Redeemable Preferred Units, Series 2 and Series 1 Senior Preferred Units and Junior Preferred Units | 10. Redeemable Preferred Units, Series 2 and Series 1 Senior Preferred Units and Junior Preferred Units Redeemable Preferred Units The Company has issued redeemable preferred units (“Redeemable Preferred Units”). The Redeemable Preferred Units are classified outside of members’ deficit because the units contain redemption features that are not solely within the control of the Company. In December 2013, the Company issued 3,420,000 Redeemable Preferred Units at an issuance price of $1.00 per unit for proceeds of $3,420. In December 2014, the Company issued 3,420,000 Redeemable Preferred Units at an issuance price of $1.00 per unit for proceeds of $3,420. In October 2015, the Company issued 6,840,000 Redeemable Preferred Units at an issuance price of $1.00 per unit for proceeds of $6,840. In November and December 2016, the Company issued an aggregate of 3,420,000 Redeemable Preferred Units at $1.00 per unit for proceeds of $3,420. On March 29, 2017, the Redeemable Preferred Units were exchanged to Series A Common Units. See Note 3, Merger and Recapitalization Redeemable Preferred Units consisted of the following: Authorized Issued and Outstanding Carrying Value Liquidation Preference At December 31, 2016 60,000,000 17,100,000 $ 71,649 $ 55,746 At December 31, 2017 - - $ - $ - At December 31, 2018 - - $ - $ - The holders of the Redeemable Preferred Units had the following rights and preferences: Tranche Right The Redeemable Preferred Unit Tranche Right obligated the holders to purchase, and provided the holders with the right to purchase, additional Redeemable Preferred Units, under certain circumstances. The Redeemable Preferred unitholders purchased these additional units in 2016 and 2015. In October 2016, the Redeemable Preferred Unit Tranche Right was settled with the closing of the Redeemable Preferred Unit financing. See Note 9, Preferred Unit Tranche Rights Redemption The Redeemable Preferred Units were redeemable on or after December 27, 2022 at the option of the Redeemable Preferred unitholder. The Redeemable Preferred Units were redeemable at the fair market value on the redemption date. Conversion The Redeemable Preferred Units had no conversion rights. Voting Rights The holders of Redeemable Preferred Units were entitled to vote as a single class with the holders of the Series A Common Units on certain matters, including the election of managers, with each Redeemable Preferred Unit and Series A Common Unit carrying one vote per unit. Distributions The Company’s Board of Managers had authority to determine the amount, if any, of proceeds available for distribution to the unitholders. Prior to the conversion of the Redeemable Preferred Units on March 29, 2017, such proceeds were to be distributed in accordance with the following order of priority: • First, to the holders of Redeemable Preferred Units, pro rata in proportion to the remaining amount to be distributed to each such holder, until each such holder has received distributions in an amount equal to the cumulative capital contributions since inception in respect of the Redeemable Preferred Units. • Thereafter, to all Redeemable Preferred Unitholders, Series A Common Units held by the Company’s founders, Series A Common Units issued to non-founders between December 27, 2013 and December 26, 2014, and vested Series A Restricted Common Unitholders issued subsequent to December 26, 2014 pro rata in proportion to their percentage interest at the time of distribution. No distributions were made in 2018, 2017 or 2016. Liquidation In the event of any liquidation, dissolution, or winding-up of the Company, the assets of the Company would have been distributed in accordance with the same order of priority that applied to distributions. Series 2 Senior Preferred Units On October 26, 2017, the Company completed the sale of 4,886,000 Series 2 Senior Preferred Units at a price of $11.26 per unit resulting in net proceeds of $55,002. Series 2 Senior Preferred Units consist of the following: Authorized Issued and Outstanding Carrying Value Liquidation Preference Common Units Issuable Upon Conversion At December 31, 2017 4,886,000 4,886,000 $ 55,002 $ 55,002 4,886,000 At December 31, 2018 - - $ - $ - - Series 1 Senior Preferred Units On March 29, 2017, the Company issued 2,500,000 Series 1 Senior Preferred Units at an issuance price of $10.00 per unit for proceeds of $25,000. See Note 3, Merger and Recapitalization Series 1 Senior Preferred Units consist of the following: Authorized Issued and Outstanding Carrying Value Liquidation Preference Common Units Issuable Upon Conversion At December 31, 2017 2,500,000 2,500,000 $ 25,000 $ 25,000 2,500,000 At December 31, 2018 - - - - - Junior Preferred Units On March 29, 2017, 134,920 Solid GT Class D Units were exchanged for 4,414,356 Junior Preferred Units of the Company. See Note 3, Merger and Recapitalization Junior Preferred Units consisted of the following: Authorized Issued and Outstanding Carrying Value Liquidation Preference At December 31, 2017 4,414,356 4,414,356 $ 44,177 $ 42,500 At December 31, 2018 - - $ - $ - The holders of the Series 1 and Series 2 Senior Preferred Units and Junior Preferred Units had the following rights and preferences: Tranche Right The holders of Series 1 Senior Preferred Units were obligated to purchase 1,973,430 Series 2 Senior Preferred Units at $12.67 per unit for gross proceeds of $25,000 in the event the Company achieves certain pre-clinical milestones. In addition, the holders of a majority of the Series 1 Senior Preferred Units had the right to require the holders of the Series 1 Senior Preferred Units to purchase the Series 2 Senior Preferred Units at any time prior to September 1, 2017, which in August 2017, was extended to December 1, 2017. The Series 1 Tranche Right was subject to certain transfer rights. See Note 9, Preferred Unit Tranche Rights Redemption The Series 1 and Series 2 Senior Preferred Units were redeemable on or after March 29, 2022 at the option of the holder at a redemption price equal to the original purchase price of $10.00 and $11.26 per unit, respectively, plus any declared but unpaid distributions. The Company presented Series 1 and Series 2 Senior Preferred Units outside of permanent equity since the redemption of Series 1 and Series 2 Senior Preferred Units was outside the control of the Company. The consent of the Junior Preferred unitholders along with Series 1 and Series 2 Senior Preferred unitholders could have effected a deemed liquidation event. Therefore, the Company presented the Junior Preferred Units outside of permanent equity. Voting Rights The holders of the Series 1 and Series 2 Senior Preferred Units and Junior Preferred Units were entitled to vote together, and not as separate classes, with each Series 1 and Series 2 Senior Preferred Unit, Junior Preferred Unit, Series A Common Unit and Series B Common Unit carrying one vote per unit. Subject to maintaining certain ownership levels, the Series 1 and Series 2 Senior Preferred unitholders as a class were entitled to elect two of the nine board members while such units were outstanding. The Junior Preferred unitholders as a class are entitled to elect two of the nine board members while such units were outstanding. Dividends The holders of Series 1 and Series 2 Senior Preferred Units were entitled to an 8% annual dividend based on the Series 1 and Series 2 Senior Preferred Unit issuance price of $10.00 and $11.26 per unit, respectively, when and if declared by the Board of Managers. No dividends were declared or paid to Series 1 or Series 2 Senior Preferred unitholders. The holders of the Junior Preferred Units were entitled to an 8% annual dividend based on the Junior Preferred Unit issuance price of $9.63 per unit, when and if declared by the Board of Managers. No dividends were declared or paid to Junior Preferred unitholders. Distributions The Company’s Board of Managers had authority to determine the amount, if any, of proceeds available for distribution. Such proceeds were to be distributed in accordance with the following order of priority: • First, the Series 2 Senior Preferred unitholders were entitled to an amount distributed, on a pro rata basis, equal to the Series 2 Senior Preferred Unit price of $11.26 per unit and any declared but unpaid Series 2 Senior Preferred dividends. • Second, the Series 1 Senior Preferred and the Junior Preferred unitholders were entitled to an amount distributed, on a pro rata basis, equal to the Series 1 Senior Preferred Unit price of $10.00 per unit and any declared but unpaid Series 1 Senior Preferred dividends and the Junior Preferred Unit price of $9.63 per unit and any declared but unpaid Junior Preferred dividends, respectively. • Third, the Series A, B, C and D Common unitholders were entitled to an amount distributed, on a pro rata basis, subject to certain limitations, until the cumulative amount distributed with respect to one Series A Common Unit, Series B Common Unit, Series C Common Unit and vested Series D Common Unit equaled the cumulative amount distributed to one Junior Preferred Unit. • Fourth, the Junior Preferred unitholders and the Series A, B, C and vested D Common unitholders were entitled to an amount distributed on a pro rata basis, subject to certain limitations, until the cumulative amount distributed with respect to one Junior Preferred Unit, Series A Common Unit, Series B Common Unit, Series C Common Unit and vested Series D Common Unit equaled the cumulative amount distributed to one Series 1 Senior Preferred Unit. • Fifth, the Series 1 and Series 2 Senior Preferred, the Junior Preferred and the Series A, B, C and vested D Common unitholders were entitled to participate on a pro rata basis in cumulative distributions, subject to certain limitations, in the remaining proceeds available for distribution. As a result of the issuance of the Series 2 Senior Preferred Units on October 26, 2017, the Series 2 Senior Preferred unitholders were entitled to cumulative amounts distributed equal to the amount paid per unit for the Series 2 Senior Preferred Units and any declared but unpaid Series 2 Senior Preferred cumulative dividends, prior to and with priority over any distributions to any other unitholders. In addition, upon the issuance of the Senior Series 2 Preferred units, the holders of the Junior Preferred Units no longer shared pro rata in the order of distributions with the Senior Series 1 Preferred unitholders and were subordinate to distributions made to Series 1 Senior Preferred unitholders. No distributions were made during the years ended December 31, 2018 and 2017. Liquidation In the event of any liquidation, dissolution, or winding-up of the Company, the assets of the Company would have been distributed in accordance with the same order of priority that applied to distributions. Corporate Conversion Immediately prior to the effectiveness of the Company’s registration statement on Form S-1, which occurred on January 25, 2018, the Company completed the Corporate Conversion whereby all the Series 1 and Series 2 Senior Preferred, Junior Preferred Units converted into shares of common stock. |