Incredimail 2008 Annual Report Download - page 28

Prices and license fees for our products vary based on market, length of license period and whether the products are offered together. Our
prices and fees range from less than $10 to about $60. These prices can vary in currencies, other than the US dollar.
Revenues
We generate our revenues primarily from two major sources: (i) advertising, primarily through search generated revenues and other services,
and (ii) software products and solutions; licensing our IncrediMail® Premium, email software, The Gold Gallery , our content database and
JunkFilter Plus
, our anti-spam solution. In addition, we generate revenues from advertising in our email client, our content database and on our
website, as well as a collaboration arrangement with a websites operator 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):
Cost of Revenues
Our cost of revenues consists primarily of salaries and related expenses, license fees and payments for content and server maintenance, all
related to our product revenues. Our revenues relating to advertising, primarily search, do not have direct cost associated with them.
Research and Development Expenses
Our research and development expenses consist primarily of salaries and other personnel-related expenses for employees primarily engaged
in research and development activities. We expect our research and development expenditures to remain at their current level as our current
strategy is to focus on our core competencies and continue enhancing our existing suite of products.
Selling and Marketing Expenses
Our selling and marketing expenses consist of salaries and other personnel-related expenses for employees primarily engaged in marketing
activities, media buying, payments to our PR firm, credit card commissions and fees to our payment gateway providers that provide secure
Internet payment processes. Credit card commissions vary between 1.9% and 3.0% based on the credit card, currency of payment and location of
clearing agency. We expect our selling and marketing expenses to decrease as we reduce our investment in media buying from their current level
of investment in the last quarter of 2008. During 2008 we employed traditional marketing strategies, including primarily online advertising, which
efforts were met to our satisfaction, and in light of the current market conditions and our increasing focus on profitability, we plan to reduce this
investment in 2009.
General and Administrative Expenses
Our general and administrative expenses consist primarily of salaries and other personnel-related expenses for executive, accounting and
administrative personnel, professional fees and other general corporate expenses. We do not currently expect a significant increase in our general
and administrative expenses in 2009.
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Income Tax Expense (Benefit)
In 2001 and 2003, we were granted the status of “Approved Enterprise” and in 2008 we received approval for continued “Privileged
Enterprise”
status, all with respect to three separate investment programs, entitling us to a tax exemption for a period of two years and to a reduced
tax rate of 10%-25% for an additional period of five to eight years (depending on the level of foreign investment in our Company). The
“Approved Enterprise” status and the “Privileged Enterprise”
status allow for 0% corporate tax for a limited period of time on undistributed profits
generated from operations, and preferential taxation of the distributed portion, requiring regular Israeli corporate tax on income generated from
other sources. To the extent the Company distributes dividends from profits generated under this program, the distributed sum would not benefit
Year Ended December 31,
2006
2007
2008
Advertising, primarily through search, and other services
$
3,066
$
9,597
$
12,748
Products
7,785
9,078
9,158
Total revenues
$
10,851
$
18,675
$
21,906