Support.com 2011 Annual Report Download

Download and view the complete annual report

Please find the complete 2011 Support.com annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 82

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82

SECURITIES & EXCHANGE COMMISSION EDGAR FILING
Support.com, Inc.
Form: 10-K
Date Filed: 2012-03-09
Corporate Issuer CIK: 1104855
Symbol: SPRT
Fiscal Year End: 12/31
© Copyright 2013, Issuer Direct Corporation. All Right Reserved. Distribution of this document is strictly prohibited, subject to the
terms of use.

Table of contents

  • Page 1
    SECURITIES & EXCHANGE COMMISSION EDGAR FILING Support.com, Inc. Form: 10-K Date Filed: 2012-03-09 Corporate Issuer CIK: 1104855 Symbol: SPRT Fiscal Year End: 12/31 © Copyright 2013, Issuer Direct Corporation. All Right Reserved. Distribution of this document is strictly prohibited, subject to ...

  • Page 2
    ..., Redwood City, CT (Address of Registrant's Principal Executive Offices) 94-3282005 (I.R.S. Employer Identification No.) 94063 (Zip Code) Registrant's telephone number including area code: (650) 556-9440 Securities registered pursuant to Section 12(b) of the Act: Title of each class Common Stock...

  • Page 3
    ... in connection with the solicitations of proxies for its 2011 annual meeting of stockholders. Except as expressly incorporated by reference, the registrant's Proxy Statement shall not be deemed to be part of this report. EDGAR Stream is a copyright of Issuer Direct Corporation, all rights reserved.

  • Page 4
    ... of Management on Internal Control over Financial Reporting Report of Independent Registered Public Accounting Firm on Internal Control over Financial Reporting Other Information Directors and Executive Officers of the Registrant Executive Compensation Security Ownership of Certain Beneficial Owners...

  • Page 5
    ... all the assets of SUPERAntiSpyware.com ("SAS") in June 2011. In January 2012, we expanded our small business capabilities through the acquisition of RightHand IT Corporation, a managed service provider for small businesses. As a result of the sale of the Enterprise business in 2009, our audited...

  • Page 6
    ... remote control software has caused growth in this segment of the market to accelerate. In addition, demand for cloud services such as online backup and hosted email, where data and computing power are located online rather than on the user's premises, is growing rapidly. In addition to technology...

  • Page 7
    ... 2012 expanded our small business support capabilities. We deliver our services to customers using our Personal Technology Experts, leveraging our proprietary technology platform. Most PTEs work from their homes rather than in brick and mortar facilities. Employee PTEs are recruited, tested, hired...

  • Page 8
    ... that our Personal Technology Experts follow a predesigned "best practice" workflow. The Solutions Toolkit also automates time-consuming steps such as tool downloads, system diagnostics, performance optimizations and software checks. 6 EDGAR Stream is a copyright of Issuer Direct Corporation, all...

  • Page 9
    ...of running and optimizing our business. Our partners also receive reports and analytic information from the warehouse for their programs on a regular basis via secure data feeds. For end user software products, we build and enhance the ARO, Cosmos, SUPERAntiSpyware, RapidStart, Hard Disk Tune-Up and...

  • Page 10
    ... located at www.sec.gov. Our telephone number is 650-556-9440 and our website address is www.support.com. The information contained on our website does not form any part of this Annual Report on Form 10-K. However, we make available, free of charge through our website, our annual reports on Form 10K...

  • Page 11
    ... regarding our ability to deliver premium technology services efficiently and through arrangements that are profitable; Our ability to offer subscriptions to our services in a profitable manner; Our ability to hire, train, manage and retain Personal Technology Experts in a home-based model and to...

  • Page 12
    ... products successfully. Our Personal Technology Experts and sales agents are generally home-based, which requires a high degree of coordination and quality control of employees working from diverse and remote locations. We are currently experiencing financial losses in our business and we may to...

  • Page 13
    ...ability to increase the efficiency of our Personal Technology Experts and sales agents; • Our ability to effectively match staffing levels with service volumes on a cost-effective basis, particularly with newer partners using models, such as subscriptions, without adequate or comparable historical...

  • Page 14
    .... If we fail to attract, train and manage our Personal Technology Experts and sales delivery agents in a manner that provides an adequate level of support for our customers, our reputation and financial performance could be harmed. Our business depends in part on our ability to attract, manage and...

  • Page 15
    ... increased the number of work-from-home sales agents supporting our programs. Failure to attract, train and manage these employees in a cost effective manner or to receive adequate compensation for their services could harm our reputation, result in financial losses under contract terms, cause us to...

  • Page 16
    ..., personnel, research and development, marketing, sales and support operations; Loss of key employees; Economic dilution to gross and operating profit; Diversion of management's attention from other business concerns and disruption of our ongoing business; Difficulty in maintaining controls and...

  • Page 17
    ... costs and may reduce the effectiveness of our solutions, and our failure to comply with those laws or regulations may harm our business and cause us to lose customers. Our software contains features that allow our Personal Technology Experts and other personnel to access, control, monitor and...

  • Page 18
    ... may offer little or no protection of our proprietary technologies. Reverse engineering, unauthorized copying or other misappropriation of our proprietary technologies could enable third parties to benefit from our technologies without paying us for them, which would harm our competitive position...

  • Page 19
    .... In addition, we have an office in India with 6,838 square feet. This lease expires on August 31, 2012. We believe our facilities are adequate to meet our current business requirements. ITEM 3. LEGTL PROCEEDINGS. Iegal Contingencies In November 2001, a class action lawsuit was filed against us, two...

  • Page 20
    ...our business,...normal judicial appeal process used in India, and have...annual financial statements. We have entered into various service level agreements with our channel partners...2011 and 2010. ITEM 4. MINE STFETY DISCLOSURES. Not applicable. 18 EDGAR Stream is a copyright of Issuer Direct Corporation...

  • Page 21
    ... price plus reinvested dividends) of the Company's Common Stock and the CRSP Total Return Index for the Nasdaq U.S. Stocks (the "Nasdaq Composite Index") and Nasdaq Computer and Data Processing Services Index from December 31, 2006 through December 31, 2011. The graph assumes that $100 was invested...

  • Page 22
    ... $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ The information presented above in the stock performance graph shall not be deemed to be "soliciting material" or to be "filed" with the Securities and Exchange Commission ...Act. 20 EDGAR Stream is a copyright of Issuer Direct Corporation, all rights reserved.

  • Page 23
    ... consumer services business, and in 2008 began reporting two operating segments, Enterprise and Consumer. In June, 2009 we sold our Enterprise business to Consona Corporation ("Consona"), changed our name to Support.com, Inc. and focused our efforts purely on the consumer and small business market...

  • Page 24
    Table of Contents 2011 Consolidated Balance Sheet Data: Cash, cash equivalents and investments Auction-rate security put option Working capital Total assets Long-term ...- 109,280 138,458 1,318 (90,559) 120,862 22 EDGAR Stream is a copyright of Issuer Direct Corporation, all rights reserved.

  • Page 25
    ... achieve profitability. Our strategies for achieving our goals include expanding existing services programs, increasing software revenues, growing our customer base, enhancing service delivery efficiency, optimizing contact center sales operations, and extending our cloud-based technology platform...

  • Page 26
    ... inputs either represent quoted prices for similar assets in active markets or have been derived from observable market data. There were no transfers between Level 1 and Level 2 measurements during the year of 2011. 24 EDGAR Stream is a copyright of Issuer Direct Corporation, all rights reserved...

  • Page 27
    ... goodwill using the two-step process required by ASC 350, Intangibles - Goodwill and Other. In the first step, we compare the carrying amount of the reporting unit to the fair value based on quoted market prices of our common stock. If the carrying value of the reporting unit exceeds the fair value...

  • Page 28
    ... do not include the excess tax benefit related to stock-based compensation that are a component of our federal and state net operating loss carryforwards in the amount of $2.6 million as of December 31, 2011. Consistent with prior years, the excess tax benefit reflected in our net operating loss...

  • Page 29
    ... and launch of our small business programs. In addition, we expect subscription revenue to become a larger portion of total services revenue in 2012 as compared to 2011. Software and other revenue is comprised primarily of fees for software products provided through direct consumer downloads and, to...

  • Page 30
    ... sales of software products acquired in 2009. In 2012, we expect sales and marketing spending levels to be determined by a number of factors including software marketing costs, sales agent costs and investments in small business programs. 28 EDGAR Stream is a copyright of Issuer Direct Corporation...

  • Page 31
    ... increase in amortization of intangible assets in 2011 was due to the acquisition of SUPERAntiSpyware in 2011. The increase in amortization of intangible assets in 2010 was due to the full-year amortization of intangible assets acquired from Xeriton Corporation in December 2009. Interest income and...

  • Page 32
    ... or to acquire complementary technologies and businesses at any time in the future, we may seek to sell additional equity or debt securities. The sale of additional equity could result in more dilution to our stockholders. 30 EDGAR Stream is a copyright of Issuer Direct Corporation, all rights...

  • Page 33
    ... to continue to make investments in our business during 2012. We believe these investments are essential to creating sustainable growth in our business in the future. Additionally, we may choose to acquire other businesses or complimentary technologies to enhance our product capabilities and such...

  • Page 34
    ...to perform the two-step goodwill impairment test. ASU 2011-08 will be effective for annual and interim goodwill impairment tests performed for fiscal years beginning after December 15, 2011. The Company expects to adopt this update for its reporting period ending March 31, 2012. The Company does not...

  • Page 35
    ...-for-sale, was based on a discounted cash flow valuation that takes into account a number of...these events could cause us to lose part or all of our investment in this security. As of December 31, 2011, we had...U.S. dollars for a limited number of customers and a small portion of our operations, ...

  • Page 36
    ...SUPPLEMENTTRY DTTT. SUPPORT.COM, INC. INDEX TO CONSOLIDTTED FINTNCITL STTTEMENTS Page Report of Independent Registered Public Accounting Firm Consolidated Balance Sheets Consolidated Statements of ...36 37 38 39 40 34 EDGAR Stream is a copyright of Issuer Direct Corporation, all rights reserved.

  • Page 37
    ... statements are free of material misstatement..., Inc. at December 31, 2011 and 2010, and the consolidated ...report dated March 9, 2012 expressed an unqualified opinion thereon. /s/ Ernst & Young LLP Redwood City, California March 9, 2012 35 EDGAR Stream is a copyright of Issuer Direct Corporation...

  • Page 38
    ... receivable, less allowance of $20 and $43 at December 31, 2011 and 2010, respectively. Prepaid expenses and other current assets Total current assets Long-term investments Property and equipment, net Purchased technology, net Goodwill Intangible assets, net Other assets Total assets LITBILITIES TND...

  • Page 39
    ... thousands except per share data) Year Ended December 31...2011 Revenue: Services Software and other Total revenue Costs of revenue: Cost of services Cost of software and other Total cost of revenue Gross profit Operating expenses: Research and development Sales... Direct Corporation, all rights reserved.

  • Page 40
    ... (in thousands except share data) Tccumulated Other Total Comprehensive ...Stock-based compensation expense Issuance of common stock upon exercise of stock options for cash Issuance of common stock under employee stock purchase plan Balances at December 31, 2011...Corporation, all rights reserved.

  • Page 41
    ... and equipment Purchase of developed technology Acquisition of business, net of cash acquired Purchases of investments Sales of investments Maturities of investments Net cash provided by (used in) investing activities Financing activities: Proceeds from issuances of common stock Net cash provided by...

  • Page 42
    .... Our common stock trades on the Nasdaq Global Select Market under the symbol "SPRT." We are a leading independent provider of online care for the digital home and small business. Our premium services and software products install, set up, connect, repair and protect personal computers and related...

  • Page 43
    ... review ...2011, Comcast, Office Depot, Office Max and Staples accounted for 41%, 15%, 13% and 17% of our total accounts receivable, respectively. As of December 31, 2010, Office Depot, Office Max and Staples...-sale, and are reported at..., as determined based on quoted market prices or liquidation values...

  • Page 44
    ...Money market fund Certificates of deposit Commercial paper Corporate bonds Corporate notes U.S. government agency securities Auction-rate ...of our available-for-sale and trading debt securities classified by the stated maturity date of the security (in thousands): December 31, 2011 2010 29,503 $...

  • Page 45
    ... Loan Program (FFELP...the marketplace through a competitive bidding process often referred to as a ...sale, was based on a discounted cash flow valuation that takes into account a number... of these events could cause us to lose part or... available-for-sale investments as of December 31, 2011 and 2010 ...

  • Page 46
    ... the entity level. We test goodwill using the two-step process required by ASC 350, Intangibles - Goodwill and Other ("ASC 350"). In the first step, we compare the carrying amount of the reporting unit to the fair value based on quoted market prices of our common stock. If the carrying value of the...

  • Page 47
    ... services remotely, using work-from-home Personal Technology Experts who utilize our proprietary technology to deliver the services. We provide services to consumers and small business, either through our channel partners (which include brick and mortar and online retailers, anti-virus providers, PC...

  • Page 48
    ... enhancements are minimal and infrequent. For certain of our products (namely SUPERAntiSpyware and RapidStart), we sell licenses for a fixed subscription period. We provide regular, significant updates over the subscription period and therefore recognize revenue for these products ratably over the...

  • Page 49
    ... to fluctuate throughout the period that the stock option is outstanding. Historically, we have based our expected volatility on historical company data. However, given the focus and overall nature of our business changed upon the sale of our Enterprise business, we no longer believe our historical...

  • Page 50
    ... the second quarter of 2009 we sold our Enterprise business to Consona. This sale qualified as the sale of "substantially all the assets of the business," and according to the terms of our Employee Stock Purchase Plan ("ESPP") plan document, such a sale terminated the ESPP. In the second quarter of...

  • Page 51
    ...our channel sales, the refund period varies by channel partner, but is generally between five and 10 days. For referral programs and direct...liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially...

  • Page 52
    ...review trading activity and pricing for these investments as of the measurement date. When sufficient quoted... data providers. These inputs either represent quoted ...2011 and 2010 was estimated by management. The Company has valued the ARS using a discounted... into Level 3 Sales Total gains/(losses):...

  • Page 53
    ... Europe and Asia Pacific Total For the year ended December 31, 2011, Comcast, Office Depot and Staples accounted for 14%, 23% and 15% of our total revenue, respectively. For the year ended December 31, 2010, Office Depot and Staples accounted for 43% and 17% of our total revenue, respectively. For...

  • Page 54
    ... On June 15, 2011, we executed an Asset Purchase Agreement to acquire certain assets and assume certain liabilities of SUPERAntiSpyware, a sole proprietorship located in Eugene, Oregon. No stock was acquired as part of the transaction. SAS provides software tools to detect and remove spyware, adware...

  • Page 55
    ... 31, 2011 2010 4,043 $ 3,797 340 337 399 399 70 69 4,852 4,602 (4,391) (3,979) 461 $ 623 Computer equipment and software Furniture and office equipment Leasehold improvements Construction in progress Accumulated depreciation $ $ 53 EDGAR Stream is a copyright of Issuer Direct Corporation, all...

  • Page 56
    ... in 2010 and $177,000 in 2009. In December 2006, we acquired the use of a toll-free telephone number for cash consideration of $250,000. This asset has an indefinite useful life. The intangible asset is tested for impairment annually or more often if events or changes in circumstances indicate that...

  • Page 57
    ...headquarters office facility located in Redwood City, California. The lease commenced on January 1, 2007 and ends on July 31, 2012. The annual fixed rents are $483,000 for the year ending December 31, 2012... process used in India,...class action lawsuit was filed against us, two of our former officers...

  • Page 58
    ... order to align our ongoing cost structure with the scale of our revenue following the sale of our Enterprise business. We reduced our workforce by 23 employees, or approximately 19% of our non-technology support agent workforce. All of the affected employees were terminated as of June 30, 2009. In...

  • Page 59
    ...In the third quarter of 2009, we ceased using a portion of our headquarters office in order to align our facilities usage with our current size. As a result, we impaired approximately 46% of our Redwood City facility. We recorded a restructuring charge of approximately $1.3 million, which related to...

  • Page 60
    ... we extended to our employees the opportunity to exchange outstanding options to purchase shares of our common stock granted under our 2000 Plan, as amended that were outstanding as of July 27, 2009 and that had exercise prices per share greater than $2.32, the last reported sale price per share of...

  • Page 61
    ... such persons to contribute to the growth and profitability of the Company, the Company's Board of Directors and stockholders approved a new ESPP and reserved 1,000,000 shares of our common stock for issuance under the ESPP. In the first quarter of 2009, prior to the sale of the Enterprise business...

  • Page 62
    ..., which are partially offset by an India tax benefit related to minimum alternative taxes paid during the holiday period. The reconciliation of the Federal statutory income tax rate to our effective income tax rate is as follows (in thousands): Year Ended December 31, 2011 2010 2009 (6,330) $ (6,283...

  • Page 63
    ...review of both the positive and negative evidence, which includes our historical operating performance, reported... against the Company's India deferred tax assets primarily...carryforwards are related to stock option deductions which, ...created for unrecognized tax benefits. The application of ASC 740 may...

  • Page 64
    ... 30, 2011 2011 (in thousands, except per share data) Mar. 31, 2011 Statements of Operations Data: Revenue: Services Software and other Total revenue Cost of revenue: Cost of services Cost of software and other Total cost of revenue Gross profit Operating expenses: Research and development Sales and...

  • Page 65
    62 EDGAR Stream is a copyright of Issuer Direct Corporation, all rights reserved.

  • Page 66
    ...of December 31, 2011 2010 2,910 $ 2,469 210 661 1,160 182 211 263 4,491 $ 3,575 On January 13, 2012, the Company executed an Asset Purchase Agreement with RightHand IT Corporation, a managed service provider for small business located in Louisville, Colorado. The Company acquired certain assets and...

  • Page 67
    ... are recorded, processed, summarized, and reported within the time periods specified in Securities and Exchange Commission rules and forms, and that such information is accumulated and communicated to our management, including our chief executive officer and chief financial officer, as appropriate...

  • Page 68
    ... our internal control over financial report as of December 31, 2011 has been audited by Ernst & Young LLP, an independent registered public accounting firm, as stated in their report, which is included herein. /s/ Joshua Pickus Joshua Pickus Chief Executive Officer and President /s/ Shelly Schaffer...

  • Page 69
    ...cash flows for each of the three years in the period ended December 31, 2011, and our report dated March 9, 2012, expressed an unqualified opinion thereon. /s/ Ernst & Young LLP Redwood City, California March 9, 2012 66 EDGAR Stream is a copyright of Issuer Direct Corporation, all rights reserved.

  • Page 70
    ... Boulevard, 3rd Floor, Redwood City, CA 94063, or telephoning 1-877-493-2778. We will disclose on our website amendments to or waivers from our Code of Ethics and Business Conduct applicable to our directors or executive officers, including our Chairman, our Chief Executive Officer and our Chief...

  • Page 71
    ...Under Equity Compensation Plans Equity Compensation Plan Information Ts of December 31, 2011 Number of securities remaining available for future issuance under equity compensation plans (excluding...our Proxy Statement. 68 EDGAR Stream is a copyright of Issuer Direct Corporation, all rights reserved.

  • Page 72
    ... to Exhibit 10.8 of Support.com's annual report on Form 10-K filed on March 11, 2009). Employment Offer Letter dated as of April 20, 2010, by and between the Registrant and Timothy Krozek. Support.com, Inc. Executive Incentive Compensation Incentive Plan (incorporated by reference to Exhibit...

  • Page 73
    ...Depot Remote Service Program Description between Support.com and Office Depot effective as of October 8, 2008 (incorporated by reference to Exhibit 10.1(a) of Support.com's quarterly report on Form 10-Q filed on August 10, 2009). (1) Form of Stock Option Grant Notification for Officers and Employees...

  • Page 74
    ...the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, on this 9th day of March, 2012. SUPPORT.COM, INC. By: /s/ Joshua Pickus Joshua Pickus Chief Executive Officer and President POWER OF TTTORNEY KNOW ALL PERSONS BY THESE PRESENTS, that...

  • Page 75
    ...Depot Remote Service Program Description between Support.com and Office Depot effective as of October 8, 2008 (incorporated by reference to Exhibit 10.1(a) of Support.com's quarterly report on Form 10-Q filed on August 10, 2009). (1) Form of Stock Option Grant Notification for Officers and Employees...

  • Page 76
    ...Financial Statement Schedules. No schedules have been filed because the information required to be set forth therein is not applicable or is shown in the financial statements or related notes included as part of this report. 72 EDGAR Stream is a copyright of Issuer Direct Corporation, all rights...

  • Page 77
    ... Support.com Gift Cards, Inc. SDC Software, Inc. Foreign Subsidiaries SupportSoft Belgium BVBA SDC Services Canada Inc. SupportSoft GmbH Support.com India Pvt Ltd Support.com Limited Belgium Canada Germany India UK EDGAR Stream is a copyright of Issuer Direct Corporation, all rights reserved.

  • Page 78
    ... 2011 Employee Stock Purchase Plan of our reports dated March 9, 2012,...reporting of Support.com, Inc. included in this Annual Report (Form 10-K) for the year ended December 31, 2011. /s/ Ernst & Young LLP Redwood City, California March 9, 2012 EDGAR Stream is a copyright of Issuer Direct Corporation...

  • Page 79
    ...whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. By: /s/ Joshua Pickus Joshua Picsus Chief Executive Officer and President Date: March 9, 2012 EDGAR Stream is a copyright of Issuer Direct...

  • Page 80
    ..., whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. By: /s/ Shelly Schaffer Shelly Schaffer Chief Financial Officer and Executive Vice President of Finance and Tdministration Date: March...

  • Page 81
    ... Chief Executive Officer of Support.com, Inc. (the "Company"), certify for the purposes of section 1350 of chapter 63 of title 18 of the United States Code that, to the best of my knowledge, (i) the Annual Report of the Company on Form 10-K for the year ended December 31, 2011 (the "Report"), fully...

  • Page 82
    ... condition and results of operations of the Company. /s/ Shelly Schaffer Shelly Schaffer Chief Financial Officer and Executive Vice President of Finance and Tdministration Date: March 9, 2012 A signed original of this written statement required by 18 U.S.C. § 1350 has been provided to Support...