Proteon logo     Print Page | Close Window

SEC Filings

S-1/A
PROTEON THERAPEUTICS INC filed this Form S-1/A on 10/07/2014
Entire Document
 


Proteon Therapeutics, Inc.

Notes to Financial Statements (Continued)

2. Summary of Significant Accounting Policies (Continued)

Concentrations of Credit Risk and Off-balance Sheet Risk

        Financial instruments that potentially subject the Company to concentrations of credit risk are primarily cash, cash equivalents and short-term investments. The Company's cash and cash equivalents are held in accounts with financial institutions that management believes are creditworthy. The Company's investment policy includes guidelines on the quality of the institutions and financial instruments and defines allowable investments that the Company believes minimizes the exposure to concentration of credit risk. These amounts at times may exceed federally insured limits. The Company has not experienced any credit losses in such accounts and does not believe it is exposed to any significant credit risk on these funds. The Company has no financial instruments with off-balance sheet risk of loss.

Deferred Public Offering Costs

        Deferred public offering costs, which primarily consist of direct, incremental legal and accounting fees relating to the IPO, are capitalized within other assets. The deferred issuance costs will be offset against IPO proceeds upon the consummation of the offering. In the event the offering is terminated, deferred offering costs will be expensed. The Company has incurred $1.2 million in IPO costs as of June 30, 2014 (unaudited).

Deferred Financing Costs

        Deferred financing costs related to the Convertible Notes as of December 31, 2013 were included in prepaid expenses and other current assets and have been fully amortized as of June 30, 2014 (unaudited) (Note 5). Deferred financing costs are amortized over the life of the related debt using the effective interest method. For the years ended December 31, 2012 and 2013, and for the six months ended June 30, 2013 and 2014 (unaudited), deferred financing costs of $0, $18,000, $0 and $18,000, respectively, were amortized to interest expense.

        As of June 30, 2014, the Company incurred $437,000 (unaudited) of costs related to the issuance of the Series D Preferred Stock. The Series D Preferred Stock issuance costs were allocated to the various tranches resulting in $360,000 allocated to the first tranche and $77,000 allocated to the second and third tranche rights. The amount allocated to the first tranche was offset against the proceeds upon closing of the issuance of the first tranche of Series D Preferred Stock (Note 9). The amount allocated to the future tranche rights has been recorded against the tranche right liability.

Fair Value of Financial Instruments

        The Company's financial instruments consist of cash and cash equivalents, short-term investments, accounts payable, accrued liabilities, Convertible Notes and features embedded in the Convertible Notes (see Note 5). The Company is required to disclose information on all assets and liabilities reported at fair value that enables an assessment of the inputs used in determining the reported fair values. FASB ASC Topic 820, Fair Value Measurement and Disclosures, established a hierarchy of inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the observable inputs be used when available. Observable inputs are inputs that market participants would use in pricing the financial instrument based on market data obtained from sources independent of the Company. Unobservable inputs are inputs that reflect the Company's assumptions about the inputs that market participants would use in pricing the financial instrument and are developed based on the best information available in the circumstances. The fair value hierarchy applies only to the valuation inputs used in determining the reported or disclosed fair value of the financial instruments and is

F-11