7. Net (Loss) Income Per Share

The Company computes basic net (loss) income per share using the “two-class” method, which includes the weighted-average number of common stock outstanding during the period and other securities that participate in dividends (a participating security). Prior to the closing of the IPO, the Company’s shares of convertible preferred stock were participating securities as defined by ASC 260-10, Earnings Per Share. Under the two-class method, basic net (loss) income per share applicable to common stockholders is computed by dividing the net (loss) income applicable to common stockholders by the weighted-average number of common shares outstanding for the period. Diluted net (loss) income per share is computed using the more dilutive of (1) the two-class method, or (2) the “if-converted” method. The Company allocates net earnings on a pari passu (equal) basis to both common and preferred stockholders. Net losses are not allocated to preferred stockholders as they have no obligation to share in the Company’s net losses.

Diluted net (loss) income per share gives effect to all potentially dilutive securities, including convertible preferred stock, convertible promissory notes and shares issuable upon the exercise of outstanding stock options and warrants, using the treasury stock method. For the three and six months ended June 30, 2014 and 2013, the Company excluded the effects of potentially dilutive shares that were outstanding during those respective periods from the denominator when their inclusion would be ant-dilutive, including for periods during which the Company generated net losses.

The denominators used in the net (loss) income per share computations are as follows:


	Three Months Ended June 30,				Six Months Ended June 30,
	2014		2013		2014		2013
Basic:
Weighted average common shares outstanding		22,608,324		4,288,243		19,150,412		3,975,463

Diluted:
Weighted average common shares outstanding		22,608,324		4,288,243		19,150,412		3,975,463
Convertible preferred stock*		—		11,245,907		—		11,255,016
Common stock options*		—		438,299		—		438,299
Common stock warrants*		—		—		—		—
Convertible promissory notes (as if converted)*		—		—		—		—

Denominator for diluted net (loss) income per share available to common stockholders		22,608,324		15,972,449		19,150,412		15,668,778

*	No amounts were considered if their effects would be anti-dilutive.

Basic and diluted net (loss) income per share attributable to common stockholders are computed as follows:


	Three Months Ended June 30,						Six Months Ended June 30,
	2014			2013			2014			2013
Net (loss) income	$	(3,645	)	$	5,337		$	(7,028	)	$	2,705
Add back: extinguishment of preferred shares		—			—			—			891
Less: net income attributable to participating securities		—			(3,869	)		—			(2,656	)

Net (loss) income attributable to common stockholders - Basic		(3,645	)		1,468			(7,028	)		940
Add: net income attributable to participating securities		—			3,869			—			2,656

Net (loss) income attributable to common stockholders - Diluted	$	(3,645	)	$	5,337		$	(7,028	)	$	3,596

Net (loss) income per share attributable to common stockholders
Basic	$	(0.16	)	$	0.34		$	(0.37	)	$	0.24

Diluted	$	(0.16	)	$	0.33		$	(0.37	)	$	0.23

Weighted-average common shares outstanding attributable to common stockholders:
Basic		22,608,324			4,288,243			19,150,412			3,975,463
Diluted		22,608,324			15,972,449			19,150,412			15,668,778

Securities outstanding at the end of the respective periods presented below, that could potentially dilute basic earnings per share in the future, that were not included in the computation of diluted net loss per share because to do so would have been antidilutive are as follows:


	June 30,
	2014		2013
Convertible preferred stock		—		—
Common stock options		1,058,160		—
Common stock warrants		19,851		19,851
Convertible promissory notes		—		1,126,517

Total		1,078,011		1,146,368

All shares of the Company’s convertible preferred stock were automatically converted to shares of the Company’s common stock upon the closing of the IPO on February 5, 2014 (see Note 8). All convertible promissory notes were either converted into shares of the Company’s Series D convertible preferred stock or repaid in cash by December 31, 2013.