Incredimail 2013 Annual Report Download - page 28

ITEM 4. INFORMATION ON THE COMPANY
A. HISTORY AND DEVELOPMENT OF THE COMPANY
Our History
We were incorporated in the State of Israel in November 1999 under the name Verticon Ltd. and changed our name to Incredimail Ltd.
in November 2000. In November 2011, we changed our name to Perion Network Ltd., to better reflect the diverse nature of our business. We
operate under the laws of the State of Israel. Our headquarters are located at 4 HaNechoshet Street, Tel-
Aviv 69710, Israel. Our phone number
is (972-3) 769-6100. Our website address is www.perion.com
. The information on our website does not constitute a part of this annual report.
Our agent for service in the United States is Smilebox Inc., which is located at 15809 Bear Creek Parkway, Suite 320, Redmond, WA 98052.
We completed the initial public offering of our ordinary shares in the United States on February 3, 2006.
Since November 20, 2007, our ordinary shares are also traded on the Tel Aviv Stock Exchange.
On August 31, 2011, we completed the purchase of Smilebox Inc., a Washington corporation.
On November 30, 2012, we completed the purchase of SweetIM Ltd., a Belize company that wholly owns SweetIM Technologies Ltd.,
an Israeli company.
On January 2, 2014, we completed the purchase of ClientConnect Ltd., an Israeli company that wholly owns ClientConnect Inc., a
Delaware corporation, and ClientConnect B.V., a Netherlands company. See "Recent Developments" below.
Principal Capital Expenditures
We had capital expenditures of $2.3 million in 2013, $45.7 million in 2012 and $32.7 million in 2011. We currently expect that outside
of possible acquisitions of products and companies, our capital expenditures will be approximately $13 million in 2014. To date, we have
financed our general capital expenditures with cash generated from operations.
In 2011, capital expenditures consisted of $31.5 million for the acquisition of Smilebox and $1.2 million for investment in computer
hardware and software, leasehold improvements and furnishings. In 2012, capital expenditures consisted of $44.2 million in connection with the
acquisition of SweetIM Ltd., and $1.5 million for investment in computer hardware and software, leasehold improvements and furnishings. In
2013, capital expenditures consisted of$2.3 million for investment in computer hardware and software, leasehold improvements and furnishings.
In 2014, we expect to continue our growth strategy for acquiring products and businesses, in addition to organic capital investments.
Our organic investments are expected to consist primarily of leasehold improvement costs related to moving our headquarter office to Holon,
acquiring computer hardware, software, peripheral equipment and installation, all which are expected to be financed by our existing resources.
To the extent we acquire new products and businesses, these acquisitions may be financed by any of, or a combination of, cash generated from
operations, or issuances of equity or debt securities.
Recent Developments
On September 16, 2013, we entered into a Share Purchase Agreement (the "Share Purchase Agreement"), by and among Perion,
Conduit Ltd., an Israeli company ("Conduit"), and ClientConnect Ltd., an Israeli company ("ClientConnect"), providing for our acquisition of all
the outstanding shares of ClientConnect in exchange for our ordinary shares (the "ClientConnect Acquisition"). On the same date, Conduit and
ClientConnect entered into a Split Agreement pursuant to which on December 31, 2013, the entire activities and operations, and related assets
and liabilities, of Conduit’s ClientConnect business were transferred to ClientConnect on a cash-free and debt-free basis and the Conduit
shareholders became the shareholders of ClientConnect in proportion to their ownership of Conduit (the "Conduit Split").
Upon the consummation of the ClientConnect Acquisition, which took place on January 2, 2014, each ClientConnect ordinary share
was exchanged for approximately 0.2387 of our ordinary shares, as a result of which ClientConnect became a wholly owned subsidiary of
ours. In addition, we granted options to purchase our ordinary shares to ClientConnect employees in exchange for their options to purchase
ClientConnect shares that were issued to them upon the consummation of the Conduit Split as a roll-
over of their then existing options to
purchase ordinary shares of Conduit. Accordingly, we issued 54.75 million of our ordinary shares to the ClientConnect shareholders and granted
options to purchase 2.82 million of our ordinary shares to the ClientConnect employees. Immediately, following the closing, we were owned
approximately 81% by the former ClientConnect shareholders and option holders and 19% by our pre-
closing shareholders and option holders,
on a fully diluted basis (as determined by the treasury stock method, together with an adjustment for an assumed issuance of our ordinary shares
at a reference price of $10.49 per share based on the Black Scholes values of out-of-the-money Perion options and ClientConnect options).
23