Common Stock, Preferred Stock and Stockholders' Deficit

6 Months Ended

Jun. 30, 2013

Common Stock, Preferred Stock and Stockholders' Deficit

Common Stock, Preferred Stock and Stockholders' Deficit

10. Common Stock, Preferred Stock and Stockholders’ Deficit

Reverse Stock Split

On June 13, 2013, the Company’s board of directors and stockholders approved an amendment to the Company’s amended and restated certificate of incorporation effecting a 1-for-1.5 reverse stock split of the Company’s issued and outstanding shares of common stock, preferred stock and the renaming of the Series I common stock to common stock.  The par value of the common stock was not adjusted as a result of the reverse stock split.  The original issue prices for all series of preferred stock were proportionately adjusted to reflect the reverse stock split.  All authorized, issued and outstanding shares of common stock, preferred stock and per share amounts presented in the unaudited interim consolidated financial statements have been retroactively adjusted to reflect this reverse stock split and the renaming of the “Series I common stock” to “common stock” for all periods presented.  The reverse stock split was effected on June 13, 2013.

Common Stock

As of each December 31, 2012 and June 30, 2013, the Company has two classes of $0.0001 par value common stock as follows:

	Authorized	Outstanding
	as of	as of
Series	December 31, 2012	December 31, 2012
Common stock	50,000,000	6,674,905
Series II	2,333,333	1,047,357
Total	52,333,333	7,722,262

	Authorized	Outstanding
	as of	as of
	June 30, 2013	June 30, 2013
	(unaudited)	(unaudited)
Common stock	100,000,000	6,738,589
Series II	2,333,333	1,052,464
Total	102,333,333	7,791,053

The Company’s two classes of common stock are identical in all significant respects.  Each share is entitled to one vote and both classes of shares are subordinate to the preferred stock in the payment of dividends and liquidation preferences.  The Series II common stock automatically converted into common stock upon the closing of the Company’s IPO on July 2, 2013 (refer to note 2).

Preferred Stock

As of each December 31, 2012 and June 30, 2013, the authorized capital stock of the Company consists of 32,742,929 shares of preferred stock, $0.0001 par value per share.

Preferred stock consists of the following as of December 31, 2012 and June 30, 2013:

Series	Issued	Authorized	Issued and Outstanding	Original Issue Price		Liquidation Preference		Carrying Value as of December 31, 2012		Carrying Value as of June 30, 2013
										(unaudited)
Series A	September 2006	6,861,975	6,826,451	$	1.2669	$	8,648	$	8,402	$	8,435
Series B	December 2007	3,500,732	3,500,729	$	3.1422	$	11,000	$	10,949	$	10,956
Series B-1	May 2008	548,032	514,102	$	4.8629	$	2,500	$	2,479	$	2,482
Series C	February and	5,308,216	5,276,554	$	3.7904	$	20,000	$	19,932	$	19,941
Series D	April 2010	5,453,975	5,453,970	$	7.3341	$	40,000	$	39,931	$	39,940
Series E	December 2010	238,000	236,108	$	8.0051	$	1,890	$	1,890	$	1,890
Series 1	December 2010	979,333	947,711	$	2.4575	$	2,329	$	5,217	$	5,217
Series 2	December 2010	1,822,000	1,821,455	$	4.1387	$	7,538	$	12,404	$	12,404
Series 3	December 2010	937,333	928,054	$	5.7507	$	5,337	$	7,517	$	7,517
Series 4	December 2010	3,093,333	3,092,932	$	2.7548	$	8,520	$	17,722	$	17,722
Series F	September 2011	4,000,000	3,965,126	$	9.3314	$	37,000	$	36,023	$	36,153
		32,742,929	32,563,192					$	162,466	$	162,657

Dividends

The holders of preferred stock are entitled to receive, when and if declared by the Board of Directors out of funds legally available, dividends at the following annual rates:

Series	Dividend Rate
Series A	$	0.10140
Series B	$	0.25140
Series B-1	$	0.38910
Series C	$	0.30330
Series D	$	0.58680
Series E	$	0.64035
Series 1	$	0.19665
Series 2	$	0.33105
Series 3	$	0.46005
Series 4	$	0.22035
Series F	$	0.74655

No dividends or other distributions will be made with respect to common stock until all declared dividends on the preferred stock have been paid.  No dividends have been declared or paid by the Company through the date of this report.

Conversion

The preferred stock is convertible into common stock at the option of the holder.  Except for the Series B-1 and Series F preferred stock, all preferred stock converts on a one for one basis.  The Series B-1 preferred stock converts into common stock on a 1:1.04719 basis and the Series F preferred stock converts into common stock in accordance with the Series F ratchet provision described below under the heading “Series F ratchet provision”. The preferred stock was automatically converted into common stock upon the closing of the Company’s IPO on July 2, 2013 (refer to note 2).

Liquidation Preferences

The preferred stockholders have liquidation preferences over common stockholders based on the series of preferred stock held.  In the event of liquidation, dissolution, or winding up of the Company, each holder of preferred shares is entitled to be paid out of available assets on a pro-rata basis based on the liquidation preference of each series plus all declared but unpaid dividends.  After the preferential amounts have been distributed by the Company, the holders of preferred stock then participate with the common stockholders in the distribution of remaining available assets.

Voting

Each holder of a share of outstanding preferred stock shall be entitled to the number of votes equal to the number of shares of common stock into which the shares of convertible preferred stock so held could be converted.

Series F Ratchet Provision

The terms of the Series F preferred stock provide that the ratio at which each share of such series automatically convert into shares of common stock will increase if a qualified IPO  price is below $13.997 per share.

Based on the Company’s IPO price of $10.00 per share, on July 2, 2013 upon the closing of the Company’s IPO, the Series F preferred stock automatically converted into a total of 5,549,989 shares of common stock, which included 1,584,863 additional shares of common stock related to the ratchet provision described above.

As of July 2, 2013, and on a pro forma basis, the Company recorded $15,849 in additional expenses related to the issuance of additional common shares resulting from the ratchet provision.