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Convertible Preferred Stock
9 Months Ended
Sep. 30, 2012
Convertible Preferred Stock [Abstract]  
Convertible preferred stock

10. Convertible preferred stock

In connection with the completion of our IPO on May 15, 2012, all of our previously outstanding shares of convertible preferred stock of 13,205,180 were converted into common stock.

Warrants

Pursuant to convertible notes we issued in August 2003, we issued warrants to purchase 110,269 shares of Series AA convertible preferred stock at an exercise price of $3.627 per share. In connection with our July 2009 line of credit agreement with Silicon Valley Bank, we also issued warrants to purchase 1,333 shares of Series D convertible preferred stock at $5.133 per share, which subsequently converted into the right to purchase 1,333 shares of Series E convertible preferred stock at a per share exercise price of $3.67.

At December 31, 2011, we recorded the fair value of preferred stock warrants of $1.1 million as long-term liabilities. The freestanding warrants were subject to remeasurement at each balance sheet date with any change in fair value recognized as a component of “Other income (expense), net” in our consolidated statements of comprehensive income. Prior to the closing of our IPO, the warrants to purchase 110,269 shares of our convertible preferred stock were exercised, and as a result, we reclassified the aggregate fair value of $1.4 million from the liability to stockholders’ equity (deficit) in our condensed consolidated balance sheet. The warrants to purchase 1,333 shares held by Silicon Valley Bank were converted to warrants to purchase our common stock upon the close of our IPO on May 15, 2012, and as a result, we reclassified the aggregate fair market value of $23,000 from the liability to stockholders’ equity (deficit). The warrants to purchase 1,333 shares were unexercised as of September 30, 2012.

The convertible preferred stock warrants were revalued up to the date the convertible preferred stock warrants were exercised or became warrants to purchase common stock upon the closing of our IPO, and the liability related to these warrants were reclassified as stockholders’ equity (deficit). For the three and nine months ended September 30, 2012, we recorded expense of $0 and $290,000, respectively, for the change in fair value of these warrants. For the three and nine months ended September 30, 2011, we recorded income of $102,000 and expense of $556,000, respectively, for the change in fair value of these warrants.