UNITED
STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
☒
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
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For the Quarterly Period Ended March 31, 2021
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OR
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☐
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
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For the transition period from ________ to ________
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Commission File No. 000-30901
SUPPORT.COM, INC.
(Exact
name of registrant as specified in its charter)
Delaware
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94-3282005
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(State
or other jurisdiction of
incorporation
or organization)
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(I.R.S.
Employer
Identification
No.)
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1521 Concord Pike (US 202), Suite 301, Wilmington, DE
19803
(Address
of principal executive offices, including zip code)
(650) 556-9440
(Registrant’s
telephone number, including area code)
Securities
registered pursuant to Section 12(b) of the Act:
Common Stock, par value $0.0001
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SPRT
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The Nasdaq Stock Market LLC
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Title
of each class
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Trading
symbol(s)
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Name of
each exchange on which registered
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Indicate
by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such
shorter period that the registrant was required to file such
reports) and (2) has been subject to such filing requirements for
the past 90 days. Yes ☒ No ☐
Indicate
by check mark whether the registrant has submitted electronically
every Interactive Data File required to be submitted pursuant to
Rule 405 of Regulation S-T (§232.405 of this chapter) during
the preceding 12 months (or for such shorter period that the
registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large
accelerated filer, an accelerated filer, a non-accelerated filer, a
smaller reporting company, or an emerging growth company. See
definitions of “large accelerated filer,”
“accelerated filer,” “smaller reporting
company,” and “emerging growth company” in Rule
12b-2 of the Exchange Act.
Large
accelerated filer
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☐
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Accelerated
filer
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☐
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Non-accelerated
filer
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☒
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Smaller
reporting company
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☒
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Emerging growth company
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☐
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If an emerging growth company, indicate by check mark if the
registrant has elected not to use the extended transition period
for complying with any new or revised financial accounting
standards provided pursuant to Section 13(a) of the Exchange
Act. ☐
Indicate
by check mark whether the registrant is a shell company (as defined
in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
On
April 26, 2021, 24,105,111 shares of the registrant’s common
stock, $0.0001 par value, were outstanding.
SUPPORT.COM, INC.
FORM 10-Q
QUARTERLY PERIOD ENDED MARCH 31, 2021
INDEX
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Page
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3
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3
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4
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5
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6
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7
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8
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21
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25
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25
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26
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26
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28
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28
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28
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28
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28
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29
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PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS (UNAUDITED)
SUPPORT.COM, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except per share amount)
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ASSETS
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Current
assets:
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Cash
and cash equivalents
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$29,005
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$13,526
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Short-term
investments
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10,016
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16,441
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Accounts
receivable, net
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6,312
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6,975
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Prepaid
expenses and other current assets
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702
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670
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Total
current assets
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46,035
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37,612
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Property
and equipment, net
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1,105
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1,115
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Right-of-use
assets, net
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17
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61
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Other
assets
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494
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478
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Total
assets
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$47,651
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$39,266
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LIABILITIES AND STOCKHOLDERS' EQUITY
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Current
liabilities:
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Accounts
payable
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$1,043
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$366
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Accrued
compensation
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2,106
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1,735
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Other
accrued liabilities
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1,546
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879
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Short-term
lease liability
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15
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58
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Short-term
deferred revenue
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1,146
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881
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Total
current liabilities
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5,856
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3,919
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Other
long-term liabilities
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910
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911
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Total
liabilities
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6,766
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4,830
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Stockholders'
equity:
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Common
stock; par value $0.0001, 50,000 shares authorized; 24,572 issued
and 24,089 outstanding at March 31, 2021 and 19,973 issued and
19,490 outstanding at December 31, 2020
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3
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2
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Additional
paid-in capital
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259,401
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250,954
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Treasury
stock, at cost (483 shares at March 31, 2021 and December 31,
2020)
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(5,297)
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(5,297)
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Accumulated
other comprehensive loss
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(2,424)
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(2,419)
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Accumulated
deficit
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(210,798)
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(208,804)
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Total
stockholders' equity
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40,885
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34,436
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Total
liabilities and stockholders' equity
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$47,651
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$39,266
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See
accompanying notes.
CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS
(in thousands, except per share amounts)
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Three Months Ended March 31,
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Revenue:
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Services
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$9,138
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$11,511
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Software
and other
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493
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438
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Total
revenue
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9,631
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11,949
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Cost
of revenues:
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Cost
of services
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6,005
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7,685
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Cost
of software and other
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90
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29
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Total
cost of revenue
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6,095
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7,714
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Gross
profit
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3,536
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4,235
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Operating
expenses:
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Engineering
and IT
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924
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1,040
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Sales
and marketing
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425
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813
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General
and administrative
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4,206
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2,053
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Total
operating expenses
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5,555
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3,906
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Income
(loss) from operations
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(2,019)
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329
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Interest
income and other, net
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42
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84
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Income
(loss) before income taxes
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(1,977)
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413
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Income
tax provision
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17
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49
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Net
income (loss)
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$(1,994)
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$364
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Net
income (loss) per share - basic and diluted
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$(0.10)
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$0.02
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Weighted
average common shares outstanding - basic
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20,205
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19,054
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Weighted
average common shares outstanding - diluted
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20,205
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19,233
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See
accompanying notes.
CONDENSED CONSOLIDATED STATEMENTS
OF COMPREHENSIVE INCOME (LOSS)
(in thousands)
(Unaudited)
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Three Months Ended March 31,
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Net
income (loss)
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$(1,994)
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$364
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Other
comprehensive income (loss):
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Change
in foreign currency translation adjustment
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(1)
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(211)
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Change
in net unrealized gain (loss) on investments
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(4)
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(1)
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Other
comprehensive income (loss)
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(5)
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(212)
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Comprehensive
income (loss)
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$(1,999)
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$152
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See
accompanying notes.
SUPPORT.COM, INC.
CONSOLIDATED STATEMENTS OF
STOCKHOLDERS’ EQUITY
(in thousands)
(Unaudited)
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Additional Paid-In Capital
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Accumulated Other Comprehensive Loss
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Total Stockholders' Shares
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Balances at
December 31, 2019
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19,053,854
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$2
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$250,092
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$(5,297)
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$(2,380)
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$(209,250)
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$33,167
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Net
income
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-
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-
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-
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-
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-
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364
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364
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Other
comprehensive income
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-
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-
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-
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-
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(212)
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-
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(212)
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Stock-based
compensation expense
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-
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-
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114
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-
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-
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-
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114
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Balances at
March 31, 2020
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19,053,854
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$2
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$250,206
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$(5,297)
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$(2,592)
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$(208,886)
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$33,433
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Balances at
December 31, 2020
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19,490
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$2
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$250,954
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$(5,297)
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$(2,419)
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$(208,804)
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$34,436
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Net
income
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-
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-
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-
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-
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-
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(1,994)
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(1,994)
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Other
comprehensive loss
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-
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-
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-
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-
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(5)
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-
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(5)
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Issuance of
common stock upon exercise of stock options & RSU
releases
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689
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-
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997
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-
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-
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-
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997
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Issuance of
common stock per Greenidge Merger Agreement
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3,910
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1
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7,233
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-
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-
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-
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7,234
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Stock-based
compensation expense
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217
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217
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Balances at
March 31, 2021
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24,089
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$3
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$259,401
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$(5,297)
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$(2,424)
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$(210,798)
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$40,885
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See
accompanying notes
CONDENSED CONSOLIDATED STATEMENTS OF
CASH FLOWS
(in thousands)
(Unaudited)
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Three Months Ended March 31,
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Operating
Activities:
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Net
income (loss)
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$(1,994)
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$364
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Adjustments
to reconcile net income to net cash used in operating
activities:
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Depreciation
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106
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72
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Amortization
of premiums and discounts on investments
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27
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23
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Stock-based
compensation
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217
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114
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Changes
in assets and liabilities:
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Accounts
receivable, net
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663
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1,327
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Prepaid
expenses and other current assets
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(32)
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(143)
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Other
long-term assets
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27
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(183)
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Accounts
payable
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674
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432
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Accrued
compensation
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366
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392
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Other
accrued liabilities
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621
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(215)
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Other
long-term liabilities
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(3)
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(60)
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Deferred
revenue
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266
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(56)
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Net
cash provided by operating activities
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938
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2,067
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Investing
Activities:
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Purchases
of property and equipment
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(97)
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(1)
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Purchases
of investments
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(400)
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-
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Maturities
of investments
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6,802
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3,029
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Net
cash provided by investing activiteis
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6,305
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3,028
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Financing
Activities:
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Proceeds
from exercise of stock options
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997
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-
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Proceeds
from Greenidge transaction stock issuance
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7,234
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-
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Net
cash provided by financing activities
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8,231
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-
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Effect
of exchange rate changes on cash and cash equivalents
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5
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(41)
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Net
increase (decrease) in cash and cash equivalents
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15,479
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5,054
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Cash
and cash equivalents at beginning of period
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13,526
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10,087
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Cash
and cash equivalents at end of period
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$29,005
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$15,141
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Supplemental
disclosure of cash flow information:
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Income
taxes paid
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$41
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$-
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See
accompanying notes.
SUPPORT.COM, INC.
NOTES TO CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
(Unaudited)
Note 1. Significant Accounting Policies
Basis of Presentation
The
accompanying unaudited interim condensed consolidated financial
statements include the accounts of Support.com, Inc. (the
“Company,” “Support.com,” “We”
or “Our”) and its wholly owned subsidiaries. All
intercompany balances and transactions have been eliminated. The
condensed consolidated balance sheet as of March 31, 2021 and the
condensed consolidated statements of operations, comprehensive
income (loss), stockholders’ equity, and cash flows for the
three months ended March 31, 2021 and 2020 are unaudited. In the
opinion of management, these unaudited interim condensed
consolidated financial statements reflect all adjustments
(consisting of normal recurring adjustments) that are necessary for
a fair presentation of the results for, and as of, the periods
shown. The results of operations for such periods are not
necessarily indicative of the results expected for the full fiscal
year or for any future period. The condensed consolidated balance
sheet information as of December 31, 2020 is derived from audited
financial statements as of that date. These financial statements
have been prepared based upon Securities and Exchange Commission
(“SEC”) rules that permit reduced disclosure for
interim periods. For a more complete discussion of significant
accounting policies and certain other information, these unaudited
interim condensed consolidated financial statements should be read
in conjunction with the consolidated financial statements and
related notes included in our Annual Report on Form 10-K for the
year ended December 31, 2020, filed with the SEC on March 30,
2020.
Merger Agreement
As
previously disclosed, on March 19, 2021, the Company, Greenidge
Generation Holdings, Inc. (“Greenidge”) and GGH Merger
Sub, Inc., a wholly-owned subsidiary of Greenidge (“Merger
Sub”) entered into an Agreement and Plan of Merger (the
“Merger Agreement”), pursuant to which Merger Sub will
be merged with and into the Company, with the Company continuing as
the surviving corporation and a wholly-owned subsidiary of
Greenidge (such transaction, the “Merger”). The Merger
is subject to certain closing conditions, including the adoption of
the Merger Agreement by a majority of the holders of the
outstanding shares of common stock of the Company entitled to vote
at a special meeting (the “Stockholder
Approval”).
Under the Merger Agreement, the aggregate consideration payable to
holders of shares of common stock of the Company, restricted stock
units (“Support Awards”) and options to purchase shares
of the Company’s common stock (“Support Options”)
consists of 2,998,261 shares of class A common stock, par value
$0.0001 per share, of Greenidge (“Greenidge Class A Common
Stock”) (the “Merger Consideration”). If the
Merger is completed, at the effective time of the Merger and
subject to the terms and conditions set forth in the Merger
Agreement, except for shares held in treasury by the Company, each
outstanding share of the Company’s common stock and each
outstanding Support Award and Support Option will be cancelled and
converted into the right to receive a number of shares of Greenidge
Class A Common Stock equal to an exchange ratio as calculated in
accordance with the Merger Agreement (the “Exchange
Ratio”). Assuming the Merger were to be completed as of May
3, 2021, the Merger Consideration would represent approximately
7.7% of the outstanding capital stock of Greenidge, after giving
effect to the shares to be issued in or underlying the Greenidge
Issuances (as defined below), and the current stockholders of
Greenidge would own approximately 90.0% of the outstanding capital
stock of Greenidge, after giving effect to the shares to be issued
in or underlying the Greenidge Issuances. “Greenidge
Issuances” means the issuance of (i) from and after
consummation of the Merger, 562,174 shares of Greenidge Class A
Common Stock to 210 Capital as a consulting fee in connection with
the transactions contemplated by the Merger Agreement, (ii) from
and after consummation of the Merger, options or warrants to
purchase 344,800 shares of Greenidge Class A Common Stock at an
exercise price of $6.25 per share of Greenidge Class A Common Stock
to B. Riley Securities, Inc., (iii) 160,000 shares of class B
common stock, par value $0.0001 per share, of Greenidge
(“Greenidge Class B Common Stock”, and together with
Greenidge Class A Common Stock, “Greenidge Common
Stock”) issued as consideration for bitcoin mining equipment,
and (iv) all of the shares of Greenidge Common Stock underlying
outstanding vested options reserved under Greenidge’s 2021
Equity Incentive Plan.
If the
Merger Agreement is terminated under certain circumstances, the
Company would be required to pay a termination fee.
In connection with and as a condition to Greenidge’s
willingness to enter into the Merger Agreement, on March 19, 2021,
the Company entered into a subscription agreement (the
“Subscription Agreement”) with 210 Capital, pursuant to
which 210 Capital subscribed for and purchased, and the Company
issued and sold, an aggregate of 3,909,871 shares of the
Company’s Common Stock for a purchase price of $1.85 per
share, for aggregate gross proceeds to the Company of
$7,233,261.35. Pursuant to and subject to the terms and conditions
set forth in the Subscription Agreement, among other things, and
only upon any termination of the Merger Agreement, the Company has
agreed that, not later than the earlier of (i) thirty (30) days
following the date of such termination and (ii) December 31, 2021
(such earlier date, the “Post-Termination Date”), it
will increase the size of the Board in order to appoint two
individuals designated by 210 Capital (each, a
“Designee”) to the Board for a term expiring at the
next succeeding annual meeting of the Company’s stockholders.
At such year’s annual meeting of the Company’s
stockholders, the Company has agreed to nominate each Designee for
election as a director with a term expiring at the subsequent
annual meeting of the Company’s stockholders, subject to
certain terms and conditions provided in the Subscription
Agreement. On and after the Post-Termination Date, so long as 210
Capital beneficially owns at least 10% of the Company’s
common stock on an as-converted basis, 210 Capital will have the
right to designate two Designees as nominees for election to the
Board. So long as 210 Capital beneficially owns between 5% and 10%
of the Company’s common stock on an as-converted basis, 210
Capital will have the right to designate one Designee as a nominee
for election to the Board.
Greenidge filed with the SEC a registration statement on Form S-4
(the “Form S-4”) on May 4, 2021 to register the Merger
Consideration, which also constitutes a proxy statement of Support
under Section 14(a) of the Securities Exchange Act of 1934, as
amended (the “Exchange Act”). Upon the effectiveness of
the Form S-4, the Company intends to solicit the Stockholder
Approval. The Merger is expected to close during the third quarter
of 2021.
Four lawsuits relating to the Merger have
been filed, each by an individual stockholder of the
Company. Two lawsuits have been filed in the United States District Court for the
District of Delaware: Stein v. Support.com, Inc.
et al, Case No.
1:21-cv-00650-UNA, filed on May 5, 2021, and Bell v. Support.com, Inc. et
al, Case No.
1:21-cv-00672-UNA, filed on May 7, 2021. The other lawsuits
have been filed in the United States District Court for the Eastern
District of New York and the United States District Court for the
Southern District of New York, respectively: Steinmetz v. Support.com, Inc. et al,
Case No. 1:21-cv-02647-UNA, filed on May 11, 2021, and Broder v. Support.com, Inc. et al, Case
No. 1:21-cv-04262-UNA, filed on May 12, 2021. The
Company and individual members of
the Board are named as defendants in the Stein and Steinmetz complaints, and the Company, individual members of the
Board, Greenidge and Merger Sub are named as defendants in
the Bell complaint. The Stein, Bell,
Steinmetz and Broder complaints generally allege that
the defendants violated the Exchange Act by failing to disclose
material information in the Form S-4, and generally seek, among
other things, injunctive relief prohibiting consummation of the
Merger and unspecified damages and attorneys’ fees. The
Company believes that the allegations made in the complaints are
without merit.
Impact of Disease Outbreak
On
March 11, 2020, the World Health Organization declared the outbreak
of a respiratory disease caused by a new coronavirus as a
“pandemic.” First identified in late 2019 and known now
as COVID-19, the outbreak has impacted millions of individuals
worldwide. In response, many countries have implemented measures to
combat the outbreak which have impacted global business operations.
As of the date of issuance of the financial statements, our
operations have not been significantly impacted; however, we
continue to monitor the situation. No impairments were recorded as
of the balance sheet date as no triggering events or changes in
circumstances had occurred as of March 31, 2021; however, due to
significant uncertainty surrounding the situation, management's
judgment regarding this could change in the future. In addition,
while our results of operations, cash flows and financial condition
could be negatively impacted, the extent of the impact cannot be
reasonably estimated at this time.
Use of Estimates
The
preparation of financial statements in conformity with accounting
principles generally accepted in the United States requires
management to make estimates and assumptions that affect the
amounts reported in the condensed consolidated financial statements
and accompanying notes. The accounting estimates that require
management’s most significant, difficult and subjective
judgments include accounting for revenue recognition, assumptions
used to estimate self-insurance accruals, the valuation and
recognition of investments, the assessment of recoverability of
intangible assets and their estimated useful lives, the valuation
and recognition of stock-based compensation and the recognition and
measurement of current and deferred income tax assets and
liabilities. Actual results could differ materially from these
estimates.
Revenue Recognition
Disaggregation of Revenue
We
generate revenue from the sale of services and sale of software
fees for end-user software products provided through direct
customer downloads and through the sale of these end-user software
products via partners. Revenue is disaggregated by type as
presented in the condensed consolidated statements of operations
and is consistent with how we evaluate our financial
performance.
Services Revenue
Services revenue is primarily comprised of fees
for customer support and technology support services. Our service
programs are designed for enterprise clients, as well as the
consumer and small and medium business (“SMB”)
markets, and include customer service,
sales support, and technical support, including computer and mobile
device set-up, security and support, virus and malware removal,
wireless network set-up, and automation system onboarding and
support.
We
offer customer support, technical support, and technology services
to large corporations, consumers and SMBs, directly and through our
partners (which include communications providers, retailers,
technology companies and others) and, to a lesser degree, directly
through our website at www.support.com. We transact with customers
via reseller programs, referral programs and direct transactions.
In reseller programs, the partner generally executes the financial
transactions with the customer and pays a fee to us which we
recognize as revenue when the service is delivered. In referral
programs, we transact with the customer directly and pay a referral
fee to the referring party. In direct transactions, we sell
directly to the customer at the retail price.
The
services described above include four types of
offerings:
●
Time-Based
Services - In connection with the provisions of certain services
programs, fees are calculated based on contracted time-based rates
with partners. For these programs, we recognize revenue as services
are performed, based on billable time of work delivered by our
technology specialists. These services programs also include
performance standards, which may result in incentives or penalties,
which are recognized as earned or incurred.
●
Tier-Based
Services – In connection with the provisions of certain
services programs, fees are calculated on partner subscription
tiers based on number of subscribers. For these programs, we
recognize revenue as services are performed, and are billed based
on the tier level of number of subscribers supported by our
experts.
●
Subscriptions –
Customers purchase subscriptions or “service plans”
under which certain services are provided over a fixed subscription
period. Revenues for subscriptions are recognized ratably over the
respective subscription periods.
●
Incident-Based
Services –
Customers purchase a discrete, one-time service. Revenue
recognition occurs at the time of service delivery. Fees paid for
services sold but not yet delivered are recorded as deferred
revenue and recognized at the time of service
delivery.
The
following represents deferred revenue activity for the three months
ended March 31, 2021 and 2020 (in thousands):
Balance
at December 31, 2020
|
$881
|
Deferred
revenue
|
1,257
|
Recognition
of unearned revenue
|
(992)
|
Balance
at March 31, 2021
|
$1,146
|
|
|
|
|
Balance
at December 31, 2019
|
$1,193
|
Deferred
revenue
|
403
|
Recognition
of unearned revenue
|
(459)
|
Balance
at March 31, 2020
|
$1,137
|
Partners are
generally invoiced monthly. Fees from customers via referral
programs and direct transactions are generally paid with a credit
card at the time of sale. Revenue is recognized net of any
applicable sales tax.
Services revenue
also includes fees from licensing of Support.com cloud-based
software. In such arrangements, customers receive a right to use
our Support.com Cloud applications in their own support
organizations. We license our cloud-based software using a
software-as-a-service (“SaaS”) model under which
customers cannot take possession of the technology and pay us on a
per-user or usage basis during the term of the arrangement. In
addition, services revenue includes fees from implementation
services of our cloud-based software. Currently, revenues from
implementation services are recognized ratably over the customer
life, which is estimated as the term of the arrangement once the
Support.com Cloud services are made available to customers. We
generally charge for these services on a time and material basis.
As of March 31, 2021, revenues from implementation services are not
material.
Software and Other Revenue
Software and other
revenue is comprised primarily of fees for end-user software
products provided through direct customer downloads and through the
sale of these end-user software products via partners. Our software
is sold to customers primarily on an annual subscription with
automatic renewal. We provide regular, significant upgrades over
the subscription period and therefore recognize revenue for these
products ratably over the subscription period. Management has
determined that these upgrades are not distinct, as the upgrades
are an input into a combined output. In addition, management has
determined that the frequency and timing of the software upgrades
are unpredictable and therefore we recognize revenue consistent
with the sale of the subscription. We generally control
fulfillment, pricing, product requirements, and collection risk and
therefore we record the gross amount of revenue. We provide a
30-day money back guarantee for the majority of our end-user
software products.
We
provide a limited amount of free technical support to customers.
Since the cost of providing this free technical support is
insignificant and free product enhancements are minimal and
infrequent, we do not defer the recognition of revenue associated
with sales of these products.
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 control transfers to
our partners.
Cash, Cash Equivalents, and Investments
All
liquid instruments with an original maturity, at the date of
purchase, of 90 days or less are classified as cash equivalents.
Cash equivalents and short-term investments consist primarily of
money market funds, certificates of deposit, commercial paper,
corporate notes and bonds, and U.S. government agency securities.
Our interest income on cash, cash equivalents and investments is
included in interest income and other, net in the condensed
consolidated statements of operations.
Cash
equivalents and short-term investments are reported at fair value
with unrealized gains/losses included in accumulated other
comprehensive loss within stockholders’ equity on the
condensed consolidated balance sheets and in the condensed
consolidated statements of comprehensive income (loss). We view
this investment portfolio as available for use in our current
operations, and therefore, we present marketable securities as
short-term assets.
We
monitor our investments for impairment on a quarterly basis to
determine whether a decline in fair value is other-than-temporary
by considering factors such as current economic and market
conditions, the credit rating of the security’s issuer, the
length of time an investment’s fair value has been below our
carrying value, our intent to sell the security and our belief that
it will not be required to sell the security before the recovery of
its amortized cost. If an investment’s decline in fair value
is deemed to be other-than-temporary, we reduce its carrying value
to the estimated fair value, as determined based on quoted market
prices or liquidation values. Declines in value judged to be
other-than-temporary, if any, are recorded in operations as
incurred. At March 31, 2021, we evaluated unrealized losses on
marketable securities and determined them to be temporary. We
currently do not intend to sell securities with unrealized losses
and concluded that we will not be required to sell these securities
before the recovery of their amortized cost basis. At March 31,
2021 and December 31, 2020, the fair value of cash, cash
equivalents and investments was $29.7 million and $30 million,
respectively.
The
following is a summary of cash, cash equivalents and investments at
March 31, 2021 and December 31, 2020 (in thousands):
As of March 31, 2021
|
|
|
|
|
Cash
|
$9,016
|
$-
|
$-
|
$9,016
|
Money
market funds
|
19,989
|
-
|
-
|
19989
|
Certificates
of deposit
|
499
|
-
|
-
|
499
|
Commercial
paper
|
1,524
|
-
|
-
|
1524
|
Corporate
notes and bonds
|
6,994
|
-
|
(1)
|
6993
|
|
1,000
|
-
|
-
|
1000
|
Total
|
$39,022
|
$-
|
$(1)
|
$39,021
|
|
|
|
|
|
Classsified
as:
|
|
|
|
|
Cash
and cash equivalents
|
$29,005
|
$-
|
$-
|
$29,005
|
Short-term
investments
|
10,017
|
-
|
(1)
|
10,016
|
Total
|
$39,022
|
$-
|
$(1)
|
$39,021
|
As of December 31, 2020
|
|
|
|
|
Cash
|
$10,918
|
$-
|
$-
|
$10,918
|
Money
market funds
|
1,258
|
-
|
-
|
1,258
|
Certificates
of deposit
|
492
|
-
|
-
|
492
|
Commercial
paper
|
3,274
|
-
|
(1)
|
3,273
|
Corporate
notes and bonds
|
9,423
|
4
|
-
|
9,427
|
|
4,599
|
-
|
-
|
4,599
|
Total
|
$29,964
|
$4
|
$(1)
|
$29,967
|
|
|
|
|
|
Classsified
as:
|
|
|
|
|
Cash
and cash equivalents
|
13,526
|
-
|
-
|
13,526
|
Short-term
investments
|
16,438
|
4
|
(1)
|
16,441
|
Total
|
$29,964
|
$4
|
$(1)
|
$29,967
|
The
following table summarizes the estimated fair value of our
marketable securities classified by the stated maturity date of the
security (in thousands):
|
|
|
Due
within one year
|
$8,591
|
$13,248
|
Due
within two years
|
1,425
|
3,193
|
|
$10,016
|
$16,441
|
Fair Value Measurements
Accounting
Standards Codification (“ASC”) 820, Fair Value Measurements and
Disclosures, defines fair value, establishes a framework for
measuring fair value under generally accepted accounting principles
and enhances disclosures about fair value measurements. Fair value
is defined under ASC 820 as the price that would be received to
sell an asset or paid to transfer a liability in an orderly
transaction between market participants at the measurement date.
Valuation techniques used to measure fair value according to ASC
820 must maximize the use of observable inputs and minimize the use
of unobservable inputs. The standard describes a fair value
hierarchy based on three levels of inputs, of which the first two
are considered observable and the last unobservable, that may be
used to measure fair value, which are the following:
●
Level 1 –
Quoted prices for identical instruments in active
markets.
●
Level 2
–
Quoted prices for similar instruments in active markets, quoted
prices for identical or similar instruments in markets that are not
active, and model derived valuations in which all significant
inputs and significant value drivers are observable in active
markets.
●
Level 3
–
Valuations derived from valuation techniques in which one or more
significant inputs or significant value drivers are
unobservable.
In
accordance with ASC 820, financial assets (cash equivalents and
investments) are measured at fair value on a recurring basis. Money
market funds, which are cash equivalents, are measured at fair
value using level 1 inputs. Certificates of deposit, commercial
paper, corporate notes and bonds, and U.S. government agency
securities, which are short-term investments, are measured at fair
value using level 2 inputs.
For
short-term investments, we review trading activity and pricing as
of the measurement date. When sufficient quoted pricing for
identical securities is not available, we use market pricing and
other observable market inputs for similar securities obtained from
various third-party data providers. These inputs either represent
quoted prices for similar assets in active markets or have been
derived from observable market data. Our policy is to recognize the
transfer of financial instruments between levels at the end of our
quarterly reporting period.
Concentrations of Credit Risk
Financial
instruments that potentially subject us to concentrations of credit
risk consist principally of cash equivalents, investments and trade
accounts receivable. Our investment portfolio consists of
investment grade securities. Except for obligations of the United
States government and securities issued by agencies of the United
States government, we diversify our investments by limiting
holdings with any individual issuer. We are exposed to credit risks
in the event of default by the issuers to the extent of the amount
recorded on the condensed consolidated balance sheets.
For the
three months ended March 31, 2021 and 2020, our two largest
customers accounted for 83% and 84% of total revenue, respectively.
There were no other customers that accounted for 10% or more of
total revenue for the three months ended March 31, 2021 and
2020.
The
credit risk in trade accounts receivable is substantially mitigated
by reasonably short payment terms and an evaluation of the
customers’ financial conditions when we enter into business
with them. As of March 31, 2021, our two largest customers
accounted for 92% of total accounts receivable. As of December 31,
2020, our two largest customers accounted for 90% of total accounts
receivable. There were no other customers that accounted for 10% or
more of our total accounts receivable as of March 31, 2021 and
December 31, 2020.
Trade Accounts Receivable and Allowance for Doubtful
Accounts
Trade
accounts receivable are recorded at the invoiced amount. We perform
evaluations of our customers’ financial condition and
generally do not require collateral. We make judgments as to our
ability to collect outstanding receivables and provide allowances
for a portion of receivables when collection becomes doubtful.
Reserves are made based on a specific review of all significant
outstanding invoices. For those invoices not specifically provided
for, reserves are recorded at differing rates, based on the age of
the receivable. In determining these rates, we analyze our
historical collection experience and current payment trends. The
determination of past-due accounts is based on contractual terms.
As of March 31, 2021, and December 31, 2020, allowance for doubtful
accounts was $4,000 and $4,000, respectively.
Self-Funded Health Insurance
Prior
to the current period, we maintained a self-funded health insurance
program with a stop-loss umbrella policy with a third-party insurer
to limit the maximum potential liability for medical claims. The
program was terminated at December 31, 2020. However, previously
incurred-but-not-reported claims and related expenses were incurred
during the current quarter. With respect to this program, we
considered historical and projected medical utilization data when
estimating the health insurance program liability and related
expense. As of March 31, 2021, $0.1 million was in reserve for the
self-funded health insurance program. As of December 31, 2020, $0.2
million was in reserve for the self-funded health insurance
program. The reserve is included in other accrued liabilities on
the condensed consolidated balance sheets.
We
regularly analyze our reserves for incurred-but-not-reported claims
and for reported-but-not-paid claims related to the self-funded
insurance program. We believe our reserves are adequate. However,
significant judgment is involved in assessing these reserves such
as assessing historical paid claims, average lags between the
claims’ incurred date, reported dates and paid dates, and the
frequency and severity of claims. There may be differences between
actual settlement amounts and recorded reserves and any resulting
adjustments are included in expense once a probable amount is
known.
Accumulated Other Comprehensive Loss
The
components of accumulated other comprehensive loss relate entirely
to accumulated foreign currency translation losses associated with
our foreign subsidiaries and unrealized losses on
investments.
Realized
gains/losses on investments reclassified from accumulated other
comprehensive loss are reported as interest income and other, net
in the condensed consolidated statements of
operations.
The
amounts noted in the condensed consolidated statements of
comprehensive income (loss) are shown before taking into account
the related income tax impact. The income tax effect allocated to
each component of other comprehensive loss for each of the periods
presented is not significant.
Stock-Based Compensation
We
apply the provisions of ASC 718, Compensation - Stock Compensation,
which requires the measurement and recognition of compensation
expense for all stock-based payment awards, including grants of
restricted stock units (“RSUs”) and options to purchase
stock, made to employees and directors based on estimated fair
values.
In
accordance with ASC 718, Compensation - Stock Compensation, we
recognize stock-based compensation by measuring the cost of
services to be rendered based on the grant date fair value of the
equity award. We recognize stock-based compensation over the period
an employee is required to provide service in exchange for the
award, generally referred to as the requisite service period. For
awards with market-based performance conditions, the cost of the
awards is recognized as the requisite service is rendered by
employees, regardless of when, if ever, the market-based
performance conditions are satisfied.
The
Black-Scholes option pricing model is used to estimate the fair
value of service-based stock options and shares purchased under our
Employee Stock Purchase Plan (“ESPP”). The
determination of the fair value of options is affected by our stock
price and a number of assumptions, including expected volatility,
expected life, risk-free interest rate and expected dividends. We
use historical data for estimating the expected volatility and
expected life of stock options required in the Black-Scholes model.
The risk-free interest rate assumption is based on observed
interest rates appropriate for the expected terms of the stock
options.
The
Monte-Carlo simulation model is used to estimate fair value of
market-based performance stock options. The Monte-Carlo simulation
model calculates multiple potential outcomes for an award and
establishes a fair value based on the most likely outcome. Key
assumptions for the Monte-Carlo simulation model include the
risk-free rate, expected volatility, expected dividends and the
correlation coefficient.
The
fair value of restricted stock grants is based on the closing
market price of our stock on the date of grant less the expected
dividend yield.
Earnings Per Share
Basic
earnings per share is computed using net income and the
weighted-average number of common shares outstanding during the
reporting period. Diluted earnings per share is computed using net
income and the weighted-average number of common shares
outstanding, including the effect of the potential issuance of
common stock such as stock issuable pursuant to the exercise of
stock options and warrants and vesting of RSUs using the treasury
stock method when dilutive.
The
following table sets forth the computation of basic and diluted
earnings per share for the three months ended March 31, 2021 and
2020 (in thousands, except per share amounts):
|
Three Months Ended March 31,
|
|
|
|
|
|
|
Net
income (loss)
|
$(1,995)
|
$364
|
|
|
|
Earnings
per share - basic and diluted
|
$(0.10)
|
$0.02
|
|
|
|
Weighted-average
shares of common stock outstanding - basic
|
20,205
|
19,054
|
Weighted-average
shares of common stock outstanding - diluted
|
20,205
|
19,233
|
Warranties and Indemnifications
We
generally provide a refund period on direct-to-consumer sales,
during which refunds may be granted to consumers under certain
circumstances, including the inability to resolve certain support
issues. For channel sales of our direct-to-consumer offering, the
refund period varies by partner, but is generally between 5-14
days. For referral programs and direct transactions, the refund
period is generally 5 days. For the majority of end-user software
products, we provide a 30-day money back guarantee. For all
channels, we recognize revenue net of refunds and cancellations
during the period. Refunds and cancellations have not been material
to date.
We
generally agree to indemnify customers against legal claims that
end-user software products infringe certain third-party
intellectual property rights. As of March 31, 2021, we have not
been required to make any payment resulting from infringement
claims asserted against customers and have not recorded any related
accruals.
Leases
We
account for leases in accordance with ASC 842. We recognize
operating and finance lease liabilities and corresponding
right-of-use (“ROU”) assets on the condensed
consolidated balance sheets and provide enhanced disclosures
surrounding the amount, timing and uncertainty of cash flows
arising from leasing arrangements. We determine if an arrangement
is a lease at inception. Operating
leases are included in operating lease ROU assets and short- and
long-term lease liabilities in our condensed consolidated balance
sheets. Finance leases are included in property and equipment,
other current liabilities, and other long-term liabilities in our
condensed consolidated balance sheets.
ROU
assets represent the right to use an underlying asset for the lease
term and lease liabilities represent the obligation to make lease
payments arising from the lease. Operating lease ROU assets and
liabilities are recognized at commencement date based on the
present value of lease payments over the lease term. As most of our
leases do not provide an implicit rate, we use our incremental
borrowing rate based on the information available at commencement
date in determining the present value of lease payments. The
implicit rate is used when readily determinable. The operating
lease ROU asset also includes any lease payments made and excludes
lease incentives. The lease terms may include options to extend or
terminate the lease when it is reasonably certain that we will
exercise that option. Lease expense for lease payments is
recognized on a straight-line basis over the lease term. We account
for the lease and non-lease components as a single lease
component.
We
have entered into various non-cancelable operating lease agreements
for certain offices and certain equipment. No leases have been
entered in to and no leases have been renewed in the current
quarter. The Sunnyvale, California office lease expired on March
31, 2021 and the Louisville, Colorado office lease will expire on
April 30, 2021.
Recent Accounting Pronouncements
Recently Adopted Accounting Standards
In August 2018, the FASB issued Accounting
Standard Update (“ASU”) No. 2018-13,
Changes to
Disclosure Requirements for Fair Value Measurements (Topic
820) (ASU 2018-13), which
improved the effectiveness of disclosure requirements for recurring
and nonrecurring fair value measurements. The standard removes,
modifies, and adds certain disclosure requirements. We adopted the
new standard effective January 1, 2020 and the standard did
not have an impact on the consolidated financial
statements.
In December 2019, the
FASB issued ASU No. 2019-12, Income
Taxes (Topic
740): Simplifying
the Accounting for Income Taxes (ASU 2019-12), which
simplifies the accounting for income taxes. We adopted the new
standard effective January 1, 2021. The adoption had an immaterial
impact on the Company’s consolidated financial
statements.
New Accounting Standards to be adopted in Future
Periods
In June 2016, the FASB
issued ASU 2016-13, Financial
Instruments—Credit Losses (Topic 326): Measurement of Credit
Losses on Financial Instruments. The standard's main
goal is to improve financial reporting by requiring earlier
recognition of credit losses on financing receivables and other
financial assets in scope. The effective date for all public
companies, except smaller reporting companies, is fiscal years
beginning after December 15, 2019, including interim periods within
those fiscal years. The effective date for all other entities is
fiscal years beginning after December 15, 2022, including interim
periods within those fiscal years. We do not expect the new
standard to have a material impact on the consolidated financial
statements.
The Company reviewed all other recently issued, but not yet
effective, accounting pronouncements and does not expect the future
adoption of any such pronouncements will have a material impact on
the consolidated financial statements.
Note 2. Income Taxes
We
recorded an income tax provision of $17,000 and $49,000 for the
three months ended March 31, 2021 and 2020, respectively. The
income tax provision for interim periods is determined using an
estimate of the annual effective tax rate, adjusted for discrete
items, if any, that are taken into account in the relevant period.
Each quarter, the estimate of the annual effective tax rate is
updated, and if the estimated effective tax rate changes, a
cumulative adjustment is made. There is a potential for volatility
of the effective tax rate due to several factors, including changes
in the mix of the pre-tax income and the jurisdictions to which it
relates, changes in tax laws and settlements with taxing
authorities and foreign currency fluctuations.
As of
March 31, 2021, deferred tax assets are fully offset by a valuation
allowance, except in those jurisdictions where it is determined
that a valuation allowance is not required.
ASC
740, Income Taxes, provides
for the recognition of deferred tax assets if realization of such
assets is more likely than not. Based upon the weight of available
evidence, which includes historical operating performance, reported
cumulative net losses since inception and difficulty in accurately
forecasting our future results, we provided a full valuation
allowance against net U.S. deferred tax assets and a partial
valuation allowance against foreign deferred tax assets. We
reassess the need for a valuation allowance on a quarterly basis.
If it is later determined that a portion or all of the valuation
allowance is not required, it generally will be a benefit to the
income tax provision in the period such determination is
made.
We do
not anticipate a material change in the total amount or composition
of our unrecognized tax benefits as of March 31, 2021.
Note 3. Commitments and Contingencies
Contingencies
We account for contingent liabilities
in accordance with ASC 450, Contingencies.
This guidance requires management to assess potential contingent
liabilities that may exist as of the date of the financial
statements to determine the probability and amount of loss that may
have occurred, which inherently involves an exercise of judgment.
If the assessment of a contingency indicates that it is probable
that a material loss has been incurred and the amount of the
liability can be estimated, then the estimated liability would be
accrued in the financial statements. If the assessment indicates
that a potential material loss contingency is not probable but is
reasonably possible, or is probable but cannot be estimated, then
the nature of the contingent liability, and an estimate of the
range of possible losses, if determinable and material, would be
disclosed. For loss contingencies considered remote, no accrual or
disclosures are generally made.
Legal matters
Federal Trade Commission Consent Order.
As previously disclosed, on
December 20, 2016 the Federal Trade Commission (“FTC”)
issued a confidential Civil Investigative Demand, or CID, requiring
us to produce certain documents and materials and to answer certain
interrogatories relating to PC Healthcheck, an obsolete software
program that we developed on behalf of a third party for their use
with their customers. The investigation relates to us providing
software like PC Healthcheck to third parties for their use prior
to December 31, 2016, when we were under management of the previous
Board and executive team. Since issuing the CID, the FTC has sought
additional written and testimonial evidence. We have cooperated
fully with the FTC’s investigation and provided all requested
information. In addition, we have not used PC Healthcheck nor
provided it to any customers since December
2016.
On March 9, 2018, the FTC notified us that it was willing to engage
in settlement discussions. On November 6, 2018, Support.com and the
FTC entered into a proposed Stipulation to Entry of Order for
Permanent Injunction and Monetary Judgment (the “Consent
Order”). The Consent Order was approved by the Commission on
March 26, 2019 and entered by the U.S. District Court for the
Southern District of Florida on March 29, 2019. Entry of the
Consent Order by the Court resolved the FTC’s multi-year
investigation of Support.com.
Pursuant to the Consent Order, under which we neither admitted nor
denied the FTC’s allegations (except as to the Court having
jurisdiction over the matter), the FTC agreed to accept a payment
of $10 million in settlement of the matter, subject to the factual
accuracy of the information we provided as part of our financial
representations. The $10 million payment was made on April 1, 2019
and was recognized in operating expenses within our consolidated
statements of operations for the year ended December 31,
2018.
Additionally, pursuant to the Consent Order, we agreed to implement
certain new procedures and enhance certain existing procedures. For
example, the Consent Order necessitates that we cooperate with
representatives of the Commission on associated investigations if
needed; imposes requirements on Support.com regarding obtaining
acknowledgements of the Consent Order and compliance certification,
including record creation and maintenance; and prohibits us from
making misrepresentations and misleading claims or providing the
means for others to make such claims regarding, among other things,
detection of security or performance issues on consumer’s
Electronic Devices. Electronic Devices include, but are not limited
to, cell phones, tablets and computers. We continue to monitor the
impact of the Consent Order regularly. If we are unable to comply
with the Consent Order, then this could result in a material and
adverse impact to the results of operations and financial
condition.
Verizon Media. As previously disclosed, On
March 22, 2010, the Company and AOL Fulfillment Services, who now
does business as Verizon Media (“Verizon Media”),
entered into a Fulfillment Services Promotion and Marketing
Agreement (“Agreement”). The Agreement related to the
development and sale of certain products and services. The Company
sold software products to Verizon Media pursuant to the terms of
the Agreement under two programs – SUPERAntiSpyware and
Computer Check-Up. Verizon Media offered these software products to
its end-customers. On May 24, 2019, the Company received a letter
from Verizon Media providing notice that it wished to terminate the
Agreement and work with the Company to wind-down all remaining
subscriptions for both programs. The Company has wound-down all
services under the Computer Check-Up program and the
SUPERAntiSpyware program. In connection with the termination of the
Computer Check-Up program, Verizon Media requested that the Company
fund rebates to its end-customers who elect to accept a refund
offer from Verizon Media. Although the Company, to date, has not
agreed with this request, Verizon Media commenced its rebate
program.
On
November 15, 2019, the Company received a letter from Verizon Media
informing the Company that, to date, Verizon Media has issued
rebates totaling $2.6 million and requesting reimbursement of this
amount from the Company (the “Dispute”). Subsequently,
the parties entered into negotiations toward a settlement of any
potential claims, which culminated in the execution of a
Confidential Settlement and Release Agreement dated September 29,
2020, pursuant to which the Company issued a one-time payment to
Verizon Media in exchange for a full and complete release from any
claims related to or arising out of the Dispute. The Company
admitted no liability and incurred no financial impact from the
settlement, as the payment was funded by the Company’s
insurance carrier.
Other Matters
We have
received and may in the future receive additional requests for
information, including subpoenas, from other governmental agencies
relating to the subject matter of the Consent Order and the Civil
Investigative Demands described above. We intend to cooperate with
these information requests and is not aware of any other legal
proceedings against us by governmental authorities at this
time.
We are
also subject to other routine legal proceedings, as well as
demands, claims and threatened litigation, that arise in the normal
course of business, potentially including assertions that we may be
infringing patents or other intellectual property rights of others.
We currently do not believe that the ultimate amount of liability,
if any, for any pending claims of any type (alone or combined) will
materially affect our financial position, results of operations or
cash flows. The ultimate outcome of any litigation is uncertain;
however, any unfavorable outcomes could have a material negative
impact on our financial condition and operating results. Regardless
of outcome, litigation can have an adverse impact on us because of
defense costs, negative publicity, diversion of management
resources and other factors.
Guarantees
We have
identified guarantees in accordance with ASC 450, Contingencies. This guidance stipulates
that an entity must recognize an initial liability for the fair
value, or market value, of the obligation it assumes under the
guarantee at the time it issues such a guarantee and must disclose
that information in our interim and annual financial statements. We
have entered into various service level agreements with our
partners, in which we may guarantee the maintenance of certain
service level thresholds. Under some circumstances, if these
thresholds are not met, we may be liable for certain financial
costs. We evaluate costs for such guarantees under the provisions
of ASC 450. We consider such factors as the degree of probability
that we would be required to satisfy the liability associated with
the guarantee and the ability to make a reasonable estimate of the
resulting cost. During the three months ended March 31, 2021 and
2020, we did not incur any costs as a result of such obligations.
We have not accrued any liabilities related to such obligations in
the condensed consolidated financial statements as of March 31,
2021 and December 31, 2020.
Note 4. Stockholder’s Equity
During
the three months ended March 31, 2021, 0.59 million shares of
common stock were issued as a result of the exercise of stock
options. During the three months ended March 31, 2020, no shares of
common stock were issued as a result of the exercise of stock
options.
During
the three months ended March 31, 2021, 0.1 million shares of common
stock were issued as a result of RSU releases. During the three
months ended December 31, 2020, no shares of common stock were
issued as a result of RSU releases.
During
the three months ended March 31, 2021, and 2020 no shares of common
stock were issued under the ESPP.
During
the three months ended March 31, 2021, in connection with the
Merger Agreement (as defined above), the Company issued and sold
approximately 3.9 million shares of the Company’s common
stock to 210 Capital, LLC (“210 Capital”), pursuant to
a stock subscription agreement with 210 Capital. Refer to Note 1
and Item 2 for additional transaction details regarding the Merger
with Greenidge.
Stock Repurchase Program
On
April 27, 2005, our Board of Directors (“Board”)
authorized the repurchase of up to 666,666 outstanding shares of
our common stock. As of March 31, 2021, the maximum number of
shares remaining that can be repurchased under this program was
602,467. No shares were repurchased during the three and nine
months ended March 31, 2021. We do not intend to repurchase shares
without further approval from the Board.
Note 5. Stock-Based Compensation
Equity Compensation Plans
We
adopted the amended and restated 2010 Equity and Performance
Incentive Plan (the “2010 Plan”), effective as of May
19, 2010. Under the 2010 Plan, the number of shares of Common Stock
that may be issued will not exceed in the aggregate 1,666,666
shares of Common Stock plus the number of shares of common stock
relating to prior awards under the 2000 Omnibus Equity Incentive
Plan that expire, are forfeited or are cancelled after the adoption
of the 2010 Plan, subject to adjustment as provided in the 2010
Plan. Pursuant to approval from our shareholders, the number of
shares of common stock that may be issued under the 2010 Plan was
increased by 750,000 shares of common stock in May 2013 and 333,333
shares in June 2016. No grants will be made under the 2010 Plan
after the tenth anniversary of its effective date. At the 2020
Annual Meeting, our stockholders approved the amendment and
restatement of the Second Amended and Restated 2010 Stock Plan
(such plan, after the amendment and restatement is now be the Third
Amended and Restated 2010 Equity and Performance Incentive Plan,
referred to herein as the “Restated Plan”). The purpose
of amending the 2010 Stock Plan was (i) to increase the number of
shares of common stock available for issuance under the Restated
Plan by 2,000,000 shares, (ii) to extend the term of the 2010 Stock
Plan, which otherwise expires on May 19, 2020, so that the Restated
Plan will continue until terminated by the Board in its discretion,
and (iii) to eliminate obsolete provisions while adding other
provisions consistent with certain compensation and governance best
practices. As of March 31, 2021, approximately 4.0 million shares
remain available for grant under the Restated Plan.
We
adopted the 2014 Inducement Award Plan (the “Inducement
Plan”), effective as of May 13, 2014. Under the Inducement
Plan, the number of shares of common stock that may be issued will
not exceed in the aggregate 666,666 shares of common stock. As of
March 31, 2021, approximately 0.2 million shares remain available
for grant under the Inducement Plan.
Employee Stock Purchase Plan
Effective May 15,
2011, our Board and stockholders approved an ESPP and reserved
333,333 shares of our common stock for issuance. The ESPP was
established to advance our interests and our stockholders'
interests by providing an incentive to attract, retain and reward
eligible employees and by motivating such persons to contribute to
our growth and profitability. At the 2020 Annual Meeting of
stockholders, our stockholders approved a proposal amending and
restating the 2011 ESPP to (i) increase the maximum number of
shares of common stock available for future issuance under the ESPP
by 1,000,000 shares, (ii) extend the
term, which otherwise would have expired on May 15, 2021, so that
the ESPP will continue until terminated by the Board in its
discretion, and (iii) make certain other administrative
changes.
The
ESPP consists of six-month offering periods during which employees
may enroll in the plan. Shares of common stock may be purchased
under the ESPP at a price established by the Compensation Committee
of the Board of Directors, provided that the price may not be less
than eighty-five percent (85%) of the lesser of (a) the fair market
value of a share of stock on the offering date of the offering
period or (b) the fair market value of a share of stock on the
purchase date. As of March 31, 2021, approximately 1.1 million
shares remain available for issuance under the ESPP.
Stock-Based Compensation
In
accordance with accounting guidance for stock-based compensation,
payments in equity instruments for goods or services are accounted
for by the fair value method. For the three months ended March 31,
2021 and 2020, stock-based compensation expense was $0.2 million
and $0.1 million, respectively.
As of
March 31, 2021, $0.9 million of unrecognized compensation cost
related to existing options was outstanding, which is expected to
be recognized over a weighted average period of 2.75 years. As of
March 31, 2021, $0.1 million of unrecognized compensation cost
related to RSUs was outstanding, which is expected to be recognized
within one year.
Stock Options
The
following table represents the stock option activity for the three
months ended March 31, 2021:
|
Number of Shares (in thousands)
|
Weighted Average Exercise Price per Share
|
Weighted Average Remaining Contractual Term (in years)
|
Aggregate Intrinsic Value (in thousands)
|
Outstanding
at December 31, 2020
|
2,629
|
$1.64
|
8.79
|
$1,605
|
Granted
|
10
|
2.13
|
9.81
|
|
Exercised
|
(589)
|
1.69
|
-
|
|
Forfeited
|
(132)
|
1.88
|
-
|
|
Outstanding
at March 31, 2021
|
1,918
|
$1.61
|
8.87
|
$5,771
|
|
|
|
|
|
Exercisable
at March 31, 2021
|
302,955
|
$1.63
|
6.50
|
951
|
Restricted
Stock Units
The following table represents RSU activity for the three months
ended March 31, 2021:
|
Number of Shares (in thousands)
|
Weighted Average Exercise Price per Share
|
Weighted Average Remaining Contractual Term (in years)
|
Aggregate Intrinsic Value (in thousands)
|
Outstanding
at December 31, 2020
|
131
|
$2.05
|
0.7
|
$287
|
Granted
|
100
|
2.15
|
|
|
Released
|
(100)
|
$2.15
|
|
|
Forfeited
|
-
|
-
|
|
|
Outstanding
at March 31, 2021
|
131
|
1.97
|
0.45
|
$599
|
|
|
|
|
|
Exercisable
at March 31, 2021
|
-
|
-
|
|
-
|
ITEM 2. MANAGEMENT’S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
This
section and other parts of this Quarterly Report on Form 10-Q may
contain “forward-looking statements” within the meaning
of the
Private Securities Litigation Reform Act of 1995.
Forward-looking statements provide current expectations of future
events based on certain assumptions regarding our business and
future performance. Such forward-looking statements are based on
information that involve a number of uncertainties and risks that
may cause actual events or results to differ materially from those
indicated by such forward-looking statements. Words such as
“expects,” “anticipates,”
“intends,” “plans,” “believes,”
“forecasts,” “estimates,”
“seeks,” “may result in,” “focused
on,” “continue to,” “on-going” and
similar expressions often identify forward-looking statements. We
undertake no obligation to publicly update or revise any
forward-looking statement, whether as a result of new information,
future events or otherwise, except as required by law. We caution
and advise readers that these statements are based on assumptions
that may not be realized and involve risks and uncertainties that
could cause actual results to differ materially from the
expectations and beliefs contained herein. For a summary of these
risks, see the risk factors included in our Annual Report on Form
10-K for the year ended December 31, 2020.
The
following discussion of our financial condition and results of
operations should be read in conjunction with our condensed
consolidated financial statements and the related notes included
elsewhere in this Form 10-Q and the section entitled
“Management’s Discussion and Analysis of Financial
Condition and Results of Operations” and the consolidated
financial statements and related notes included in our Annual
Report on Form 10-K for the year ended December 31,
2020.
OVERVIEW
Support.com, Inc. is a leading provider of customer and technical
support solutions delivered through its home-based employee model.
For more than twenty years, the Company’s homesourcing model
has produced outstanding results for enterprise clients and
consumers. Support.com’s proven and secure, cloud-based
technology platform is designed and optimized to deliver scalable
and flexible solutions from a global, home-based workforce. With
this ExpertAnywhere delivery capability, Support.com is positioned
to meet client needs through a global network of on-demand,
custom-profiled experts. Support.com is at the forefront of a
dynamic shift in the modern workplace by providing meaningful,
home-based career paths to employees. The Company’s
transformative homesourcing model is the future of
technology-enabled, expert-driven customer support that is better
for clients, employees, and the planet.
We intend the following
discussion of our financial condition and results of
operations to provide information that will assist in understanding
our consolidated financial statements, the changes in certain key
items in those consolidated financial statements from quarter to
quarter, and the primary factors that accounted for those changes,
as well as how certain accounting principles, policies and
estimates affect our consolidated financial
statements.
RESULTS OF OPERATIONS
Three Months Ended March 31, 2021 and 2020
REVENUE
|
Three Months Ended March 31,
|
|
|
|
|
|
In thousands, except percentages
|
|
|
|
|
Services
|
$9,138
|
$11,511
|
$(2,373)
|
-21%
|
Software
and other
|
493
|
438
|
55
|
13%
|
Total
revenue
|
$9,631
|
$11,949
|
$(2,318)
|
|
Services. Service revenue consists primarily of
fees for customer support services generated from our partners. We
provide these services remotely, generally using service delivery
personnel who utilize our proprietary technology to deliver the
services. Service revenue also includes licensing of our
Support.com Cloud applications. Service revenue for the three
months ended March 31, 2021 decreased by $2.4 million, or 21% from
the same period in 2020. This decrease was, as previously
disclosed, primarily due to a decline in two lines of business from
one of our major customers due to a realignment of the
customer’s needs, one of which concluded in the second
quarter of 2020 and the other scheduled to conclude in the second
quarter of 2021. For
the three months ended March 31, 2021, services revenue generated
from our partnerships and direct services was $9.1 million compared
to $11.0 million for the same period in 2020. We have shifted our
focus from the direct-to-consumer market to the enterprise business
market, and from primarily U.S. based delivery capabilities to
global delivery capabilities. As with any market that is undergoing
shifts, growth opportunities in our services programs are difficult
to predict, but we are focused on delivering growth through these
new strategic initiatives.
Software
and other. Software
and other revenue is comprised primarily of fees for end-user
software products provided through direct customer downloads, and,
to a lesser extent, through the sale of these software products via
partners. Software and other revenue for the three months ended
March 31, 2021 increased by $0.1 million, or 13% from the same
period in 2020.
COST OF REVENUE
|
Three Months Ended March 31,
|
|
|
|
|
|
In thousands, except percentages
|
|
|
|
|
Cost
of services
|
$6,005
|
$7,685
|
$(1,680)
|
-22%
|
Cost
of software and other
|
90
|
29
|
61
|
211%
|
Total
cost of revenue
|
$6,095
|
$7,714
|
$(1,619)
|
|
Cost of services. Cost of services consists primarily of
compensation costs and contractor expenses for people providing
services, technology and telecommunication expenses related to the
delivery of services and other personnel-related expenses in
service delivery. The decrease of $1.7 million, or 22%
in cost of services for the
three months ended March 31, 2021 compared to the same period in
2020 was primarily due to lower personnel expenses due to a
decrease in headcount as a result of the decreased business from
one of our major customers.
Cost of software and other.
Cost of software and other
consists primarily of third-party royalty fees for our end-user
software products. Certain of these products were developed using
third-party research and development resources, and the third party
receives royalty payments on sales of products it
developed.
OPERATING EXPENSES
|
Three Months Ended March 31,
|
|
|
|
|
|
In thousands, except percentages
|
|
|
|
|
Engineering
and IT
|
$924
|
$1,040
|
$(116)
|
-11%
|
Sales
and marketing
|
425
|
813
|
(388)
|
-48%
|
General
and administrative
|
4,206
|
2,053
|
2,153
|
105%
|
Total
operating expenses
|
$5,555
|
$3,906
|
$1,649
|
|
Engineering and IT. Engineering and IT expense consists
primarily of compensation costs, third-party consulting expenses
and related overhead costs for engineering and IT personnel and are
expensed as they are incurred. Engineering and IT costs for
the three months ended March 31, 2021 decreased $0.1
million, or 1%, as compared to the same period in 2020 primarily
due to reduced costs related to contractors providing services for
direct-to-consumer related projects.
Sales and marketing. Sales and marketing expense consists
primarily of compensation costs of business development, program
management and marketing personnel, as well as expenses for lead
generation and promotional activities, including public relations,
website design, advertising and marketing. Sales and
marketing costs for the three months ended March 31, 2021 decreased $0.4
million, or 48% compared to the same period in 2020 primarily due
to reductions in costs related to marketing campaigns targeted to
generate direct-to-consumer growth opportunities.
General and administrative.
General and administrative
expense consists primarily of compensation costs and related
overhead costs for administrative personnel and professional fees
for legal, accounting and other professional services.
General and administrative costs for the three months ended
March 31, 2021
increased $2.1 million, or 105%, compared to the same period in
2020 primarily due to one-time costs associated with the Greenidge
merger.
INTEREST INCOME AND OTHER, NET
|
Three Months Ended March 31,
|
|
|
|
|
|
In thousands, except percentages
|
|
|
|
|
Interest
income and other, net
|
$42
|
$84
|
$(42)
|
-50%
|
Interest income and other, net.
Interest income and other, net consists primarily of interest
income on our cash, cash equivalents and short-term investments.
Interest income and other, net for the three months ended March 31,
2021 decreased $0.04 million, or 50% compared to the same period in
2020 primarily due to lower yields on investments.
INCOME TAX PROVISION
|
Three Months Ended March 31,
|
|
|
|
|
|
In thousands, except percentages
|
|
|
|
|
Income
tax provision
|
$17
|
$49
|
$(32)
|
-65%
|
Income tax provision. For the three
months ended March 31, 2021, the income tax provision consisted of
both foreign and domestic taxes.
LIQUIDITY AND CAPITAL RESOURCES
Total
cash, cash equivalents and investments at March 31, 2021 and
December 31, 2020 were $39 million and $30 million, respectively.
The increase in cash, cash equivalents and investments was
primarily driven by proceeds from the sale of common stock of the
Company to 210 Capital, pursuant to the Subscription Agreement, as
well as stock option exercises.
Operating Activities
Net
cash provided by operating activities was $0.9 million and $2.1
million for the three months ended March 31, 2021 and 2020,
respectively. Net cash provided by operating activities primarily
consists of the net income (loss) for the period, adjusted for
non-cash items and changes in operating assets and liabilities.
Non-cash items include depreciation, amortization and stock-based
compensation expense. The sum of these non-cash items totaled $0.4
million and $0.2 million for the three months ended March 31, 2021
and 2020, respectively.
Net
cash provided by operating activities during the three months ended
March 31, 2021 was the result of a net loss of $2 million, which
was lower primarily due to one-time costs associated the
aforementioned merger activities during the first quarter of 2021,
adjustments for non-cash items of $0.3 million, decreases in
accounts receivable of $0.7 million and increases in accounts
payable, accrued liabilities, accrued compensation and deferred
revenue of $1.9 million.
Investing Activities
Net
cash provided by investing activities was $6.3 million and $3
million for the three months ended March 31, 2021 and 2020,
respectively. For the three months ended March 31, 2021, net cash
provided by investing activities was primarily due to investment
maturities of $6.8 million, partially offset by the purchase of
marketable securities of $0.4 million and purchases of fixed assets
of $0.1 million. For the three months
ended March 31, 2021, net cash provided by investing activities was
primarily due to investment maturities of $3
million.
Financing Activities
Net
cash provided by financing activities was $8.2 million for the
three months ended March
31, 2021 due to proceeds from the sale of common stock of
the Company to 210 Capital pursuant to the Subscription Agreement
and from the exercise of certain stock options.
Working Capital and Capital Expenditure Requirements
At
March 31, 2021, we
had stockholders’ equity of $41.0 million and working capital
of $40.2 million. We believe that our existing cash balances will
be sufficient to meet our working capital requirements, as well as
our planned capital expenditures, for at least the next 12
months.
If we
require additional capital resources to grow our business
internally or to acquire complementary technologies and businesses
at any time in the future, we may seek to sell additional equity or
debt securities. The current economic environment, however, could
limit our ability to raise capital by issuing new equity or debt
securities on acceptable terms, and lenders may be unwilling to
lend funds on acceptable terms that would be required to support
operations. The sale of additional equity or convertible debt
securities could result in dilution to our existing stockholders.
The issuance of debt securities would result in increased interest
expenses and could impose new restrictive covenants that would
limit our operating flexibility.
We plan
to continue to make investments in our business during 2021. We
believe these investments are essential to creating sustainable
growth in our business in the future. Additionally, we may choose
to acquire other businesses or complimentary technologies to
enhance our product capabilities and such acquisitions would likely
require the use of cash.
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
In
preparing the interim condensed consolidated financial statements,
we make estimates, assumptions and judgments that can have a
significant impact on net revenue, operating income or loss and net
income or loss, as well as on the value of certain assets and
liabilities on our condensed consolidated balance sheet. We base
our estimates, assumptions and judgments on historical experience
and various other factors that we believe to be reasonable under
the circumstances. Actual results could differ materially from
these estimates under different assumptions or conditions. On a
regular basis, we evaluate our estimates, assumptions and
judgments, and make changes accordingly. We believe that the
estimates, assumptions and judgments involved in the accounting for
revenue recognition, fair value measurements, purchase accounting
in business combinations, self-insurance accruals, accounting for
intangible assets, stock-based compensation and accounting for
income taxes have the greatest potential impact on our consolidated
financial statements, so we consider these to be our critical
accounting policies. For further information on our critical
accounting policies and estimates, see Note 1 to our consolidated
financial statements on Form 10-K for the year ended December 31,
2020. There have been no significant changes in these critical
accounting policies and estimates during the three months ended
March 31, 2021.
ITEM 3. QUANTITATIVE AND QUALITATIVE
DISCLOSURES ABOUT MARKET RISK
As a smaller reporting company, as defined in Rule 12b-2 of the
Exchange Act, we are not required to provide the information called
for by this Item.
ITEM 4. CONTROLS AND
PROCEDURES
Evaluation of Disclosure Controls and Procedures
We
maintain “disclosure controls and procedures,” as such
term is defined in Rule 13a-15(e) under the Exchange Act, that are
designed to ensure that information required to be disclosed by us
in reports that we file or submit under the Exchange Act is
recorded, processed, summarized and reported within the time
periods specified in Securities and Exchange Commission rules and
forms, and that such information is accumulated and communicated to
our management, including our Chief Executive Officer and Chief
Financial Officer, as appropriate, to allow timely decisions
regarding required disclosure. In designing and evaluating our
disclosure controls and procedures, management recognized that
disclosure controls and procedures, no matter how well conceived
and operated, can provide only reasonable, not absolute, assurance
that the objectives of the disclosure controls and procedures are
met. Our disclosure controls and procedures have been designed to
meet, and management believes they meet, reasonable assurance
standards. Additionally, in designing disclosure controls and
procedures, our management necessarily was required to apply its
judgment in evaluating the cost-benefit relationship of possible
disclosure controls and procedures. The design of any disclosure
controls and procedures also is based in part upon certain
assumptions about the likelihood of future events, and there can be
no assurance that any design will succeed in achieving its stated
goals under all potential future conditions.
Our
Chief Executive Officer and our Chief Financial Officer, after
evaluating the effectiveness of our “disclosure controls and
procedures” as of the end of the period covered by this
quarterly report, have concluded that our disclosure controls and
procedures are effective based on their evaluation of these
controls and procedures required by paragraph (b) of Exchange Act
Rules 13a-15 or 15d-15.
Changes in Internal Control over Financial Reporting
There were no changes that occurred during the
three months ended March 31, 2021 that have materially affected, or are reasonably
likely to materially affect, our internal control over financial
reporting.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
There
have been no material changes to the risk factors disclosed in the
Company’s Annual Report on Form 10-K for the fiscal year
ended December 31, 2020.
ITEM 1A. RISK FACTORS
The
risk factors disclosed in the Company’s Annual Report on Form
10-K for the fiscal year ended December 31, 2020 are incorporated
by reference herein. In addition:
Termination of the Merger could trigger payment of fees or expenses
to Greenidge, as well as negatively impact the business, financial
condition, results of operations or stock price of
Support.
If the Merger is not consummated, Support may
be subject to a number of adverse effects,
including:
|
●
|
|
Support
may be required to pay Greenidge a $3.5 million termination
fee under certain circumstances;
|
|
●
|
|
Support
may be required to reimburse Greenidge’s fees and expenses in
connection with the Merger, up to $2.0 million under certain
circumstances;
|
|
●
|
|
the
price of Support common stock may decline;
|
|
●
|
|
Support
may experience negative reactions from the financial markets or
from its employees, suppliers or customers; and
|
|
●
|
|
costs
related to the Merger, such as legal, accounting, financial
advisory and proxy solicitation fees, must be paid even if the
Merger is not completed.
|
While
Greenidge may become obligated under the Merger Agreement to
reimburse Support for certain of Support’s fees and expenses
up to $2.0 million plus any fees and expenses incurred by
Support in connection with any cooperation by Support with certain
acts of Greenidge, such Greenidge obligation arises only under
limited circumstances and, even if such obligation does arise, such
reimbursement may not be sufficient to reimburse Support for all of
its fees and expenses.
In
addition, if the Merger is not consummated, Support could be
subject to litigation related to any failure to consummate the
Merger or related to any enforcement proceedings commenced against
Support to perform its obligations under the Merger
Agreement.
Greenidge is not a publicly traded company and does not have a long
operating history, making it difficult to determine the fair market
value of Greenidge or the Greenidge Common Stock.
Greenidge
capital stock is and has been privately held and is not currently
traded on any public market, which makes it difficult to determine
the fair market value of Greenidge, the Merger Consideration or any
other Greenidge capital stock. In addition, Greenidge began its
bitcoin mining operations in May 2019. While Support has engaged
BTIG, LLC for its analysis and opinion as to the fairness, from a
financial point of view, to the holders of Support common stock
(other than 210 Capital) of the consideration to be received by
such holders in the Merger pursuant to the Merger Agreement, which
analysis requires an estimate of the value of Greenidge and the pro
forma combined business, such analysis and such unaudited pro forma
financial information are estimates made on the basis of the
historical financial statements and presently available information
of Greenidge and Support, and are subject to numerous assumptions
and factors, including about Greenidge and Support individually,
and their current and future financial condition and results of
operations. Any change in Greenidge’s financial condition or
results of operations may cause significant variations in the price
of Greenidge Common Stock.
Any
estimate of the fair market value of Greenidge or any Greenidge
capital stock is only an estimate and depends on multiple
variables, including energy pricing trends, bitcoin pricing trends,
market activity, the impact of the Merger, and other factors, that
could positively or negatively affect such values.
Support and Greenidge operate in different industries. As a result,
if the Merger is completed, former Support stockholders who receive
the Merger Consideration will be subject to new risks as
stockholders of Greenidge.
Greenidge operates
in the cryptocurrency and bitcoin mining and power generation
industries. As a result, if the Merger is completed, former Support
stockholders who receive the Merger Consideration will be subject
to the various risks related to, and inherent in, such industries,
as stockholders of Greenidge.
The Merger Consideration consists of a fixed aggregate amount of
Greenidge Class A Common Stock and is not adjusted before or at the
Closing to account for the performance of Support or
Greenidge.
The
aggregate number of Greenidge Class A Common Stock to be issued as
merger consideration is a fixed amount that will not be adjusted
before or at the closing of the Merger (the “Closing”)
(other than to reflect the economic effect of stock splits, reverse
stock splits, stock dividends, subdivisions, etc.), including if
the performance of Support’s business improves or
Greenidge’s business deteriorates in the period after the
execution of the Merger Agreement and before Closing. In addition,
the Exchange Ratio will be determined shortly before Closing and
will be impacted by the fully diluted amount of Support common
stock as calculated under the Merger Agreement. Accordingly, as the
fully diluted amount of Support common stock increases, the
Exchange Ratio, and the number of Greenidge Class A Common Stock
per share of Support common stock issued to former Support
stockholders, decreases.
Each party is subject to business uncertainties and contractual
restrictions while the Merger is pending, which could adversely
affect each party’s business and operations.
In
connection with the pendency of the Merger, it is possible that
some customers, suppliers and other business partners with whom
Support and/or Greenidge has a business relationship may delay or
defer certain business decisions or might decide to seek to
terminate, change or renegotiate their relationships with Support
or Greenidge, as the case may be, as a result of the Merger or
otherwise, which could negatively affect Support’s or
Greenidge’s business, regardless of whether the Merger is
completed. The pending transaction could also divert management
time and resources that could otherwise have been devoted to other
opportunities that may have been beneficial to Greenidge or
Support.
Under
the terms of the Merger Agreement, each of Support and Greenidge
are subject to certain restrictions on the conduct of their
respective businesses prior to the Closing of the Merger which may
adversely affect its ability to execute certain of its business
strategies. Such limitations could adversely affect Support’s
or Greenidge’s business and operations.
There can be no assurances that the IRS will treat the Merger in
accordance with the Intended Tax Treatment.
Support
and Greenidge have structured the Merger with the intent that it
will qualify as a “reorganization” within the meaning
of Section 368(a) of the Internal Revenue Code of 1986, as amended
(the “Intended Tax Treatment”). However, Support and
Greenidge have not sought, and will not seek, any ruling from the
Internal Revenue Service (the “IRS”) regarding any
matter affecting the Merger and have not sought, and will not seek,
any tax opinion from their respective legal counsel regarding the
qualification of the Merger for the Intended Tax Treatment. Thus,
there can be no assurance that the IRS will ultimately conclude
that the Merger meets all of the requirements for the Intended Tax
Treatment. A successful challenge by the IRS to the Intended Tax
Treatment of the Merger could result in taxable gain to
Support’s stockholders as a result of the
Merger.
Because the Merger will result in an ownership change under
Section 382 of the Internal Revenue Code for Support,
Support’s pre-merger net operating loss
carryforwards and certain other tax attributes will be subject to
limitations.
As
of December 31, 2020, Support had approximately
$145.6 million in U.S. federal tax net operating loss
carryforwards, the usage of which is subject to Section 382 of
the Internal Revenue Code of 1986, as amended
(“Section 382”). If a corporation undergoes an
“ownership change” within the meaning of
Section 382, the corporation’s net operating loss
carryforwards and certain other tax attributes arising from before
the ownership change are subject to limitations on use after the
ownership change. In general, an ownership change occurs if there
is a cumulative change in the corporation’s equity ownership
by certain stockholders that exceeds fifty percentage points over a
rolling three-year period. Similar rules may apply under state tax
laws. The Merger will result in an ownership change for Support
and, accordingly, Support’s net operating loss carryforwards
and certain other tax attributes will be subject to limitations on
their use after the Merger. Consequently, even if the combined
organization achieves profitability, it may not be able to utilize
a material portion of Support’s or the combined
organization’s net operating loss carryforwards and other tax
attributes, which could have a material adverse effect on its cash
flow and results of operations.
The dual class structure of Greenidge Common Stock will have the
effect of concentrating voting power with the Controlling
Stockholder, which may depress the market value of Greenidge Class
A Common Stock and will limit a Support stockholder’s or a
new investor’s ability to influence the outcome of important
transactions, including a change in control.
While the economic rights of Greenidge Class A
Common Stock and Greenidge Class B Common Stock are the same,
Greenidge Class A Common Stock shares have one (1) vote per
share, while Greenidge Class B Common Stock shares have ten
(10) votes per share. Holders of Greenidge Class B Common
Stock represent 100% of Greenidge’s voting power as of
April 26, 2021 and Greenidge expects such holders to represent
approximately 99% of Greenidge’s voting power immediately
following Closing, assuming the conversion of all shares of series
A preferred stock, par value $0.0001 per share, of Greenidge, into
Greenidge Class B Common Stock, the exercise of all outstanding
options to purchase Greenidge Class B Common Stock and assuming no
new issuances of Greenidge Class A Common Stock. Given the 10:1
voting ratio, even a significant issuance of Greenidge Class A
Common Stock, and/or a transaction involving Greenidge Class A
Common Stock as consideration, may not impact Atlas Capital Resources (A9) LP’s (the
“Controlling Stockholder’s”) significant majority
voting position in Greenidge.
In addition, regardless of the votes per share of
Greenidge Common Stock, assuming the Merger were to be completed as
of May 3, 2021, the Merger Consideration would represent approximately 7.7% of the
outstanding capital stock of Greenidge, after giving effect
to the shares to be issued in or underlying the Greenidge
Issuances. Accordingly, former Support
stockholders will have limited ability, if any, to influence the
outcome on any matters that are or may be subject to Greenidge
stockholder approval.
Greenidge
has enacted a dual class voting structure to ensure the continuity
of voting control of Greenidge for the foreseeable future. As a
result, for the foreseeable future, the Controlling Stockholder
will be able to control matters submitted to Greenidge’s
stockholders for approval, including the election of directors,
amendments of its organizational documents and any merger,
consolidation, sale of all or substantially all of its assets or
other major corporate transactions.
The
Controlling Stockholder may have interests that differ from other
Greenidge stockholders – including the Support stockholders
receiving Greenidge Class A Common Stock in the Merger – and
may vote its Greenidge Class B Common Stock in a way with which
other stockholders may disagree or which may be adverse to such
other stockholders’ interests. In addition, this concentrated
control will have the effect of delaying, preventing or deterring a
change in control of Greenidge, could deprive its stockholders of
an opportunity to receive a premium for their capital stock as part
of a sale of Greenidge, and might have a negative effect on the
market price of shares of Greenidge Class A Common
Stock.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF
PROCEEDS
Previously reported
on the Company’s Current Report on Form 8-K filed with the
SEC on March 22, 2021.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. MINE SAFETY DISCLOSURES
None.
ITEM 5. OTHER INFORMATION
None.
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Chief
Executive Officer Section 302 Certification.
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Chief
Financial Officer Section 302 Certification.
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Statement
of the Chief Executive Officer under 18 U.S.C. §
1350(1)
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Statement
of the Chief Financial Officer under 18 U.S.C. §
1350(1)
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(1) The
certifications filed as Exhibits 32.1 and 32.2 are not deemed
“filed” for purposes of Section 18 of the Securities
Exchange Act of 1934 and are not to be incorporated by reference
into any filing of the Company under the Securities Exchange Act of
1933 or the Securities Exchange Act of 1934, whether made before or
after the date hereof irrespective of any general incorporation by
reference language contained in any such filing, except to the
extent that the registrant specifically incorporates it by
reference.
Pursuant
to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.
May 13,
2021
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SUPPORT.COM,
INC.
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By:
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/s/ Lance
Rosenzweig
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Lance Rosenzweig
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President
and Chief Executive Officer
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By:
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/s/ Caroline Rook
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Caroline Rook
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Chief Financial Officer
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