Support.com 2014 Annual Report Download - page 52

Table of Contents
Note 2. Warrants
On October 25, 2010, we entered into a Support Services Agreement (the “Customer Agreement”) with Comcast Cable Communications Management, LLC (“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 were valued as they were earned, and the resulting value was recorded as a charge against
revenue in the period in which the performance milestone was met and the warrant was earned. During the third and fourth quarters of 2013, the performance milestones for the first and second tranche of warrants
were met, respectively. Therefore, we issued to Comcast warrants to purchase a total of 490,000 shares of our common stock (warrants to purchase 166,000 shares were issued on September 30, 2013 and warrants
to purchase 324,000 shares were issued on December 31, 2013) and recorded warrant-related charges of $777,000 against revenue for the year ended December 31, 2013. The value of the first and second tranche
of warrants was estimated using the following weighted-average assumptions: risk-free interest rate of 0.74%, expected term of 3 years, volatility of 59.12% and expected dividend of 0%. The right to receive this final
tranche expired on March 31, 2014 due to the termination of the Customer Agreement on such date.
Note 3. Property and Equipment
Property and equipment are stated at cost, less accumulated depreciation, and consist of the following as of December 31, 2014 and 2013 (in thousands):
December 31,
2014 2013
Computer equipment and software $ 4,796 $ 4,565
Furniture and office equipment 180 185
Leasehold improvements 360 355
5,336 5,105
Accumulated depreciation (4,919) (4,644)
$ 417 $ 461
Depreciation expense was $275,000, $351,000, and $503,000 for the years ended December 31, 2014, 2013, and 2012, respectively.
Note 4. Intangible Assets
Amortization expense related to intangible assets was $1.1 million, $1.3 million, and $1.5 million for the years ended December 31, 2014, 2013 and 2012.
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 the carrying value may not be recoverable.
The following table summarizes the components of intangible assets (in thousands):
Non-
compete
Partner
Relationships
Customer
Base
Technology
Rights
Tradenames
Indefinite
Life
Intangibles
Total
As of December 31, 2014
Gross carrying value $ 593 $ 145 $ 641 $ 5,330 $ 760 $ 250 $ 7,719
Accumulated amortization (527) (145) (453) (3,582) (649) — (5,356)
Net carrying value $ 66 $ — $ 188 $ 1,748 $ 111 $ 250 $ 2,363
As of December 31, 2013
Gross carrying value $ 593 $ 145 $ 641 $ 5,330 $ 760 $ 250 $ 7,719
Accumulated amortization (477) (145) (361) (2,689) (593) — (4,265)
Net carrying value $ 116 $ — $ 280 $ 2,641 $ 167 $ 250 $ 3,454
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