8. Capital Stock

Redeemable Convertible Preference shares

In January 2012, the Company completed the sale of Series D redeemable convertible preference shares, or Series D. A portion of the proceeds from the sale of Series D shares was used to repurchase ordinary shares under a repurchase program. A total of 1,047,596 shares of Series D preference were sold at a price of $11.25 per share, resulting in net proceeds of approximately $11.6 million. Upon the closing of the IPO, all outstanding convertible preference shares, including the Series D shares, converted into ordinary shares on a one-to-one basis.

Redeemable convertible preference shares at January 31, 2012 consisted of the following:


	Par Value Per Share		Shares				Initial Liquidation Preference
Series	Par Value Per Share		Authorized		Outstanding		Initial Liquidation Preference
							(in thousands)
A	$	0.00045		5,611,111		5,611,107	$	10,100
B	$	0.00045		3,665,550		3,629,253		13,000
C	$	0.00045		3,027,777		3,027,771		16,350
D	$	0.00045		2,222,222		1,047,596		11,785

				14,526,660		13,315,727	$	51,235

Ordinary Share Repurchase Program

In January 2012, the Company completed an ordinary share repurchase program. Pursuant to the program, the Company offered to repurchase ordinary shares at a price of $10.35 per ordinary share, which approximated the then-current fair market value. A total of 698,424 ordinary shares were tendered by employees, former-employees and consultants for repurchase by the Company. The ordinary shares tendered for repurchase were originally acquired through the exercise of stock options prior to the shares being tendered. A total of approximately $7.2 million cash was paid to ordinary shareholders for the 698,424 shares repurchased. The cost of this repurchase program was reflected in additional paid-in capital in the consolidated statements of redeemable convertible preference shares and shareholders’ equity (deficit).

Stock Split

Effective August 24, 2012, the Company’s board of directors and shareholders approved a reverse stock split of one (1) ordinary share for every four and one half (4.5) authorized, issued and outstanding ordinary shares and one (1) preference share for every four and one half (4.5) authorized, issued and outstanding preference shares (the “Stock Split”). Upon approval of the Stock Split, the ordinary shares and preference shares outstanding and the number of ordinary shares and preference shares covered by each outstanding right, option, warrant or arrangement were proportionately decreased to reflect the Stock Split and the exercise or purchase price of each such right, option, warrant or arrangement was proportionately increased to reflect the Stock Split. The Company is authorized to accept the surrender of fractional shares resulting from the Stock Split from any shareholder that elects to forego payment for such fractional shares.

Initial Public Offering

On October 15, 2012, in connection with its initial public offering, or IPO, the Company completed the sale of 6,000,000 ordinary shares inclusive of 1,095,349 shares sold by certain shareholders of the Company. The public offering price of the shares sold in this offering was $6.00 per share. The net proceeds from the offering to the Company were approximately $25.4 million after deducting underwriting discounts and commissions and other offering expenses. Upon the completion of the IPO, all 13,315,727 outstanding redeemable convertible preference shares converted into ordinary shares on a one-to-one basis and all outstanding warrants to purchase redeemable convertible preference shares converted into warrants to purchase ordinary shares. On November 6, 2012, a total of 900,000 ordinary shares were sold to the Company’s IPO underwriters in connection with their exercise of the over-allotment option. The net proceeds to the Company from the sale of these shares were approximately $5.0 million after deducting underwriting discounts and commissions.

Preference shares

After completion of the IPO, a total of 20,000,000 preference shares, with a $0.00045 par value per share, were authorized. There were no shares issued and outstanding as of January 31, 2013.

Warrants

In connection with a financing agreement in 2004, the Company issued warrants to purchase Series B redeemable convertible preference shares at an exercise price of $3.582 per share. The warrants are fully vested and are exercisable through December 2014.

In June 2005, the FASB issued authoritative guidance on the classification of freestanding warrants and other similar instruments on shares that are redeemable (either puttable or mandatorily redeemable). The guidance requires liability classification for warrants issued that are exercisable into convertible preferred stock. Liability classification requires the warrants to be remeasured to their fair value for each reporting period. At January 31, 2012, the fair value of the warrants of $259,000 was included in accrued liabilities.

Prior to the closing of IPO, the Company utilized the Black-Scholes option pricing model to determine the fair value of the warrants to purchase redeemable convertible preference shares, including the consideration of underlying ordinary share price, a risk-free interest rate, the expected term and expected volatilities. The warrants were revalued up to the closing of IPO and any change in fair value has been recorded in other income (loss).

The warrants to purchase 36,292 redeemable convertible preference shares converted to warrants to purchase ordinary shares in connection with the IPO on October 10, 2012, and as a result, $110,000 of aggregate fair market value was reclassified from liabilities to shareholders’ equity. A total of 36,292 warrants were outstanding and have not been exercised as of January 31, 2013.

Ordinary shares

200,000,000 and 44,444,444 ordinary shares were authorized at January 31, 2013 and 2012, respectively. As of January 31, 2013 and 2012, the following ordinary shares were reserved for future issuance:


	As of January 31,
	2013		2012
Shares reserved for redeemable convertible preference shares		—		13,315,727
Shares reserved for options and restricted stock units		5,818,126		4,960,843
Shares reserved for employee stock purchase plan		460,445		—
Shares reserved for warrants		36,292		36,292