This excerpt taken from the WBMD 8-K filed Nov 21, 2006.
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 Companys outstanding stock options been determined based on the fair value at the grant dates for those options consistent with SFAS No. 123, the Companys 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)