Support.com 2011 Annual Report Download - page 48

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
For certain products, we sell perpetual licenses. We provide a limited amount of free technical support to customers and therefore we do not
defer the recognition of revenue associated with sales of these products, since the cost of providing this free technical support is insignificant and free
product 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 subscription period.
Other revenue consists primarily of revenue generated through partners advertising to our customer base in various forms, including toolbar
advertising, email marketing, and free trial offers. We recognize other revenue in the period in which our partners notify us that the revenue has been
earned.

Research and development expenditures are charged to operations as they are incurred. Based on our product development process,
technological feasibility is established on the completion of a working model. Costs incurred by us between the completion of the working model and
the point at which the product is ready for general release have been insignificant. Accordingly, we have charged all such costs to research and
development expense in the period in which they were incurred in the consolidated statements of operations.

We capitalize costs related to software that we license and incorporate into our product and service offerings or develop for internal use. In
2009, we acquired purchased technology for $350,000 and recorded amortization expense related to this technology of $83,000, $83,000 and $41,000
in 2011, 2010 and 2009, respectively. In addition, in 2011, we accumulated $70,000 related to software developed for internal use and will amortize
over the useful life of this software once it is placed into service.

Advertising costs are recorded as sales and marketing expense in the period in which they are incurred. Advertising expense was $10.8
million, $10.6 million, and $1.9 million for the years ended December 31, 2011, 2010, and 2009, respectively.

Basic net loss per share is computed using our net loss and the weighted average number of common shares outstanding during the reporting
period. Diluted net loss per share is computed using our net loss and the weighted average number of common shares outstanding, including the effect
from the potential issuance of common stock such as stock issuable pursuant to the exercise of stock options using the treasury stock method when
dilutive.
The following table sets forth the computation of basic and diluted net loss per share (in thousands, except per share amounts):
 
    
Net loss $ (18,640) $ (18,067) $ (14,577)
Basic:
Weighted-average shares of common stock outstanding 48,288 46,818 46,378
Shares used in computing basic net loss per share 48,288 46,818 46,378
Basic net loss per share $ (0.39) $ (0.39) $ (0.31)
Diluted:
Weighted-average shares of common stock outstanding 48,288 46,818 46,378
Add: Common equivalent shares outstanding — — —
Shares used in computing diluted net loss per share 48,288 46,818 46,378
Diluted net loss per share $ (0.39) $ (0.39) $ (0.31)
46
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