Enom 2011 Annual Report Download - page 94

Stock Repurchases
Under a stock repurchase plan, shares repurchased by the Company are accounted for when the transaction is settled. Repurchased shares held for
future issuance are classified as treasury stock. Shares formally or constructively retired are deducted from common stock at par value and from additional
paid in capital for the excess over par value. If additional paid in capital has been exhausted, the excess over par value is deducted from retained earnings.
Direct costs incurred to acquire the shares are included in the total cost of the repurchased shares.
Product Development and Software Development Costs
Product development expenses consist primarily of expenses incurred in research and development, software engineering and web design activities
and related personnel compensation to create, enhance and deploy our software infrastructure. Product and software development costs, other than software
development costs qualifying for capitalization, are expensed as incurred. Costs of computer software developed or obtained for internal use that are incurred
in the preliminary project and post implementation stages are expensed as incurred. Certain costs incurred during the application and development stage,
which include compensation and related expenses, costs of computer hardware and software, and costs incurred in developing additional features and
functionality of the services, are capitalized. The estimated useful life of costs capitalized is evaluated for each specific project. Capitalized costs are generally
amortized using the straight-line method over a three year estimated useful life, beginning in the period in which the software is ready for its intended use.
Unamortized amounts are included in property and equipment, net in the accompanying consolidated balance sheets. The net book value of capitalized
software development costs is $16,362 (net of $11,371 accumulated amortization) and $15,837 (net of $18,332 accumulated amortization) as of December 31,
2010 and 2011, respectively.
Preferred Stock Warrants
Preferred stock warrants on shares subject to mandatory or contingent redemption are classified as liabilities as the underlying preferred stock
contains provisions that allow the holders the right to receive cash in the event of a deemed liquidation. Preferred stock warrants are recorded at fair value and
are remeasured each reporting period, with changes in fair value recorded in other income (expense) in the accompanying statements of operations.
Income Taxes
Deferred income taxes are recognized for differences between financial reporting and tax bases of assets and liabilities at the enacted statutory tax
rates in effect for the years in which the temporary differences are expected to reverse. The effect on deferred taxes of a change in tax rates is recognized in
income in the period that includes the enactment date. The Company evaluates the realizability of deferred tax assets and recognizes a valuation allowance for
its deferred tax assets when it is more likely than not that a future benefit on such deferred tax assets will not be realized.
The Company recognizes the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on
examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the consolidated financial statements from
such positions are then measured based on the largest benefit that has a greater than 50% likelihood of being realized upon settlement. The Company
recognizes interest and penalties accrued related to unrecognized tax benefits in its income tax (benefit) provision in the accompanying statements of
operations.
Net Loss Per Share
Basic loss per share is computed by dividing the net loss attributable to common stockholders by the weighted average number of common shares
outstanding during the period. Net loss attributable to common stockholders is increased for cumulative preferred stock dividends earned during the period.
Diluted loss per share is computed by dividing the net loss attributable to common stockholders by the weighted average common shares outstanding plus
potentially dilutive common shares. Because the Company reported losses for the periods presented, all potentially dilutive common shares comprising of
stock options, RSPRs, RSUs, stock from the employee stock purchase plan, warrants and convertible preferred stock are antidilutive.
RSPRs and RSUs and other restricted awards are considered outstanding common shares and included in the computation of basic earnings per
share as of the date that all necessary conditions of vesting are satisfied. RSPRs and RSUs are excluded from the dilutive earnings per share calculation when
their impact is antidilutive. Prior to satisfaction of all conditions of vesting, unvested RSPRs are considered contingently issuable shares and are excluded
from weighted average
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