Bridge Financing

6 Months Ended

Jun. 30, 2013

Bridge Financing

Bridge Financing

4. Bridge Financing

In connection with a Bridge financing in 2006, the Company issued warrants exercisable for approximately 243,000 shares of Series B redeemable convertible preferred stock (“Series B Preferred”) at an exercise price of $7.6055 per share.

Prior to the Company’s initial public offering (“IPO”) in October 2012, the Company classified the warrants as a liability and re-measured the liability to estimated fair value at June 30, 2012 using the Black-Scholes option pricing model under the following assumptions: contractual life according to the remaining terms of the warrants, no dividend yield, risk-free interest rate of 0.17%, and volatility of 58%.

The increase in the fair value of the warrants from issuance through our IPO in October of 2012, totaled $1,205,000 and was recorded in warrant and other income (expense), net, and included $467,000 and $381,000 of interest expense in the statement of operations and comprehensive loss for the three and six months ended June 30, 2012, respectively. Effective immediately prior to the closing of the Company’s IPO in October of 2012, the warrants for convertible preferred stock became warrants for common stock and were reclassified to equity. All but 178 warrants were exercised during 2012, with the remaining warrants being exercised in January 2013, resulting in the net issuance of 153,000 shares of common stock.