Incredimail 2009 Annual Report Download - page 89

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INCREDIMAIL LTD .
AND ITS SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Incredimail Ltd. 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. Bizchord Ltd., a wholly-owned subsidiary in Israel, is engaged
in transaction processing. In 2008, the Company restricted the business of Bizchord to exclusively processing the Company's
transactions. Incredimail Ltd. ("Incredimail") and its wholly-owned subsidiaries are collectively referred to as "the Company".
The Company was incorporated under the laws of Israel in 1999 and commenced operations in 2000.
The Company generates revenues primarily from advertising, by offering search powered by search providers, to the users of its
applications, as well as from selling premium versions of its email products.
The Company has one major customer which accounts for 42%, 49% and 68% of total revenues, in 2007, 2008 and 2009,
respectively. Losing this customer could cause a material adverse effect to the Company's results of operations and financial
position. The major customer has limited termination rights. Subsequent to year-end, the customer informed the Company that it
is considering implementing market-wide policy changes affecting the assets the Company is heavily dependent on for its search
generated revenues. The customer has informed the Company that while these changes are being discussed internally, no
decision has been made nor is there any certainty it will be made or implemented, and even if implemented, it is the Company’s
understanding that, they would have no impact on the Company before the end of 2010.
The consolidated financial statements have been prepared according to United States generally accepted accounting principles
("U.S. GAAP").
The preparation of financial statements in conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.
The Company has operations in Israel and most of the Israeli expenses are currently paid in new Israeli shekels
("NIS"); however, the markets for the Company's products are located outside of Israel and the Company generates
most of its revenues in U.S. dollars ("dollars"). The Company's management believes that the dollar is the currency of
the primary economic environment in which the Company operates. Thus, the functional and reporting currency of
the Company is the dollar.
Accordingly, monetary accounts maintained in currencies other than the dollar are remeasured into dollars in
accordance with Accounting Standards Codification ("ASC") 830, "Foreign Currency Matters" (formerly Statement
of Financial Accounting Standards ("SFAS") No. 52). All transaction gains and losses of the remeasured monetary
balance sheet items are reflected in the statements of operations as financial income or expenses, as appropriate.
The consolidated financial statements include the accounts of the Company and its subsidiaries. Intercompany
balances and transactions have been eliminated upon consolidation.
The Company considers short-term unrestricted highly liquid investments that are readily convertible into cash,
purchased with original maturities of three months or less to be cash equivalents.
NOTE 1:
-
GENERAL
NOTE 2:
-
SIGNIFICANT ACCOUNTING POLICIES
a.
Use of estimates:
b.
Financial statements in U.S. dollars:
c.
Principles of consolidation:
d.
Cash equivalents:
F-8