Stamps.com 2001 Annual Report Download - page 48

STAMPS.COM INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Description of Business
Stamps.com Inc. ("Stamps.com Inc." or the "Company"), incorporated in Delaware on January 9, 1998, provides easy, convenient and
cost-effective Internet-based services for mailing letters or shipping packages or parcels anywhere in the United States and at anytime. Our core
mailing and shipping services are designed to allow individual consumers or employees of small businesses or larger enterprises to print US
postage or shipping labels, schedule a pick-up, track a package and apply enterprise-wide business rules to manage and account for mailing and
shipping costs. With all of the Company's services, no additional hardware is required; a customer can access our services through an existing
Internet connection and print postage or shipping labels with ordinary laser or inkjet printers. The Company launched its Internet Postage
service on a national basis on October 22, 1999. Prior to the first quarter of 2000, the Company reported as a development stage enterprise.
2. Summary of Significant Accounting Policies
Principles of Consolidation
The consolidated financial statements include the accounts of Stamps.com Inc. and its subsidiaries, which include iShip.com, Inc. and
EncrypTix, Inc. During 2001, the Company sold its iShip subsidiary and EncrypTix ceased operations and effected a general assignment of its
assets for the benefit of its creditors. The Company held approximately a 66 2/3% equity interest and a greater than 90% voting interest in
EncrypTix, Inc. at December 31, 2000. Because of the voting control and liquidation preferences held by the company, the Company has
consolidated 100% of the losses of EncrypTix, Inc. in the accompanying consolidated financial statements and experienced a one time gain in
2001 to eliminate the cumulative suspended loss allocated to the minority shareholders from EncrypTix. All significant intercompany accounts
and transactions have been eliminated.
Use of Estimates and Risk Management
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 financial statements and the accompanying notes. Actual results could
differ from those estimates and such differences may be material to the financial statements.
The Company is involved in various litigation matters as a claimant and a defendant. The Company records any amounts recovered in these
matters when received. The company records liabilities for claims against it when the loss is probable and estimatable. Amounts recorded are
based on reviews by outside counsel, in-house counsel and management. Actual results could differ from estimates.
Cash Equivalents and Investments
The Company considers all highly liquid investments with an original or remaining maturity of three months or less at the date of purchase to be
cash equivalents.
The Company's cash equivalents and investments are comprised of money market, U.S. government obligations and public corporate debt
securities at December 31, 2001. All investments are classified as available for sale and are recorded at market using the specific identification
method. Realized gains and losses are reflected in other income and expense while unrealized gains and losses, which to date have not been
material, are included as a separate component of stockholders' equity.
F-6
2002. EDGAR Online, Inc.