Stamps.com 2001 Annual Report Download - page 50

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STAMPS.COM INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
from the sale of products by a third party vendor to the Company's customer base are recognized as revenue when earned and collection is
deemed probable.
Computation of Net Loss per Share
Basic loss per share is computed by dividing the net loss available to common stockholders for the period by the weighted average number of
common shares outstanding during the period. Diluted losses per share is computed by dividing the net losses for the period by the weighted
average number of common and common equivalent shares outstanding during the period.
Common equivalent shares, representing incremental common shares issuable upon the exercise of stock options and warrants are excluded
from the diluted earnings per share calculation as their effect is anti-dilutive due to the net losses in each year.
Advertising Costs
The Company expenses the costs of producing advertisements when the advertising first runs, and expenses the costs of communicating and
placing the advertising in the period in which the advertising space or airtime is used.
Internet advertising expenses are recognized based on specifics of the individual agreements. Under partner or affiliate agreements, advertising
expense is recognized as identified customers are generated from partner or affiliate promotions.
Income Taxes
The Company accounts for income taxes in accordance with Statement of Financial Accounting Standards (SFAS) No. 109, "Accounting for
Income Taxes." Under this method, deferred tax liabilities and assets are determined based on the difference between the financial statements
and the tax basis of assets and liabilities using the enacted tax rate in effect for the years in which the differences are expected to reverse.
Valuation allowances are recorded to reduce deferred tax assets when it is more likely than not a tax benefit will not be realized.
Research and Development Costs
Research and development costs are expensed as incurred. These costs primarily consist of salaries, development materials, supplies and
applicable overhead expenses of personnel directly involved in the research and development of new technology and service offerings.
Stock-Based Compensation
The Company has adopted the provisions of SFAS No. 123 ("SFAS 123"), "Accounting for Stock-Based Compensation." In accordance with
the provisions of SFAS 123, the Company has elected the disclosure of only provisions related to employee stock options and follows the
provisions of Accounting Principals Board Opinion (APB) No. 25 in accounting for stock options issued to employees. Under APB No. 25,
compensation expense, if any, is recognized as the difference between the exercise price and the fair value of the common stock on the
measurement date, which is typically the date of grant, and is recognized over the service period, which is typically the vesting period.
F-8
2002. EDGAR Online, Inc.