MERGER WITH SUPPORT.COM

12 Months Ended

Dec. 31, 2022

Business Combination and Asset Acquisition [Abstract]

As described in Note 1, on September 14, 2021, Greenidge and Support.com combined their respective businesses through an all-stock merger transaction where Support.com became a wholly owned subsidiary of Greenidge. The Merger was accounted for as a business combination using the acquisition method of accounting in accordance with the provisions of FASB ASC 805, Business Combinations ("ASC 805"). Greenidge was determined to be the acquiring company for accounting purposes. As of December 31, 2022, the Company has classified the Support.com business as held for sale and discontinued operations in these consolidated financial statements (see Note 4).

At the effective time of the Merger ("Effective Time"): (i) each share of common stock of Support.com (the "Support.com Common Stock") issued and outstanding immediately prior to the Effective Time was cancelled and extinguished and automatically converted into the right to receive 0.115 (the "Exchange Ratio") shares of class A common stock, par value $0.0001, of the Company, (ii) each outstanding stock option of Support.com immediately prior to the Effective Time (an "Option") was accelerated, and the holder of each Option received the right to receive an amount of the Company’s class A common stock equal to the Exchange Ratio, multiplied by the number of shares of Support.com Common Stock underlying such Option, less any shares withheld in satisfaction of the aggregate exercise price of such Option and such holder’s tax withholding obligations and (iii) each outstanding restricted stock unit of Support.com immediately prior to the Effective Time (an "RSU") was accelerated, and the holder of each RSU received the right to receive an amount of the Company’s class A common stock equal to the Exchange Ratio, multiplied by the number of shares of Support.com Common Stock underlying such RSU, less any shares and such holder’s tax withholding obligations.

The Company applied the acquisition method of accounting in accordance with ASC 805, with respect to the identifiable assets and liabilities of Support.com, which were measured at estimated fair value as of the date of the business combination. Any excess of the acquisition price over the fair value of the assets and liabilities acquired was recorded as goodwill.

As required by ASC 805, the acquisition price was determined based on the value of the consideration paid to Support.com shareholders, calculated to be $93.9 million (see table below). This acquisition price was allocated to the identifiable assets acquired and liabilities assumed of Support.com based upon their estimated fair values at the Merger date, primarily using Level 2 and Level 3 inputs.

The following table summarizes the estimated value of the consideration paid (purchase price):


$ in thousands, except per share amount
Support common stock exchanged	25,745,487
Exchange ratio	0.115
Greenidge Class A common stock exchanged	2,960,731
Greenidge common stock value per share	$	31.71
Consideration paid	$	93,885

For the period immediately prior to the effective date of the Merger, Greenidge was a private company, and Support.com’s stock price fluctuated significantly based on factors not representative of the value of its underlying operations; therefore, Greenidge used the average of its closing stock price for the first ten days of trading on the Nasdaq Exchange ($31.71 per share) to measure the value of the consideration paid to Support.com shareholders.

The following table summarizes the allocation of the purchase price to the identifiable assets acquired and liabilities assumed by Greenidge, with the excess of the purchase price over the fair value of Support.com’s net assets recorded as goodwill.


$ in thousands
Cash and cash equivalents	$	27,113
Short term investments	496
Accounts receivable	5,383
Prepaid expenses and other current assets	713
Property and equipment	1,349
Other long-term assets	383
Accounts payable	(117)
Accrued expenses and other current liabilities	(3,535)
Other long-term liabilities	(242)
Intangible assets	3,810
Deferred tax assets	13,163
Goodwill	45,369
Total consideration	$	93,885

For assets and liabilities (excluding identifiable intangible assets and deferred taxes), the Company estimated that the carrying values, net of allowances, represented the fair values at the effective date of the Merger.

Acquisitions are accounted for using the acquisition method which requires allocation of the purchase price to assets acquired and liabilities assumed based on estimated fair values. Any excess of the purchase price over the fair value of the assets and liabilities acquired is recorded as goodwill. The Company performs a goodwill impairment test annually in the fourth quarter or more frequently if events or circumstances indicate that an impairment loss may have been incurred. The applicable guidance allows an entity to first assess qualitative factors to determine if it is more likely than not that the fair value of a reporting unit is less than carrying value. If it is determined that it is more likely than not that the fair value of a reporting unit is less than carrying value then the company will estimate and compare the fair value of its reporting units to their carrying value, including goodwill. If the carrying value of goodwill is not recoverable, an impairment is recognized for the difference. Fair value is determined through the use of projected future cash flows, multiples of earnings and sales and other factors. Such analysis requires the use of certain market assumptions and discount factors, which are subjective in nature. See Note 4, "Discontinued Operations" for further details on the Company's impairment of the goodwill.

The following fair value estimates for identifiable intangible assets were based on assumptions that market participants would use in pricing an asset, based on the most advantageous market for the asset (i.e., its highest and best use).

$ in thousands
Identifiable Intangible Asset

Useful Life

Fair Value

Customer relationships

4 years

3,320

Tradename

5 years

490

Total identifiable intangible assets

3,810

The fair value of the customer relationships intangible asset was valued using a multi-period excess earnings method, a form of the income approach, which incorporates the estimated future cash flows to be generated from Support.com’s existing customer base. Excess earnings are the earnings remaining after deducting the market rates of return on the estimated values of contributory assets, including debt-free net working capital, tangible assets, and other identifiable intangible assets. The excess earnings are thereby calculated for each year of multi-year projection periods and discounted to present value.

The fair value of the Support.com tradename was valued using the relief from royalty method under the income approach. This method estimates the cost savings generated by a company related to the ownership of an asset for which

it would otherwise have had to pay royalties or license fees on revenues earned through the use of the asset and discounted to present value. See Note 4, "Discontinued Operations" for further details on the Company's impairment of the intangible assets.

Results of Support.com Operations Since the Merger

For the year ended December 31, 2021, the acquired Support.com business contributed $10.0 million in revenue and an operating loss of $73.6 million, which included a goodwill impairment charge of approximately $42.3 million. These results are included within loss from discontinued operations, net of tax on the Consolidated Statement of Operations.

Supplemental Pro Forma Financial Information

In accordance with ASC 805, supplemental unaudited pro forma information gives effect to the Merger as if it had occurred on January 1, 2021. Because Support.com has been classified as held for sale, its results of operations are included in loss from discontinued operations, net of tax in the consolidated statements of operations and there would be no change to reported revenues from continuing operations on a pro forma basis for those periods. On an unaudited pro forma basis, the net loss of the combined entity as though the business combination had occurred on January 1, 2021 is $50.5 million.

The unaudited pro forma financial information reflects certain adjustments related to the acquisition, such as:

•Conforming the accounting policies of Support.com to those applied by Greenidge;

•Recording certain incremental expenses resulting from purchase accounting adjustments, such as amortization expense in connection with fair value adjustments to intangible assets; and

•Recording the related tax effects of pro forma adjustments.

The pro forma net loss for year ended December 31, 2021 includes $36.7 million of transaction costs ($27.7 million after tax), such as advisor fees, legal and accounting expenses. These costs will not affect the combined company’s statement of operations beyond 12 months after the closing date, September 14, 2021.

The unaudited pro forma financial information should not be relied upon as being indicative of the historical results that would have been obtained if the Merger had actually occurred on that date, nor the results of operations of the Company in the future.