6. Net Loss Per Share

Basic net loss per share, which excludes dilution, is computed by dividing the net loss attributable to common shareholders by the weighted-average number of shares of common stock outstanding during the period. Diluted net loss per share reflects the potential dilution that could occur if securities or other contracts to issue common stock, such as stock options, convertible notes, convertible preferred stock and warrants, result in the issuance of common stock which share in the earnings of the Company. Stock options and convertible preferred stock have been excluded from the computation of diluted net loss per share for all periods as their effect would be anti-dilutive. Such potentially dilutive shares are excluded when the effect would be to reduce the loss per share. The treasury stock method has been applied to determine the dilutive effect of warrants.

The following table sets forth the weighted average potential shares of common stock that are not included in the calculation of diluted net loss per share because to do so would be anti-dilutive for each period presented (in thousands):


	THREE MONTHS ENDED SEPTEMBER 30				NINE MONTHS ENDED SEPTEMBER 30
	2013		2012		2013		2012
Convertible preferred stock		2,714		8,504		6,274		8,504
Convertible notes ⁽¹⁾		503		—		501		—
Stock options outstanding		2,369		1,749		2,211		1,672
Warrants to purchase convertible preferred stock		32		207		61		153
Warrants to purchase common stock ⁽²⁾		—		—		—		—

⁽¹⁾

As of September 30, 2012, the Company had approximately $8,804,000, in contingently convertible notes payable and related accrued interest for which the contingencies related to conversion had not been met as of September 30, 2012. Therefore, it would have no dilutive or anti-dilutive impact until the contingency had been met effective upon the IPO in August 2013. Refer to Note 11 for further discussion. The Company used the if-converted method to determine the dilutive effect of convertible notes as of July 1, 2013, the beginning of the quarter when the contingency had been met.

⁽²⁾

In October 2012 and April 2013, the Company issued warrants to purchase a number of shares of common stock equal to 15% of the funded principal amount of the October 2012 Junior Secured Promissory Notes as defined in Note 10, divided by 70% of the value of common stock in a sale of the Company or a qualified initial public offering (Qualified IPO), with an exercise price of 70% of the value of common stock in a sale of the Company or a Qualified IPO. In June 2013, the Company issued warrants to purchase a number of shares of common stock equal to 10% of the total committed amount of the June 2013 Credit Facility as defined in Note 10, divided by 70% of the value of common stock in a sale of the Company or a Qualified IPO, with an exercise price of 70% of the value of common stock in a sale of the Company or a Qualified IPO. These warrants were contingently exercisable for which the contingencies related to exercise had not been met until the IPO in August 2013. Therefore, they would have no dilutive or anti-dilutive impact until the contingency had been met in August 2013. Refer to Note 10 for further discussion. The Company used the if-converted method to determine the dilutive effect of warrants to purchase common stock as of July 1, 2013, the beginning of the quarter when the contingency had been met.

The numbers of shares of common stock issuable upon the exercise of warrants to purchase convertible preferred stock and upon the conversion of convertible preferred stock were at a ratio of one-to-one.


	THREE MONTHS ENDED SEPTEMBER 30						NINE MONTHS ENDED SEPTEMBER 30
	2013			2012			2013			2012
	(in thousands, except per share data)
Numerator:
Net loss	$	(6,110	)	$	(13,802	)	$	(18,498	)	$	(21,698	)
Deemed dividend on convertible notes		—			—			(1,378	)		(1,253	)

Net loss attributable to common stockholders	$	(6,110	)	$	(13,802	)	$	(19,876	)	$	(22,951	)

Effect of potentially dilutive securities:
Convertible notes		(1,089	)		—			(118	)		—
Warrants to purchase common stock		(201	)		—			(201	)		—

Net loss for diluted earnings per share	$	(7,400	)	$	(13,802	)	$	(20,195	)	$	(22,951	)

Denominator:

Shares used for basic net loss per share		12,888			1,262			5,187			1,253

Effect of potentially dilutive securities:
Convertible notes		1,043			—			20			—
Warrants to purchase common stock		86			—			22			—

Weighted average shares outstanding for diluted earnings per share		14,017			1,262			5,229			1,253

Basic net loss per share:	$	(0.47	)	$	(10.94	)	$	(3.83	)	$	(18.32	)

Diluted net loss per share:	$	(0.53	)	$	(10.94	)	$	(3.86	)	$	(18.32	)