Support.com 2011 Annual Report Download - page 54

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In June 2011, the FASB issued ASU No. 2011-05, “”. This update is to improve the comparability, consistency and
transparency of financial reporting and increases the prominence of items reported in other comprehensive income. Under this amendment, an entity
has the option to present the total of comprehensive income, the components of net income, and the components of other comprehensive income either
in a single continuous statement of comprehensive income or in two separate but consecutive statements. On October 21, 2011, the FASB decided
that the specific requirement to present items that are reclassified from other comprehensive income to net income alongside their respective
components of net income and other comprehensive income will be deferred. With the exception of the requirements of the update subject to deferral,
ASU No. 2011-05 is effective for public entities for fiscal years and interim periods within those years beginning after December 15, 2011. The
Company does not believe that the adoption of this guidance will have a significant impact on the Company’s consolidated financial statements.
In September 2011, the FASB issued ASU No. 2011-08, “”. This update is to simplify how entities, both
public and nonpublic, test goodwill for impairment. The amendments in the update permit an entity to first assess qualitative factors to determine
whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount as a basis for determining whether it is
necessary 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 expect that the adoption of this guidance will have a material effect on the Company’s consolidated financial statements.
In December 2011, the FASB issued ASU No. 2011-11, “”. This update is to require an
entity to disclose information about offsetting and related arrangements to enable users of its financial statements to understand the effect of those
arrangements on its financial position. ASU No. 2011-11 will be effective for annual reporting periods beginning on or after January 1, 2013. The
Company does not expect this update will have any significant impact on our financial position.
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On October 25, 2010, we entered into a Support Services Agreement (the “Customer Agreement”) with Comcast under which Support.com
provides technology support services to customers of Comcast in exchange for fees. In connection with the Customer Agreement, Support.com and
Comcast entered into a Warrant Agreement, under which Support.com agreed to issue to Comcast warrants to purchase up to 975,000 shares of
Support.com common stock in the future in the event that Comcast meets specified sales milestones under the Customer Agreement. Each warrant, if
issued, will have an exercise price per share of $4.9498 and a term of three years from issuance. On September 27, 2011, the Company and Comcast
amended the Warrant Agreement to extend the expiration date for the performance milestones while maintaining the previously agreed revenue
thresholds. The warrants will be valued as they are earned, and the resulting value will be recorded as a charge against revenue in the period in which
the performance milestone is met and the warrant is earned. As of December 31, 2011, none of the performance milestones have been met, and
therefore no warrants have been issued. Consequently, the Company has not recorded any warrant-related charges against our revenue for any period
through December 31, 2011.
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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, rootkits, Trojans, worms, parasites, dialers, and other types of malware. The acquisition increases the number and type of software
products we provide to our customers, enables us to grow our direct business by marketing existing services to SAS software customers, and
broadens the product suite we can offer to our channel partners.
We engaged an independent third-party appraisal firm to assist in determining the fair value of assets acquired and liabilities assumed from the
transaction. 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. We placed value on SAS’s technology, trade
name and existing customer relationships, as well as non-compete agreements signed by certain key employees. The purchase price for SAS exceeded
the fair value of SAS net tangible and intangible assets acquired. As a result, we have recorded goodwill in connection with this transaction. This
goodwill is deductible for tax purposes.
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