Convertible Preferred Stock and Stockholders' Equity (Deficit)

12 Months Ended

Dec. 31, 2013

Convertible Preferred Stock and Stockholders' Equity (Deficit)

12. Convertible Preferred Stock and Stockholders’ Equity (Deficit)

Convertible Preferred Stock

As of December 31, 2013, no shares of convertible preferred stock were outstanding. The authorized, issued, and outstanding shares of convertible preferred stock at December 31, 2012 were as follows:

	Shares Authorized	Shares Issued and Outstanding	Carrying Value and Liquidation Preference
Series A	43,147,400	4,309,972	$	43,100
Series B	36,750,400	3,579,597		46,893
Series C	93,000,000	9,214,160		130,381
Series D	64,000,000	6,287,026		88,962
Series 1	6,360,500	636,042		7,944
Total	243,258,300	24,026,797	$	317,280

Conversion

The preferred stock was convertible at the option of the holder at any time into fully paid, nonassessable shares of common stock. The number of shares of common stock to which a holder was entitled upon conversion was the product obtained by multiplying the preferred conversion rate (the original issue price divided by the convertible preferred stock conversion price (the original issue price, subject to certain adjustments for antidilution)) by the number of shares being converted.

Each share of convertible preferred stock automatically converted into common stock upon closing of our IPO. Our Amended and Restated Certificate of Incorporation currently authorizes 5,000,000 shares of preferred stock, none of which have been issued by us or designated by our board of directors. A description of certain rights applicable to shares of convertible preferred stock prior to their conversion in our IPO is as follows:

Voting Rights

With the exception of the holders of Series 1 convertible preferred stock, which had no voting rights, the holders of each share of convertible preferred stock had one vote for each share of common stock into which such convertible preferred stock could have been converted.

Holders of Series D convertible preferred stock were granted a separate vote. In addition to any other vote or consent required, the vote or written consent of the holders of at least 50% of the outstanding Series D convertible preferred stock would have been necessary for effecting or validating certain actions as were previously outlined in our Certificate of Incorporation before it was amended and restated in connection with our IPO.

Dividends and Distributions

The holders of the convertible preferred stock were entitled to receive, when, as and if declared by the Board of Directors, a noncumulative cash dividend at the annual rate of 8% of the original issue price per annum on each outstanding share of convertible preferred stock. The original issue price is $10.00 for Series A, $13.10 for Series B and $14.15 for Series C, Series D and Series 1. Such dividends were to be payable only when, as and if declared by the Board of Directors. After payment of dividends at the rate set forth above, any additional dividends declared would have been distributed among all holders of convertible preferred stock and common stock in proportion to the number of shares of common stock that would have then been held by each such holder if all shares of convertible preferred stock were converted into common stock. No dividends were declared prior to the conversion of all shares of preferred stock into shares of common stock in connection with the closing of our IPO.

Liquidation Rights

Upon liquidation, dissolution, or winding up of the Company (whether voluntary or involuntary) (a “Liquidation Event”), before any distribution or payment was to be made to the holders of any Series A, Series B, Series C or Series 1 convertible preferred stock or common stock, the holders of Series D convertible preferred stock would have been entitled to be paid out of our assets legally available for distribution, an amount equal to the original purchase price of the Series D convertible preferred stock plus all declared and unpaid dividends. The holders of Series A, Series B, Series C and Series 1 convertible preferred stock would have been entitled to receive, prior and in preference to any distribution of any of our assets legally available for distribution to the holders of common stock, an amount equal to the respective original purchase price of such series of convertible preferred stock plus all declared and unpaid dividends. After payments of the full liquidation preferences of the Series A, Series B, Series C, Series D and Series 1 convertible preferred stock described above, the remaining assets of the Company would have been available for distribution to stockholders.

Warrants

At December 31, 2013, warrants to purchase 82,575 shares of common stock were outstanding at exercise prices ranging between $10.00 and $13.10 per share and are exercisable through 2018. No warrants were granted, exercised or canceled during 2013.

Equity Incentive Plan

In January 2013, our Board of Directors adopted our 2013 Equity Incentive Plan, or the 2013 Plan, which became effective upon of the closing of our IPO in May 2013. The 2013 Plan has 81,948 shares of common stock available for future issuance as of December 31, 2013, subject to automatic annual increases beginning on January 1, 2014 through January 1, 2023. Further, all remaining shares available under the 2003 Equity Incentive Plan, or the 2003 Plan, were transferred to the 2013 Plan upon adoption. The 2013 Plan provides for the granting of incentive stock options, nonstatutory stock options, stock bonuses and rights to acquire restricted stock to employees, officers, directors and consultants. Incentive stock options may be granted with exercise prices of not less than 100% of the estimated fair value of our common stock and nonstatutory stock options may be granted with an exercise price of not less than 85% of the estimated fair value of the common stock on the date of grant. Stock options granted to a stockholder owning more than 10% of our voting stock must have an exercise price of not less than 110% of the estimated fair value of the common stock on the date of grant. Stock options are generally granted with terms of up to ten years and vest over a period of four years.

As of December 31, 2013, 4,903,323 shares of common stock were reserved under the 2013 Plan for the issuance of options and restricted stock.

A summary of Portola’s stock option activity follows:

				Shares
				Subject to			Weighted-
	Shares Available			Outstanding			Average Exercise
	for Grant			Options			Price Per Share
Balance at December 31, 2012		593,011			3,451,178		$	6.35
Options authorized		150,000		–			–
Options granted		(1,022,601	)		1,022,601			18.31
Options exercised	–				(403,468	)		6.40
Options canceled		361,538			(361,538	)		8.58
Balance at December 31, 2013		81,948			3,708,773		$	9.43

Additional information related to the status of options at December 31, 2013, is as follows (aggregate intrinsic value in thousands):

			Weighted-
			Average		Remaining
			Exercise Price		Contractual		Aggregate
	Shares		Per Share		Life		Intrinsic Value
Outstanding and exercisable		3,708,773	$	9.43		6.5	$	60,600
Vested and expected to vest		3,631,910	$	9.26		6.5	$	60,600
Vested		2,324,788	$	6.33		5.0	$	45,199

The aggregate intrinsic values of options outstanding and exercisable, vested and expected to vest were calculated as the difference between the exercise price of the options and the fair value of our common stock as of December 31, 2013.

The aggregate intrinsic value of options exercised was $6.3 million, $451,000 and $290,000 for the years ended December 31, 2013, 2012 and 2011, respectively.

The total estimated grant date fair value of options vested during the years ended December 31, 2013, 2012 and 2011 was $3.8 million, $3.0 million and $1.8 million, respectively.

Additional information regarding our stock options outstanding and vested and exercisable as of December 31, 2013 is summarized below:

	Options Outstanding and Exercisable				Options Vested
	Number of	Weighted
	Options	Average	Weighted		Number	Weighted
	Outstanding	Remaining	Average		of	Average
	and	Contractual	Exercise Price		Options	Exercise Price
Exercise Prices	Exercisable	Life (Years)	per Share		Vested	Per Share
$1.00 - $2.00	14,042	1.1	$	1.34	14,042	$	1.34
$3.30	381,521	2.4		3.30	381,521		3.30
$3.6 - $4.10	378,399	3.9		4.09	378,399		4.09
$4.5 - $5.10	463,189	3.6		5.02	463,189		5.02
$5.30	152,750	4.5		5.30	152,750		5.30
$7.00	449,244	8.1		7.00	206,664		7.00
$8.50	416,921	7.2		8.50	270,056		8.50
$9.00	379,318	6.4		9.00	354,875		9.00
$9.5 - $10.90	406,068	9.2		10.05	26,693		9.75
$19.74 - $28.47	667,321	9.6		22.23	76,599		20.25
	3,708,773	6.5	$	9.43	2,324,788	$	6.33