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Table of Contents
SUPPORTSOFT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Sales by the Company to customers that exceeded by 10% of our total revenue, expressed as a percentage of total revenue, in each of the years ended
December 31, 2008 and 2007 were:
Year Ended
December 31,
2008 2007
Customer A (Consumer segment) 11% —
Customer C (Enterprise segment) 13% 18%
No single customer represented greater than 10% of total revenue for the year ended December 31, 2006.
Note 3. Business Combination
On May 2, 2008, we acquired all of the stock of YourTechOnline.com (YTO) (the “Acquisition”), a provider of remote technology services based in
Kelowna, British Columbia. YTO’s service delivery methodology involves technical support agents who view and control a computer screen remotely. We
acquired YTO to bolster our remote service delivery capabilities utilizing work-from-home agents.
When we acquired the business, we engaged an independent third-party appraisal firm to assist in determining the fair values of assets acquired and
liabilities assumed. Such a valuation requires management to make significant estimates, especially with respect to intangible assets. These estimates are based
on historical experience and information obtained from the management of the acquired company. The total purchase price was approximately $2.8 million,
including cash consideration of $2.7 million and direct transaction costs of $0.1 million. Of the cash paid at closing, approximately $0.5 million was held in an
escrow account for specified indemnity obligations. The purchase price for YTO exceeded the fair value of YTO net tangible and intangible assets acquired. As a
result, we have recorded goodwill in connection with this transaction in accordance with SFAS No. 142.
The operating results of YTO are included in our accompanying consolidated statements of operations from May 2, 2008, the date of the Acquisition.
To get the full benefits of YTO’s service delivery methodology, we deemed it important to retain certain key YTO employees in our Consumer business
segment. These key employees signed non-compete agreements restricting their ability to attain competing employment outside SupportSoft for two years after
the Acquisition. In addition, we placed value on YTO’s referral partner relationships and existing customer relationships.
The tangible and identifiable intangible assets and liabilities acquired is summarized as follows. The financial information presented includes purchase
accounting adjustments to the tangible and intangible assets:
Amount
(in thousands)
Amortization
Period
Cash $ 48
Accounts receivable, net 45
Accrued liabilities (401)
Net liabilities assumed (308)
Identifiable intangible assets:
Non-compete agreements 224 18 months
Referral partner relationships 25 3 years
Customer relationships 31 3 years
Goodwill 2,854
Total estimated purchase price $ 2,826
68
Source: SUPPORTSOFT INC, 10-K, March 11, 2009