Incredimail 2014 Annual Report Download - page 41

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Recent Acquisitions
On January 2, 2014, we completed the purchase of all of 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.
In accordance with Accounting Standards Codification Topic 805, "Business Combinations" ("ASC 805"), using the acquisition method
of accounting, ClientConnect is deemed the accounting acquirer and Perion is deemed the accounting acquiree. In accordance with the ASC 805
presentation requirements, following the acquisition, our 2014 financial statements 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.
On July 15, 2014, we consummated the acquisition of Grow Mobile, Inc., a Delaware corporation headquartered in San Francisco. The
initial payments of $10 million ($8.2 million after taking into account a post-
closing working capital adjustment) was paid in cash (of which
approximately $1.3 million is subject to continued employee vesting) and $7 million was paid in the form of 687,467 ordinary shares (of which
approximately $1.1 million in form of 108,159 shares are subject to continued employee vesting). In addition, the former Grow Mobile security
holders may earn up to an additional $13.2 million in cash and $11.8 million in ordinary shares, contingent upon achieving certain revenue and
profit milestones through June 30, 2016. See Note 3b of the Financial Statements for additional information on accounting for our Grow Mobile
acquisition. Grow Mobile provides an innovative platform for mobile advertising that enables advertisers of mobile applications to buy, track,
optimize, and scale user acquisition campaigns from a single dashboard. Grow Mobile has become part of Perion’
s mobile marketing business,
which was recently created to address the advertising needs of advertisers of mobile applications, and will enable Perion to provide a more
comprehensive technical and platform solution for app developers.
On February 10, 2015, we consummated the acquisition of Make Me Reach SAS, a private French company headquartered in Paris,
France. The total purchase price was $11.2 million, of which $5.6 million in cash and $4.8 million in the form of 1,437,510 ordinary shares were
paid upon closing. In the subsequent 12 months post-
closing, the founder of Make Me Reach may be entitled to receive an additional amount of
$0.4 million in cash and $0.4 million in ordinary shares. In addition, certain key employees of Make Me Reach are entitled to retention payments
in an aggregate amount of up to $775,000, of which, $144,397 was paid in cash at closing and $62,883 was paid in the form of 18,998 ordinary
shares at closing. In the subsequent 12 months post-
closing, certain key employees may be entitled to receive the remaining balance of the
retention payment, which shall be paid as follows: up to $359,552 in cash and $208,168 in ordinary shares. Make Me Reach has become part of
Perion’
s mobile marketing business which was recently created to address the advertising needs of mobile app developers, and will enable
Perion to provide a more comprehensive technical and platform solution for app developers. Make Me Reach is a Facebook Preferred Marketing
Developer (PMD) and Twitter Marketing Platform Partner (MPP).
36