ended June 30, 2005 and in the twelve months ended June 30, 2006 we recorded a gain on the sale of discontinued operations of $4,532,000. The gain on the sale of Allume for the twelve months ended June 30, 2006 totaled $302,000.

Loss from discontinued operations totaling $2,796,000 for the twelve months ended June 30, 2006 represents the pre-tax net loss of IMSI Software Segment.

Item 7- Financial Statements

Documents filed as part of this annual report on Form 10-KSB:

Financial Statements

Report of Independent Registered Accounting Firm for the years ended June 30, 2006 and 2005

Consolidated Balance Sheets at June 30, 2006 and 2005

Consolidated Statements of Operations and Comprehensive Income (Loss) for the years ended June 30, 2006 and 2005

Consolidated Statements of Shareholders' Equity for the years ended June 30, 2006 and 2005

Consolidated Statements of Cash Flows for the years ended June 30, 2006 and 2005

Notes to Consolidated Financial Statements

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Shareholders

Broadcaster, Inc.

We have audited the accompanying consolidated balance sheet of Broadcaster, Inc. and subsidiaries (the “Company”) as of June 30, 2006 and 2005 and the related consolidated statements of operations and comprehensive income (loss), shareholders’ equity, and cash flows for the years then ended. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of Broadcaster, Inc. and subsidiaries as of June 30, 2006 and 2005, and the results of their operations and their cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America.

/s/ Burr, Pilger & Mayer LLP

October 5, 2006

San Francisco, California

BROADCASTER INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In thousands, except share amounts)

	June 30, 2006			June 30, 2005
ASSETS
Current assets:
Cash and cash equivalents		$14,107			$4,347
Investment in marketable securities		-			714
Receivables, less allowances for doubtful accounts, discounts and returns of $0 in 2006 and $0 in 2005		254			251
Inventories		-			16
Notes Receivable		1,604			2,000
Receivables, other		175			30
Other current assets		420			342
Assets related to discontinued operations		181			15,422
Total current assets		16,741			23,122

Fixed assets, net		306			319

Intangible Assets
Goodwill		30,198			1,648
Other intangible assets, net		18,700			1,326
Total intangible assets		48,898			2,974

Total assets		$65,945			$26,415


LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Short term debt		1,777			2,670
Trade accounts payable		1,928			772
Accrued and other liabilities		1,846			1,651
Liabilities related to discontinued operations		89			2,862
Deferred revenues		674			-
Total current liabilities		6,314			7,955

Long-term debt and other obligations		178			230
Unearned contract fees		122			-
Deferred Tax		7,180			-

Total liabilities		13,794			8,185

Shareholders' Equity
Common stock, no par value; authorized 300,000,000 shares; issued and outstanding 63,124,518 shares in 2006 and 28,796,886 shares in 2005		76,304			43,663
Accumulated deficit		(24,483	)		(25,331	)
Other comprehensive income		330			(102	)
Total shareholders' equity		52,151			18,230

Total liabilities and shareholders' equity		$65,945			$26,415

See Notes to Consolidated Financial Statements

BROADCASTER, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS and COMPREHENSIVE INCOME (LOSS)

(In thousands, except per share amounts)

	Fiscal Year ended June 30,
	2006			2005
Net revenues		$8,203			$4,347
Product costs		3,174			1,824
Gross margin		5,029			2,523

Costs and expenses
Sales and marketing		2,944			1,903
General and administrative		3,760			925
Research and development		218			68
Total operating expenses		6,922			2,896

Operating loss		(1,893	)		(373	)

Other income and (expense)
Interest and other, net		125			(91	)
Realized / unrealized gain (loss) on marketable securities		765			(42	)
(Loss) gain on sale of product line		(1	)		53
Loss before income tax		(1,004	)		(453	)

Income tax provision		11			25

Loss from continuing operations		(1,015	)		(478	)

Loss from discontinued operations, net of income tax		(2,971	)		(3,311	)
Gain from the sale of discontinued operations, net of income tax		4,834			2,035

Net income (loss)		848			(1,754	)

Other comprehensive loss
Foreign currency translation adjustments		432			(32	)
Comprehensive income (loss)		$1,280			$(1,786	)

Basic earnings (loss) per share
Loss from continuing operations		$(0.03	)		$(0.02	)
Loss from discontinued operations, net of income tax		$(0.09	)		$(0.12	)
Gain from the sale of discontinued operations, net of income tax		$0.15			$0.08
Net income (loss)		$0.03			$(0.06	)
Diluted earnings (loss) per share
Loss from continuing operations		$(0.03	)		$(0.02	)
Loss from discontinued operations, net of income tax		$(0.09	)		$(0.12	)
Gain from the sale of discontinued operations, net of income tax		$0.15			$0.08
Net income (loss)		$0.03			$(0.06	)

Shares used in computing basic earnings (loss) per share		32,645			27,694
Shares used in computing diluted earnings (loss) per share		32,645			27,694

See Notes to Consolidated Financial Statements

BROADCASTER, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

Years ended June 30, 2006 and 2005

(In thousands, except share amounts)

	Common Stock
	Shares			Amount			Accumulated deficit			Accumulated other comprehensive loss			Total
Balance at July 1, 2005		26,261,829			$41,512			($23,577	)		($70	)		$17,865
Issuance of common stock related to:
Warrants exercised		422,934			37									37
Stock options exercised		309,179			177									177
Acquisitions		1,802,944			1,791									1,791
Issuance of warrants related to:
Consulting services rendered					26									26
Acquisitions					8									8
Issuance of common stock options related to:
Consulting services rendered					4									4
Acquisitions					108									108
Net loss								(1,754	)					(1,754	)
Foreign currency translation adjustment, net of income tax											(32	)		(32	)
Balance at June 30, 2005		28,796,886			$43,663			($25,331	)		($102	)		$18,230

Issuance of common stock related to:
Warrants exercised		1,153,634			-									-
Stock options exercised		904,688			701									701
Acquisitions		32,276,583			31,842									31,842
Finders fee related to acquisitions		20,000			25									25
Issuance of warrants related to:
Acquisitions					6									6
Procurement of short term debt					68									68
Issuance of common stock options related to:
Consulting services rendered					24									24
Variable accounting adjustment					5									5
Stock buy back		(27,273	)		(30	)								(30	)
Net income								848						848
Foreign currency translation adjustment, net of income tax											432			432
Balance at June 30, 2006		63,124,518			$76,304			($24,483	)		$330			$52,151

See Notes to Consolidated Financial Statements

BROADCASTER, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

	Fiscal Year ended June 30,
	2006			2005
Cash flows from operating activities:
Net income (loss)		$848			($1,754	)
Adjustments to reconcile net income to net cash used by operating activities:
Depreciation and amortization		1,692			418
Net provision for bad debt		98			172
Net provision for returns and price discounts		-			(390	)
Net provision for inventory obsolescence		-			(39	)
Loss from discontinued operations		2,971			3,311
Gain on the sale of discontinued operations		(4,834	)		(2,035	)
Loss (gain) on sale of product line		1			(53	)
Stock based compensation charges		97			30
Changes in assets and liabilities:
Marketable securities		714			3,210
Receivables		418			(123	)
Receivables Other		256			987
Inventories		16			21
Other current assets		114			(84	)
Trade accounts payable		(180	)		253
Accrued and other liabilities		(132	)		785
Deferred revenue		(61	)		-
Operating cash (used in) discontinued operations		(3,091	)		(366	)
Net cash (used in) provided by operating activities		(1,073	)		4,343
Cash flows from investing activities:
Proceeds from sale of discontinued operations		16,688			258
Acquisition of product lines		-			(43	)
Acquisition of subsidiaries		(2,979	)		(1,328	)
Purchases of equipment		(21	)		(120	)
Software development costs and in-process technologies		-			(64	)
Purchase of domain names		-			(9	)
Purchase of trademark		-			(1	)
Note to related party		-			371
Cash provided by discontinued operations in investing activities		-			471
Net cash provided by (used in) investing activities		13,688			(465	)
Cash flows from financing activities:
Proceeds from borrowings		850			400
Repayments of notes		(4,570	)		(1,837	)
Proceeds from warrants and options exercised		701			214
Stock buyback		(30	)		-
Cash used in discontinued operations in financing activities		-			(1,016	)
Net cash used in financing activities		(3,049	)		(2,239	)
Effect of exchange rate change on cash and cash equivalents		194			(32	)
Net increase in cash and cash equivalents		9,760			1,607
Cash and cash equivalents at beginning of year		4,347			2,740
Cash and cash equivalents at end of the year		$14,107			$4,347

See Notes to Consolidated Financial Statements

(In thousands)

	Fiscal Year ended June 30,
	2006		2005
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Interest paid		$129		$225
Income tax paid		66		2

SUPPLEMENTAL DISCLOSURE OF NON-CASH FINANCING ACTIVITIES
Cashless warrant exercise		-		-
Notes payable incurred in conjunction with acquisitions		2,775		645
Capital stock issued in conjunction with acquisitions		31,867		1,791
Warrants issued in conjunction with acquisitions		6		8
Cashless stock options issued in conjunction with acquisitions		$-		$108

See Notes to Consolidated Financial Statements

BROADCASTER, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

1.	Summary of Significant Accounting Policies

Organization, Operations and Liquidity

The Company was incorporated in California in November 1982. Broadcaster operates a subscription based internet entertainment network and promotes and sells house plans and other services to consumers and builders over the Internet. Prior to the disposal of the Precision Design business, the Company also developed and published CAD software and similar products targeted to small to medium-size businesses, professionals, and consumers. The Company’s strategy to reposition itself as an online business has been achieved via the acquisitions of AccessMedia Networks Inc (2006), Weinmaster Homes Ltd. (2005) and Houseplans Inc (2004), and by the divestiture of the Precision Design business (2006). As consideration for the sale of Precision Design, we received a combination of $6.5 million in cash and an interest free note of $1.5 million which was paid in full on July 3, 2006. Included in the assets sold were the TurboCad and DesignCAD product lines as well as other design and personal productivity titles.

Historically, we have financed our working capital and capital expenditure requirements primarily from short-term and long-term notes and bank borrowings, capitalized leases and sales of common stock. We may also seek additional equity and/or debt financing to sustain our growth strategy. However, we believe that we have sufficient funds to support our operations at least for the next twelve months, based on our current cash position, equity sources and borrowing capacity. We believe that we will be able to obtain any additional financing required on competitive terms. In addition, we will continue to seek opportunities and discussions with third parties concerning the sale or license of certain product lines and/or the sale or license of a portion of our assets.

To achieve our growth objectives, we are considering different strategies, including growth through mergers and/or acquisitions. As a result, we are evaluating and we will continue to evaluate other companies and businesses for potential synergies that would add value to our existing operations.

The forecast period of time through which our financial resources will be adequate to support working capital and capital expenditure requirements is a forward-looking statement that involves risks and uncertainties, and actual results could vary. Furthermore, any additional equity financing may be dilutive to shareholders, and debt financing may involve restrictive covenants.

We are subject to the risks associated with similar companies in a comparable stage of growth and expansion. These risks include, but are not limited to, fluctuations in operating results, seasonality, competition, dependence on key individuals, dependence on international operations, foreign currency exchange rate fluctuations, product concentration, and the ability to adequately finance its ongoing operations.

Principles of Consolidation

The consolidated financial statements include the accounts of Broadcaster and its wholly owned subsidiaries. All significant inter-company balances and transactions have been eliminated in consolidation. Our principal operating subsidiaries were Houseplans as of June 30, 2005 and AccessMedia Networks Inc, Houseplans Inc and Weinmaster Homes Ltd as of June 30, 2006.

Use of Estimates

Our consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States (GAAP). These accounting principles require us to make certain estimates, judgments and assumptions. We believe that the estimates, judgments and assumptions upon which we rely are reasonable based upon information available to us at the time that these estimates, judgments and assumptions are made. These estimates, judgments and assumptions can affect the reported amounts of assets and liabilities as of the date of our consolidated financial statements as well as the reported amounts of revenues and expenses during the periods presented. Our consolidated financial statements would be affected to the extent there are material differences between these estimates and actual results. In many cases, the accounting treatment of a particular transaction is specifically dictated by GAAP and does not require management’s judgment in its application. There are also areas in which management’s judgment in selecting any available alternative would not produce a materially different result.

Revenue Recognition

Revenue is recognized in accordance with American Institute of Certified Public Accountants Statement of Position SOP 97-2, Software Revenue Recognition, and SOP 98-9, Modification of SOP 97-2, With Respect to Certain Transactions. Revenue is recognized when persuasive evidence of an arrangement exists (generally a purchase order), product has been delivered, the fee is fixed and determinable, and collection of the resulting account is probable.

Revenue from packaged product sales to resellers and end users is recorded at the time of the sale net of estimated returns.

Revenue from post contract customer support (PCS) is recognized ratably over the contract period.

Subscription revenue is recognized ratably over the contract period.

Non-refundable advanced payments received under license agreements with no defined terms are recognized as revenue when the customer accepts the delivered software.

Revenue from software licensed to developers, including amounts in excess of non-refundable advanced payments, is recorded as the developers ship products containing the licensed software.

Revenue from original equipment manufacturer (OEM) contracts is recognized upon completion of our contractual obligations.

Revenue from the display of text-based links to the websites of its advertisers is recognized as the click-throughs (the number of times a user clicks on an advertiser's listing) occur.

Concentrations

Financial instruments that potentially subject us to concentrations of credit risk consist of cash and cash equivalents and receivables. At times, cash balances held at financial institutions are in excess of federally insured limits.

No single customer accounted for greater than 10% of our gross revenues in any period presented.

Royalty Agreements

We have entered into agreements whereby we are obligated to pay royalties on content published. We generally pay royalties based on a percentage of sales on respective products or on a fee per unit sold basis. We expense royalties as product costs during the period in which the related revenues are recorded.

Cash and Cash Equivalents

We consider all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents. As of June 30, 2006, approximately $548,203 of our cash was held in foreign financial institutions for the benefit of our foreign subsidiaries.

Marketable Securities

Some of the excess funds not needed for current operations are used to invest in marketable securities. All investments in securities are bought and sold through a registered broker; and, held principally for the purpose of selling them in the near term. Every month, we buy and sell security investments, thus continually changing our stock positions. Therefore, the investments in securities are classified as trading securities as defined in paragraph 12.a. of Statement of Financial Accounting Standards No. 115 (“FAS 115”). The unrealized holding gains and losses of these securities have been included in earnings in accordance with paragraph 13 of FAS 115.

Marketable securities are stated at fair value. Marketable securities maturing within one year that are classified as current assets. We carry all of our marketable securities at fair value. During the year ended June 30, 2006, all our holdings of marketable securities were liquidated.

Fair Value of Financial Instruments

The fair value of cash and cash equivalents, trade receivables, trade payables and debt approximates carrying value due to the short maturity of such instruments.

As of June 30, 2006 we had no holdings of marketable securities.

Inventories

Inventories, consisting primarily of CD-ROMs, manuals, packaging, freight in, production costs and packing supplies, are valued at the lower of cost or market and are accounted for on the first-in, first-out basis. Management performs periodic assessments to determine the existence of obsolete, slow moving and non-salable inventories, and records necessary provisions to reduce such inventories to net realizable value. We recognize all inventory reserves as a component of product costs. Following the discontinuance of the Precision Design business, the Company determined that any remaining inventory was obsolete.

Fixed Assets

Fixed assets are stated at cost. Depreciation of furniture and equipment is computed using the straight-line method over the estimated useful lives of the respective assets of 3 to 5 years. Depreciation of software and computer equipment is computed using the straight-line method over an estimated useful life of 3 years.

Software Development Costs and License Fees

Costs incurred in the initial design phase of software development are expensed as incurred in research and development. Once the point of technological feasibility is reached, direct production costs are capitalized in compliance with Statement of Financial Accounting Standards SFAS No. 86, Accounting for the Costs of Computer Software to be Sold, Leased or Otherwise Marketed. We cease capitalizing computer software costs when the product is available for general release to customers. Costs associated with acquired completed software are capitalized.

We amortize capitalized software development costs and visual content license fees on a product-by-product basis. The amortization for each product is the greater of the amount computed using (a) the ratio of current gross revenues to the total of current and anticipated future gross revenues for the product or (b) 18, 36, or 60 months, depending on the product. Broadcaster evaluates the net realizable value of each software product at each balance sheet date and records write-downs to net realizable value for any products for which the carrying value is in excess of the estimated net realizable value.

Other Intangible Assets

Other intangible assets other than goodwill represent Internet domain names, acquired customer lists and contracts, distribution rights and relationships, trade names and trademarks and media content. These assets are amortized using the straight-line method over the estimated useful lives, generally five to thirty years.

Goodwill

In accordance with SFAS No. 142, Goodwill and Intangible Assets, goodwill is being assessed for impairment annually (in our first fiscal quarter) or more frequently if circumstances indicate impairment. We have not recognized any impairment related to goodwill in either fiscal 2006 or fiscal 2005.

Impairment of Long Lived Assets

We review long-lived assets and identifiable intangible assets for impairment whenever events or changes in circumstances indicate that the carrying amount of these assets may not be recoverable. We assess these assets for impairment based on estimated undiscounted future cash flows from these assets. If the carrying value of the assets exceeds the estimated future undiscounted cash flows, a loss is recorded for the excess of the asset’s carrying value over the fair value. We did not recognize any impairment loss for long-lived assets in either fiscal 2006 or fiscal 2005.

Advertising Costs

We expense advertising costs as they are incurred. Advertising and related promotion expenses for the fiscal year ended June 30, 2006 and June 30, 2005 were $1,234,000 and $950,000, respectively.

Income Taxes

Foreign Currency Translation

The asset and liability accounts of foreign subsidiaries are translated from their respective functional currencies at the rates in effect at the balance sheet date, and revenue and expense accounts are translated at weighted average rates during the periods. Foreign currency translation adjustments are included in other comprehensive income. Foreign currency transaction gains and losses are included in the statement of operations.

Stock Based Awards

In February 2000, we canceled approximately 870,000 common stock options held by existing employees and replaced those options with new options with a revised expiration date. The canceled options had a weighted average exercise price of $3.51 per share, and the reissued options are exercisable at $0.75 per share. This cancellation and re-grant meets the definition of a re-pricing under FIN 44, and the reissued options are being accounted for as variable plan accounting. Under variable plan accounting, we recognize an expense or benefit equal to the per share change in the share value until the underlying option expires or is exercised. During fiscal year 2006 and 2005, we recognized a $5,000 benefit and a $0 expense respectively related to stock options.

Had compensation cost for the stock-based compensation plans been determined based upon the fair value at grant dates for awards under those plans consistent with the method prescribed by SFAS 123, net income would have been charged the pro forma amounts indicated below. The pro forma consolidated financial information should be read in conjunction with the related historical information and is not necessarily indicative of actual results.

(In thousands, except per share amounts)

	Fiscal Year ended June 30,
	2006			2005

Net income (loss), as reported		$848			($1,754	)
Intrinsic compensation charge recorded under APB 25		5			-
Pro Forma compensation charge under SAS 123, net of tax		(338	)		(684	)
Pro Forma net income (loss)		515			(2,438	)
Earnings Per Share:
Basic—as reported		$0.03			($0.06	)
Basic—pro forma		$0.02			($0.09	)

Diluted—as reported		$0.03			($0.06	)
Diluted—pro forma		$0.02			($0.09	)

The fair value of each option granted was estimated on the date of the grant using the Black-Scholes option-pricing model using the following weighted average assumptions:

	Fiscal Year ended June 30,
	2006		2005
Risk-free interest rates		5.10%		4.19%
Expected dividend yields		0%		0%
Expected volatility		72.4%		66%
Expected option life (in years)		10		10

The weighted average fair values as of the grant date for grants made in fiscal 2006 and 2005 were $0.94 and $.84, respectively.

We have granted options and warrants to certain key consultants which resulted in non-cash expenses recognized as of June 30, 2006. Non-cash expenses for grants to non-employees were recorded at the time of options and warrant grants, and calculated using the Black-Scholes method of valuation. The non-cash expense for stock based compensation has been as follows:

(In thousands)

	Fiscal Year ended June 30,
	2006		2005

Sales Adjustments		$-		$21
General and Administrative		24		5
Research and Development		-		4
Total charge to earnings		$24		$30

Recent Accounting Pronouncements

Postretirement Benefits - In Sptember 2006, the FASB issued Statement of Financial Accounting Standards N0. 158, Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans—an amendment of FASB Statements No. 87, 88, 106, and 132(R) (“SFAS 158”). This Statement requires an employer to recognize the overfunded or underfunded status of a defined benefit postretirement plan (other than a multiemployer plan) as an asset or liability in its statement of financial position and to recognize changes in that funded status in the year in which the changes occur through comprehensive income of a business entity or changes in unrestricted net assets of a not-for-profit organization. This Statement also requires an employer to measure the funded status of a plan as of the date of its year-end statement of financial position, with limited exceptions. SFAS 158 is effective for financial statements issued for fiscal years ending after December 15, 2006. We are currently assessing the potential impact that adoption of SFAS 158 will have on our financial statements.

Fair Value Measurements - In September 2006, the FASB issued Statement of Financial Accounting Standards No. 157, Fair Value Measurements (“SFAS 157”). This Statement defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles (GAAP), and expands disclosures about fair value measurements. This Statement applies under other accounting pronouncements that require or permit fair value measurements, but does not require any new fair value measurements. SFAS 157 is effective for financial statements issued for fiscal years beginning after November 15, 2007. We are currently assessing the potential impact that adoption of SFAS 157 will have on our financial statements.

Accounting for Uncertainty in Income Taxes - In June 2006, the FASB issued FIN No. 48, Accounting for Uncertainty in Income Taxes - an interpretation of FASB Statement No. 109, which clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements in accordance with FASB Statement No. 109, Accounting for Income Taxes. The interpretation prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. FIN No. 48 requires recognition of tax benefits that satisfy a greater than 50% probability threshold. FIN No. 48 also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition. FIN No. 48 is effective for us beginning July 1, 2007. We are assessing the potential impact that the adoption of FIN No. 48 will have on our financial statements.

Accounting Changes and Error Corrections - In June 2005, the FASB issued Statement of Financial Accounting Standards No. 154, Accounting Changes and Error Corrections (“SFAS 154)”. SFAS 154 replaces APB Opinion No. 20, “Accounting Changes” and FAS No. 3, Reporting Accounting Changes in Interim Financial Statement”. SFAS 154 requires that a voluntary change in accounting principle be applied retrospectively with all prior period financial statements presented on the new accounting principle. SFAS 154 also requires that a change in method of depreciating or amortizing a long-lived non-financial asset be accounted for prospectively as a change in estimate, and correction of errors in previously issued financial statements should be termed a “restatement”. SFAS 154 is effective for accounting changes and correction of errors made in fiscal years beginning after December 15, 2005. The implementation of SFAS 154 is not expected to have a material impact on the Company’s consolidated financial statements.

Share-Based Payment - revision of SFAS 123, Accounting for Stock-Based Compensation - In December 2004, FASB issued Statement of Financial Accounting Standards SFAS No. 123 (Revised 2004), Share-Based Payment (“SFAS 123(R)”). The new pronouncement replaces the existing requirements under SFAS 123 and APB 25. According to SFAS 123(R), all forms of share-based payments to employees, including employee stock options and employee stock purchase plans, would be treated the same as any other form of compensation by recognizing the related cost in the Statement of Operations. This pronouncement eliminates the ability to account for stock-based compensation transactions using APB No. 25 and generally would require instead that such transactions be accounted for using a fair-value based method. FASB concluded that, for small business issuers, SFAS 123(R) is effective for awards and stock options granted, modified or settled in cash in annual periods beginning after December 15, 2005. SFAS 123(R) provides transition alternatives for public companies to restate prior interim periods or prior years. We are in the process of evaluating the impact of this standard on our Statement of Operations.

Reclassifications

The amounts reported for fiscal 2006 and 2005 present the results of operations for the Software segment as discontinued operations due to the sale of Precision Design on June 9, 2006.

2.	Discontinued operations

Sale of Precision Design

In June, 2006, we sold Precision Design, our legacy software business as part of our overall strategy to position the company solely as an on-line business. We received a combination of $6.5 million in cash of which $0.5 million was deposited in an escrow to back our representations and warranties in the sale Agreement , and an interest free note of $1.5 million which was paid in full on July 3, 2006. Included in the assets sold were the TurboCad and DesignCAD product lines as well as other design and personal productivity titles.

The sale of Precision Design is expected reduce our operating expenses for fiscal year 2007 by approximately $5 million. Additionally, our increased cash positions us to grow our Internet entertainment business and to take advantage of future opportunities.

Sale of Allume

On July 1, 2005, we sold 100% of the issued and outstanding capital stock of Allume to Smith Micro Software, Inc. for $11 million cash and 397,547 unregistered shares of its common stock, having a market value (based on a ten day trading average covering $4.40) of $1.75 million. A portion of the purchase price, including $1.25 million cash and shares of common stock having a closing date market value of $750,000 was deposited in an indemnity escrow to secure certain representations and warranties included in the stock purchase agreement. At June 30^th, 2006, an amount of $312,000 was still held in the indemnity escrow account. The gain on sale of Allume is approximately $302,000 but this is subject to change based upon the release of the remaining escrowed consideration.

Sale of ArtToday

As previously disclosed in our annual report on Form 10-KSB for the fiscal year ended June 30, 2003, we sold ArtToday, Inc, our wholly-owned subsidiary based in Arizona, to Jupitermedia Corporation in June 2003.

During the fourth quarter of fiscal 2005 we recorded a gain of $2.0 million from the sale of discontinued operations representing the successful achievement of the third earn-out from the sale of ArtToday. The full amount of the $2.0 million was paid by Jupitermedia per the stock purchase agreement on August 15, 2005.

In addition, during the second and fourth quarters of fiscal 2004, we recorded gains of $1.0 million and $1.0 million, respectively from the sale of discontinued operations representing the successful achievement of the first and second earn-outs from the sale of ArtToday to Jupitermedia Corporation in June 2003.

Operating results of the Precision Design and Allume businesses, which were formerly included in the Software Segment are as follows:

(In thousands)

	Fiscal Year ended June 30,
	2006			2005

Net revenues		$8,191			$19,376
Pre-tax loss		(2,971	)		(3,311	)

3.	Product Line and Other Acquisitions

The Weinmaster Homes, Ltd. acquisition

On July 1, 2005, Houseplans, Inc, our wholly owned subsidiary consummated the acquisition of all the stock of Weinmaster Homes, Ltd. (“WHL”), pursuant to a Stock Purchase Agreement, dated July 1, 2005, between Weinmaster Homes, Ltd., Bruce Weinmaster and Janice Weinmaster and Houseplans, Inc.

The purchase price of approximately $4.2 million was comprised as follows:

(In thousands)

Description	Amount

Fair value of common stock		$ 1,021
Cash		2,000
Promissory note		1,000
Expenses		146
Total		$ 4,167

The fair value of our common stock was determined based on 826,583 shares issued and priced using the average market price of our common stock over the five day period immediately preceding and including June 28, 2005.

The allocation of the purchase price to the assets acquired and liabilities assumed based on their estimated fair values was as follows:

(In thousands)

Description	Amounts (unaudited)

Cash acquired		$297
Other tangible assets acquired		115
Amortizable intangible assets
Domain names		640
Designer agreements / relationships		1,100
Trademarks		20
Proprietary plans		610
Customer lists		40
Goodwill		2,499
Liabilities assumed		(160	)
Deferred tax liability		(994	)
Total		$4,167

The assets will be amortized or depreciated over a period of years shown on the following table:

Description	Estimated remaining life (years)

Tangible assets
Furniture and equipments	3 - 5
Software and computer equipment	3
Amortizable intangible assets
Trade names / trademarks / domain names	5 - 8
Designer agreements / relationships	5 - 8
Broker agreements / relationships	5 - 8
Proprietary plans	15 - 20
Customer lists	1 - 2

$2,499,000 has been allocated to goodwill. Goodwill represents the excess of the purchase price over the fair value of the net tangible and intangible assets acquired, and is not deductible for tax purposes. Goodwill will not be amortized and will be tested for impairment at least annually.

The following attributes of the combination of the WHL and Houseplans businesses were considered significant factors to the establishment of the purchase price, resulting in the recognition of goodwill:

WHL is the operator of the #2 Google ranked globalHouseplans.com website as well as the Canadian focused Weinmaster.com. WHL, one of the leading marketers of stock house plans in Canada, has operated its plans business in the United States and Canada for more than twenty-five years, and is one of the leading innovators in the market. In addition to more than 14,800 plans available to customers, which includes over 500 proprietary Weinmaster plans, WHL has an impressive array of content and tools to help homeowners and their builders economically build their dream homes. Potential operating synergies are anticipated to arise and are more likely to include sales growth from joint marketing programs, utilization of best practices developed in each organization, shared content and reduced common product development costs and limited reductions in administrative costs.

AccessMedia acquisition

On December 16, 2005, Broadcaster and AccessMedia entered into a definitive agreement whereby Broadcaster agreed to acquire 100% of the outstanding capital stock of AccessMedia. The acquisition was completed on June 1, 2006. Broadcaster accounted for the business combination as a purchase.

The purchase price of approximately $32.1 million was comprised as follows:

(In thousands)

Description	Amount

Fair value of common stock	$28,420
Direct transaction costs	3,690
Total	$32,110

The calculation is based on the issuance of 29,000,000 shares of Broadcaster common stock to the shareholders of AccessMedia measured as of the date of the definitive merger agreement using a five-trading-day average price of Broadcaster’s common stock. The definitive merger agreement was announced on December 16, 2005.

The value of AccessMedia's net tangible and intangible assets are based upon their estimated fair value as of the date of the completion of the business combination. The estimated fair value is independent of the preliminary values historically recorded on the books and records of AccessMedia. The allocation of the purchase price to the assets acquired and liabilities assumed based on their estimated fair values was as follows:

(In thousands)

Description	Amounts (unaudited)

Cash acquired	$134
Other tangible assets acquired	719
Amortizable intangible assets
Software	9,800
Domain names	80
Media content	5,800
Goodwill	25,901
Liabilities assumed	(3,943)
Deferred tax liability	(6,381)
Total	$32,110

$15,680,000 has been allocated to amortizable intangible assets with useful lives ranging from ten to thirty years as follows: software - ten years, domain names and content - thirty years.

The residual purchase price of $25,901,000 has been recorded as goodwill. Goodwill represents the excess of the purchase price over the fair value of the net tangible and intangible assets acquired. In accordance with Statement of Financial Accounting Standards No. 142, “Goodwill and Other Intangible Assets,” goodwill will not be amortized and will be tested for impairment at least annually. The agreement provides that 35 million additional shares may be earned and awarded to the current stockholders of AccessMedia. Any additional shares earned would be a future addition to goodwill.

AccessMedia’s acquired technology includes certain additional products with market opportunities. These opportunities were significant contributing factors to the establishment of the purchase price, resulting in the recognition of a significant amount of goodwill. In addition, the acquisition provides an experienced workforce, development of certain technology assets permitting the company to deliver content to consumers over the Internet, existing business knowledge and practice supporting the proposed products and services, marketing programs and a base level of customers.

Proforma Information

The following proforma financial information for the fiscal year ended June 30^th, 2005 gives effect to the acquisitions of Weinmaster and AccessMedia as if those acquisitions had occurred on the first day of the fiscal year.

	Fiscal Year ended June, 30 2005 (unaudited)
	As Originally Stated	Weinmaster	AccessMedia	Proforma

Net revenues	$ 4,347	$ 623	$ 458	$ 5,428
Net Income	(1,754)	3	(1,456)	(3,207)
Earnings per share	(0.06)	-	(0.05)	(0.11)

The following proforma financial information for the fiscal year ended June 30^th, 2006 gives effect to the acquisition of AccessMedia as if that acquisitions had occurred on the first day of the fiscal year

	Fiscal Year ended June, 30 2006 (unaudited)
	As Originally Stated	AccessMedia	Proforma

Net revenues	$ 8,203	$ 5,391	$ 13,594
Net Income	848	(3,716)	(2,868)
Earnings per share	0.03	(0.12)	(0.09)

The unaudited proforma financial information has been prepared by Broadcaster for illustrative purposes only and is not necessarily indicative of the condensed combined consolidated financial position or results of operations in future periods, or the results that actually would have been realized had Broadcaster, AccessMedia and Weinmaster been a combined company during the specified periods.

4.	Fixed Assets

Fixed assets consist of the following:

(In thousands)

	June 30, 2006	June 30, 2005
Computer and office equipment	$701	$570
Software	522	509
Building improvements	118	119
Subtotal	$1,341	$1,198
Accumulated depreciation	(1,035)	(879)
Fixed assets, net	$306	$319

We incurred depreciation expenses of $156,000 and $163,000 for the fiscal years ended June 30, 2006 and 2005 respectively.

5.	Intangible Assets

Goodwill

In accordance with SFAS No. 142, Goodwill and Intangible Assets, goodwill is being assessed for impairment annually (in our first fiscal quarter) or more frequently if circumstances indicate impairment. We had goodwill in the amount of $30,198,000 as of June 30, 2006. We have not recognized any impairment related to goodwill in either fiscal 2006 or fiscal 2005.

Other intangible assets, net

Other intangible assets, consist of the following:

	June 30, 2006	June 30, 2005

Acquired cost
Software development costs and license fees	10,106	293
Domain names	1,827	1,122
Distribution rights	668	-
Customer lists	1,650	403
Licensed media content	5,800	-
Trademarks	18	-
	20,069	1,818
Accumulated amortization
Software development costs and license fees	(199)	(117)
Domain names	(625)	(258)
Distribution rights	(45)	-
Customer lists	(484)	(117)
Licensed media content	(16)	-
Other intangible assets, net	18,700	1,326

Amortization Expense

The following table summarizes the actual and estimated amortization expense for our intangible assets for the periods indicated (in thousands):

(In thousands)

	Fiscal Year ending June 30,
	2005	2006	2007	2008	2009	2010	2011
	Actual		Estimate

Capitalized Software	$438	$433	$688	$596	$593	$593	$593
Capitalized Domain Names	408	560	368	367	303	175	3
Capitalized Distribution Rights	36	76	45	45	45	45	45
Capitalized Customer Names	131	402	344	285	285	252	-
Licensed media content	-	65	789	789	789	789	789
Total amortization expense	$1,013	$1,536	$2,234	$2,082	$2,015	$1,854	$1,430

Debt

The following table details our outstanding debt as of June 30, 2006:

(In thousands)

	June 30, 2006	June 30, 2005

Short-Term
Acquisition related obligations
Monterey Bay Tech, Inc. ("MBYI")	-	2,667
All other acquisition related obligations	2	3
Demand notes payable	1,775	-
Subtotal Short-Term	1,777	2,670
Weighted average short term interest rate	3.9%	2.9%

Long-Term
Acquisition related obligations
All other acquisition related obligations	178	230
Subtotal Long Term	178	230

The MBYI obligation in 2005 consisted of a 4% secured promissory note amounting to $2.0 million and a non-interest bearing note amounting to $667,000. These obligations were incurred in relation to the acquisition of Allume and were repaid in full following the sale of Allume. All other short term acquisition related obligations were non-interest bearing. Demand notes payable consisted of a 4% secured note payable to a related party in amounting to $1,725,000 and a 10% unsecured note payable to a non-related party amounting to $50,000. The related party note is secured on the assets of a subsidiary company.

Long term debt consists of non-interest bearing obligations related to the acquisition of product lines.

The following table details the repayments of the debt detailed above over the next five years ending June 30, 2011:

(In thousands)

	Fiscal Year ending June 30,
	2007	2008	2009	2010	2011 and beyond

Short Term Debt	$1,777	$-	$-	$-	$-
Long Term Debt	-	25	50	50	53
Total Repayments	$1,777	$25	$50	$50	$53

7.	Accrued and Other Liabilities

Accrued and other liabilities consist of the following:

(In thousands)

	June 30, 2006	June 30, 2005
Accrued & other liabilities
Severance	$969	$-
Bonuses	133	912
Payroll & benefits	167	182
Audit & legal	269	208
Lease termination	-	156
Income taxes payable	119	-
Payroll taxes	-	81
Other	189	112
Total accrued & other liabilities	$1,846	$1,651

8.	Realized / Unrealized Gain on Marketable Securities

The following table details the net gains and losses we recognized during fiscal years 2006 and 2005.

(In thousands)

	Gain (loss) on marketable securities for the fiscal year ended June 30, 2006
	Realized	Unrealized			Total
Description		Reversal of unrealized gain or loss recognized in prior periods	Unrealized gain or loss for the year ended June 30, 2006	Sub total Unrealized gain / (loss)

Smith Micro common stock	$923	-	-	-	$923
Other stock in investment portfolio	($234)	$90	($14)	76	($158)
Total	$689	$90	($14)	$76	$765


	Gain (loss) on marketable securities for the fiscal year ended June 30, 2005
	Realized	Unrealized			Total
Description		Reversal of unrealized gain or loss recognized in prior periods	Unrealized gain or loss for the year ended June 30, 2005	Sub total Unrealized gain / (loss)

Jupitermedia common stock	$2,094	($2,146)	$212	($1,934)	$160
Other Stock in investment portfolio	(33)	148	(317)	(169)	(202)
Total	$2,061	($1,998)	($105)	$(2,103)	($42)

9.	Marketable Securities Activity

(In thousands)

	Fiscal Year ended June 30,
	2006	2005

Purchases	$-	($3,926)
Proceeds from sales of securities	1,832	7,965
Realized gain	(689)	(2,061)
Unrealized (gain) loss	(76)	2,103
Increase to cash held by brokerage firm	-	(25)
Borrowings from (repayment of ) margin account	(355)	(882)
Interest and dividends earned	2	(1)
Margin interest paid	-	37
Total	$714	$3,210

10.

Interest and Other, net

Interest and other expense, net, include interest expense, interest income, foreign currency transaction gains and losses, and other non-recurring items. The following table summarizes the components of interest and other, net for fiscal 2006 and 2005:

(In thousands)

	Fiscal Year ended June 30,

	2006	2005
	$	$

Interest & Other, net
Interest expense	($129)	($225)
Interest income	217	104
Foreign exchange gain	37	30
Total Interest & Other, Net	$125	($91)

The reduction in interest expense for fiscal 2006 was mainly the result of a reduction in the interest we incurred on the acquisitions-related notes and interest incurred on our short term financing activities.

The increase in interest income during fiscal 2006 is primarily due to higher cash balances arising from operations and proceeds from the disposal of businesses.

11.

Related Party Transactions

Note Receivable from Related Party - Digital Creative Development Corporation (“DCDC”) 15% Note

On January 31, 2005, we sold the DCDC 15% Note to Mag Multi Corp (Mag Multi), a New York corporation for $343,000, representing the principal balance and all accrued interest as of the date of the transfer. This amount was received in its entirety on February 10, 2005. The DCDC note was a 15% one-year note we received on September 18, 2003 from DCDC upon extending a loan to them in the amount of $350,000. This note was secured by 400,000 shares of Broadcaster’s stock held by DCDC and was originally due on September 18, 2004. The maturity of this note was subsequently extended to May 31, 2005 in exchange for a full payment of the then accrued interest, a payment of $25,000 against the principal amount and an increase in the collateral securing the note.

Note Payable to Related Party

AccessMedia Networks, Inc., our wholly-owned subsidiary, has an obligation amounting to approximately $1,725,000 under various promissory notes payable to Mr. Nolan Quan, a beneficial owner of more than 5% of our outstanding voting shares of common stock. The promissory notes carry an annual interest rate of 4% and are collateralized by the assets of AccessMedia Networks, Inc. The promissory notes are payable on demand at anytime.

Service Agreement with Alchemy Communications, Inc

AccessMedia Networks, Inc., our wholly-owned subsidiary, has entered into an operating agreement with Alchemy Communications, Inc., pursuant to which Alchemy provides office and operating space, staffing, technical services and consulting, bandwidth and hosting, network infrastructure and other related services. During the one month ended June 30, 2006, we incurred approximately $180,749 in costs associated with employee benefits, administrative space and operating costs. Mr. Nolan Quan owns either directly or indirectly a 10% or greater ownership interest in Alchemy Communications, Inc.

Technology and Content Licensing Agreements

MyVod Inc., our wholly-owned indirect subsidiary, has entered into various licensing agreements with Broadcaster LLC, in consideration of a one-time license fee of one dollar for each license. The licenses provide certain key technologies, including digital rights management and content distribution systems, in connection with our AccessMedia business. The licenses are nonexclusive and are granted in perpetuity. However, we generally do not have the right to modify the licensed technologies used in our AccessMedia business, nor do we have the right to receive updates or upgrades or to obtain a copy of the source code for such technologies. Mr. Nolan Quan owns, either directly or indirectly, a 10% or greater ownership interest in Broadcaster LLC.

Consulting Agreements

On May 1, 2003, we entered into a consulting agreement with Mr. Bruce Galloway, Chairman of our Board of Directors, to provide services to the Company related to potential acquisitions and divestitures. In return for his services, Mr. Galloway could be entitled to a fee from zero to $200,000 for each such transaction dependent on his involvement and the consideration received or paid by us as a result of the transactions. Mr. Galloway was not compensated under this agreement in fiscal year 2004 or 2005 or through December 31, 2005 in fiscal year 2006.

On December 12, 2005, we entered into a consulting agreement with Mr. Galloway, to provide services to the Company related to investor introductions and relationships. In return for his services through June 30, 2006, Mr. Galloway was paid $10,000 a month.

On June 20, 2005, we entered into an engagement letter with Baytree Capital Associates LLC (“Baytree”). Under the terms of its engagement, we agreed to pay Baytree, as a result of the Merger, a fee of 5% of the aggregate value of the consideration to be paid to the former AccessMedia stockholders, payable in our shares, for services delivered in connection with the Merger. We have agreed to reimburse Baytree for its reasonable expenses, including fees and disbursements of counsel, and to indemnify Baytree and related parties against liabilities, including liabilities under federal securities laws, relating to, or arising out of, its engagement. In addition, we agreed to pay to Baytree 1.0 million shares of our common stock upon consummation of the Merger. Over the past two years, we have not paid to Baytree any other fees for banking and related services. Mr Michael Gardner is the sole managing member of Baytree.

12.

Legal Proceedings

From time to time, we may be involved in litigation relating to claims arising out of our operations in the normal course of business.

The Company’s subsidiary Accessmedia Networks, Inc. was named as one of a number of co-defendants in a suit filed by the FTC in the Central District of California alleging a violation of Section 5 of the FTC Act arising from products known as Movieland.com, Moviepass.TV, and Popcorn.net. A U.S. district court judge denied the FTC's request to issue a temporary restraining order. Trial on the merits of the case will be scheduled for a later time. Management believes the claims are without merit and the Company intends to defend the actions vigorously. While management believes there is no legal basis for liability, due to the uncertainty surrounding the litigation process, no reasonable estimate of loss is available. Accesmedia Networks, Inc was also named as one of a number of co-defendants in a suit filed by the Washington State Attorney General alleging violations of the Washington Spyware Act and Consumer Protection Act arising from products known as Movieland.com, Moviepass.TV, and Popcorn.net. The Company intends to vigorously defend the allegations. While management believes there is no legal basis for liability, due to the uncertainty surrounding the litigation process, no reasonable estimate of loss is available.

There are no proceedings in which any of our directors, officers or affiliates, or any registered or beneficial shareholder, is an adverse party or has a material interest adverse to our interest.

13.

Employee Benefit Plan

We have a defined contribution plan, which qualifies under Section 401(k) of the Internal Revenue Code for employees meeting certain service requirements. The plan allows eligible employees to contribute up to the annual maximum as defined by the Internal Revenue Service to include catch-up contribution for individuals age 50 or older. At the discretion of the board of directors, Broadcaster may also make contributions each year for the benefit of all eligible employees under the plan. Discretionary contributions for the years ended June 30, 2006 and 2005 were $0 and $71,000, respectively.

14.

Employee Stock Incentive Plans and Equity Related Transactions

Stock Options

During fiscal 2004, we adopted a new stock option plan “The 2004 Incentive Stock Option Plan” (the “2004 Plan”). Our Board of Directors and shareholders adopted the predecessor to the 2004 Plan, the 1993 Incentive Option Plan on June 30, 1993 (the “1993 Plan”). The purpose of the 2004 and the 1993 Plans was to further the growth and general prosperity of Broadcaster by enabling our employees to acquire our common stock, increasing their personal involvement in the Company and thereby enabling Broadcaster to attract and retain our employees.

Under existing federal tax laws, certain benefits are not applicable to stock options granted under plans adopted more than ten years prior. In particular, options granted more than ten years after adoption of the 1993 Plan are not eligible for incentive stock option treatment within the meaning of Section 422 of the Internal Revenue Code of 1986, as amended. Broadcaster believes that the ability to grant incentive stock options to its employees is critically important. We hope to offer incentive compensation to such employees on par with those provided by our competition and others in the high-tech industry. In addition, tax laws and incentive compensation policies have changed since adoption of the 1993 Plan. As a result, our Board of Directors has adopted and our shareholders approved the 2004 Plan to permit Broadcaster to offer a wide range of incentives, including incentive and non-statutory stock options and stock purchase rights.

The 2004 Plan provides for the granting of options to purchase up to an aggregate of 10,500,000 common shares to employees, directors and other service providers of Broadcaster. Any options that expire prior to exercise will become available for new grants from the “pool” of ungranted options. Options that are granted under the 2004 Plan may be either options that qualify as incentive stock options under the Internal Revenue Code (“Incentive Options”), or those that do not qualify as such incentive stock options (“Non-Qualified Incentive Options”).

The 2004 Incentive Options may not be granted at a purchase price less than the fair market value of the Common Shares on the date of the grant (or, for an option granted to a person holding more than 10% of the Company’s voting stock, at less than 110% of fair market value) and Non-Qualified Incentive Options may not be granted at a purchase price less than 85% of fair market value on the date of grant.

The term of each option, under the 2004 plan, which is fixed at the date of grant, may not exceed ten years from the date the option is granted (by law, an Incentive Option granted to a person holding more than 10% of the Company’s voting stock may be exercisable only for five years). At June 30, 2006, 6,500,000options were available for future grants under the 2004 plan. The 6,500,000 shares were approved by Broadcaster shareholders at the Annual Meeting held in May 2006.

The 1993 Employee Incentive Plan, as amended, permitted us to grant options to purchase up to 2,925,000 shares of common stock to employees, directors and consultants at prices not less than the fair market value at date of grant for incentive stock options and not less than 85% of fair market value for non-statutory stock options. These options generally expire 10 years from the date of grant and become exercisable ratably over a 3 to 5-year period. The plan expired on June 30, 2003. At June 30, 2006, no shares were available for future grants under the 1993 plan.

Option activity under the 2004 and 1993 Plans are as follows:

	Number of Shares	Weighted Average Exercise Price

Outstanding, June 30, 2004	3,168,245	$1.05
Granted	1,855,864	1.10
Exercised	(309,179)	0.57
Cancelled	(207,001)	1.24
Outstanding, June 30, 2005	4,507,929	$1.10
Granted	1,575,500	1.33
Exercised	(904,688)	0.74
Cancelled	(657,234)	1.23
Outstanding, June 30, 2006	4,521,507	$1.19

Warrants

Warrants have been granted from time to time in conjunction with financings, debt settlements, Board of Directors and employee compensation and consulting arrangements. Warrant activity is as follows:

	Number of Warrants	Average Exercise Price

Outstanding, June 30, 2004	6,958,244	$1.30
Granted	245,000	1.13
Exercised	(95,000)	0.39
Exercised - cashless	(560,000)	-
Expired	(150,000)	0.45
Outstanding, June 30, 2005	6,398,244	$1.40
Granted	126,250	1.13
Exercised	-	-
Exercised - cashless	(1,987,501)	-
Expired	-	-
Outstanding, June 30, 2006	4,536,993	$1.72

Other Information Regarding Stock Options and Warrants

Additional information regarding common stock options and warrants outstanding as of June 30, 2006 is as follows:

Options Outstanding				Options Exercisable
Range of Exercise Prices	Number Outstanding	Weighted Avg. Remaining Life	Weighted Avg. Exercise Price	Number Exercisable	Weighted Avg. Exercise Price
$0.20-$0.60	163,500	6.98	0.43	163,500	0.43
$0.61-$0.71	319,426	6.78	0..68	319,426	0.68
$0.72-$1.06	975,197	8.11	0.90	799,697	0.90
$1.07-$1.44	2,053,834	8.67	1.20	1,775,893	1.21
$1.45-$4.17	1,009,550	8.96	1.75	474,423	1.66
	4,521,507		1.19	3,532,939	1.11

Warrants Outstanding			Warrants Exercisable
Range of Exercise Prices	Number Outstanding	Weighted Avg. Exercise Price	Number Exercisable	Weighted Avg. Exercise Price
$0.20	150,000	0.20	150,000	0.20
$0.21 - $0.75	361,952	0.56	361,952	0.56
$0.81	1,887,500	0.81	1,887,500	0.81
$0.90	147,000	0.90	147,000	0.90
$1.03 - $1.26	996,250	1.15	981,250	1.15
$1.65 - $2.30	600,000	1.98	600,000	1.98
$5.00 - $14.85	394,291	9.05	394,291	9.05
	4,536,993		4,521,993

15.

Commitments

Future minimum payments for operating leases are as follows:

(In thousands)

	Fiscal Year	Operating Leases
	2007	$502
	2008	90
	2009	12
	2010	-
	2011 and after	-
Total minimum payments		$604

For the twelve months ending June 30, 2006 and 2005 we recognized $390,000 and $363,000, respectively, as rental expense related to operating leases.

16.

Income Taxes

The provision (benefit) for taxes on income was comprised of the following:

(In thousands)

	Fiscal Year ended June 30, 2006	Fiscal Year ended June 30, 2005
Current:
Federal	$96	$-
State	32	25
Foreign	79	-
Total Current	207	25

Deferred:
Federal	(22)	-
State	(5)	-
Foreign	(169)	-
Total Deferred	(196)	-

Total tax provision	$11	$25

Deferred tax balances consist of the following:

(In thousands)

	June 30, 2006	June 30, 2005
Deferred tax assets
Net operating loss carry forward	13,625	14,313
Tax credits	525	441
Purchased intangibles	208	2,974
Allowance for doubtful accounts and returns	51	99
Inventory reserve	55	366
Accrued expenses	398	98
Unrealized appreciation	20	53
Fixed assets	-	77
Valuation allowance	(14,408)	(17,113)
	474	1,308

Deferred tax liabilities
Purchased intangibles	(7,180)	-
State taxes	(463)	(724)
Fixed assets	(2)	-
Installment receivables	(9)	(584)
Net deferred tax assets (liabilities)	(7,180)	-

At June 30, 2006, Broadcaster had an operating loss carry forward of approximately $35,720,000 for federal tax purposes and approximately $12,707,000 for state tax purposes, which expire in various amounts through 2026.

Approximately $3,600,000 of the valuation allowance is related to deferred tax assets of acquired entities, and accordingly, any subsequently recognized tax benefits related to these assets will be allocated to reduce goodwill.

The federal net and state net operating losses begin to expire in 2119, and 2009 respectively. Use of the net operating losses may be limited in the event of an ownership change as defined by the Internal Revenue Code. Management believes that there may be some limitation due to an ownership change during the year, as defined by the Internal Revenue Code. We are currently in the process of quantifying such limitation.

The effective tax rate differs from the federal statutory rate for the years ended June 30, 2006 and 2005 as follows:

(In thousands)

	Fiscal Year ended June 30, 2006	Fiscal year ended June 30, 2005

Federal tax at 35% statutory rate	$301	($545)
State tax provision, net of federal benefit	508	(82)
Change in valuation allowance	(2,705)	54
Effect of intangible assets	2,766	-
Other	(859)	598
Total income tax provision (benefit)	$11	$25

The components of the provision related to continuing operations and discontinued operations are as follows:

	Fiscal Year ended June 30, 2006	Fiscal Year ended June 30, 2005

Continuing operations	$(117)	$25
Discontinued operations	128	-
Total tax provision	$11	$25

17.

Earnings per Share - Potentially Dilutive Securities

Basic earnings per share are computed using the weighted average number of common shares outstanding during the period. Diluted earnings per share are computed using the weighted average number of common and potentially dilutive securities outstanding during the period. Potentially dilutive securities consist of the incremental common shares issuable upon on exercise of stock options and warrants (using the treasury stock method). Potentially dilutive securities are excluded from the computation if their effect is anti-dilutive. The following table summarizes the weighted average shares outstanding:

	Fiscal Year ended June 30
	2006	2005

Basic Weighted Average Shares Outstanding	32,644,639	27,694,435

Total Stock Options Outstanding	4,521,507	4,647,624
Less: Anti Dilutive Stock Options due to loss	(4,521,507)	(4,647,624)

Total Warrants Outstanding	4,536,993	6,398,244
Less: Anti Dilutive Warrants due to loss	(4,536,993)	(6,398,244)

Diluted Weighted Average Shares Outstanding	32,644,639	27,694,435

18.

Segment Information

We have two reportable operating segments which are based on our product families that generate revenues and incur expenses related to the sale of our AccessMedia and Houseplans. All inter-company amounts are eliminated through consolidation. Certain general and administrative expenses are allocated among our different segments based on each segment’s contribution to total revenue.

(In thousands)

	Fiscal Year ended June, 30 2006			Fiscal Year ended June, 30 2005
	AccessMedia	Houseplans	Total	AccessMedia	Houseplans	Total

Net revenues	$945	$7,258	$8,203	$-	$4,347	$4,347
Gross margin	519	4,510	$5,029	-	2,523	$2,523
Operating loss	(88)	(1,805)	($1,893)	-	(373)	($373)
Total Assets	$41,854	$23,910	$65,764	$-	$10,993	$10,993

The following table details the geographical breakdown in our net revenues and total assets by geographic location. The international column includes revenues relating to our wholly owned subsidiaries, Weinmaster Homes Ltd., in Canada.

(In thousands)

	Fiscal Year ended June, 30 2006			Fiscal Year ended June, 30 2005
	Domestic	International	Total	Domestic	International	Total

Net revenues	$5,967	$2,236	$8,203	$4,347	$-	$4,347
Total Assets	$59,952	$5,812	$65,764	$10,993	$-	$10,993

19.

Subsequent Events

Acquisition of America’s Biggest, Inc.

On September 29, 2006, Broadcaster, Inc. completed the acquisition of 100% of the assets of America’s Biggest, Inc. The consideration paid to America’s Biggest consisted of 1,000,000 shares of Broadcaster stock and $500,000 in cash. America’s Biggest is an online grassroots talent showcase for actors, comedians, dancers, models as well as bands and musicians. America’s Biggest empower its artist membership with technology and business tools to enable them to build their own brand and fan base independent of big labels.

Item 8- Changes In and Disagreements with Accountants on Accounting and Financial Disclosure

Appointment of Burr, Pilger & Mayer LLP

Burr, Pilger & Mayer LLP was retained pursuant to their engagement letter dated January 10, 2005, and has been appointed to audit our financial statements for the fiscal year ending June 30, 2006. As our most recent fiscal year ended June 30, 2006, there were no disagreements with Burr, Pilger & Mayer LLP on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which, if not resolved to the satisfaction of Burr, Pilger & Mayer LLP, would have caused Burr, Pilger & Mayer LLP to make reference to the subject matter of the disagreement in connection with its reports.

Item 8A- Controls and Procedures

(a) Evaluation of Disclosure Controls and Procedures: Our Chief Executive Officer and our Chief Financial Officer, after evaluating the effectiveness of the Company’s “disclosure controls and procedures” (as defined in the Securities Exchange Act of 1934 (Exchange Act) Rules 13a-15(e) or 15d-15(e)) as of the end of the period covered by this annual report, have concluded that our disclosure controls and procedures are effective based on their evaluation of these controls and procedures required by paragraph (b) of Exchange Act Rules 13a-15 or 15d-15.

(b) Changes in Internal Control over Financial Reporting: There were no changes in our internal control over financial reporting identified in connection with the evaluation required by paragraph (d) of Exchange Act Rules 13a-15 or 15d-15 that occurred during our last fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Code of Ethics

We have established and maintain a Code of Ethics and Business Conduct policy which incorporate our code of ethics applicable to all employees, officers, and independent directors, who are not employees of the Company, with regard to their Broadcaster-related activities. Our policy is designed to deter wrongdoing and to promote honest and ethical conduct and compliance with all applicable laws and regulations. It also communicates our expectations of our employees and helps enable us to provide accurate and timely disclosure in our filings with the SEC and other public communications. In addition, the policy incorporates guidelines pertaining to topics such as environmental compliance, health and safety compliance; diversity and non-discrimination; vendor relations, employee privacy; and business continuity.

The full text of our Code of Ethics and Business Conduct policy is published on our website at imsisoft.com. We intend to disclose any future amendments to the provisions of our Code of Ethics and Business Conduct policy, or waivers of any provisions granted to executive officers and directors, on this website within five business days following the date of such amendment or waiver.

Item 8B- Other Information

Not Applicable

PART III

Item 9- Directors, Executive Officers, Promoters, and Control Persons; Compliance with Section 16(a) of the Exchange Act

Directors

The following table sets forth all of the members of the Board of Directors of Broadcaster, and certain information about them as of July 26th, 2006.

NAME	AGE	POSITION	DIRECTOR SINCE

Bruce Galloway (3)	48	Chairman of the Board of Directors	2001
Martin Wade, III (3)	57	Chief Executive Officer and Director	2001
Evan Binn (1) (2)	67	Director	2001
Donald Perlyn (1)	63	Director	2001
Robert S. Falcone (2)	59	Director	2002
Richard J. Berman (1) (2) (3)	64	Director	2002
Kathryn Felice	36	Director	2006

(1) Member of the Compensation Committee.

(2) Member of the Audit Committee.

(3) Member of the Executive Committee.

Bruce R. Galloway, age 48. Mr. Galloway became Chairman of Broadcaster in August 2001, pursuant to the proposed merger agreement between Broadcaster and Digital Creative Development Corp (“DCDC”) signed on August 31, 2001. Mr. Galloway is currently the Founder and President of of Galloway Capital Management, LLC based in New York. Galloway Capital Management is an investment firm focusing on investments in and turnaround initiatives for distressed companies. Prior to founding Galloway Capital Management, Mr. Galloway was a Managing Director at Burnham Securities, Inc., an investment bank and NASD Broker/Dealer based in New York. Prior to joining Burnham Securities, Inc., from 1991 to 1993, Mr. Galloway was a Senior Vice President at Oppenheimer & Company, an investment bank and NASD Broker/Dealer based in New York. He is currently the Chairman of Datametrics Corporation and Command Security Corp as well as a Director of Forward Industries, Inc., Waiter.com, Inc. and GVI Security Solutions, Inc. Mr. Galloway serves as the Chairman of the Board and Executive Committee.

Martin R. Wade, III, age 57. Mr. Wade became a director and Chief Executive Officer of Broadcaster in August 2001. He brings to the Company a proven track record in mergers and acquisitions and investment banking. Prior to joining Broadcaster, he served in several executive positions, including chief executive officer, with DCDC between 2000 and 2001. Mr. Wade served from 1998 to 2000 as an M&A banker at Prudential Securities and from 1996 to 1998 as a Managing Director in Mergers and Acquisition at Salomon Brothers. From 1991 to 1996, Mr. Wade was National Head of Investment Banking at Price Waterhouse, LLC. Mr. Wade also spent six years in the M&A department at Bankers Trust and eight years at Lehman Brothers Kuhn Loeb. Mr. Wade is credited with participating in over 200 M&A transactions involving various clients such as, Nike, Cornerstone National Gas Company, Landmark Graphics and Redken Laboratories, Inc. He also serves on the Boards of Directors for DiMon (NYSE: DMN), NexMed (OTC: NEXM) and Command Security Corp (OTC: CMMD).

Evan Binn, age 67. Mr. Binn became a director of Broadcaster in August 2001. Mr Binn is a self employed Certified Public Accountant. Mr. Binn received his bachelor’s degree from the University of California at Los Angeles and is a certified public accountant in California. He is a member of the California Society of Certified Public Accountants and has maintained a practice in Los Angeles, California for thirty-seven years.

Donald Perlyn, age 63. Mr. Perlyn became a director of Broadcaster in August 2001. Mr. Perlyn serves as Executive Vice President of Nathan's Famous, Inc. and President of its subsidiary Miami Subs Corporation. He was hired by Miami Subs in May 1989 and became its President in July of 1998. In October 1999 Miami Subs was acquired by Nathan's Famous Inc., itself a DCDC subsidiary. Mr. Perlyn is also a member of the Board of Directors of Nathan's Famous, Inc. (NASDAQ: NATH). Mr. Perlyn is an attorney and a 32-year veteran of the restaurant industry.

Robert S. Falcone, age 59. Mr. Falcone became a director of Broadcaster in February 2002 and has over thirty-seven years of financial management and board experience. Mr. Falcone is currently President and Chief Executive Officer of Catalyst Acquisition Group, a private equity corporate buyout firm. From 2003 to 2004 he served as the Executive Vice President and Chief Financial Officer of BearingPoint, Inc. an international consulting firm serving Global 2000 companies, medium-sized businesses, government agencies and other organizations. From 2000 to 2002 he was chief financial officer for 800.com, a pioneer in consumer electronics Internet retailing. He served as Senior Vice President and Chief Financial Officer for Nike, Inc. from 1992 to 1998, a time when the company grew annual sales to nearly $10 billion. He began his career at Price Waterhouse, LLP where he spent twenty-one years, eight of which as an audit partner. A graduate of Villanova University and a certified public accountant, Mr. Falcone serves on the boards of directors for RadioShack Corporation (NYSE: RSH), and The Nautilus Group (NYSE: NLS). Mr. Falcone serves as the Chairman of the Audit Committee and is the designated audit committee financial expert.

Richard J. Berman, age 64. Mr. Berman became a director of Broadcaster in February 2002. His business career spans over 35 years of venture capital, management and merger and acquisitions experience. In the last five years, Mr. Berman has served as a professional director and/or officer of about a dozen public and private companies. He is currently Chief Executive Officer of Nexmed, a small public biotech company; Chairman of National Investment Managers, a public company in pension administration and investment management; and Chairman of Candidate Resources, a private company delivering HR services over the web. The nine public companies that Mr. Berman is a director of are Dyadic International, Inc. (AMEX: DIL), Broadcaster, Inc, Internet Commerce Corporation (NASDAQ: ICCA), MediaBay, Inc. (NASDAQ: MBAY), NexMed, Inc. (NASDAQ: NEXM), GVI Security Solutions Inc. (OTC: GVIS.OB), National Investment Managers (OTC: NIVM.OB), Nayna Networks, Inc. (OTC: NAYN.OB) and Advaxis, Inc (OTC: ADXS.OB). From 1998 - 2000, he was employed by Internet Commerce Corporation as Chairman and CEO. Previously, Mr. Berman worked at Goldman Sachs; was Senior Vice President of Bankers Trust Company, where he started the M&A and Leveraged Buyout Departments; created the largest battery company in the world by merging Prestolite, General Battery and Exide to form Exide (NYSE); helped create what is now Soho (NYC) by developing five buildings; and advised on over $4 billion of M&A transactions. He is a past Director of the Stern School of Business of NYU.

Kathryn Felice, age 36. Ms. Felice became a director of Broadcaster in May 2006. She has served as General Counsel of AccessMedia Networks, Inc. (“AccessMedia”), a Delaware corporation, since May 2005. Before joining AccessMedia, Ms. Felice practiced commercial litigation in San Diego, California, representing various technology companies and venture capital groups. Immediately prior, Ms. Felice served as law clerk to the Honorable Louisa S. Porter in the United States District Court for the Southern District of California. During law school, Ms. Felice was a judicial extern to Federal District Judge Thomas J. Whelan; served on The San Diego Law Review, was a contributing editor for The Journal of Contemporary Legal Issues, and a member of the National Moot Court Tax Team. Prior to attending law school, Ms. Felice served as a director in the West Coast Region of Kaplan Educational Centers, a wholly owned subsidiary of the Washington Post. Ms. Felice earned her Bachelor of Science degree from the University of California at Los Angeles and her law degree from the University of San Diego School of Law.

Executive Officers and Significant Employees

Martin R. Wade, III, Chief Executive Officer. See above.

Blair Mills, Chief Financial Officer, Broadcaster, Inc. age 42. Most recently, Mr. Mills served as Chief Financial Officer of AccessMedia. Prior to AccessMedia, Mr. Mills served in various management positions at several internet-based businesses including most recently Longview Media, Inc. Mr. Mills has also served as an independent consultant to small businesses and emerging growth companies. Mr. Mills is a Chartered Accountant in Canada and a Certified Public Accountant in the United States.

Kathryn Felice, General Counsel, Accessmedia Networks, Inc, age 36. See above.

Sanger Powell Robinson II, Vice President of Marketing and Business Development, Accessmedia Networks, Inc. age 38. Mr. Robinson is a founder and CEO of NetBroadcaster.com, Inc, an entertainment portal that has ranked amongst the eight most visited in the world. Mr. Robinson has been important in the development of the AccessMedia software and advises AccessMedia Networks on its marketing strategies and developing strategic relationships with online traffic aggregators and marketing companies. Before joining AccessMedia, he attended Boston University and worked for many years in the music industry.

Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the Exchange Act requires the Company's directors and executive officers, and persons who own more than ten percent of a registered class of the Company's equity securities, to file with the Commission initial reports of ownership and reports of changes in ownership of the Company's Common Stock and other equity securities of the Company. Officers, directors and greater than ten percent shareholders are required by the Commission's regulations to furnish the Company with copies of all Section 16(a) forms they file.

We have been provided with copies of all forms (3, 4 and 5) filed by officers, directors, or ten percent shareholders within three days of such filings.

The Audit Committee includes at least one member who is determined by the Board to meet the qualifications of an “audit committee financial expert” in accordance with SEC rules. Robert S. Falcone is the director who has been determined to be an audit committee financial expert. Shareholders should understand that this designation is a disclosure requirement of the SEC related to Mr. Falcone’s experience and understanding with respect to certain accounting and auditing matters. The designation does not impose on Mr. Falcone any duties, obligations or liability that are greater than are generally imposed on him as a member of the Audit Committee and Board of Directors, and his designation as an audit committee financial expert pursuant to this SEC requirement does not affect the duties, obligations or liability of any other member of the Audit Committee or Board of Directors.

Item 10- Executive Compensation

The following table sets forth all compensation awarded, earned or paid for services rendered to Broadcaster and its subsidiaries in all capacities during each of the fiscal years ended June 30, 2006, 2005 and 2004 to (i) our Chief Executive Officer (“CEO”) during fiscal 2006 and (ii) our three most highly compensated executive officers other than the CEO who were serving as executive officers at the end of fiscal 2006.

Summary Compensation Table
		Annual Compensation				Long-Term Compensation Awards
Name and Principal Positions	Fiscal Year		Salary (1) ($)	Bonus (1) ($)	Other Annual Compensation(2) ($)	Securities Underlying Options (#)	All Other Compensation

Martin R. Wade, III⁽³⁾	2006		244,940	415,000	13,727		-
Chief Executive Officer	2005		200,000	255,000	12,464	-	-
	2004		200,000	-	12,246	46,667	-

Blair Mills	2006		8,000			-	-
Chief Financial Officer	2005			-	-		-
	2004		-	-	-	-	-

Robert Mayer	2006		157,792	108,550	13,621	40,000	78,810
Executive Vice	2005		138,000	32,540	12,358	45,000	-
President of	2004		133,500	44,000	16,465	-	-
Precision Design

Robert O’Callahan⁽⁵⁾	2006		142,244	137,500	13,626	-	-
Chief Financial Officer	2005			-	-	150,000	-
until June 15, 2006	2004		-	-	-	-	-

(1)

Amounts paid in fiscal 2006 are based upon the following annual salaries: Mr. Wade $225,000, Mr. Landies $195,000, Mr. Mayer $138,000.

(2)

Includes payments of medical and dental insurance premiums by the Company on behalf of the named officers’ dependents.

(3)

Amount of securities underlying options in fiscal year 2003 reflect the cancellation of options in connection with an amendment to Mr. Wade’s employment agreement in November 2002.

(4)

Mr. Landies ceased to serve as our President effective as of February 28, 2006 and ceased to be an employee on June 30, 2006.

(5)

Mr. O’Callahan ceased to serve as our CFO effective as of June 15, 2006.

Options/Warrants/SAR Grants in the 2006 Fiscal Year

The following table provides the specified information concerning grants of options and warrants to purchase our common stock made during the fiscal year ended June 30, 2006, to the persons named in the Summary Compensation Table. No stock appreciation rights were granted during fiscal year 2006.

Option Grants/Warrant Issuances in Last Fiscal Year
	Individual Grants				Potential Realized Value at Assumed Annual Rates of Stock Price Appreciation for Option Term⁽³⁾
Name	Number of Securities Underlying Options Granted⁽¹⁾	% of Total Options Granted to Employees in Fiscal Year	Exercise or Base Price ($/Sh)⁽²⁾	Expiration Date	5%	10%

Gordon Landies⁽⁴⁾
Robert Mayer	20,000 20,000		$1.45 $1.08	08/08/2015 02/23/2016	$	$
Robert O’Callahan	--	--	--	--	--	--

(1)

All options granted in the year ended June 30, 2006 were granted pursuant to our 2004 Stock Incentive Option Plan (the “2004 Plan”). These options, which typically have a four-year vesting period, become exercisable over time based on continuous employment with the Company, and, in certain cases, are subject to various performance criteria or vest in full immediately. As of the close of the merger with AccessMedia the 2004 Option Plan expanded by 6.5 Million shares.

(2)

All options in this table have exercise prices equal to the fair market value on the date of grant.

(3)

Potential gains are net of exercise price, but before taxes associated with exercise. These amounts represent certain assumed rates of appreciation only, based on the SEC rules. Actual gains, if any, on stock option exercises are dependent on the future performance of the common stock, overall market conditions and the option holder’s continued employment through the vesting period. The amounts reflected in this table may not necessarily be achieved. If there is no appreciation, there is no potential realizable value.

(4)

Mr. Landies ceased to serve as our President effective February 28, 2006.

(5)

Mr. O’Callahan ceased to serve as our CFO effective as of June 15, 2006.

Aggregate Option Exercises in 2006 Fiscal Year and Year-End Value

The following table sets forth information on the option exercises during the last fiscal year by each of the named executive officers and the number of shares covered by both exercisable and non-exercisable stock options (and warrants) held by them as of June 30, 2005. Also reported are the values for "in-the-money" options, which represent the positive spread between the exercise price of any such existing stock option and the fiscal year-end price of the common stock. No stock appreciation rights were held or exercised by the named executive officers during fiscal year 2005.

Aggregated Option/SAR Exercises In Last Fiscal Year and FY-End Option/SAR Values
			Number of Unexercised Options / SARs At June 30, 2006 (1)	Value of Unexercised In-The-Money Options At June 30, 2006 ($)(2)
Name	Exercise #	Value Realized ($)	Exercisable / Unexercisable	Exercisable / Unexercisable
Gordon Landies (3)	50,000	$11,250	380,025 / -	$68,020 / -
Robert Mayer	-	-	126,250 / 6,250	$85,063 / $438
William Bush (4)	-	-	181,176 / 6,250	$69,362 / $438

(1)

These options, which typically have a four-year vesting period, become exercisable over time based on continuous employment with the Company; and, in certain cases, are subject to various performance criteria or vest in full immediately.

(2)

Based on the difference between the market price of the common stock at June 30, 2005 ($1.23 per share) and the aggregate exercise prices of the options.

(3)

Mr. Landies ceased to serve as our President effective February 28, 2006.

Employment Contracts and Termination of Employment and Change-In-Control Arrangements

In June 2005, Martin R. Wade, III, our Chief Executive Officer, entered into an employment agreement pursuant to which Mr. Wade receives an annual base salary of $225,000. Mr. Wade earns a bonus of $100,000 on the sale of Broadcaster assets if the sale price exceeds $2 million and 2% of the sale price if it exceeds $5 million. This agreement is for a term of three years unless terminated for cause, death or disability.

We entered into an employment agreement with Gordon Landies, our former President, pursuant to which Mr. Landies is entitled to twenty-four months of full compensation of $195,000 annually, acceleration of options and full benefits beginning June 30, 2006. Pursuant to the terms of his employment agreement, Mr. Landies received a bonus in the amount of $150,000 as a result of the closing of the AccessMedia Merger.

In June 2005, we entered into an employment agreement with Robert Mayer, our former Executive Vice President of Precision Design. Mr. Mayer is also a former Director. He ceased to serve on the Board of Directors effective the start of business of October 20, 2005. Mr. Mayer’s agreement provides for the payment to Mr. Mayer of a $144,000 minimum base annual salary and bonuses of up to $60,000 annually. During fiscal 2006, Mr. Mayer was paid a cash bonus of $75,000 for the sale of assets and product lines associated with the Precision Design Business Unit.

In June 2005, we entered into an employment agreement with Mr. Robert O'Callahan, our former Chief Financial Officer. Mr. O’Callahan’s agreement provides for the payment to Mr. O’Callahan of a $140,000 minimum base annual salary and an annual bonus of up to $80,000. Mr. O’Callahan was granted an option under the 2004 Option Plan to purchase 150,000 shares of Broadcaster's then outstanding capital stock at the closing price of the stock as of the date of grant. During fiscal 2006, Mr. O’Callahan will earn a cash bonus of $50,000 for the sale of any asset, company or product line of the Company in which the net sales price is in excess of $10,000,000. In the event of a sale, merger or consolidation of the Company with or into another entity or any other corporate reorganization which results in a net per share amount greater than $2.00, Mr. O’Callahan earns a bonus of $50,000, which becomes immediately payable. Pursuant to the terms of his employment agreement, Mr. O’Callahan was paid a bonus in the amount of $125,000 in connection with the closing of the acquisition of AccessMedia Merger.

Item 11- Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

The following table sets forth, as of June 30, 2006 the beneficial ownership of the Company's Common Stock by:
Each director or nominee;
Each other executive officer named in the Summary Compensation Table;
All directors and executive officers as a group; and
Each person who is known by the Company to own of record or beneficially more than five percent (5%) of the Company's Common Stock.
Except as otherwise indicated, the shareholders listed in the table have sole voting and dispositive power with respect to the shares indicated, subject to community property laws where applicable.

Title of Class	Name and Address of Beneficial Owner	Amount and Nature of Beneficial Owner (1)	Percent of Class (1)
Directors and Executive Officers:
Common Stock	Bruce Galloway. 9201 Oakdale Avenue, Suite 200, Chatsworth, CA 91311. (2)	1,299,650	2.06%
Common Stock	Gordon Landies. 100 Rowland Way, Suite 300, Novato, CA 94945. (3)	799,560	1.27%
Common Stock	Robert Mayer. 100 Rowland Way, Suite 300, Novato CA 94945. (4)	535,206	*
Common Stock	Robert Falcone. 9201 Oakdale Avenue, Suite 200, Chatsworth, CA 91311. (5)	393,750	*
Common Stock	Richard Berman. 9201 Oakdale Avenue, Suite 200, Chatsworth, CA 91311. (6)	378,750	*
Common Stock	Donald Perlyn. 9201 Oakdale Avenue, Suite 200, Chatsworth, CA 91311. (7)	351,250	*
Common Stock	Evan Binn. 9201 Oakdale Avenue, Suite 200, Chatsworth, CA 91311. (8)	171,250	*
Common Stock	Robert O’Callahan. 100 Rowland Way, Suite 300, Novato CA 94945. (9) (14)	150,000	*
Common Stock	Kathryn Felice. 9201 Oakdale Avenue, Suite 200, Chatsworth, CA 91311. (15)	16,250	*
Common Stock	Martin Wade. 9201 Oakdale Avenue, Suite 200, Chatsworth, CA 91311. (10) (16)	9,822,425	15.56%
Common Stock	All directors and executive officers as a group (10 persons)	13,918,091	18.89%

5% Shareholders:
Common Stock	Michael Gardner. (11)	31,574,300	50.02%
Common Stock	Nolan Quan. (12)	31,574,300	50.02%
Common Stock	Digital Creative Development Corporation. (13)	9,822,425	15.56%

(1) Applicable percentages are based on 63,124,518 shares outstanding on June 30, 2006 adjusted as required by rules promulgated by the SEC. Beneficial ownership is determined under the rules of the SEC and generally includes voting or investment power with respect to securities. Shares of common stock subject to options, warrants and convertible notes currently exercisable or convertible, or exercisable or convertible within 60 days after June 30, 2006 are deemed outstanding for computing the percentage of the person holding such options but are not deemed outstanding for computing the percentage of any other person. Unless otherwise indicated in the footnotes to this table and subject to any applicable community property laws, the Company believes that each of the shareholders named in the table have sole voting and investment power with respect to the shares of common stock indicated as beneficially owned by them. The symbol “*” represents holdings which are less than 1% of the outstanding common stock of Broadcaster.


(2) Includes 666,250 shares issuable upon exercise of options and/or warrants to purchase shares of common stock of Broadcaster that are currently exercisable or will become exercisable within 60 days after June 30, 2006.

(3) Includes 750,000 shares issuable upon exercise of options and/or warrants to purchase shares of common stock of Broadcaster that are currently exercisable or will become exercisable within 60 days after June 30, 2006.

(4) Includes 125,000 shares issuable upon exercise of options and/or warrants to purchase shares of common stock of Broadcaster that are currently exercisable or will become exercisable within 60 days after June 30, 2006.

(5) Includes 378,750 shares issuable upon exercise of options and/or warrants to purchase shares of common stock of Broadcaster that are currently exercisable or will become exercisable within 60 days after June 30, 2006.

(6) Includes 378,750 shares issuable upon exercise of options and/or warrants to purchase shares of common stock of Broadcaster that are currently exercisable or will become exercisable within 60 days after June 30, 2006.

(7) Includes 341,250 shares issuable upon exercise of options and/or warrants to purchase shares of common stock of Broadcaster that are currently exercisable or will become exercisable within 60 days after June 30, 2006.

(8) Includes 141,250 shares issuable upon exercise of options and/or warrants to purchase shares of common stock of Broadcaster that are currently exercisable or will become exercisable within 60 days after June 30, 2006.

(9) Includes 150,000 shares issuable upon exercise of options and/or warrants to purchase shares of common stock of Broadcaster that are currently exercisable or will become exercisable within 60 days after June 30, 2006.

(10) Includes 246,667 shares issuable upon exercise of options and/or warrants to purchase shares of common stock of Broadcaster that are currently exercisable or will become exercisable within 60 days after June 30, 2006.

(11) The information is as reported on Schedule 13D filed with the SEC on June 14, 2006. The shares are owned by various entities affiliated with Mr. Michael Gardner as follows: (i) 8,244,300 shares of common stock of Broadcaster held by Mr. Gardner, (ii) 2,450,000 shares of common stock of Broadcaster held by Baytree Capital Associates LLC and (iii) 20,880,000 shares beneficially owned by Mr. Nolan Quan. As the sole managing member of Baytree Capital Associates LLC, Mr. Gardner has sole voting and dispositive power of 2,450,000 shares of common stock of Broadcaster held by Baytree Capital Associates LLC and, therefore, may be deemed to beneficially own such shares. Subject to a certain Company Voting Agreement, Mr. Gardner may also be deemed to have shared power to vote 20,880,000 shares of common stock of Broadcaster beneficially owned by Mr. Quan and, therefore, Mr. Gardner may be deemed to beneficially own such shares of common stock. Mr. Gardner, however, disclaims any beneficial ownership of such 20,880,000 shares of common stock. Mr. Gardner’s address is The Trump Tower, 40 Wall Street, 58th Floor, New York, NY 10005.


(12) The information is as reported on Schedule 13D filed with the SEC on June 14, 2006. The shares are owned by various entities affiliated with Mr. Nolan Quan as follows: (i) 4,640,000 shares of common stock of Broadcaster held by Software People LLC, (ii) 4,640,000 shares of common stock of Broadcaster held by Trans Global Media LLC, (iii) 9,280,000 shares of common stock of Broadcaster held by Broadcaster LLC, (iv) 2,320,000 shares of common stock of Broadcaster held by Access Media Technologies LLC and (v) 10,694,300 beneficially owned by Mr. Michael Gardner. As the sole director and managing member of Software People LLC, Trans Global Media LLC, Broadcaster LLC and Access Media Technologies LLC (collectively, the “AccessMedia Entities”), Mr. Quan has sole voting and dispositive power of such 20,880,000 shares of common stock of Broadcaster held by the AccessMedia Entities and, therefore, may be deemed to beneficially own such shares. Pursuant to a certain Company Voting Agreement, Mr. Quan may also be deemed to have shared power to vote 10,694,300 shares beneficially owned by Mr. Gardner and, therefore, Mr. Quan may be deemed to beneficially own such shares of common stock. Mr. Quan, however, disclaims any beneficial ownership of such 10,694,300 shares of common stock. Mr Nolan Quan is Mr. Quan’s address is 9201 Oakdale Avenue, Suite 200, Chatsworth, CA 91311.

(13) Pursuant to a Schedule 13D filed with the SEC on March 3, 2006,Digital Creative Development Corporation is the record owner of 7,125,758 shares of common stock of Broadcaster. Pursuant to a certain Parent Voting Agreement, Digital Creative Development Corporation may be deemed to have shared power to vote 246,667 shares of common stock of Broadcaster held by Mr. Wade and 2,450,000 shares of common stock of Broadcaster held by Baytree Capital Associates LLC and, therefore, Digital Creative Development Corporation may be deemed to beneficially own such shares of common stock. Digital Creative Development Corporation, however, disclaims any beneficial ownership of such 2,696,667 shares of common stock. The address of Digital Creative Development Corporation is 200 East 82nd Street, New York, NY 10028.

(14) Mr. O’Callahan ceased to serve as our Chief Financial Officer effective as of June 16, 2006.

(15) Includes 16,250 shares issuable upon exercise of options and/or warrants to purchase shares of common stock of Broadcaster that are currently exercisable or will become exercisable within 60 days after June 30, 2006.

(16) Pursuant to a certain Parent Voting Agreement, Mr. Martin Wade may be deemed to have shared power to vote 7,125,758 shares of common stock of Broadcaster held by Digital Creative Development Corp. and 2,450,000 shares of common stock of Broadcaster held by Baytree Capital Associates LLC and, therefore, Mr. Wade may be deemed to beneficially own such shares of common stock. Mr. Wade, however, disclaims any beneficial ownership of such 9,575,758 shares of common stock.

Item 12- Certain Relationships and Related Transactions

Note Receivable from Related Party - DCDC 15% Note

On January 31, 2005, we sold the DCDC promissory note to Mag Multi Corp (Mag Multi), a New York corporation for $343,000, representing the principal balance and all accrued interest as of the date of the transfer. This amount was received in its entirety on February 10, 2005. The DCDC note was a 15% one-year note we received on September 18, 2003 from Digital Creative Development Corporation upon extending a loan to them in the amount of $350,000. This note was secured by 400,000 shares of our stock held by DCDC and was originally due on September 18, 2004. The maturity of this note was subsequently extended to May 31, 2005 in exchange for a full payment of the then accrued interest, a payment of $25,000 against the principal amount and an increase in the collateral attached to the note.

Note Payable to Related Party

Service Agreement with Alchemy Communications, Inc

Technology and Content Licensing Agreements

Consulting Agreements

On December 12, 2005, we entered into a consulting agreement with Mr. Galloway to provide services to the Company related to investor introductions and relationships. In return for his services through June 30, 2006, Mr. Galloway was paid $10,000 per month.

On June 20, 2005, we entered into an engagement letter with Baytree Capital Associates LLC (“Baytree”). Under the terms of its engagement, we agreed to pay Baytree, as a result of the Merger, a fee of 5% of the aggregate value of the consideration to be paid to the former AccessMedia stockholders, payable in our shares, for services delivered in connection with the Merger. We have agreed to reimburse Baytree for its reasonable expenses, including fees and disbursements of counsel, and to indemnify Baytree and related parties against liabilities, including liabilities under federal securities laws, relating to, or arising out of, its engagement. In addition, we agreed to pay to Baytree 1.0 million shares of our common stock upon consummation of the merger. Over the past two years, we have not paid to Baytree any other fees for banking and related services.

Item 13- Exhibits

(a) Exhibits and Index of Exhibits:

The following documents are filed as a part of this Report:

Financial Statements

The following consolidated financial statements of Broadcaster, Inc., and Subsidiaries, and the Independent Auditors' Report issued thereon, are incorporated by reference in Part II, Item 7:

Report of Independent Registered Accounting Firm for the year ended June 30, 2006 and 2005

Consolidated Balance Sheets at June 30, 2006 and 2005

Consolidated Statements of Operations and Comprehensive Income (Loss) for the years ended June 30, 2006 and 2005

Consolidated Statements of Shareholders' Equity for the years ended June 30, 2006 and 2005

Consolidated Statements of Cash Flows for the years ended June 30, 2006 and 2005

Notes to Consolidated Financial Statements

Exhibits

The following exhibits are filed as part of, or incorporated by reference into this Report:

Number	Exhibit Title	Note	Page

2.1	Stock Purchase Agreement, dated January 20, 2004, by and between the Company and Aladdin Systems Holding, Inc.	7
2.2	Stock Purchase Agreement, dated July 1, 2005, by and among the Company, Houseplans, Inc., Weinmaster Homes, Ltd., Bruce Weinmaster and Janice Weinmaster.	8
2.3	Stock Purchase Agreement, dated July 1, 2005, by and between the Company and Smith Micro Software, Inc.	9
2.4	Agreement and Plan of Merger, dated August 8, 2005, by and among the Company, ACCM Acquisition Corp., AccessMedia Networks, Inc., and the stockholders of AccessMedia Networks, Inc. (2.1)	10
2.5	Agreement and Plan of Merger, dated December 16, 2005, by and among the Company, Broadcaster, Inc., ACCM Acquisition Corp., AccessMedia Networks, Inc. and the stockholders of AccessMedia Networks, Inc.	11
2.6	Amended and Restated Agreement and Plan of Merger, dated March 24, 2006, by and among the Company, Broadcaster, Inc., ACCM Acquisition Corp., AccessMedia Networks, Inc. and the stockholders of AccessMedia Networks, Inc.	12
2.7*	Asset Purchase Agreement, dated June 9, 2006, by and between the Company and IMSI Design LLC.
3.1	Amended and Restated Articles of Incorporation.	1
3.2	Amended and Restated Bylaws.	2
10.1	2004 Incentive Stock Option Plan. (4.1)	3
10.2	2004 Warrant Plan. (4.2)	3
10.3	Amendment to 2004 Incentive Stock Option Plan.	4
10.4	Employment Agreement, dated June 15, 2005, by and between the Company and Robert O’Callahan. (10.1)	5
10.5	Amended and Restated Executive Employment Agreement, dated September 1, 2001, by and between the Company and Gordon A. Landies. (10.2)	5
10.6	Amendment to Executive Employment Agreement, dated June 30, 2005, by and between the Company and Gordon A. Landies. (10.3)	5
10.7	Executive Employment Agreement, dated June 1, 2005, by and between the Company and Robert Mayer. (10.4)	5
10.8	Amended and Restated Employment Agreement, dated September 12, 2006, by and between the Company and Martin R. Wade, III.	15
10.9	Consulting Agreement, dated May 1, 2003, by and between the Company and Bruce Galloway. (99.2)	6
10.10*	Form of Stock Purchase Warrant.
10.11	Joint Operating Agreement, dated August 8, 2005, by and between the Company and AccessMedia Networks, Inc. (2.2)	10
10.12	Form of Parent Voting Agreement (Exhibit B to 2.1)	11
10.13*	Amendment No. 1 to Parent Voting Agreement, dated September 18, 2006, by and between AccessMedia Networks, Inc. and certain shareholders of the Company.
10.14	Company Voting Agreement, dated December 16, 2005, by and among the Company and certain stockholders of AccessMedia Networks, Inc. (10.1)	13
10.15*	Amendment No. 1 to Company Voting Agreement, dated September 18, 2006, by and between the Company, Broadcaster Networks, Inc. and certain former stockholders of AccessMedia Networks, Inc.
10.16*	Engagement Letter, dated June 20, 2005, by and between the Company and Baytree Capital Associates LLC.
10.17*	Billing System Software Technology Licensing Agreement, dated April 1, 2005, by and between MicroBilling Systems Ltd. and Camnation, Inc.
10.18*	Digital Asset Creation Software Technology Licensing Agreement, dated April 1, 2005, by and between Broadcaster LLC and MyVod, Inc.
10.19*	DRM Software Technology Licensing Agreement, dated April 1, 2005, by and between Broadcaster LLC and MyVod, Inc.

10.20*	Desktop Notifier Technology Licensing Agreement, dated April 1, 2005, by and between Media Zone Ltd. and Camnation, Inc.
10.21*	Telco Billing Software Technology Licensing Agreement, dated April 1, 2005, by and between Media Charger LLC and Camnation, Inc.
10.22*	Content Management Software Technology Licensing Agreement, dated April 1, 2005, by and between Broadcaster LLC and MyVod, Inc.
10.23*	Digital Content Distribution Technology Licensing Agreement, dated April 1, 2005, by and between Broadcaster LLC and MyVod, Inc.
10.24*	Promissory Note in connection with the Asset Purchase Agreement, dated June 9, 2006, by IMSI Design LLC.
10.25*	Executive Employment Agreement, dated October 11, 2006, by and between the Company and Blair Mills.
10.26*	Consulting Agreement, dated July 1, 2005, by and between the Company and Bruce Galloway.
10.27*	Gigabit Data Center Services Agreement, dated April 27, 2005 by and between Alchemy Communications, Inc and AccessMedia Networks, Inc
16.1	Letter from Grant Thornton.	14
21.1*	List of Subsidiaries.
23.1*	Consent of Burr, Pilger & Mayer LLP.
24*	Power of Attorney.
31.1*	Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2*	Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1*	Certification of Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of Sarbanes-Oxley Act of 2002.

Notes
(1)	Incorporated by reference to Exhibits to the Company’s Registration Statement on Form S-3 filed on September 22, 1993.
(2)	Incorporated by reference to Exhibit 5.03 to the Company’s Current Report on Form 8-K filed on January 18, 2005.
(3)	Incorporated by reference to the exhibits to the Company’s Registration Statement on Form S-8 filed on March 25, 2004. Parenthetical references following the description of each document relate to the exhibit number under which such exhibit was initially filed.
(4)	Incorporated by reference to Annex G to the Company’s Definitive Proxy Statement on Schedule 14A filed on May 5, 2006.
(5)	Incorporated by reference to the exhibits to the Company’s Annual Report on Form 10-KSB filed on September 28, 2005. Parenthetical references following the description of each document relate to the exhibit number under which such exhibit was initially filed.
(6)	Incorporated by reference to Exhibit 99.2 to the Company’s Current Report on Form 10-KSB filed on September 25, 2003.
(7)	Incorporated by reference to Exhibit 2.1 to the Company’s Current Report on Form 8-K filed on April 21, 2004.
(8)	Incorporated by reference to Exhibit 2.1 to the Company’s Current Report on Form 8-K filed on July 7, 2005.
(9)	Incorporated by reference to Exhibit 2.2 to the Company’s Current Report on Form 8-K filed on July 7, 2005.
(10)	Incorporated by reference to the exhibits to the Company’s Current Report on Form 8-K filed on August 9, 2005. Parenthetical references following the description of each document relate to the exhibit number under which such exhibit was initially filed.
(11)	Incorporated by reference to the exhibits to the Company’s Current Report on Form 8-K filed on December 19, 2005. Parenthetical references following the description of each document relate to the exhibit number under which such exhibit was initially filed.
(12)	Incorporated by reference to Exhibit 2.1 to the Company’s Current Report on Form 8-K filed on March 29, 2006.
(13)	Incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on May 5, 2006.
(14)	Incorporated by reference to Exhibit 16 to the Company’s Current Report on Form 8-K filed on November 12, 2004.
(15)	Incorporated by reference to Exhibit 1.01 to the Company’s Current Report on Form 8-K filed on September 22, 2006.

Item 14- Principal Accountant Fees and Services

Burr, Pilger & Mayer, LLP has served as our principal accountant since January 2005.

(1) Audit Fees

Burr, Pilger & Mayer, LLP, our principal accountant during fiscal 2006, billed us audit fees in the aggregate amounts of $180,642 and $41,200 during fiscal 2006 and 2005 respectively. These fees relate to the audit of our annual financial statements, to the review of our financial statements included in our quarterly reports on Forms 10-QSB and regulatory filings or engagements.

(2) Audit-Related Fees

Burr, Pilger & Mayer, LLP our principal accountant during fiscal 2005, billed us audit-related fees in the aggregate amounts of $27,753 and $0 during fiscal 2006 and 2005 respectively. These fees relate primarily to use of audit reports in securities issuance, successor auditor consultation and acquisition and asset sale activity.

(3) Tax Fees

No fees of this sort were billed by Burr, Pilger & Mayer, LLP, our principal accountant during fiscal 2006 or fiscal 2005.

(4) All Other Fees

Burr, Pilger & Mayer, LLP, our principal accountant during fiscal 2006, billed us all other fees in the aggregate amounts of $0 and $884 during fiscal 2006 and 2005 respectively. These fees were in connection with consulting on financial reporting and presentation. No fees of this sort were billed by Grant Thornton LLP.

(5) Audit Committee Policy

During the year ended June 30, 2006, all audit fees were pre-approved by the Audit Committee. The Audit Committee has adopted a policy that it must pre-approve all fees for audit services, tax services and other services from our principal accountant.

SIGNATURES

Pursuant to the requirement of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Novato, State of California on October 11, 2006.

INTERNATIONAL MICROCOMPUTER SOFTWARE, INC.

By: /s/ MARTIN WADE III

Martin Wade III

Chief Executive Officer

By: /s/ BLAIR MILLS

Blair Mills

Chief Financial Officer

POWER OF ATTORNEY

KNOW ALL BY THESE PRESENTS that each individual whose signature appears below constitutes and appoints Martin Wade III and Blair Mills, and each of them, his attorneys-in-fact, and agents, each with the power of substitution and re-substitution, for him and in his name, place and stead, in any and all capacities, to sign any and all amendments (including post-effective amendments) to this Report on Form 10-KSB, and to file the same, with all exhibits thereto and all documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents or any of them, or his or their substitute or substitutes, may lawfully do or cause to be done by virtue hereof.

Pursuant to the Requirement of the Securities Exchange Act of 1934, the following persons in the capacities and on October 11, 2006, have signed this report below.

By: /s/ BRUCE GALLOWAY

Bruce Galloway

Director & Chairman of the Board of Directors

By: /s/ MARTIN WADE III

Martin Wade III

Director

By: /s/ DONALD PERLYN

Donald Perlyn

Director

By: /s/ EVAN BINN

Evan Binn

Director

By: /s/ KATHRYN FELICE

Kathryn Felice

Director

By: /s/ ROBERT S. FALCONE

Robert S. Falcone

Director

By: /s/ RICHARD J. BERMAN

Richard J. Berman

Director

INDEX TO EXHIBITS

Number	Exhibit Title	Page

2.7	Asset Purchase Agreement, dated June 9, 2006, by and between the Company and IMSI Design LLC.
10.10	Form of Stock Purchase Warrant.
10.13	Amendment No. 1 to Parent Voting Agreement, dated September 18, 2006, by and between AccessMedia Networks, Inc. and certain shareholders of the Company.
10.15	Amendment No. 1 to Company Voting Agreement, dated September 18, 2006, by and between the Company, Broadcaster Networks, Inc. and certain former stockholders of AccessMedia Networks, Inc.
10.16	Engagement Letter, dated June 20, 2005, by and between the Company and Baytree Capital Associates LLC.
10.17	Billing System Software Technology Licensing Agreement, dated April 1, 2005, by and between MicroBilling Systems Ltd. and Camnation, Inc.
10.18	Digital Asset Creation Software Technology Licensing Agreement, dated April 1, 2005, by and between Broadcaster LLC and MyVod, Inc.
10.19	DRM Software Technology Licensing Agreement, dated April 1, 2005, by and between Broadcaster LLC and MyVod, Inc.
10.20	Desktop Notifier Technology Licensing Agreement, dated April 1, 2005, by and between Media Zone Ltd. and Camnation, Inc.
10.21	Telco Billing Software Technology Licensing Agreement, dated April 1, 2005, by and between Media Charger LLC and Camnation, Inc.
10.22	Content Management Software Technology Licensing Agreement, dated April 1, 2005, by and between Broadcaster LLC and MyVod, Inc.
10.23	Digital Content Distribution Technology Licensing Agreement, dated April 1, 2005, by and between Broadcaster LLC and MyVod, Inc.
10.24	Promissory Note in connection with the Asset Purchase Agreement, dated June 9, 2006, by IMSI Design LLC.
10.25	Executive Employment Agreement, dated October 11, 2006, by and between the Company and Blair Mills.
10.26	Consulting Agreement, dated July 1, 2005, by and between the Company and Bruce Galloway.
10.27	Gigabit Data Center Services Agreement, dated April 27, 2005 by and between Alchemy Communications, Inc and AccessMedia Networks, Inc
21.1	List of Subsidiaries.
23.1	Consent of Burr, Pilger & Mayer LLP.
24	Power of Attorney.
31.1	Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1	Certification of Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of Sarbanes-Oxley Act of 2002.

EX-2.7 2 broadcaster_10ksb-ex0207.htm ASSET PURCHASE AGREEMENT Unassociated Document

Exhibit 2.7

ASSET PURCHASE AGREEMENT

entered into as of June 9, 2006

by and between

BROADCASTER INC.,

a California corporation,

and

IMSI DESIGN, LLC,

a Delaware limited liability company

TABLE OF CONTENTS

Page

1.	DEFINITIONS		1

2.	PURCHASE AND SALE OF ASSETS		11

	2.1	Closing	11
	2.2	Assumption of Liabilities	11
	2.3	Purchase Price	11
	2.4	Purchase Price Adjustment	12
	2.5	Liabilities Before and After Closing Date	14
	2.6	Transfer Taxes	14
	2.7	Non-Assignable Contracts	14

3.	SELLER'S REPRESENTATIONS AND WARRANTIES		15

	3.1	Organization; Good Standing; Subsidiaries	15
	3.2	Due Authorization; No Conflict	16
	3.3	No Default	16
	3.4	Permits; Compliance with Laws	16
	3.5	Title to Assets	17
	3.6	Sufficiency of Assets	17
	3.7	Precision Design Software Business Intellectual Property	17
	3.8	Employment and Employee Benefit Matters	20
	3.9	Taxes and Fees	21
	3.10	No Litigation; Disputes	22
	3.11	Financial Statements	22
	3.12	Liabilities	23
	3.13	Material Adverse Effect	23
	3.14	Accounts Receivable	23
	3.15	Interim Operations	23
	3.16	Customers and Suppliers	24
	3.17	Disclosure	25
	3.18	Real Property	25
	3.19	Environmental Matters	26
	3.20	Seller Contracts	26
	3.21	Employees	27
	3.22	Inventory	27
	3.23	Product Warranty	28
	3.24	Brokers' Fees	28
	3.25	Statements True and Correct	28
	3.26	Disclaimer	28

4.	PURCHASER'S REPRESENTATIONS AND WARRANTIES		28

	4.1	Organization	28

-i-

TABLE OF CONTENTS

(continued)

Page

	4.2	Due Authorization	28
	4.3	No Litigation	29
	4.4	Purchaser's Investigation	29
	4.5	Statements True and Correct	29
	4.6	Disclaimer	29

5.	POST-CLOSING COVENANTS		29

	5.1	Further Cooperation	29
	5.2	Confidentiality	30
	5.3	Precision Design Software Employees	30
	5.4	AR Collection Assistance/Transition Services	30
	5.5	Online Placement	31
	5.6	Use of IMSI Trademarks	31
	5.7	Negotiations for FormTool Product	31
	5.8	Exclusive Right to Purchase Optional Assets	31
	5.9	Cooperation in Tax Matters	31
	5.10	Non-Compete: Non-Solicit	31
	5.11	Enforcement	32

6.	SURVIVAL; INDEMNIFICATION		33

	6.1	Survival	33
	6.2	Indemnification	33
	6.3	Limitations	34
	6.4	Indemnification Procedures	34
	6.5	Indemnity Payments; Obligations	36
	6.6	Survival	36
	6.7	Determination of Loss and Amount	36
	6.8	Adjustment to Purchase Price	36

7.	DOCUMENTS TO BE DELIVERED AT THE CLOSING		36

	7.1	Delivery by the Seller	36
	7.2	Delivery by the Purchaser	37

8.	GENERAL PROVISIONS		37

	8.1	No Waivers	37
	8.2	Expenses	37
	8.3	Publicity	37
	8.4	Benefit; Assignment	38
	8.5	Severability	38
	8.6	Interpretation	38

-ii-

TABLE OF CONTENTS

(continued)

Page

8.7	Entire Agreement	38
8.8	Notices	39
8.9	Bulk Transfer Laws	40
8.10	Tax Matters	40
8.11	Judicial Interpretation	40
8.12	Governing Law	40
8.13	Counterparts	40
8.14	Specific Performance	41

-iii-

TABLE OF CONTENTS

(continued)

Page

Exhibits
Exhibit A-1	Tangible Personal Property of the Precision Design Software Business
Exhibit A-2	Domain Names of the Precision Design Software Business
Exhibit B-1	Additional Acquired Assets
Exhibit B-2	Additional Assumed Liabilities
Exhibit C	Precision Design Software Products
Exhibit D	Precision Design Software Employees
Exhibit E	Escrow Agreement
Exhibit F	Promissory Note
Exhibit G	Purchase Price Allocation
Exhibit H	Transition Services Agreement
Exhibit I	Office Sublease
Exhibit J	Warehouse Sublease
Exhibit K	Bill of Sale
Exhibit L	Assignment and Assumption Agreement
Exhibit M	Cross Receipt

-iv-

ASSET PURCHASE AGREEMENT

This Asset Purchase Agreement (the “Agreement”) is entered into as of this 9^thday of June, 2006 by and between Broadcaster, Inc., a California corporation (“Seller”), and IMSI Design, LLC, a Delaware limited liability company( “Purchaser”).

RECITALS:

A. Seller owns, directly or indirectly, and/or operates a business which sells, licenses, markets, promotes, supports and/or otherwise provides software and related products and services, in electronic downloadable and packaged forms, online, via retail outlets and through arrangements with republishers, original equipment manufacturers (OEMs) and other third parties, defined further herein as the Precision Design Software Business. Certain assets of the Precision Design Software Business are owned by a German subsidiary of Seller, IMSI International Microcomputer Software GmbH, a German limited liability company (the “GermanSub”), in which Seller is the owner of 100% of the outstanding equity interest (the “Ownership Interest”), which Ownership Interest is also being sold to Purchaser as part of the transaction completed hereby.

B. This Agreement contains the terms pursuant to which Purchaser shall acquire for cash and a promissory note substantially all of those assets used in the operation of the Precision Design Software Business, assume certain specified liabilities and agree to perform Seller’s obligations under certain specified assigned contracts and leases, all as specified herein.

AGREEMENT:

In consideration of the agreements and covenants herein contained, and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereby agree as follows:

1. DEFINITIONS

As used herein, the following terms shall have the following meanings unless the context otherwise requires:

“Accounts Receivable” has the meaning set forth in Section 3.14.

“Acquired Assets” means all of the Seller’s right, title and interest in and to all of the assets used in the operation of the Precision Design Software Business prior to the Closing Date, which include (a) all the tangible personal property used primarily in the operation of the Precision Design Software Business listed on Exhibit A-1 hereto, (b) all Intellectual Property used in the Precision Design Software Business, including (i) the Precision Design Software Products, (ii) the Precision Design Software Business Intellectual Property, (iii) the Precision Design Software Business Customer Information, subject to any limitations arising under an applicable Legal Requirement, (iv) the Precision Design Software Business Materials, and (v) the Internet web sites and the rights in the domain names set forth on Exhibit A-2; (c) the Seller Contracts, (d) the Inventory, (e) accounts receivable and trade receivables in respect of the Precision Design Software Business, (f) all claims, causes of action and rights to sue arising out of or related to infringement, violation or misappropriation of any of the foregoing, (g) the assets set forth on Exhibit B-1 and (h) the Ownership Interest; except and excluding, in each case, the Excluded Assets.

“Affiliate” shall mean a Person in which the Seller or Purchaser, as applicable, owns at least 50% of the voting or ownership interests or a Person that is directly, or indirectly through one or more intermediaries, controlling, controlled by or under common control with the Seller or Purchaser, as applicable.

“Agreement” has the meaning set forth in the Introductory Paragraph.

“Arbiter” has the meaning set forth in Section 2.4(d).

“Assumption and Assignment Agreement” refers to that document set forth in Exhibit K.

“Assumed Liabilities” means the following Liabilities of Seller with respect to the Precision Design Software Business arising after the Closing Date: (a) all Liabilities of Seller under the Seller Contracts listed on Disclosure Schedule 3.20(a) (to the extent set forth on the Pro-forma Balance Sheet), but not including any such Liabilities that arose as a result of any breach or alleged breach by Seller on or before the Closing Date of any Seller Contracts, (b) those additional Liabilities of Seller with respect to the Precision Design Software Business set forth on Exhibit B-2, and (c) Purchaser’s obligations under the Subleases; provided, however, that in no event shall any of the Assumed Liabilities include any of the Excluded Liabilities.

“Balance Sheet Date” means April 30, 2006.

“Business Day” shall mean a day on that is not a Saturday, Sunday or a day on which banks in the State of California or New York are closed.

“Cash Consideration” has the meaning set forth in Section 2.3(a).

“Closing” has the meaning set forth in Section 2.1(a).

“Closing Date” means the date hereof.

“Closing Date Balance Sheet” has the meaning set forth in Section 2.4(b).

“Closing Date Net Assets” has the meaning set forth in Section 2.4(b).

“COBRA” means Part 6 of Subtitle B of Title I of ERISA, Section 4980B of the Code and any similar state Legal Requirement.

“Code” means the Internal Revenue Code of 1986, as amended.

“Confidential Information” has the meaning set forth in Section 5.2(a).

“Contract” means any contract, subcontract, agreement, arrangement, bond, commitment, permission, franchise, indemnity, indenture, instrument, lease, license or understanding, whether or not in writing.

“Damages” means any losses, amounts paid in settlement, claims of any kind, damages, liabilities, obligations, judgments, expenses and reasonable out-of-pocket costs (including, without limitation, costs of investigation or enforcement of rights hereunder), reasonable expenses and attorneys’ fees, including, without limitation, any consequential damages or any special or punitive damages; provided, however, that the amount thus determined shall be reduced by any amounts actually recovered from any third party, including the proceeds received with respect to any applicable insurance policy but excluding the amount of resulting increase in insurance premiums.

“Disclosure Schedules” has the meaning set forth in Section 3.

“Disputed Items” has the meaning set forth in Section 2.4(c).

“Encumbrances” means any lien, mortgage, security interest, pledge, restriction on transferability, defect of title or other claim, charge, or encumbrance of any nature whatsoever on any property or property interest, including any restriction on the use, voting, transfer, receipt of income, or other exercise of any attributes of ownership.

“Environmental Law” means any Legal Requirement with respect to the protection of the public health, safety or the environment, including with respect to any hazardous materials, drinking water, groundwater, wetlands, landfills, open dumps, storage tanks, solid waste, or waste water, water, soil, air, pollution, the protection, preservation or restoration of natural resources, plant and animal life or human health or the environment, or waste management, regulation or control.

“Equity Securities” of a Person means, as applicable, (a) any capital stock, membership interests or other share capital of such Person, (b) any securities of such Person directly or indirectly convertible into or exchangeable for any capital stock, membership interests or other share capital of such Person or containing any profit participation features with respect to such Person, (c) any rights or options directly or indirectly to subscribe for or to purchase any capital stock, membership interests, other share capital of such Person or securities containing any profit participation features with respect to such Person or directly or indirectly to subscribe for or to purchase any securities directly or indirectly convertible into or exchangeable for any capital stock, membership interests, other share capital of such Person or securities containing any profit participation features with respect to such Person, (d) any share appreciation rights, phantom share rights or other similar rights relating to such Person, or (e) any Equity Securities of such Person issued or issuable with respect to the securities referred to in clauses (a) through (d) above in connection with a combination of shares, recapitalization, merger, consolidation or other reorganization.

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended.

“ERISA Affiliate” means any person or entity at any relevant time considered a single employer with any Seller under Section 414 of the Code.

“Escrow Agent” means Commerce Bank, New York, New York.

“Escrow Agreement” means the escrow agreement in the form attached hereto as Exhibit E.

“Escrow Account” means the account established pursuant to the terms of the Escrow Agreement.

“Escrow Amount” means $500,000.

“Excluded Assets” means the following assets of Seller: (a) Seller’s rights under this Agreement (including Seller’s rights to the consideration paid and payable under this Agreement), (b) all cash, cash equivalents and short term investments of Seller, (c) all assets maintained in connection with any employee benefit plan, program or arrangement, (d) policies of insurance covering Seller that are not primarily related to the Acquired Assets, (e) tangible copies of any personnel records that Seller is required by law to retain in its possession (except that all copies shall be provided to Purchaser with respect to any employee of the Precision Design Software Business hired by Purchaser, subject to any limitations arising under an applicable Legal Requirement), (f) Seller’s certificates of incorporation, qualifications to conduct business as a foreign corporation, arrangements with registered agents relating to foreign qualifications, taxpayer and other identification numbers, seals, minute books, stock transfer books, blank stock certificates, and other documents relating to the organization, maintenance, and existence of Seller and Seller’s predecessors, (g) all rights to any refunds of Pre-Closing Taxes, (h) the assets, software, products, Contracts, services and Intellectual Property that are used in the houseplans.com internet business or held by (and not in any way used by the Precision Design Software Business): (i) HousePlans, Inc. or its subsidiary, or (ii) IMSI Australia Pty Ltd., (i) the assets, software, products, Contracts, services and Intellectual Property that are acquired pursuant to the Merger, (j) Excluded Programs, and (k) all other assets, services, products, Contracts and Intellectual Property, Affiliates and businesses of the Seller not related to the Precision Design Software Business or reflected on the Pro-forma Balance Sheet.

“Excluded Liabilities” shall mean all Liabilities of the Seller other than the Assumed Liabilities, including (a) any Liability not primarily related to the Precision Design Software Business, (b) all liability for Pre-Closing Taxes or any other Taxes of Seller, (c) any Liability for costs and expenses (including legal fees and expenses) that Seller has incurred in connection with this Agreement and the transactions contemplated hereby, (d) any Liabilities (i) relating to or arising under or in connection with any “employee benefit plan” (as defined in Section 3(3) of ERISA) or any other benefit plan, program or arrangement of any kind at any time maintained, sponsored or contributed or required to be contributed to by either Seller or any ERISA Affiliate, or with respect to which either Seller or any ERISA Affiliate has any Liability (including, for the avoidance of doubt, any plan listed on Disclosure Schedule 3.8(b)), (ii) pertaining to the employment or service with, or termination from employment or service with, either Seller or any ERISA Affiliate of any individual (including in connection with the transactions contemplated by this Agreement) or (iii) relating to or arising under Seller’s 1993 Employee Incentive Plan or Seller’s 2004 Incentive Stock Option Plan, (e) any Liability that Seller has incurred in connection with the Merger and the transactions contemplated thereby and (f) any Liability for Indebtedness.

“Excluded Programs” means the following software programs in the form in which they are made generally available to the public at Closing: (a) FormTool, a program for electronic form creation and management, (b) Flow Charts & More, a flow chart drawing program, (c) TurboProject, a program providing project management support along with universal control to manage schedules, activities, resources and costs, and (d) ResumeWriter, a resume preparation program.

“Financial Statements” has the meaning set forth in Section 3.11.

“GAAP” means generally accepted accounting principles in effect in the United States of America at the time of application thereof, applied on a consistent basis.

“GermanSub” has the meaning set forth in the Recitals.

“Governmental Authority” means (a) any multinational, international, foreign, federal, state, county, province, local or municipal government or administrative or regulatory agency or political subdivision thereof, (b) any governmental agency, authority, board, bureau, commission, department or instrumentality, (c) any court or administrative tribunal, (d) any non-governmental agency, tribunal or entity that is vested by a governmental agency with applicable jurisdiction, or (e) any arbitration tribunal or other non-governmental authority with applicable jurisdiction.

“Indebtedness” means, at any time and with respect to any Person, (a) all indebtedness of such Person for borrowed money, (b) all indebtedness of such Person for the deferred purchase price of property or services (other than property, including inventory, and services purchased, and trade payables, other expense accruals and deferred compensation items arising, in the ordinary course of business, consistent with past practice), (c) all obligations of such Person evidenced by notes, bonds, debentures or other similar instruments (other than performance, surety and appeal bonds arising in the ordinary course of business in respect of which such Person’s Liability remains contingent), (d) all indebtedness of such Person created or arising under any conditional sale or other title retention agreement with respect to property acquired by such Person (even though the rights and remedies of Seller or lender under such agreement in the event of default are limited to repossession or sale of such property), (e) all obligations of such Person under financing leases and similar leases which have been or should be, in accordance with GAAP, recorded as capital leases, to the extent required to be so recorded, (f) all reimbursement, payment or similar obligations of such Person, contingent or otherwise, under acceptance, letter of credit or similar facilities, (g) all Indebtedness of others referred to in clauses (a) through (f) above guaranteed directly or indirectly by such Person, or in effect guaranteed directly or indirectly by such Person through an agreement (i) to pay or purchase such Indebtedness or to advance or supply funds for the payment or purchase of such Indebtedness, (ii) to purchase, sell or lease (as lessee or lessor) property, or to purchase or sell services, primarily for the purpose of enabling the debtor to make payment of such Indebtedness, (iii) to supply funds to or in any other manner invest in the debtor (including any agreement to pay for property or services irrespective of whether such property is received or such services are rendered) or (iv) otherwise to assure a creditor against loss in respect of such Indebtedness, and (h) all Indebtedness referred to in clauses (a) through (g) above secured by (or for which the holder of such Indebtedness has an existing right, contingent or otherwise, to be secured by) any Encumbrance upon or in property (including, without limitation, accounts and contract rights) owned by such Person, even though such Person has not assumed or become liable for the payment of such Indebtedness, and including in clauses (a) through (h) above any accrued and unpaid interest thereon and any costs associated with termination and prepayment thereunder.

“Indemnified Party” has the meaning set forth in Section 6.4(a).

“Indemnifying Party” has the meaning set forth in Section 6.4(a).

“Indemnity Cap” has the meaning set forth in Section 6.3.

“Indemnity Deductible” has the meaning set forth in Section 6.3.

“Intellectual Property” means, all of the following in any jurisdiction throughout the world (a) all trademarks, service marks (registered or unregistered) (domestic or international), trade dress, logos, designs, trade names, fictitious business names, slogans, Internet domain names and rights in telephone numbers, product goodwill and indications of origin, together with all translations, adaptations, derivations, and combinations of any of the foregoing, and all applications, registrations and renewals pertaining to any of the foregoing, and all goodwill associated therewith; (b) all inventions (whether patentable or unpatentable and whether or not reduced to practice), all improvements thereto, and all patents, patent applications, and patent disclosures, together with all reissues, continuations, divisions, revisions, continuations-in-part, renewals, reexaminations and extensions thereof; (c) all discoveries, improvements, ideas, know-how, formulas, methodologies, processes, specifications, customer lists, mailing and supplier lists, pricing and cost information, products plans, service plans and rights in research and development, and confidential, proprietary and other non-public information (including the right to limit or control the use or disclosure thereof) and trade secrets; (d) all copyrights (including mask works) and works of authorship, including all writings, artwork, clipart, web art, web sites, sounds, graphics, photographs, animations, images, designs, mask works or other works, and all registrations, applications and renewals in connection therewith, and all moral rights; (e) all designs and plans (in paper and electronic form); (f) rights of privacy and rights of publicity; (g) all technology and computer programs, software, data, databases, data compilations and data collections (including source code, object code, programming tools, drawings, and specifications) (whether embodied in software, firmware or otherwise), documentation, designs, files, net lists, records, tools, including technical data; (h) all other intellectual property rights, industrial property rights, and proprietary rights; (i) all Licenses, immunities and the like related to any of the foregoing; (j) all fixations, instantiations, copies, reductions to practice and tangible embodiments of any of the foregoing (in whatever form or medium); and (k) all books and records describing or used in connection with any of the foregoing.

“Inventory” means all inventory of the Precision Design Software Business in the retail channel under consignment, in any distributor’s warehouse or in Seller’s warehouses or other locations controlled by Seller as of the Closing Date.

“Leasehold Improvements” mean all buildings, structures, improvements and fixtures located on any land leased pursuant to the Leases.

“Leases” mean the Office Lease and the Warehouse Lease.

“Leased Premises” mean the Office Leased Premises and the Warehouse Leased Premises.

“Legal Requirement” means any federal, state, county, local, provincial, municipal, foreign, international, multinational, or other Order, constitution, law, rule, code, ordinance, plan, permit, principle of common law, regulation, statute or treaty.

“Liability” means any liability or obligation (whether known or unknown, whether asserted or unasserted, whether absolute or contingent, whether accrued or unaccrued, whether liquidated or unliquidated and whether due or to become due), including any liability for Taxes.

“License” means any Contract that grants Seller the right to use, republish, sale, distribute, exploit or otherwise enjoy the benefits of any Intellectual Property (including any covenants not to sue with respect to any Intellectual Property).

“Licensed Product” means a third party software product or module which meets all of the following conditions: (i) it is duly licensed to Seller pursuant to a valid and enforceable License set forth in Disclosure Schedule 3.20(a), (ii) it is used by Seller in the operation of the Precision Design Software Business only in accordance with the terms and conditions of such License, and (iii) it is identified in Exhibit C as a licensed or distributed application, training material or plug-in .

“Material Adverse Effect” means a material adverse change in or effect with respect to the condition (financial or other) or operations of the Acquired Assets, Assumed Liabilities or the Precision Design Software Business.

“Material Liability” means an individual Liability in the amount of ten thousand dollars ($10,000.00) or more that is not reflected on the Pro Forma Balance Sheet.

“Merger” means the transactions contemplated by the Agreement and Plan of Merger, dated as of December 16, 2005 and amended as of March 24, 2006 (the “Merger Agreement”), by and among Seller, AccessMedia Networks, Inc. (“AccessMedia”), ACCM Acquisition Corp., a wholly-owned subsidiary of Seller, and the shareholders of AccessMedia whereby AccessMedia will become a wholly-owned subsidiary of Seller.

“Net Assets” as of any date means, with respect to the Precision Design Software Business, current assets that are Acquired Assets less current liabilities that are Assumed Liabilities (provided that current assets and current liabilities exclude deferred revenue (which deferred revenue shall not exceed $30,000.00), intercompany accounts payable,any amounts related to Taxes and one-half of the outstanding Liability related to Upperspace Corporation).

“Net Asset Adjustment” has the meaning set forth in Section 2.4(b).

“Non-Assignable Contract” has the meaning set forth in Section 2.7.

“Objection Notice” has the meaning set forth in Section 2.4(d).

“Office Lease” means that certain lease commencing on January 9, 2004, as amended, by and between IMSI and Golden Gate Plaza, LLC with respect to the Office Leased Premises.

“Office Leased Premises” means the commercial office premises leased by IMSI pursuant to the Office Lease located at 100 Rowland Way, Suite 300, Novato, CA 94945.

“Optional Assets” mean the “IMSI” trademark/trade name and the domain name “imisoft.com.”

“Order” means any award, decision, injunction, judgment, order, ruling, subpoena, or verdict entered, issued, made, or rendered by any court, administrative agency, or other Government Agency or by any arbitrator.

“Ordinary Course of Business” means an action which meets all of the following: (a) it is consistent with the past practices of Seller, (b) it is consistent with prudent and commercial business judgment, and (c) it is taken in the ordinary course of the normal day-to-day operations of the Precision Design Software Business.

“Ownership Interest” has the meaning set forth in the Recitals.

“Parties” or “Party” means Seller and Purchaser or any of them.

“Permit” means any permit, approval, consent, clearance, authorization, license, variance, waiver, permission or declaration or filing required by a Governmental Authority under any Legal Requirement.

“Permitted Liens” means (a) covenants, conditions, restrictions, encroachments, encumbrances, easements, rights of way, licenses, grants, building or use restrictions, exceptions, reservations, limitations or other imperfections of title (other than a lien securing any Indebtedness) with respect to the Acquired Assets which do not secure any monetary amount and which, individually or in the aggregate, does not materially detract from the value of, or materially interfere with the present occupancy or use of, any of such assets and the continuation of the present occupancy or use of such asset; (b) unfiled mechanic’s, materialmen’s and similar liens with respect to amounts not yet due and payable or which are being contested in good faith through appropriate proceedings and for which adequate reserves in accordance with GAAP are reflected on the Balance Sheet; (c) liens for Taxes not yet due and payable or which are being contested in good faith through appropriate proceedings and for which adequate reserves are reflected on the Balance Sheet; (d) liens securing rental payments under capital and equipment lease arrangements, which capital lease arrangements existing as of the Closing Date are, in accordance with GAAP, reflected as Indebtedness on the Balance Sheet, including (i) a lien by Greater Bay Bank for the lease of a forklift; and (e) that UCC lien filed by Upperspace Corporation on all intellectual property assets pertaining to the DesignCAD software business acquired by Seller from Upperspace Corporation.

“Person” means any natural person, general or limited partnership, corporation, limited liability company or other entity.

“Pre-Closing Taxes” means any tax payable with respect to the Precision Design Software Business (including the Acquired Assets) or other properties or operations of Seller or of any member of any affiliated group of which either Seller is a member attributable to a taxable period ending on or prior to the Closing Date.

“Precision Design Software Business” means all of Seller’s software business related to the Precision Design Software Products, including its own product lines and those to which it has the right to sell (including all plug-ins, training materials and symbol content collections), in packaged or electronic downloadable form, and related services, excluding the Excluded Assets.

“Precision Design Software Business Customer Information” means all customer information used in or otherwise related to the Precision Design Software Business, including the database of all related purchases and customer transactions.

“Precision Design Software Business Intellectual Property” means all Intellectual Property necessary for, used in or relating to the Precision Design Software Business as it is currently conducted, including the design, development, distribution, marketing, manufacture, use, import, license, and sale of the Precision Design Software Products.

“Precision Design Software Business Materials” means all advertising and promotional materials, catalogs, studies, reports, newsletters, archives and other printed or written materials or electronic versions thereof, used in or otherwise relating to the Precision Design Software Business.

“Precision Design Software Employees” means those individuals who, prior to the Closing Date, perform services as an employee primarily for the Precision Design Software Business, as listed on Exhibit E hereto, which list includes any individual who is on an approved leave of absence, vacation, or short-term disability.

“Precision Design Software Products” means all versions (including versions in development) of each software product set forth on Exhibit C, and all services related thereto or provided in connection therewith.

“Pro-forma Balance Sheet” means the pro-forma balance sheet as of April 30, 2006 for the Precision Design Software Business and the notes thereto, if any, prepared on a pro-forma basis consistent with GAAP.

“Pro-forma Profit and Loss Statements” means the pro-forma profit/loss statements for the Precision Design Software Business, and the notes thereto, if any, prepared on a pro-forma basis consistent with GAAP, for each of the two (2) most recent fiscal years.

“Promissory Note” has the meaning set forth in Section 2.3(b), as may be adjusted pursuant to Section 2.4(g).

“Purchaser” has the meaning set forth in the Introductory Paragraph.

“Purchaser Indemnified Parties” has the meaning set forth in Section 6.2(a).

“Purchaser Indemnitee” has the meaning set forth in Section 6.2(a).

“Purchase Price” shall be Eight Million Dollars ($8,000,000), as may be adjusted pursuant to Section 2.4 and Section 6.8.

“Seller Contracts” means all domestic and international Contracts relating to the Precision Design Software Business, including marketing, advertising, customer support, technical support, distribution, vendor and any other purchase and sale agreements to or otherwise used in the Precision Design Software Business, and copies of all documentation and correspondence with respect thereto.

“Seller Indemnified Parties” has the meaning set forth in Section 6.2(b).

“Seller Indemnitee” has the meaning set forth in Section 6.2(b).

“Seller” has the meaning set forth in the Introductory Paragraph.

“Shrinkwrap Software License” means a non-exclusive, internal use only, written software License to Seller for mass-market, non-customized software that (a) is licensed solely in executable or object code form, (b) is not incorporated into, or used directly in the development, manufacturing or distribution of any of the products or services of the Precision Design Software Business (including the Precision Design Software Products), and (c) is generally available to the public on standard terms for less than a total cost of Five Thousand Dollars ($5,000).

“Subleases” refers to those documents attached hereto as Exhibit H, subleasing the Office Leased Premises to the Purchaser, and Exhibit I, subleasing the Warehouse Leased Premises to the Purchaser.

“Systems” has the meaning set forth in Section 3.7(k).

“Tax” or “Taxes” means all (a) United States federal, state or local or non-United States taxes, assessments, charges, duties, levies or other similar governmental charges of any nature, including all income, franchise, profits, capital gains, capital stock, transfer, sales, use, occupation, property, excise, severance, windfall profits, stamp, stamp duty reserve, license, payroll, withholding, ad valorem, value added, alternative, minimum, environmental, customs, social security (or similar), unemployment, sick pay, disability, registration and other taxes, assessments, charges, duties, fees, levies or other similar governmental charges of any kind whatsoever, whether disputed or not, together with all estimated taxes, deficiency assessments, additions to tax, penalties and interest; (b) any liability for the payment of any amount of a type described in clause (a) arising as a result of being or having been a member of any consolidated, combined, unitary or other group or being or having been included or required to be included in any Tax Return related thereto; and (c) any liability for the payment of any amount of a type described in clause (a) or clause (b) as a result of any obligation to indemnify or otherwise assume or succeed to the liability of any other Person.

“Tax Returns” means any and all returns, reports, claims for refund, information returns, or other statements (including elections, declarations, disclosures, schedules, estimates, and attachments), including amendments thereof, required to be filed by a Party with respect to Taxes.

“Third-Party Consent” has the meaning set forth in Section 2.7.

“To Seller’s knowledge” means the actual knowledge, after reasonable inquiry, of the officers and directors of IMSI and GermanSub.

“Transfer Taxes” means any sales, transfer, documentary, use, registration, value-added and other similar Taxes (including all applicable real estate transfer taxes) and related fees (including any penalties, interest and additions to such taxes) incurred in connection with this Agreement and the transactions contemplated hereby.

“Transition Services Agreement” has the meaning set forth in Section 5.4.

“Warehouse Lease” means that certain lease dated March 16, 2004, as amended, by and between IMSI and Harrison Family Enterprises, II with respect to the Warehouse Leased Premises.

“Warehouse Leased Premises” means the warehouse premises leased by IMSI pursuant to the Warehouse Lease located at 1051 Aldridge Road, Suite I-1, Vacaville, CA 95688.

2. PURCHASE AND SALE OF ASSETS

2.1 Closing.

(a) Closing. The closing of the transactions contemplated by this Agreement (the “Closing”) shall take place at the offices of Greyhawk Capital Management, LLC, in __________, Idaho, commencing at 10:00 a.m. local time on the Closing Date.

(b) Purchase and Sale. At the Closing, subject to the terms and conditions of this Agreement, Seller shall sell, assign, transfer, convey and deliver to Purchaser, and Purchaser shall purchase and accept from Seller, all of Seller’s right, title and interest in and to all of the Acquired Assets.

(c) Deliveries. At the Closing, (A) Seller will deliver to Purchaser the documents set forth in Section 7.1 and (B) Purchaser will deliver to Seller the documents set forth in Section 7.2.

2.2 Assumption of Liabilities. At the Closing, subject to the terms and conditions of this Agreement, Purchaser shall assume and become responsible for all of the Assumed Liabilities.

2.3 Purchase Price. On the Closing Date, Purchaser shall cause the following to be delivered to Seller:

(a) Six Million Five Hundred Thousand Dollars ($6,500,000) in cash at the Closing (the “Cash Consideration”) via wire transfer of immediately available funds as directed by Seller less the Escrow Amount, which will be deposited into Escrow pursuant to the terms of the Escrow Agreement.

(b) A promissory note duly executed by Purchaser to Seller in the principal amount of One Million, Five Hundred Thousand Dollars ($1,500,000) in a form attached hereto as Exhibit F (“Promissory Note”).

(c) Purchase Price Allocation. The Purchase Price (and all other capitalized costs) shall be allocated among the Acquired Assets in accordance with Code §1060 and the Treasury regulations thereunder in the manner set forth on Exhibit G hereto, which allocation shall be binding upon Seller and Purchaser as adjusted pursuant to Section 2.4. Seller and Purchaser shall report, act and file Tax returns (including Internal Revenue Service Form 8594) in all respects and for all purposes consistent with such allocation. Seller and Purchaser shall timely and properly prepare, execute, file and deliver all such documents, forms and other information as either may reasonably request to prepare in connection with such allocation. Neither Seller nor Purchaser shall take any position (whether in audits, Tax Returns or otherwise) that is inconsistent with such allocation unless required to do so by applicable Legal Requirement.

2.4 Purchase Price Adjustment.

(a) After the Closing, the Purchase Price may be recalculated based on the Net Asset Adjustment determined in accordance with this Section 2.4.

(b) As soon as reasonably practical after the Closing, but in no event more than sixty (60) days after the Closing Date, Purchaser shall prepare and deliver to Seller a pro-forma balance sheet of the Precision Design Software Business as of the close of business on the Closing Date (the “Closing Date Balance Sheet”), which shall include Purchaser’s computation of the Net Assets as of the Closing Date (the “Closing Date Net Assets”) (which the parties currently anticipate will show a Net Asset value of One Million Dollars ($1,000,000)) and Purchaser’s proposed purchase price adjustment, if any, to be made in accordance with this Section 2.4, which amount shall be equal to the amount of Net Assets on the Pro-Forma Balance Sheet less the amount of Net Assets on the Closing Date Balance Sheet (the “Net Asset Adjustment”) (the “Draft Adjustment Report”) provided, however that the parties acknowledge that the Net Asset Adjustment may be a negative number and that an adjustment to the purchase price pursuant to Section 2.4(g) shall only be required if the Net Asset Adjustment is plus or minus (+/-) One Hundred Thousand Dollars ($100,000.00). If the Net Asset Adjustment is greater than plus or minus One Hundred Thousand Dollars ($100,000) the amount due shall be the amount of the adjustment greater or less than the $100,000 difference. The Closing Date Balance Sheet shall be prepared in accordance with GAAP and shall, for purposes of computing the Closing Date Balance Sheet, assume that the Precision Design Software Business continued to be conducted in the same manner as it had been conducted between the Balance Sheet Date and the Closing Date. Seller shall provide Purchaser access to the books and records of the Precision Design Software Business and to knowledgeable employees and accounting professionals of Seller upon reasonable notice and will provide Purchaser with any information Purchaser reasonably requests in order to prepare the Closing Date Balance Sheet.

(c) For a thirty (30) day period, beginning after Seller’s receipt of the Closing Date Balance Sheet and the Draft Adjustment Report, Seller and Purchaser shall cooperate with each other to resolve any disagreements between them with respect to the Draft Adjustment Report. In the event Seller and Purchaser agree on the Draft Adjustment Report and the proposed Net Asset Adjustment set forth therein (such agreement to be indicated in writing by Seller and Purchaser by signing such Draft Adjustment Report), then the Draft Adjustment Report shall be deemed to be the final Adjustment Report (the “Adjustment Report”), and the Net Asset Adjustment set forth therein shall be conclusive and binding upon Purchaser and Seller and be effected as set forth below in Section 2.4(g).

(d) In the event Seller and Purchaser do not reach agreement on all aspects of the Draft Adjustment Report within the thirty (30) day period, including with respect to the Net Asset Adjustment set forth therein, Seller shall promptly (but in no event later than five (5) days following the expiration of such thirty (30) day period) prepare a written notice of its objections (the “Objection Notice”): (i) objecting in good faith to the Closing Date Balance Sheet and or the Net Asset Adjustment as set forth in the Draft Adjustment Report, (ii) setting forth in reasonable detail the nature and dollar amount of the items being disputed (collectively, the “Disputed Items”) and the reasons therefor, and (iii) specifying its calculation of the Disputed Items, the Closing Date Balance Sheet and the Net Asset Adjustment. Any account or determination set forth or reflected in the Closing Date Balance Sheet that is not specifically objected to in the Objection Notice will be deemed final, binding and conclusive upon Purchaser and Seller upon delivery of the Objection Notice. In connection with the preparation of the Objection Notice, Purchaser shall grant Seller’s accountants and other representatives reasonable access to all of the books and records of the Precision Design Software Business; provided, however, that such access will not be conducted or provided at times or in a manner that would unreasonably interfere with Purchaser’s operations. If Seller fails to deliver a timely Objection Notice, then the Closing Date Balance Sheet and the calculation of Net Assets and the Net Asset Adjustment set forth in the Draft Adjustment Report shall be deemed conclusive and binding upon Purchaser and Seller.

(e) Any Disputed Items shall be submitted to a recognized independent public accounting firm mutually satisfactory to Purchaser and Seller (the “Arbiter”), and Purchaser and Seller shall promptly deliver to the Arbiter the Closing Date Balance Sheet, the Draft Adjustment Report and Seller’s Objection Notice. The Arbiter shall act as an expert and not as an arbitrator to calculate and determine promptly, but not later than thirty (30) days after the acceptance of its appointment (based solely on the written submissions of Seller, on the one hand, and Purchaser, on the other, in the documents delivered to the Arbiter and not by independent investigation) only the Disputed Items. In resolving any Disputed Item, the Arbiter’s determination of such Disputed Item may not be more favorable to Purchaser than the related amount set forth in the Closing Date Balance Sheet or more favorable to Seller than the related amount set forth in the Objection Notice. Purchaser and Seller shall cooperate with the Arbiter in making its determination and such determination shall be conclusive and binding upon Purchaser and Seller.

(f) Purchaser and Seller shall each bear one-half of the fees and expenses of the Arbiter.

(g) Within five (5) Business Days after the final determination of the Closing Date Balance Sheet, the Closing Date Net Assets and the Net Asset Adjustment in accordance with Section 2.4(c) or 2.4(d), a final adjustment to the Purchase Price will be made as follows:

(i) If the Net Asset Adjustment is in excess of zero, then the amount of such excess will be paid by Purchaser to Seller by wire transfer of immediately available funds to the account specified by Seller within five (5) Business Days of such final determination.

(ii) If the Net Asset Adjustment is less than zero, then the amount of such shortfall shall be paid by Seller to Purchaser, at Seller’s discretion, by (i) a release from Escrow of the amount of said shortfall or (b) wire transfer of immediately available funds to the account specified by Purchaser within five (5) Business Days of such final determination.

(h) For the purposes of this Section 2.4, each accounting term used herein and not otherwise defined will have the meaning that is applied thereto in accordance with GAAP. Each account included in the Closing Date Balance Sheet and in the calculation of Net Assets as of the Closing Date will be calculated in accordance with GAAP, and will be consistent with the books and records of the Seller and the definition of Net Assets herein agreed; provided, however, that all known errors and adjustments of the type required in a year-end closing of the books will be taken into account in the calculation of each account set forth above.

(i) Nothing in this Section 2.4 or in the statements, reports or documents contemplated hereby shall affect the Parties’ rights and obligations in respect of a breach or alleged breach of any representation or warranty herein.

2.5 Liabilities Before and After Closing Date. Subsequent to the Closing Date, Purchaser shall be responsible for any and all Assumed Liabilities as set forth in Section 2.2 above. Except for the Assumed Liabilities, Purchaser is not assuming any Liability. Seller shall be responsible for the payment of all obligations, office leases, utilities and other operating expenses of the Precision Design Software Business accruing on or prior to the Closing Date and shall continue to be responsible for the Excluded Assets and Excluded Liabilities after the Closing Date.

2.6 Transfer Taxes. Purchaser and Seller shall each be responsible for its own Liability for Transfer Taxes as a result of the transactions contemplated hereunder. Purchaser, on the one hand, and Seller, on the other, shall cooperate in good faith to (a) prepare and file any Tax Returns or requests for refunds of Transfer Taxes, and (b) obtain any available exemption from or reduction in Transfer Taxes.

2.7 Non-Assignable Contracts. Nothing in this Agreement shall be construed as an attempt by Seller to assign, sublease or sublicenseto Purchaser pursuant to this Agreement any contract, permit, franchise, claim or asset included in the Acquired Assets or with respect to the Leased Premises that is, by its valid terms or by law, nonassignable (or not novatable or able to be sublicensed or subleased) without the consent of any other party or parties, unless such consent or novation shall have been obtained, or as to which all the remedies for the enforcement thereof available to Seller would not pass by operation of law to Purchaser as incidental to the assignments provided for and the transactions contemplated by this Agreement (a “Non-Assignable Contract”). To the extent that any such consent (each a “Third-Party Consent”) in respect of (or a novation of) a Non-Assignable Contract shall not have been obtained on or before the Closing Date, Purchaser shall proceed with the Closing, Seller and Purchaser shall continue to use their best good faith efforts to obtain any such Third-Party Consent or novation after the Closing Date and Purchaser shall be delegated the point person for the negotiation and obtaining of any and all such consents, until such time as they shall have been obtained, provided, however, that the parties agree to work cooperatively so that all consents can be obtained (and novations shall be entered into) no later than three (3) months after the Closing Date. Seller and Purchaser shall cooperate in any arrangement reasonably satisfactory to Purchaser to provide that Purchaser shall obtain Seller’s interest in, including the claims, rights and benefits of, and shall assume the corresponding obligations of, Seller under such Non-Assignable Contract (including by means of any subcontracting, sublicensing or subleasing arrangement) or through performance by Seller as agent as Purchaser may reasonably request; provided that (a) Purchaser shall undertake to pay, perform or satisfy the corresponding liabilities or obligations under the terms of such Non-Assignable Contract to the extent that Purchaser would have been responsible therefor if such consent or approval had been obtained, and (b) Seller shall promptly pay to Purchaser, when received, all moneys received by Seller under any such Non-Assignable Contract or any claim, right or benefit arising thereunder until such Third-Party Consent is obtained. To the extent Seller requests that Purchaser assist Seller in seeking to obtain any Third Party Consent after the Closing Date, then Seller shall pay and discharge, and shall indemnify and hold harmless Purchaser and its Affiliates from and against, any and all reasonable out of pocket costs of seeking to obtain or obtaining any such Third Party Consent (which shall include payment of any applicable consent, transfer and similar fees). Nothing contained in this Section or in any other provision of this Agreement shall be deemed to constitute an agreement to exclude from the Acquired Assets any contracts as to which such consent may be necessary.

3. SELLER’S REPRESENTATIONS AND WARRANTIES

Seller hereby represents and warrants to Purchaser, as of the date hereof, that the statements contained in this Article 3 are true and correct, except where a representation is as of (a specified date, in which case such representation shall be true as of such date, except as expressly set forth in the attached disclosure schedules (the “Disclosure Schedules”), which schedules shall be arranged corresponding to the numbered and lettered paragraphs of the representations and warranties contained in this Article 3 and matters disclosed under a particular number or letter on such schedules shall be deemed disclosed only for purposes of the corresponding representation and warranty herein.

3.1 Organization; Good Standing; Subsidiaries.

(a) Seller is: (i) a corporation duly organized, validly existing and in good standing under the laws of the State of California, with full corporate power and authority to conduct its business as it is now being conducted and to own, lease or use the Acquired Assets in connection with the Precision Design Software Business; (ii) is duly qualified to operate the Precision Design Software Business, and is in good standing in each jurisdiction where the ownership of property or the conducting of the Precision Design Software Business requires such qualification; and (iii) other than set forth on Disclosure Schedule 3.1(iii), does not have any Subsidiaries.

(b) The Acquired Assets do not include any Equity Security of any Person, with the exception of the Ownership Interest.

(c) Seller holds of record and owns beneficially 100% of the shares of equity interest of the GermanSub, free and clear of any restrictions on transfer, Taxes, Liens, options, warrants, purchase rights, contracts, commitments, equities, claims and demands, subject to limitations, if any, imposed by German law. Seller is not a party to any option, warrant, purchase right or other contract or commitment (other than this Agreement) that could require Seller to sell, transfer or otherwise dispose of any capital stock of the GermanSub. Seller is not a party to any voting trust, proxy, or other agreement or understanding with respect to the voting of any capital stock of the GermanSub.

3.2 Due Authorization; No Conflict. The execution, delivery and performance of this Agreement and of all the documents and instruments and consummation of the transactions contemplated hereby have been duly and validly authorized by all necessary corporate or other required action of Seller, including the consent or approval of Seller’s Board of Directors or other governing or managing body, as required under applicable law. No approval of the shareholders of the Seller is required under any applicable law or Seller’s organizational documents and the consummation of the transactions contemplated hereby will not give rise to any dissenters rights or other valid claims from the Seller’s shareholders. This Agreement, and each other document and instrument required hereby, when executed and delivered by Seller will be a valid and binding obligation of Seller, fully enforceable against Seller in accordance with their respective terms. Neither the execution and delivery of this Agreement nor the consummation of the transactions contemplated hereby will, directly or indirectly (with or without notice or lapse of time, giving of notice or both, or otherwise): (a) conflict with or violate any provision of Seller’s charter, bylaws or other governing instrument, or any Legal Requirement or any Order which is either applicable to, binding upon or enforceable against the Seller or the Precision Design Software Business; (b) result in any breach of or default, or trigger any requirement to obtain the consent of any third party (except as set forth in Disclosure Schedule 3.20(b)(i)), under any mortgage, lease, promissory note, governmental or real property license, Contract, purchase order, indenture, trust or other instrument or written agreement which is either binding upon or enforceable against Seller or the Acquired Assets; (c) contravene, conflict with, or result in a violation of any of the terms or requirements of, or give any Governmental Authority the right to revoke, withdraw, suspend, cancel, terminate, modify or require, any Permit that is material to the Precision Design Software Business; (d) terminate, amend or modify, or give any other Person the right to terminate, amend, modify, abandon or refuse to perform any material contract, agreement, arrangement, commitment or plan to which Seller is a party (or beneficiary) and which relates to the ownership or operation of the Acquired Assets; or (e) accelerate or modify, or give any Person the right to accelerate or modify, the time within which, or the terms under which, any duties or obligations are to be performed, or any rights or benefits are to be received, under any material contract, agreement, arrangement, commitment or plan to which Seller is a party (or beneficiary) and which relates to the ownership or operation of the Acquired Assets.

3.3 No Default. Seller is not in material breach under the Leases and Seller is not in material breach under any of the Seller Contracts. To Seller’s knowledge, no party is in breach under any Seller Contracts.

3.4 Permits; Compliance with Laws. All Permits required for the operation of the Precision Design Software Business and/or use of the Acquired Assets, as currently conducted or proposed to be conducted by the Seller as of the Closing Date, are current and valid. A list of all such Permits is attached as Disclosure Schedule 3.4. Seller is in compliance with all Legal Requirements in respect of the conduct and operation of the Precision Design Software Business and the use of the Acquired Assets.

3.5 Title to Assets. Seller has good and marketable title to all of the Acquired Assets, except for Permitted Liens and subject to, with respect to the Seller Contracts set forth in Disclosure Schedule 3.20(b)(i), the requirement of advance notice to, or consent or approval from, a third party for purposes of assignment.

3.6 Sufficiency of Assets.

(a) Except as provided in Disclosure Schedule 3.6(a), the Acquired Assets constitute all of the assets necessary for the conduct of the Precision Design Software Business as currently conducted and as currently proposed to be conducted.

(b) Except as provided in Disclosure Schedule 3.6(b), there are no assets customarily used by Seller in the Ordinary Course of Business, or necessary for the operation of the Precision Design Software Business that will not be transferred, licensed or leased to Purchaser pursuant to this Agreement.

(c) Each item of tangible property included in the Acquired Assets is suitable and sufficient (in terms of condition and otherwise) for the operation of the Precision Design Software Business, as currently conducted and proposed to be conducted.

(d) All Inventory of the Precision Design Software Business are at levels that Seller considers to be usual and customary.

3.7 Precision Design Software Business Intellectual Property.

(a) Disclosure Schedule 3.7(a) contains a complete list of all the Precision Design Software Business Intellectual Property consisting of (i) patents and patent applications (including provisional applications); (ii) registered trademarks and servicemarks, applications to register trademarks and servicemarks, intent-to-use applications, other registrations or applications to trademarks or servicemarks, and trademarks or servicemarks in which common law rights are owned or otherwise controlled; (iii) registered copyrights and applications for copyright registration; (iv) mask work registrations and applications to register mask works; (v) Internet domain names; and (vi) other Intellectual Property that is the subject of an application, certificate, filing, registration or other document issued by, filed with, or recorded by, any Governmental Authority.

(b) Except as set forth in Disclosure Schedule 3.7(b), and without limiting any other representation or warranty herein, to Seller’s knowledge, there is no information, material, fact, or circumstance, that would render any of the Precision Design Software Business Intellectual Property invalid, unenforceable or unusable, or cause the loss, lapse or abandonment of any Precision Design Software Business Intellectual Property.

(c) Except as set forth in Disclosure Schedule 3.7(c)(i), Seller exclusively owns and possesses all right, title and interest in and to, or has the right to use and otherwise exploit pursuant to a License set forth in Disclosure Schedule 3.20(a) all Precision Design Software Business Intellectual Property. Seller has sole and exclusive rights and Seller is not contractually obligated to pay any compensation (other than licensing fees and royalties expressly set forth in the applicable License agreements to any third party in respect thereof) to the use and other exploitation of the Precision Design Software Business Intellectual Property, and to the material covered thereby in connection with the services, and products related to and/or used by the Precision Design Software Business. Disclosure Schedule 3.20(a) lists each License concerning the Precision Design Software Business Intellectual Property to which Seller or any Affiliate of Seller is a party or beneficiary, excluding Shrinkwrap Software Licenses.

(d) After the Closing, Purchaser will be permitted to exercise all of Seller’s rights under all Licenses (including sublicenses) and other Contracts related to Precision Design Software Business Intellectual Property to the same extent Seller would have been able to had the transactions contemplated hereunder not occurred and without the payment of any additional amounts or consideration other than ongoing fees, royalties or payments which Seller would otherwise be required to pay and without obtaining the consent or permission of any party to such Licenses and other Contracts except for Third Party Consents set forth in Disclosure Schedule 3.20(b)(i).

(e) Neither the Precision Design Software Business Intellectual Property (excluding the Licensed Products) nor the operation of the Precision Design Software Business (as it is currently conducted) infringes, violates or misappropriates any Intellectual Property right of any third party, or constitute unfair competition or trade practices under any Legal Requirement and the Seller is not aware of any facts which indicate a likelihood of any of the foregoing. To Seller’s knowledge, the Licensed Products do not infringe, violate or misappropriate an Intellectual Property right of any third party or constitutes unfair competition or trade practices under any Legal Requirement and the Seller is not aware of any facts which indicated a likelihood of any of the foregoing. Except as set forth on Disclosure Schedule 3.7(e)(i), neither the Seller nor any Affiliate thereof has received any notices in the past three (3) years regarding any alleged infringement, violation or misappropriation of Intellectual Property in connection with the Precision Design Software Business (including any demands or offers to license any Intellectual Property from any third party). Except as set forth on Disclosure Schedule 3.7(e)(ii), (a) there are no claims (including office actions) against the Seller or any subsidiary thereof (or to Seller’s knowledge, any third party) that were either made within the past three (3) years or are presently pending contesting the validity, use, ownership, enforceability or registrability of any of the Precision Design Software Business Intellectual Property, and, to the knowledge of the Seller, there is no basis for any such claim, and (b) to Seller’s knowledge, no third party has infringed, violated or misappropriated any of the Precision Design Software Business Intellectual Property.

(f) No Precision Design Software Business Intellectual Property, or service or product of the Precision Design Software Business (excluding the Licensed Products) is subject to any outstanding Order that restricts in any manner the use, transfer or licensing thereof by Seller or that may affect the validity, use, ownership, registrability or enforceability of such Precision Design Software Business Intellectual Property, service or product. To Seller’s knowledge, the Licensed Products are not subject to any outstanding Order that restricts in any manner the use, transfer or licensing thereof by Seller or that may affect the validity, use, ownership, registrability or enforceability of any Licensed Product. All of the Precision Design Software Business Intellectual Property is valid and subsisting and in full force and effect and enforceable, and none of the Precision Design Software Business Intellectual Property has been misused.

(g) Seller has taken all actions it deems necessary or reasonably desirable to protect, perfect its rights in, maintain, and preserve its ownership of, the Precision Design Software Business Intellectual Property, including the confidentiality of the trade secrets therein. No loss of any of the Precision Design Software Business Intellectual Property is reasonably foreseeable, and neither Seller nor any Affiliate thereof has permitted any Precision Design Software Business Intellectual Property to enter into the public domain. All Precision Design Software Business Intellectual Property is in compliance with applicable formal legal requirements (including, as applicable, timely payment of filing, examination and maintenance fees, and timely filings of proofs of working or use, affidavits of use and incontestability and renewal applications). To the Seller’s knowledge, the owners of any Intellectual Property rights granted to Seller in respect of the Precision Design Software Business Intellectual Property have taken all commercially reasonable actions to protect, maintain, protect their rights in, and preserve their ownership of the Intellectual Property subject to such Licenses.

(h) Except as provided on Disclosure Schedule 3.7(h), to Seller’s knowledge, no source code for any Precision Design Software Product has been made available or licensed to any person, and neither Seller nor any Affiliate of Seller is under any obligation (including any contingent obligation pursuant to an escrow arrangement) to do so. Neither Seller nor any Affiliate of Seller, is or was a member of or contributor to any standards body related to the Precision Design Software Business. To Seller’s knowledge, no funding, facilities, or personnel of any Governmental Authority were used, directly or indirectly, to develop any Precision Design Software Business Intellectual Property, and no Precision Design Software Business Intellectual Property is subject to any “march in” or similar rights.

(i) Seller and each of its Affiliates with access to any Precision Design Software Business Customer Information has complied with, and the performance of this Agreement will comply with, all applicable privacy policies (or related policies, programs or other notices) and Legal Requirements (including obtaining from customers their express consent to use, store, display, distribute and transfer from any place in the world to any other place in the world electronic or otherwise the personal information of such customers). No (i) product, technology, service or publication of the Precision Design Software Business, or (ii) material published or distributed by, or conduct or statement of, Seller or any of its subsidiaries in respect of the Precision Design Software Business, constitutes obscene material, a defamatory statement or material, false advertising or otherwise violates any Legal Requirement.

(j) Each current and former employee and/or independent contractor of Seller or any of Affiliate thereof who has participated in the development or creation of Precision Design Software Business Intellectual Property entered into a written Contract pursuant to which such employee or independent contractor assigned to the Seller all of its rights, including all Intellectual Property rights, in and to all ideas, inventions, processes, works of authorship and other work products that relate to the Precision Design Software Business and that, in the case of employees, were conceived, created, authored or developed during the term of such employee’s employment by Seller or the German Sub. Each current and former employee and/or independent contractor of Seller or the German Sub who has had access to any confidential information of Seller (or the confidential information of any third party to whom either Seller owes a duty of confidentiality) relating to the Precision Design Software Business has entered into a written confidentiality agreement pursuant to which such employee or independent contractor agrees to maintain the secrecy of such confidential information and not to use such confidential information except as permitted by the Seller.

(k) Except as set forth on Disclosure Schedule 3.7(k), the computer systems, including the software, hardware, networks and interfaces (collectively, “Systems”) used in the conduct of the Precision Design Software Business and included in the Acquired Assets are (and immediately after Closing, will be) sufficient for the immediate and anticipated future needs of the Precision Design Software Business, including without limitation as to capacity and ability to process current and anticipated peak volumes in a timely manner.

(l) Except as set forth on Disclosure Schedule 3.7(l), (i) no software governed by a license commonly referred to as an open source, free software, copy left or community source code license, including, but not limited to, any GNU General Public License, GNU Lesser General Public License, or any other restrictive license arrangement (such software “Open Source Software”) is incorporated into, integrated, or bundled with any Precision Design Software Business Intellectual Property or otherwise used by Seller; and (ii) none of the licenses relating to the Open Source Software listed on Disclosure Schedule 3.7(l) obligate the Seller to (A) distribute or disclose any other software combined, distributed or marketed with such Open Source Software in source code form, or (B) license such Open Source Software and/or other software combined, distributed or marketed with such Open Source Software or any associated Intellectual Property on a royalty free basis, provided, however that the above representations, with respect to the Licensed Products, shall be limited to the Seller’s knowledge.

3.8 Employment and Employee Benefit Matters.

(a) The Precision Design Software Employees are the only employees with respect to which the Precision Design Software Business has any Liability. A copy of each employment agreement, termination notice, separation or settlement agreement, release and any other related agreement related to these employees has been made available to the Purchaser. There are no complaints, demands, claims or charges outstanding or anticipated, to Seller’s knowledge, relating to the employment of such individuals.

(b) Disclosure Schedule 3.8(b) contains a correct and complete list of all “employee benefit plans” (as such term is defined in Section 3(3) of ERISA) and each other benefit plan, program or arrangement maintained, sponsored, or otherwise contributed to or required to be contributed to, by Seller for the benefit of Precision Design Software Employees or with respect to which Seller has any Liability (including a copy of the Seller’s employee handbook related to the Precision Design Software Business and a statement of Seller’s severance practice). For the avoidance of doubt, “Employee Benefit Plan” shall include any benefit plan of IMSI GmbH. Seller nor any ERISA Affiliate maintains, sponsors, contributes to, has any obligation to contribute to, or has any Liability under or with respect to (i) any “employee benefit plan” (as such term is defined in Section 3(2) of ERISA) that is subject to Section 302 or Title IV of ERISA or Section 412 of the Code, (ii) any “multiemployer plan” (as such term is defined in Section 3(37) of ERISA), or (iii) any benefit plan, program or arrangement that provides for post-retirement medical, life insurance or other similar benefits (other than health continuation coverage required by COBRA). None of the Seller nor any ERISA Affiliate has any current or potential Liability under Title IV of ERISA. The Seller and the ERISA Affiliates have complied and are in compliance with the requirements of COBRA.

(c) Except as set forth in Disclosure Schedule 3.8(c), Seller has no obligations to the Precision Design Software Employees other than for (i) payment of salary for services rendered, (ii) reimbursement for reasonable expenses incurred on behalf of Seller, and (iii) other standard employee benefits made generally available to all employees.

(d) Neither the Seller nor the Precision Design Software Business is a party to or bound by or subject to any collective bargaining agreement or other similar arrangement with any labor union or employee association including general commitments and commitments based on works customs nor has any Seller or the Precision Design Software Business made any commitment to or conducted any negotiation or discussion with any labor union or employee association with respect to any future agreement or arrangement and, to Seller’s knowledge, there is no current application for certification or other attempt to organize or establish any labor union or employee association with respect to Precision Design Software Employees.

(e) There are no existing or, to Seller’s knowledge, threatened labor strikes, slow downs, work stoppages or other similar labor troubles affecting the Precision Design Software Business or any other controversies or unfair labor practice proceedings or any organizational efforts presently being made or threatened by or on behalf of any labor union.

(f) There are no claims for worker’s compensation against Seller, nor are there any events or circumstances now or in the past that would render Seller liable for any worker’s compensation claims.

(g) Except as set forth in the Disclosure Schedule 3.8(a), none of the Precision Design Software Employees, or any members of their immediate families, are indebted to Seller or, to the Seller’s knowledge, have any direct or indirect ownership interest in any firm or corporation with which Seller is affiliated or with which Seller has a business relationship, or any firm or corporation which competes with Seller, other than passive investments in publicly traded companies (representing less than one percent (1%) of such company) which may compete with Seller.

(h) To Seller’s knowledge, no Precision Design Software Employee or member of their immediate families, is directly or indirectly, interested in any Contract with Seller.

(i) Seller is in compliance with all applicable employment and immigration laws with respect to the Precision Design Software Employees.

3.9 Taxes and Fees.

(a) Seller has timely filed with the appropriate Government Agencies all Tax Returns required to be filed, which Tax Returns are true, correct and complete in all material respects. All taxes owed by Seller (whether or not shown on any Tax Return) have been timely paid to the appropriate taxing authorities. There are no Encumbrances for Taxes upon the Acquired Assets or any other assets, tangible or intangible, of Seller, other than for Taxes not yet due and payable. Seller has withheld and paid all Taxes required to have been withheld and paid in connection with amounts paid or owing to any employee, independent contractor, creditor, shareholder, or other third party. There is no examination or proceeding pending or, to the Seller’s knowledge, threatened by any authority or agency relating to the assessment or collection of, or any delinquencies in filing relating to, any Taxes from Seller. Seller has not executed or filed any consent or agreement to extend the period of assessment or collection of any Taxes. Seller is not a party to any Tax allocation or Tax sharing agreement. Seller is not currently subject to any waiver or extension of any statute of limitations with respect to Taxes. Seller is not currently the beneficiary of any extension of time within which to file any Tax Return.

(b) Seller has no Liability for the Taxes of any Person under Treasury Regulation Section 1.1502-6 (or any similar provision of state, local, or foreign law), as a transferee or successor, by contract or otherwise.

(c) The unpaid Taxes of Seller (A) did not, as of the Pro-Forma Balance Sheet Date exceed the reserve for Tax Liability (rather than any reserve for deferred Taxes established to reflect timing differences between book and Tax income) set forth on the face of the Balance Sheet (rather than any notes thereto) and (B) do not exceed that reserve as adjusted for the passage of time through the Closing Date in accordance with the past custom and practice of the Seller in filing its Tax Returns.

3.10 No Litigation; Disputes. There are no suits, claims, litigation, arbitration or other proceeding or administrative actions existing or, to Seller’s knowledge, threatened, to which Seller is a party or which is otherwise related to the Precision Design Software Business or the Acquired Assets. Seller has not filed any voluntary petition in bankruptcy, nor has it been served with or otherwise received notice of any involuntary petition in bankruptcy having been filed against Seller. Neither the Precision Design Software Business nor the Acquired Assets is subject to any Order that affects the Acquired Assets or the operation of the Precision Design Software Business, its prospects, net income or financial condition or which would interfere with the transactions contemplated by this Agreement or any other transaction documents consummating the transactions contemplated herein.

3.11 Financial Statements. The Pro-forma Balance Sheet of the Precision Design Software Business, and the Pro-forma Profit and Loss Statements (collectively, the “Financial Statements”) are included as Disclosure Schedule 3.11. Except as set forth on Disclosure Schedule 3.11, the Financial Statements (a) have been valued and presented in accordance with GAAP, (b) present fairly the financial condition and the results of operations of the Precision Design Software Business as of the dates and for the periods indicated thereon, and (c) are in accordance with the books of account and records of Seller.

3.12 Liabilities.

(a) The Precision Design Software Business has no Material Liabilities that aggregate in excess of One Hundred Thousand Dollars ($100,000.00), except for Liabilities: (i) reflected or reserved for on the face of the Pro-forma Balance Sheet (rather than in any notes thereto), (ii) which have arisen in the Ordinary Course of Business since the Balance Sheet Date (none of which is a liability resulting from breach of contract, breach of warranty, tort, infringement, misappropriation claim, lawsuit, violation of any Legal Requirement or environmental liability or clean-up obligation), (iii) relating to performance obligations under leases or Contracts in accordance with the terms and conditions thereof which are not required by GAAP to be reflected on the Pro-forma Balance Sheet (none of which is a liability resulting from breach of contract, breach of warranty, tort, infringement, misappropriation claim, lawsuit, violation of any Legal Requirement or environmental liability or clean-up obligation) or (iv) as set forth on Disclosure Schedule 3.12(a).

(b) As of the Closing Date, Seller has resolved or provided for the payment of all Liabilities, except the Assumed Liabilities (to the extent reflected on the Pro-forma Balance Sheet) and except as provided in Disclosure Schedule 3.12(b).

3.13 Material Adverse Effect. Other than changes resulting from general economic conditions, since the Balance Sheet Date, there has not been any Material Adverse Effect, nor have any events occurred nor do any circumstances exist which, individually or in the aggregate, could reasonably be expected to result in a Material Adverse Effect.

3.14 Accounts Receivable. All accounts receivable of the Precision Design Software Business are reflected on the Pro-forma Balance Sheet or on the accounting records of Seller relating to the Precision Design Software Business as of the Closing Date (collectively, the “Accounts Receivable”) and represent valid obligations arising from sales actually made or services actually performed in the Ordinary Course of Business. The Accounts Receivable are current and collectible and there is no contest, claim, or right of set-off (other than returns or other set-offs reflected on the face of the Pro-forma Balance Sheet) with any obligor of an Account Receivable relating to the amount or validity of such Account Receivable.

3.15 Interim Operations. Since the Balance Sheet Date, Seller has operated the Precision Design Software Business only in the Ordinary Course of Business and, except as set forth in Disclosure Schedule 3.15, with respect to the Precision Design Software Business, Seller has not:

(a) suffered any adverse change in the assets, properties, business, operations, prospects, net income or financial condition of the Precision Design Software Business;

(b) incurred or become subject to, or agreed to incur or become subject to, any material obligation or Liability, except in the Ordinary Course of Business;

(c) mortgaged or pledged any of its assets, tangible or intangible, or granted any Encumbrance except for Permitted Liens;

(d) canceled or agreed to cancel any debts or claims except in the Ordinary Course of Business;

(e) suffered any extraordinary loss (whether or not covered by insurance) or waived any material rights;

(f) terminated any Contract, agreement, governmental license, or other instrument to which either Seller is a party, except in the Ordinary Course of Business;

(g) increased the rate of compensation payable by it to any Precision Design Software Employee, except in the Ordinary Course of Business;

(h) delayed or postponed the payment of Seller’s accounts payable and other Liabilities outside the Ordinary Course of Business;

(i) made any commitment to or assumed any Liability to any labor organization which represents, or proposes to represent, employees of Seller;

(j) entered into any sale, assignment, lease or other transfer or disposition of any of the Acquired Assets of Seller except in the Ordinary Course of Business or in connection with the acquisition of similar property or assets in the Ordinary Course of Business;

(k) transferred, assigned, or granted any license or sublicense of any rights under or with respect to any Precision Design Software Business Intellectual Property except in the Ordinary Course of Business;

(l) permitted the loss, lapse or abandonment of any Precision Design Software Business Intellectual Property;

(m) suffered or engaged in any other material occurrence, event, incident, action, failure to act, or transaction outside the Ordinary Course of Business;

(n) disclosed any Confidential Information outside the Ordinary Course of Business;

(o) discharged a Material Liability or Encumbrance outside the Ordinary Course of Business; or

(p) committed to do any of the foregoing.

3.16 Customers and Suppliers. As of the date of this Agreement, (a) Seller is not engaged in a material dispute with any customer of or supplier to the Precision Design Software Business, (b) there has been no adverse change in the business relationship of Seller with any customer or supplier in the last twelve (12) months, and (c) no customer or supplier of the Precision Design Software Business in the past twelve (12) months has threatened or, to Seller’s knowledge, is contemplating any material modification or change in the business relationship with Seller (including indicating that such customer or supplier would stop, or decrease the rate of buying or supplying materials, products or services from or to Seller).

3.17 Disclosure.

(a) No representation or warranty of Seller in this Agreement omits to state a material fact necessary to make the statements herein or therein, in light of the circumstances in which they were made, not misleading.

(b) Seller has disclosed to the Purchaser all material information relating to the Acquired Assets, the Precision Design Software Business and the transactions contemplated by this Agreement.

3.18 Real Property.

(a) Seller does not own any real property related to the Precision Design Software Business, including any Leasehold Improvements.

(b) Seller has provided true and complete copies of each Lease to Purchaser. The Leases are legal, valid, binding and in full force and effect and are the only leases, subleases, licenses, concessions and agreements (oral or written) relating to the Precision Design Software Business. Seller has performed all material obligations required to be performed by it to date under the Leases and neither Seller nor, to Seller’s knowledge, any other party thereto is in material breach under the Leases (and no event has occurred which, with due notice or lapse of time or both, would constitute such a lapse or breach). To Seller’s knowledge, no amount due under the Leases remains unpaid, and no material controversy, claim, dispute or disagreement exists between the parties to either of the Leases. Seller has delivered to the Purchaser true, correct and complete copies of the Leases, including all guaranties, renewals, modifications, amendments and other agreements thereto. No security deposit or portion thereof deposited with respect to the Leases has been applied in respect of a breach under such Lease which has not been redeposited in full. Seller does not, and will not in the future, owe any brokerage commissions or finder’s fees with respect to the Leases. The other parties to the Leases are not Affiliates of, and otherwise do not have any economic interest in, Seller. There are no Encumbrances on the estate or interest created by the Leases.

(c) To Seller’s knowledge, all Leasehold Improvements and the operations thereon conducted conform in all material respects to all applicable Legal Requirements, including health, fire, environmental, safety, zoning and building laws, ordinances and administrative regulations, except for possible nonconforming uses or violations which do not and will not expose any person or property to injury or damage, materially and adversely affect any insurance coverage, give rise to strict liability, penalties or fines, jeopardize any Permit or materially interfere with the present use, operation or maintenance thereof with regards to the Precision Design Software Business as now used, operated or maintained, and which do not and will not materially and adversely affect the value thereof. To Seller’s knowledge, all Leasehold Improvements conform in all material respects to all applicable codes and rules adopted by national and local associations and boards of insurance underwriters, and all such Leasehold Improvements and fixtures are in good operating condition and repair.

(d) All public utilities required for the operation of the Leased Premises and necessary for the conduct of the business of Seller as presently conducted are installed and operating, and all installation and connection charges, to Seller’s knowledge, are paid in full.

(e) The Leases and the Subleases, the Leased Premises are not subject to any other lease, sublease, real property, license or other agreement granting to any Person any right to the use, occupancy or enjoyment of such property or any portion thereof.

(f) To Seller’s knowledge, all Leasehold Improvements, plumbing, electrical, heating, air conditioning, elevator, ventilating and all other mechanical or structural systems under each of the Leases in the Leasehold Improvements are in good working order and condition, and the roof, basement and foundation walls of such Leasehold Improvements under each of the Leases are in good condition and free of leaks and other material defects.

3.19 Environmental Matters. To Seller’s knowledge:

(a) Seller has no Liability, whether contingent or otherwise, under any Environmental Law relating to the Leased Premises or the Precision Design Software Business; and

(b) no request for information, notice, Governmental Authority inquiry, demand letter, notice of violation or alleged violation of, non-compliance or alleged noncompliance with or any Liability under, any Environmental Law by or relating to the operation of the Precision Design Software Business or the Leased Premises has been received by or threatened in writing against Seller.

3.20 Seller Contracts.

(a) Disclosure Schedule 3.20(a) hereto lists (i) all of the Seller Contracts, and (ii) any commitments, arrangements and understandings which are material to the Sublease and/or to the conduct, operations or financial condition of the Precision Design Software Business. True and complete copies of all such Seller Contracts or, if not reduced to writing, reasonably complete and accurate written descriptions thereof, together with all amendments and supplements thereto and all waivers of any terms thereof, have been provided to Purchaser prior to the execution of this Agreement.

(b) Each Seller Contract (including each License and any Shrinkwrap Software License) is valid, binding, and enforceable against Seller and, to the Seller’s knowledge, the other parties thereto in accordance with its terms, and is in full force and effect and will continue to be legal, valid, binding and in full force and effect on identical terms following the consummation of the transactions contemplated hereby. Seller has performed all material obligations required to be performed by such Seller under each of the Seller Contracts and Seller is not in breach (nor will it be with due notice or lapse of time or both) under any of the Seller Contracts. Disclosure Schedule 3.20(b)(i) lists each Seller Contract which requires consent or approval of or notice to a third party in order to transfer such Seller Contract to Purchaser pursuant to this Agreement. To Seller’s knowledge, no other party thereto is in material breach of any Seller Contract or has received notice that it is in breach thereunder (and, to Seller’s knowledge, no other party will, with due notice or lapse of time or both, be in breach under any Seller Contract). There is no Contract concerning the Precision Design Software Business Intellectual Property under which there is currently any dispute (and, to the Seller’s knowledge, there are no facts or circumstances that may reasonably be expected to lead to a dispute) regarding the scope of such Contract, or performance under such Contract, including with respect to any payment to be made or received by the Seller thereunder. The operation of the Precision Design Software Business does not violate any term of any Contract to which Seller or any subsidiary thereof is a party or beneficiary, or to which the Acquired Assets are bound.

(c) No Seller nor any Affiliate thereof is a party to or bound by, and none of the Acquired Assets are bound by, any Seller Contract that has had or could reasonably be expected to have, individually or in the aggregate with any other Contracts, a Material Adverse Effect.

(d) Except as set forth on Disclosure Schedule 3.20(d), no Seller nor any Affiliate thereof is a party to or bound by, and none of the Acquired Assets are bound by, any Contract that (i) upon consummation of the transactions contemplated by this Agreement, automatically terminates (or allows termination by the other party thereto), or creates or vests a right in or accelerates a right of the other party thereto, waives or reduces an obligation of the other party thereto, or cancels or impairs any right of or creates or increases any obligation of a Seller or any subsidiary thereof (or allows the other party to create or vest a right in or accelerate a right of it, waive or reduce an obligation of it, or cancel or impair a right of or create or increase an obligation of a Seller), or (ii) contains any covenant or other provision which limits the ability of the party which was a Seller or its Affiliate immediately prior to Closing to compete with any person in any line of business or in any area or territory, or which restricts such party’s right to use any Intellectual Property (including standstill, co-existence, exclusivity and settlement agreements).

(e) Each Liability arising under a Seller Contract directly relates to the Precision Design Software Business.

3.21 Employees. Exhibit D is a true and complete list of the Precision Design Software Employees as of the date of this Agreement, which list identifies the name of such employees, and the following compensation information with respect to each of them: (a) current annual base salary, bonus and commission; (b) accrued vacation and sick leave time; (c) the amount of any unpaid bonus for the previous fiscal year; and (d) the dates and amounts of the last increase in compensation. Except as set forth on Disclosure Schedule 3.21 hereto, or as otherwise provided by applicable state law, the employment of all Precision Design Software Employees is terminable at will by Seller without any penalty or severance obligations incurred by Seller.

3.22 Inventory. The Inventory consists of raw materials and supplies, manufactured and purchased parts, goods in process, and finished goods, all of which is merchantable and fit for the purpose for which it was procured or manufactured, and none of which is slow-moving, obsolete, damaged, or defective, subject only to the reserve for inventory writedown set forth on the face of the Pro-forma Balance Sheet (rather than in any notes thereto) as adjusted for the passage of time through the Closing Date in accordance with the past custom and practice of Seller.

3.23 Product Warranty. Each product manufactured, sold, licensed, or delivered by Seller has been in conformity with all applicable contractual commitments and all express and implied warranties, and Seller has no Liability (and there is no basis for any present or future action, suit, proceeding, hearing, investigation, charge, complaint, claim, or demand against Seller giving rise to any Liability) for replacement or repair thereof or other damages in connection therewith, subject only to the reserve for product warranty claims set forth on the face of the Pro-forma Balance Sheet (rather than in any notes thereto) as adjusted for the passage of time through the Closing Date in accordance with the past custom and practice of Seller. Disclosure Schedule 3.23 includes the standard end user license agreement for Seller (containing applicable guaranty, warranty, and indemnity provisions). No product manufactured, sold, licensed or delivered by Seller is subject to any guaranty, warranty, or other indemnity beyond the applicable standard end user license agreement set forth in Disclosure Schedule 3.23.

3.24 Brokers’ Fees. Seller has, and subsequent to the Closing Purchaser shall have, no Liability to pay any fees or commissions to any broker, finder, or agent with respect to the transactions contemplated by this Agreement.

3.25 Statements True and Correct. No representation or warranty or other statement made by the Seller in this Agreement or in connection with the transactions contemplated hereby, contains any untrue statement of a material fact or omits to state a material fact necessary to make any of them, in light of the circumstances in which they were made, not misleading.

3.26 Disclaimer. EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT (OR IN ANY CERTIFICATE, SCHEDULE, EXHIBIT OR INSTRUMENT HERETO OR DELIVERED HEREUNDER INCLUDING THOSE DESCRIBED IN SECTION 7.1 HERETO), SELLER MAKES NO REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, AT LAW OR IN EQUITY, IN RESPECT OF ANY OF ITS ASSETS (INCLUDING THE ACQUIRED ASSETS), LIABILITIES (INCLUDING THE ASSUMED LIABILITIES) OR OPERATIONS, INCLUDING WITH RESPECT TO MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE, TITLE, AND NONINFRINGEMENT, ANY IMPLIED WARRANTIES ARISING FROM COURSE OF DEALING OR PERFORMANCE, AND ANY IMPLIED WARRANTIES REGARDING INCOME POTENTIAL WITH RESPECT TO THE ASSETS, AND ANY SUCH OTHER REPRESENTATIONS OR WARRANTIES ARE HEREBY EXPRESSLY DISCLAIMED.

4. PURCHASER’S REPRESENTATIONS AND WARRANTIES

Purchaser represents and warrants to Seller as follows:

4.1 Organization. Purchaser is a limited liability company, duly organized, legally existing and in good standing under the laws of the State of Delaware, and has full power, ability and authority to conduct its business as it is now conducted, to enter into this Agreement and to carry out the other transactions and agreements contemplated hereby.

4.2 Due Authorization. The execution, delivery and performance of this Agreement and (all the documents and instruments and the consummation of the transactions contemplated hereby have been duly and validly authorized by all necessary corporate or other required action of Purchaser. This Agreement when executed and delivered by Purchaser will be a valid and binding obligation of Purchaser, fully enforceable in accordance with its terms. Neither the execution and delivery of this Agreement nor the consummation of the transactions contemplated hereby will directly or indirectly (with or without notice or lapse of time): (a) conflict with or violate any provision of Purchaser’s charter, bylaws, operating agreement or other governing instruments, or any Legal Requirement or Order which is either applicable to, binding upon or enforceable against Purchaser; or (b) result in any breach of or default under any material mortgage, contract, agreement, indenture, trust, written agreement or other instrument which is either binding upon or enforceable against Purchaser.

4.3 No Litigation. There are no existing suits or litigation pending or threatened against Purchaser or its properties which could materially affect Purchaser’s ability to enter into this Agreement or consummate the transactions contemplated hereby. Purchaser has not filed any voluntary petition in bankruptcy, nor been served with or otherwise received notice of any involuntary petition in bankruptcy having been filed against it.

4.4 Purchaser’s Investigation. Purchaser is an experienced investor and has made its own investigation and analysis of the Acquired Assets and Assumed Liabilities as it deems necessary with respect to the condition, suitability, compliance with law, and prospects for future development of the Acquired Assets and the Precision Design Software Business for Purchaser’s use and all other aspects of this transaction set forth herein. Purchaser will rely upon its own (and its consultants’) inspections, investigations and analyses of the Acquired Assets, Assumed Liabilities and the Precision Design Software Business and information related thereto as presented by Seller.

4.5 Statements True and Correct. No representation or warranty or other statement made by the Purchaser in this Agreement or in connection with the transactions contemplated hereby, contains any untrue statement of a material fact or omits to state a material fact necessary to make any of them, in light of the circumstances in which they were made, not misleading.

4.6 Disclaimer. EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT (OR IN ANY CERTIFICATE, SCHEDULE, EXHIBIT OR INSTRUMENT HERETO OR DELIVERED HEREUNDER, INCLUDING THOSE DESCRIBED IN SECTION 7.2 HERETO), PURCHASER MAKES NO REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, AT LAW OR IN EQUITY, INCLUDING ANY IMPLIED WARRANTIES ARISING FROM COURSE OF DEALING OR PERFORMANCE, AND ANY SUCH OTHER REPRESENTATIONS OR WARRANTIES ARE HEREBY EXPRESSLY DISCLAIMED.

5. POST-CLOSING COVENANTS

Purchaser and Seller agree as follows with respect to the period following the Closing Date:

5.1 Further Cooperation. In case, at any time after the Closing Date, any further actions are necessary to carry out the purposes of and effect the transactions contemplated by this Agreement, each of the Parties will take such further actions (including the execution and delivery of such further instruments and documents) as the other Party reasonably may request, all at the sole cost and expense of the requesting Party (unless the requesting Party is entitled to indemnification therefor under Section 6 below).

5.2 Confidentiality.

(a) Seller agrees that for a period of three (3) years from the Closing Date, Seller will not divulge any Confidential Information to third parties or use or permit to be used any Confidential Information in violation of Section 5.10(a). For this purpose, “Confidential Information” shall mean all information pertaining to the Precision Design Software Business, Assumed Liabilities and/or Acquired Assets. “Confidential Information” shall not include any information that is now or subsequently becomes available to third parties who are not under a duty of confidentiality through no fault or omission of Seller or is released or approved for release by Purchaser without restriction. Notwithstanding the foregoing, Seller may disclose Confidential Information (i) solely to the extent required in the opinion of counsel by a court of competent jurisdiction or other Governmental Authority or otherwise as required by applicable law, rule or regulation, provided that prompt notice to Purchaser of said disclosure is provided by Seller, (ii) strictly on a “need-to-know” basis under an obligation of confidentiality to its legal counsel, accountants, banks and other financing sources and their advisors, or (iii) in any legal proceedings that arise in connection with this Agreement or the transactions contemplated herein and therein.

(b) The parties hereby agree that to the extent any Party is required to disclose this Agreement to any third party, including in connection with any filing with any Governmental Authority, all terms as to price and any other financial terms shall be redacted and shall not be disclosed in such disclosure or filing.

5.3 Precision Design Software Employees. On the Closing Date, the Seller shall pay to all Precision Design Software Employees whose employment relationship with Seller is terminated all vacation pay to which any such individual may be entitled upon termination of employment pursuant to applicable Legal Requirements and/or the terms of any applicable agreement with such individual. Purchaser has the right (but not the obligation) to offer employment effective as of the Closing Date to all of the Precision Design Software Employees. This Section is for the sole benefit of the Parties hereto and their permitted successors and assigns, and nothing herein expressed or implied shall give or be construed to give any person or entity, other than the Parties hereto and such permitted successors and assigns, any legal or equitable rights hereunder.

5.4 AR Collection Assistance/Transition Services. To the extent Seller receives any payments, other than those payments received from the Purchaser under this Agreement, relating to the operation of the Precision Design Software Business (e.g., Accounts Receivable), Seller will promptly remit any such payments to Purchaser. At Purchaser’s option, Seller hereby agrees to provide Purchaser with reasonable assistance, on the terms set forth in the Transition Services Agreement, attached hereto as Exhibit H (the “Transition Services Agreement”), in connection with Purchaser’s collection of the accounts receivable of and other transition services related to the Precision Design Software Business. As more fully described in the Transition Services Agreement, Purchaser agrees to provide Seller with warehouse and shipping fulfillment services.

5.5 Online Placement. Seller agrees that, for a period of one (1) year following the Closing Date, it will continue to provide links to the Precision Design Software Products from its imsisoft.com website to Purchaser’s website and assist Purchaser in making other reasonable use of the website, as reasonably directed by Purchaser. Purchaser acknowledges that Seller is not guaranteeing any number of click-throughs to a Purchaser destination web page. Purchaser may modify, redesign and change the look and feel of the website from time to time with the approval of the Seller (until such time as the Optional Assets are purchased by Purchaser), which shall not be unreasonably withheld, at Purchaser’s expense, provided, however that Seller may continue to market its Excluded Programs on the imsisoft.com website with placement similar to how the Excluded Programs are located on the website as of June 1, 2006. If Purchaser subsequently purchases the Optional Assets pursuant to Section 5.8 below, Purchaser agrees to display Houseplans.com or a replacement promotion for Houseplans.com in the same area of the imsisoft.com website for a period of two (2) years from said purchase date.

5.6 Use of IMSI Trademarks. For a period of two (2) years from the Closing Date, Purchaser shall have the right to use the “IMSI” trademark solely to the extent necessary for Purchaser’s marketing and advertising efforts indicating that the Precision Design Software Products were formerly those of the Seller, subject to Purchaser’s right to purchase the trademark pursuant to Section 5.8 below.

5.7 Negotiations for FormTool Product. If Seller has not sold its FormTool Product (including the software application, related trademarks and domain names) by the close of business on July 15, 2006, then, beginning on July 16, 2006, Purchaser shall have the exclusive right to purchase the FormTool Product for a period of thirty (30) days (the “Purchase Period”) for One Dollar ($1.00).

5.8 Exclusive Right to Purchase Optional Assets. Beginning on January 1, 2007, Purchaser shall have the exclusive right for a period of ninety (90) days to purchase the Optional Assets at a price per item of One Dollar ($1.00) , the terms of said purchase shall incorporate the provisions of Section 5.5, above. If Purchaser exercises this right to buy any or all of the Optional Assets and subsequently sells any or all Optional Assets, on a stand alone basis and not as part of a merger or sale of the majority of the Purchaser’s assets, Purchaser agrees to share fifty percent (50%) of the net profits from said sale with Seller, which shall be amount shall be delivered to Seller within thirty (30) days of the consummation of any such sale, provided, however that each party shall be responsible for the taxes associated with their respective share of said profits.

5.9 Cooperation in Tax Matters. Purchaser and Seller shall cooperate fully, as and to the extent reasonably requested by the other Party, in connection with the filing of Tax Returns and any audit, litigation or other proceeding with respect to Taxes.

5.10 Non-Compete; Non-Solicit. Seller agrees that:

(a) Neither Seller nor any of its Affiliates will, directly or indirectly, for a period of three (3) years after the Closing Date (the “Restricted Period”), sell or otherwise provide any license to sell or provide services (consisting of any of the following: maintenance or support services; technical support services; customer support services; professional services; consulting services; marketing, advertising or promotional services) in connection with any software products in competition with the Precision Design Software Products. For purposes of this Section 5.10(a), the Parties agree that the Excluded Programs and the products or services: (i) related to, the business of HousePlans, Inc. and its subsidiary, including their software, products and services, as such business(es) are conducted as of the date hereof, and (ii) acquired pursuant to the Merger are not in competition with the Precision Design Software Products.

(b) During the Restricted Period:

(i) neither Seller nor any of Seller’s Affiliates will, directly or indirectly, (1) induce or attempt to induce any employee or independent contractor of Purchaser to leave the employ or contracting relationship with the Purchaser, or in any way interfere with the relationship between Purchaser and any employee or full-time independent contractor thereof, or (2) induce or attempt to induce any customer, supplier or other business relation of Purchaser to cease doing business with the Purchaser or in any way interfere with the relationship between any such customer, supplier or other business relation and Purchaser.

(ii) neither Purchaser nor any of Purchaser’s Affiliates will, directly or indirectly, induce or attempt to induce any employee (excluding the Precision Design Software Employees and Anne Verde) or independent contractor of Seller to leave the employ or contracting relationship with the Seller, or in any way interfere with the relationship between Seller and any employee or full-time independent contractor thereof.

(c) If the final judgment of a court of competent jurisdiction declares that any term or provision of this Section 5.10 is invalid or unenforceable, the Parties agree that the court making the determination of invalidity or unenforceability shall have the power to reduce the scope, duration, or area of the term or provision, to delete specific words or phrases, or to replace any invalid or unenforceable term or provision with a term or provision that is valid and enforceable and that comes closest to expressing the intention of the invalid or unenforceable term or provision, and this Agreement shall be enforceable as so modified after the expiration of the time within which the judgment may be appealed.

5.11 Enforcement. The Parties agree that money damages would be an inadequate remedy for any breach of Section 5.10. Therefore, in the event of a breach of Section 5.10, Purchaser may, in addition to other rights and remedies existing in its favor, apply to any court of competent jurisdiction for specific performance and/or injunctive or other relief in order to enforce, or prevent any violations of, the provisions of Section 5.10. The provisions of Sections 5.10 and 5.11 are intended to be for the benefit of Purchaser and its respective successors and assigns, each of which may enforce such provisions and each of which (other than Purchaser) is an express third-party beneficiary of such provisions and this Agreement generally. Sections 5.10 and 5.11 will survive the Closing Date and continue in full force in accordance with their terms without limitation.

6. SURVIVAL; INDEMNIFICATION

6.1 Survival.

(a) All of the representations and warranties of the parties hereto contained in the Agreement shall survive the Closing and continue in full force and effect until the second anniversary of the Closing Date (with the exception of those set forth in Sections 3.1, 3.2, 3.5, 3.9 and 3.24, which shall continue in full force and effect until the expiration of the applicable statutes of limitation); provided that any representation or warranty in respect of which indemnity may be sought under this Article 6, and the indemnity with respect thereto, shall survive the time at which it would otherwise terminate pursuant to this Section 6.1(a) if notice of the inaccuracy or breach thereof giving rise to such right of indemnity shall have been given to the party against whom such indemnity may be sought prior to such time; in any such case such representation or warranty shall survive until any claim for indemnity related to such inaccuracy or breach is resolved. Any claim with respect to the foregoing sentence under Section 6.2 must be asserted in writing with reasonable particularity by the party making such claim within the applicable survival period. The representations and warranties in this Agreement (as modified by the Disclosure Schedule in the case of the representations and warranties of Seller) shall survive for the periods set forth in this Section 6.1(a) and shall in no event be affected by any investigation, inquiry or examination made for or on behalf of any party, or the knowledge of any party’s officers, directors, shareholders, employees or agents or the acceptance by any party of any certificate or opinion hereunder.

(b) The post-closing covenants set forth in Section 5 and Section 6 and the agreements of the parties contained in this Agreement shall survive the Closing in accordance with their terms.

6.2 Indemnification.

(a) Indemnification by Seller. Subject to (1) the survival provisions set forth in Section 6.1 and (2) the other limitations set forth in this Article 6, Seller shall defend, indemnify and hold harmless Purchaser, its Affiliates, and their successors and assigns (each, individually, a “Purchaser Indemnitee,” and collectively, “Purchaser Indemnified Parties”) from and against any and all Damages which Purchaser Indemnified Parties may at any time suffer or incur, or become subject to, as a result of or in connection with:

(i) any breach of any representation or warranty made by Seller in this Agreement or in any certificate, schedule, exhibit or instrument delivered hereunder;

(ii) any failure by Seller to carry out, perform, or otherwise fulfill or comply with any covenant, agreement, undertaking, or obligation under this Agreement or in any certificate, schedule, exhibit or instrument delivered hereunder;

(iii) the Excluded Liabilities; or

(iv) any suit, action or other proceeding brought by any Governmental Authority or other Person arising out of, or in any way related to, any of the matters referred to in Section 6.2(a)(i) through 6.2(a)(iii).

(b) Indemnification by Purchaser. Subject to (1) the survival provisions set forth in Section 6.1, and (2) the other limitations set forth in this Article 6, Purchaser agrees to indemnify and hold harmless Seller and its respective Affiliates, successors and assigns (each, individually, a “Seller Indemnitee,” and collectively, the “Seller Indemnified Parties”) from, against and in respect of any and all Damages which Seller Indemnified Parties may at any time suffer or incur, or become subject to, as a result of or in connection with:

(i) any breach of the representations and warranties of Purchaser contained in this Agreement;

(ii) any failure by Purchaser to perform or otherwise fulfill or comply with any covenant, undertaking, agreement or obligation to be performed, fulfilled, or complied with by Purchaser hereunder prior to, on or after the Closing;

(iii) any Assumed Liability; or

(iv) any suit, action or other proceeding brought by any governmental authority or other Person arising out of, or in any way related to, any of the matters referred to in Section 6.2(b)(i) through 6.3(b)(iii).

6.3 Limitations. Seller shall have no obligation to indemnify any Purchaser Indemnified Party for Damages under Section 6.2(a)(i), and Purchaser shall have no obligation to indemnify any Seller Indemnified Party for Damages under Section 6.2(a)(i) (a) unless and until such Damages in the aggregate exceed One Hundred Thousand Dollars ($100,000) (the “Indemnity Deductible”) (provided that once the aggregate amount of such Damages exceeds the amount of the Indemnity Deductible, Seller shall be obligated to indemnify the Purchaser Indemnified Parties from and against all such Damages without regard to the Indemnity Deductible), and (b) to the extent such Damages exceed Four Million Dollars ($4,000,000) (the “Indemnity Cap”); provided, that none of the foregoing limitations shall apply in the case of fraud or intentional breach.

6.4 Indemnification Procedures.

(a) Notice of Third Party Claim. Any party making a claim for indemnification under Section 6.2(a) or 6.2(b) (the “Indemnified Party”) will notify the Party from whom indemnification is claimed (the “Indemnifying Party”) of the claim in writing promptly after receiving written notice of any action, lawsuit, proceeding, investigation or other claim against it by a third party. Such notice will describe the claim, the amount thereof (to the extent then known and quantifiable), and the basis therefor, in each case to the extent known to the Indemnified Party. The failure to so notify the Indemnifying Party will not relieve the Indemnifying Party of its obligations under Section 6.2(a) or 6.2(b) as the case may be, except to the extent that such failure actually prejudices the Indemnifying Party.

(b) Assumption of Defense. With respect to any third party claim which gives rise or is alleged to give rise to a claim for indemnity under Section 6.2(a) or 6.2(b) and which involves only the payment of money damages to such third party, the Indemnifying Party, at its option (subject to the limitations set forth below), will be entitled to control and assume responsibility for the defense of such claim and to appoint a competent and reputable counsel reasonably acceptable to the Indemnified Party to act as lead counsel of such defense. Prior to the Indemnifying Party’s assuming control of such defense, the Indemnifying Party must first agree in writing to be liable for all related Damages notwithstanding any other provision of this Article 6 and furnish the Indemnified Party with evidence which, in the Indemnified Party’s reasonable judgment, establishes that the Indemnifying Party is and will be able to satisfy any such liability.

(c) Limits of Assumption of Defense. An Indemnifying Party’s rights under Section 6.4(b) will be subject to the following additional limitations:

(i) with respect to any claim the defense of which the Indemnifying Party has assumed, the Indemnified Party will be entitled to participate in the defense of such claim and to employ counsel of its choice for such purpose, and the fees and expenses of such separate counsel will be borne by the Indemnified Party (except that the reasonable fees and expenses of such separate counsel incurred prior to the date the Indemnifying Party effectively assumes control of such defense will be borne by the Indemnifying Party);

(ii) the Indemnifying Party will not be entitled to assume (or retain, as applicable) control of such defense if (A) the claim for indemnification relates to or arises in connection with any criminal proceeding, action, indictment, allegation or investigation against the Indemnified Party, (B) the claim involves an amount greater than twice the Indemnity Cap, or an amount less than twice the amount of the Indemnity Deductible, (C) the Indemnified Party reasonably concludes in good faith that, in light of any actual or potential conflict of interest, it would be inappropriate for legal counsel selected by the Indemnifying Party to represent the Indemnified Party, (D) the Indemnified Party reasonably believes in good faith that an adverse determination with respect to the action, lawsuit, investigation, proceeding or other claim giving rise to such claim for indemnification would be materially detrimental to or materially injure the Indemnified Party’s reputation or future business prospects (or, in the case of a claim by a Purchaser Indemnitee, Seller’s reputation or business prospects), or (E) the Indemnifying Party fail to vigorously prosecute or defend such claim in good faith or fail to begin such prosecution or defense in a timely manner; and

(iii) if the Indemnifying Party assumes control of the defense of any such claim, then the Indemnifying Party will obtain the prior written consent of the Indemnified Party before entering into any settlement of such claim, if such settlement does not expressly and unconditionally release the Indemnified Party from all liabilities and obligations with respect to such claim.

If the Indemnifying Party has the right to, but does not, assume control of the defense of any claim in accordance with this Section 6.4, then the Indemnifying Party may nonetheless participate (at its own expense) in the defense of such claim and at the Indemnifying Party’s request the Indemnified Party will consult in a reasonable manner with the Indemnifying Party in respect of such defense. As used in this Article 6, the term “settlement” refers to any settlement, compromise, consent or similar decree, or election to permit default judgment to be entered, in respect of any claim.

6.5 Indemnity Payments; Obligations. Any amounts owed by Seller pursuant to Section 6.2(a) shall be satisfied by payment first, from the Escrow Account and, if depleted, by wire transfer of immediately available funds to an account designated by Purchaser. Any amounts owed by Purchaser pursuant to Section 6.2(b) shall be satisfied by payment by wire transfer of immediately available funds to an account designated by Purchaser.

6.6 Survival. Notwithstanding any other provision to the contrary in this Agreement, this Article 6 shall survive termination of this Agreement without limitation.

6.7 Determination of Loss and Amount. In view of the limitation set forth in Section 6.3, for purposes of determining whether any Damages have occurred, or the amount of such Damages, the representations, warranties, covenants and agreements of the parties set forth in this Agreement will be considered without regard to any materiality qualification set forth therein.

6.8 Adjustment to Purchase Price. Any indemnity payment by Purchaser or Seller under this Agreement will be deemed an adjustment to Purchase Price for all purposes.

7. DOCUMENTS TO BE DELIVERED AT THE CLOSING

7.1 Delivery by the Seller. As of the Closing Date, in addition to the execution and delivery of this Agreement, Seller shall:

(i) execute, acknowledge and deliver to Purchaser (a) the Sublease in the form of Exhibit I with respect to the Office Leased Premises and in the form of Exhibit J with respect to the Warehouse Leased Premises and (b) a consent executed by the applicable landlord to each Sublease, including any waivers by said landlord of any notice provisions;

(ii) execute and deliver to Purchaser the Bill of Sale in the form of Exhibit K;

(iii) execute and deliver to Purchaser the Escrow Agreement in the form of Exhibit E, Assignment and Assumption Agreement in the form of Exhibit L, and the Transition Services Agreement in the form of Exhibit H;

(iv) deliver to Purchaser a certified copy of a resolution of the Seller’s Board of Directors duly authorizing and approving the transactions contemplated hereby;

(v) deliver to Purchaser an opinion of Seller’s Counsel, dated as of the Closing Date addressed to Purchaser, that this transaction has been duly authorized and the execution and delivery of this Agreement and documents referenced and the transactions contemplated hereby by Seller have been approved by the appropriate and requisite parties, and that this Agreement is enforceable; and

(vi) electronically transfer of all source code documents as directed by Purchaser.

7.2 Delivery by the Purchaser. As of the Closing Date, in addition to the execution and delivery of this Agreement, Purchaser shall:

(i) cause the wire transfer of immediately available funds to Seller in the amount of the Cash Consideration;

(ii) execute, acknowledge and deliver to Seller the Subleases with respect to the Office Leased Premises and the Warehouse Leased Premises and the Promissory Note;

(iii) execute, acknowledge and deliver to Seller the Assignment and Assumption Agreement and the Transition Services Agreement;

(iv) deliver to Seller an opinion of Purchaser’s counsel that Purchaser is a duly organized company and that this transaction has been duly authorized and the execution and delivery of this Agreement and documents referenced and the transactions contemplated hereby by Purchaser has been approved by the appropriate and requisite parties; and

(v) deliver to Seller a copy of the certificate of good standing of Purchaser issued no later than five (5) Business Days after the Closing Date by the Secretary of State (or comparable officer) of the jurisdiction of Purchaser.

The execution by Seller and Purchaser of a cross-receipt, substantially in the form of Exhibit M, shall be conclusive evidence that the transactions described above have been consummated.

8. GENERAL PROVISIONS

8.1 No Waivers. None of the Parties shall be deemed to waive any of its rights, powers or remedies hereunder unless such waiver is in writing and signed by said Party. No delay or omission by any Party in exercising any of said rights, powers or remedies shall operate as a waiver thereof, nor shall a waiver signed by any Party of any breach of the covenants, conditions or agreements binding on the other Parties on one occasion be construed as a waiver or consent to such breach on any future occasion or a waiver of any other covenant, condition, or agreement herein contained.

8.2 Expenses. Each of the Parties hereto shall pay its own fees and expenses incident to the negotiation, preparation and execution of this Agreement, or the Closing, including the fees and expenses of legal counsel, accountants, investment bankers, consultants and other experts.

8.3 Publicity. Seller and Purchaser shall obtain the other’s written consent (such consent not to be unreasonably withheld or delayed) prior to any publication, presentation, public announcement or press release concerning the relationship between the Parties or the existence or terms of this Agreement, except as may otherwise be required by applicable Legal Requirement. In addition, Seller and Purchaser agree not to make any disparaging or derogatory comments regarding the other Party to any third party.

8.4 Benefit; Assignment. This Agreement shall be binding upon and inure to the benefit of and shall be enforceable by the Parties and each of their respective legal representatives, successors and permitted assigns. Neither Party may assign any portion of this Agreement, voluntarily or involuntarily, including by operation of law, without the prior written consent of the other Party, except that either Party may assign this Agreement upon written notice to the other Party, to an Affiliate of the assignor without the other Party’s consent in the case of a merger, consolidation, or a “change in control.” For purposes of this Section, “change in control” shall mean (A) the sale, transfer or other disposition of all or substantially all of a Party’s assets; or (B) any other corporate reorganization or business combination in which fifty percent (50%) or more of a Party’s outstanding voting stock is transferred, or exchanged through merger, to different holders in a single transaction or a series of related transactions. Any attempt to otherwise assign this Agreement shall be null and void. With the exception of the foregoing and as otherwise provided herein, no person or entity not a Party hereto shall have any interest herein or be deemed a third party beneficiary hereof, and nothing contained herein shall be construed to create any rights enforceable by any other person or third party.

8.5 Severability. Except as otherwise provided in Section 5.8(c), any provision of this Agreement held or determined by a court (or other legal authority) of competent jurisdiction to be illegal, invalid, or unenforceable in any jurisdiction shall be deemed separate, distinct and independent, and shall be ineffective to the extent of such holding or determination without (a) invalidating the remaining provisions of this Agreement in that jurisdiction or (b) affecting the legality, validity or enforceability of such provision in any other jurisdiction.

8.6 Interpretation.

(a) Captions and paragraph headings used in this Agreement are for convenience only and shall not be used to interpret any provision hereof. Except as specifically set forth herein, all Section and Article references are to Sections and Articles of this Agreement.

(b) Where the context so requires or permits, the use of the singular form includes the plural, and the use of the plural form includes the singular, and the use of any gender includes any and all genders. Neither the term “including” nor any derivative thereof is used in this Agreement to signify any limitation to any item or items specified in connection therewith. Terms such as lessee, lessor, lease, landlord, tenant, licensor, licensee and license will be interpreted broadly to include sub-leasing or sub-licensing arrangements and/or the parties thereto.

(c) Each party to this Agreement acknowledges that such party has caused this Agreement to be reviewed and/or had the opportunity to have it approved by legal counsel of such party’s own choice. The parties have negotiated the provisions of this Agreement, and any presumption that an ambiguity contained in this Agreement shall be construed against the party that caused this Agreement to be drafted shall not apply to the interpretation of this Agreement.

8.7 Entire Agreement. This Agreement, together with the exhibits, schedules, certificates and instruments attached hereto, which documents are incorporated herein by reference, constitutes the entire agreement and understanding of the Parties with respect to the subject matter hereof, and is intended as the Parties’ final expression and complete and exclusive statement of the terms thereof, superseding all prior or contemporaneous agreements, representations, promises and understandings, whether written or oral, and may be amended or modified only by an instrument in writing signed by all parties.

8.8 Notices. Any notice required or permitted to be given hereunder shall be (a) in writing, (b) effective on the first Business Day following the date of receipt, and (c) delivered by one of the following means: (i) by personal delivery; (ii) by prepaid, overnight package delivery or courier service; or (iii) by the United States Postal Service, first class, certified mail, return receipt requested, postage prepaid. All notices given under this Agreement shall be addressed, in the case of Seller, as follows:

Attn: Chief Financial Officer

Broadcaster, Inc.

100 Rowland Way, Suite 300

Novato, California 94945

With a copy to (which shall not constitute notice):

Attn: Gerald V. Niesar, Esq.

Niesar Curls Bartling LLP

90 New Montgomery Street, 9th Floor

San Francisco, CA 94105

All notices given under this Agreement shall be addressed, in the case of Purchaser, as follows:

Attn: Jack Bunce

GreyHawk Capital Management, LLC

675 Sun Valley Road

Ketchum, Idaho 83340

Fax: 208 727 6976

With a copy to (which shall not constitute notice):

Attn: Michael Kendall, Esq.

Goodwin Procter LLP

Exchange Place

Boston, Massachusetts 02109

Fax: 617-523-1231

or to such other addresses of which the Parties have been advised in writing by any of the above-described means. Personal delivery to a Party or to any officer, partner, agent, or employee of such Party at its address herein shall constitute receipt. The following shall also constitute receipt: (iv) a Party’s rejection or other refusal to accept notice, and (v) the inability to deliver to a Party because of a changed address of which no notice has been received by the other Party. Notwithstanding the foregoing, no notice of change of address shall be effective until ten (10) days after the date of receipt thereof. This Section shall not be construed in any way to affect or impair any waiver of notice or demand herein provided.

8.9 Bulk Transfer Laws. The Parties hereby waive compliance with any applicable bulk transfer laws, including the bulk transfer provisions of the Uniform Commercial Code of any state, or any similar statute, with respect to the transaction contemplated by this Agreement.

8.10 Tax Matters. Purchaser and Seller agree to use, or cause their respective Affiliates to use, the standard procedure set forth in Revenue Procedure 2004-53 with respect to wage reporting.

8.11 Judicial Interpretation. Should any provision of this Agreement require judicial interpretation, the Parties agree that the court interpreting or construing the same shall not apply a presumption that the terms hereof shall be more strictly construed against one Party by reason of the rule of construction that a document is to be construed more strictly against the Party which itself or through its agent prepared the same, it being agreed that the agents of each Party have participated in the preparation hereof.

8.12 Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of California, without giving effect to any principles of conflicts of law. With respect to any litigation arising out of or relating to this Agreement, the Parties agree that it shall be exclusively filed in and heard by the state or federal courts with jurisdiction to hear such suits located in Marin County, California and each Party hereby submits to the exclusive jurisdiction of such courts.

8.13 Counterparts. This Agreement may be executed in multiple counterparts, each of which shall be deemed an original and all of which taken together shall constitute one and the same Agreement. Execution and delivery of this Agreement by exchange of facsimile and/or PDF copies bearing the facsimile and/or PDF signature of a Party hereto shall constitute a valid and binding execution and delivery of this Agreement by such Party. Such facsimile and/or PDF copies shall constitute enforceable original documents.

8.14 Specific Performance. Without limiting or waiving in any respect any rights or remedies of the Parties to this Agreement now or hereinafter existing at law or equity or by statute, each of the Parties hereto shall be entitled to seek specific performance of the obligations to be performed by the other in accordance with the provisions of this Agreement. The Parties mutually agree that the Acquired Assets are unique and cannot readily be purchased on the open market and that Purchaser will be irreparably damaged in the absence of the consummation of the transactions contemplated by this Agreement. In the event of a material breach by Seller under this Agreement, Purchaser’s rights, and the obligations of Seller, will, at Purchaser’s election, be enforceable by decree of specific performance. In such event of any Seller’s material breach, and if Purchaser pursues the remedy of specific performance of this Agreement: (a) Seller hereby agrees not to raise any defense or objection to Purchaser’s enforcement action on the grounds that Purchaser’s damage may be adequately compensated by money damages only, and (b) Purchaser will be entitled to such monetary damages for actual damages of a material nature incurred by Purchaser as a result of Seller’s breach of its respective representations, covenants, warranties and agreements contained in this Agreement that cannot be, or have not been, cured through the remedy of specific performance of Seller’s obligations under this Agreement. Purchaser’s right, if any, to specific performance shall not preclude Purchaser from pursuing any other remedy that may be available to it at law or in equity.

[The Remainder of this Page Left Intentionally Blank.]

IN WITNESS WHEREOF, each Party has executed or caused its duly authorized officer to execute this Agreement as of the day and year first above written.

“Seller”

BROADCASTER, INC.,

a California corporation

By:_________________________

Name: Martin Wade

Its: Chief Executive Officer

“Purchaser”

IMSI DESIGN, LLC

a Delaware limited liability company

By:________________________

Name:

Its:

EXHIBIT A-1

Tangible Personal Property of the Precision Design Software Business

Precision Design Projected Employees

Furniture List

Employee Name	Desk	Chair	Table	Book Case	File Cabinet	Other
Banuet, Jessica		2		1	3
Botha, Mauritz	2	3		2	2
Brumbaugh, Joe		2		3	1
Bruner, John	1	2		1	3
Cardenas, Alejandro
Cardenas, Tomas	1	1			1
Carter, Brian	1	2		1	2
Fowler, Richard		1			1
Havranek, Jim	1	2		1	3
Herring, Jerry						Home Office
Jakab, Paul						Home Office
Knauer, Sylvia		2			1
LaFleur, Ruth	1	2	1		1
Lopez, Tomas
Maier, Mark		1			1
Mayer, Robert	1	4	1	1	1
McNamara, George	1	1			1
Phinney, Bruce		1			1
Shirk, Jason		1			1
Volpe, Pamela	1	2		1	1
Extra	1	3	3	3	5
Total	12	33	5	15	32

Precision Design Projected Employees

Hardware List

Employee	Display	Computer(s)*	Keyboard	Mouse	Other
Banuet, Jessica	19” CRT Monitor	Dell Dimension 2.8 Ghz	KeyBd	Mouse
	17” CRT Monitor	PcPlus PPRO 200	KeyBd	Mouse
Botha, Mauritz	19” LCD	Laptop	KeyBd	Mouse
		MacPower Book
Brumbaugh, Joe	19” CRT Monitor	PcPlus P4 2.66 Ghz	KeyBd	Mouse
		PcPlus PPRO 166Mhz
					4 Port KVM
					HP Laserjet 4M
Bruner, John	17 CRT Monitor	Dell Dimension 2.8 Ghz	KeyBd	Mouse
Cardenas, Alejandro	17” CRT	PcPlus PPRO 166	KeyBd	Mouse
Cardenas, Tomas	17” CRT	Dell Dimension P4 2.4 Ghz	KeyBd	Mouse
Carter, Brian	19” CRT	Dell Dimension 2.8 Ghz	KeyBd	Mouse
Fowler, Richard	17” CRT	Dell Dimension P4 2.66 Ghz	KeyBd	Mouse
Havranek, Jim	17” CRT	Dell Dimension P4 2.66 Ghz	KeyBd	Mouse
Herring, Jerry	N/A
Jakab, Paul	N/A
Kanuer, Sylvia	17” Crt	Dell Dimension P4 2.66 Ghz	KeyBd	Mouse
LaFluer, Ruth	17” CRT	Dell Dimension P4 2.66 Ghz	KeyBd	Mouse
Lopez, Tomas	N/A
Maier, Mark	17” Monitor	Dell Dimension P4 3.06 Ghz	KeyBd	Mouse
Mayer, Robert	17” LCD	PcPlus P4 2.4 Ghz	KeyBd	Mouse
	20” LCD	Apple iMac	KeyBd	Mouse
					HP Laserjet 5
McNamara, George	19” CRT	Dell Dimension P4 2.66	KeyBd	Mouse
Phinney, Bruce	17” CRT	Dell Dimension P4 2.66 Ghz	KeyBd	Mouse
Shirk, Jason	17” Monitor	Dell Dimension P4 2.66 Ghz	KeyBd	Mouse
Volpe, Pamela	19” LCD	PcPlus P4 2.4Ghz	KeyBd	Mouse
Warehouse					Label Printer
					Linksys Router
					750W UPS

Rowland Way Equipment		4 CD Duplicators
		3 CD Printers
		2 Port KVM
		Dell Dimension P4 2.66 Ghz
		PcPlus P4 2.4 Ghz
		MacIntel Laptop
		MacCube
	The following Servers:	Matisse, Monet, and the IMSI Web10 server

*Purchaser obtains as part of the Acquired Assets any and all software (and related licenses) on said computers as of the Closing Date (with the exception of those specifically excluded pursuant to Disclosure Schedule 3.8(b).

EXHIBIT A-2

Websites and Domain Names related to the Precision Design Software Business

I.	Registered with United Domains

unigraphics-symbols.com

unigraphics-symbole.de

turbocadsymbols.de

turbocadsymbols.com

turbocadsymbole.de

turbocadsymbol.de

turbocadsymbol.com

turbocad.org

turbocad.net

solidworkssymbole.de

proesymbols.com

proesymbole.de

megacadsymbols.de

megacadsymbols.com

megacadsymbole.de

megacadsymbole.com

kidscad.com

inventorsymbols.de

inventorsymbols.com

inventorsymbole.de

catiasymbols.com

catiasymbole.de

cadsymbols.se

cadsymbols.info

cadsymbols.de

cadsymbols.co.uk

cadsymbole.de

cadsymbol.net

cadsymbol.de

cadsymbol.com

cadsymbol.co.uk

cadforkids.com

cad-symbols.net

cad-symbols.de

cad-symbols.co.uk

cad-symbol.net

autocadsymbols.de

autocadsymbole.de

3dsymbols.de

3d-symbols.de

II.

Registered with Network Solutions

precisiondrawing.com

drawplan.com

designcad.com

turbotyping.com

turbocadcam.com

turbocad-cam.com

turboproject.com

turbocad.com

floorplan.com

turbocadtoday.com

hijaak.com

partsworks.com

hijaakpro.com

kidzclipart.com

autocadaddons.com

autocadsymbol.com

cadrating.com

cadratings.com

cadreview.com

cadreviews.com

mycadportal.com

cadgateway.com

maximumcad.com

cadcountry.com

mydesignportal.com

mydesignwebs.com

mycadstuff.com

cadonly.com

freecadsw.com

cadwebnet.com

cadwebnetwork.com

cadsites.com

cadaftermarket.com

cadrenderstudio.com

contractorcad.com

contractorscad.com

instantdeckdesign.com

instantdesign.com

cadmovies.com

EXHIBIT B-1

Additional Acquired Assets

Contingent Royalty Payment estimated to be in the amount of Sixty Thousand Dollars ($60,000) from OrgChart LLC related to the sale by Broadcaster to it of OrgChart Pro, if and when received.

EXHIBIT B-2

Additional Assumed Liabilities

None.

EXHIBIT C

Precision Design Software Products

I.	Applications

Owned Applications

Animations & More 50,000

CAD Symbols for Windows

CAD Symbols for Macintosh

CAD View and Convert, CAD View and Convert Plus

Clipart&More Product Line

ClipArt&More 250,000 for Windows

ClipArt&More 2.5 Million for Macintosh

ClipArt&More 2.5 Million for Windows

ClipArt&More 3 Million for Macintosh

ClipArt&More 3 Million for Windows

DesignCAD Product Line

DesignCAD 3D Max, Max Plus

DesignCAD Express

DesignCAD 2D

FloorPlan Product Line

FloorPlan 3D

FloorPlan 3D Design Suite

FloorPlan Bathroom Designer

FloorPlan Interior Designer

FloorPlan Kitchen Designer

HiJaak Product Line

HiJaak Pro

HiJaak Standard

HiJaak Image Manager

Instant Product Line

Instant Architect

Instant Deck Designer

Instant Engineer

Instant Estimator

Instant Modeler

Instant Symbols

Instant Shed and Shop Designer

Instant Woodworking

ScanPro

TurboCAD for Windows Product Line

TurboCADCAM

TurboCAD Professional

TurboCAD Deluxe

TurboCAD Standard

TurboCAD Designer

TotalCAD

TurboSketch

Licensed Applications

Legacy Family Tree Deluxe

Org Chart Professional

QuickPick Figures

SolidConverter Product Line

SolidConverter DWG to PDF

SolidConverter PDF to Word

SolidCapture

IMSI PDF to Word

IMSI PDF to Word Professional

TurboTyping

CAD Render Studio

Distributed Applications

Big Hammer Product Line

Fence Designer

Garage Designer

Patio Designer

Geomate Product Line

GrafiCalc

SectionCalc

ToleranceCalc

Realtime Landscaping Pro

II.

Training Materials

Owned Training Materials

2D and 3D Training Guides for TurboCAD Windows

2D and 3D Training CDs for TurboCAD Windows

DesignCAD 3D Max Training CD

DesignCAD Express Training CD

TurboCAD Professional Constraint Manager Training CD

Essential TurboCADCAM Movies

FloorPlan 3D Training Essentials

Licensed Training Materials

TurboCAD Architectural Tutorial

Distributed Training Materials

TurboCAD Essentials 3 - Text and Dimensions

TurboCAD Essentials 4 - Modify and Copy

III.

Content

Owned Content

TurboCAD Windows Exterior, Interior and Kitchen symbols

FloorPlan Exterior, Interior and Kitchen symbols

TC Mech

IV.

Plug-ins

Owned Plug-ins

CAM for TurboCAD Professional

Hatch Pattern Creator

Licensed Plug-ins

Allcad 2D and 2D/3D

Animation Lab for TurboCAD Professional

ContourCAM for DesignCAD

Furniture Maker for TurboCAD, TurboCAD Professional

EXHIBIT D

Precision Design Software Employees

See Attached Exhibit D.

EXHIBIT E

Escrow Agreement

EXHIBIT F

Promissory Note

EXHIBIT G

Purchase Price Allocation

Purchaser will determine the manner in which to allocate the purchase price no later than 30 days after receipt of the Closing Date Balance Sheet from Purchaser, subject to Seller’s consent which will not be unreasonably withheld.

EXHIBIT H

Transition Services Agreement

EXHIBIT I

Office Sublease

EXHIBIT J

Warehouse Sublease

EXHIBIT K

Bill of Sale

EXHIBIT L

Assignment and Assumption Agreement

EXHIBIT M

Cross-Receipt

EX-10.10 3 broadcaster_10ksb-ex1010.htm FORM OF STOCK PURCHASE WARRANT Unassociated Document

Exhibit 10.10

STOCK PURCHASE WARRANT

To Purchase Shares of Common Stock of

International Microcomputer Software, Inc.

THIS CERTIFIES that, for value received, __________, The Holder, or Holder’s transferee (the "Holder"), is entitled, upon the terms and subject to the conditions set forth herein, at any time on or after the date of this Warrant and on or before, but in no case after, five (5) years from the date of this Warrant, to subscribe for and purchase, from International Microcomputer Software, Inc., a California corporation (the "Company"), shares of the Company's Common Stock.

This Warrant is issued in connection with certain Agreement(s) (the "Agreement"), a form of which is attached hereto as Exhibit A and incorporated herein by this reference.

1. Number of Warrant Shares and Vesting.

This Warrant entitles the Holder to purchase up to the number of shares of the Common Stock of Company equal to ____________ shares of Common Stock sold pursuant to the Agreements. The Warrants shall vest as follows: __________.

2. Exercise Price.

The purchase price is the closing price of the Common Stock of the Company on __________, which was $_____.

3. Exercise of Warrant. The purchase rights represented by this Warrant are exercisable by the Holder, in whole or in part, at any time on or after the date of this Warrant and on or before five (5) years from the date of this Warrant, by the surrender of this Warrant, a Notice of Exercise in the form attached as Exhibit B. If no registration statement is then in effect with respect to shares issuable on exercise of this warrant, the Investment Representation Certificate in the form attached as Exhibit C duly executed at the office of the Company in Novato, California (or such other office or agency of the Company as it may designate by notice in writing to the Holder at the address of such Holder appearing on the books of the Company), and upon payment of the purchase price of the shares thereby purchased (by cash or by check or bank draft payable to the order of the Company or by cancellation of indebtedness of the Company to the Holder, if any, at the time of exercise in an amount equal to the purchase price of the shares thereby purchased); whereupon the Holder shall be entitled to receive a certificate for the number of shares of Common Stock so purchased.

4. Conversion of Warrant (Cashless Exercise). In lieu of exercising this Warrant as described in Section 3, the registered holder hereof shall have the right to convert this warrant, in whole or in part, by surrender of this Warrant and a Notice of Conversion in the form attached as Exhibit D duly executed at the office of the Company, into shares of Common Stock of the Company, as provided in this Section 4. Upon exercise of this conversion right, the holder hereof shall be entitled to receive that number of shares of Common Stock of the Company equal to the quotient obtained by dividing [(A - B)(X)] by (A), where:

A = the Fair Market Value (as defined below) of one share of Common Stock on the date of conversion of this Warrant.

B = the purchase price for one share of Common Stock under this Warrant.

X = the number of shares of Common Stock as to which this Warrant is being converted.

If the above calculation results in a negative number, then no shares of Common Stock shall be issued or issuable upon conversion of this Warrant.

"Fair Market Value" of a share of Common Stock shall be the average closing price of such stock on the ten (10) trading days immediately preceding the date as of which such value is to be determined.

5. Restrictions on Transfer.

(a) Permitted Transfers. This Warrant shall be freely transferable in whole or in part, subject to the limitations specified in this Section 5, provided that any such transfer shall be for not less than 10% of the amount of this Warrant.

(b) Investment Representation. The Holder agrees that the Holder will not offer, sell or otherwise dispose of this Warrant or any securities issued on exercise of this Warrant except under circumstances which will not result in a violation of the Securities Act. Unless a registration statement is in effect, then upon exercise of this Warrant, the Holder shall confirm in writing, by executing the form attached as Exhibit C hereto, that the securities purchased thereby are being acquired for investment solely for the Holder's own account and not as a nominee for any other Person, and not with a view toward distribution or resale.

(c) Disposition of Warrant or Shares. With respect to any offer, sale or other disposition of this Warrant or any securities issued upon exercise of this Warrant, the Holder agrees to give written notice to the Company prior thereto, describing briefly the manner thereof, together with a written opinion of the Holder's counsel, if reasonably requested by the Company, to the effect that such offer, sale or other disposition may be effected without registration under the Securities Act or qualification under any applicable state securities laws of this Warrant or such shares, as the case may be, and indicating whether or not under the Securities Act certificates for this Warrant or such shares, as the case may be, to be sold or otherwise disposed of require any restrictive legend as to applicable restrictions on transferability in order to insure compliance with the Securities Act. Each certificate representing this Warrant or the securities thus transferred (except a transfer pursuant to Rule 144) shall bear a legend as to the applicable restrictions on transferability in order to insure compliance with the Securities Act, unless in the aforesaid reasonably satisfactory opinion of counsel for the Holder or the security holder, as the case may be, such legend is not necessary in order to insure compliance with the Securities Act. The Company may issue stop transfer instructions to its transfer agent in connection with such restrictions.

In the event Holder seeks an opinion from Holder's counsel as to transfer without registration, the Company shall provide such factual information to Holder's counsel as Holder's counsel may reasonably request for the purpose of rendering such opinion and such counsel may rely on the accuracy and completeness of such information in rendering such opinion.

(d) Procedure. Subject to the limitations set forth in this Section 5, Holder may transfer the Warrant on the books of the Company by surrendering to the Company: (i) this Warrant; (ii) a written Assignment, in the form attached as Exhibit E, naming the assignee and duly executed by Holder; and (iii) funds sufficient to pay any stock transfer taxes payable upon the making of such transfer.

The company shall thereupon execute and deliver a new Warrant in the name of the assignee specified in such instrument of assignment, and if the Warrant is transferred in part, the Company shall also execute and deliver in the name of the Holder a new Warrant covering the untransferred portion of the Warrant. Upon issuance of the new Warrant or Warrants, the Warrant surrendered for transfer shall be canceled by the Company.

(e) Expenses. The Company shall pay all expenses, and other charges payable in connection with the preparation, issue, and delivery of any new Warrant under this Section 5.

6. No Rights as Shareholder. This Warrant does not entitle the Holder to any voting rights or other rights as a shareholder of the Company prior to exercise.

7. Loss, Theft, Destruction or Mutilation of Warrant. Upon receipt by the Company of evidence reasonably satisfactory to it of the loss, theft, destruction or mutilation of this Warrant, and in case of loss, theft or destruction, of indemnity or security reasonably satisfactory to it, and upon reimbursement to the Company of all reasonable expenses incidental thereto, and upon surrender and cancellation of this Warrant, if mutilated, the Company will make and deliver a new Warrant of like tenor and dated as of such cancellation, in lieu of this Warrant.

8. Saturdays, Sundays, Holidays, etc. If the last or appointed day for the taking of any action or the expiration of any right required or granted herein shall be a Saturday or a Sunday or shall be a legal holiday, then such action may be taken or such right may be exercised on the next succeeding day not a legal holiday.

9. Miscellaneous. This Warrant may be amended and any term of this Warrant may be waived only by a written instrument signed by the Company and the Holder. This Warrant shall be binding upon any successors or assigns of the Company. This Warrant shall constitute a contract under the laws of the State of California and for all purposes shall be construed in accordance with and governed by the laws of said state applied without reference to conflict of laws principles.

Dated:

INTERNATIONAL MICROCOMPUTER

SOFTWARE, INC.

___________________________________

By:

EXHIBIT A

RELATED AGREEMENT(S)

EXHIBIT B

NOTICE OF EXERCISE

TO: International Microcomputer Software, Inc.

The undersigned hereby elects to purchase _______________ shares of Common Stock of International Microcomputer Software, Inc. pursuant to the terms of the attached Warrant, and tenders herewith payment of the purchase price in full, together with all applicable transfer taxes, if any.

(1) Please issue a certificate or certificates representing said shares of Common Stock in the name of the undersigned.

(2) The undersigned represents that the aforesaid shares of Common Stock are being acquired for the account of the undersigned for investment.

(Date)

EXHIBIT C

INVESTMENT REPRESENTATION CERTIFICATE

HOLDER:

COMPANY:

INTERNATIONAL MICROCOMPUTER SOFTWARE, INC.

SECURITY:

COMMON STOCK

AMOUNT:

DATE:

In connection with the purchase of the above-listed Securities, the undersigned Holder represents to the Company the following:

(a) Holder is aware of the Company's business affairs and financial condition and has acquired sufficient information about the Company to reach an informed and knowledgeable decision to acquire the Securities. Holder is acquiring these Securities for investment for Holder's own account only and not with a view to, or for resale in connection with, any "distribution" thereof within the meaning of the Securities Act of 1933, as amended (the "Securities Act").

(b) Holder acknowledges and understands that the Securities constitute "restricted securities" under the Securities Act and have not been registered under the Securities Act in reliance upon a specific exemption therefrom, which exemption depends upon, among other things, the bona fide nature of Holder's investment intent as expressed herein. In this connection, Holder understands that, in the view of the Securities and Exchange Commission, the statutory basis for such exemption may be unavailable if Holder's representation was predicated solely upon a present intention to hold these Securities for the minimum capital gains period specified under tax statutes, for a deferred sale, for or until an increase or decrease in the market price of the Securities, or for a period of one year or any other fixed period in the future. Holder further understands that the Securities must be held indefinitely unless they are subsequently registered under the Securities Act or an exemption from such registration is available. Holder understands that the certificate evidencing the Securities will be imprinted with a legend which prohibits the transfer of the Securities unless they are registered or such registration is not required in the opinion of counsel satisfactory to the Company.

(c) Holder is familiar with the provisions of Rule 144, promulgated under the Securities Act, which, in substance, permit limited public resale of "restricted securities" acquired, directly or indirectly from the issuer thereof, in a non-public offering subject to the satisfaction of certain conditions.

The Securities may be resold in certain limited circumstances subject to the provisions of Rule 144, which requires the resale to occur not less than one year after the later of the date the Securities were sold by the Company or the date the Securities were sold by an affiliate of the Company, within the meaning of Rule 144; and, in the case of acquisition of the Securities by an affiliate, or by a non-affiliate who subsequently holds the Securities less than two years, the satisfaction of certain conditions of Section 13 or 15(d) of the Securities Exchange Act of 1934, ninety (90) days thereafter (or such longer period as any market stand-off agreement may require) the Securities may be resold, subject to the satisfaction of certain of the conditions specified by Rule 144, including: (1) the resale being made through a broker in an unsolicited "broker's transaction" or in transactions directly with a market maker (as said term is defined under the Securities Exchange Act of 1934); and, in the case of an affiliate, (2) the availability of certain public information about the Company, (3) the amount of Securities being sold during any three month period not exceeding the limitations specified in Rule 144, and (4) the timely filing of a Form 144, if applicable.

(d) Holder further understands that in the event all of the applicable requirements of or 144 are not satisfied, registration under the Securities Act, compliance with Regulation A, or some other registration exemption will be required; and that, notwithstanding the fact that Rule 144 is not exclusive, the Staff of the Securities and Exchange Commission has expressed its opinion that persons proposing to sell private placement securities other than in a registered offering and otherwise than pursuant to Rule 144 will have a substantial burden of proof in establishing that an exemption from registration is available for such offers or sales, and that such persons and their respective brokers who participate in such transactions do so at their own risk. Holder understands that no assurances can be given that any such other registration exemption will be available in such event.

Signature of Holder:

___________________________

Date:___________________________

EXHIBIT D

NOTICE OF CONVERSION

To: International Microcomputer Software, Inc.

(1) The undersigned hereby elects to convert that portion of the attached Warrant representing the right to purchase [____________________] shares of Common Stock of the Company into such number of shares of Common Stock of the Company as is determined pursuant to Section 4 of such Warrant, which conversion shall be effected pursuant to the terms of the attached Warrant.

(2) Please issue a certificate or certificates representing said shares in the name of the undersigned or in such other name as is specified below:

(Name):

(Address):

(3) The undersigned represents that the aforesaid shares of Common Stock of the Company are being acquired for the account of the undersigned for investment and not with a view to, or for resale in connection with, the distribution thereof and that the undersigned has no present intention of distributing or reselling such shares.

(Date) (Signature)

EXHIBIT E

ASSIGNMENT

FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto [Name and Address] the rights represented by the foregoing Common Stock Warrant issued by International Microcomputer Software, Inc., on [date], and appoints ________________ its attorney to transfer said rights on the books of said corporation, with full power of substitution in the premises.

_______________________________

Signature guaranteed:

Dated: _________________

EX-10.13 4 broadcaster_10ksb-ex1013.htm AMENDMENT NO. 1 TO PARENT VOTING AGREEMENT Unassociated Document

Exhibit 10.13

AMENDMENT NO. 1 TO

PARENT VOTING AGREEMENT

THIS AMENDMENT NO. 1 TO PARENT VOTING AGREEMENT (this “Amendment”) is made and entered into as of September ___, 2006 by and among AccessMedia Networks, Inc., a Delaware corporation (“AccessMedia”), and the undersigned stockholders (the “Stockholders”) of Broadcaster, Inc., a California corporation formerly known as International Microcomputer Software, Inc.

WHEREAS, the parties have entered into that certain Parent Voting Agreement, dated as of December 16, 2005 (the “Agreement”), pursuant to which the Stockholders have agreed to, among other things, vote any and all Subject Shares Beneficially Owned by such Stockholders in favor of certain directors nominated by the Stockholders’ Representative; and

WHEREAS, in accordance with Section 7 of the Agreement, the parties now desire to amend the Agreement as provided herein.

NOW, THEREFORE, in consideration of the foregoing and for other good and valid consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereby agree as follows:

1. Capitalized terms used in this Amendment and not otherwise defined shall have the meaning set forth in Agreement.

2. Section 1(d) of the Agreement shall be amended and restated to read in its entirety as follows:

(d) “Expiration Date” means the earlier to occur of (i) December 31, 2010 and (ii) the date on which the aggregate number of shares issued pursuant to the Merger Agreement to the former stockholders of AccessMedia, exclusive of any shares issued in connection with any banking, consulting, broker or other fees or arrangements related to the Merger, represent a majority of the outstanding shares of common stock of IMSI.

3. Except as amended hereby, the Agreement shall remain in full force and effect. This Amendment may be executed in two or more counterparts and by facsimile, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

(Remainder of page intentionally left blank)

IN WITNESS WHEREOF, the undersigned have executed this Amendment No. 1 to Parent Voting Agreement as of the date first set forth above.

ACCESSMEDIA NETWORKS, INC.

By: ____________________________________

Name: Martin Wade, III

Title: Chief Executive Officer

STOCKHOLDERS:

________________________________________

MARTIN WADE, III

BAYTREE CAPITAL ASSOCIATES LLC

By: ____________________________________

Name: Michael Gardner

Title: Managing Member

DIGITAL CREATIVE DEVELOPMENT CORPORATION

By: ____________________________________

Name:

Title:

EX-10.15 5 broadcaster_10ksb-ex1015.htm AMENDMENT NO. 1 TO COMPANY VOTING AGREEMENT Unassociated Document

Exhibit 10.15

AMENDMENT NO. 1 TO

COMPANY VOTING AGREEMENT

THIS AMENDMENT NO. 1 TO COMPANY VOTING AGREEMENT (this “Amendment”) is made and entered into as of September ___, 2006 by and among Broadcaster, Inc., a California corporation formerly known as International Microcomputer Software, Inc. (“Broadcaster”), Broadcaster Networks, Inc., a Delaware corporation formerly known as Broadcaster, Inc. (“IMSI Delaware”), and the undersigned former stockholders (the “Stockholders”) of AccessMedia Networks, Inc., a Delaware corporation (the “Company”).

WHEREAS, the parties have entered into that certain Company Voting Agreement, dated as of December 16, 2005 (the “Agreement”), pursuant to which the Stockholders have agreed to, among other things, vote any and all Subject Shares Beneficially Owned by such Stockholders in favor of directors nominated by Broadcaster; and

WHEREAS, in accordance with Section 8 of the Agreement, the parties now desire to amend the Agreement as provided herein.

NOW, THEREFORE, in consideration of the foregoing and for other good and valid consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereby agree as follows:

1. Capitalized terms used in this Amendment and not otherwise defined shall have the meaning set forth in Agreement.

2. Section 1(d) of the Agreement shall be amended and restated to read in its entirety as follows:

(d) “Expiration Date” means the earlier to occur of (i) the Effective Time (as defined in the Merger Agreement) and (ii) the date on which the Merger Agreement is terminated pursuant to its terms; provided, however, that the obligations of Stockholder under Sections 2(a)(iv) and (b) hereof shall survive the Expiration Date until the earlier of (i) December 31, 2010 and (ii) the date on which the aggregate number of shares issued pursuant to the Merger Agreement to the former stockholders of AccessMedia, exclusive of any shares issued in connection with any banking, consulting, broker or other fees or arrangements related to the Merger, represent a majority of the outstanding shares of common stock of IMSI (the “Voting Termination Date”).

(Remainder of page intentionally left blank)

IN WITNESS WHEREOF, the undersigned have executed this Amendment No. 1 to Company Voting Agreement as of the date first set forth above.

BROADCASTER, INC.

By: ____________________________________

Name: Martin Wade, III

Title: Chief Executive Officer

BROADCASTER NETWORKS, INC.

By: ____________________________________

Name: Martin Wade, III

Title: Chief Executive Officer

ACCM ACQUISITION CORP.

By: ____________________________________

Name: Martin Wade, III

Title: Chief Executive Officer

STOCKHOLDERS:

________________________________________

MICHAEL GARDNER

BROADCASTER LLC

By: ____________________________________

Name: Nolan Quan

Title: Managing Member

ACCESSMEDIA TECHNOLOGIES LLC

By: ____________________________________

Name: Nolan Quan

Title: Managing Member

SOFTWARE PEOPLE LLC

By: ____________________________________

Name: Nolan Quan

Title: Managing Member

TRANS GLOBAL MEDIA LLC

By: ____________________________________

Name: Nolan Quan

Title: Managing Member

EX-10.16 6 broadcaster_10ksb-ex1016.htm ENGAGEMENT LETTER Unassociated Document

Exhibit 10.16

June 20, 2005

PRIVATE AND CONFIDENTIAL

International Microcomputer Software, Inc.

100 Rowland Way

Novato, CA 94945

Attention: Martin Wade, CEO

Martin:

This letter agreement (the “Agreement”) confirms our understanding that International Microcomputer Software, Inc. (the “Company”) has engaged Baytree Capital Associates, LLC (“Baytree”) to act as its exclusive financial advisor with respect to the merger, consolidation or any other business combination, of the Company with America’s Media, Inc. (“AM”) in one or a series of transactions, involving a substantial amount of the business, securities or assets of the Company (the “Transaction”).

As discussed, we propose to undertake certain services on your behalf, to the extent requested by you, which shall consist of the following: (i) assisting you in analyzing the Company’s operations and future prospects both without the Transaction and pro forma for the Transaction; (ii) assisting you in conducting due diligence on AM; (iii) negotiating the financial aspects of the Transaction under your guidance; and (iv) reviewing and aiding in the preparation of all documentation related to the Transaction.

As compensation for the services to be provided by Baytree hereunder, the Company agrees to pay to Baytree five percent (5.0%) of the aggregate value of the consideration issued to AM at the Closing of the Transaction, with such consideration to be in the same form as that paid to AM. In addition, the Company agrees to pay to Baytree for ongoing consulting services one (1.0) million shares of the Company’s common stock with such consulting services to be rendered by Baytree through June 30, 2008. Further, upon the request of Baytree, the Company agrees to reimburse Baytree for all out-of-pocket expenses incurred by Baytree in connection with its engagement hereunder, whether or not a Transaction is consummated. As Baytree will be acting on your behalf, the Company agrees to the indemnification and other obligations set forth in Schedule I attached hereto, which Schedule is an integral part hereof.

The Company shall make available to Baytree all financial and other information concerning its business and operations that Baytree reasonably requests as well as any other information relating to the Transaction prepared by the Company or any of its other advisors. In performing its services hereunder, Baytree shall be entitled to rely without investigation upon all information that is available from public sources as well as all other information supplied to it by or on behalf of the Company or its advisors.

Any advice, written or oral, provided by Baytree pursuant to this Agreement will be treated by the Company as confidential, and will not be reproduced, summarized, described or referred to, or furnished to any other party, except in each case with our prior written consent.

This Agreement may be terminated by either the Company or Baytree upon receipt of written notice to that effect by the other party. Upon any termination of this Agreement, Baytree will be entitled to prompt payment of all fees accrued prior to such termination, and reimbursement of all out-of-pocket expenses as described above. In addition, if at any time prior to twelve (12) months after the termination by the Company of this Agreement, the Transaction is consummated, Baytree will be entitled to payment in full of the compensation described above. The indemnity and other provisions contained in Schedule I will also remain operative and in full force and effect regardless of any termination of this Agreement.

The Company acknowledges and agrees that Baytree has been retained solely to provide the advice or services set forth in this Agreement. Baytree shall act as an independent contractor, and any duties of Baytree arising out of its engagement hereunder shall be owed solely to the Company.

This Agreement shall be binding upon and inure to the benefit of the Company, Baytree, each Indemnified Person (as defined in Schedule I) and their respective successors and assigns.

This Agreement shall be governed by, and construed and enforced in accordance with, the laws of the State of New York.

If any term, provision, covenant or restriction contained in this Agreement, including Schedule I, is held by a court of competent jurisdiction or other authority to be invalid, the remainder of the terms, provisions, covenants and restrictions contained in this Agreement shall remain in full force and effect and shall in no way be affected, impaired or invalidated.

After reviewing this Agreement, please confirm that the foregoing is in accordance with your understanding by signing and returning to me the duplicate of this letter attached hereto, whereupon it shall be our binding Agreement.

Very truly yours,

BAYTREE CAPITAL ASSOCIATES, LLC

By:___________________________

Michael Gardner

Chairman and CEO

Accepted and agreed to this 20th day of June, 2005

INTERNATIONAL MICROCOMPUTER SOFTWARE, INC.

By:______________________________

Martin Wade

Chief Executive Officer

SCHEDULE I

This Schedule I is a part of and is incorporated into that certain letter agreement (together, the “Agreement”), dated June 20, 2005, by and between International Microcomputer Software, Inc. (the “Company”) and Baytree Capital Associates, LLC (“Baytree”).

The Company agrees to indemnify and hold harmless Baytree and its affiliates (Baytree and each such entity or person, an “Indemnified Person”) from and against any owes, claims, damages, costs and other liabilities (collectively “Liabilities”), and will reimburse each indemnified Person for all fees and expenses (including the reasonable fees and expenses of counsel) (collectively, “Expenses”) as they are incurred in investigating, preparing, pursuing or defending any claim, or (collectively, “Actions”), arising out of or in connection with advice or services rendered pursuant to this Agreement. However, the Company will not be responsible for any Liabilities or Expenses of any Indemnified Person that are determined by a judgment of a court of competent jurisdiction to have resulted solely from such Indemnified Person’s gross negligence or willful misconduct.

Upon receipt by an Indemnified Person of actual notice of an Action against such Indemnified Person with respect to which indemnity may be sought under this Agreement, such Indemnified Person shall promptly notify the Company in writing. The Company shall, if requested by Baytree, assume the defense of any such Action including the employment of counsel reasonably satisfactory to Baytree. Any Indemnified Person shall have the right to employ separate counsel in any such Action and participate in the defense thereof, but the fees and expenses of such counsel shall be at the expense of such Indemnified Person, unless: (i) the Company has failed promptly to assume the defense and employ counsel or (ii) the named parties to any such Action include such Indemnified Person and the Company, and such Indemnified Person shall have legal defenses available to it which are different from those available to the Company.

The reimbursement and indemnity obligations of the Company set forth herein shall apply to any modification of this Agreement and shall remain in full force and effect regardless of any termination of, or the completion of any Indemnified Person’s services under or in connection with, this Agreement.

EX-10.17 7 broadcaster_10ksb-ex1017.htm BILLING SYSTEM SOFTWARE TECHNOLOGY LICENSING AGREEMENT Unassociated Document

Exhibit 10.17

BILLING SYSTEM SOFTWARE TECHNOLOGY

LICENSING AGREEMENT

THIS AGREEMENT is entered into this 1st day of April, 2005 by and between MicroBilling Systems, Ltd., a foreign entity whose address is 126 Aldersgate Street, Barbicon, London EC1A 4JQ, UK (“Licensor”), and Camnation, Inc., a Delaware corporation located at 910 Foulk Road, Suite 201, Wilmington, DE 19803 (“Licensee”).

RECITALS

WHEREAS, Licensor is engaged in the business of designing and developing computer-related software and related products for application on the Internet, and has, over the years, acquired and developed substantial and valuable technical knowledge, know-how, and experience in the design and development of such systems. Specifically, Licensor has developed and continues developing Billing System Software Technology (the “Software”). The Billing System Software platform was originally designed as a mechanism to invoice and bill customers for purchases made via the Internet. The Billing System software allows immediate access to an application or Website while securely requesting personal and payment information later, a description of which is annexed hereto as Exhibit A.

WHEREAS, Licensee desires to obtain from Licensor and Licensor is willing to grant to Licensee, a non-exclusive license relating to the Software in accordance with the terms and conditions herein; and

WHEREAS, Licensor and Licensee believe it is in their mutual interest and desire to enter into this licensing agreement (“Agreement”) whereby Licensee would use the Software in the conduct of its operations on the Internet pursuant to the terms and conditions hereinafter provided.

NOW, THEREFORE, in consideration of the promises and the mutual covenants of this Agreement, the parties hereto agree as follows:

GRANT OF LICENSE

1.1 Grant. Subject to the terms and conditions set forth in this Agreement, Licensor hereby grants to Licensee, for the term of this Agreement, a nonexclusive, nontransferable, license in the Software, to use the Software in the operation of its business on the Internet.

1.2 Restriction. Except as specifically granted in this Agreement, Licensor owns and retains all right, title, and interest in Software and any and all related materials. This Agreement does not transfer ownership rights of any description in the Software, or any related material to Licensee or any third party. Licensee shall not modify, reverse engineer, or decompile the software, or create derivative works based on the Software. Licensee shall retain all copyright and trademark notices on the Software and Documentation and shall take other necessary steps to protect Licensor’s intellectual property rights. This License may not be transferred, assigned, or sublicensed (either voluntarily or involuntarily) by Licensee without the express written consent of Licensor. Any attempted transfer, assignment, or sublicense, in violation of this Section shall be void and ineffective for all purposes. In the event of an assignment or sublicense permitted by this Section, this Agreement shall be binding upon the heirs, successors and assigns of the parties hereto.

TERM AND TERMINATION

2.1 Term. This Agreement, and the License granted hereunder, becomes effective as of the date of execution by both parties and shall extend forward in perpetuity unless sooner terminated as set forth below in Section 2.2.

2.2 Termination for Cause. Either party, as applicable, shall have the right, in addition, and without prejudice to any other rights or remedies, to terminate this Agreement as follows:

2.2.1 by either party for any material breach of this Agreement that is not cured within ten (10) days of receipt by the party in default of a notice specifying the breach and requiring its cure;

2.2.2 by either party, immediately upon written notice, if: (a) all or a substantial portion of the assets of the party are transferred to an assignee for the benefit of creditors, to a receiver, or to a trustee in bankruptcy; (b) a proceeding is commenced by or against either party for relief under bankruptcy or similar laws and such proceeding is not dismissed within sixty (60) days; or (c) the other party is adjudged bankrupt;

2.2.3 by Licensor, immediately upon written notice if Licensee’s failure to comply with Licensor’s standard Terms and Conditions for use of the Software, including, by way of example and not limitation, failure on the part of Licensee to comply with Licensor’s anti-spam policy (attached hereto as Exhibit “B”), the commission of consumer or credit card fraud by Licensee, material misrepresentations made to Licensor, upon which Licensor relied when entering into this Agreement.

2.3 Rights on Termination. Licensor has and reserves all rights and remedies that it has by operation of law or otherwise to enjoin the unlawful or unauthorized use of Software. Sections 1.2, 6, 7, and 8, will survive termination or expiration of this Agreement as will any cause of action or claim of either party, whether in law or in equity, arising out of any breach or default. On termination all rights granted to Licensee under this Agreement cease and immediately revert to Licensor and Licensee will promptly cease all use and reproduction of the Software, and Licensee will promptly return all copies of the Software to Licensor or destroy all of Licensee’s copies of the Software and so certify to Licensor in writing within fourteen (14) days of termination.

CONSIDERATION

3.1 Consideration. In consideration for the license granted hereunder, Licensee agrees to pay to Licensor the sum of one dollar ($1) plus other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged.

3.2 Payments. All payments due Licensor shall be made in U.S. currency unless otherwise specified by Licensor.

LICENSOR’S OBLIGATIONS

4.1 Deliverables. Upon execution of this Agreement, Licensor shall deliver the Software to Licensee in a format appropriate for the Licensee’s platform.

4.2 Support and Maintenance. Beginning upon the effective date of this Agreement as provided in Schedule A, Licensor shall meet with Licensee relating to the installation and operation of hardware, software, machinery, equipment, materials, object codes, specifications, designs, manufacturing and processing procedures, methods, layout, and the like that Licensor believes Licensee may require in order to adapt the Technology to use on its Internet Web site(s). Licensor shall also provide Licensee such technical and other qualified experts to train and otherwise educate Licensee in the use of the Technology and assist in the resolution of any problems or matters that require on-the-spot assistance. In any such event, Licensee shall pay all time, travel and out-of-pocket expenses incurred by any such Licensor personnel or agents, it being understood that the salaries of the experts shall be the responsibility of Licensee.

LICENSEE’S OBLIGATIONS

5.1 Financial Resources. Licensee represents that it has the financial resources and business operations that will enable it to reasonably commercialize the Software and that it shall, during the term of this Agreement and any renewal thereof, use its best efforts to promote the Software on the World Wide Web. Licensee further agrees that it will, in good faith and with reasonable diligence, conduct all operations incorporating the Software in accordance with the highest standards of business customs of the industry and that it will endeavor to utilize its skill and resources in such effort to the extent that high standards of business practice and judgment dictate.

5.2 Compliance. Licensee shall fully comply with the marking provisions of the intellectual property laws of the United States.

CONFIDENTIALITY

6.1 Confidentiality. Licensee acknowledges that the Software, and all information relating to the business and operations of the Licensor that Licensee learns or has learned during or prior to the term of this Agreement, may be the valuable, confidential, and proprietary information of the Licensor. During the period this Agreement is in effect, and at all times afterwards, Licensee, and its employees, contractors, consultants, and agents, will: (a) safeguard the confidential information with the same degree of care that it uses to protect its own confidential information; (b) maintain the confidentiality of this information; (c) not use the information except as permitted under this Agreement; and (d) not disseminate, disclose, sell, publish, or otherwise make available the information to any third party without the prior written consent of Licensor.

6.2 Limitations on Confidentiality Restrictions. Section 6.1 does not apply to any information that: (a) is already lawfully in the receiving party’s possession (unless received pursuant to a nondisclosure agreement); (b) is or becomes generally available to the public through no fault of the receiving party; (c) is disclosed to the receiving party by a third party who may transfer or disclose such information without restriction; (d) is required to be disclosed by the receiving party as a matter of law (provided that the receiving party will use all reasonable efforts to provide the disclosing party with prior notice of such disclosure and to obtain a protective order therefor); (e) is disclosed by the receiving party with the disclosing party’s approval; and (f) is independently developed by the receiving party without any use of confidential information. In all cases, the receiving party will use all reasonable efforts to give the disclosing party ten (10) days’ prior written notice of any disclosure of information under this agreement.

6.3 Injunctive Relief for Breach. Licensor and Licensee acknowledge that any breach of Section 6.1 by a receiving party will irreparably harm the disclosing party. Accordingly, in the event of a breach, the disclosing party is entitled to promptly seek injunctive relief in addition to any other remedies that the disclosing party may have at law or in equity.

WARRANTIES, DISCLAIMER, AND LIMITATIONS.

7.1 Warranties.

7.1.1 Licensor hereby warrants to Licensee that Licensor is the owner of the Software or has the right to grant to Licensee the license to use the Software in the manner and for the purposes set forth in this Agreement without violating any rights of a third party.

7.1.2 Licensee hereby warrants to Licensor that it has performed all necessary due diligence to ascertain whether the Software performs in the manner represented by Licensee and that the Software is suitable for Licensor’s purposes.

7.2 Disclaimer. THE WARRANTIES SET FORTH IN SECTION 7.1, ABOVE, ARE IN LIEU OF, AND THIS AGREEMENT EXPRESSLY EXCLUDES, ALL OTHER WARRANTIES, EXPRESS OR IMPLIED, ORAL OR WRITTEN, INCLUDING, WITHOUT LIMITATION: (a) ANY WARRANTY THAT THE SOFTWARE IS ERROR-FREE, WILL OPERATE WITHOUT INTERRUPTION, OR IS COMPATIBLE WITH ALL EQUIPMENT AND SOFTWARE CONFIGURATIONS; (b) ANY AND ALL IMPLIED WARRANTIES OF MERCHANTABILITY; AND (c) ANY AND ALL WARRANTIES OF FITNESS FOR A PARTICULAR PURPOSE.

7.3 Remedies on Breach of Warranty. In the event of any breach of the warranty set forth in Section 7.1, Licensee’s exclusive remedy shall be for Licensor to promptly replace defective Software media; if Licensor is unable to replace the media within thirty (30) days of notification by Licensee of a defect, Licensee’s sole remedy is to terminate this Agreement, at which time Licensor will refund any and all license or other fees paid by Licensee pursuant to this Agreement.

7.4 Limitation of Liability. LICENSOR IS NOT LIABLE FOR ANY INDIRECT, INCIDENTAL, SPECIAL, OR CONSEQUENTIAL DAMAGES, INCLUDING THE LOSS OF PROFITS, REVENUE, DATA, OR USE OR COST OF PROCUREMENT OF SUBSTITUTE GOODS INCURRED BY LICENSEE OR ANY THIRD PARTY, WHETHER IN AN ACTION IN CONTRACT OR TORT OR BASED ON A WARRANTY, EVEN IF LICENSOR OR ANY OTHER PERSON HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES. LICENSOR’S LIABILITY FOR DAMAGES UNDER THIS AGREEMENT SHALL NOT EXCEED THE AMOUNTS ACTUALLY PAID BY LICENSEE TO LICENSOR UNDER THIS AGREEMENT.

INDEMNITY.

8.1 Infringement Indemnity. Licensor indemnifies, defends, and holds Licensee harmless from and against any claims, actions, or demands alleging that the Software infringes any United States patent, United States copyright, or other United States intellectual property right of a third party. If use of the Software is permanently enjoined for any reason, Licensor, at Licensor’s option, and in its sole discretion, may: (a) modify the Software so as to avoid infringement; (b) procure the right for Licensee to continue to use and reproduce the Software and Documentation; or (c) terminate this Agreement and refund to Licensee all license fees paid. Licensor shall have no obligation under this Section 8.1 for or with respect to claims, actions, or demands alleging infringement that arise as a result of (a) the combination of noninfringing items supplied by Licensor with any items not supplied by Licensor; (b) modification of the Software or Documentation by Licensee or by Licensor in compliance with Licensee’s designs, specifications, or instructions; (c) the direct or contributory infringement of any process patent by Licensee through the use of the Software; and (d) continued allegedly infringing activity by Licensee after Licensee has been notified of the possible infringement.

8.2 Other Indemnity. Licensee is responsible and indemnifies and holds Licensor harmless for any and all losses, liability, or damages arising out of, or incurred in connection with, Licensee’s use or reproduction of the Software pursuant to this Agreement.

8.3 Condition to Indemnification. Should any claim subject to indemnity be made against Licensor or Licensee, the party against whom the claim is made agrees to provide the other party with prompt written notice of the claim. Licensor will control the defense and settlement of any claim under Section 8.1 and Licensee will control the defense and settlement of any claim under Section 8.2. The indemnified party agrees to cooperate with the indemnifying party and provide reasonable assistance in the defense and settlement of such claim. The indemnifying party is not responsible for any costs incurred or compromise made by the indemnified party unless the indemnifying party has given prior written consent to the cost or compromise.

EXPORT CONTROLS AND RESTRICTED RIGHTS.

9.1 Export Controls. The Software and all underlying information or technology may not be exported or re-exported into any country to which the U.S. has embargoed goods, or to anyone on the U.S. Treasury Department’s list of Specially Designated Nationals or the U.S. Commerce Department’s Table of Deny Orders. Licensee shall not export the Software or any underlying information or technology to any facility in violation of these or other applicable laws and regulations. Licensee represents and warrants that it is not a national or resident of, or located in or under the control of, any country subject to such export controls.

9.2 Restricted Rights. The Software and Documentation are provided with Restricted Rights. Use, duplication, or disclosure by the U.S. Government is subject to restrictions as set forth in subparagraph (c)(1) of the Commercial Computer Software - Restricted Rights clause at h, subparagraph (c)(1)(ii) of The Rights in Technical Data and Computer Software clause at 252.227-7013, or subparagraph (d) of the Commercial Computer Software--Licensing at NASA FAR supplement 16-52.227-86, or their equivalent, as applicable.

10.

IMPROVEMENTS.

During the term of this Agreement, each party shall advise the other .party of any technical improvements and inventions relating to the Technology. While no improvements are required by this Agreement, all such improvements and inventions ‘shall become the property of Licensor, and Licensee agrees to execute any and all documents requested by Licensor in order to perfect Licensor’s right in same.

11.

GENERAL.

11.1 Entire Agreement. This Agreement, along with the Exhibits attached and referenced in this Agreement, constitutes the final and complete understanding between the parties, and replaces and supersedes all previous oral or written agreements, understandings, or arrangements between the parties with respect to the subject matter contained in this Agreement.

11.2 Waiver. This Agreement may not be modified or amended except in a writing signed by an authorized officer of each party. The failure of either party to enforce any provision of this Agreement shall not be deemed a waiver of the provisions or of the right of such party thereafter to enforce that or any other provision.

11.3 Notices. Except as otherwise provided in this Agreement, notices required to be given pursuant to this Agreement shall be effective when received, and shall be sufficient if given in writing, hand-delivered, sent by facsimile with confirmation of receipt, sent by First Class Mail, return receipt requested (for all types of correspondence), postage prepaid, or sent by overnight courier service and addressed as follows:

To Licensor:

Dawn of Time, Inc.

1443 E. Washington Blvd., Suite 647

Pasadena, CA 91104

Attn: Daniel Brent

To Licensee:

Camnation, Inc.

910 Foulk Road, Suite 201

Wilmington, DE 19803

Attn: Blair Mills

11.4 Publicity. Without the prior written consent of the other party, neither party shall disclose the terms and conditions of this Agreement, except disclosure may be made as is reasonably necessary to the disclosing party’s bankers, attorneys, or accountants or except as may be required by law.

11.5 Relationship. Nothing in this Agreement shall be deemed to create an employer-employee, principal-agent, or joint venture relationship. Neither party shall have the authority to enter into any contracts on behalf of the other party.

11.6 Governing Law and Jurisdiction. This Agreement shall be governed by and construed in accordance with the laws of the State of California.

11.7 Severability. In case any provision of this Agreement is held to be invalid, unenforceable, or illegal, the provision will be severed from this Agreement, and such invalidity, unenforceability, or illegality will not affect any other provisions of this Agreement.

11.8 Arbitration. In the event of any dispute between the parties arising out of this Agreement, the dispute shall be resolved by arbitration, in Los Angeles, California, under the rules of the American Arbitration Association by an arbitrator agreed upon in writing by the parties. In the event the parties cannot agree upon the choice of an arbitrator, each party shall appoint one individual representative and the two party representatives shall, between themselves, choose an arbitrator.

11.9 Attorney’s Fees. In the event of any dispute between the parties arising out of this Agreement, the prevailing party shall be entitled, in addition to any other rights and remedies it may have, to recover its reasonable attorney’s fees and costs.

11.10 Successors. This Agreement shall be binding on and shall inure to the benefit of the parties hereto, and their heirs, administrators, successors, and assigns.

11.11 Effective Date. The effective date of this Agreement shall be April 1, 2005.

IN WITNESS WHEREOF, the parties have caused this Agreement to be executed as of the date written above.

LICENSEE: CAMNATION, INC.

Date:________________________________	By:_______________________________ Blair Mills, President
LICENSOR: DAWN OF TIME, INC.

Date:________________________________	By:_______________________________ Daniel Brent, President

SIGNATURE PAGE TO TECHNOLOGY LICENSE AGREEMENT

EXHIBIT “A”

BILLING SYSTEM SOFTWARE TECHNOLOGY

LICENSING AGREEMENT

BETWEEN

MICRO BILLING SYSTEMS LIMITED

AND

CAMNATION, INC.

DATED: April 1, 2005

1. The Software is defined as follows:

BILLING SYSTEM SOFTWARE TECHNOLOGY

The Billing System Software platform was originally designed as a mechanism to invoice and bill customers for purchases made via the Internet. The Billing System software allows immediate access to an application or Website while securely requesting personal and payment information later. The system works by installing a software module on the consumer’s machine, which allows access to the application or Website that is being offered by the company that utilizes the Billing System solution. After a predetermined period of time or other billing trigger, the user is presented with an invoice and multiple payment options to satisfy the original invoice that they received. This system is effective because it offers a wide range of payment options including credit card, check, wire transfer, telephone, or various Internet payment systems. The system can also provide anonymity to the user by supporting billing mechanisms, which do not require personal information.

If the consumer refuses to pay or pays fraudulently, access to the application or Website can be immediately revoked. A major marketing benefit is the user can get nearly instant access to the application or Website without having to complete cumbersome forms or having to lookup and provide financial information. Typically, this application is left on the system and can be used to offer additional products, track upsell purchases, or to identify and permanently block fraudulent users from future purchases.

EXHIBIT “B”

ANTI-SPAM POLICY

Licensee may use the Software in conjunction with any reasonable promotional tool, whether currently known or unknown, with the following exceptions:

A. SPAM. Licensee agrees not to perform any activity that is prohibited by the CAN-SPAM Act dealing with illegal distribution of Unsolicited Commercial Bulk Email (“UCBE”), commonly known as “spam.” No spamming of any kind maybe employed as an advertising or promotional tool. Any breach of the Licensor’s Anti-Spam Policy may result in immediate termination of the Agreement.

B. DECEPTIVE ADVERTISING. All forms of deceptive or unfair advertising are strictly prohibited. The Software may not be used in any way, shape, or form to support deceptive advertising. Likewise, the Software may not be used in conjunction with deceptive advertising. Licensee, to be certain of compliance with the requirements of both state and federal advertising law, should obtain independent legal advice before engaging in any promotion. Use of the Software to support, or in conjunction with, deceptive or unfair advertising may result in immediate termination of the Agreement.

EX-10.18 8 broadcaster_10ksb-ex1018.htm DIGITAL ASSET CREATION SOFTWARE TECHNOLOGY LICENSING AGREEMENT Unassociated Document

Exhibit 10.18

DIGITAL ASSET CREATION SOFTWARE TECHNOLOGY

LICENSING AGREEMENT

THIS AGREEMENT is entered into this 1st day of April, 2005 by and between Broadcaster, LLC a Nevada limited liability company whose address is 3540 W. Sahara Avenue, Las Vegas, NV 89102 (“Licensor”), and MyVod, Inc., a Delaware corporation located at 25 Greystone Manor, Lewes, DE 19958 (“Licensee”).

RECITALS

WHEREAS, Licensor is engaged in the business of designing and developing computer-related software and related products for application on the Internet, and has, over the years, acquired and developed substantial and valuable technical knowledge, know-how, and experience in the design and development of such systems. Specifically, Licensor has developed and continues developing Digital Asset Creation Software Technology (the “Software”). Through the use of Digital Asset Creation’s proprietary suite of tools, a single video file is transformed into all of the assets needed to promote it on the Web including image galleries, Macromedia Flash, content streams, content downloads, and XML data files, a description of which is annexed hereto as Exhibit A.

NOW, THEREFORE, in consideration of the promises and the mutual covenants of this Agreement, the parties hereto agree as follows:

GRANT OF LICENSE

TERM AND TERMINATION

2.2 Termination for Cause. Either party, as applicable, shall have the right, in addition, and without prejudice to any other rights or remedies, to terminate this Agreement as follows:

2.2.1 by either party for any material breach of this Agreement that is not cured within ten (10) days of receipt by the party in default of a notice specifying the breach and requiring its cure;

CONSIDERATION

3.2 Payments. All payments due Licensor shall be made in U.S. currency unless otherwise specified by Licensor.

LICENSOR’S OBLIGATIONS

4.1 Deliverables. Upon execution of this Agreement, Licensor shall deliver the Software to Licensee in a format appropriate for the Licensee’s platform.

4.2 Support and Maintenance. Beginning upon the effective date of this Agreement as provided in Schedule A, Licensor shall meet with Licensee relating to the installation and operation of hardware, software, machinery, equipment, materials, object codes, specifications, designs, manufacturing and processing procedures, methods, layout, and the like that Licensor believes Licensee may require in order to adapt the Technology to use on its Internet Web site(s). Licensor shall also provide Licensee such technical and other qualified experts to train and otherwise educate Licensee in the use of the Technology and assist in the resolution of any problems or matters that require on-the-spot assistance. In any such event, Licensee shall pay all time, travel and out-of-pocket expenses incurred by any such Licensor personnel or agents, it being understood that the salaries of the experts shall be the responsibility of Licensee.

LICENSEE’S OBLIGATIONS

5.2 Compliance. Licensee shall fully comply with the marking provisions of the intellectual property laws of the United States.

CONFIDENTIALITY

6.3 Injunctive Relief for Breach. Licensor and Licensee acknowledge that any breach of Section 6.1 by a receiving party will irreparably harm the’ disclosing party. Accordingly, in the event of a breach, the disclosing party is entitled to promptly seek injunctive relief in addition to any other remedies that the disclosing party may have at law or in equity.

WARRANTIES, DISCLAIMER, AND LIMITATIONS.

7.1 Warranties.

INDEMNITY.

8.1 Infringement Indemnity. Licensor indemnifies, defends, and holds Licensee harmless from and against any .claims, actions, or demands alleging that the Software infringes any United States patent, United States copyright, or other United States intellectual property right of a third party. If use of the Software is permanently enjoined for any reason, Licensor, at Licensor’s option, and in its sole discretion, may: (a) modify the Software so as to avoid infringement; (b) procure the right for Licensee to continue to use and reproduce the Software and Documentation; or (c) terminate this Agreement and refund to Licensee all license fees paid. Licensor shall have no obligation under this Section 8.1 for or with respect to claims, actions, or demands alleging infringement that arise as a result of (a) the combination of noninfringing items supplied by Licensor with any items not supplied by Licensor; (b) modification of the Software or Documentation by Licensee or by Licensor in compliance with Licensee’s designs, specifications, or instructions; (c) the direct or contributory infringement of any process patent by Licensee through the use of the Software; and (d) continued allegedly infringing activity by Licensee after Licensee has been notified of the possible infringement.

8.3 Condition to Indemnification. Should any claim subject to indemnity be made against Licensor or Licensee, the party against whom the claim is made agrees to provide the other party with prompt written notice of the claim. Licensor will control the defense and settlement of any claim under Section 8.1 and Licensee will control the defense and. settlement of any claim under Section 8.2. The indemnified party agrees to cooperate with the indemnifying party and provide reasonable assistance in the defense and settlement of such claim. The indemnifying party is not responsible for any costs incurred or compromise made by the indemnified party unless the indemnifying party has given prior written consent to the cost or compromise.

EXPORT CONTROLS AND RESTRICTED RIGHTS.

9.2 Restricted Rights. The Software and Documentation are provided with Restricted Rights. Use, duplication, or disclosure by the U.S. Government is subject to restrictions as set forth in subparagraph (c)(1) of the Commercial Computer Software-Restricted Rights clause at h, subparagraph (c)(1)(ii) of The Rights in Technical Data and Computer Software clause at 252.227-7013, or subparagraph (d) of the Commercial Computer Software--Licensing at NASA FAR supplement 16-52.227-86, or their equivalent, as applicable.

10.

IMPROVEMENTS.

During the term of this Agreement, each party shall advise the other party of any technical improvements and inventions relating to the Technology. While no improvements are required by this Agreement, all such improvements and inventions shall become the property of Licensor, and Licensee agrees to execute any and all documents requested by Licensor in order to perfect Licensor’s right in same.

11.

GENERAL.

To Licensor:

Broadcaster, LLC

3540 W. Sahara Avenue

Las Vegas, NV 89102

Attn: Bruce K. Muhlfeld

To Licensee:

MyVod, Inc.

25 Greystone Manor

Lewes, DE 19958

Attn: Blair Mills

11.6 Governing Law and Jurisdiction. This Agreement shall be governed by and construed in accordance with the laws of the State of California.

11.10 Successors. This Agreement shall be binding on and shall inure to the benefit of the parties hereto, and their heirs, administrators, successors, and assigns.

11.11 Effective Date. The effective date of this Agreement shall be April 1, 2005.

IN WITNESS WHEREOF, the parties have caused this Agreement to be executed as of the date written above.

LICENSEE: MYVOD, INC.

Date:________________________________	By:__________________________________ Blair Mills, President
LICENSOR: BROADCASTER, LLC

Date:________________________________	By:__________________________________ Bruce K. Muhlfeld, President

SIGNATURE PAGE TO TECHNOLOGY LICENSE AGREEMENT

EXHIBIT “A”

DIGITAL ASSET CREATION SOFTWARE TECHNOLOGY

LICENSING AGREEMENT

BETWEEN

BROADCASTER, LLC

AND

MYVOD, INC.

DATED: April 1, 2005

1. The Software is defined as follows:

Digital Asset Creation Software Technology

With an ever growing demand for video on the Web, Digital Asset Creation (DAC) was created in order to provide a complete solution to anyone who has video and wants to publish it on the web, whether it is home made or the latest theatrical blockbuster. Through the use of Digital Asset Creation’s (DAC’s) proprietary suite of tools, a single video file is transformed into all of the assets needed to promote it on the Web including image galleries, Macromedia Flash, content streams, content downloads, and XML data files. Video can be provided to DAC in a variety of formats including, but not limited to, DV, HI-8, U-matic (3/4 inch), Beta Cam, VHS and DVD. Once the raw video is loaded into the system, a proprietary application is used to quickly and efficiently split the video into scenes at natural boundaries. The application also captures several different frames from each scene for use as still images. Technicians monitor the final scene selections and images and they can adjust or override the tool as needed. During this process, technicians enter data including title, actor, director, synopsis and description information into a database. Once this phase is complete, the images are automatically processed for such effects as watermarking, sharpening and color correction. Also, the scene files are used to produce short previews that are compatible with Macromedia Flash. Finally, the scene files are transformed into a variety of customer selectable output formats such as avi and wms with multiple bit-rates for each format.

EXHIBIT “B”

ANTI-SPAM POLICY

Licensee may use the Software in conjunction with any reasonable promotional tool, whether currently known or unknown, with the following exceptions:

A. SPAM. Licensee agrees not to perform any activity that is prohibited by the CAN-SPAM Act dealing with illegal distribution of Unsolicited Commercial Bulk Email (“UCBE”), commonly known as “spam.” No spamming of any kind may be employed as an advertising or promotional tool. Any breach of the Licensor’s Anti-Spam Policy may result in immediate termination of the Agreement.

EX-10.19 9 broadcaster_10ksb-ex1019.htm DRM SOFTWARE TECHNOLOGY LICENSING AGREEMENT Unassociated Document

Exhibit 10.19

DRM SOFTWARE TECHNOLOGY

LICENSING AGREEMENT

THIS AGREEMENT is entered into this 1st day of April, 2005 by and between Broadcaster, LLC a Nevada limited liability company whose address is 3540 W. Sahara Avenue, Las Vegas, NV 89102 (“Licensor”), and MyVod, Inc., a Delaware corporation located at 25 Greystone Manor, Lewes, DE 19958 (“Licensee”).

RECITALS

WHEREAS, Licensor is engaged in the business of designing and developing computer-related software and related products for application on the Internet, and has, over the years, acquired and developed substantial and valuable technical knowledge, know-how, and experience in the design and development of such systems. Specifically, Licensor has developed and continues developing DRM Software Technology (the “Software”). DRM is short for Digital Rights Management, a system for protecting the copyrights of data circulated via the Internet or other digital media by enabling secure distribution and/or disabling illegal distribution of the data, a description of which is annexed hereto as Exhibit A.

NOW, THEREFORE, in consideration of the promises and the mutual covenants of this Agreement, the parties hereto agree as follows:

GRANT OF LICENSE

TERM AND TERMINATION

2.2 Termination for Cause. Either party, as applicable, shall have the right, in addition, and without prejudice to any other rights or remedies, to terminate this Agreement as follows:

2.2.1 by either party for any material breach of this Agreement that is not cured within ten (10) days of receipt by the party in default of a notice specifying the breach and requiring its cure;

CONSIDERATION

3.2 Payments. All payments due Licensor shall be made in U.S. currency unless otherwise specified by Licensor.

LICENSOR’S OBLIGATIONS

4.1 Deliverables. Upon execution of this Agreement, Licensor shall deliver the Software to Licensee in a format appropriate for the Licensee’s platform.

LICENSEE’S OBLIGATIONS

5.2 Compliance. Licensee shall fully comply with the marking provisions of the intellectual property laws of the United States.

CONFIDENTIALITY

WARRANTIES, DISCLAIMER, AND LIMITATIONS.

7.1 Warranties.

INDEMNITY.

EXPORT CONTROLS AND RESTRICTED RIGHTS.

9.2 Restricted Rights. The Software and Documentation are provided with Restricted Rights. Use, duplication, or disclosure by the U.S. Government is subject to restrictions as set forth in subparagraph (c)(1) of the Commercial Computer Software-Restricted Rights clause at h, subparagraph (c)(1)(ii) of The Rights in Technical Data and Computer Software clause at 252.227-7013, or subparagraph (d) of the Commercial Computer Software--Licensing at NASA FAR supplement 16-52.227-86, or their equivalent, as applicable.

10.

IMPROVEMENTS.

11.

GENERAL.

To Licensor:

Broadcaster, LLC

3540 W. Sahara Avenue

Las Vegas, NV 89102

Attn: Bruce K. Muhlfeld

To Licensee:

MyVod, Inc.

25 Greystone Manor

Lewes, DE 19958

Attn: Blair Mills

11.6 Governing Law and Jurisdiction. This Agreement shall be governed by and construed in accordance with the laws of the State of California.

11.10 Successors. This Agreement shall be binding on and shall inure to the benefit of the parties hereto, and their heirs, administrators, successors, and assigns.

11.11 Effective Date. The effective date of this Agreement shall be April 1, 2005.

IN WITNESS WHEREOF, the parties have caused this Agreement to be executed as of the date written above.

LICENSEE: MYVOD, INC.

Date:___________________________________	By:_________________________________ Blair Mills, President
LICENSOR: BROADCASTER, LLC

Date:___________________________________	By:_________________________________ Bruce K. Muhlfeld, President

SIGNATURE PAGE TO TECHNOLOGY LICENSE AGREEMENT

EXHIBIT “A”

DRM SOFTWARE TECHNOLOGY

LICENSING AGREEMENT

BETWEEN

BROADCASTER, LLC

AND

MYVOD, INC.

DATED: April 1, 2005

1. The Software is defined as follows:

DRM SOFTWARE TECHNOLOGY

DRM is short for Digital Rights Management, a system for protecting the copyrights of data circulated via the Internet or other digital media by enabling secure distribution and/or disabling illegal distribution of the data. The DRM software protects intellectual property by encrypting the data so that it can only be accessed by authorized users. The DRM Software technology provides secure DRM delivery of digital content. DRM is a set of standards and technologies that allows digital content to be distributed while also being protected, managed and tracked. DRM helps answer basic questions about the user’s rights to digital content, whether in the entertainment and publishing industries or in the corporate world, and provides technological means to offer and enforce the rights.

To provide the highest level of security for content provider’s media, Broadcaster has created a robust authentication and tracking system built around Microsoft’s industry standard DRM API. Building on top of Microsoft’s technology allows the greatest compatibility with existing Internet users and future upgradeability to more sophisticated DRM technologies.

EXHIBIT “B”

ANTI-SPAM POLICY

Licensee may use the Software in conjunction with any reasonable promotional tool, whether currently known or unknown, with the following exceptions:

A. SPAM. Licensee agrees not to perform any activity that is prohibited by the CAN-SPAM Act dealing with illegal distribution of Unsolicited Commercial Bulk Email (“UCBE”), commonly known as “spam.” No spamming of any kind may be employed as an advertising or promotional tool. Any breach of the Licensor’s Anti-Spam Policy may result in immediate termination of the Agreement.

EX-10.20 10 broadcaster_10ksb-ex1020.htm DESKTOP NOTIFIER TECHNOLOGY LICENSING AGREEMENT Unassociated Document

Exhibit 10.20

DESKTOP NOTIFIER TECHNOLOGY

LICENSING AGREEMENT

THIS AGREEMENT is entered into this 1st day of April, 2005 by and between Media Zone, Ltd., a Delaware corporation whose address is 19360 Rinaldi Street, Suite 148, Porter Ranch, CA 91326 (“Licensor”), and Camnation, Inc., a Delaware corporation located at 910 Foulk Road, Suite 201, Wilmington, DE 19803 (“Licensee”).

RECITALS

WHEREAS, Licensor is engaged in the business of designing and developing computer-related software and related products for application on the Internet, and has, over the years, acquired and developed substantial and valuable technical knowledge, know-how, and experience in the design and development of such systems. Specifically, Licensor has developed and continues developing Desktop Notifier Technology (the “Software”). The Desktop Notifier is a tool designed to provide real time news or other popup notifications to Internet users. The Desktop Notifier remains persistent in the users tool bar and generates notification windows based on server determined critical events, a description of which is annexed hereto as Exhibit A.

NOW, THEREFORE, in consideration of the promises and the mutual covenants of this Agreement, the parties hereto agree as follows:

GRANT OF LICENSE

TERM AND TERMINATION

2.2 Termination for Cause. Either party, as applicable, shall have the right, in addition, and without prejudice to any other rights or remedies, to terminate this Agreement as follows:

2.2.1 by either party for any material breach of this Agreement that is not cured within ten (10) days of receipt by the party in default of a notice specifying the breach and requiring its cure;

CONSIDERATION

3.2 Payments. All payments due Licensor shall be made in U.S. currency unless otherwise specified by Licensor.

LICENSOR’S OBLIGATIONS

4.1 Deliverables. Upon execution of this Agreement, Licensor shall deliver the Software to Licensee in a format appropriate for the Licensee’s platform.

LICENSEE’S OBLIGATIONS

5.2 Compliance. Licensee shall fully comply with the marking provisions of the intellectual property laws of the United States.

CONFIDENTIALITY

WARRANTIES, DISCLAIMER, AND LIMITATIONS.

7.1 Warranties.

INDEMNITY.

EXPORT CONTROLS AND RESTRICTED RIGHTS.

9.2 Restricted Rights. The Software and Documentation are provided with Restricted Rights. Use, duplication, or disclosure by the U.S. Government is subject to restrictions as set forth in subparagraph (c)(1) of the Commercial Computer Software-Restricted Rights clause at h, subparagraph (c)(1)(ii) of The Rights in Technical Data and Computer Software clause at 252.227-7013, or subparagraph (d) of the Commercial Computer Software--Licensing at NASA FAR supplement 16-52.227-86, or their equivalent, as applicable.

10.

IMPROVEMENTS.

11.

GENERAL.

To Licensor:

Media Zone, Ltd.

19360 Rinaldi Street, Suite 148

Porter Ranch, CA 91326

Attn: Nolan Quan

To Licensee:

Camnation, Inc.,

910 Foulk Road, Suite 201

Wilmington, DE 19803

Attn: Blair Mills

11.6 Governing Law and Jurisdiction. This Agreement shall be governed by and construed in accordance with the laws of the State of California.

11.10 Successors. This Agreement shall be binding on and shall inure to the benefit of the parties hereto, and their heirs, administrators, successors, and assigns.

11.11 Effective Date. The effective date of this Agreement shall be April 1, 2005.

IN WITNESS WHEREOF, the parties have caused this Agreement to be executed as of the date written above.

LICENSEE: CAMNATION, INC.

Date:__________________________________	By:_________________________________ Blair Mills, President
LICENSOR: MEDIA ZONE, LTD.

Date:__________________________________	By:_________________________________ Nolan Quan, President

SIGNATURE PAGE TO TECHNOLOGY LICENSE AGREEMENT

EXHIBIT “A”

DESKTOP NOTIFIER TECHNOLOGY

LICENSING AGREEMENT

BETWEEN

MEDIA ZONE, LTD.

AND

CAMNATION, INC.

DATED: April 1, 2005

1. The Software is defined as follows:

Desktop Notifier Technology

The Desktop Notifier software is a tool designed to be used standalone or integrated with other software to provide real time news or other popup notifications to Internet users. The Notifier remains persistent in the users tool bar and generates notification windows based on server determined critical events. These events could range from news broadcasts, billing reminders, email notifications or any other server generated message. These messages can either be targeted towards a wide audience or customized and triggered for specific users. Use of the Media Zone’s Huba technology allows for interesting notification windows with transparency and organic designs.

EXHIBIT B

ANTI-SPAM POLICY

Licensee may use the Software in conjunction with any reasonable promotional tool, whether currently known or unknown, with the following exceptions:

A. SPAM. Licensee agrees not to perform any activity that is prohibited by the CAN-SPAM Act dealing with illegal distribution of Unsolicited Commercial Bulk Email (“UCBE”), commonly known as “spam.” No spamming of any kind may be employed as an advertising or promotional tool. Any breach of the Licensor’s Anti-Spam Policy may result in immediate termination of the Agreement.

B. DECEPTIVE ADVERTISING. All forms of deceptive or unfair advertising are strictly prohibited. The Software may not be used in any way, shape, or form to support deceptive advertising. Likewise, the Software may not be used in conjunction with deceptive advertising. Licensee,-to be certain of compliance with the requirements of both state and federal advertising law, should obtain independent legal advice before engaging in any promotion. Use of the Software to support, or in conjunction with, deceptive or unfair advertising may result in immediate termination of the Agreement.

EX-10.21 11 broadcaster_10ksb-ex1021.htm TELCO BILLING SOFTWARE TECHNOLOGY LICENSING AGREEMENT Unassociated Document

Exhibit 10.21

TELCO BILLING SOFTWARE TECHNOLOGY

LICENSING AGREEMENT

THIS AGREEMENT is entered into this 1st day of April, 2005 by and between Media Charger, LLC, a California limited liability company whose address is 13351 Riverside Drive, Suite 353, Sherman Oaks, CA 91423 (“Licensor”), and Camnation, Inc., a Delaware corporation located at 910 Foulk Road, Suite 201, Wilmington, DE 19803 (“Licensee”).

RECITALS

WHEREAS, Licensor is engaged in the business of designing and developing computer-related software and related products for application on the Internet, and has, over the years, acquired and developed substantial and valuable technical knowledge, know-how, and experience in the design and development of such systems. Specifically, Licensor has developed and continues developing Telco Billing Software Technology (the “Software”). The Telco Billing Technology was developed to provide a wide range of telecom billing solutions. Their services include 900 Billing, 4250 Miscellaneous Billing, SMS Billing, and other related types of billing solutions, or Website, a description of which is annexed hereto as Exhibit A.

NOW, THEREFORE, in consideration of the promises and the mutual covenants of this Agreement, the parties hereto agree as follows:

GRANT OF LICENSE

TERM AND TERMINATION

2.2 Termination for Cause. Either party, as applicable, shall have the right, in addition, and without prejudice to any other rights or remedies, to terminate this Agreement as follows:

2.2.1 by either party for any material breach of this Agreement that is not cured within ten (10) days of receipt by the party in default of a notice specifying the breach and requiring its cure;

CONSIDERATION

3.2 Payments. All payments due Licensor shall be made in U.S. currency unless otherwise specified by Licensor.

LICENSOR’S OBLIGATIONS

4.1 Deliverables. Upon execution of this Agreement, Licensor shall deliver the Software to Licensee in a format appropriate for the Licensee’s platform.

4.2 Support and Maintenance. Beginning upon the effective date of this Agreement as provided in Schedule A, Licensor shall meet with Licensee relating to the installation and operation of hardware, software, machinery, equipment, materials, object codes, specifications, designs, manufacturing and processing procedures, methods, layout, and the like that Licensor believes Licensee may require in order to adapt the Technology to use on its Internet Website(s). Licensor shall also provide Licensee such technical and other qualified experts to train and otherwise educate Licensee in the use of the Technology and assist in the resolution of any problems or matters that require on-the-spot assistance. In any such event, Licensee shall pay all time, travel and out-of-pocket expenses incurred by any such Licensor personnel or agents, it being understood that the salaries of the experts shall be the responsibility of Licensee.

LICENSEE’S OBLIGATIONS

5.2 Compliance. Licensee shall fully comply with the marking provisions of the intellectual property laws of the United States.

CONFIDENTIALITY

WARRANTIES, DISCLAIMER, AND LIMITATIONS.

7.1 Warranties.

INDEMNITY.

EXPORT CONTROLS AND RESTRICTED RIGHTS.

10.

IMPROVEMENTS.

11.

GENERAL.

To Licensor:

Media Charger, LLC

13351 Riverside Drive, Suite 353

Sherman Oaks, CA 91423

Attn: Rob Gould

To Licensee:

Camnation, Inc.,

910 Foulk Road, Suite 201

Wilmington, DE 19803

Attn: Blair Mills

11.6 Governing Law and Jurisdiction. This Agreement shall be governed by and construed in accordance with the laws of the State of California.

11.10 Successors. This Agreement shall be binding on and shall inure to the benefit of the parties hereto, and their heirs, administrators, successors, and assigns.

11.11 Effective Date. The effective date of this Agreement shall be April 1, 2005.

IN WITNESS WHEREOF, the parties have caused this Agreement to be executed as of the date written above.

LICENSEE: CAMNATION, INC.

Date:_______________________________	By:__________________________________ Blair Mills, President
LICENSOR: MEDIACHARGER, LLC

Date:_______________________________	By:__________________________________ Robert Gould, President

SIGNATURE PAGE TO TECHNOLOGY LICENSE AGREEMENT

EXHIBIT “A”

TELCO BILLING SOFTWARE TECHNOLOGY

LICENSING AGREEMENT

BETWEEN

MEDIACHARGER, LLC

AND

CAMNATION, INC.

DATED: April 1, 2005

l. The Software is defined as follows:

Telco Billing Software Technology

The MediaCharger software application was developed to provide a wide range of telecom billing solutions. Their services include 900 Billing, 4250 Miscellaneous Billing, SMS Billing, and other types of billing solutions. MediaCharger has developed a back end system and a consumer application for offering and managing these various billing options. Media Charger has formed relationships with many international and domestic phone-billing companies to achieve its company charter. These solutions provide a unique and convenient method for Website operators and application publishers to charge for their products. MediaCharger provides a software API to allow these publishers and operators to easily add telephone billing to their products.

EXHIBIT “B”

ANTI-SPAM POLICY

Licensee may use the Software in conjunction with any reasonable promotional tool, whether currently known or unknown, with the following exceptions:

A. SPAM. Licensee agrees not to perform any activity that is prohibited by the CAN-SPAM Act dealing with illegal distribution of Unsolicited Commercial Bulk Email (“UCBE”), commonly known as “spam.” No spamming of any kind may be employed as an advertising or promotional tool. Any breach of the Licensor’s Anti-Spam Policy may result in immediate termination of the Agreement.

B. DECEPTIVE ADVERTISING. All forms of deceptive or unfair advertising are strictly prohibited. The Software may not be used in any way, shape, or form to support deceptive advertising. Likewise, the Software may not be used in conjunction with deceptive advertising. Licensee, to be certain of compliance with the requirements of both state and federal advertising law, should obtain independent legal advice before engaging in any promotion. Use of the Software to support, or in conjunction with, deceptive or unfair advertising may result in immediate termination of the Agreement.

EX-10.22 12 broadcaster_10ksb-ex1022.htm CONTENT MANAGEMENT SOFTWARE TECHNOLOGY LICENSING AGREEMENT Unassociated Document

Exhibit 10.22

CONTENT MANAGEMENT SOFTWARE TECHNOLOGY

LICENSING AGREEMENT

THIS AGREEMENT is entered into this 1st day of April, 2005 by and between Broadcaster, LLC a Nevada limited liability company whose address is 3540 W. Sahara Avenue, Las Vegas, NV 89102 (“Licensor”), and MyVod, Inc., a Delaware corporation located at 25 Greystone Manor, Lewes, DE 19958 (“Licensee”).

RECITALS

WHEREAS, Licensor is engaged in the business of designing and developing computer-related software and related products for application on the Internet, and has, over the years, acquired and developed substantial and valuable technical knowledge, know-how, and experience in the design and development of such systems. Specifically, Licensor has developed and continues developing Content Management Software Technology (the “Software”). The Content Management System was created to provide an easy and intuitive way to enter, manage and publish articles consisting of various text and graphical elements, a description of which is annexed hereto as Exhibit A.

NOW, THEREFORE, in consideration of the promises and the mutual covenants of this Agreement, the parties hereto agree as follows:

GRANT OF LICENSE

TERM AND TERMINATION

2.2 Termination for Cause. Either party, as applicable, shall have the right, in addition, and without prejudice to any other rights or remedies, to terminate this Agreement as follows:

2.2.1 by either party for any material breach of this Agreement that is not cured within ten (10) days of receipt by the party in default of a notice specifying the breach and requiring its cure;

CONSIDERATION

3.2 Payments. All payments due Licensor shall be made in U.S. currency unless otherwise specified by Licensor.

LICENSOR’S OBLIGATIONS

4.1 Deliverables. Upon execution of this Agreement, Licensor shall deliver the Software to Licensee in a format appropriate for the Licensee’s platform.

LICENSEE’S OBLIGATIONS

5.2 Compliance. Licensee shall fully comply with the marking provisions of the intellectual property laws of the United States.

CONFIDENTIALITY

WARRANTIES, DISCLAIMER, AND LIMITATIONS.

7.1 Warranties.

INDEMNITY.

EXPORT CONTROLS AND RESTRICTED RIGHTS.

9.2 Restricted Rights. The Software and Documentation are provided with Restricted Rights. Use, duplication, or disclosure by the U.S. Government is subject to restrictions as set forth in subparagraph (c)(1) of the Commercial Computer Software-Restricted Rights clause at h, subparagraph (c)(1)(ii) of The Rights in Technical Data and Computer Software clause at 252.227-7013, or subparagraph (d) of the Commercial Computer Software--Licensing at NASA FAR supplement 16-52.227-86, or their equivalent, as applicable.

10.

IMPROVEMENTS.

11.

GENERAL.

To Licensor:

Broadcaster, LLC

3540 W. Sahara Avenue

Las Vegas, NV 89102

Attn: Bruce K. Muhlfeld

To Licensee:

MyVod, Inc.

25 Greystone Manor

Lewes, DE 19958

Attn: Blair Mills

11.6 Governing Law and Jurisdiction. This Agreement shall be governed by and construed in accordance with the laws of the State of California.

11.10 Successors. This Agreement shall be binding on and shall inure to the benefit of the parties hereto, and their heirs, administrators, successors, and assigns.

11.11 Effective Date. The effective date of this Agreement shall be April 1, 2005.

IN WITNESS WHEREOF, the parties have caused this Agreement to be executed as of the date written above.

LICENSEE: MYVOD, INC.

Date:_________________________________	By:_________________________________ Blair Mills, President
LICENSOR: BROADCASTER, LLC

Date:_________________________________	By:_________________________________ Bruce K. Muhlfeld, President

SIGNATURE PAGE TO TECHNOLOGY LICENSE AGREEMENT

EXHIBIT “A”

CONTENT MANAGEMENT SOFTWARE TECHNOLOGY

LICENSING AGREEMENT

BETWEEN

BROADCASTER, LLC

AND

MYVOD, INC.

DATED: April 1, 2005

1. The Software is defined as follows:

Content Management Software Technology

The Content Management Software Technology (CMS) was created to provide an easy and intuitive way to enter, manage, and publish articles consisting of various text and graphical elements. The CMS allows a contributor to log on with a unique username and password and contribute articles through a simple interface. In addition to text, the contributor may upload other media associated with this article including images, videos, 3rd party links, etc. When an article is ready for publication, the information is exported into an XML file with any related media (images, videos) and is ready for distribution via http upload, FTP, or RSS feed, and can be used by any XML compatible system. Furthermore, articles are categorized into various genres (Sports, Entertainment, etc.) allowing articles to be grouped together or excluded during publication based on the target interests of the website. The CMS utilizes a rights management system that restricts the access and abilities of logged in users to control and secure content. Using this system allows remote users to contribute over the web without needing any special access to servers or equipment. It also allows content to be accepted from anonymous or unknown sources. Once the media has been inserted into the system it awaits review by a user with editor abilities who is then capable of changing, deleting, or publishing the article.

EXHIBIT “B”

ANTI-SPAM POLICY

Licensee may use the Software in conjunction with any reasonable promotional tool, whether currently known or unknown, with the following exceptions:

A. SPAM. Licensee agrees not to perform any activity that is prohibited by the CAN-SPAM Act dealing with illegal distribution of Unsolicited Commercial Bulk Email (“UCBE”), commonly known as “spam.” No spamming of any kind may be employed as an advertising or promotional tool. Any breach of the Licensor’s Anti-Spam Policy may result in immediate termination of the Agreement.

EX-10.23 13 broadcaster_10ksb-ex1023.htm DIGITAL CONTENT DISTRIBUTION TECHNOLOGY LICENSING AGREEMENT Unassociated Document

Exhibit 10.23

DIGITAL CONTENT DISTRIBUTION TECHNOLOGY

LICENSING AGREEMENT

THIS AGREEMENT is entered into this 1st day of April, 2005 by and between Broadcaster, LLC a Nevada limited liability company whose address is 3540 W. Sahara Avenue, Las Vegas, NV 89102 (“Licensor”), and MyVod, Inc., a Delaware corporation located at 25 Greystone Manor, Lewes, DE 19958 (“Licensee”).

RECITALS

WHEREAS, Licensor is engaged in the business of designing and developing computer-related software and related products for application on the Internet, and has, over the years, acquired and developed substantial and valuable technical knowledge, know-how, and experience in the design and development of such systems. Specifically, Licensor has developed and continues developing Digital Content Distribution Technology (the “Software”). Digital Content Distribution provides content publishers and Web marketers with a cutting edge tool to showcase, sell, and deliver high quality electronic media, a description of which is annexed hereto as Exhibit A.

NOW, THEREFORE, in consideration of the promises and the mutual covenants of this Agreement, the parties hereto agree as follows:

GRANT OF LICENSE

1.2 Restriction. Except as specifically granted in this Agreement, Licensor owns and retains all right, title, and interest in Software and any and all related materials. Unless Section 1.3 applies, this Agreement does not transfer ownership rights of any description in the Software, or any related material to Licensee or any third party. Licensee shall not modify, reverse engineer, or decompile the software, or create derivative works based on the Software. Licensee shall retain all copyright and trademark notices on the Software and Documentation and shall take other necessary steps to protect Licensor’s intellectual property rights. This License may not be transferred, assigned, or sublicensed (either voluntarily or involuntarily) by Licensee without the express written consent of Licensor. Any attempted transfer, assignment, or sublicense, in violation of this Section shall be void and ineffective for all purposes. In the event of an assignment or sublicense permitted by this Section, this Agreement shall be binding upon the heirs, successors and assigns of the parties hereto.

TERM AND TERMINATION

2.2 Termination for Cause. Either party, as applicable, shall have the right, in addition, and without prejudice to any other rights or remedies, to terminate this Agreement as follows:

2.2.1 by either party for any material breach of this Agreement that is not cured within ten (10) days of receipt by the party in default of a notice specifying the breach and requiring its cure;

CONSIDERATION

3.2 Payments. All payments due Licensor shall be made in U.S. currency unless otherwise specified by Licensor.

LICENSOR’S OBLIGATIONS

4.1 Deliverables. Upon execution of this Agreement, Licensor shall deliver the Software to Licensee in a format appropriate for the Licensee’s platform.

LICENSEE’S OBLIGATIONS

5.2 Compliance. Licensee shall fully comply with the marking provisions of the intellectual property laws of the United States.

CONFIDENTIALITY

WARRANTIES, DISCLAIMER, AND LIMITATIONS.

7.1 Warranties.

INDEMNITY.

EXPORT CONTROLS AND RESTRICTED RIGHTS.

9.2 Restricted Rights. The Software and Documentation are provided with Restricted Rights. Use, duplication, or disclosure by the U.S. Government is subject to restrictions as set forth in subparagraph (c)(1) of the Commercial Computer Software-Restricted Rights clause at h, subparagraph (c)(1)(ii) of The Rights in Technical Data and Computer Software clause at 252.227-7013, or subparagraph (d) of the Commercial Computer Software--Licensing at NASA FAR supplement 16-52.227-86, or their equivalent, as applicable.

10.

IMPROVEMENTS.

11.

GENERAL.

To Licensor:

Broadcaster, LLC

3540 W. Sahara Avenue

Las Vegas, NV 89102

Attn: Nolan Quan

To Licensee:

MyVod, Inc.

25 Greystone Manor

Lewes, DE 19958

Attn: Nolan Quan

11.6 Governing Law and Jurisdiction. This Agreement shall be governed by and construed in accordance with the laws of the State of California.

11.10 Successors. This Agreement shall be binding on and shall inure to the benefit of the parties hereto, and their heirs, administrators, successors, and assigns.

11.11 Effective Date. The effective date of this Agreement shall be April 1, 2005.

IN WITNESS WHEREOF, the parties have caused this Agreement to be executed as of the date written above.

LICENSEE: MYVOD, INC.

Date:_______________________________________	By:________________________________ Nolan Quan, President
LICENSOR: BROADCASTER, LLC

Date:_______________________________________	By:________________________________ Bruce K. Muhlfeld, President

SIGNATURE PAGE TO TECHNOLOGY LICENSE AGREEMENT

EXHIBIT “A”

DIGITAL CONTENT DISTRIBUTION TECHNOLOGY

LICENSING AGREEMENT

BETWEEN

BROADCASTER, LLC

AND

MYVOD, INC.

DATED: April 1, 2005

1. The Software is defined as follows:

Digital Content Distribution Technology

Digital Content Distribution (“DCD”) provides content publishers and Web marketers with a cutting edge tool to showcase, sell, and deliver high quality electronic media. DCD is a dynamic system which provides a platform for seamlessly integrating and displaying advertising units into a user’s content stream. Broadcaster, LLC recognizes that there needs to be a balanced approach when advertising to web users; but that this advertising needs to blend in with the users’ experience.

EXHIBIT “B”

ANTI-SPAM POLICY

Licensee may use the Software in conjunction with any reasonable promotional tool, whether currently known or unknown, with the following exceptions:

A. SPAM. Licensee agrees not to perform any activity that is prohibited by the CAN-SPAM Act dealing with illegal distribution of Unsolicited Commercial Bulk Email (“UCBE”), commonly known as “spam.” No spamming of any kind may be employed as an advertising or promotional tool. Any breach of the Licensor’s Anti-Spam Policy may result in immediate termination of the Agreement.

EX-10.24 14 broadcaster_10ksb-ex1024.htm PROMISSORY NOTE IN CONNECTION WITH THE ASSET PURCHASE AGREEMENT Unassociated Document

Exhibit 10.24

PROMISSORY NOTE

June 9, 2006

Novato, California

$1,500,000.00

FOR VALUE RECEIVED, IMSI DESIGN, LLC, a Delaware limited liability company (the “Company”) hereby promises to pay to the order of Broadcaster, Inc., a California corporation, (the “Holder”), the principal sum of One Million, Five Hundred Thousand United States Dollars ($1,500,000.00) together with interest at the rate of 8% per annum as hereinafter specified.

2.	This Note is made in connection with that Asset Purchase Agreement dated June 9, 2006 (the “Purchase Agreement”) whereby the Company has agreed to purchase from the initial Holder all of the Acquired Assets, as defined therein.

The principal balance of this Note shall be due and payable on July 3, 2006 (“Due Date”). If timely paid, no interest shall be deemed to have accrued. Principal (and all other amounts) due under this Note shall be payable in United States dollars, in immediately available funds, to the Holder by wire transfer to the account specified by the initial Holder for delivery of the Cash Consideration paid to the initial Holder pursuant to the Purchase Agreement, unless otherwise specified by the Holder and designated in writing to the Company.

If any payment required by this Note is not made within five (5) business days of the Due Date, a late charge in the amount of 2% of the payment may be assessed by Holder, provided that notice of such assessment is given in writing to the Company. Payment, when made, shall be applied first to interest accrued to date on the payment, and the remainder applied to principal. After maturity or the occurrence of an Event of Default, this Note shall bear interest at the rate of 10% per annum, calculated and compounded semi-annually, not in advance. “Event of Default” means the occurrence of any of the following events: (i) failure of the Company to make any payment of principal and interest when due; (ii) the appointment of a trustee, receiver, custodian, liquidator or similar official with respect to the Company or any substantial part of the Company’s assets or funds for the benefit of the creditors of the Company, or the commencement of any proceeding under any bankruptcy or insolvency laws by or against the Company; or (iii) dissolution, termination of existence, insolvency or business failure of the Company or any other maker, endorser or guarantor hereof.

The Company hereby waives presentment, demand, notice, protest and other demands and notices in connection with the delivery, acceptance or enforcement of this Note. No delay or omission on the part of the Holder in exercising any right hereunder shall operate as a waiver of such right or of any other right under this Note, and a waiver, delay, or omission on any one occasion shall not be construed as a bar to or waiver of any such right on any future occasion. In the Event of Default, which is not cured within seven (7) business days, after notice of said Default, the Company hereby agrees to reimburse on demand all reasonable costs and expenses, including, without limitation, attorney’s fees and legal expenses, reasonably incurred and paid by the Holder directly related to its enforcement of this Note. This Note shall be governed by the laws of the State of California without regard to conflict of laws principles.

“Company”

IMSI Design, LLC

a Delaware limited liability company

By:________________________

Title:_______________________

EX-10.25 15 broadcaster_10ksb-ex1025.htm EXECUTIVE EMPLOYMENT AGREEMENT Unassociated Document

Exhibit 10.25

EXECUTIVE EMPLOYMENT AGREEMENT

This Executive Employment Agreement (the “Agreement”) is made as of the 15th day of June, 2006 (the “Effective Date”), by and between Broadcaster, Inc., a California corporation (the “Company”) and Blair Mills (“Executive”), an individual residing in California.

WHEREAS, the Company is in need of an executive with significant experience in accounting and finance matters; and

WHEREAS, Executive has experience in such fields; and

WHEREAS, the Company wishes to engage Executive to serve as its Chief Financial Officer,

NOW THEREFORE, in consideration of the premises and the covenants contained herein, the parties hereby agree as follows:

1. DUTIES AND POSITION. During the term of this Agreement, Executive agrees to be employed by and to serve the Company as its Chief Financial Officer. The Company agrees to employ and retain Executive in such capacity and Executive accepts and agrees to such employment, subject to the general supervision, advice and direction of the Company’s Board of Directors. Executive shall perform such duties as are customarily performed by an executive in a similar position. Executive shall devote his full business time to the performance of his duties as Chief Financial Officer. Executive’s reasonable attention to personal investments and other business matters of his immediate family shall not be deemed to be a violation of this Agreement.

2. TERMS OF EMPLOYMENT.

2.1. Term of Employment. The Term of Executive's employment commenced effective as of the date first set forth above and shall continue until the 14th day of June, 2009, unless sooner terminated pursuant to the provisions set forth hereinbelow (the “Term”).

2.2. Place of Performance. Executive shall be based at the principal offices of the Company, which are located at 9201 Oakdale Avenue, Chatsworth, California. In no case will Executive be required or expected to move his principal residence from the Los Angeles Area.

3. SALARY, BENEFITS AND BONUS COMPENSATION.

3.1. Salary. As payment for the services to be rendered by Executive as provided in Section 1 and subject to the terms and conditions of Section 4, the Company agrees to pay to Executive a salary equal to One Hundred Fifty Thousand Dollars ($150,000) per year, payable in twenty-four equal installments on the 15^th and the last days of each month (as may be adjusted from time to time, the “Base Salary”). Executive’s salary shall be reviewed by the Company’s Board of Directors in accordance with Company policies, and Executive shall be eligible for increases in salary and benefits as determined by the Company’s Board of Directors in its sole discretion. In no event shall Executive’s salary be reduced below the Base Salary except with Executive’s consent which may be withheld in Executive’s sole discretion.

3.2. Bonuses. Executive shall be eligible to receive discretionary quarterly bonuses of up to $15,000 related to Executive’s success in meeting job specific MBOs and corporate performance as documented in the Quarterly Bonus Plan to be agreed on by Executive and his direct supervisor, as determined by the Company’s Board of Directors.

3.3. Employee Benefits. Executive shall be eligible to participate in all benefit plans generally available to employees who are managers of the Company including health, dental, life insurance, stock and bonus compensation programs.

4. TERMINATION.

4.1. Definitions. For purposes of this Agreement, the following terms shall have the following meanings:

(a) “Termination For Cause” shall mean termination by the Company of Executive’s employment by the Company for reasons of Executive’s conviction of, or plea of “guilty” or “no contest” to, a felony involving moral turpitude, persistent dishonesty or fraud, persistent willful breaches of the material terms of this Agreement, or habitual neglect of the duties which he is required to perform hereunder.

(b) “Termination Other Than For Cause” shall mean termination by the Company of Executive’s employment by the Company (other than a Termination For Cause), or a Demotion, as defined below.

(c) “Voluntary Termination” shall mean termination of Executive’s employment with the Company by action of Executive (other than termination by reason of Executive’s disability or death as described in Sections 4.4 and 4.5).

(d) “Demotion” shall mean (i) any reduction of Executive’s then current Base Salary; (ii) any material reduction in the package of benefits and incentives provided to Executive or any action by the Company which would materially and adversely affect Executive’s participation or reduce Executive’s benefits under any such plans, except to the extent that such benefits and incentives of all other officers of the Company are similarly reduced; (iii) any material diminution of Executive’s duties, responsibilities, or authority; or (iv) any requirement that Executive relocate to a work site that would increase Executive’s one-way commute distance to more than fifty (50) miles from Executive’s principal residence.

4.2. Termination For Cause.

(a) Termination For Cause may be effected by the Company at any time during the Term and shall be effected by notice to Executive.

(b) Upon Termination For Cause, Executive immediately shall be paid any accrued salary, any bonus compensation to the extent earned, any vested deferred compensation (other than pension plan or profit sharing plan benefits which will be paid in accordance with the applicable plan), any benefits under any plan of the Company in which Executive is a participant to the full extent of Executive’s rights under such plans, any accrued vacation pay and any appropriate business expenses incurred by Executive in connection with his duties hereunder, all to the date of termination, but Executive shall not be paid any other compensation or reimbursement of any kind, including without limitation, severance compensation.

4.3. Termination Other Than For Cause.

(a) Notwithstanding anything else in this Agreement, the Company may effect a Termination Other Than For Cause at any time upon notice to Executive of such termination.

(b) Upon any Termination Other Than For Cause, Executive shall be paid any accrued salary, any bonus compensation to the extent earned, any deferred compensation (other than pension plan or profit sharing plan benefits which will be paid in accordance with the applicable plan), any accrued vacation pay and any appropriate business expenses incurred by Executive in connection with his duties hereunder, all to the date of termination, and any severance compensation provided in Section 5, but Executive shall be entitled to no other compensation or reimbursement of any kind.

(c) Notwithstanding the foregoing, in view of Executive's immigration status, the Company shall not have the right to effect a Termination Other Than For Cause at any time prior to July 31, 2007; provided, however, that this limitation on the Company's right to Terminate Executive's employment shall not be construed to prevent the Company from terminating Executive's status as Chief Financial Officer and appointing another person to such position at such time as shall be determined by the Board of Directors in the exercise of its sole discretion.

4.4. Termination by Reason of Disability.

(a) If, during the Term, Executive is determined by an examining physician to have failed to perform his duties under this Agreement on account of illness or physical or mental incapacity, and such illness or incapacity continues for a consecutive period of more than four (4) months, or an aggregate of more than six (6) months in a twelve (12) month period, the Company shall have the right to terminate Executive’s employment hereunder by notice to Executive.

(b) Upon a termination by reason of disability, the Company shall pay to the Executive any accrued salary, any bonus compensation to the extent earned, any vested deferred compensation (other than pension plan or profit sharing plan benefits which will be paid in accordance with the applicable plan), any benefits under any plans of the Company in which Executive is a participant to the full extent of Executive’s rights under such plans, any accrued vacation pay and any appropriate business expenses incurred by Executive in connection with his duties hereunder, all to the date of termination, but no other compensation or reimbursement of any kind.

4.5. Death.

(a) In the event of Executive’s death during the Term, Executive’s employment shall be deemed to terminate as of the last day of the month during which his death occurs.

(b) Upon termination by death, the Company shall pay to Executive’s estate any accrued salary, any bonus compensation to the extent earned, any vested deferred compensation (other than pension plan or profit sharing plan benefits which will be paid in accordance with the applicable plan), any accrued vacation pay and any appropriate business expenses incurred by Executive in connection with his duties hereunder, all to the date of termination, but no other compensation or reimbursement of any kind.

4.6. Voluntary Termination. Executive may effect a Voluntary Termination of this Agreement at any time upon sixty (60) days notice to the Company. In the event of a Voluntary Termination, the Company immediately shall pay any accrued salary, any bonus compensation to the extent earned, any vested deferred compensation (other than pension plan or profit sharing plan benefits which will be paid in accordance with the applicable plan), any benefits under any plans of the Company in which Executive is a participant to the full extent of Executive’s rights under such plans, any accrued vacation pay and any appropriate business expenses incurred by Executive in connection with his duties hereunder, all to the date of termination, but no other compensation or reimbursement of any kind.

5. SEVERANCE COMPENSATION.

Upon a Termination Other Than for Cause, Executive shall receive a severance fee equal to one month salary for each three months Executive has been employed by the Company, calculated at his then-current Base Salary, not to exceed a total of six months severance fee. At the Company's option, such fee shall be payable in full at the time of severance, or in equal monthly increments, each equal to at least the Executive's monthly base salary at the time of severance. In addition, Executive shall receive:

(a) any benefits under any medical and dental plans of the Company in which Executive is a participant to the full extent of Executive’s rights under such plans for a period of twelve (12) months following the date of termination, or (at the Company’s option) payment in cash of the cost of such benefits at COBRA rates then in effect; and

(b) full vesting of any and all unvested stock options held by Executive as of the date of termination.

6. PAID TIME OFF. Executive shall eligible to accrue vacation and sick leave according to company policy. During the first year of employment, Executive will accrue vacation time off on a monthly basis at the rate of .833 days per month or ten (10) days per year. In the second and subsequent years, Executive will accrue vacation time off on a monthly basis at the rate of 1.25 days per month or fifteen (15) days per year. By virtue of past service with Accessmedia Networks, Inc. Executive has already accrued 6 days of vacation time at the signing of this agreement. Executive is ineligible to accrue vacation benefits while Executive is absent without pay including, but not limited to, unpaid leaves of absence. The purpose of vacation leave is, among other things, to provide time for recreation and relaxation. The Company encourages all of its employees to take accrued vacation leave each year. Accordingly, the maximum vacation Executive will be permitted to accrue is twenty-four (24) days or 192 hours. Once this cap on the accrual of vacation has been reached, no additional vacation leave will accrue until Executive has reduced the balance of unused vacation to less than twenty-four (24) days. Thereafter, vacation leave will accrue on a prospective basis as long as Executive’s total accrual remains under the cap. The Company reserves the right to compensate Executive for earned, unused vacation at any time in its sole discretion. In addition to vacation leave, Executive will be eligible to accrue six (6) days of sick leave a year.

7. HOLIDAYS. Executive shall be entitled to holidays with pay during each calendar year consistent with the holiday schedule applicable to management employees of the Company, generally.

8. COMPLIANCE WITH EMPLOYER’S RULES. The employment relationship between the parties shall be governed by the general employment policies and procedures of the Company, including (but not limited to) those relating to the protection of confidential information and assignment of inventions; provided, however, that when the terms of this Agreement differ from or are in conflict with the Company’s general employment policies or procedures, this Agreement shall control. Executive agrees to abide by all of the Company’s policies and procedures in effect from time to time.

9. RETURN OF PROPERTY. Upon termination of Executive’s employment, Executive shall deliver all property (including keys, records, notes, lists, data, memoranda, models, and equipment) that is in the Executive’s possession or under the Executive’s control which is the Company’s property or related to the Company’s business.

10. INDEMNIFICATION OF EXECUTIVE. The Company shall indemnify Executive against any direct losses incurred by Executive in the course of his duties to the fullest extent permissible under applicable law.

11. MISCELLANEOUS.

11.1. Every notice or other communication required or contemplated by this Agreement by either party shall be delivered to the other party at the address set forth on the signature page below by: (i) personal delivery; (ii) postage prepaid, return receipt requested, registered or certified mail; (iii) internationally recognized express courier, such as Federal Express, UPS or DHL; or (iv) facsimile or email with a confirmation copy sent simultaneously by postal mail. Notice not given in writing shall be effective only if acknowledged in writing by a duly authorized representative of the party to whom it was given. Either party may change its or his address for notice from time to time by providing written notice in the manner set forth above.

11.2. Attorney Fees. In the event that any action, suit or other proceeding at law or in equity is brought to enforce the provisions of this Agreement, or to obtain money damages for the breach thereof, and such action results in the award of a judgment for money damages or in the granting of any injunction in favor of the Company, then all reasonable expenses, including, but not limited to, reasonable attorneys’ fees and disbursements (including those incurred on appeal) of the Company in such action, suit or other proceeding shall (on demand of the Company) forthwith be paid by Executive. If such action results in a judgment in favor of Executive, then all reasonable expenses, including but not limited to, reasonable attorney’s fees and disbursements (including those incurred on appeal) of Executive in such action, suit or other proceeding shall (on demand of Executive) forthwith be paid by the Company.

11.3. Entire Agreement. This Agreement supersedes all prior agreements, and the terms set forth herein represent the entire understanding and agreement between the Company and Executive regarding compensation, employment, status and position. It is further understood that the Company’s policies, procedures and rules may be amended or changed at any time by the Company.

11.4. Amendment. This Agreement may be modified or amended only if the amendment is made in writing and is signed by both parties. This Agreement cannot be altered in any way by any oral statement(s) made by Executive or the Company.

11.5. Severability. If any provision(s) of this Agreement shall be held to be invalid or unenforceable for any reason, the remaining provisions shall continue to be valid and enforceable. If a court finds that any provision(s) of this Agreement is invalid or unenforceable, but that by limiting such provision it would become valid or enforceable, then such provision shall be deemed to be written, construed, and enforced as so limited.

11.6. Waiver Of Contractual Right. The failure of either party to enforce any provision of this Agreement shall not be construed as a waiver or limitation of that party’s right subsequently to enforce and compel strict compliance with every provision of this Agreement.

11.7. Applicable Law. This Agreement shall be governed by the laws of the State of California.

In witness whereof, the parties hereto have executed, or caused to be executed, this Agreement this 11th day of October, 2006 but as of the day and year first above written.

Broadcaster, Inc.

Executive

By: /s/ Martin Wade

Martin Wade, CEO

/s/ Blair Mills

Blair Mills

EX-10.26 16 broadcaster_10ksb-ex1026.htm CONSULTING AGREEMENT Unassociated Document

Exhibit 10.26

IMSI

CONTRACT FOR CONSULTING SERVICES

Name of Consultant (“Consultant”):		Bruce Galloway
		Address: 216 E. 47^th Street
		N.Y., N.Y. 10017
		Phone: 917-405-4591
		Fax: 212-397-9728

Contact Person:		Same as above.

Effective Dates of Contract:		July 1, 2005 through June 30, 2006

International Microcomputer Software, Inc. (“IMSI”) and Consultant each hereby agree as follows:

1. Services and Fees:

a. The Services that Consultant will perform, and the fees which IMSI will pay to Consultant in return for those Services, are described in the “Description of Work and Fees” attached as Exhibit A to this Contract for Consulting Services (“the Contract”).

b. If IMSI and Consultant anticipate working together on more than one project, additional exhibits describing such projects may be made a part of the Contract. Each additional exhibit must be signed by both parties to be valid and incorporate this Contract by reference.

c. For all assignments and any other obligations related to the Services, Consultant shall keep IMSI informed of the status of work, at such intervals as provided Exhibit A or any related exhibit and provide any additional information as reasonably requested by IMSI. Upon IMSI’s acceptance of services/work, IMSI will pay Consultant as provided in the related exhibit.

d. Consultant shall at all times faithfully and diligently perform the Services under this Contract and use Consultant’s best efforts, skill, and attention for the fulfillment of the Services and in the performance of the work. Except as is necessary to provide the Services and directed by IMSI pursuant to Exhibit A or any other exhibit, Consultant shall have discretion and control of the rendering of the Services and the manner in which said Services are performed. Consultant shall have no obligation to work any particular hours or days, nor shall Consultant be obligated to devote full time to the performance of the Services. Subject to the limitations set forth in Paragraph 6, herein, Consultant shall have the right to contract with, and perform services on behalf of, any other persons, firms, or corporations.

2. Term: The term of the Contract is for twelve (12) months, unless the Contract is terminated by one or both of the parties as provided in Paragraph 3.

3. Termination:

a. IMSI may terminate the Contract immediately if Consultant or any of its employees or agents:

i. Breaches the confidentiality provisions of the Contract;

ii. Is late in the delivery of the Services or if the quality of any delivered work is unacceptable; or

iii. Engages in any of the following activities:

~ harassment of any IMSI employee, consultant, customer or vendor;

~ use of drugs or alcohol on IMSI’s premises or in the performance of the Services,

~ any illegal conduct;

~ removing or using, without permission, any IMSI equipment, materials or property;

~ falsification of information in invoices; or

~ any act of dishonesty or constituting a breach of trust.

In the event that the Contract is terminated by IMSI for any of the above reasons, Consultant will be paid only for work delivered and approved by IMSI up to the date of such termination.

b. IMSI may terminate the Contract without any reason by giving five (5) days written notice to Consultant. If IMSI terminates the Contract for convenience and without cause, IMSI will pay Consultant [for 30 days after such a termination, at the average daily rate of payment paid to Consultant from the beginning of the Contract to the termination date] [the remaining term of the Contract, pursuant to the payment terms contained in Exhibit A] [a termination fee of two thousand dollars ($2,000)].

c. Consultant may terminate the Contract at any time, for any reason, by giving thirty (30) days written notice to IMSI. Should Consultant terminate the Contract in this manner, Consultant will be paid only for work delivered and approved by IMSI up to the date of such termination.

4 Relationship of Parties:

a. Consultant enters into this Contract as, and shall continue to be, an independent contractor. Under no circumstances shall Consultant look to IMSI as its employer, or as a partner, agent, or principal. Neither Consultant nor Consultant’s employees, contract personnel, or agents shall be entitled to any benefits otherwise accorded to IMSI’s regular employees, if any, including workers’ compensation, disability insurance, health, pension, vacation, or sick pay. There shall be no tax withholdings taken from any fees paid to Consultant pursuant to this Contract (including, without limitation, FICA, state and federal unemployment compensation contributions, and state and federal income taxes), and Consultant shall pay, when and as due, any and all taxes incurred as a result of Consultant’s fees pursuant to this Contract. Upon request, Consultant shall provide IMSI with proof of such payment.

b. Consultant also understands and agrees that Consultant shall be solely responsible for complying with all federal, state, and local laws requiring business permits, certificates, and licenses required to carry out the Services to be performed under this Contract. Furthermore, Consultant recognizes that it is Consultant’s responsibility to obtain compensation insurance coverage for Consultant and Consultant’s employees, agents, and contract personnel. Upon request, Consultant shall provide IMSI with proof of workers’ compensation coverage for Consultant and Consultant’s employees, agents, and contract personnel. Consultant shall also be solely responsible for obtaining insurance coverage for Consultant and Consultant’s employees, agents, and contract personnel, and Consultant shall provide proof of it to IMSI upon request.

c. Consultant acknowledges that if it is a nonresident alien individual that IMSI may deduct U.S. federal income tax from any fees paid hereunder for U.S. income tax purposes. This action shall not create, or be construed as creating, an employment relationship between IMSI and Consultant.

d. It is expressly understood and agreed that Consultant shall only represent IMSI to the extent authorized by this Contract, and in no other way, and that Consultant shall not be an agent of IMSI. In this regard, Contractor shall have no authority to enter into any agreements or other binding obligations on IMSI’s behalf without the prior written authorization of IMSI, and that Consultant shall not hold himself or herself out as the agent or employee of IMSI.

e. Consultant retains all control and responsibility for any of its employees, agents or consultants that it uses in the provision of the Services/work under this Contract. Consultant ensure that such individuals perform said work in compliance this Contact and any and all exhibits.

5. Indemnification: Consultant shall indemnify, defend and hold IMSI harmless from and against any claim, liability, injury, damages, costs or attorneys’ fees that IMSI incurs as a result of the Consultant’s (or Consultant’s agents, representatives or employees) negligence, improper conduct, intentional acts or omissions, failure to comply with any law, or breach of this Contract, IMSI shall indemnify, defend and hold Consultant harmless from and against any claim, liability, injury, damages, costs or attorneys’ fees that Consultant incurs as a result of IMSI’s (or IMSI’s agents, representatives or employees) negligence, improper conduct, intentional acts or omissions, failure to comply with any law, or breach of this Contract.

6. Confidentiality:

a. Consultant (including its agents and employees) will not improperly disclose any IMSI Confidential Information (as defined below) and will take all reasonable precautions to prevent its unauthorized dissemination, both during and after the Contract. Consultant will limit the internal distribution of IMSI Confidential Information to its employees and agents who have a need to know. Consultant will not use any IMSI Confidential Information for its own benefit or for the benefit of anyone other than IMSI. Consultant will not design or manufacture any products, which incorporate any IMSI Confidential Information without the express, written consent of IMSI.

b. “IMSI Confidential Information” means information relating to the research, development, products, methods of manufacture, trade secrets, business plans, customers, finances, and personnel data related to the business or affairs of IMSI, including but not limited to any and all information related to the IMSI products. IMSI Confidential Information does not include any information: (i) which Consultant knew, through no breach of any other confidentiality obligation, before IMSI disclosed it to Consultant; (ii) which has become publicly known through no wrongful act of Consultant; or (iii) which Consultant developed independently, as evidenced by appropriate documentation, without the use of any IMSI Confidential Information.

c. All IMSI Confidential Information remains the property of IMSI and no license or other rights in the Confidential Information is granted hereby. All information is provided “AS IS” and without any warranty, express, implied, or otherwise, regarding its accuracy or performance. Further, upon IMSI’s written request, Consultant agrees to return to IMSI all IMSI Confidential Information, including but not limited to all computer programs, documentation, notes, plans, drawings, and copies thereof.

7. License to Use Consultant’s Related Rights: As applicable, Consultant hereby grants IMSI, and Its subsidiaries, licensees and affiliates, a royalty-free, irrevocable, perpetually worldwide, non-exclusive license to use, disclose, reproduce, modify, license and distribute any rights Consultant my have in certain materials, products and courseware that it uses in performing the Services or work under this Contract “Consultant’s Related Rights.” which rights are listed in Exhibit B. Consultant will indemnify, hold harmless and, at IMSI’s request, will defend IMSI and its subsidiaries, licensees and affiliates from and against all claims, liabilities, damages, losses and expenses including, but not limited to reasonable

attorneys’ fees and costs of suit, arising out of or in connection with all claims that the use or disclosure of Consultant’s Related Rights violates any third party rights. During and after the Contract, Consultant will assist IMSI in every reasonable way, at IMSI’s expense, to secure, maintain and defend for IMSI’s benefit all copyrights, patent rights, mask work rights, trade secret rights and other applicable proprietary rights in and to work provided by Consultant.

8. Miscellaneous:

a. Prohibition of Assignment: Neither Consultant or IMSI may assign or delegate any of its rights or obligations under the Contract without first obtaining the written consent of the other party.

b. Sufficiency of Resources: Consultant represents that it has sufficient resources to timely and accurately perform the Services and work requested under the Contract.

c. Governing Law: California law will govern the Contract, without regard to its conflict of law principles.

d. Severability: If any provision of the Contract is found by a court of competent jurisdiction to be unenforceable for any reason, the remainder of the Contract shall continue in full force and effect.

e. Dispute Resolution:

i. Arbitration: Except for any claim by IMSI that Consultant has breached the terms of Paragraph 6 of the Contract, the parties agree to submit any dispute arising out of or in connection with the Contract to binding arbitration in Marin County, California before the American Arbitration Association, (“AAA”) under the then standing Commercial Arbitration Rules of the AAA. The “prevailing party” if any, in any arbitration will be entitled to the recovery of its costs and reasonable attorneys’ fees from the other party. Any arbitration shall be final and binding and the arbitrator’s order will be enforceable in any court of competent jurisdiction. By agreeing to this arbitration provision, each party acknowledges that they are waiving their respective rights to a jury trial for any disputes relating to all aspects of the relationship between Consultant and IMSI under the Contract, with the exception of a breach of Paragraph 6.

ii. Court Action and Equitable Relief: Consultant acknowledges that any breach of the confidentiality provisions of the Contract by Consultant will result in irreparable harm to IMSI. For any claim by IMSI that Consultant has breached the terms of Paragraph 6 of the Contract, IMSI shall have the right to assert any claim, demand or suit, including a claim for injunction or other equitable relief, in any Court of competent jurisdiction. In the event that IMSI is the “prevailing party” in any action to enforce the confidentiality provisions of Paragraph 6 of the Contract, IMSI will be entitled to the recovery of its costs and reasonable attorneys’ fees.

iii. Limitation of Liability: Except for any damages arising from Consultant’s breach of Paragraph 6 the Contract, neither party shall under any circumstances be liable for any consequential, indirect, special, incidental or exemplary damages, including without limitation, any loss of revenues, profits, or business or other economic loss arising out of or in connection with the services provided hereunder, except to the extent that such damages are included in a third party claim that gives rise to a right of indemnification under Paragraph 5 above.

f. Survival of Terms: The provisions of paragraphs 4, 5, 6, 7, and 8c, 8d and 8e of the Contract shall survive any termination of the Contract.

g. Modification: Any modification of the Contract will be effective only if it is in writing and signed by both parties.

h. Entire Agreement: The Contract and the Exhibits attached to the Contract constitute the entire agreement between IMSI and Consultant and supersede all prior or contemporaneous written or verbal agreements and understandings in connection with the subject matter hereof.

IMSI	CONSULTANT

International Microcomputer Software, Inc.

BRUCE GALLOWAY

By: /s/ Robert O’Callahan

/s/ Bruce Galloway

Name: ______________________________

Robert O’Callahan

Chief Financial Officer

Title: _______________________________

EXHIBIT A

DESCRIPTION OF WORK AND FEES

1. Name of Consultant: Bruce Galloway

2. Effective Dates of Contract: July 1, 1005 through June 30, 2006.

3. Scope of Work: Consultant shall research, contact, schedule and attend with Martin Wade a minimum of 20 meetings resulting in substantial discussions with portfolio managers, hedge fund managers and other large instutitional investors of interest to IMSI. Consultant shall render such services and spend such time as may be necessary to fully complete its tasks in a professional manner.

4. Invoice Submission and Payment: Consultant shall submit an invoice for all services rendered at the conclusion or each month, containing a detailed list of the hours worked by Consultant and a summary of the progress made on required tasks. Upon IMSI’s acceptance of Consultant’s work, IMSI will pay Consultant’s invoice. IMSI will not unreasonably delay acceptance or rejection of Consultant’s work. (IMSI generally pays consultants within thirty (30) days after IMSI receives an invoice for completed work.)

5. Consultant Fees: Monthly Payment: Upon IMSI’s acceptance of Consultant’s work for the previous month, IMSI will pay Consultant ten thousand dollars ($10,000.00).

6. Expenses: Consultant will not be reimbursed for any expenses incurred in connection with this Contract absent prior written approval of IMSI.

7. Equipment: Consultant will supply all its own equipment for this Contract.

8. Entire Scope of Work: This Exhibit A contains the entire Scope of Work for Consultant. If a change in the scope of the work results in a material increase or decrease in the cost or time for completion of the services, the fees and schedule may be renegotiated upon the mutual agreement of the parties. In that event, a new Exhibit A will be drafted, signed and attached to the Contract.

This Exhibit A incorporates that Contract dated July 1, 2005 herein by this reference.

AGREED:

AGREED:

IMSI	CONSULTANT

International Microcomputer Software, Inc.

Bruce Galloway

By: /s/ Robert O’Callahan

/s/ Bruce Galloway

Name: ______________________________

Robert O’Callahan

Chief Financial Officer

Title: _______________________________

EX-10.27 17 broadcaster_10ksb-ex1027.htm GIGABIT DATA CENTER SERVICES AGREEMENT x

Service Agreement

1200 West Seventh Street, Suite l1-100

Los Angeles, CA 90017

www.alchemy.net

Tel: (213) 596-3000 Fax: (213) 596-3004

Exhibit 10.27

GIGABIT DATA CENTER SERVICES AGREEMENT

As a Gigabit Data Center ("GDC") Customer you agree to be bound by the terms of the GDC Services Agreement as set forth below. Please read this document thoroughly and initial at the end of each page in acknowledgement of this agreement.

1. GENERAL TERMS

This document, along with the Gigabit Data Center Service Order(s) ("GDCSO(s)") agreement (s), shall comprise a complete and binding agreement between Customer and Alchemy. Each GDCSO agreement, and any amendments thereto, when dated and subscribed by Customer and Alchemy, shall incorporate the terms and conditions of this Agreement. In the event of any conflict or inconsistency between this Agreement and the terms set forth in a GDCSO agreement(s), the terms of the GDCSO agreement(s) shall in all cases prevail.

In connection with the Space made available hereunder, Alchemy shall perform services which support the overall operation of the Gigabit Data Center ("GDC"), e.g., janitorial services, environmental systems maintenance, and power plant maintenance, at no additional charge to Customer. However, Customer shall be required to maintain the Collocation Space in an orderly manner and shall be responsible for the removal of trash, packing, cartons, etc. from the Space. Further, Customer shall maintain the Space in a safe condition, including but not limited to the preclusion of storing combustible materials in the Space.

Any option granted to Customer to renew its license to occupy the Space shall be contingent on the election by Alchemy to continue to own or lease the Premises in which the Space is located for the duration of the Renewal Period(s), such election to be exercised at the sole discretion of Alchemy.

2. GDC SERVICES

Collocation Space: If contracted for, Alchemy shall provide Customer with shared or private data center space as indicated in the GDCSO(s).

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Connectivity: If contracted for, Alchemy shall provide Customer with connectivity to the Internet through Alchemy's network as specified in the GDCSO(s). Connectivity is measured and billed using a 95/5 Rule. The aggregate of both inbound and outbound bandwidth is sampled at five-minute intervals throughout the month. Once all samples have been accumulated, the top 5% of the collected samples are discarded, the highest remaining sample, rounded to the next full mega bit per second (Mbps) times the negotiated rate, will be billed. Alchemy shall provide cross-connectivity, where applicable, for an additional fee.

Virtual Hosting: If contracted for, Alchemy shall provide Customer with virtual hosting on servers owned by either Alchemy or a third party supplier as indicated in the GDCSO(s).

Streaming: If contracted for, Alchemy shall provide Customer with video and audio streaming services as indicated in this agreement and in the GDCSO(s).

Content Distribution: If contracted for, Alchemy shall provide Customer with content distribution services as indicated in the GDCSO(s).

Storage: If contracted for, Alchemy shall provide Customer with storage on the EMC Enterprise Storage System as indicated in the GDCSO(s).

Encoding and Production: If contracted for, Alchemy shall provide Customer with encoding and production services as indicated in the GDCSO(s).

Equipment Leasing: If contracted for, Alchemy shall provide Customer with leased equipment as indicated in the GDCSO(s).

Technical Support: If contracted for, Alchemy shall provide Customer with complete technical support upon Customer's request and in accordance with Alchemy's terms and conditions and listed rates.

Eyes Hands Support: If contracted for, Alchemy shall provide Customer with assistance to observe conditions in their Collocation Space and offer light hands assistance such as shutting off and turning on equipment as directed by Customer.

3. STREAMING SERVICES

Content Preparation: If contracted for, Alchemy shall prepare Content consisting of fully encoded audio or video product provided by Content Provider for placement on Alchemy servers. (Alchemy may also perform encoding for an additional fee, as agreed by the parties). Customer shall provide Alchemy with timely access to its Content as required for Alchemy to prepare said Content and provide all services Customer has elected to receive. Customer understands and acknowledges that Alchemy’s performance depends, in part, upon Customer’s assistance and cooperation in all matters pertaining to this Agreement.

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Connectivity and Content Streaming: If contracted for, Utilizing Alchemy’s servers, Customer shall be provided with Content storage and Internet connectivity. Customer’s content shall be distributed on an “On-demand” basis on the Internet utilizing the Internet video and or audio formats specified by Customer, which may include, Microsoftâ Windows Media Server’ (“WMS”), Appleâ QuickTime Server’ (“QuickTime”), Server Push and Web Page serving. Customer shall agree to a committed amount of minimum monthly transfer of content, measured in megabytes, as stated in the GDCSO(s). Although it is Alchemy’s policy to accommodate usage above committed amounts, megabyte transfer levels beyond the committed amounts are not guaranteed.

Technical Support/Maintenance: If contracted for, shall provide Customer with technical support upon Customer's request and in accordance with Alchemy's terms and conditions and applicable fees.

4. LICENSES

Customer hereby grants Alchemy a worldwide, non-exclusive license to host, distribute, display, cache and transmit Content in connection with the Web Content Distribution Services.

5. OWNERSHIP

Customer retains all right, title and interest in and to the Content it places with Alchemy. Alchemy, its heirs, successors and/or assigns retain all right, title and interest in and to all software, hardware, products, equipment and other intellectual properties created by or for Alchemy in connection with the Web Content Distribution Services.

6. TERM OF AGREEMENT

Customer's license to occupy the Collocation Space shall begin on the "Start Date," as set forth in the GDCSO agreement(s) or on the date Alchemy completes the build-out of the Space, whichever is later. The term of the Customer's license to occupy the Space shall be indicated on the GDCSO(s).

Should Alchemy fail, for any reason to tender possession of the Space to Customer on or before the Requested Service Date (specified in the GDCSO agreement(s) relevant thereto) this Agreement shall not be void or voidable. If Alchemy fails to tender possession of the Space to Customer within a sixty (60) day period after such Requested Service Date (due to any reason other than the acts or omissions of Customer), Customer may, upon written notice to Alchemy, declare the relevant GDCSO agreement(s) null and void with no further obligation attributed to Customer, and Alchemy shall refund all fees and charges paid in advance by Customer, except in the case where the delay was caused by Customer, in which case, Alchemy shall retain any funds necessary to recover the cost or obligations incurred on behalf of Customer. Except as provided herein, Alchemy shall not be liable to Customer in any way as a result of a delay or failure to tender possession.

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Following the expiration of the Term, as set forth in the GDCSO agreement(s) noted “End Date,” for each Space and/or Service or failure of the Parties to enter into any Renewal Periods, Customer's license to occupy the Space and receive services shall continue in effect on a month-to-month basis upon the same terms and conditions specified herein, unless terminated by either Customer or Alchemy upon thirty (30) days prior written notice.

7. TERMINATION

Either party shall have the right to terminate this agreement should the other party breach a material term or condition of this Agreement and fail to cure such breach within thirty (30) days after receipt of written notice of the breach, except in the case of failure to make timely payment to Alchemy, which must be cured within ten (10) days of the payment due date. Alchemy has the option, at its sole discretion, to terminate this Agreement should Customer become insolvent or the subject of bankruptcy proceedings, a receivership, liquidation or a sale for the benefit of creditors.

Upon termination or expiration of the Term for each Space, Customer agrees to do the following: (i) remove the Equipment and other property that has been installed by Customer or Customer's agent(s) and return the Space to Alchemy in substantially the same condition as it was on the date of installation, Alchemy at its sole discretion may refuse to allow the removal of some or all Customer equipment until all outstanding amounts owed to Alchemy are paid in full; (ii) pay any outstanding fees within five (5) days of termination of service; (iii) return any confidential information it has received from Alchemy and (iii) return any equipment or supplies that are the property of Alchemy. In the event such Equipment or property has not been removed within thirty (30) days of the effective termination or expiration date, the Equipment shall be deemed abandoned and Customer shall lose all rights and title thereto.

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In the event the GDC becomes the subject of a taking by eminent domain by any authority having such power, Alchemy shall have the right to terminate this Agreement. Alchemy shall attempt to give Customer reasonable advance notice of the removal schedule. Customer shall have no claim against Alchemy for any relocation expenses, any part of any award that may be made for such taking or the value of any unexpired term or renewed periods that result from a termination by Alchemy under this provision, or any loss of business from full or partial interruption or interference due to any termination. However, nothing contained in this Agreement shall prohibit Customer from seeking any relief or remedy against the condemning authority in the event of an eminent domain proceeding or condemnation that affects the Space.

8. DEFAULT

If Customer fails to perform its obligations, or fails to pay for services rendered hereunder, Alchemy may, at its sole option and with written notice, issue a default notice letter to Customer, demanding the default condition be cured. If the default condition is not remedied within the time period specified in the notice letter, Alchemy may then, without the necessity of any further notice, discontinue performance and terminate this Agreement, for default, and pursue any other remedies available at law or in equity, including reimbursement of the cost of collection and reasonable attorney fees. Alchemy's failure to exercise any of its rights hereunder shall not constitute or be construed by Customer as being a waiver of any past, present, or future right or remedy. In the case of Customer's failure to make timely payments, Alchemy may discontinue any or all services for any period of time as it deems appropriate without written notice to Customer, and such action shall not be deemed a breach of this Agreement by Alchemy.

At any time during the term of this Agreement, Alchemy may, at it's sole option, immediately terminate this Agreement if Customer is not then maintaining the Equipment solely for the purpose of originating and/or terminating telecommunications transmissions carried over the Alchemy Network or as otherwise set forth in this Agreement, or pursuant to the terms and conditions, if any, contained in any Collocation Schedule identified herewith.

If Customer commits an act of default under any Collocation Schedule to which this Agreement pertains, Alchemy may, in its sole discretion, declare Customer to be in default of any and all other Collocation Schedules then in effect, without the necessity of showing separate failures, acts or omissions by Customer.

If Customer commits an act of default with respect to the purchase of telecommunications services that would entitle Alchemy under its separate tariffs and agreements to terminate its services to Customer, then Alchemy and all Alchemy's Affiliates shall be entitled to terminate this Agreement and all GDC services to which this Agreement pertains.

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Alchemy may, without notice, suspend or terminate services to customer if Customer is found to be engaged in unlawful activities or upon the request to do so by any legal or governmental agencies.

At the termination of this agreement for any reason or if Customer has failed to make timely payments of amounts owed, Alchemy at its sole discretion may refuse to allow the removal of some or all of Customer equipment from Alchemy’s facilities until all outstanding amounts owed to Alchemy are paid in full. In order to satisfy outstanding balances owed, Customer specifically herein consent and agree that Alchemy may take possession and ownership of all or part of Customer equipment, if Customer fails to bring all payments up to date within thirty (30) days of receiving written notice from Alchemy of its intent to take possession of said equipment. If the value of the equipment in which Alchemy has taken possession and ownership of has a resale value that is less than the amount owed, Alchemy is entitled to take whatever legal actions are necessary to collect the difference.

9. PRICES AND PAYMENT TERMS

Customer shall pay ALCHEMY monthly recurring fees (the "Recurring Fees"), which shall include charges for use and occupancy of the Space (the "Occupancy Fees"), connectivity (or cross-connect fees, if applicable), power charges, streaming charges and, where applicable, technical support and system administration. In addition to any Recurring Fees, Customer shall be charged non-recurring fees for build-out of the Space (the "Build-Out Charges"), where applicable, Escort charges, and other services, which shall be set forth in the GDCSO agreement(s). If Customer requests that Alchemy provide services not delineated herein or in the GDCSO agreement(s) at any time during the Term, Customer agrees to pay the fee for such services in effect at the time such service was rendered. All payments will be made in U.S. dollars. Late payments hereunder will accrue interest at a rate of one and one-half percent (1 ½%) per month, or the highest rate allowed by applicable law, whichever is lower. If in its judgment Alchemy determines that Customer is not creditworthy or is otherwise not financially secure, Alchemy may, upon written notice to Customer, modify the payment terms to require assurances to secure Customer's payment obligations hereunder.

All payments required by this Agreement are exclusive of all national, state, municipal or other governmental excise, sales, value-added, use, personal property, and occupational taxes, excises, withholding taxes and obligations and other levies now in force or enacted in the future, all of which Customer will be responsible for and will pay in full. Customer agrees to pay or reimburse Alchemy for any applicable taxes that are levied based on the transactions hereunder, exclusive of taxes on income and real estate taxes on the GDC. Any such charges shall be invoiced and payable within the payment terms of this Agreement. Alchemy agrees to provide Customer with reasonable documentation to support invoiced amounts applied to taxes within thirty (30) calendar days of receipt of a Customer's written request.

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The Occupancy Fee and/or Power Charges shall be increased to reflect any increases incurred by and required under the lease relevant to the Premises in which the Space is located. Customer shall pay to Alchemy its pro rata share of any such increases based on the number of square feet of the Space compared to the number of square feet leased by Alchemy under the applicable lease. Alchemy shall notify Customer of any such increase as soon as practicable.

Payments shall be due upon Customer's receipt of each monthly invoice. Late payment charges will be calculated based on 1.5% per month of the unpaid amount.

Charges delineated in the Collocation Schedule for build-out of the Space shall be invoiced and paid by Customer when invoiced. Alchemy may require payment of the "Build Out Fees" prior to commencing construction.

Customer agrees to reimburse Alchemy for all reasonable repair or restoration costs associated with damage or destruction caused by Customer's personnel, Customer's agent(s) or Customer's suppliers/contractors or Customer's visitors during the Term or as a consequence of Customer's removal of the Equipment or property installed in the Space.

10. ADDITIONAL TERMS GOVERNING USE OF COLLOCATION SPACE AND INSTALLATION OF EQUIPMENT

Before beginning any delivery, installation, replacement or removal work, Customer must obtain Alchemy 's written approval of Customer's choice of suppliers and contractors which approval shall not be unreasonably withheld or delayed. Alchemy may request additional information before granting approval and may require scheduling changes and substitution of suppliers and contractors as conditions of its approval. Approval by Alchemy is not an endorsement of Customer's supplier or contractor, and Customer will remain solely responsible for the selection of the supplier or contractor and all payments to Alchemy for construction work performed on their behalf.

Customer shall not make any construction changes or material alterations to the interior or exterior portions of the Space, including any cabling or power supplies for the Equipment, without obtaining Alchemy's written approval for Customer to have the work performed. Alchemy reserves the right to perform and manage any construction or material alterations within the GDC and Collocation Space areas at rates to be negotiated between the Parties hereto.

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Customer's use of the Space, installation of Equipment and access to the GDC shall at all times be subject to Customer's adherence to the generally accepted industry standards, security rules and rules of conduct established by Alchemy for the GDC. Except where advanced written permission has been given by Alchemy, Customer's access to the GDC shall be limited to the individuals identified and authorized by Customer to have such access. Customer agrees not to erect any signs or devices to the exterior portion of the Space without submitting the request to Alchemy and obtaining Alchemy's written approval.

Customer may not provide, or make available to any third party, space within Collocation Space without Alchemy's prior written consent. If Customer should provide, or make available to any third party, space within the Collocation Space without obtaining the written consent of Alchemy, Customer shall be in breach of this Agreement and Alchemy may pursue any legal or equitable remedy, including but not limited to the immediate termination of this Agreement.

Customer is responsible for maintaining the cleanliness of the Collocation Space. There shall be no trash or dust allowed to accumulate within the Space. Neither food nor drink is permitted within the Collocation area, including within individual cages.

F. Customer's use of Alchemy services shall at all times comply with Alchemy's then-current Acceptable Use Policy, as amended by Alchemy from time to time. The sending of unsolicited bulk email is specifically forbidden under this Agreement. Customer activities that result in IP address blocking, filtering, or other such actions by outside third party entities which cause Alchemy or any of Alchemy’s other customers to be negatively impacted is also specifically forbidden under this Agreement. If Customer is found by Alchemy to be in violation of any part of this section, Alchemy has the right to immediately terminate services to customer and/or this Agreement.

Customer is responsible for retrieving entry passes from its terminated employees or others whom Customer no longer wishes to have access to its Collocation space.

Alchemy shall not arbitrarily or discriminatorily require Customer to relocate the Equipment; however, upon sixty (60) days prior written notice or, in the event of an emergency, such time as may be reasonable, Alchemy reserves the right to change the location of the Space or the GDC to a site which shall afford comparable environmental conditions for the Equipment and comparable accessibility to the Equipment. Alchemy and Customer will work together in good faith to minimize any disruption of Customer's services as a result of such relocation. Alchemy shall be responsible for the cost of improving the Space to which the Equipment may be relocated, and for relocation of Equipment interconnected to Alchemy services, except that Alchemy shall not be responsible for relocating facilities installed in violation of this Agreement.

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All equipment brought into or taken out of the GDC facility must be cleared through Alchemy's equipment control system. Alchemy shall not be held responsible for the condition of equipment shipped to the GDC that arrives in damaged condition.

11. INSURANCE

If Space is contracted for, Customer agrees to maintain, at Customer's expense, during the entire period of occupancy, for each Collocation Space (i) Comprehensive General Liability Insurance for bodily injury or property damage, in an amount not less than one million dollars per occurrence; (ii) Workers' Compensation Insurance, with a limit not less than five hundred thousand dollars Bodily Injury each accident (iii) "All Risk" Property insurance covering all of Client's personal property located at the GDC, (iv) commercial automobile liability insurance (bodily injury and property damage) in an amount not less than one million dollars per accident for all vehicles including owned, non-owned, leased and hired vehicles; (v) Errors and Omissions insurance. All property insurance covering customer's property located in the GDC premises shall expressly waive any right of subrogation on the part of the insurer against Alchemy, its officers, directors employees, agents and contractors. Customer further agrees to name Alchemy and the party from whom Alchemy leases its GDC space, as "Additional Insured" on the appropriate policies.

A reputable insurance company authorized to do business in the state of California shall issue all policies subject to this provision. Prior to installation of equipment in Customer's collocation space, customer shall furnish Alchemy with certificates of insurance which evidence the minimum levels of insurance set forth herein. Customer shall not materially alter or cancel insurance relating to GDC occupancy without notification to Alchemy of not less than thirty days.

12. REPRESENTATIONS AND WARRANTIES OF CUSTOMER

Equipment: Customer represents and warrants that it owns or has the legal right and authority, and will continue to own or have such right and authority during the term of this Agreement, to place and use the Customer Equipment as contemplated by this Agreement. Customer further represents and warrants that its placement, arrangement, and use of the Customer Equipment in the Gigabit Data Center complies with the Customer Equipment Manufacturer's environmental and other specifications.

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Customer's Business: Customer represents and warrants that Customer's services, products, materials, data, information and equipment used in connection with this Agreement and Customer's use of GDC Services (collectively, "Customer's Business") does not as of the Installation Date, and will not during the term of this Agreement operate in any manner that would violate any applicable federal, state or local law or regulation or infringe in any way upon the rights of third parties.

Breach of Warranties: In the event of any breach, or reasonably anticipated breach, of any of the foregoing warranties, in addition to any other remedies available in law or equity, Alchemy shall have the right, at Alchemy's sole discretion, to suspend any related GDC Services if deemed reasonably necessary by Alchemy to prevent any harm to its business.

13. DISCLAIMERS AND LIMITATION OF LIABILITY

The collocation space is accepted "as is" by customer. Customer acknowledges that no representation has been made by alchemy as to the fitness of the collocation space for customer's intended purpose. Except for the warranties set forth in this article, there are no warranties, whether express, implied, oral, or written, with respect to the collocation space or services covered or furnished pursuant to this agreement, including but not limited to, any implied warranty of merchantability or fitness for a particular purpose. Moreover, the remedies provided in this article are exclusive and in lieu of all other remedies.

Customer and its representatives visit the GDC at their own risk and Alchemy assumes no liability for any harm to such persons resulting from any cause other than Alchemy's negligence or willful misconduct resulting in personal injury to such visitors.

Alchemy assumes no liability for damage or loss relating to customers business. To the extent Alchemy is liable for any damage to or loss of Customer's equipment, such liability shall be limited solely to the then-current value of Customer's equipment.

The liability of Alchemy for damages arising out of the services provided herein, including, without limitation, mistakes, omissions, interruptions, delays, tortious conduct or errors, or failure to furnish space, whether caused by acts of commission or omission, shall be limited to a prorated refund of the charges paid by client for the use of the space. The receipt of such refunds shall be the sole remedy afforded to customer.

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Alchemy Gigabit Data Center Agreement - Confidential

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Customer is responsible for providing Alchemy with emergency contacts, including phone numbers and pager numbers. Alchemy shall use reasonable efforts to contact Customer in the event of a malfunction affecting Customer’s equipment (e.g. a power outage affecting Customer’s equipment). However, Alchemy shall not be liable for damage, which may occur as a result of an inability to make contact with Customer’s emergency representative.

14. CONFIDENTIAL INFORMATION

Each party acknowledges that it will have access to certain confidential information of the other party concerning the other party's business, plans, customers, technology, and products, including the terms and conditions of this Agreement ("Confidential Information"). Confidential Information will include, but not be limited to, each party's proprietary software and customer information. Each party agrees that it will not use in any way, for its own account or the account of any third party, except as expressly permitted by this Agreement, nor disclose to any third party (except as required by law or to that party's attorneys, accountants and other advisors as reasonably necessary), any of the other party's Confidential Information and will take reasonable precautions to protect the confidentiality of such information.

Information will not be deemed Confidential Information hereunder if such information: (i) is known to the receiving party prior to receipt from the disclosing party directly or indirectly from a source other than one having an obligation of confidentiality to the disclosing party; (ii) becomes known (independently of disclosure by the disclosing party) to the receiving party directly or indirectly from a source other than one having an obligation of confidentiality to the disclosing party; (iii) becomes publicly known or otherwise ceases to be secret or confidential, except through a breach of this Agreement by the receiving party; or (iv) is independently developed by the receiving party.

15. NON-SOLICITATION

Customer understands and acknowledges that; due to the highly technical nature of Alchemy's business Alchemy would suffer significant financial damage from the loss of GDC or other Alchemy employees. Therefore, Customer agrees that it shall refrain, during the term of this Agreement and for a period of one year after the expiration of this Agreement, from directly or indirectly employing or seeking or attempting to employ or solicit for employment, in any capacity (whether as a full or part time employee or as a consultant or independent contractor) any person who is employed at Alchemy.

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16. EXCUSED PERFORMANCE

Neither Party shall be liable to the other Party under this Agreement for any failure nor delay in performance that is due to causes beyond its reasonable control, including but not limited to, acts of nature, governmental actions, fires, civil disturbances, interruptions of power, or transportation problems.

17. ASSIGNMENTS OR TRANSFER

Customer shall not assign or transfer the rights or obligations associated with this Agreement, in whole or in part, without Alchemy's prior written consent.

18. PUBLICITY

Customer shall not use Alchemy's name in publicity or press releases without Alchemy's prior written consent.

19. LIMITATION OF LIABILITY

In no event shall Alchemy or any of its officers, directors, agents, contractors or employees, be liable for any loss of profit or revenue or for indirect, incidental, special, punitive or exemplary damages incurred or suffered by Customer arising from or pertaining to Customer's use or occupancy of the Collocation Space including, without limitation, damages arising from interruption of electrical power or HVAC services.

Customer shall indemnify and hold harmless Alchemy, its officers, directors, agents, contractors and employees, from and against any and all third party claims, costs, expenses or liabilities arising from or in connections with Customer's use of the GDC facility. Customer further agrees to indemnify Alchemy against Customer's acts of negligence resulting in damage to third parties.

20. FORCE MAJEURE

Neither party shall be deemed in default of this Agreement to the extent that performance of their obligations or attempts to cure any breach were delayed or prevented by acts of nature, including earthquakes and floods, fire, natural disaster, accident, acts of government, labor strikes or any other cause beyond the control of such party.

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21. GOVERNING LAW

This Agreement shall be governed and construed by the laws of the State of California except as they pertain to its conflict of law provisions. The courts of the State of California, County of Los Angeles shall have jurisdiction over any legal disputes relating to or in connection with this Agreement.

22. ENTIRE AGREEMENT

This Agreement constitutes the entire understanding between the parties and supercedes all other agreements, whether written or oral. This Agreement may not be modified except in a writing, which is signed, by both parties or their duly authorized representatives.

23. NOTICE

Any and all notices to be provided under this agreement shall be in writing. Notice shall be considered received, delivered and effective three (3) business days following posting when mailed, postage prepaid, by United States mail (certified or registered mail, return receipt requested), addressed to the party to be notified. If delivered in person, notice shall be considered received, delivered and effective the date so delivered. For purposes of notice, the addresses of the parties, until changed as herein provided, shall be as follows. If intended for Alchemy, shall be addressed: Alchemy Communications, Inc., 1200 West 7^th Street, Suite L1-100, Los Angeles, CA 90017, attention: Jamie Daquino; with a copy addressed to: Alchemy Communications, Inc., 1200 West 7^th Street, Suite L1-100, Los Angeles, CA 90017, attention: Zane Alsabery. If intended for Customer, shall be addressed: 6300 Canoga Ave, 15^th Floor, W.H. CA 91367 , attention: _____________________. Any party hereto, by written notice to the other party, may change the address for notices to be sent to them.

Zane Alsaberry 4/29/05 Alchemy Signature Date Zane Alsaberry Alchemy Name (printed) CEO Alchemy Title Alchemy Communications, Inc.	Nolan Quan 4/27/05 Customer Signature Date Nolan Quan Customer Name (printed) President Customer Title Accessmedia Networks, Inc. Company

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EX-21.1 18 broadcaster_10ksb-ex2101.htm LIST OF SUBSIDIARIES Unassociated Document

Exhibit 21.1

SUBSIDIARIES OF THE REGISTRANT AS OF JUNE 30, 2006

Subsidiary	Country of Incorporation

AccessMedia Networks, Inc.	California, USA
PeopleCaster, Inc.	Delaware, USA
MyVod, Inc.	Delaware, USA
Media Zone, LTD	California, USA
Value Investments, Inc.	Nevada, USA
IMSI Australia PTY	Australia
Weinmaster Homes, Limited.	Canada
Houseplans, Inc.	California, USA

EX-23.1 19 broadcaster_10ksb-ex2301.htm CONSENT OF BURR, PILGER & MAYER LLP Unassociated Document

Exhibit 23.1

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We have issued our report dated October 5, 2006, accompanying the consolidated financial statements included in the Annual Report of International Microcomputer Software, Inc. on Form 10-KSB for the year ended June 30, 2006. We hereby consent to the incorporation by reference of said report in the Registration Statements of International Microcomputer Software Inc. on Form S-8 (File No. 333-105073, effective May 8, 2003 and File No. 333-113918, effective March 25, 2004).

/s/ Burr, Pilger & Mayer, LLP

San Francisco, California

October 12, 2006

EX-31.1 20 broadcaster_10ksb-ex3101.htm CERTIFICATION OF CHIEF EXECUTIVE OFFICER PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002 Unassociated Document

Exhibit 31.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER UNDER SECTION 302 OF THE SARBANES-OXLEY ACT

I, Martin Wade, III, certify that:

1. I have reviewed this annual report on Form 10-KSB of International Microcomputer Software, Inc;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the periods covered by this annual report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the small business issuer as of, and for, the periods presented in this report;

4. The small business issuer’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-(15e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the small business issuer and have:

a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the small business issuer, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared:

b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c. Evaluated the effectiveness of the small business issuer's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d. Disclosed in this report any change in the small business issuer's internal control over financial reporting that occurred during the small business issuer's most recent fiscal quarter (the small business issuer's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the small business issuer's internal control over financial reporting; and

5. The small business issuer’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the small business issuer's auditors and the audit committee of the small business issuer's board of directors (or persons performing the equivalent functions):

a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the small business issuer's ability to record, process, summarize and report financial information; and

b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the small business issuer’s internal control over financial reporting.

Dated: October 11, 2006

/s/ MARTIN WADE III

Martin Wade III

Chief Executive Officer

EX-31.2 21 broadcaster_10ksb-ex3102.htm CERTIFICATION OF CHIEF FINANCIAL OFFICER PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002 Unassociated Document

Exhibit 31.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER UNDER SECTION 302 OF THE SARBANES-OXLEY ACT

I, Blair Mills, certify that:

1. I have reviewed this annual report on Form 10-KSB of International Microcomputer Software, Inc;

b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the small business issuer’s internal control over financial reporting.

Dated: October 11, 2006

/s/ BLAIR MILLS

Blair Mills

Chief Financial Officer

EX-32.1 22 broadcaster_10ksb-ex3201.htm CERTIFICATION OF CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICER PURSUANT TO SECTION 906 OF SARBANES-OXLEY ACT OF 2002 Certification of Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of Sarbanes-Oxley Act of 2002

Exhibit 32.1

CERTIFICATION PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT

Securities and Exchange Commission

450 Fifth Street, N.W

Washington, D.C. 20549

Ladies and Gentlemen:

The certification set forth below is being furnished to the Securities and Exchange Commission solely for the purpose of complying with Rule 13a-14(b) or Rule 15d-14(b) of the Securities Exchange Act of 1934 and with Section 1350 of Chapter 63 of Title 18 of the United States Code.

Martin Wade III, the Chief Executive Officer of International Microcomputer Software, Inc, and Blair Mills, the Chief Financial Officer of International Microcomputer Software, Inc, each certifies that:

1.	the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2.	the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of International Microcomputer Software, Inc.

By: /s/ MARTIN WADE III

Martin Wade III

Chief Executive Officer

By: /s/ BLAIR MILLS

Blair Mills

Chief Financial Officer

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