Earthlink 2008 Annual Report Download - page 287

HELIO, INC. and HELIO LLC
NOTES TO COMBINED FINANCIAL STATEMENTS
11. Stock Compensation (continued)
The table below reflects the pro forma net loss (and net loss per share) for the period inception to December 31, 2005 (in thousands):
The weighted average deemed fair value of employee time-vested stock options outstanding was $1.15, $1.16 and $0.96 per share for
the periods ended December 31, 2005, 2006, and 2007, respectively. The fair value of these options was estimated at the date of grant using the
Black-Scholes option-pricing model using the same weighted average assumptions in the above table accordance with the requirements of FAS
123(R) and SAB No. 107, Share-Based Payment .
Put Option
The Company provides each employee who was granted stock options (an “Optionee”) a put option (the “Put”), whereby the Optionee
has the right to sell any vested options and vested shares of stock issued pursuant to the exercise of stock options (the “Vested Shares”) to the
Company at any time after March 31, 2010 (the “Put Initiation Date”), provided the following conditions are met (collectively, the “Triggering
Events”):
(i) the Operating Company shall have or exceed 3.3 million active members; and,
(ii) the Operating Company must have been profitable for at least two (2) consecutive quarters commencing with the quarter
ending December 31, 2009; and
(iii) the fair value of the Operating Company’s assets must exceed the amount of the Operating Company’
s liabilities, as defined in
the agreement.
If an Optionee so desired to exercise their Put up to the Put Initiation Date and all of the Triggering Events were met, the purchase price
of the Vested Shares shall be based on a valuation of the Company as calculated by a third party appraisal firm designated by the Company’s
board of directors.
As of December 31, 2005, 2006 and 2007, the likelihood of the Triggering Events occurring within the Put Initiation Date were not
certain and accordingly, the Vested Shares under the Put are included in the equity section of the Company’s balance sheets for these periods.
However, as facts and circumstances change and it is deemed that the likelihood of the Triggering Events occurring within a
reasonable period is
deemed probable, as defined under FAS 123(R), the Company would be required to reclassify such Vested Shares from equity to a liability at
such time (on a grant-by-grant basis).
27
Inception
(January 27,
2005) to
December 31,
2005
Net loss, as reported
$
(42,023
)
Add: stock
-
based compensation included in net loss under the intrinsic method
43
Less: stock-based compensation expense determined under the fair value based
method for all awards
(891
)
Net loss, pro forma
$
(42,871
)