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YEARS ENDED DECEMBER 31, | ||||||||||||
2014 | 2013 | 2012 | ||||||||||
Deferred acquisition costs capitalized | $ | 7,995 | $ | 5,919 | $ | 2,334 | ||||||
Deferred acquisition costs amortized: | ||||||||||||
Sales and marketing | 858 | 663 | 755 | |||||||||
Other cost of revenue | 7,052 | 5,082 | 1,522 | |||||||||
Total amortization | 7,910 | 5,745 | 2,277 | |||||||||
Balance at December 31, | $ | 469 | $ | 384 | $ | 210 |
YEARS ENDED DECEMBER 31, | ||||||||||||
2014 | 2013 | 2012 | ||||||||||
Interest income | $ | (73 | ) | $ | (86 | ) | $ | (75 | ) | |||
Foreign exchange gain | 41 | 76 | 3 | |||||||||
Loss on disposal of fixed assets | 111 | 44 | 26 | |||||||||
Warrant remeasurement | (1,574 | ) | 543 | 200 | ||||||||
Other | 8 | 94 | 98 | |||||||||
Other (income) expense, net | $ | (1,487 | ) | $ | 671 | $ | 252 |
|
YEARS ENDED DECEMBER 31, | |||||||
2014 | 2013 | ||||||
Office and telephone equipment (5 years) | $ | 123 | $ | 128 | |||
PC and networking hardware (4 years) | 1,125 | 827 | |||||
Software (3–5 years) | 8,532 | 3,222 | |||||
Furniture and fixtures (5 years) | 711 | 497 | |||||
Vehicles (5 years) | 54 | — | |||||
Leasehold improvement (over life of lease) | 571 | 212 | |||||
Property and equipment | 11,116 | 4,886 | |||||
Accumulated depreciation | (3,254 | ) | (1,762 | ) | |||
Property and equipment, net | $ | 7,862 | $ | 3,124 |
|
Year ending December 31: | |||
2015 | $ | 63 | |
2016 | 11 | ||
Total future amortization: | $ | 74 |
|
AMORTIZED COST | GROSS UNREALIZED HOLDING LOSSES | FAIR VALUE | |||||||||
As of December 31, 2014 | |||||||||||
Available-for-sale: | |||||||||||
Municipal bond | $ | 1,000 | $ | (58 | ) | $ | 942 | ||||
$ | 1,000 | $ | (58 | ) | $ | 942 | |||||
Short-term investments: | |||||||||||
U.S. Treasury securities | $ | 5,677 | $ | — | $ | 5,677 | |||||
Certificates of deposit | 800 | — | 800 | ||||||||
U.S. government funds | 15,894 | — | 15,894 | ||||||||
$ | 22,371 | $ | — | $ | 22,371 | ||||||
AMORTIZED COST | GROSS UNREALIZED HOLDING LOSSES | FAIR VALUE | |||||||||
As of December 31, 2013 | |||||||||||
Available-for-sale: | |||||||||||
Municipal bond | $ | 1,000 | $ | (168 | ) | $ | 832 | ||||
$ | 1,000 | $ | (168 | ) | $ | 832 | |||||
Short-term investments: | |||||||||||
U.S. Treasury securities | $ | 5,778 | $ | — | $ | 5,778 | |||||
Certificates of deposit | 2,700 | — | $ | 2,700 | |||||||
U.S. government funds | 7,610 | — | $ | 7,610 | |||||||
$ | 16,088 | $ | — | $ | 16,088 |
DECEMBER 31, 2014 | |||||||
AMORTIZED COST | FAIR VALUE | ||||||
Available-for-sale: | |||||||
Due under one year | $ | — | $ | — | |||
Due after one year through five years | — | — | |||||
Due after five years through ten years | 1,000 | 942 | |||||
Due after ten years | — | — | |||||
$ | 1,000 | $ | 942 |
|
• | Level 1 inputs: Unadjusted quoted prices in active markets for identical assets or liabilities accessible to the reporting entity at the measurement date. |
• | Level 2 inputs: Valuations based on observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data. |
• | Level 3 inputs: Unobservable inputs for the asset or liability used to measure fair value to the extent that observable inputs are not available, thereby allowing for situations in which there is little, if any, market activity for the asset or liability at the measurement date. |
AS OF DECEMBER 31, 2014 | |||||||||||||||
FAIR VALUE | LEVEL 1 | LEVEL 2 | LEVEL 3 | ||||||||||||
Assets | |||||||||||||||
Municipal bond | 942 | — | 942 | — | |||||||||||
Money market funds | $ | 44,575 | $ | 44,575 | $ | — | $ | — | |||||||
Total | $ | 45,517 | $ | 44,575 | $ | 942 | $ | — | |||||||
AS OF DECEMBER 31, 2013 | |||||||||||||||
FAIR VALUE | LEVEL 1 | LEVEL 2 | LEVEL 3 | ||||||||||||
Assets | |||||||||||||||
Restricted cash | $ | 3,000 | $ | 3,000 | $ | — | $ | — | |||||||
Municipal bond | 832 | — | 832 | — | |||||||||||
Total | $ | 3,832 | $ | 3,000 | $ | 832 | $ | — | |||||||
Liabilities | |||||||||||||||
Warrant liabilities | $ | 4,900 | $ | — | $ | — | $ | 4,900 | |||||||
Total | $ | 4,900 | $ | — | $ | — | $ | 4,900 |
WARRANT LIABILITIES | |||||||
2014 | 2013 | ||||||
Balance at January 1, | $ | 4,900 | $ | 551 | |||
Issued warrant liability awards | 1,124 | 3,806 | |||||
Settlement of warrant liability upon exercise | (1,270 | ) | — | ||||
Change in fair value upon remeasurement | (1,574 | ) | 543 | ||||
Reclassification to stockholders’ equity | (3,180 | ) | — | ||||
Balance at December 31, | $ | — | $ | 4,900 |
• | Investment securities: Debt securities classified as available-for-sale are measured using quoted market prices when quoted market prices are available. If quoted market prices in active markets for identical assets are not available to determine fair value, then the Company uses quoted prices of similar instruments and other significant inputs derived from observable market data obtained from third-party data providers. Short-term investments are carried at amortized cost and the fair value is disclosed in Note 3. Fair value is determined in the same manner as available-for-sale securities and is considered a Level 2 measurement. |
• | Warrant liabilities: These liabilities are valued using the Black-Scholes-Merton option-pricing model using certain unobservable inputs that are estimated by the Company. These inputs include a measure of volatility using an average of peer companies’ publicly traded stock volatility, expected dividend payments based on management’s assertion that no dividends will be paid in the near term, the remaining contractual term and a discount rate using an average equivalent bond yield calculation. The range of inputs used is as follows: |
YEARS ENDED DECEMBER 31, | |||
2014 | 2013 | ||
Expected volatility | 34%-46% | 35%–43% | |
Expected dividends | —% | —% | |
Risk-free rate | 0.03%-2.02% | 0.1%–2.10% | |
Term | 0.1-6.0 years | 0.3–6.3 years |
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Year ending December 31: | |||
2015 | $ | 766 | |
2016 | 447 | ||
2017 | 6 | ||
Total minimum lease payments | $ | 1,219 | |
Year ending December 31: | |||
2015 | $ | 101 | |
2016 | 151 | ||
2017 | 101 | ||
2018 | 51 | ||
2019 | 51 | ||
2020-2021 | 66 | ||
Total minimum commitment | $ | 521 | |
|
YEARS ENDED DECEMBER 31, | ||||||||||||
2014 | 2013 | 2012 | ||||||||||
Claims reserve at beginning of year | $ | 5,612 | $ | 2,582 | $ | 1,637 | ||||||
Claims incurred during the year related to: | ||||||||||||
Current year | 80,438 | 56,702 | 37,779 | |||||||||
Prior years | (525 | ) | (65 | ) | 77 | |||||||
Total claims incurred | 79,913 | 56,637 | 37,856 | |||||||||
Claims paid during year related to: | ||||||||||||
Current year | 75,094 | 50,907 | 35,250 | |||||||||
Prior years | 5,088 | 2,516 | 1,584 | |||||||||
Total claims paid | 80,182 | 53,423 | 36,834 | |||||||||
Non-cash claims expense | 236 | 184 | 77 | |||||||||
Claims reserve at end of year | $ | 5,107 | $ | 5,612 | $ | 2,582 |
YEARS ENDED DECEMBER 31, | ||||||||||||
2014 | 2013 | 2012 | ||||||||||
Claims reserve at beginning of year | $ | 5,612 | $ | 2,582 | $ | 1,637 | ||||||
Claims incurred during the year related to: | ||||||||||||
Current year | 80,438 | 56,702 | 37,779 | |||||||||
Prior years | (525 | ) | (65 | ) | 77 | |||||||
Total claims incurred | 79,913 | 56,637 | 37,856 | |||||||||
Claims paid during year related to: | ||||||||||||
Current year | 75,094 | 50,907 | 35,250 | |||||||||
Prior years | 5,088 | 2,516 | 1,584 | |||||||||
Total claims paid | 80,182 | 53,423 | 36,834 | |||||||||
Non-cash claims expense | 236 | 184 | 77 | |||||||||
Claims reserve at end of year | $ | 5,107 | $ | 5,612 | $ | 2,582 |
|
BALANCE | INTEREST RATE | MATURITY | |||
(in thousands) | |||||
Line of credit | $14,900 | 5% | July 23, 2016 |
|
YEARS ENDED DECEMBER 31, | ||||||
2014 | 2013 | 2012 | ||||
Valuation assumptions: | ||||||
Expected term (in years) | 6.25 | 6.25 | 6.25 | |||
Expected volatility | 54.3%–59.3% | 54.9%–57.4% | 60% | |||
Risk-free interest rate | 1.8%–2.0% | 1.0%–2.0% | 0.9%-1.3% | |||
Expected dividend yield | —% | —% | —% |
NUMBER OF OPTIONS | WEIGHTED- AVERAGE EXERCISE PRICE | AGGREGATE INTRINSIC VALUE (in thousands) | ||||||||
December 31, 2011 | 4,506,708 | $ | 1.06 | $ | — | |||||
Granted | 352,146 | 4.05 | — | |||||||
Exercised | (502,874 | ) | 0.91 | 1,579 | ||||||
Forfeited | (129,097 | ) | 1.28 | — | ||||||
December 31, 2012 | 4,226,883 | 1.32 | — | |||||||
Granted | 1,294,150 | 4.40 | — | |||||||
Exercised | (547,981 | ) | 1.11 | 2,285 | ||||||
Forfeited | (309,607 | ) | 2.48 | — | ||||||
December 31, 2013 | 4,663,445 | 2.12 | 30,406 | |||||||
Granted | 754,200 | 9.64 | — | |||||||
Exercised | (176,595 | ) | 1.20 | 1,428 | ||||||
Forfeited | (128,494 | ) | 5.40 | — | ||||||
December 31, 2014 | 5,112,556 | 3.19 | 21,116 | |||||||
Vested and exercisable at December 31, 2014 | 3,578,138 | $ | 1.77 | $ | 18,541 |
WEIGHTED-AVERAGE GRANT DATE FAIR VALUE | FAIR VALUE OF OPTIONS VESTED | |||||||
(per share) | (in thousands) | |||||||
Year: | ||||||||
2012 | $ | 2.26 | $ | 1,296 | ||||
2013 | $ | 2.97 | $ | 1,675 | ||||
2014 | $ | 5.33 | $ | 2,203 |
NUMBER OF SHARES | WEIGHTED-AVERAGE GRANT DATE FAIR VALUE PER RESTRICTED STOCK | ||||||
Nonvested stock award balance at December 31, 2012 | — | $ | — | ||||
Restricted stock awards granted | 732,708 | 4.77 | |||||
Awards upon which restrictions lapsed | (10,482 | ) | 4.77 | ||||
Restricted stock awards forfeited | — | — | |||||
Nonvested stock award balance at December 31, 2013 | 722,226 | 4.77 | |||||
Restricted stock awards granted | 6,126 | 5.79 | |||||
Awards upon which restrictions lapsed | (143,967 | ) | 4.81 | ||||
Restricted stock awards forfeited | — | — | |||||
Nonvested stock award balance at December 31, 2014 | 584,385 | 4.77 |
YEARS ENDED DECEMBER 31, | |||||||||||
2014 | 2013 | 2012 | |||||||||
Claims expenses | $ | 236 | $ | 184 | $ | 77 | |||||
Other cost of revenue | 79 | 46 | 32 | ||||||||
Sales and marketing | 553 | 677 | 428 | ||||||||
Technology and development | 461 | 351 | 268 | ||||||||
General and administrative | 2,755 | 680 | 629 | ||||||||
Total stock-based compensation | $ | 4,084 | $ | 1,938 | $ | 1,434 |
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YEARS ENDED DECEMBER 31, | |||||||||||
2014 | 2013 | 2012 | |||||||||
Revenue: | |||||||||||
Subscription business | $ | 105,052 | $ | 76,818 | $ | 55,352 | |||||
Other business | 10,858 | 7,011 | 178 | ||||||||
115,910 | 83,829 | 55,530 | |||||||||
Claims expenses: | |||||||||||
Subscription business | 75,397 | 53,787 | 37,773 | ||||||||
Other business | 4,516 | 2,850 | 83 | ||||||||
79,913 | 56,637 | 37,856 | |||||||||
Other cost of revenue: | |||||||||||
Subscription business | 11,005 | 8,118 | 6,412 | ||||||||
Other business | 5,118 | 3,430 | 51 | ||||||||
16,123 | 11,548 | 6,463 | |||||||||
Gross profit: | |||||||||||
Subscription business | 18,650 | 14,913 | 11,167 | ||||||||
Other business | 1,224 | 731 | 44 | ||||||||
19,874 | 15,644 | 11,211 | |||||||||
Sales and marketing | 11,608 | 9,091 | 7,149 | ||||||||
Technology and development | 9,899 | 4,888 | 3,406 | ||||||||
General and administrative | 14,312 | 8,652 | 6,195 | ||||||||
Operating loss | $ | (15,945 | ) | $ | (6,987 | ) | $ | (5,539 | ) |
YEARS ENDED DECEMBER 31, | |||||||||||
2014 | 2013 | 2012 | |||||||||
United States | $ | 86,494 | $ | 58,847 | $ | 34,611 | |||||
Canada | 29,416 | 24,982 | 20,919 | ||||||||
Total revenue | $ | 115,910 | $ | 83,829 | $ | 55,530 |
|
AS OF DECEMBER 31, | ||||||||||||
2014 | 2013 | 2012 | ||||||||||
Statutory net income | $ | 990 | $ | 1,126 | $ | 1,266 | ||||||
Statutory capital and surplus | 23,661 | 16,875 | 11,794 |
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YEARS ENDED DECEMBER 31, | ||||||||||||
2014 | 2013 | 2012 | ||||||||||
United States | $ | (21,371 | ) | $ | (8,256 | ) | $ | (6,522 | ) | |||
Foreign | 187 | (11 | ) | 196 | ||||||||
$ | (21,184 | ) | $ | (8,267 | ) | $ | (6,326 | ) |
YEARS ENDED DECEMBER 31, | ||||||||||||
2014 | 2013 | 2012 | ||||||||||
Current: | ||||||||||||
U.S. federal & state | $ | 26 | $ | 30 | $ | 24 | ||||||
Foreign | (30 | ) | (122 | ) | 60 | |||||||
(4 | ) | (92 | ) | 84 | ||||||||
Deferred: | ||||||||||||
U.S. federal & state | — | — | — | |||||||||
Foreign | (3 | ) | — | — | ||||||||
(3 | ) | — | — | |||||||||
Income tax (benefit) expense | $ | (7 | ) | $ | (92 | ) | $ | 84 |
YEARS ENDED DECEMBER 31, | |||||||||
2014 | 2013 | 2012 | |||||||
Federal income taxes at statutory rate | 34.0 | % | 34.0 | % | 34.0 | % | |||
Equity compensation | (0.9 | ) | (8.6 | ) | (8.5 | ) | |||
Change in valuation allowance | (32.5 | ) | (25.1 | ) | (26.5 | ) | |||
Other, net | (0.5 | ) | 0.8 | 0.1 | |||||
Effective income tax rate | 0.1 | % | 1.1 | % | (0.9 | )% |
YEARS ENDED DECEMBER 31, | ||||||||
2014 | 2013 | |||||||
Deferred tax assets: | ||||||||
Current: | ||||||||
Loss reserves | $ | 1,013 | $ | 1,033 | ||||
Other | 801 | 575 | ||||||
Noncurrent: | ||||||||
Net operating loss carryforwards | 14,346 | 8,322 | ||||||
Depreciation and amortization | 356 | 322 | ||||||
Equity compensation | 713 | 229 | ||||||
Other | 228 | 118 | ||||||
Total deferred tax assets | 17,457 | 10,599 | ||||||
Deferred tax liabilities: | ||||||||
Current: | ||||||||
Deferred costs | (140 | ) | (114 | ) | ||||
Noncurrent: | ||||||||
Intangible assets | (1,623 | ) | (1,622 | ) | ||||
Total deferred tax liabilities | (1,763 | ) | (1,736 | ) | ||||
Total deferred taxes | 15,694 | 8,863 | ||||||
Less deferred tax asset valuation allowance | (17,313 | ) | (10,485 | ) | ||||
Net deferred taxes | $ | (1,619 | ) | $ | (1,622 | ) |
YEARS ENDED DECEMBER 31, | ||||||||||||
2014 | 2013 | 2012 | ||||||||||
Balance, beginning of year | $ | 390 | $ | 526 | $ | 348 | ||||||
Decreases to tax positions related to prior periods | (346 | ) | (162 | ) | — | |||||||
Increases to tax positions related to the current year | 21 | 26 | 178 | |||||||||
Balance, end of year | $ | 65 | $ | 390 | $ | 526 |
|
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THREE MONTHS ENDED | |||||||||||||||||||||||||||||||
DEC. 31, 2014 | SEPT. 30, 2014 | JUN. 30, 2014 | MAR. 31, 2014 | DEC. 31, 2013 | SEPT. 30, 2013 | JUN. 30, 2013 | MAR. 31, 2013 | ||||||||||||||||||||||||
(in thousands, except share amounts) | |||||||||||||||||||||||||||||||
Total revenues | $ | 31,868 | $ | 30,312 | $ | 28,090 | $ | 25,640 | $ | 24,011 | $ | 22,134 | $ | 19,842 | $ | 17,842 | |||||||||||||||
Gross profit | 5,524 | 4,445 | 5,150 | 4,756 | 4,088 | 4,119 | 3,829 | 3,608 | |||||||||||||||||||||||
Net loss | (4,276 | ) | (8,509 | ) | (3,479 | ) | (4,913 | ) | (3,203 | ) | (1,222 | ) | (1,824 | ) | (1,926 | ) | |||||||||||||||
Net loss per share attributable to common stockholders: | |||||||||||||||||||||||||||||||
Basic and diluted | (0.16 | ) | (0.41 | ) | (2.25 | ) | (3.22 | ) | (2.23 | ) | (0.87 | ) | (1.32 | ) | (1.76 | ) | |||||||||||||||
Weighted average shares used to compute net loss per share attributable to common stockholders: | |||||||||||||||||||||||||||||||
Basic and diluted | 27,231,651 | 20,857,126 | 1,543,134 | 1,524,028 | 1,433,811 | 1,411,866 | 1,379,803 | 1,094,989 |
|
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Trupanion, Inc. Condensed Balance Sheets (Parent Company Only) (In thousands, except for share and per share data) | ||||||||
AS OF DECEMBER 31, | ||||||||
2014 | 2013 | |||||||
Assets | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 45,042 | $ | 9,039 | ||||
Prepaid expenses and other assets | 399 | 118 | ||||||
Total current assets | 45,441 | 9,157 | ||||||
Restricted cash | — | 3,000 | ||||||
Property and equipment, net | 450 | 97 | ||||||
Intangible assets, net | 4,847 | 4,910 | ||||||
Investments in and advances to subsidiaries | 25,219 | 14,411 | ||||||
Total assets | $ | 75,957 | $ | 31,575 | ||||
Liabilities, redeemable convertible preferred stock, and stockholders’ equity (deficit) | ||||||||
Current liabilities: | ||||||||
Accounts payable | 7 | 23 | ||||||
Accrued liabilities | 152 | 206 | ||||||
Short-term debt | — | 900 | ||||||
Warrant liabilities | — | 4,900 | ||||||
Deferred tax liabilities | 124 | 82 | ||||||
Total current liabilities | 283 | 6,111 | ||||||
Long-term debt | 14,900 | 25,199 | ||||||
Deferred tax liabilities | 1,499 | 1,540 | ||||||
Total liabilities | 16,682 | 32,850 | ||||||
Redeemable convertible preferred stock: $0.00001 par value per share, 0 and 15,648,723 authorized at December 31, 2014 and December 31, 2013, respectively, and 0 and 14,857,989 issued and outstanding at December 31, 2014 and December 31, 2013, respectively. | — | 31,724 | ||||||
Stockholders’ equity (deficit): | ||||||||
Common stock, $0.00001 par value per share, 200,000,000 and 26,000,000 shares authorized at December 31, 2014 and December 31, 2013, respectively, 28,451,920 and 27,830,941 issued and outstanding at December 31, 2014; 2,857,620 and 2,236,641 shares issued and outstanding at December 31, 2013. | — | — | ||||||
Preferred stock: $0.00001 par value per share, 10,000,000 and 0 authorized at December 31, 2014 and December 31, 2013, respectively, and 0 issued and outstanding at December 31, 2014 and December 31, 2013. | — | — | ||||||
Special voting shares, $0.00001 par value per share, 0 and 2,500,030 shares authorized at December 31, 2014 and December 31, 2013, respectively, and 0 and 2,247,130 issued and outstanding at December 31, 2014 and December 31, 2013, respectively. | — | — | ||||||
Additional paid-in capital | 119,045 | 5,769 | ||||||
Accumulated other comprehensive income (loss) | 11 | (164 | ) | |||||
Accumulated deficit | (57,180 | ) | (36,003 | ) | ||||
Treasury stock, at cost: 620,979 shares at December 31, 2014 and December 31, 2013. | (2,601 | ) | (2,601 | ) | ||||
Total stockholders’ equity (deficit) | 59,275 | (32,999 | ) | |||||
Total liabilities, redeemable convertible preferred stock, and stockholders’ equity (deficit) | $ | 75,957 | $ | 31,575 |
Trupanion, Inc. Condensed Statements of Comprehensive Loss (Parent Company Only) (In thousands) | ||||||||||||
YEARS ENDED DECEMBER 31, | ||||||||||||
2014 | 2013 | 2012 | ||||||||||
Expenses: | ||||||||||||
Claims expenses | $ | 240 | $ | 187 | $ | 77 | ||||||
Other costs of revenue | 79 | 46 | 31 | |||||||||
Sales and marketing | 553 | 677 | 428 | |||||||||
Technology and development | 528 | 391 | 268 | |||||||||
General and administrative | 4,108 | 1,131 | 887 | |||||||||
Total expenses | 5,508 | 2,432 | 1,691 | |||||||||
Operating loss | (5,508 | ) | (2,432 | ) | (1,691 | ) | ||||||
Interest expense | 6,726 | 609 | 535 | |||||||||
Other (income) loss | (1,575 | ) | 630 | 208 | ||||||||
Loss before equity in undistributed earnings of subsidiaries | (10,659 | ) | (3,671 | ) | (2,434 | ) | ||||||
Equity in undistributed earnings of subsidiaries | (10,518 | ) | (4,504 | ) | (3,976 | ) | ||||||
Net loss | $ | (21,177 | ) | $ | (8,175 | ) | $ | (6,410 | ) | |||
Other comprehensive income (loss), net of taxes: | ||||||||||||
Other comprehensive income (loss) of subsidiaries | 175 | (22 | ) | (69 | ) | |||||||
Other comprehensive income (loss) | 175 | (22 | ) | (69 | ) | |||||||
Comprehensive loss | $ | (21,002 | ) | $ | (8,197 | ) | $ | (6,479 | ) |
Trupanion, Inc. Condensed Statements of Cash Flows (Parent Company Only) (In thousands) | ||||||||||||
YEARS ENDED DECEMBER 31, | ||||||||||||
2014 | 2013 | 2012 | ||||||||||
Operating activities | ||||||||||||
Net loss | $ | (21,177 | ) | $ | (8,175 | ) | $ | (6,410 | ) | |||
Adjustments to reconcile net loss to cash (used in) provided by operating activities: | ||||||||||||
Loss attributable to equity method investments | 10,518 | 4,504 | 3,976 | |||||||||
Depreciation and amortization | 67 | 37 | — | |||||||||
Amortization of debt discount and prepaid loan fees | 5,033 | 36 | 11 | |||||||||
Stock-based compensation expense | 4,084 | 1,938 | 1,434 | |||||||||
Loss on disposal of equipment | — | 52 | — | |||||||||
Warrant expense | (1,574 | ) | 543 | 200 | ||||||||
Changes in operating assets and liabilities: | ||||||||||||
Prepaid expenses and other assets | (339 | ) | (64 | ) | (11 | ) | ||||||
Accounts payable | 889 | 1,840 | 538 | |||||||||
Accrued liabilities | (84 | ) | 206 | — | ||||||||
Net cash (used in) provided by operating activities | (2,583 | ) | 917 | (262 | ) | |||||||
Investing activities | ||||||||||||
Purchases of property and equipment | (243 | ) | (65 | ) | (33 | ) | ||||||
Advances to subsidiaries | (22,209 | ) | (9,455 | ) | (6,910 | ) | ||||||
Equity method investment | — | — | (249 | ) | ||||||||
Net cash used in investing activities | (22,452 | ) | (9,520 | ) | (7,192 | ) | ||||||
Financing activities | ||||||||||||
Restricted cash | 3,000 | (3,000 | ) | — | ||||||||
Other financing costs | (103 | ) | — | — | ||||||||
Issuance of preferred stock | — | — | 6,922 | |||||||||
Net Proceeds from IPO | 72,755 | — | — | |||||||||
Issuance (settlement) of forward contract | — | — | (52 | ) | ||||||||
Purchase of treasury stock | — | — | (2,327 | ) | ||||||||
Deferred financing costs | — | (56 | ) | — | ||||||||
Redemption of preferred stock | — | — | (2,727 | ) | ||||||||
Proceeds from exercise of stock options | 211 | 607 | 458 | |||||||||
Proceeds from line of credit and debt financing | 17,000 | 15,000 | — | |||||||||
Repayment of debt financing | (32,000 | ) | 5,000 | — | ||||||||
Net cash provided by financing activities | 60,863 | 17,551 | 2,274 | |||||||||
Effect of foreign exchange rates on cash, net | 175 | (22 | ) | (69 | ) | |||||||
Net increase (decrease) in cash and cash equivalents | 36,003 | 8,926 | (5,249 | ) | ||||||||
Cash and cash equivalents at beginning of year | 9,039 | 113 | 5,362 | |||||||||
Cash and cash equivalents at end of year | $ | 45,042 | $ | 9,039 | $ | 113 | ||||||
Supplemental disclosures | ||||||||||||
Noncash investing and financing activities: | ||||||||||||
Income taxes paid | (9 | ) | — | — | ||||||||
Interest paid | (1,494 | ) | (642 | ) | (570 | ) | ||||||
Warrants issued in conjunction with debt issuance | 1,124 | 3,806 | 18 | |||||||||
Exchange of stock and intangible asset for equity method investment | — | 448 | (250 | ) | ||||||||
Cashless exercise of preferred stock warrants | 1,270 | — | — | |||||||||
Common stock warrant reclassification to equity | 3,180 | — | — |
|
|
YEARS ENDED DECEMBER 31, | |||||||
2014 | 2013 | ||||||
Office and telephone equipment (5 years) | $ | 123 | $ | 128 | |||
PC and networking hardware (4 years) | 1,125 | 827 | |||||
Software (3–5 years) | 8,532 | 3,222 | |||||
Furniture and fixtures (5 years) | 711 | 497 | |||||
Vehicles (5 years) | 54 | — | |||||
Leasehold improvement (over life of lease) | 571 | 212 | |||||
Property and equipment | 11,116 | 4,886 | |||||
Accumulated depreciation | (3,254 | ) | (1,762 | ) | |||
Property and equipment, net | $ | 7,862 | $ | 3,124 |
|
YEARS ENDED DECEMBER 31, | ||||||||||||
2014 | 2013 | 2012 | ||||||||||
Deferred acquisition costs capitalized | $ | 7,995 | $ | 5,919 | $ | 2,334 | ||||||
Deferred acquisition costs amortized: | ||||||||||||
Sales and marketing | 858 | 663 | 755 | |||||||||
Other cost of revenue | 7,052 | 5,082 | 1,522 | |||||||||
Total amortization | 7,910 | 5,745 | 2,277 | |||||||||
Balance at December 31, | $ | 469 | $ | 384 | $ | 210 |
YEARS ENDED DECEMBER 31, | ||||||||||||
2014 | 2013 | 2012 | ||||||||||
Interest income | $ | (73 | ) | $ | (86 | ) | $ | (75 | ) | |||
Foreign exchange gain | 41 | 76 | 3 | |||||||||
Loss on disposal of fixed assets | 111 | 44 | 26 | |||||||||
Warrant remeasurement | (1,574 | ) | 543 | 200 | ||||||||
Other | 8 | 94 | 98 | |||||||||
Other (income) expense, net | $ | (1,487 | ) | $ | 671 | $ | 252 |
|
Year ending December 31: | |||
2015 | $ | 63 | |
2016 | 11 | ||
Total future amortization: | $ | 74 |
|
AMORTIZED COST | GROSS UNREALIZED HOLDING LOSSES | FAIR VALUE | |||||||||
As of December 31, 2014 | |||||||||||
Available-for-sale: | |||||||||||
Municipal bond | $ | 1,000 | $ | (58 | ) | $ | 942 | ||||
$ | 1,000 | $ | (58 | ) | $ | 942 | |||||
Short-term investments: | |||||||||||
U.S. Treasury securities | $ | 5,677 | $ | — | $ | 5,677 | |||||
Certificates of deposit | 800 | — | 800 | ||||||||
U.S. government funds | 15,894 | — | 15,894 | ||||||||
$ | 22,371 | $ | — | $ | 22,371 | ||||||
AMORTIZED COST | GROSS UNREALIZED HOLDING LOSSES | FAIR VALUE | |||||||||
As of December 31, 2013 | |||||||||||
Available-for-sale: | |||||||||||
Municipal bond | $ | 1,000 | $ | (168 | ) | $ | 832 | ||||
$ | 1,000 | $ | (168 | ) | $ | 832 | |||||
Short-term investments: | |||||||||||
U.S. Treasury securities | $ | 5,778 | $ | — | $ | 5,778 | |||||
Certificates of deposit | 2,700 | — | $ | 2,700 | |||||||
U.S. government funds | 7,610 | — | $ | 7,610 | |||||||
$ | 16,088 | $ | — | $ | 16,088 |
DECEMBER 31, 2014 | |||||||
AMORTIZED COST | FAIR VALUE | ||||||
Available-for-sale: | |||||||
Due under one year | $ | — | $ | — | |||
Due after one year through five years | — | — | |||||
Due after five years through ten years | 1,000 | 942 | |||||
Due after ten years | — | — | |||||
$ | 1,000 | $ | 942 |
|
AS OF DECEMBER 31, 2014 | |||||||||||||||
FAIR VALUE | LEVEL 1 | LEVEL 2 | LEVEL 3 | ||||||||||||
Assets | |||||||||||||||
Municipal bond | 942 | — | 942 | — | |||||||||||
Money market funds | $ | 44,575 | $ | 44,575 | $ | — | $ | — | |||||||
Total | $ | 45,517 | $ | 44,575 | $ | 942 | $ | — | |||||||
AS OF DECEMBER 31, 2013 | |||||||||||||||
FAIR VALUE | LEVEL 1 | LEVEL 2 | LEVEL 3 | ||||||||||||
Assets | |||||||||||||||
Restricted cash | $ | 3,000 | $ | 3,000 | $ | — | $ | — | |||||||
Municipal bond | 832 | — | 832 | — | |||||||||||
Total | $ | 3,832 | $ | 3,000 | $ | 832 | $ | — | |||||||
Liabilities | |||||||||||||||
Warrant liabilities | $ | 4,900 | $ | — | $ | — | $ | 4,900 | |||||||
Total | $ | 4,900 | $ | — | $ | — | $ | 4,900 |
WARRANT LIABILITIES | |||||||
2014 | 2013 | ||||||
Balance at January 1, | $ | 4,900 | $ | 551 | |||
Issued warrant liability awards | 1,124 | 3,806 | |||||
Settlement of warrant liability upon exercise | (1,270 | ) | — | ||||
Change in fair value upon remeasurement | (1,574 | ) | 543 | ||||
Reclassification to stockholders’ equity | (3,180 | ) | — | ||||
Balance at December 31, | $ | — | $ | 4,900 |
• | Warrant liabilities: These liabilities are valued using the Black-Scholes-Merton option-pricing model using certain unobservable inputs that are estimated by the Company. These inputs include a measure of volatility using an average of peer companies’ publicly traded stock volatility, expected dividend payments based on management’s assertion that no dividends will be paid in the near term, the remaining contractual term and a discount rate using an average equivalent bond yield calculation. The range of inputs used is as follows: |
YEARS ENDED DECEMBER 31, | |||
2014 | 2013 | ||
Expected volatility | 34%-46% | 35%–43% | |
Expected dividends | —% | —% | |
Risk-free rate | 0.03%-2.02% | 0.1%–2.10% | |
Term | 0.1-6.0 years | 0.3–6.3 years |
|
Year ending December 31: | |||
2015 | $ | 766 | |
2016 | 447 | ||
2017 | 6 | ||
Total minimum lease payments | $ | 1,219 | |
Year ending December 31: | |||
2015 | $ | 101 | |
2016 | 151 | ||
2017 | 101 | ||
2018 | 51 | ||
2019 | 51 | ||
2020-2021 | 66 | ||
Total minimum commitment | $ | 521 | |
|
YEARS ENDED DECEMBER 31, | ||||||||||||
2014 | 2013 | 2012 | ||||||||||
Claims reserve at beginning of year | $ | 5,612 | $ | 2,582 | $ | 1,637 | ||||||
Claims incurred during the year related to: | ||||||||||||
Current year | 80,438 | 56,702 | 37,779 | |||||||||
Prior years | (525 | ) | (65 | ) | 77 | |||||||
Total claims incurred | 79,913 | 56,637 | 37,856 | |||||||||
Claims paid during year related to: | ||||||||||||
Current year | 75,094 | 50,907 | 35,250 | |||||||||
Prior years | 5,088 | 2,516 | 1,584 | |||||||||
Total claims paid | 80,182 | 53,423 | 36,834 | |||||||||
Non-cash claims expense | 236 | 184 | 77 | |||||||||
Claims reserve at end of year | $ | 5,107 | $ | 5,612 | $ | 2,582 |
|
BALANCE | INTEREST RATE | MATURITY | |||
(in thousands) | |||||
Line of credit | $14,900 | 5% | July 23, 2016 |
|
WEIGHTED-AVERAGE GRANT DATE FAIR VALUE | FAIR VALUE OF OPTIONS VESTED | |||||||
(per share) | (in thousands) | |||||||
Year: | ||||||||
2012 | $ | 2.26 | $ | 1,296 | ||||
2013 | $ | 2.97 | $ | 1,675 | ||||
2014 | $ | 5.33 | $ | 2,203 |
YEARS ENDED DECEMBER 31, | ||||||
2014 | 2013 | 2012 | ||||
Valuation assumptions: | ||||||
Expected term (in years) | 6.25 | 6.25 | 6.25 | |||
Expected volatility | 54.3%–59.3% | 54.9%–57.4% | 60% | |||
Risk-free interest rate | 1.8%–2.0% | 1.0%–2.0% | 0.9%-1.3% | |||
Expected dividend yield | —% | —% | —% |
NUMBER OF OPTIONS | WEIGHTED- AVERAGE EXERCISE PRICE | AGGREGATE INTRINSIC VALUE (in thousands) | ||||||||
December 31, 2011 | 4,506,708 | $ | 1.06 | $ | — | |||||
Granted | 352,146 | 4.05 | — | |||||||
Exercised | (502,874 | ) | 0.91 | 1,579 | ||||||
Forfeited | (129,097 | ) | 1.28 | — | ||||||
December 31, 2012 | 4,226,883 | 1.32 | — | |||||||
Granted | 1,294,150 | 4.40 | — | |||||||
Exercised | (547,981 | ) | 1.11 | 2,285 | ||||||
Forfeited | (309,607 | ) | 2.48 | — | ||||||
December 31, 2013 | 4,663,445 | 2.12 | 30,406 | |||||||
Granted | 754,200 | 9.64 | — | |||||||
Exercised | (176,595 | ) | 1.20 | 1,428 | ||||||
Forfeited | (128,494 | ) | 5.40 | — | ||||||
December 31, 2014 | 5,112,556 | 3.19 | 21,116 | |||||||
Vested and exercisable at December 31, 2014 | 3,578,138 | $ | 1.77 | $ | 18,541 |
NUMBER OF SHARES | WEIGHTED-AVERAGE GRANT DATE FAIR VALUE PER RESTRICTED STOCK | ||||||
Nonvested stock award balance at December 31, 2012 | — | $ | — | ||||
Restricted stock awards granted | 732,708 | 4.77 | |||||
Awards upon which restrictions lapsed | (10,482 | ) | 4.77 | ||||
Restricted stock awards forfeited | — | — | |||||
Nonvested stock award balance at December 31, 2013 | 722,226 | 4.77 | |||||
Restricted stock awards granted | 6,126 | 5.79 | |||||
Awards upon which restrictions lapsed | (143,967 | ) | 4.81 | ||||
Restricted stock awards forfeited | — | — | |||||
Nonvested stock award balance at December 31, 2014 | 584,385 | 4.77 |
YEARS ENDED DECEMBER 31, | |||||||||||
2014 | 2013 | 2012 | |||||||||
Claims expenses | $ | 236 | $ | 184 | $ | 77 | |||||
Other cost of revenue | 79 | 46 | 32 | ||||||||
Sales and marketing | 553 | 677 | 428 | ||||||||
Technology and development | 461 | 351 | 268 | ||||||||
General and administrative | 2,755 | 680 | 629 | ||||||||
Total stock-based compensation | $ | 4,084 | $ | 1,938 | $ | 1,434 |
|
YEARS ENDED DECEMBER 31, | |||||||||||
2014 | 2013 | 2012 | |||||||||
Revenue: | |||||||||||
Subscription business | $ | 105,052 | $ | 76,818 | $ | 55,352 | |||||
Other business | 10,858 | 7,011 | 178 | ||||||||
115,910 | 83,829 | 55,530 | |||||||||
Claims expenses: | |||||||||||
Subscription business | 75,397 | 53,787 | 37,773 | ||||||||
Other business | 4,516 | 2,850 | 83 | ||||||||
79,913 | 56,637 | 37,856 | |||||||||
Other cost of revenue: | |||||||||||
Subscription business | 11,005 | 8,118 | 6,412 | ||||||||
Other business | 5,118 | 3,430 | 51 | ||||||||
16,123 | 11,548 | 6,463 | |||||||||
Gross profit: | |||||||||||
Subscription business | 18,650 | 14,913 | 11,167 | ||||||||
Other business | 1,224 | 731 | 44 | ||||||||
19,874 | 15,644 | 11,211 | |||||||||
Sales and marketing | 11,608 | 9,091 | 7,149 | ||||||||
Technology and development | 9,899 | 4,888 | 3,406 | ||||||||
General and administrative | 14,312 | 8,652 | 6,195 | ||||||||
Operating loss | $ | (15,945 | ) | $ | (6,987 | ) | $ | (5,539 | ) |
YEARS ENDED DECEMBER 31, | |||||||||||
2014 | 2013 | 2012 | |||||||||
United States | $ | 86,494 | $ | 58,847 | $ | 34,611 | |||||
Canada | 29,416 | 24,982 | 20,919 | ||||||||
Total revenue | $ | 115,910 | $ | 83,829 | $ | 55,530 |
|
AS OF DECEMBER 31, | ||||||||||||
2014 | 2013 | 2012 | ||||||||||
Statutory net income | $ | 990 | $ | 1,126 | $ | 1,266 | ||||||
Statutory capital and surplus | 23,661 | 16,875 | 11,794 |
|
YEARS ENDED DECEMBER 31, | ||||||||||||
2014 | 2013 | 2012 | ||||||||||
United States | $ | (21,371 | ) | $ | (8,256 | ) | $ | (6,522 | ) | |||
Foreign | 187 | (11 | ) | 196 | ||||||||
$ | (21,184 | ) | $ | (8,267 | ) | $ | (6,326 | ) |
YEARS ENDED DECEMBER 31, | ||||||||||||
2014 | 2013 | 2012 | ||||||||||
Current: | ||||||||||||
U.S. federal & state | $ | 26 | $ | 30 | $ | 24 | ||||||
Foreign | (30 | ) | (122 | ) | 60 | |||||||
(4 | ) | (92 | ) | 84 | ||||||||
Deferred: | ||||||||||||
U.S. federal & state | — | — | — | |||||||||
Foreign | (3 | ) | — | — | ||||||||
(3 | ) | — | — | |||||||||
Income tax (benefit) expense | $ | (7 | ) | $ | (92 | ) | $ | 84 |
YEARS ENDED DECEMBER 31, | |||||||||
2014 | 2013 | 2012 | |||||||
Federal income taxes at statutory rate | 34.0 | % | 34.0 | % | 34.0 | % | |||
Equity compensation | (0.9 | ) | (8.6 | ) | (8.5 | ) | |||
Change in valuation allowance | (32.5 | ) | (25.1 | ) | (26.5 | ) | |||
Other, net | (0.5 | ) | 0.8 | 0.1 | |||||
Effective income tax rate | 0.1 | % | 1.1 | % | (0.9 | )% |
YEARS ENDED DECEMBER 31, | ||||||||
2014 | 2013 | |||||||
Deferred tax assets: | ||||||||
Current: | ||||||||
Loss reserves | $ | 1,013 | $ | 1,033 | ||||
Other | 801 | 575 | ||||||
Noncurrent: | ||||||||
Net operating loss carryforwards | 14,346 | 8,322 | ||||||
Depreciation and amortization | 356 | 322 | ||||||
Equity compensation | 713 | 229 | ||||||
Other | 228 | 118 | ||||||
Total deferred tax assets | 17,457 | 10,599 | ||||||
Deferred tax liabilities: | ||||||||
Current: | ||||||||
Deferred costs | (140 | ) | (114 | ) | ||||
Noncurrent: | ||||||||
Intangible assets | (1,623 | ) | (1,622 | ) | ||||
Total deferred tax liabilities | (1,763 | ) | (1,736 | ) | ||||
Total deferred taxes | 15,694 | 8,863 | ||||||
Less deferred tax asset valuation allowance | (17,313 | ) | (10,485 | ) | ||||
Net deferred taxes | $ | (1,619 | ) | $ | (1,622 | ) |
YEARS ENDED DECEMBER 31, | ||||||||||||
2014 | 2013 | 2012 | ||||||||||
Balance, beginning of year | $ | 390 | $ | 526 | $ | 348 | ||||||
Decreases to tax positions related to prior periods | (346 | ) | (162 | ) | — | |||||||
Increases to tax positions related to the current year | 21 | 26 | 178 | |||||||||
Balance, end of year | $ | 65 | $ | 390 | $ | 526 |
|
THREE MONTHS ENDED | |||||||||||||||||||||||||||||||
DEC. 31, 2014 | SEPT. 30, 2014 | JUN. 30, 2014 | MAR. 31, 2014 | DEC. 31, 2013 | SEPT. 30, 2013 | JUN. 30, 2013 | MAR. 31, 2013 | ||||||||||||||||||||||||
(in thousands, except share amounts) | |||||||||||||||||||||||||||||||
Total revenues | $ | 31,868 | $ | 30,312 | $ | 28,090 | $ | 25,640 | $ | 24,011 | $ | 22,134 | $ | 19,842 | $ | 17,842 | |||||||||||||||
Gross profit | 5,524 | 4,445 | 5,150 | 4,756 | 4,088 | 4,119 | 3,829 | 3,608 | |||||||||||||||||||||||
Net loss | (4,276 | ) | (8,509 | ) | (3,479 | ) | (4,913 | ) | (3,203 | ) | (1,222 | ) | (1,824 | ) | (1,926 | ) | |||||||||||||||
Net loss per share attributable to common stockholders: | |||||||||||||||||||||||||||||||
Basic and diluted | (0.16 | ) | (0.41 | ) | (2.25 | ) | (3.22 | ) | (2.23 | ) | (0.87 | ) | (1.32 | ) | (1.76 | ) | |||||||||||||||
Weighted average shares used to compute net loss per share attributable to common stockholders: | |||||||||||||||||||||||||||||||
Basic and diluted | 27,231,651 | 20,857,126 | 1,543,134 | 1,524,028 | 1,433,811 | 1,411,866 | 1,379,803 | 1,094,989 |
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