Incredimail 2008 Annual Report Download

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INCREDIMAIL LTD.
FORM 20-F
(Annual and Transition Report (foreign private issuer))
Filed 06/24/09 for the Period Ending 12/31/08
Telephone 972 3 516 0195
CIK 0001338940
Symbol MAIL
SIC Code 7371 - Computer Programming Services
Industry Computer Services
Sector Technology
http://www.edgar-online.com
© Copyright 2011, EDGAR Online, Inc. All Rights Reserved.
Distribution and use of this document restricted under EDGAR Online, Inc. Terms of Use.

Table of contents

  • Page 1
    ... SIC Code Industry Sector 972 3 516 0195 0001338940 MAIL 7371 - Computer Programming Services Computer Services Technology http://www.edgar-online.com © Copyright 2011, EDGAR Online, Inc. All Rights Reserved. Distribution and use of this document restricted under EDGAR Online, Inc. Terms of Use.

  • Page 2
    ... OF THE SECURITIES EXCHANGE ACT OF 1934 Date of event requiring this shell company report...For the transition period from ____ to _____ Commission File No. 000-51694 IncrediMail Ltd. (Exact Name of Registrant as specified in its charter) N/A (Translation of Registrant's name into English) Israel...

  • Page 3
    ...-known seasoned issuer, as defined in Rule 405 of the Securities Act Yes 1 No  If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934. Yes 1 No  Indicate...

  • Page 4
    ... to continually enhance our existing products and to develop new products that achieve widespread market acceptance; our ability to maintain substantial revenues from "search" activities and further increase these revenues; our dependence on a limited number of possible customers in general and one...

  • Page 5
    ... Securities by the Issuer and Affiliated Purchasers Changes in Registrant's Certifying Accountant Corporate Governance 73 73 73 74 74 74 74 75 75 75 75 Identity of Directors, Senior Management and Advisers Offer Statistics and Expected Timetable Key Information Information on the Company Unresolved...

  • Page 6
    PART I ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS Not applicable. ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE Not applicable. ITEM 3. A. KEY INFORMATION SELECTED FINANCIAL DATA The following tables present selected financial data and should be read in conjunction with "...

  • Page 7
    ... number of downloads and acceptance of the search properties offered with them, and subsequently, the percentage of registered or active users of our free product who become actual purchasers of our products and services, as well as making our products and services attractive to new users. In order...

  • Page 8
    ... of the search properties offered with them, and to a certain extent our enhanced software products, for which we currently charge a one-time license, or subscription fee. Many email users have multiple email clients and accounts, many of which are likely provided to them free of charge by large...

  • Page 9
    ... features that provide a personalized email experience. Many of the large Internet and software companies offer their email software programs free of charge. Competition with these products could result in fewer downloads of our product, reduced prices and margins, fewer purchases of our products...

  • Page 10
    ..., changing technologies and evolving products and services enhancements. Google, Yahoo! and Microsoft are each offering a web-based e-mail service in addition to the many other services they provide, such as desktop search, local search, instant messaging, photos, maps, video sharing, mobile...

  • Page 11
    ... reasonable steps to insure the security of personal information, concerns may be expressed, from time to time, about whether our products compromise the privacy or confidentiality of the information of users and others. Concerns about our collection, use, sharing or handling of personal information...

  • Page 12
    ...market share. Our software may contain undetected errors, failures or defects, especially when the products are first introduced or when new versions are released. Our customers' computer environments are often characterized by a wide variety of standard and non-standard configurations that make pre...

  • Page 13
    ... More individuals are using non-PC devices to access the Internet, and our online services may not be accepted by such users. The number of individuals who access the Internet through devices other then personal computer, such as mobile phones, has increased dramatically. Our products were designed...

  • Page 14
    ... intellectual property rights than those of the United States; costs and delays associated with translating and supporting our products in multiple languages; foreign exchange rate fluctuations and economic instability, such as higher interest rates and inflation, which could make our products more...

  • Page 15
    ... and require additional management time and attention. 14 Unlawful copying of our products or other third party violations of existing legal protections or reductions in the legal protection for intellectual property rights of software developers or use of open source software could adversely...

  • Page 16
    ... of service" attacks directed at Internet companies and service providers, may discourage people from using the Internet, including for communications and commerce. Furthermore, newer users of the Internet could be less active email users compared to our earlier users. If use of the Internet as...

  • Page 17
    ... Capital Investments, 1959" for more information about these programs. Risks Related to our Ordinary Shares and their Listing on a Stock Exchange We incur significant costs as a result of being a public company. As a public company, we incur significant legal, accounting and other expenses. We incur...

  • Page 18
    ... of Israeli law may delay, prevent or make difficult an acquisition of our Company, which could prevent a change of control and therefore depress the price of our shares. Future sales of our ordinary shares could reduce our stock price. Sales by shareholders of substantial amounts of our ordinary...

  • Page 19
    ..., Suite 204, Newark, Delaware 19715. Our website addresses are www.incredimail-corp.com and www.incredimail.com . The information on our websites does not constitute part of this annual report. We completed the initial public offering of our ordinary shares in the United States on February 3, 2006...

  • Page 20
    ... We are an Internet content and media company, whose products we believe bring a new level of fun, personality and convenience to email, desktops and screen savers, and have been downloaded more than eighty million times. Having secured a large active email user base, IncrediMail is now branching...

  • Page 21
    one time. In addition, the term "active user" as used in this annual report means a registered user who has performed any activity using any IncrediMail® product or service, including opening or sending emails using IncrediMail®, logged into his instant messaging with a HiYo client, downloading ...

  • Page 22
    ... be downloaded over the Internet through a personal computer running on a Microsoft Windows operating system: IncrediMail ® Xe , launched in September 2000, is our flagship product that is available over the Internet free of charge. It offers a variety of features that the user can apply to email...

  • Page 23
    ... server and delete email messages from the account without first having to download them. This software feature is built into IncrediMail ® Premium and does not require the user to download or install any additional software. Users are therefore able to remove undesirable emails that they suspect...

  • Page 24
    ... because our products are purchased in holiday sales in December or in the after-holiday sales in January. This is in addition to the general seasonality of the Internet as well as e-commerce, being more active in the winter months. However, as search generated revenues account for a growing...

  • Page 25
    ... for email software products and services that aim to offer a personalized and entertaining email experience for consumers. IncrediMail was among the first companies to offer to the consumer email market a solution that combines an email product with an online gallery of creative content. Compiling...

  • Page 26
    ... market share with our new products and those currently being developed. Our products also compete in the market for web-based email software products, such as Google's Gmail, Yahoo! Mail and Microsoft's Hotmail. The web based email market is characterized with significant competition, changing...

  • Page 27
    .... We define an "active" user as any user who has performed any activity using any IncrediMail® product or service, including opening or sending emails using IncrediMail®, sending a message utilizing our HiYo tool, downloading content or updating the product, in the 30 days prior to the measurement...

  • Page 28
    ... who uses our Incredi brand name and to whom we refer users, IncrediGames.com, an online computer games site. The following table shows our revenues by category (in thousands of US Dollars): Year Ended December 31, 2006 2007 2008 Advertising, primarily through search, and other services Products...

  • Page 29
    ... to receive the fee. Advertisers are charged and pay monthly, based on the number of clicks generated by users clicking on these ads. In accordance with EITF No. 01-9, "Accounting for Consideration Given by a Vendor to a Customer or a Reseller of the Vendor's Product," the Company accounts for...

  • Page 30
    ... the Company's stock options are expected to be outstanding. The risk-free interest rate is based on the yield from U.S. Treasury zero-coupon bonds with an equivalent term. Taxes on Income We record income taxes using the asset and liability approach. Management judgment is required in determining...

  • Page 31
    .... This statement changes the disclosure requirements for derivative instruments and hedging activities. Entities are required to provide enhanced disclosures about (a) how and why and entity uses derivative instruments, (b) how derivative instruments and related hedged items are accounted for under...

  • Page 32
    ... attributable mainly to two factors: (i) we do not have manufacturing costs for our products, and (ii) we sell our products online and rely primarily on viral marketing, although in 2007 and 2008, we increased our investment in non-viral marketing. The continued decrease in our operating margin in...

  • Page 33
    ... our large user base, primarily those using our free products. In 2009 we expect to further increase our search generated revenues through our new HiYo user base, which in 2008 did not generate revenues and by further optimizing our offering to our IncrediMail and Magentic users. Revenues from...

  • Page 34
    ...registered users. In 2007 we began developing a new version of Magentic , dramatically enhancing its personal photograph tools, and we expect to release Magentic2 during the second quarter of 2008. In addition, we are working on a totally new version of our back-bone email client product IncrediMail...

  • Page 35
    ...suspended in order to focus on our core competencies. In addition, in 2008 we launched HiYo , our graphic and communication enhancement tool for instant messaging products. In December 2008, we also released the Beta of a new version of our back-bone email client product IncrediMail ® . Although we...

  • Page 36
    ... supports POP3 and is compatible with e-mail clients such as IncrediMail ® . We believe that IncrediMail will benefit from Gmail's growing popularity, as users are able to access their Gmail accounts via IncrediMail ® and are likely to choose this option. The storing of digital photos on personal...

  • Page 37
    ...'s e-mail client, blocks such Spam from entering IncrediMail® users' Inboxes. As Spam threats are consistently rising, we believe that the need to purchase IncrediMail's Anti-Spam mechanism will sustain the current level of revenue from sales of our JunkFilter Plus product. As part of the Company...

  • Page 38
    ...our incorporation. Since February 5, 2008 Ofer Adler serves as the Company's Chief Executive Officer. As a Chief Executive Officer he is responsible for our day-to-day operations, business development and the overall management of IncrediMail. As a Chief Product Officer he had overall responsibility...

  • Page 39
    ... by IncrediMail promptly after the date of grant. In accordance with the shareholders approval of December 27, 2007 each of the directors who is not an employee of the Company, receives for each year of service by such person as a director of the Company, an option to purchase 10,000 Ordinary Shares...

  • Page 40
    ...00 per share. The Company undertook to re-price Mr. Adler's options as part of the terms of service of Mr. Yaron Adler as the Company's President, which terms were approved at the shareholders meeting of the Company held on April 9, 2008. On June 2, 2009, we provided notice to our shareholders of an...

  • Page 41
    ... or as an addition to the then current number of directors, provided that the total number of directors shall not at any time exceed seven directors. Any director so appointed shall hold office until the annual general meeting of our shareholders at which the term of his or her class expires, unless...

  • Page 42
    ...); or 45 - the total number of shares of non-controlling shareholders voted against the election of the external director does not exceed one percent of the aggregate voting rights in the company. The Israeli Companies Law provides for an initial three-year term for an external director, which...

  • Page 43
    ... of the work of the issuer's public accountants). In addition, applicable Nasdaq Marketplace Rules require that a foreign private issuer can maintain an audit committee that meets the requirements of Rule 10A-3(b)(subject to the exemptions provided in Rule 10A-3(c)) under the Exchange Act, instead...

  • Page 44
    ... continuing services. The employment agreements do not provide for a specified term and may be terminated by either party upon ninety days' prior notice. Upon termination by us of the employment of either of these executives other than for "cause" (as set forth in the agreements), we are required to...

  • Page 45
    ... to the Amended Agreement in rendering the services of President, as set forth below, Mr. Yaron Adler shall be subordinate to the Company's Chief Executive Officer. The Company shall have the right to terminate the Amended Agreement at any time by providing Yaron Adler with a 30 days prior notice of...

  • Page 46
    ...to purchase 12,500 ordinary shares at an exercise price of $5.21 per share, exercisable within 60 days of this Annual Report. Includes options to purchase 50,000 ordinary shares at an exercise price of $3.00 per share, exercisable within 60 days of this Annual Report. Includes options to purchase 60...

  • Page 47
    ... connection with share-based compensation. Please also see Note 10 of our financial statements included in this annual report for information on the options issued under our plan. Under the 2003 Plan, we may grant to our directors, officers, employees, service providers and controlling shareholders...

  • Page 48
    ... of the options shall accelerate. Adjustments to the number of options or exercise price shall not be made in the event of rights offering on outstanding shares. ITEM 7. A. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS MAJOR SHAREHOLDERS The following table sets forth information regarding the...

  • Page 49
    ...00 per share. The Company undertook to re-price Mr. Adler's options as part of the terms of service of Mr. Yaron Adler as the Company's President, which terms were approved at the shareholders meeting of the Company held on April 9, 2008. On June 2, 2009, we provided notice to our shareholders of an...

  • Page 50
    ... listed company on the Tel Aviv Stock Exchange on December 4, 2007 under the symbol "EMAIL". 54 The following table shows, for the periods indicated, the high and low closing sale prices of our Ordinary Shares as reported on the Nasdaq Capital Market or the Nasdaq Global Market, as applicable, and...

  • Page 51
    ... are the last full trading days before filing of this annual report, were $4.81 and NIS 20.02, (equal to $5.04 based on the Bank of Israel representative exchange rate as of such date), respectively. B. PLAN OF DISTRIBUTION Not applicable. C. MARKETS Our ordinary shares are quoted on the Nasdaq...

  • Page 52
    ... the ownership or voting of ordinary shares by non-residents of Israel, except with respect to citizens of countries that are in a state of war with Israel. Under the Israeli Companies Law, an annual general meeting of our shareholders should be held once every calendar year, but no later than 15...

  • Page 53
    ... and shareholder approval, in such order. Disclosure of personal interest. The Israeli Companies Law requires that an office holder promptly disclose to the company any personal interest that he or she may have and all related material information known to him or her, in connection with any existing...

  • Page 54
    ... the abstaining shareholders and (ii) shareholders that are part of the other party to the merger or hold 25% or more of any control measures of the other party to the merger are excluded. Shares held by relatives or companies controlled by a person are deemed held by that person. The term "control...

  • Page 55
    ...' shareholders resolved to approve the merger, and (ii) at least 50 days have passed from the time that the merger proposal was filed with the Israeli Registrar of Companies. 59 Tender Offer. The Israeli Companies Law requires a purchaser to conduct a tender offer in order to purchase shares in...

  • Page 56
    ... business practice in Israel is not to distribute such reports to shareholders. We do however make our audited financial statements available to our shareholders at the Company's offices and to mail such reports to shareholders upon request. IncrediMail also files its annual reports with the SEC...

  • Page 57
    ... to the Company's results. On July 1, 2008, we entered into an agreement with Google regarding our participation in Google's AdSense program, which allows us to receive a portion of the amount paid to Google by advertisers for the activity performed through the Company's applications. See Exhibits...

  • Page 58
    ... to make such a change pursuant to regulations published by the Israeli Minister of Finance, which provide the conditions for so doing. A company that elects to measure its results for tax purposes based on the U.S. dollar/NIS exchange rate cannot change that election for a period of three years...

  • Page 59
    ...which the Company requested to have the tax benefits apply to the Beneficiary Enterprise - Year of Election), or 12 years from the first day of the Year of Election. The tax benefits granted to a Privileged Enterprise are determined, as applicable to its geographic location within Israel. Similar to...

  • Page 60
    ...defined as an enterprise whose major activity in a given tax year is industrial production. The following corporate tax benefits, among others, are available to Industrial Companies: - - - - amortization of the cost of purchased know-how and patents, which are used for the development or advancement...

  • Page 61
    ... as well as in Israel) there is a special relationship between the parties (including but not limited to family relationship or a relationships of control between companies), and due to this relationship the price set for an asset, right, service or credit was determined or other conditions for the...

  • Page 62
    ..., gain from the sale or exchange of preferred shares by a U.S. person who is or was a 10-Percent Shareholder at any time during the five-year period ending with the sale or exchange is treated as dividend income to the extent of earnings and profits of the company attributable to the stock sold or...

  • Page 63
    ...long-term if, at the time of the sale or disposition, the ordinary shares were held for more than one year. Long-term capital gains realized by non-corporate U.S. Holders are generally subject to a lower marginal U.S. federal income tax rate than ordinary income, other than qualified dividend income...

  • Page 64
    ... part, based on our total market value determined using the average of the selling price of our ordinary shares on the last trading day of each calendar quarter. We believe this valuation approach is reasonable. While we intend to manage our business so as to avoid passive foreign investment company...

  • Page 65
    ... law) at our principal executive offices at IncrediMail Ltd., 4 HaNechoshet Street, Tel-Aviv 69710, Israel. I. SUBSIDIARY INFORMATION Not applicable. 71 ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Exchange Rate Risk. A significant portion of our revenues and expenses...

  • Page 66
    ...disclosed in the reports that we file or submit under the Exchange Act is accumulated and communicated to the our management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure. (b) Management's Annual Report on Internal Control...

  • Page 67
    ...to provide only management's report in this annual report. (d) Changes in Internal Control Over Financial Reporting : During the period covered by this report, no changes in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act...

  • Page 68
    ... Tax Authority which has not yet been received. Under the repurchase program, share purchases may be made from time to time at the discretion of management in the open market or in privately negotiated transactions depending on market conditions, share price, trading volume and other factors. Such...

  • Page 69
    ... Online Standard Terms and Conditions (4) OEM Agreement, effective December 7, 2004, between Commtouch Ltd. and the Registrant (1) The Registrant's 2003 Israeli Share Option Plan and the form of Option Agreement (1) F-2 F-3 - F-4 F-5 F-6 F-7 F-9 Google Services Agreement, dated July 1, 2008...

  • Page 70
    ... United Stated Code Certification required by Rule 13a-14(b) or Rule 15d-14(b) and Section...filed separately with the SEC. 77 INCREDIMAIL LTD. AND ITS SUBSIDIARIES CONSOLIDATED FINANCIAL STATEMENTS AS OF DECEMBER 31, 2008 IN U.S. DOLLARS INDEX Page Report of Independent Registered Public Accounting...

  • Page 71
    ... Global F-2 Tel-Aviv, Israel June 24, 2009 INCREDIMAIL LTD. AND ITS SUBSIDIARIES CONSOLIDATED BALANCE SHEETS U.S. dollars in thousands December 31, 2007 2008 ASSETS CURRENT ASSETS: Cash and cash equivalents Short term bank deposit Marketable securities Trade receivables Deferred taxes, net Other...

  • Page 72
    ...accompanying notes are an integral part of the consolidated financial statements. F-3 INCREDIMAIL LTD. AND ITS SUBSIDIARIES CONSOLIDATED BALANCE SHEETS U.S. dollars in thousands (except share and per share data) December 31, 2007 2008 LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES: Trade...

  • Page 73
    ...0.46 The accompanying notes are an integral part of the consolidated financial statements. F-5 INCREDIMAIL LTD. AND ITS SUBSIDIARIES STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY U.S. dollars in thousands (except per share data) Accumulated other comprehensive income Retained earnings (accumulated...

  • Page 74
    ... December 31, 2006 Tax benefit in respect of offering expenses Issuance of shares to non-employees Stock based compensation Exercise of share options FIN 48 opening balance adjustment Comprehensive income: Changes in unrealized holding gains on marketable securities, net Net loss Total comprehensive...

  • Page 75
    ... initial public offering, net Tax benefit in respect of issuance expenses Exercise of share options Reimbursement of issuance costs Short-term bank credit, net Repurchase of Ordinary shares Net cash provided by (used in) financing activities Increase (decrease) in cash and cash equivalents Cash and...

  • Page 76
    ... and its wholly-owned subsidiary in the U.S, Incredimail Inc., design develop and market content and media products, particularly email products, creating an entertaining experience by offering users the ability to design a customized and personal presentation, targeting the consumer and home market...

  • Page 77
    ... future. Under the terms of the acquisition agreement, additional contingent payment of up to $250,000 in cash and in shares of Incredimail, equally, was to be paid to the selling shareholders of Bizchord based on services rendered to the Company by the selling shareholders over two years. In 2007...

  • Page 78
    ... provides to the Company guarantees with respect to office lease agreements and business credit. F - 10 INCREDIMAIL LTD. AND ITS SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 2: f. - SIGNIFICANT ACCOUNTING POLICIES (Cont.) Marketable securities and long-term investment: The Company...

  • Page 79
    ..., receiving a share of the advertising revenues from companies providing search capabilities. In addition, the Company offers advertisers the ability to place text-based ads on its website and banners in its email clients. Advertisers are charged monthly based on the number of times a user clicks...

  • Page 80
    ... evidence of an agreement exists, delivery of the product has occurred, the fee is fixed or determinable, and collectability is probable. The Company's e-mail users may also purchase a license to its content database. This content database provides additional Incredimail content files in the form...

  • Page 81
    ... Committee, limits the amount the Company may invest in any one type of investment or issuer, thereby reducing credit risk concentrations. The Company is subject to a low amount of credit risk with respect to sales of the Company's software products and content database, as these sales are primarily...

  • Page 82
    ...requires a number of assumptions, of which the most significant are expected stock price volatility and the expected option term. Expected volatility was calculated based upon an average between historical volatilities of the Company, similar entities and industry sector index similar to the Company...

  • Page 83
    ... zero-coupon bonds with an equivalent term. The fair value of the Company's stock options granted to employees and directors was estimated using the following weighted average assumptions: Year ended December 31, 2006 2007 2008 Risk free interest rate Dividend yield Expected volatility Weighted...

  • Page 84
    ... instrument consists of an Auction Rate Security (see note 3(b)). ARS issued by Credit Suisse Balance, beginning of period Sale of ARS, net Balance, end of period $ 100 (100) - $ v. Treasury shares: The Company repurchases its Ordinary shares from time to time on the open market and holds such...

  • Page 85
    ... the credit ratings of the securities, the nature of underlying collateral, as applicable and the financial condition and near-term prospects of the issuer. Based on the Company's consideration of these factors, the amortized cost of marketable securities as of December 31, 2007 and 2008 was reduced...

  • Page 86
    ... multiple failed auctions as the amount of securities submitted for sale has exceeded the amount of purchase orders. Based on valuation models and an analysis of other-than-temporary impairment factors, the Company has recorded a pre-tax impairment charge of $4,900,000 in the fourth quarter...

  • Page 87
    ... losses, see Note 2(i). F - 20 INCREDIMAIL LTD. AND ITS SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 6: GOODWILL The changes in the carrying amount of goodwill for the years ended December 31, 2007 and 2008 were as follows: December 31, 2007 2008 U.S. dollars in thousands Goodwill...

  • Page 88
    ... be required to refund the amount of the benefits, in whole or in part, including interest. As of December 31, 2008, management believes that the Company meets all conditions of the approvals. On April 1, 2005, an amendment to the Law came into effect ("the Amendment") and has significantly changed...

  • Page 89
    ... major changes in the manner in which tax benefits are awarded under the Law so that companies are no longer required for Investment Center approval in order to qualify for tax benefits. The period of tax benefits for a new "Privileged Enterprise"commences in the "Year of Commencement". This year is...

  • Page 90
    ... tax rate in Israel $ 3,242 31% $ (1,369) $ 29% 4,714 27% Theoretical income tax expense Increase (decrease) in tax expenses resulting from: "Approved Enterprise" benefits Non-deductible expenses Previous years taxes Other-than-temporary impairment on marketable securities and ARS Gain on sale...

  • Page 91
    ...38 4,714 $ $ NOTE 10: a. SHAREHOLDERS' EQUITY Ordinary share rights: The Ordinary shares entitle their holders to voting rights, the right to receive cash dividend and the right to a share in excess assets upon liquidation of the Company. b. Shares granted to non-employees: In August 2006, the...

  • Page 92
    ...the activity in the share options granted to employees and directors as of December 31, 2008 and related information is as follows: Weighted average exercise price Weighted average remaining contractual term Aggregate intrinsic value U.S. dollars in thousands Number of options (Years) Outstanding...

  • Page 93
    ...SUPPLEMENTARY DATA ON SELECTED CONSOLIDATED STATEMENTS OF OPERATIONS (Cont.) Financial income (expenses), net: Year ended December 31, 2006 2007 U.S. dollars in thousands 2008 Financial income: Interest from bank deposits and marketable securities Gains from marketable securities, net Exchange rate...

  • Page 94
    ... customer has limited termination rights. NOTE 13: a. SEGMENT INFORMATION Reportable segments information: In 2007, following the acquisition of Bizchord, the Company determined that Bizchord is considered a reportable segment and provided summarized financial information as set forth below. Year...

  • Page 95
    ... SEGMENT INFORMATION (Cont.) Product lines: Total revenues from external customers divided on the basis of the Company's product lines are as follows: Year ended December 31, 2006 2007 U.S. dollars in thousands 2008 Search related advertising Advertising and Collaborations Software license Content...

  • Page 96
    ... Share Option Plan and the form of Option Agreement (1) Google Services Agreement, dated July 1, 2008, by and between the Registrant and Google Ireland Ltd., a company organized under the laws of Ireland.* List of all subsidiaries. Code of Ethics (4) Certification required by Rule 13a-14(a) or Rule...

  • Page 97
    ... with the SEC on January 26, 2006 as an exhibit to our registration statement on Form F-1/A (File No. 333-129246). Previously filed with the SEC on May 12, 2008 as an exhibit to our annual report on Form 20-F. Confidential treatment has been requested with respect to certain portions of this exhibit...

  • Page 98
    ..."AdSense for Content Site" means the web site(s) located at the URL(s) stated in the applicable Order Form or as otherwise agreed between the parties in writing from time to time; "AdSense for Search Set" means a set of one or more Ads provided by Google as part of the AdSense for Search Services in...

  • Page 99
    ..., file sharing, games, internet navigation, search and/or other services); "Client ID(s)" means a unique alphanumeric code or codes provided by Google to Customer (and which may be modified by Google from time to time) to be used by Customer in accordance with the applicable Google Data Protocol...

  • Page 100
    ...a search box or other similar means implemented in accordance with the Agreement which is transmitted by Customer to Google in order to obtain Websearch Results; " Request" means a request for an AdSense for Content Set generated by an End User accessing a web page on the AdSense for Content Site on...

  • Page 101
    ...a set of one or more (but no more than ten) web search results provided by Google to Customer as part of the WebSearch Services in accordance with the applicable Agreement; "WebSearch Services" means the provision of Web search results in accordance with the applicable Agreement; and "WebSearch Site...

  • Page 102
    ... provided by Google in the applicable Google Data Protocol, assist Customer in limiting Websearch Results to web pages served from the country(ies) specified on the Order Form; and if 'Safe Search' is enabled by Customer [***] within [***] of the end of each month during the Services Term, provide...

  • Page 103
    ... for Search Services in such a way that all search queries submitted by End Users via the Site(s) are sent to Google by the applicable Google Data Protocol so as to generate a request for AdSense for Search Set in accordance with the Agreement. 3.4 (a) AdSense for Content (if ordered) Google shall...

  • Page 104
    ... the applicable Order Form, unless otherwise agreed in writing between the parties; in the event that the AdSense for Content Site requires user authentication [***] ; ensure that no AdSense for Content Sets are displayed on any Site pages which contain web search results, private email, newsletters...

  • Page 105
    ...its own expense. Google shall not be responsible for providing any End User support services. (f) (g) (h) 4. 5. 5.1 (a) Customer's Obligations Customer shall not, and shall not allow any third party to: edit, modify, truncate, add content to, change the order of the information contained in or...

  • Page 106
    ..., content, data, routines, algorithms, methods, ideas design, user interface techniques, software, materials and/or documentation; remove, deface, obscure, or alter Google's copyright notice, trademarks or other proprietary rights notices affixed to or provided or displayed as part of any Services...

  • Page 107
    ..., except for the limited use rights expressly set forth in the Agreement. Any rights not expressly granted herein are deemed withheld. Customer, its licensors, or other applicable third party providers shall own all Intellectual Property Rights in and to Customer Content. Google shall not acquire...

  • Page 108
    ... terms for all Services shall be as set out in this clause 9 unless expressly stated otherwise in the applicable Order Form. 9.1 [***] 9.2 AdSense for Search Services (if ordered) and/or AdSense for Content Services (if ordered) Google shall pay to Customer [***] - 13 Search Services (if ordered...

  • Page 109
    ... of: (a) the Customer Content, Site, [***] (if any) and/or Customer Brand Features infringe any copyright, trade secret or trademark of such third party; Google's use of any Customer Content in compliance with this GSA and/or the applicable Agreement(s); and/or Customer's use of the Services in any...

  • Page 110
    ...AN APPLICATION FOR CONFIDENTIAL TREATMENT UNDER RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934; [***] DENOTES OMISSIONS. 12.4 Subject to clauses 12.1, 12.2 and 12.3, each party's total liability in relation to all events or series of connected events occurring in any given calendar year arising...

  • Page 111
    ...applicable Order Form will take precedence. Customer understands and agrees that, notwithstanding anything to the contrary in the NDA, [***] Such disclosure of information shall be subject to the terms of the Google Privacy Policy located at, or such other URL as Google may provide from time to time...

  • Page 112
    ... OF THE COMISSION PURSUANT TO AN APPLICATION FOR CONFIDENTIAL TREATMENT UNDER RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934; [***] DENOTES OMISSIONS. 14.7 Termination or expiration of this GSA or any Agreement, in part or in whole, shall not: a) limit either party from pursuing other remedies...

  • Page 113
    ... the other with immediate effect. Google reserves the right to suspend or terminate the provision of any Services or parts of any Services or to vary any Services or parts of Services and/or the manner in which these are provided at any time in order to comply with any applicable law. The failure to...

  • Page 114
    ...Hachayal Tel Aviv 69710, Israel phone: +972 3 7696103 fax: +972 3 6474601 email: [email protected] Order Form Effective Date: 1 July 2008 SEARCH SERVICES SEARCH SERVICES [***] non-refundable annual service and support fee [***] monthly search fee minimum payment [***] search fees (for all Queries...

  • Page 115
    ...THE COMISSION PURSUANT TO AN APPLICATION FOR CONFIDENTIAL TREATMENT UNDER RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934; [***] DENOTES OMISSIONS. GSA Order Form Terms and Conditions "GSA" means the 'Google Services Agreement' entered into between Google and Customer with the 'GSA Effective Date...

  • Page 116
    ... Yacov Kaufman Print name: Ofer Adler, Yacov Kaufman Title: CEO, CFO Date: June 29, 2008 PORTIONS OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED SEPARATELY WITH THE SECRETARY OF THE COMISSION PURSUANT TO AN APPLICATION FOR CONFIDENTIAL TREATMENT UNDER RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF...

  • Page 117
    Exhibit 8 List of all subsidiaries 1. 2. IncrediMail Inc., a Delaware corporation. BizChord Ltd., a company incorporated in Israel.

  • Page 118
    ..., Chief Executive Officer of IncrediMail Ltd., certify that: 1. 2. I have reviewed this annual report on Form 20-F of IncrediMail Ltd.; 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...

  • Page 119
    ..., Chief Financial Officer of IncrediMail Ltd., certify that: 1. 2. I have reviewed this annual report on Form 20-F of IncrediMail Ltd.; 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...

  • Page 120
    ... 13.1 CERTIFICATION OF PERIODIC FINANCIAL REPORTS UNDER 18 U.S.C 1350 In connection with the Annual Report on Form 20-F of IncrediMail Ltd. For the year ended December 31, 2008, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), the undersigned hereby certifies...

  • Page 121
    ... 13.2 CERTIFICATION OF PERIODIC FINANCIAL REPORTS UNDER 18 U.S.C 1350 In connection with the Annual Report on Form 20-F of IncrediMail Ltd. For the year ended December 31, 2008, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), the undersigned hereby certifies...

  • Page 122
    ... the 2003 Israeli Share Option Plan of Incredimail Ltd., of our report dated June 24, 2009, with respect to the consolidated financial statements of IncrediMail Ltd. and its subsidiaries included in this Annual Report on Form 20-F for the year ended December 31, 2008. Tel Aviv, Israel June 24, 2009...