Question-and-Answer Session
Operator
(Operator Instructions) Our first question comes from Thanos Moschopoulos - BMO Nesbitt Burns.
Thanos Moschopoulos - BMO Nesbitt Burns
Hi, good afternoon. I will start off with some financial questions. First, just to make sure I got the transitional costs straight: it is $814,000 in the quarter, with $474,000 of that being in OpEx, the rest in gross margin?
Mike Cooperman
Yes, that’s right.
Thanos Moschopoulos - BMO Nesbitt Burns
Great. Did the Critical Path acquisition add anything to deferred revenue and to the prepaid domain and other expense line?
Mike Cooperman
No, Thanos, all of that business is done on a monthly basis.
Thanos Moschopoulos - BMO Nesbitt Burns
So nothing additive from the acquisition. But as you subsequently sign new business with Critical Path, it would be showing up in those lines, would it not? It is not a deferred revenue business, is what you are saying?
Mike Cooperman
It is not a deferred revenue stream. It is a revenue stream where we enter into a contract, but only charge them monthly, for the month, as the service agreement.
Thanos Moschopoulos - BMO Nesbitt Burns
As far as the depreciation and amortization lines, should those look pretty steady going forward?
Mike Cooperman
I'm sorry, could you say that again?
Thanos Moschopoulos - BMO Nesbitt Burns
The depreciation and amortization lines, now with the acquisition having been done, is that what the run rate will be for the next little while?
Mike Cooperman
It is subject to the fact that obviously we will be taking care of business and we will be replacing equipment and infrastructure as we need it. Yes, that is fair. We did indicate that we would be spending some monies on additional fixed assets this year. But it won't be more than a point or two higher than last year.
Thanos Moschopoulos - BMO Nesbitt Burns
You haven't owned Critical Path for very long, but what would you say the sales cycle looks like on that, as far as closing new business? In general, what has it done to the sales cycle for your overall email business, now that you have expanded it greatly?
Elliot Noss
There are two elements that I would pull out of that. The sales cycle we're finding for email is pretty similar to what we were experiencing for blogware or email defense, subject to the same constraints around customers' roadmap and customers' need.
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