Note 10 - Stockholders' Equity (Deficit) | 9 Months Ended |
Sep. 30, 2013 |
Stockholders' Equity Note [Abstract] | ' |
Stockholders' Equity Note Disclosure [Text Block] | ' |
10. Stockholders’ Equity (Deficit) |
|
Initial Public Offering |
|
On August 12, 2013, the Company closed the IPO pursuant to a registration statement on Form S-1. In the IPO, the Company sold 5,125,000 shares of common stock at a public offering price of $9.00 per share. The aggregate offering price for shares sold in the offering was approximately $46.1 million. Net proceeds were approximately $40.0 million, after deducting underwriting discounts and commissions of $3.2 million and offering expenses of $2.9 million, of which $0.1 million was unpaid as of September 30, 2013. Upon the closing of the IPO, all outstanding shares of the Company’s convertible preferred stock automatically converted into 21,840,537 shares of common stock and the carrying value of $76.2 million is included in additional paid-in capital on the condensed consolidated balance sheet as of September 30, 2013. |
|
Convertible preferred stock as of December 31, 2012 consisted of the following: |
|
Convertible | | Shares | | | Shares Issued | | | Issuance Price | | | Carrying Value (2) | | | Liquidation | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Preferred Stock | Authorized | and | Per Share (1) | Preference | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Outstanding (1) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Series A-1 | | | 26,165,827 | | | | 26,165,827 | | | $ | 0.105 | | | $ | 1,341,000 | | | $ | 2,747,000 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Series A-2 | | | 22,473,726 | | | | 22,324,696 | | | | 0.2013 | | | | 4,494,000 | | | | 4,494,000 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Series B | | | 16,134,433 | | | | 16,134,433 | | | | 0.5476 | | | | 8,777,000 | | | | 8,835,000 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Series C | | | 16,404,591 | | | | 16,229,717 | | | | 0.28592 | | | | 4,546,000 | | | | 4,640,000 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Series D | | | 24,876,609 | | | | 24,876,609 | | | | 1.00496 | | | | 24,901,000 | | | | 25,000,000 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Series D-1 | | | 24,075,053 | | | | 24,075,052 | | | | 1.3137 | | | | 32,132,000 | | | | 31,627,000 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | 130,130,239 | | | | 129,806,334 | | | | | | | $ | 76,191,000 | | | $ | 77,343,000 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
|
| -1 | Amounts are presented without giving effect to the Company’s 1-for-6 reverse stock split that was effective July 24, 2013. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| -2 | Amounts are net of issuance costs. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
|
Immediately following the closing of the IPO, the Company’s certificate of incorporation was amended to authorize 20,000,000 shares of undesignated preferred stock and 200,000,000 shares of common stock. |
|
Common Stock |
|
At September 30, 2013 and December 31, 2012, there were 31,906,634 and 4,816,863 shares of common stock issued and outstanding, respectively. |
|
The following table summarizes common stock activity: |
|
| | Number of Shares | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Outstanding at December 31, 2012 | | | 4,816,863 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Option exercises | | | 190,900 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Conversion of convertible preferred stock | | | 21,840,537 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Common stock issued in connection with IPO | | | 5,125,000 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Treasury stock withheld (see Note 5) | | | (66,666 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Outstanding at September 30, 2013 | | | 31,906,634 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
|
Treasury Stock |
|
The Company has 66,666 shares of treasury stock that are withheld in connection with the acquisition of Crowd Science. The Company is accounting for these withheld shares as treasury stock, which could be re-issued if the Company determined to do so. See Note 5 for additional information. |
|
Shares Reserved for Future Issuance |
|
At September 30, 2013, the Company has reserved the following shares of common stock for future issuance. |
|
| | 30-Sep-13 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Common stock options outstanding | | | 5,691,987 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Warrants to purchase common stock outstanding | | | 53,983 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Shares available for future issuance | | | 1,023,817 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | 6,769,787 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
|
Equity Incentive Plans |
|
The Company’s 2004 Stock Plan (the “2004 Plan”), authorized the Company to grant restricted stock awards or stock options to employees, directors and consultants at prices not less than the fair market value at date of grant for incentive stock options and not less than 85% of fair market value for non-statutory options. Option vesting schedules were determined by the board of directors at the time of issuance and they generally vest at 25% on the first anniversary of the grant (or the employment or service commencement date) and monthly over the next 36 months. Options generally expire ten years from the date of grant unless the optionee is a 10% shareholder, in which case the term will be five years from the date of grant. Unvested options exercised are subject to the Company’s repurchase right. Upon the effective date of the registration statement related to the Company’s IPO, the 2004 Plan was amended to cease the grant of any additional awards thereunder, although the Company will continue to issue common stock upon the exercise of stock options previously granted under the 2004 Plan. |
|
In July 2013, the Company adopted a 2013 Equity Incentive Plan (the “2013 Plan”) which became effective on August 6, 2013. The 2013 Plan will serve as the successor equity compensation plan to the 2004 Plan. The 2013 Plan will terminate on July 23, 2023. The 2013 Plan provides for the grant of incentive stock options, nonqualified stock options, restricted stock awards, stock appreciation rights, performance stock awards, restricted stock units and stock bonus awards to employees, directors and consultants. Stock options granted must be at prices not less than 100% of the fair market value at date of grant. Option vesting schedules are determined by the compensation committee of the board of directors at the time of issuance and they generally vest at 25% on the first anniversary of the grant (or the employment or service commencement date) and monthly over the next 36 months. Options generally expire ten years from the date of grant unless the optionee is a 10% stockholder, in which case the term will be five years from the date of grant. Unvested options exercised are subject to the Company’s repurchase right. The Company has reserved 2,000,000 shares of its common stock for issuance under the 2013 Plan, and shares reserved for issuance will increase January 1 of each year by the lesser of (i) 5% of the number of shares issued and outstanding on December 31 immediately prior to the date of increase or (ii) such number of shares as may be determined by the board of directors. |
|
Prior to the IPO, the fair value of the common stock underlying the Company’s stock options was determined by the Company’s board of directors, which intended all options granted to be exercisable at a price per share not less than the per-share fair value of the Company’s common stock underlying those options on the date of grant. The valuations of the Company’s common stock were determined in accordance with the guidelines outlined in the American Institute of Certified Public Accountants Practice Aid, Valuation of Privately-Held-Company Equity Securities Issued as Compensation. The assumptions the Company used in the valuation model are based on future expectations combined with management judgment. In the absence of a public trading market, the Company’s board of directors, with input from management, exercised significant judgment and considered numerous objective and subjective factors to determine the fair value of the Company’s common stock as of the date of each option grant. |
|
The following table summarizes option award activity: |
|
| | Number of | | | Weighted- | | | Weighted- | | | Aggregate | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Shares | Average | Average | Intrinsic | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
(in thousands) | Exercise | Remaining | Value | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Price | Contractual | (in thousands) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Life | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | (years) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Balance at December 31, 2012 | | | 4,015 | | | $ | 3.78 | | | | 7.88 | | | $ | 8,659 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Granted | | | 1,963 | | | | 8.58 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Exercised | | | (191 | ) | | | 1.98 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Canceled and forfeited | | | (95 | ) | | | 5.57 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Balance at September 30, 2013 | | | 5,692 | | | $ | 5.47 | | | | 8.02 | | | $ | 29,244 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Vested and exercisable as of September 30, 2013 | | | 2,547 | | | $ | 3.5 | | | | 6.71 | | | $ | 17,911 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Vested as of September 30, 2013 and expected to vest thereafter (1) | | | 5,123 | | | $ | 5.22 | | | | 7.87 | | | $ | 27,575 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
|
| -1 | Options expected to vest reflect an estimated forfeiture rate. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
|
The weighted average grant date fair value of options granted was $6.41 and $2.76 in the three months ended September 30, 2013 and 2012, respectively and $5.89 and $2.70 for the nine months ended September 30, 2013 and 2012, respectively. Prior to the Company’s IPO, aggregate intrinsic value represented the difference between the Company’s estimated fair value of its common stock and the exercise price of outstanding, in-the-money options. After the Company’s IPO, aggregate intrinsic value represented the difference between the market value of the Company’s common stock and the exercise price of outstanding, in-the-money options. The total intrinsic value of options exercised was approximately $0.9 million and $34,000 for the three months ended September 30, 2013 and 2012, respectively, and was $1.3 million and $3.4 million for the nine months ended September 30, 2013 and 2012, respectively. |
|
Employee Stock Purchase Plan |
|
In July 2013, the Company adopted a 2013 Employee Stock Purchase Plan (the “2013 Purchase Plan”) that became effective on August 6, 2013. The 2013 Purchase Plan is designed to enable eligible employees to periodically purchase shares of the Company’s common stock at a discount through payroll deductions of up to 15% of their eligible compensation, subject to any plan limitations. At the end of each offering period, employees are able to purchase shares at 85% of the lower of the fair market value of the Company’s common stock on the first trading day of the offering period or on the last day of the offering period. Purchases are accomplished through participation in discrete offering periods. The 2013 Purchase Plan is intended to qualify as an employee stock purchase plan under Section 423 of the Internal Revenue Code. The Company has reserved 500,000 shares of its common stock for issuance under the 2013 Purchase Plan and shares reserved for issuance will increase January 1 of each year by the lesser of (i) a number of shares equal to 1% of the total number of outstanding shares of common stock on December 31 immediately prior to the date of increase or (ii) such number of shares as may be determined by the board of directors. There were no shares purchased by employees under the Company’s ESPP for the three and nine months ended September 30, 2013. |
|
Stock-Based Compensation |
|
The fair value of options granted to employees is estimated on the grant date using the Black-Scholes option valuation model. This valuation model for stock-based compensation expense requires the Company to make assumptions and judgments about the variables used in the calculation including the expected term (weighted-average period of time that the options granted are expected to be outstanding), volatility of the Company’s common stock, a risk-free interest rate, expected dividends, and the estimated forfeitures of unvested stock options. To the extent actual results differ from the estimates, the difference will be recorded as a cumulative adjustment in the period estimates are revised. The Company uses the simplified calculation of expected life, and volatility is based on an average of the historical volatilities of the common stock of a group of entities with characteristics similar to those of the Company. The risk-free rate is based on the U.S. Treasury yield curve in effect at the time of grant for periods corresponding with the expected life of the option. Expected forfeitures are based on the Company’s historical experience. The Company currently has no history or expectation of paying cash dividends on common stock. |
|
The fair value of option grants is determined using the Black-Scholes option valuation model with the following assumptions: |
|
| | Three Months Ended September 30, | | | Nine Months Ended September 30, | |
| | 2013 | | | 2012 | | | 2013 | | | 2012 | |
Expected term (in years) | | | 5.51 | | | | - | | | | 6.08 | | | | | | | | 6.01 | | | | | | | | 5.51 | | | | - | | | | 6.12 | | | | 5.93 | | | | - | | | | 6.01 | |
Volatility | | | | | | | 80% | | | | | | | | | | | | 49% | | | | | | | | | | | | 80% | | | | | | | | 49% | | | | - | | | | 65% | |
Risk-free interest rate | | | 1.50% | | | | - | | | | 1.72% | | | | 0.76% | | | | - | | | | 0.92% | | | | 1.02% | | | | - | | | | 1.72% | | | | 0.76% | | | | - | | | | 1.07% | |
Dividend yield | | | | | | | — | | | | | | | | | | | | — | | | | | | | | | | | | — | | | | | | | | | | | | — | | | | | |
|
The expected term of ESPP shares is the average of the remaining purchase periods under each offering period. The assumptions used to value employee stock purchase rights were as follows: |
|
| | Three Months Ended September 30, | | | Nine Months Ended September 30, | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | 2013 | | | 2012 | | | 2013 | | | 2012 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Expected term (in years) | | | 0.48 | | | | — | | | | 0.48 | | | | — | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Volatility | | | 80% | | | | — | | | | 80% | | | | — | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Risk-free interest rate | | | 0.08% | | | | — | | | | 0.08% | | | | — | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Dividend yield | | | — | | | | — | | | | — | | | | — | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
|
The following table summarizes the effects of stock-based compensation related to vesting stock-based awards included in the Company’s accompanying condensed consolidated statements of operations (in thousands): |
|
| | Three Months Ended September 30, | | | Nine Months Ended September 30, | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | 2013 | | | 2012 | | | 2013 | | | 2012 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Cost of revenue | | $ | 46 | | | $ | 31 | | | $ | 107 | | | $ | 104 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Sales and marketing | | | 503 | | | | 324 | | | | 1,186 | | | | 1,018 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Research and development (1) | | | 86 | | | | 29 | | | | 223 | | | | 67 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
General and administrative | | | 537 | | | | 131 | | | | 992 | | | | 349 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total employee stock-based compensation | | $ | 1,172 | | | $ | 515 | | | $ | 2,508 | | | $ | 1,538 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
|
| -1 | Excludes $68,000, $23,000, $145,000 and $72,000 for the three months ended September 30, 2013 and 2012 and for the nine months ended September 30, 2013 and 2012, respectively, that was capitalized as part of internal-use software development costs. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
|