Incredimail 2008 Annual Report Download - page 88

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F - 21
Employees and payroll accruals
$
1,443
$
1,467
Government authorities
1,296
2,023
Accrued expenses
505
936
$
3,244
$
4,426
NOTE 8:
-
COMMITMENTS AND CONTINGENT LIABILITIES
a.
Commitments:
The Company rents its facilities under an operating lease agreement with an initial term expiring in 2011, with an option for
additional two years.
Future minimum lease commitments under non-cancelable operating leases for the years ended December 31, are as follows:
U.S. dollars in
thousands
2009
$
456
2010
624
2011
624
$
1,704
Total rent expenses for the years ended December 31, 2006, 2007 and 2008 amounted to $118,000, $337,000 and $678,000
respectively.
The Company leases its motor vehicles under cancelable operating lease agreements. The minimum payment under these operating
leases, upon cancellation of these lease agreements amounted to $34,000 as of December 31, 2008. Total lease expenses for the
years ended December 31, 2006, 2007 and 2008 amounted to, $206,000, $373,000 and $556,000, respectively.
b.
Legal Proceedings
On November 3, 2008, a complaint was filed against the Company in the United States District Court for the Southern District of
New York in a purported class action regarding one of the Company
’s products. The plaintiff, on behalf of himself and the
purported classes, seeks injunctive relief, an unspecified amount for damages, plus costs and attorney fees for alleged claims that
components of the Company’s product were rendered inoperable by a software update or updates. The Company believes that the
allegations have no merit and therefore no provision was recorded as of December 31, 2008.
INCREDIMAIL LTD. AND ITS SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 9:
-
INCOME TAXES
a.
Tax benefits under the Israel Law for the Encouragement of Capital Investments, 1959 (the
“
Law
”
):
Two programs of the Company have been granted “Approved Enterprise” status under the Law. For these programs, the Company
has elected alternative benefits, waiving grants in return for tax exemptions. These benefits include a tax-exemption for a period of
two years and taxation at the reduced corporate tax rate of 25% for an additional period of five to eight years thereafter. The benefit
period commenced in 2003 and in 2005 for the first and second programs, respectively.
The period of tax benefits detailed above is subject to limits of the earlier of 12 years from the commencement of production or 14
years from receiving the approval. The entitlement to the above benefits is subject to fulfilling the conditions stipulated by the Law,
regulations published thereunder and instruments of approval for the specific investments in “Approved Enterprises”. In the event
of failure to comply with these conditions, the benefits may be canceled and the Company may 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 the provisions of