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This excerpt taken from the WBMD 8-K filed Nov 21, 2006. Stock-Based
Compensation
Prior to January 1, 2006, stock-based compensation was
accounted for by using the intrinsic value-based method in
accordance with the provisions of Accounting Principles Board
(“APB”) Opinion No. 25, “Accounting for
Stock Issued to Employees”, and related interpretations,
and the Company complied with the disclosure provisions of
SFAS No. 123, “Accounting for Stock-Based
Compensation”. Accordingly, the Company only recorded
compensation expense for any stock options granted with an
exercise price that was less than the fair value of the
underlying stock at the date of grant.
Had compensation cost for the Company’s outstanding stock
options been determined based on the fair value at the grant
dates for those options consistent with SFAS No. 123,
the Company’s 2005 net loss would not have been
materially different from the amount reported.
In December 2004, the Financial Accounting Standards Board
(“FASB”) issued SFAS No. 123(R),
“Share-Based Payment”, which establishes standards for
transactions in which an entity exchanges its equity for goods
or services. This statement requires an entity to measure the
cost of employee services received in exchange for an award of
equity instruments based on the grant-date fair value of the
award. This eliminates the exception to account for such awards
using the intrinsic method previously allowable under APB
Opinion No. 25.
Effective January 1, 2006, the Company adopted
SFAS No. 123(R) using the prospective method.
The adoption of SFAS No. 123(R)’s fair value
method did not have any impact on its consolidated results of
operations or financial position.
Medsite,
Inc. and Subsidiary
Notes to
Consolidated Financial
Statements — (Continued)
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