8x8 2007 Annual Report Download - page 59

NET LOSS PER SHARE
Basic net loss per share is computed by dividing net loss available to common stockholders (numerator) by the weighted
average number of common shares outstanding during the period (denominator). Due to net losses incurred for all periods
presented, weighted average basic and diluted shares outstanding for the respective periods are the same. The following options
and warrants were not included in the computations of net loss per share because the effect on the calculations would be anti-
dilutive (in thousands):
2007 2006 2005
(Restated) (Restated)
Common stock options 8,930 8,871 7,146
Warrants 8,663 8,663 6,537
17,593 17,534 13,683
Years Ended March 31,
2. RESTATEMENT
The Company has restated its consolidated financial statements to correct certain errors that existed in its previously issued
consolidated financial statements for the years ended March 31, 2006 and 2005, principally related to our application of
Emerging Issues Task Force Issue No. 00-19, “ Accounting for Derivative Financial Instruments Indexed to, and Potentially
Settled in, a Company’s Own Stock” (“EITF 00-19”) with respect to the accounting for warrants issued to three investors in
three different equity financings consummated in fiscal 2005 and 2006 (“Equity Financings”). In fiscal years 2005 and 2006,
the financial statements accounted for these warrants as equity. The warrants include a provision that specifies the Company
must deliver freely tradable shares upon exercise by the warrant holder. Because there are circumstances that may not be
within the control of the Company that could prevent delivery of registered shares, EITF 00-19 requires the warrants to be
recorded as a liability at fair value with subsequent changes in fair value recorded as an item of expense or income. The
restated financial statements reflect a liability for the warrants in the consolidated balance sheets and income or loss in the
consolidated statement of operations for the change in fair value of the warrant liability from period-to-period. In connection
with the restatement, the Company also has corrected an error that it had previously identified and determined not to be
material with respect to the consolidated financial statements for the affected periods. This correction relates to the
reclassification of $2.0 million from long-term investments to short-term investments as of March 31, 2006.
In addition, as part of the Company’s review of the outstanding warrants, the Company determined that an immaterial number
of warrants were not included in our outstanding warrants in the table presented under “NET LOSS PER SHARE”, above. The
Company has restated the outstanding warrants for the periods ended March 31, 2006 and 2005 to reflect the correct number of
warrants outstanding.
Summary of Restatement Adjustments
The following summarizes the effects of the restatement on the 2006 consolidated balance sheet and the consolidated
statements of income and cash flows for the years ended March 31, 2006 and 2005 (in thousands, except shares or per share
amounts):
As Previously Restatement
CONSOLIDATED BALANCE SHEET Reported Adjustments Restated
Short-term investments $ 12,726 $ 1,979 $ 14,705 (1)
Total current assets $ 23,815 $ 1,979 $ 25,794
Long-term investments $ 3,972 $ (1,979) $ 1,993 (1)
Fair value of warrant liability (non current) $ - $ 7,123 $ 7,123 (2)
Additional paid-in capital $ 215,072 $ (11,809) $ 203,263 (3)
Accumulated deficit $ (195,005) $ 4,686 $ (190,319) (4)
As of March 31, 2006
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