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S-1
PROTEON THERAPEUTICS INC filed this Form S-1 on 09/16/2014
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Proteon Therapeutics, Inc.

Notes to Financial Statements (Continued)

2. Summary of Significant Accounting Policies (Continued)

and the related information contained within the notes to the financial statements are unaudited. These interim financial statements have been prepared on the same basis as the annual audited financial statements and, in the opinion of management, reflect all adjustments, consisting of normal and recurring adjustments, necessary for the fair presentation of the Company's financial position at June 30, 2014 and results of its operations and its cash flows for the six months ended June 30, 2013 and 2014. The results for the six months ended June 30, 2014 are not necessarily indicative of results to be expected for the year ending December 31, 2014 or any other interim or future period.

Unaudited Pro Forma Financial Information

        On June 24, 2014, the Company's Board of Directors authorized the Company to file a registration statement with the Securities and Exchange Commission ("SEC") permitting the Company to sell shares of its Common Stock to the public. Upon the closing of a qualified (as defined in the Company's Articles of Incorporation) initial public offering ("IPO") or otherwise upon the election of the holders of the specified percentage of preferred stock, all of the Company's convertible notes plus accrued interest will convert into redeemable convertible preferred stock and the outstanding redeemable convertible preferred stock will automatically convert into Common Stock. The unaudited pro forma balance sheet and statement of redeemable convertible preferred stock and stockholders' (deficit) equity as of June 30, 2014 reflect the assumed conversion of: all of the outstanding shares of Series A Redeemable Convertible Preferred Stock ("Series A Preferred Stock"), the Series A-1 Redeemable Convertible Preferred Stock ("Series A-1 Preferred Stock"), the Series B Redeemable Convertible Preferred Stock ("Series B Preferred Stock"), the Series C Redeemable Convertible Preferred Stock ("Series C Preferred Stock") and the Series D Redeemable Convertible Preferred Stock ("Series D Preferred Stock") (collectively "Preferred Stock") into shares of common stock.

        Unaudited pro forma net loss per share attributable to common stockholders is computed using the weighted-average number of common shares outstanding after giving effect to the conversion of all Preferred Stock and Convertible Notes and associated accrued interest into shares of the Common Stock as if such conversion had occurred at the beginning of the period presented, or the date of original issuance, if later, and excludes the accretion of Preferred Stock to its redemption value and interest expense of the Convertible Notes. Accordingly, the pro forma basic and diluted net loss per share attributable to common stockholders does not include the effects of the cumulative Preferred Stock dividends and extinguishment of Series B redeemable convertible Preferred Stock. As the years ended December 31, 2012 and December 31, 2013, the six months ended June 30, 2013 and 2014 (unaudited), resulted in net losses, there is no income allocation required under the two-class method or dilution attributed to pro forma weighted average shares outstanding in the calculation of pro forma diluted loss per share attributable to common stockholders.

        As noted above, the unaudited pro forma information reflects the automatic conversion, at the closing of an IPO of the Company's Common Stock of Preferred Stock into shares of Common Stock. The conversion of Preferred Stock has been reflected assuming shares of Series D Preferred Stock Series C Preferred Stock, Series B Preferred Stock, Series A-1 Preferred Stock and Series A Preferred Stock convert into shares of fully paid Common Stock at the applicable conversion ratios. The unaudited pro forma information also assumes the extinguishment of the liability related to the Series D investors' purchase rights upon the closing of an IPO of the Company's Common Stock. See Note 9 for further discussion of the Preferred Stock conversion features, as well as a discussion of the rights and preferences of the redeemable convertible Preferred Stock.

F-9