Incredimail 2013 Annual Report Download - page 36

Foreign data protection, privacy and other laws and regulations may affect our business, and such laws can be more restrictive than
those in the United States. For example, in Israel, privacy laws require that any request for information for use or retention in a database be
accompanied by a notice that indicates: whether a person is legally required to disclose such information or that such disclosure is subject to such
person’
s consent; the purpose for which the information is requested; and to whom the information is to be delivered. A breach of privacy under
such laws is considered a civil wrong and subject to a significant fines and civil damages. Certain violations of the law are considered criminal
offences punishable by imprisonment. In the European Union and the United Kingdom, privacy legislation has tightened the restrictions around
accessing and using data stored in a subscriber’
s terminal equipment and requires the consent of the subscriber before accessing such
information. Further, the European Commission is currently considering a data protection regulation that may include operational requirements
for companies that receive personal data that are different than those currently in place in the European Union, and that may also include
significant penalties for non-
compliance. To further complicate matters in Europe, Member States may not adopt relevant European Union
Directives or may adopt differing laws in their respective jurisdictions.
These regulations result in significant compliance costs and could result in restricting the growth and profitability of our business.
C. ORGANIZATIONAL STRUCTURE
IncrediMail, Inc., our wholly-
owned Delaware subsidiary, owns all of the outstanding shares of common stock of Smilebox Inc., a
Washington corporation.
SweetIM Ltd., our wholly-
owned Belize subsidiary, owns all of the outstanding ordinary shares of SweetIM Technologies Ltd., an
Israeli company.
ClientConnect Ltd., our wholly owned Israeli subsidiary, owns all of the outstanding shares of common stock of ClientConnect, Inc., a
Delaware corporation, and all of the outstanding ordinary shares of ClientConnect B.V., a Netherlands company.
D. PROPERTY, PLANTS AND EQUIPMENT
We lease five facilities, three located in Israel (Tel Aviv, Ness Ziona and Holon) and three located in the United States (Redmond,
Washington, and San Francisco, California).
The lease in Tel Aviv covers a total area of 30,000 square feet and expires in 2015, with an annual cost of approximately $1.1 million.
In Ness Ziona, we lease an area of 2,850 square feet, which expires in 2015, and an additional area of 900 square feet, which expires in 2014,
with a total annual cost of approximately $0.1 million. During the third quarter of 2014, we plan to move all of our Israeli personnel to
Holon. The lease in Holon covers a total area of 101,500 square feet and expires in 2024, with an option to extend for two additional two-
year
periods. Annual cost is approximately $3.1 million.
The lease in Redmond covers a total area of 8,300 square feet, with an annual cost of approximately $0.3 million, expiring in 2015, with
an option to extend for another 2 to 5 years. The Company's office moved to new a space in San Francisco, leasing a total of approximately
4,658 square feet, with an annual cost of approximately $0.3 million and expiring in 2019.
We believe that our current facilities, particularly the space we plan to occupy in Holon, Israel, during the third quarter of 2014, are
adequate to meet our current needs, and we believe that suitable additional space will be available as needed to accommodate ongoing operations
and any such growth.
We own approximately 520 servers located in Israel, Europe and the United States. We also rent the services of approximately 260
additional servers located around the world, mainly through Amazon Web Services, and Microsoft Windows Azure cloud services. Our servers
include mainly web servers, application servers, mail servers and database servers. Bezeq and Cellcom Israel Ltd. provide our Internet and
related telecommunications services in Israel, including hosting and co-location facilities, needed to operate our websites. Bezeq is Israel’
s
largest provider of such services and is a member of Bezeq Group, Israel’
s incumbent national telecommunications provider. In the United States
CenturyLink, and in Europe Evoswitch, is our co-
location provider. Our ISPs are CenturyLink, NTT Communication, Level3 Communication
and Colt. Bezeq and Cellcom are the two largest providers of such services in Israel. All other Internet Service Providers ("ISPs") are tier-
1
worldwide providers in this area. All co-
location and telecommunication services are provided through standard purchase orders and invoices.
We add servers and expand our systems located at their facilities as our operations require. We believe there are many alternative providers of
these services both within and outside of Israel.
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