Capital Structure-Convertible Preferred Stock	3 Months Ended
Mar. 31, 2013
Capital Structure-Convertible Preferred Stock
Capital Structure-Convertible Preferred Stock	7. Capital Structure—Convertible Preferred Stock On February 28, 2011, the Company entered into a Series B Preferred Stock Purchase Agreement with various investors (“Series B Agreement”) which provided for the issuance of up to 10,131,879 shares of Series B preferred stock, par value $.001 per share, subject to various terms and conditions. On February 28, 2011, the Company issued 6,921,939 shares of Series B Preferred Stock at a per share price of $4.90. The total consideration for the Series B Preferred Stock consisted of the conversion of the Bridge Note payable of $2.5 million and related accrued interest of $84,444 into 520,418 shares of Series B Preferred Stock, the exercise of related warrants of $625,000 for 127,581 shares of Series B Preferred Stock and the Company’s receipt of gross cash proceeds of $31.3 million for the balance of the Series B Preferred Stock. The terms of the Series B Agreement provided for additional tranches of preferred stock to be issued upon the achievement of a certain milestone by the Company or at any other time within ninety days of the original issuance (“additional closing”), as well as additional closings at the option of the holders (“optional closings”). On May 31, 2011, the Company had an additional closing for the sale of 51,033 shares of Series B Preferred Stock for gross cash proceeds of $250,003. On December 22, 2011, the Series B Agreement was amended to remove the additional closing clause, to include three additional tranches of preferred shares to be issued upon certain milestones to be met by the Company and to amend the terms of the optional closing clauses. Further, on December 22, 2011, the Company issued 990,030 shares of Series B Preferred Stock for gross cash proceeds of $4.9 million. On April 4, 2012, the Company completed the sale and third closing of 1,020,648 shares of Series B Preferred Stock for gross cash proceeds totaling $5.0 million. On July 24, 2012, the Company completed an additional sale of 1,020,648 shares of Series B Preferred Stock for gross cash proceeds totaling $5.0 million. As such, as of December 31, 2012, all of the 10,131,879 shares of Series B Preferred Stock authorized for issuance under the Series B Agreement were outstanding. Total issuance costs related to the Series B Preferred Stock issued during 2011 and 2012 were $230,126 and $15,026, respectively. On November 13, 2009, the Company authorized the sale and issuance of up to 4,694,375 shares of Series A Preferred Stock. The Company completed the initial closing on that date for the sale of 1,564,791 shares of Series A Preferred Stock at a price per share of $1.38, with cash proceeds received totaling $2.1 million, which is net of issuance costs of $86,908. During 2010, the Company completed the sale and second closing of 3,129,584 shares of Series A Preferred Stock for gross cash proceeds totaling $4.3 million. As such, as of December 31, 2011 and 2010, the Company had 4,694,375 shares of Series A Preferred Shares outstanding. JAWZ II LLC invested in Series A Preferred Stock and Series B Preferred Stock at the issuance prices of $1.38 and $4.90, respectively. James Wisler, the brother of Gerald Wisler (CEO), is manager of JAWZ II LLC. Upon the closing of the Company’s IPO on April 16, 2013, all outstanding shares of the Company’s Series A and B preferred stock were converted into 10,625,847 shares of common stock. Significant rights, restrictions, and preferences of the Series A Preferred Stock and Series B Preferred Stock, as of December 31, 2012 and March 31, 2013, are as follows: Dividend Provisions The holders of each outstanding share of Series A and B preferred stock are entitled to receive annual, cumulative dividends of 8% of the applicable Original Issuance Price of $1.38 and $4.90 per share, respectively (subject to appropriate adjustments in the event of any stock dividend, stock split, combination or other similar recapitalizations with respect to such shares) (the Accrued Dividends). Accruing Dividends shall accrue from day-to-day, whether or not declared, and shall be cumulative, provided except for in the event of a liquidation, such accruing dividends shall be payable, when and as declared by the Board of Directors, in preference to any distribution to the holders of the common stock. After payment of such dividends, any additional dividends or distributions shall be distributed among all holders of common stock and preferred stock in proportion to the number of shares of common stock that would be held by each such holder if all shares of preferred stock were converted to common stock. Through March 31, 2013, the Company had not declared any dividends. In the event of liquidation, the cumulative to date amount of dividends that could have been payable at March 31, 2013 was approximately $8.5 million. Liquidation Preferences In the event of a liquidation, dissolution, or winding-up of the affairs of the Company, including a change in control, the holders of each Series A and B share shall be entitled to receive the applicable Original Issuance Price per share, adjusted for any combinations or subdivisions with respect to such shares and, in addition, an amount equal to all declared but unpaid dividends prior and in preference to any distribution to the holders of the common stock. All remaining proceeds will be shared pro rata by the holders of the preferred and common stock on an as-converted basis until, with respect to each Series A and B of preferred stock, such holders shall have received an amount per share equal to $1.38 and $4.90, respectively, multiplied by the Original Issuance Price per share of preferred stock. Thereafter, if proceeds remain, the holders of the common stock shall receive the remaining proceeds pro rata based on the number of shares of common stock held by each. In any liquidating transaction, if proceeds received by this corporation or its shareholders are other than cash; its value will be deemed its fair market value. Voting Rights As long as any shares of Series A and B preferred shares are outstanding, the holders of such shares shall be entitled to each elect one director. The holders of Series A and B preferred and common stock, voting together as a single class, on an as-converted basis, shall be entitled to elect any remaining directors. On all other matters, each holder of Series A and B preferred shares shall have the right to vote for each share of common stock into which such preferred stock could then be converted. Conversion Rights Each share of Series A and B preferred stock is convertible, at the option of the shareholder at any time, into shares of common stock, subject to adjustments for certain dilutive events and calculated by dividing the Conversion Price into the per share Conversion Value. The initial per share conversion price of the Series A and B preferred stock is $1.38 and $4.90, respectively. Beneficial Conversion In connection with the issuance of the Series B Preferred stock on July 24, 2012, the Company recorded a beneficial conversion charge representing the difference between the conversion price and the fair value of the Company’s common stock as of the Commitment Date. The intrinsic value was in excess of the proceeds at the commitment date; therefore, the beneficial conversion charge was limited to the proceeds of approximately $5.0 million.

7. Capital Structure—Convertible Preferred Stock

On February 28, 2011, the Company entered into a Series B Preferred Stock Purchase Agreement with various investors (“Series B Agreement”) which provided for the issuance of up to 10,131,879 shares of Series B preferred stock, par value $.001 per share, subject to various terms and conditions. On February 28, 2011, the Company issued 6,921,939 shares of Series B Preferred Stock at a per share price of $4.90. The total consideration for the Series B Preferred Stock consisted of the conversion of the Bridge Note payable of $2.5 million and related accrued interest of $84,444 into 520,418 shares of Series B Preferred Stock, the exercise of related warrants of $625,000 for 127,581 shares of Series B Preferred Stock and the Company’s receipt of gross cash proceeds of $31.3 million for the balance of the Series B Preferred Stock. The terms of the Series B Agreement provided for additional tranches of preferred stock to be issued upon the achievement of a certain milestone by the Company or at any other time within ninety days of the original issuance (“additional closing”), as well as additional closings at the option of the holders (“optional closings”). On May 31, 2011, the Company had an additional closing for the sale of 51,033 shares of Series B Preferred Stock for gross cash proceeds of $250,003.

On December 22, 2011, the Series B Agreement was amended to remove the additional closing clause, to include three additional tranches of preferred shares to be issued upon certain milestones to be met by the Company and to amend the terms of the optional closing clauses. Further, on December 22, 2011, the Company issued 990,030 shares of Series B Preferred Stock for gross cash proceeds of $4.9 million.

On April 4, 2012, the Company completed the sale and third closing of 1,020,648 shares of Series B Preferred Stock for gross cash proceeds totaling $5.0 million.

On July 24, 2012, the Company completed an additional sale of 1,020,648 shares of Series B Preferred Stock for gross cash proceeds totaling $5.0 million. As such, as of December 31, 2012, all of the 10,131,879 shares of Series B Preferred Stock authorized for issuance under the Series B Agreement were outstanding.

Total issuance costs related to the Series B Preferred Stock issued during 2011 and 2012 were $230,126 and $15,026, respectively.

On November 13, 2009, the Company authorized the sale and issuance of up to 4,694,375 shares of Series A Preferred Stock. The Company completed the initial closing on that date for the sale of 1,564,791 shares of Series A Preferred Stock at a price per share of $1.38, with cash proceeds received totaling $2.1 million, which is net of issuance costs of $86,908.

During 2010, the Company completed the sale and second closing of 3,129,584 shares of Series A Preferred Stock for gross cash proceeds totaling $4.3 million. As such, as of December 31, 2011 and 2010, the Company had 4,694,375 shares of Series A Preferred Shares outstanding.

JAWZ II LLC invested in Series A Preferred Stock and Series B Preferred Stock at the issuance prices of $1.38 and $4.90, respectively. James Wisler, the brother of Gerald Wisler (CEO), is manager of JAWZ II LLC.

Upon the closing of the Company’s IPO on April 16, 2013, all outstanding shares of the Company’s Series A and B preferred stock were converted into 10,625,847 shares of common stock. Significant rights, restrictions, and preferences of the Series A Preferred Stock and Series B Preferred Stock, as of December 31, 2012 and March 31, 2013, are as follows:

Dividend Provisions

The holders of each outstanding share of Series A and B preferred stock are entitled to receive annual, cumulative dividends of 8% of the applicable Original Issuance Price of $1.38 and $4.90 per share, respectively (subject to appropriate adjustments in the event of any stock dividend, stock split, combination or other similar recapitalizations with respect to such shares) (the Accrued Dividends). Accruing Dividends shall accrue from day-to-day, whether or not declared, and shall be cumulative, provided except for in the event of a liquidation, such accruing dividends shall be payable, when and as declared by the Board of Directors, in preference to any distribution to the holders of the common stock. After payment of such dividends, any additional dividends or distributions shall be distributed among all holders of common stock and preferred stock in proportion to the number of shares of common stock that would be held by each such holder if all shares of preferred stock were converted to common stock. Through March 31, 2013, the Company had not declared any dividends. In the event of liquidation, the cumulative to date amount of dividends that could have been payable at March 31, 2013 was approximately $8.5 million.

Liquidation Preferences

In the event of a liquidation, dissolution, or winding-up of the affairs of the Company, including a change in control, the holders of each Series A and B share shall be entitled to receive the applicable Original Issuance Price per share, adjusted for any combinations or subdivisions with respect to such shares and, in addition, an amount equal to all declared but unpaid dividends prior and in preference to any distribution to the holders of the common stock. All remaining proceeds will be shared pro rata by the holders of the preferred and common stock on an as-converted basis until, with respect to each Series A and B of preferred stock, such holders shall have received an amount per share equal to $1.38 and $4.90, respectively, multiplied by the Original Issuance Price per share of preferred stock. Thereafter, if proceeds remain, the holders of the common stock shall receive the remaining proceeds pro rata based on the number of shares of common stock held by each. In any liquidating transaction, if proceeds received by this corporation or its shareholders are other than cash; its value will be deemed its fair market value.

Voting Rights

As long as any shares of Series A and B preferred shares are outstanding, the holders of such shares shall be entitled to each elect one director. The holders of Series A and B preferred and common stock, voting together as a single class, on an as-converted basis, shall be entitled to elect any remaining directors. On all other matters, each holder of Series A and B preferred shares shall have the right to vote for each share of common stock into which such preferred stock could then be converted.

Conversion Rights

Each share of Series A and B preferred stock is convertible, at the option of the shareholder at any time, into shares of common stock, subject to adjustments for certain dilutive events and calculated by dividing the Conversion Price into the per share Conversion Value. The initial per share conversion price of the Series A and B preferred stock is $1.38 and $4.90, respectively.

Beneficial Conversion

In connection with the issuance of the Series B Preferred stock on July 24, 2012, the Company recorded a beneficial conversion charge representing the difference between the conversion price and the fair value of the Company’s common stock as of the Commitment Date. The intrinsic value was in excess of the proceeds at the commitment date; therefore, the beneficial conversion charge was limited to the proceeds of approximately $5.0 million.