As part of the original deal, Microsoft had also agreed to invest $12m, or about £7.6m, in Sendo, an investment that entitled Microsoft to a position on Sendo's board of directors, according to the lawsuit. Sendo's work on the new phone began immediately, but so did the problems, Sendo said. The company said Microsoft was supposed to send software that was "code complete" -- meaning it worked. Instead, Sendo alleges Microsoft gave it a program with "numerous critical problems" and "failed to take steps to remedy". The Stinger phone was supposed to debut in August 2001, but the software problems forced Sendo to push the release date back to December 2001, Sendo said. "Despite numerous previous representations by Microsoft that Stinger software was (ready), it was becoming clear that it was not," Sendo attorneys wrote in the lawsuit. Sendo counted on revenue from the sale of the phone it was developing, so the launch delay created a "cash flow crisis" that was discussed at board meetings attended by Microsoft's appointee, according to the suit. In December 2001, after yet another launch delay, Sendo tried to pressure Microsoft for the $12m it promised to invest, Sendo alleges. But Microsoft refused, knowing "full well it would push Sendo towards insolvency", Sendo attorneys claim in the suit. Although Microsoft refused to invest the $12m, it did ultimately agree to loan Sendo $14m. Terms of the loan were finalised in February 2002. But Microsoft refused to release any of the loaned money and simultaneously demanded that Sendo build 300 test phones for Microsoft engineers to look at, Sendo alleges. Microsoft also demanded that Sendo spend all its time and resources on the phone, Sendo claims. The phone maker said it obliged, turning its attention to making the 300 phones, which forced delays in other products it was developing and cost about $3.6m, the company said. On 27 May, 2002, Microsoft also began a review of Sendo's work on the phone, ordering a "multiday, full review of Sendo and its progress", according to the suit. Sendo honoured Microsoft's request, the phone maker said, providing the software giant with the work and the materials to review. This, according to the lawsuit, amounted to "unbridled access to Sendo confidential and trade secret information". But a few months later the partnership unraveled. On 23 September, 2002, Sendo learned that Microsoft would not invest the $12m and the relationship formally ended, Sendo said.
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