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Preferred Stock Warrants
3 Months Ended
Mar. 31, 2015
Proceeds From Issuance Of Preferred Stock Preference Stock And Warrants [Abstract]  
Preferred Stock Warrants

Note 8.  Preferred Stock Warrants

On August 22, 2014, in connection with the Company’s entry into the Growth Term Loan, the Company issued to the lenders Series E Loan Warrants exercisable for an aggregate of 2,512,562 shares of Series E preferred stock at a price of $0.2189 per share. The warrants provide for cashless exercise at the option of the holders, and also contain provisions for the adjustment of the number of shares issuable upon the exercise of the warrant in the event of stock splits, recapitalizations, reclassifications, consolidations or dilutive issuances. In connection with the completion of the initial public offering in May 2015, the Series E Loan Warrants will become exercisable for an aggregate of 23,396 shares of the Company’s common stock at an exercise price of $23.51 per share. The Series E Loan Warrants expire by their terms on August 22, 2024, provided that the warrants will be automatically exercised on a cashless basis upon expiration if not previously exercised if the fair market value of a share of the Company’s common stock exceeds the per share exercise price.

The Company allocated the total proceeds of the Growth Term Loan and the Series E Loan Warrants based on the residual value method. Assumptions used to determine the initial fair value included fair value of shares of Series E Stock on grant date $0.31; Exercise price $0.2189; Expected risk-free interest rate 1.6%; Expected volatility 70.0%; Expected term 4.5 years; and Expected dividend yield 8.0%. The fair value of the Series E Warrants of $0.12 per share, or $301,507, was recorded as a discount on the Growth Term Loan to be accreted over the term of the Growth Term Loan using the effective interest method. The Company has accounted for the Series E Loan Warrants as liabilities as such warrants are indexed to shares that could be redeemed for cash outside the control of the Company. The preferred Warrants were valued using quoted market prices from the Company’s May 2015 IPO at March 31, 2015 and using the Black-Scholes option pricing model as of December 31, 2014.  Refer to Note 4 for assumptions used to value these warrants.  At March 31, 2015 and December 31, 2014, the fair value of the Series E Loan Warrants was $231,140 and $301,508, respectively.

On December 30, 2014, in connection with the Company’s Note and Warrant Purchase Agreements (Note 5) the Company agreed to issue warrants (the “Convertible Note Warrants”) exercisable for an aggregate of 9,311,586 shares of Series E Stock at a price of $0.2189 per share, for aggregate consideration of $1,354. The Convertible Note Warrants were issued on January 15, 2015. The warrants provide for cashless exercise at the option of the holders, and also contain provisions for the adjustment of the number of shares issuable upon the exercise of the warrant in the event of stock splits, recapitalizations, reclassifications, consolidations or dilutive issuances. In connection with the completion of the IPO in May 2015, the Convertible Note Warrants will become exercisable for shares of the Company’s common stock at the initial public offering price of $14.00 per share. The Convertible Note Warrants expire by their terms on January 15, 2022. As the Convertible Note Warrants were issued in conjunction with and in order to establish a lending facility commitment, they are being accounted for as a debt discount to be amortized over the life of the Note Agreements using the effective interest method and as a warrant liability, at fair value, as they are indexed to shares that could be redeemed for cash outside the control of the Company.

The Company recorded the initial $741,828 of the Convertible Note Warrants using the Black-Scholes option pricing model and assumptions further described in Note 4, specifically using a 7 year term, a 1.6% risk free interest rate, 75% volatility, 0% dividend yield and a common stock price of $0.13 which is a pre-IPO equivalent to the Company’s $14.00 per share offering price in May 2015, which the Company considered to approximate the fair value at January 14, 2015 and March 31, 2015 as the operations of the business had not changed during the intervening period. At March 31, 2015, the Company revalued the Convertible Note Warrants to $727,737 using the Black-Scholes option pricing model and specifically using a 6.5 year term, a 1.7% risk free interest rate, 75% volatility, 0% dividend yield and a common stock price of $0.13 per share.