Support.com 2014 Annual Report Download - page 19

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Table of Contents
• Localization of our services, including translation into foreign languages and adaptation for local practices and regulatory requirements;
• Lack of familiarity with and unexpected changes in foreign regulatory requirements;
• Longer accounts receivable payment cycles and difficulties in collecting accounts receivable;
• Difficulties in managing and staffing international operations;
• Fluctuations in currency exchange rates;
• Potentially adverse tax consequences, including the complexities of foreign value added or other tax systems and restrictions on the repatriation of earnings;
• Dependence on certain third parties, including channel partners with whom we do not have extensive experience;
• The burdens of complying with a wide variety of foreign laws and legal standards;
• Increased financial accounting and reporting burdens and complexities;
• Political, social and economic instability abroad, terrorist attacks and security concerns in general; and
• Reduced or varied protection for intellectual property rights in some countries.
Operating in international markets also requires significant management attention and financial resources. The investment and additional resources required to establish operations and manage growth in other
countries may not produce desired levels of revenue or profitability.
We have recorded long-lived assets, and our results of operations would be adversely affected if their value becomes impaired.
Goodwill and identifiable intangible assets were recorded in part due to our acquisition of substantially all of the assets and liabilities of YourTechOnline.com in May 2008, our acquisition of substantially all of the
assets of Xeriton Corporation in December 2009, our acquisition of certain assets and assumed liabilities of SUPERAntiSpyware in June 2011 and our acquisition of certain assets and assumed liabilities of
RightHand IT Corporation in January 2012. We also have certain intangible assets with indefinite lives. We assess the impairment of goodwill and indefinite lived intangible assets annually or more often if events or
changes in circumstances indicate that the carrying value may not be recoverable. We assess the impairment of acquired product rights and other finite lived intangible assets whenever events or changes in
circumstances indicate that its carrying amount may not be recoverable. Our results of operations would be adversely affected if impairment of our goodwill or intangible assets occurred.
ITEM 1B. UNRESOLVED STAFF COMMENTS.
Not applicable.
ITEM 2. PROPERTIES.
Our corporate headquarters is located in Redwood City, California, where we sublease an office facility of approximately 21,620 square feet. The sublease agreement will expire on February 18, 2017. We are
in the process of evaluating an expansion of our corporate headquarters to support the growth of the business. We also lease office facilities in Eugene, Oregon (for which the lease agreement will expire on
December 31, 2017) and Louisville, Colorado (for which the lease agreement will expire on January 31, 2016). In addition, we lease an office in Bangalore, India with 6,838 square feet for which the lease will expire
on August 31, 2021.
ITEM 3. LEGAL PROCEEDINGS.
Legal Contingencies
On April 3, 2014, LT Tech LLC filed a complaint against the Company in U.S. District Court for the Eastern District of Texas alleging infringement of United States Patent No. 6,177,932. LT Tech LLC is believed
to be a non-practicing entity (“NPE”) and has filed several patent infringement lawsuits against other companies in U.S. District Court for the Eastern District of Texas and elsewhere. On June 30, 2014, the Company
and LT Tech LLC executed a Settlement and License Agreement according to which the Company paid LT Tech LLC a total amount of $150,000 which was recorded as a charge against earnings in cost of services
in the second quarter of 2014. On July 8, 2014, the Company obtained a dismissal for the complaint filed by LT Tech LLC. The Company denies any wrongdoing or liability and entered into the settlement to minimize
the costs of defense.
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