Hi Kevin

An interesting proposition which to me has a few warning bells on. The first is why they have not managed to make enough on their software so far to be able to pay for its further development in the usual way? And what is their sales plan and projection that would convince you that they are going to be successful - expansion plans often fail and you would get burned here!

So they are basically borrowing that money from you to get the development done. So a question is when they expect to get the money for the first sales. And at that point, they would in theory be in a position to pay you some money. Rather than just a royalty, they could pay for writing the software at a rock bottom rate - so you are guaranteed something for your work and then a royalty for sales.

Would you be a valued partner or just some guy who writes a bit of software? If you are likely to be valued and they are small, being given some shares in return for the work is a tried and tested way of getting long term income without immediate payment.

An important question is - do you really trust these guys - because in an arrangement like this, if things go wrong and they are unscrupulous, they'll take what you have done and walk away. So you need at least a legal heads of agreement with the basic points of ownership, payment etc.

And how was the software written originally. What happened to those people and can you talk to them? Do these guys really understand software development (which would be great) or are they salesmen and managers who will not understand when the inevitable tricky points come up!

So, my main point is do you really, really trust them!

Good luck

mike