Incredimail 2011 Annual Report Download - page 96

PERION NETWORK LTD. AND ITS SUBSIDIARIES
(Formerly: Incredimail Ltd.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands (except share and per share data)
Perion Network Ltd. ("Perion") (formerly: Incredimail Ltd.) and its wholly-
owned subsidiaries (collectively referred to as the "Company"), is a digital
media company that provides products and services to consumers to help make their everyday life simpler and more enjoyable, focusing on second
wave adopters. The Company’s products include: IncrediMail, an e-
mail client; Smilebox, a photo sharing and social expression product and service;
PhotoJoy, a photo discovery and sharing screensaver & wallpaper product; and Fixie, a PC optimization product. The Company generates revenues
primarily through search, the sale of premium products and services, and advertising.
The Company was incorporated under the laws of Israel in 1999 and commenced operations in 2000.
In November 2011, the Company changed its name from IncrediMail Ltd. to Perion Network Ltd.
The Company has one major customer which accounted for 68%, 70% and 67% of total revenues, in 2009, 2010 and 2011, respectively. This customer
represents 63% and 68% of total trade receivable as of December 31, 2010 and 2011, 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. On December 27, 2010, the
Company signed an agreement with the customer, effective January 1, 2011 through January 31, 2013.
On August 31, 2011, the Company completed the acquisition of all of the outstanding shares of Smilebox Inc. ("Smilebox"). The Company included
the financial results of Smilebox in its consolidated financial statements from the date of acquisition. Under the Purchase Agreement, the total
consideration is composed of cash and Ordinary shares of the Company, as follows:
NOTE 1:
-
GENERAL
NOTE 2:
-
ACQUISITION
OF SMILEBOX INC.
• $ 24,269 in cash;
•
128,538 Ordinary shares of the Company issuable at closing at fair value of $ 750;
•
$ 7,000 in cash and in Ordinary shares of the Company (subject to certain adjustments), payable within 7 months following the closing
(March 2012). In connection with this consideration, the Company recorded a $ 6,474 liability; and
• A milestone-
based contingent cash and Ordinary shares of the Company payment ("Contingent Payment") of up to $ 8,000 payable in
September 2012. The Company recognized a liability of zero with respect to this Contingent Payment, which represents its fair value.
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