(1) Gain from the sale of the Insure.com name, website and related assets.
The following tables set forth unaudited quarterly statements of operations data for 2009 and 2008. The information for each of these quarters has been prepared on substantially the same basis as the audited financial statements included elsewhere in this annual report, and, in our opinion, include all adjustments, consisting only of normal recurring adjustments, necessary for a fair presentation of the results of operations for these periods. Historical results are not necessarily indicative of the results to be expected in the future, and results of interim periods are not necessarily indicative of results for the entire year.
We generate revenues primarily from the receipt of commissions paid to us by insurance companies based upon the insurance policies sold to consumers through our service. These revenues come in the form of first year, bonus and renewal commissions that vary by company and product. We recognize the full first year commission revenues on term life insurance after the insurance company approves the policy and accepts the initial premium payment. At the time revenue is recognized, an allowance is recorded based on historical information for estimated commissions that will not be received due to the non-payment of installment first year premiums and any premium refunds made by the insurance carriers. We recognize commission revenue on other lines of insurance, primarily health insurance, after we receive notice that the insurance company has received payment of the related premium. First year commission revenues per policy can fluctuate due to changing premiums, commission rates, and types or amount of insurance sold. We receive bonuses based upon individual criteria set by insurance companies. We recognize bonus revenue in the period in which it is earned. Bonus revenues are typically higher in the fourth quarter of our fiscal year due to the bonus system used by many life insurance companies, which pay greater amounts based upon the achievement of certain levels of annual production. Revenues for renewal commissions are recognized after we receive notice that the insurance company has received payment for a renewal premium. Renewal commission rates are significantly less than first year commission rates and may not be offered by every insurance company. We also generate revenue from the sale of leads for various lines of insurance to third parties. Such revenues are recognized when we receive notification from those sources of the revenue due to us. Our revenue recognition accounting policy has been applied consistently to all periods presented in this report.
General and administrative expenses include cost not directly attributed to the operations of the Company, including certain management and administrative wages, legal, audit rent and insurance expenses.
Selling and Marketing. Selling and marketing expenses decreased $1.2 million, or 31%, in 2009 when compared with 2008, to a total of $2.7 million in 2009 compared to $3.9 million in 2008. We intentionally decreased our advertising spending in 2009 as we were generating more leads than were required for our growing call center. As a result, selling and marketing expenses decreased to 19% of revenue, compared to 25% of revenue in 2008.
Operations. Operations expenses increased by 2%, or $199,000, in 2009. The majority of this category consists of wages and bonuses for the agents in our call center, as well as for the support staff that processes and case manages the applications and delivered policies. These costs increased by 7%, or $398,000 in 2009. Decreases in other categories, such as freight, postage and outside technology consulting, partially offset the increase in salaries.
On October 9, 2009, we sold our Insure.com brand name, including certain trademarks, urls, websites, website content, and its insurance articles library for $15 million in cash and a $1 million non-interest bearing note receivable, recording a net gain on the transaction after expenses and note discount of $15,606,000. As a result of this sale, we changed our corporate name to Life Quotes, Inc.
Our sources of funds will consist primarily of commissions generated from the sale of life insurance products, fee revenue from the sale of insurance leads, investment income, and maturity proceeds from our certificates of deposit and fixed maturity portfolio. The principal uses of funds are selling and marketing expenses, operations, general and administrative expenses, and acquisitions of furniture, equipment and software.
Operating activities used cash of $96,000 in 2009, while cash provided by operating activities was approximately $93,000 in 2008, as shown in our statements of cash flows included elsewhere in this annual report. The decline in operating cash flow in 2009, as compared to 2008, resulted primarily from a larger operating loss, exclusive of the gain on the sale of the website and related assets.
In December 2007, the FASB issued ASC 805, “Business Combinations.” ASC 805 establishes principles and requirements for how the acquirer (a) recognizes and measures in its financial statements the identifiable assets acquired, the liabilities assumed, and any noncontrolling interest in the acquiree, (b) recognizes and measures the goodwill acquired in the business combination or a gain from a bargain purchase, and (c) determines what information to disclose to enable users of the financial statements to evaluate the nature and financial effects of the business combination. This Statement applies prospectively to business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2008. An entity may not apply it before that date. Since the effective date of ASC 805, the Company has not had any business combinations which would require the application of ASC 805.
In June 2009, the FASB issued SFAS No. 168, The FASB Accounting Standards Codification™ and the Hierarchy of Generally Accepted Accounting Principles - a replacement of FASB Statement No. 162 (ASC 105). ASC 105 establishes the FASB Accounting Standard Codification™ (Codification) as the source of authoritative accounting principles recognized by the FASB to be applied by nongovernmental entities in the preparation of financial statements in conformity with generally accepted accounting principles in the United States (U.S. GAAP). All guidance contained in the Codification carries an equal level of authority. The Codification does not change current U.S. GAAP, but is intended to simplify user access to all authoritative U.S. GAAP by providing all the authoritative literature related to a particular topic in one place. On the effective date of ASC 105, the Codification superseded all then-existing non-SEC accounting and reporting standards. All other non-grandfathered non-SEC accounting literature not included in the Codification will become non-authoritative. ASC 105 is effective for financial statements issued for interim and annual periods ending after September 15, 2009. The Company has revised all references in this Form 10-K to the authoritative accounting principles to reflect the Codification.