Incredimail 2012 Annual Report Download - page 13

Our servers and communications systems could be damaged or interrupted by fire, flood, power loss, telecommunications failure,
earthquakes, acts of war or terrorism, acts of God, computer viruses, physical or electronic break-
ins and similar events or disruptions. Although
we maintain back-
up systems for our servers, any of these events could cause system interruption, delays, loss of critical data and lost registered
users and revenues.
We currently rely solely on the Internet as a means to sell our products. Accordingly, if we, or our customers, are unable to utilize the
Internet due to a failure of technology or infrastructure, hacking, terrorist activity or other reasons, we could lose current or potential customers
and revenues. While we have backup systems for most aspects of our operations, our systems are not fully redundant and our disaster recovery
planning may not be sufficient for all eventualities. In addition, we may have inadequate insurance coverage to compensate us for losses from a
major interruption. Furthermore, interruptions in our website could materially impede our ability to attract new companies to advertise on our
website and to maintain relationships with current advertisers. Difficulties of this kind could damage our reputation, be expensive to remedy and
curtail our growth.
Our products operate in a variety of computer configurations and could contain undetected errors or defects that could result in
product failures, lost revenues and loss of market share.
Our software may contain undetected errors, failures or defects, especially when the products are first introduced or when new versions
are released. Our customers’ computer environments are often characterized by a wide variety of standard and non-
standard configurations that
make pre-release testing for programming or compatibility errors very difficult and time-
consuming. Therefore, there could be errors or failures
in our products. In addition, despite testing by us and beta testing by some of our registered users, errors, failures or bugs may not be found in
new products or releases until after commencement of commercial sales. In the past, we have discovered software errors, failures and defects in
certain of our product offerings after their full introduction and have likely experienced delayed or lost revenues during the period required to
correct these errors.
Errors, failures or defects in products released by us could result in negative publicity, product returns, loss of or delay in market
acceptance of our products, loss of competitive position or claims by customers. Alleviating any of these problems could require significant
expense and could cause interruptions.
Due to our evolving business model and rapid changes in the Internet, we may not be able to accurately predict our future performance
or continue our revenue growth or profitability.
Since beginning operations in 2000, we have introduced many new products and initiatives, some of which have been unsuccessful. In
addition, our revenue mix between products, search generated revenue and other advertising revenue has changed dramatically over the years.
Consequently, in some cases, we have a limited history of ongoing operations from which to predict our future performance and making such
predictions is very complex and challenging, particularly with regard to aggressively increasing the distribution and profitability of search
generated revenue, new products and initiatives and scaling existing business. The future viability of our business will greatly depend on our
ability to increase search generated revenues with a sufficient return on investment, increase product sales, introduce new products, including
adapting and creating products for new platforms such as mobile platforms, appealing to the Internet market, increase search generated, affiliate
and advertising revenues, exploit our brand name and control our costs, which we may be unable to do. As a result, we may not be able to
continue our revenue growth or profitability.
We may have difficulty managing our growth, which could limit our ability to increase our sales and control our costs.
We have invested heavily to increase the organic growth of our operations in recent years. These investments have included recruiting
of experienced personnel, investments in infrastructures, advertising and the acquisition of new businesses and products. This strategy for
emphasizing accelerated growth is required in order to achieve our business objectives, and is placing increased demands on our management
and on our operational resources. This growth has, and continues to increase the challenges involved in:
• implementing appropriate operational and financial systems and controls;
• expanding our sales and marketing infrastructure and capabilities;
•
expanding our infrastructures and technological capabilities; and
•
maintaining the commitment of our employees.
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