sprt_10k

10-K 1 sprt_10k.htm ANNUAL REPORT sprt_10k

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

(Mark One)

☒	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

	For the Fiscal Year Ended December 31, 2020

	OR

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

	For the transition period from ________ to ________

Commission File No. 000-30901

SUPPORT.COM, INC.

(Exact name of registrant as specified in its charter)

Delaware		94-3282005
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

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		SPRT		The Nasdaq Stock Market LLC
Title of each class		Trading symbol(s)		Name of each exchange on which registered

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☒

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ☒

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 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 the 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	☐	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☒
		Emerging growth company	☐

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 has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

The aggregate market value of the registrant’s common stock held by non-affiliates as of June 30, 2020, the end of the registrant’s second fiscal quarter, was approximately $26.9 million, based on a closing market price of $1.41 per share.

As of March 5, 2021, there were 19,656,591 shares of the registrant’s common stock outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the registrant’s definitive proxy statement to be filed subsequent to the date hereof with the Securities and Exchange Commission pursuant to Regulation 14A in connection with the registrant’s fiscal year 2021 annual meeting of stockholders are incorporated by reference into Part III of this report. Such definitive proxy statement will be filed with the Commission not later than 120 days after the end of the registrant’s fiscal year ended December 31, 2020.

CAUTIONARY STATEMENT REGARDING FORWARD LOOKING STATEMENTS

This Form 10-K contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, including the following:

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certain statements, including possible or assumed future results of operations, in “Management’s Discussion and Analysis of Financial Condition and Results of Operations”;

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any statements regarding the prospects for our business or any of our services;

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any statements preceded by, followed by or that include the words “may,” “will,” “should,” “seeks,” “believes,” “expects,” “anticipates,” “intends,” “continue,” “estimate,” “plans,” “future,” “targets,” “predicts,” “budgeted,” “projections,” “outlooks,” “attempts,” “is scheduled,” or similar expressions; and

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other statements regarding matters that are not historical facts.

Our business and results of operations are subject to risks and uncertainties, many of which are beyond our ability to control or predict. Because of these risks and uncertainties, actual results may differ materially from those expressed or implied by forward-looking statements, and investors are cautioned not to place undue reliance on such statements. All forward-looking statements herein speak only as of the date hereof, and we undertake no obligation to update any such forward-looking statements. Important factors that could cause actual results to differ materially from our expectations and may adversely affect our business and results of operations include, but are not limited to, those items set forth in Item 1A. “Risk Factors” appearing in this Form 10-K.

SUPPORT.COM, INC.

FORM 10-K

FOR FISCAL YEAR ENDED DECEMBER 31, 2020

TABLE OF CONTENTS

		Page
PART I
ITEM 1.	Business	5
ITEM 1A.	Risk Factors	8
ITEM 1B.	Unresolved Staff Comments	24
ITEM 2.	Properties	25
ITEM 3.	Legal Proceedings	25
ITEM 4.	Mine Safety Disclosures	25
PART II
ITEM 5.	Market for the Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	25
ITEM 6.	Selected Consolidated Financial Data	26
ITEM 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	26
ITEM 7A.	Quantitative and Qualitative Disclosures About Market Risk	32
ITEM 8.	Financial Statements and Supplementary Data	33
	Report of Independent Registered Public Accounting Firm	34
ITEM 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosures	60
ITEM 9A.	Controls and Procedures	61
	Report of Management on Internal Control over Financial Reporting	61
ITEM 9B.	Other Information	62
PART III
ITEM 10.	Directors, Executive Officers and Corporate Governance	62
ITEM 11.	Executive Compensation	62
ITEM 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	62
ITEM 13.	Certain Relationships and Related Transactions and Director Independence	62
ITEM 14.	Principal Accountant Fees and Services	62
PART IV
ITEM 15.	Exhibits and Financial Statement Schedules	62
Signatures		68

PART I

ITEM 1 – BUSINESS

Business Overview

Support.com, Inc. (“Support.com,” the “Company,” “We” or “Our”) provides customer and technical support solutions delivered by home-based employees. Our homesourcing model, which enables outsourced work to be delivered by people working from home, has been specifically designed for remote work, with attention to security, recruiting, training, delivery, and employee engagement.

Customer Support Solutions

We provide outsourced customer support and cloud-based technology platforms to companies in multiple industry verticals. We serve clients in verticals such as media and communication, healthcare, retail, and technology with omnichannel programs that include voice, chat, and self-service. We meet clients’ needs through our network of home-based employees and cloud-based platforms. With our fully distributed team, we are able to flex staffing levels and skill sets to address client requirements, offering business process continuity. We custom-profile customer support professionals (called “experts”) who meet the requirements for the work-from-home environment and for specific client criteria related to industry experience, and skill set.

Technical Support Programs

We offer technical support programs to our enterprise clients that are sold to the clients’ end customers. These tailored programs can be bundled with complementary services or offered on stand-alone basis as a subscription or one-time purchase.

We also offer a subscription-based tech support service direct-to-consumers and small businesses that helps users solve a wide-range of technology problems with all computers, smartphones, and other connected devices, including device setup, troubleshooting, connectivity or interoperability problems, and malware and virus removal.

End-User Software

Our SUPERAntiSpyware® software is a malware protection and removal software product available for the Windows OS on personal computers and tablets. The software is licensed on an annual basis, and is sold direct to consumers and businesses, or through re-sellers.

Sales and Marketing

Customer Support Solutions

We sell our customer support solutions through a dedicated sales force with a consultative approach. We market these solutions to clients in a number of verticals, including media and communication, healthcare, retail and technology. Our direct sales efforts occur in response to our lead generation program, a request for proposal, a reference from an existing client, or otherwise. The sales cycle varies depending upon the type of client, the type of services, and the existence of an established relationship.

We also license Support.com’s technology platform and/or applications separately from our outsourced customer support services. In such an arrangement, customers receive the right to use our cloud-based software in their own support organization, using a SaaS model under which customers pay us on a per-user or a per-session basis during the term of the arrangement. We also provide implementation services to customers, typically covering integration of our software with other customers’ systems.

Technical Support Programs

We sell tech support subscription services and fully managed technical support programs to clients through our direct sales efforts. Typical clients may include communication providers (MSOs/ISPs), retailers, or OEMs, among others. Our clients may bundle our subscription-based tech support services with existing complementary services or offer them on a stand-alone basis to their end customers. Our tech support subscription services may be offered under the client’s brand (white-labeled) or co-branded.

We also sell our tech support services direct to consumers and small businesses primarily through online marketing channels, including but not limited to search engine optimization (SEO), paid and earned social media, and content marketing.

End-User Software Product

We license SUPERAntiSpyware® directly to clients and through re-sellers or partners. To date, a majority of the end-user software revenue has come through direct sales to clients. A substantial percentage of SUPERAntiSpyware® software revenue arises from customers who download free trial versions of the software or free versions of the software with limited functionality before making a purchase decision.

Engineering and IT

Engineering and IT expense was $3.7 million and $4.1 million for the years ended December 31, 2020 and 2019, respectively.

We maintain dedicated engineering and IT teams to develop, maintain, and continue to improve proprietary, cloud-based technologies that are essential to our business. We focus our investment in engineering and IT across the following major areas: the creation and refinement of our Guided Paths® software and library; solutions for support interaction optimization; endpoint applications and other extensions to gather data to assist support interactions and allow remote support when necessary; business analytics and reporting; open application interfaces; and internal service delivery management tools.

Guided Paths® contains step-by-step self-support guides, with decision points along the way to help customers resolve problems. Our experts also leverage Guided Paths as instructional guides and knowledge base as part of customer support.

The service delivery management tools used by our experts for technology support services include our own Support.com cloud-based software capabilities and other contact center applications such as customer relationship management (“CRM”), ticketing, ordering, methods of payment, and telephony, which are all integrated into applications for our contact center specialists. The tools support all omnichannel services to include voice, email, chat, SMS and self-service.

For business analytics and reporting, we build and maintain a data warehouse that aggregates and restructures data from all of our applications to create a comprehensive view of the service delivery lifecycle, as well as data about the disposition of support interactions. This data set provides visibility into sales conversion effectiveness, service delivery efficiency, service level performance, subscription utilization, partner program performance and many other aspects of running and optimizing our business. Our partners also receive reports and analytic information from the warehouse for their programs on a regular basis via secure data feeds.

Open application interfaces of our Support.com Cloud enable integration with CRM, ticketing systems, and other contact center applications.

Intellectual Property

We own the trademarks SUPPORT.COM®, GUIDED PATHS®, PERSONAL TECHNOLOGY EXPERTS, BUSINESS TECHNOLOGY EXPERTS and NEXUS® in the United States for specified support services and software, and we have registrations and common law rights for several related trademarks in the U.S. and certain other countries. We own the domain name Support.com and additional other domain names. We have a pending trademark registration for Homesourcing™. We also retain exclusive rights to our proprietary services technology, and our end user software products. In addition, we hold non-exclusive rights to sell and distribute certain other software products.

We own two U.S. patents related to our business and have a number of pending patent applications covering certain advanced technology. Our issued patents include U.S. Patent No. 8,020,190 (“Enhanced Browser Security”) and U.S. Patent No. 6,754,707 (“Secure Computer Support System”). However, we do not know if our current patent applications or any future patent application will result in a patent being issued with the scope of the claims we seek, if at all. Also, we do not know whether any patents we have or may receive will be challenged or invalidated. It is difficult to monitor unauthorized use of technology, particularly in foreign countries where the laws may not protect our proprietary rights as fully as they do in the United States, and our competitors may develop technology that competes with ours but nevertheless does not infringe our intellectual property rights.

We rely on a combination of copyright, trade secret, trademark and contractual protection to establish and protect our proprietary rights that are not protected by patents. We also enter into confidentiality agreements with our employees and consultants involved in product development. We generally require our employees, customers and potential business partners to enter into confidentiality agreements before we will disclose any sensitive aspects of our business. Also, we generally require employees and contractors to agree to assign and surrender to us any proprietary information, inventions or other intellectual property they generate while working for us in the scope of employment. These precautions, and our efforts to register and protect our intellectual property, may not prevent misappropriation or infringement of our intellectual property.

Competition

We are active in markets that are highly competitive and subject to rapid change. Although we do not believe there is one principal competitor for all aspects of our offerings, we do compete with a number of other vendors.

With regard to our customer support services, our competitors include large multi-national corporations and smaller, regional providers, and may vary by geography. We compete with in-house customer management operations as well as other companies that provide outsourced customer care including: Concentrix, Teleperformance, Sitel, TaskUs, Alorica and 24-7 Intouch, among others. The principal competitive factors include: technological innovation, operational performance and efficiencies, pricing, brand, and financial stability.

With respect to licensing of our Support.com technology platform and applications, our competitors include companies focused on service desk, knowledge management, remote support and IT process automation. We believe the principal competitive factors in our technology platform and applications include breadth and depth of functionality, including our remote security and employee monitoring features, ease of implementation, overall performance, scalability, pricing, financial resources, and customer support. We believe that our Support.com technology platform and applications offering provides an integrated solution that covers different areas of functionality required by customers.

With respect to partnerships for our technology support services, our competitors include companies focused on premium technology services, certain warranty providers, emerging Internet of Things (“IoT”) technology support providers, global business process outsourcing providers or contact centers focused on technical support and other companies who offer technical support through partners. We believe the principal competitive factors in our services market include: pricing, breadth and depth of service offerings, quality of the customer experience, proprietary technology, time to market, account management, vendor reputation, scale, and financial resources.

With regard to our direct-to-consumer and small and medium-sized business (“SMB”) technical support services, our competitors include device retailers, multiple system operators (MSOs)/internet service providers (ISPs), and smaller privately-held or local companies in the home installation, computer repair, or general tech support space. We believe the principal competitive factors in our premium tech support market include the breadth of service offering, value-based and flexible pricing, and customer experience and service levels.

In the market for our end-user software product, SUPERAntiSpyware®, we face direct competition from other anti-malware software vendors, anti-virus software vendors, operating system providers and other OEMs that may provide similar solutions and function in their products, and from individuals and groups who offer “free” and open source utilities online. We compete in this market on the basis of our value-based pricing.

The competitors in our markets for services and software can have some or all of the following competitive advantages: longer operating histories, greater economies of scale, greater financial resources, greater engineering and technical resources, greater sales and marketing resources, stronger strategic alliances and distribution channels, larger user bases, products with different functions and feature sets, and greater brand recognition than we have. We expect new competitors to continue to enter the markets in which we operate.

For additional information related to competition, see Item 1A, Risk Factors.

Employees

As of December 31, 2020 and 2019, we had 780 and 1,231 employees, respectively. As of December 31, 2020, we had 719 employees based in the United States, of whom 664 were work-from-home agents and 55 were corporate employees, and 61 employees based outside of the United States. In addition to our work-from-home employees, we also use contract labor. None of our employees are covered by collective bargaining agreements.

Securities and Exchange Commission (“SEC”) Filings and Other Available Information

Our telephone number is 650-556-9440 and our website address is www.support.com. The information contained on our website does not form any part of this annual report on Form 10-K. However, we make available, free of charge through our website, our annual reports on Form 10-K, our quarterly reports on Form 10-Q and our current reports on Form 8-K filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 as soon as reasonably practicable after we electronically file this material with, or furnish it to, the SEC. The reports filed with the SEC by us and by our officers, directors, and significant shareholders are also available for review on the SEC’s website at www.sec.gov. In addition, we make available our Code of Ethics and Business Conduct for Employees, Officers and Directors on: https://www.support.com/about-us/investor-relations/corporate-governance/. This Code is also available in print without charge to any person who requests it emailing us at IR@support.com.

ITEM 1A. – RISK FACTORS

Risks Related to Our Operations, Customers and Strategy

Our financial condition and results of operations may vary from quarter to quarter, which may cause the price of our common shares to decline.

Our quarterly results of operations have fluctuated in the past and could do so in the future. Because our results of operations are difficult to predict, you should not rely on quarterly comparisons of our results of operations as an indication of our future performance. Fluctuations in our results of operations may be due to a number of factors, including, but not limited to, those listed below and those identified throughout this “Risk Factors” section:

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The performance of our partners, including the success of our partners in attracting end users of our products, which can impact the amount of revenue we derive;

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Change, or reduction in or discontinuance of our programs with clients and partners;

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Cancellations, rescheduling or deferrals of significant customer products or service programs;

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Our reliance on a small number of partners for a substantial majority of our revenue;

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Our ability to successfully license and grow revenue related to our SUPERAntiSpyware® software, Guided Paths®, Support.com Cloud and our service offerings;

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The timing of our sales to our clients and our partners’ resale of our products to end users and our ability to enter into new sales with partners and renew existing programs with our clients and partners;

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The availability and cost-effectiveness of advertising placements for our software products and services and our ability to respond to changes in the advertising markets in which we participate;

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The efficiency and effectiveness of our technology specialists;

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Our ability to effectively match staffing levels with service volumes on a cost-effective basis;

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Our ability to manage contract labor;

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Our ability to hire, train, manage and retain our home-based customer support specialists and enhance the flexibility of our staffing model in a cost-effective fashion and in quantities sufficient to meet forecast requirements;

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Our ability to manage costs under our self-funded health insurance program;

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Usage rates on the subscriptions we offer;

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Our ability to maintain a competitive cost structure for our organization;

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The rate of expansion of our offerings and our investments therein;

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Changes in the markets for computers and other technology devices relating to unit volume, pricing and other factors, including changes driven by declines in sales of personal computers and the growing popularity of tablets, and other mobile devices and the introduction of new devices into the connected home;

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Our ability to adapt to our clients’ needs in a market space defined by frequent technological change;

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Severe financial hardship or bankruptcy of one or more of our major clients;

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The amount and timing of operating costs and capital expenditures in our business;

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Failure to protect our intellectual property;

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Diversion of management’s attention from other business concerns, incurrence of costs and disruption of our ongoing business activities as a result of acquisitions or divestitures by us;

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Costs related to the defense and settlement of litigation, which can also have an additional adverse impact on us because of negative publicity, diversion of management resources and other factors;

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Costs related to the defense and settlement of government investigations, requests for information and audits, which can also have an additional adverse impact on us because of negative publicity, diversion of management resources and other factors, including, without limitation, those audits, requests for information and investigations described in Part II. Item 1. Legal Proceedings of this report;

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Public health or safety concerns, medical epidemics or pandemics, such as COVID-19, and other natural- or man-made disasters;

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The effects of any acquisitions, divestitures or significant investments; and

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Potential losses on investments, or other losses from financial instruments we may hold that are exposed to market risk.

Due to fluctuations in our quarterly and annual results of operations and other factors, the price at which our common shares trades may be volatile. Accordingly, you may not be able to resell your common shares at or above the price you paid. In future periods, our stock price could decline if, amongst other factors, our revenue or operating results are below our estimates or the estimates or expectations of securities analysts and investors.

A substantial portion of our revenue is generated by a limited number of clients. The loss or reduction in business from any of these clients would adversely affect our business and results of operations.

We receive a significant amount of our revenue from a limited number of customers. For the year ended December 31, 2020, two customers accounted for over 80% of our total revenue.

In the past, sales to our largest customers have fluctuated significantly from period to period and year to year and will likely continue to fluctuate in the future. The loss of these or other significant relationships, the change of the terms or terminations of our arrangements with any of these customers, the reduction or discontinuance of programs or billable hours with any of these customers, or the failure of any of these customers to achieve their targets has in the past adversely affected and could in the future adversely affect our business. For example, our partners may decide to shorten our billable hours and use other vendors in the provision of their business and/or may periodically place these types of services out for bid. Our competitors, many of whom have significantly more resources than we do, may offer more favorable bids for the same business compared to what we offer; and as a result, we may lose, or face a decline in the business we do with these significant customers.

We may engage in the acquisition of other companies, investments, joint ventures and strategic alliances outside of our current line of business, which may have an adverse material effect on our existing business.

We may engage in the acquisition of other companies, investments, joint ventures and strategic alliances outside of our current line of business to design and develop new technologies and products, to strengthen competitiveness by scaling up and to expand our existing business line into new regions. Such transactions, especially in new lines of business, inherently involve risk due to the difficulties in integrating operations, technologies, products and personnel. Integration issues are complex, time-consuming and expensive and, without proper planning and implementation, may adversely affect our existing business. Furthermore, we may incur significant acquisition, administrative and other costs in connection with these transactions, including costs related to integration or restructuring of acquired businesses. In addition, we may make investments in companies outside our current line of business in an attempt to broaden our business opportunities. These investments may not provide a return or lead to an increase in our operating results, and we may not obtain the benefits of these investments that we intend to recognize when making them. There can be no assurance that these transactions will be beneficial to our business or financial condition. Even assuming these transactions are beneficial, there can be no assurance that we will be able to successfully integrate the new business lines acquired or achieve all or any of the initial objectives of these transactions.

We may make acquisitions that deplete our resources and do not prove successful.

We have made acquisitions in the past and may make additional acquisitions in the future. Our management may not be able to effectively implement our acquisition program and internal growth strategy simultaneously. The integration of acquisitions involves a number of risks and presents financial, managerial and operational challenges. We may have difficulty, and may incur unanticipated expenses related to, integrating management and personnel from these acquired entities with our management and personnel. Our failure to identify, consummate or integrate suitable acquisitions could adversely affect our business and results of operations. We cannot readily predict the timing, size or success of our future acquisitions. Even successful acquisitions could have the effect of reducing our cash balances.

We may pursue investments, joint ventures and dispositions, which could adversely affect our results of operations.

We may invest in businesses that offer complementary products, services and technologies, augment our market coverage, or enhance our technological capabilities. We may also enter into strategic alliances or joint ventures to achieve these goals. We may not be able to identify suitable investment, alliance, or joint venture opportunities, or to consummate any such transactions. In addition, our original estimates and assumptions used in assessing any transaction may be inaccurate and we may not realize the expected financial or strategic benefits of any such transaction.

We may also seek to divest or wind down portions of our business, either acquired or otherwise, each of which could materially affect our cash flows and results of operations. Any future dispositions we may make could involve risks and uncertainties, including our ability to sell such businesses on terms acceptable to us, or at all. In addition, any such dispositions could result in disruption to other parts of our business, potential loss of employees or customers, or exposure to unanticipated liabilities or ongoing obligations to us following any such dispositions. For example, in connection with such dispositions, we may agree to provide certain indemnities to the purchaser, which may result in additional expenses and may adversely affect our financial condition and results of operations. In addition, dispositions may include the transfer of technology and/or the licensing of certain IP rights to third-party purchasers, which could limit our ability to utilize such IP rights or assert these rights against such third-party purchasers or other third parties.

We have a history of losses, we may incur losses in the future and may not sustain profitability in the near term; and as a result, we may need to alter our business plans or change our business strategy.

Although we have recently been profitable in the last two fiscal years, our profitability declined in 2020 compared to 2019. Prior to becoming profitable in 2019, we had a history of losses. Our accumulated deficit as of December 31, 2020 amounted to $208.8 million. We may incur losses in the future and may not be able to sustain our profitability in the near term. As a result, we may elect or may be required to alter our business plans or change our business strategy. Any change to our business plans or strategy will present risks related to our ability to execute on these changes and may require us to make additional investments in our business, all of which could harm our operating results and cause our stock price to decline.

Our stock price is subject to volatility.

Our stock price has experienced substantial price volatility in the past and may continue to do so in the future. Further, our business, the technology industry and the stock market as a whole have experienced extreme stock price and volume fluctuations that have affected stock prices in ways that may have been unrelated to corporate operating performance. For example, in 2020 as a result of macroeconomic conditions and the related impact of Covid-19, the stock market experienced wide fluctuations. In the past year, our stock price has fluctuated from as low as $0.93 per share In March 2020 to a high of $2.57 in February 2021. This significant volatility may continue to occur in the future for reasons that are unrelated to our business or if our business experiences unexpected results. We believe our stock price should reflect expectations of future growth and profitability. If we fail to meet expectations related to future growth, profitability, potential future dividends or share repurchases, or other market expectations, our stock price may decline significantly, which could have a material adverse impact on the confidence of our investors and employee retention.

Our contracts generally do not contain minimum purchase requirements and can generally be terminated by our customers on short notice without penalty.

We enter into written agreements with each client for our services, and we generally seek multi-year terms for such agreements. However, these agreements generally permit our clients to terminate for convenience on relatively short notice. Moreover, these agreements generally allow clients to procure similar services from other vendors, do not penalize our clients for early termination, and do not contain minimum purchase requirements or volume commitments. Accordingly, we face the risk that our clients may cancel or renegotiate contracts we have with them, which may adversely affect our results. If a principal client canceled or did not renew its contract with us, our results would suffer. Clients can generally reduce the volume of services they outsource to us without any penalties, which would have an adverse effect on our revenue, results of operations and overall financial condition.

Our business is based on a relatively new and evolving business model.

We are executing a plan to grow our business by providing customer support services provided by experts who work from their homes, creating a robust, timely and innovative library of Guided Path® self-support tools, licensing our Support.com Cloud application, and providing end-user consumer software products. We may not be able to offer these services and software products successfully. Our customer support experts are generally home-based, which requires a high degree of coordination and quality control of employees working from diverse and remote locations. We expect to invest cash generated from our existing business to support our growth initiatives. Our investments, which typically are made in advance of revenue, may not yield increased revenue to offset these expenses. As a result of these factors, the future revenue and income potential of our business is uncertain. Any evaluation of our business and our prospects must be considered in light of these factors and the risks and uncertainties often encountered by companies in our stage of development. Some of these risks and uncertainties relate to our ability to do the following:

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Maintain our current relationships and service programs, and develop new relationships, with service partners, subscriptions, and licensees of our Support.com technical support offering on acceptable terms or at all;

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Reach prospective customers for our software products in a cost-effective fashion;

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Reduce our dependence on a limited number of partners for a substantial majority of our revenue;

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Successfully license and grow revenue related to our consumer software, Support.com technical support subscriptions, Guided Paths® and our technology support service offerings;

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Manage our employees and contract labor efficiently and effectively;

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Maintain gross and operating margins;

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Match staffing levels with demand for services and forecast requirements;

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Obtain bonuses and avoid penalties in contractual arrangements;

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Operate successfully in a time-based pricing model;

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Operate effectively in the SMB market;

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Successfully introduce new, and adapt our existing, services and products for consumers and businesses;

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Respond effectively to changes in the market for customer support services;

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Realize benefits of any acquisitions we make;

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Adapt to changes in the markets we serve;

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Adapt to changes in our industry, including consolidation;

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Adapt to changes in the market due to public health concerns, medical epidemics or pandemics, such as COVID-19, and other natural- or man-made disasters;

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Respond to government regulations relating to our current and future business;

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Manage and respond to present, threatened, and future litigation; and

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Manage and respond to present, threatened or future government investigations and audits, including, without limitation, those audits and investigations described in Part II. Item 1 Legal Proceedings of this report.

If we are unable to address these risks, our business, results of operations and prospects could suffer.

Changes in the market for computers and other consumer electronics and in the technology support services market could adversely affect our business.

Reductions in unit volumes of sales for computers and other devices we support, or in the prices of such equipment, could adversely affect our business. We offer both services that are attached to the sales of new computers and other devices, and services designed to fix existing computers and other devices. Declines in the unit volumes sold of these devices or declines in the pricing of such devices could adversely affect demand for our services or our revenue mix, either of which would harm our operating results. Further, we do not support all types of computers and devices, meaning that we must select and focus on certain operating systems and technology standards for computers, tablets, smart phones, and other devices. We may not be successful in supporting new devices in the connected home and “Internet of Things,” and consumers and SMBs may prefer equipment we do not support, which may decrease the market for our services and products if customers migrate away from platforms we support. In addition, the structures and pricing models for programs in the technology support services market may change in ways that reduce our revenues and our margins.

Risks Related to COVID-19

The COVID-19 pandemic and the remedial measures taken by many countries to combat the pandemic may adversely impact the Company’s business, results of operations, financial condition and stock price.

The global outbreak of the coronavirus disease 2019 (“COVID-19”) was declared a pandemic by the World Health Organization and a national emergency by the U.S. Government in March 2020. The COVID-19 pandemic has negatively affected the U.S. and global economy, disrupted global supply chains, significantly restricted travel and transportation, resulted in mandated closures and orders to “shelter-in-place,” and created significant disruption of the financial markets. The full extent of the COVID-19 impact on our operational and financial performance will depend on future developments, including the duration and spread of the pandemic and related actions taken by the U.S. government, state and local government officials, and international governments to prevent disease spread, all of which are uncertain, out of our control and cannot be predicted.

The full impact of the COVID-19 pandemic on our business is uncertain and impossible to predict, as such impact is largely dependent on the pandemic’s impact upon our customers. This uncertainty makes it challenging for management to estimate the future performance of our businesses, although management believes that our home based employee model provides us with certain advantages over traditional “brick and mortar” competitors in the face of the pandemic.

The continued spread of COVID-19 has also led to disruption and volatility in the global capital markets, which, depending on future developments, could impact our capital resources and liquidity in the future. If we need to raise additional capital to support operations in the future, we may be unable to access capital markets and additional capital may only be available to us on terms that could be significantly detrimental to our existing stockholders and to our business as a result of COVID-19. We are also monitoring the impacts of COVID-19 on the fair value of our assets. While we do not currently anticipate any material impairments on our assets as a result of COVID-19, future changes in expectations for sales, earnings and cash flows related to intangible assets and goodwill below our current projections could cause these assets to be impaired.

Risks related to Regulatory Oversight, Litigation or Compliance with Laws

We have been, are currently and may be in the future the subject of governmental investigations relating to past products and services.

We have been, are currently and may in the future be the subject of governme

SEC Form 10-K filed by support.com, Inc.