Incredimail 2013 Annual Report Download - page 38

On November 30, 2012, we completed the purchase of all the outstanding shares of SweetIM Ltd., a Belize company that wholly owns
SweetIM Technologies Ltd., an Israeli consumer internet company ("SweetIM"). SweetIM produces a variety of free, fun, easy-to-
use and safe
applications and downloadable content for everyday use under the "SweetPacks" trade name. SweetIM generates a significant majority of its
revenues through the Google AdSense program. We paid $10 million in cash and 1.99 million of our ordinary shares at the closing. In June
2013, we paid $2.7 million as a result of a working capital adjustment. A deferred payment of $5.6 million in cash was paid in December 2013,
and a contingent payment of up to $7.5 million in cash is due in May 2014, if certain milestones are met. The milestones are based on our
revenues in the fiscal year of 2013and the absence of certain changes in the industry in which we operate. We believe that that the terms of the
Share Purchase Agreement will require us to pay $2.5 million with respect to the contingent payment.
On January 2, 2014, we completed the purchase of all the outstanding shares of ClientConnect. On December 31, 2013, pursuant to a
Split Agreement, Conduit transferred to ClientConnect the entire activities and operations, and related assets and liabilities, of its ClientConnect
business on a cash-free and debt-
free basis and the Conduit shareholders became the shareholders of ClientConnect in proportion to their
ownership of Conduit. Upon the consummation of the ClientConnect Acquisition, each ClientConnect ordinary share was exchanged for
approximately 0.2387 of our ordinary shares, as a result of which ClientConnect became a wholly owned subsidiary of ours. In addition, we
granted options to purchase our ordinary shares to ClientConnect employees in exchange for their options to purchase ClientConnect shares that
were issued to them upon the consummation of the Conduit Split as a roll-
over of their then existing options to purchase ordinary shares of
Conduit. Accordingly, we issued 54.75 million of our ordinary shares to the ClientConnect shareholders and granted options to purchase 2.82
million of our ordinary shares to the ClientConnect employees. Immediately, following the closing, we were owned approximately 81% by the
former ClientConnect shareholders and option holders and 19% by our pre-
closing shareholders and option holders, on a fully diluted basis (as
determined by the treasury stock method, together with an adjustment for an assumed issuance of our ordinary shares at a reference price of
$10.49 per share based on the Black Scholes values of out-of-the-
money Perion options and ClientConnect options). ClientConnect provides
distribution, monetization and analytical services to software developers, distributors and publishers.
The financial statements included in this annual report do not reflect the ClientConnect business. However, we have included certain
information about the ClientConnect business in this Item 5. In addition, shortly after filing this annual report, we expect to submit with the SEC
a report on Form 6-
K containing containing the audited consolidated statements of income, change in shareholders' equity and cash flows of
ClientConnect for the years ended December 31, 2011, 2012 and 2013 and the audited consolidated balance sheets of ClientConnect as of
December 31, 2012 and 2013, as well as pro forma combined financial data of Perion and ClientConnect as though the ClientConnect
Acquisition were consummated on January 1, 2013.
Commencing in 2014, the ClientConnect Acquisition will be reflected in our financial statements as a reverse acquisition of all of our
outstanding shares and options by ClientConnect in accordance with Accounting Standards Codification Topic 805, "Business
Combinations" (“ASC 805”),
using the acquisition method of accounting whereby ClientConnect will be deemed the accounting acquirer and we
will be deemed accounting acquiree. In accordance with the ASC 805 presentation requirements, following the acquisition,our 2014 financial
statements will include ClientConnect’
s comparative numbers, namely, consolidated balance sheets as of December 31, 2013, and the related
consolidated statements of income, comprehensive income, changes in shareholders' equity and cash flows for each of the two years in the
period ended December 31, 2013.
Revenues
We generate our revenues primarily from three major sources: (i) search generated revenues, (ii) sale of premium software products and
solutions, and (iii) advertising and other. The following table shows our revenues by category (in thousands of U.S. dollars):
Year Ended December 31,
2011
2012
2013
Search
$
25,466
$
38,061
$
59,038
Products
7,191
17,574
17,818
Advertising and Other
2,816
4,588
10,292
Total revenues
$
35,473
$
60,223
$
87,148
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