Incredimail 2012 Annual Report Download - page 102

PERION NETWORK LTD. AND ITS SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands (except share and per share data)
Perion Network Ltd. ("Perion") and its wholly-
owned subsidiaries (collectively referred to as the "Company"), is a digital media
company that provides products and services to consumers, focusing on second wave adopters. The Company’
s products include
primarily: IncrediMail, a communication client; Smilebox, a photo sharing and social expression product and service; and Sweet
IM, an instant messaging application. 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 70%, 67% and 63% of total revenues, in 2010, 2011 and 2012,
respectively. This customer represents 68% and 72% of total trade receivable as of December 31, 2011 and 2012, 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 January 31, 2013, the Company signed an amendment to the agreement
extending the term of the agreement to May 31, 2013 to coincide with the expiration date of the current agreement between
Sweet IM and Google.
On April 24, 2013 the Company signed a new agreement with Google, combining the activity of the
Company and that of SweetIM, under one agreement, while terminating the previous agreements both Company and SweetIM
had, effective May 1, 2013, extending the term again for another two years ending April 30, 2015
The preparation of the consolidated financial statements in conformity with U.S. generally accepted accounting principles
requires management to make estimates, judgments and assumptions. The Company's management believes that the
estimates, judgments and assumptions used are reasonable based upon information available at the time they are made.
These estimates, judgments and assumptions can affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the dates of the financial statements, and the reported amounts of revenue and expenses
during the reporting period. Actual results could differ from those estimates. On an ongoing basis, the Company's
management evaluates estimates, including those related to fair values and useful lives of intangible assets, fair values of
stock-
based awards, income taxes, and contingent liabilities. Such estimates are based on historical experience and on
various other assumptions that are believed to be reasonable, the results of which form the basis for making judgments
about the carrying values of assets and liabilities.
NOTE 1:
-
GENERAL
NOTE 2:- SIGNIFICANT ACCOUNTING POLICIES
a.
Use of estimates:
F
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