Support.com 2014 Annual Report Download - page 49

Table of Contents
Expected Term: Our expected term represents the period that our stock options are expected to be outstanding and is determined based on historical experience of similar stock options considering the
contractual terms of the stock options, vesting schedules and expectations of future employee behavior.
Expected Volatility: Our expected volatility represents the amount by which the stock price is expected to fluctuate throughout the period that the stock option is outstanding. The expected volatility is based on
the historical volatility of the Company’s stock.
Expected Dividend: We use a dividend yield of zero, as we have never paid cash dividends and do not expect to pay dividends in the future.
The fair value of our stock-based awards was estimated using the following weighted average assumptions for the years ended December 31, 2014, 2013, and 2012:
Stock Option Plan Employee Stock Purchase Plan
2014 2013 2012 2014 2013 2012
Risk-free interest rate 1.6% 0.9% 0.6% 0.1% 0.1% 0.1%
Expected term (in years) 5.1 3.7 3.7 0.5 0.5 0.5
Volatility 57.3% 57.5% 57.2% 49.1% 48.4% 62.3%
Expected dividend 0% 0% 0% 0% 0% 0%
Weighted average grant-date fair value $ 1.17 $ 2.02 $ 1.30 $ 0.64 $ 1.24 $ 1.15
We recorded the following stock-based compensation expense for the fiscal years ended December 31, 2014, 2013, and 2012 (in thousands):
For the Year Ended December 31,
2014 2013 2012
Stock-based compensation expense related to grants of:
Stock options $ 1,110 $ 1,642 $ 4,276
ESPP 110 106 80
RSU 1,654 1,733 169
2,874 $ 3,481 $ 4,525
Stock-based compensation expense recognized in:
Cost of service $ 267 $ 332 $ 354
Cost of software and others 14 12 26
Research and development 479 766 1,019
Sales and marketing 413 412 483
General and administrative 1,701 1,959 2,643
$ 2,874 $ 3,481 $ 4,525
Cash proceeds from the issuance of common stock net of repurchase of common stock were $1.1 million, $6.9 million, and $3.5 million for the years ended December 31, 2014, 2013, and 2012, respectively. No
income tax benefit was realized from stock option exercises during the years ended December 31, 2014 and 2012. An income tax benefit (charge) of ($8,000) and $34,000 was realized from stock option exercises
during the years ended December 31, 2014 and 2013, respectively. In accordance with ASC 718, we present excess tax benefits from the exercise of stock options, if any, as net cash generated in financing activities.
Income Taxes
Income taxes are accounted for under the asset and liability method. Under this method, deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences
between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases, and operating losses and tax credit carryforwards. Deferred tax assets and liabilities are measured
using enacted tax rates in effect for the year in which those temporary differences are expected to be reversed or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the
consolidated statements of operations in the period that includes the enactment date. A valuation allowance is recorded to reduce the carrying amounts of deferred tax assets, if it is more likely than not, that such
assets will not be realized.
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