8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): July 27, 2010

REACHLOCAL, INC.

(Exact name of Registrant as specified in its charter)

Delaware	001-34749	20-0498783
(State or other jurisdiction of incorporation)	(Commission File No.)	(I.R.S. Employer Identification No.)
21700 Oxnard Street, Suite 1600, Woodland Hills, California		91367
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code: (818) 274-0260

Not Applicable

(Former name or former address if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.02. Results of Operations and Financial Condition.

On July 27, 2010, ReachLocal, Inc. (the “Company”) publicly disseminated a press release announcing financial results for the second quarter ended June 30, 2010.

The foregoing description is qualified in its entirety by reference to the Company’s press release, dated July 27, 2010, a copy of which is attached hereto as Exhibit 99.1 and incorporated herein by reference. Such information shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and is not incorporated by reference into any filing of the Company, whether made before or after the date hereof, regardless of any general incorporation language in such filing.

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits

Exhibit No.	Description
99.1	Press Release dated July 27, 2010.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Date: July 27, 2010	REACHLOCAL, INC.
	By:	/s/    ZORIK GORDON
		Zorik Gordon
		President and Chief Executive Officer

INDEX TO EXHIBITS

Exhibit No.	Description
99.1	Press Release dated July 27, 2010.

EX-99.1

Exhibit 99.1

REACHLOCAL REPORTS SECOND QUARTER 2010 RESULTS

Revenue Increases 47% Year-over-Year to $70.4 Million

Direct Local Revenue Grows 60% Year-over-Year to $52.3 million

(WOODLAND HILLS, CA) – July 27, 2010 - ReachLocal, Inc. (NASDAQ:RLOC), a leader in local online marketing solutions for small and medium-sized businesses (SMBs), today reported financial results for the second quarter ended June 30, 2010.

“ReachLocal delivered strong growth and financial results for our first quarter as a public company,” said Zorik Gordon, President and CEO of ReachLocal. “We believe our results demonstrate our ability to address the large, global, untapped local online advertising market and the strength of our strategy of leveraging our proprietary technology platform with our ‘feet on the street’ sales force. During the quarter, we added to our local Internet Marketing Consultant (IMC) sales force, expanded our geographic footprint into five additional markets, executed the beta launch of Bizzy, our new SMB retention and acquisition platform, and added to our product portfolio with the release of our new TotalLiveChat product.”

Quarterly Results at a Glance

	Q2 2010			Q2 2009			% Change
Consolidated Revenues	$	70,362		$	47,970		47	%
Net Income (Loss)	$	(2,394	)	$	(1,010	)	(137	)%
Net Income (Loss) per Diluted Share	$	(0.09	)	$	(0.04	)	(125	)%
Consolidated Adjusted EBITDA	$	455		$	499		(9	)%
Underclassmen Expense	$	8,679		$	5,968		45	%
Cash Flow from Operations	$	6,956		$	5,530		26	%
Non-GAAP Net Income (Loss)	$	(387	)	$	(234	)	(65	)%
Non-GAAP Net Income (Loss) per Diluted Share	$	(0.02	)	$	(0.01	)	(100	)%
Key Metrics (at period end):
Active Advertisers		16,700			13,200		27	%
Active Campaigns		21,400			16,100		33	%
Total Upperclassmen		246			143		72	%
Total Underclassmen		395			256		54	%
Total IMCs		641			399		61	%
Revenue by Channel and Geography:
Direct Local Revenues	$	52,323		$	32,781		60	%
National Brand Agencies and Resellers Revenues (NBAR)	$	18,039		$	15,189		19	%
International Revenues (included above)	$	11,122		$	1,521		631	%

“The Direct Local channel, our primary engine of growth, delivered 60% year-over-year revenue growth, driven by our increasing number of IMCs as well as the improved productivity of our Upperclassmen IMCs,” said Michael Kline, COO of ReachLocal. “We continued to invest in the hiring of Underclassmen IMCs and in the expansion of our IMC footprint by opening additional offices in the United States, the United Kingdom and Australia.” Results from ReachLocal’s Australian operations are not included for Q2 2009, as such operations were not consolidated into the Company’s financial statements until September 2009, when the Company acquired the portion of that operation that it did not already own.

Cash and Share Count

As of June 30, 2010, ReachLocal had cash and cash equivalents and short-term investments of $83.8 million. The Company received $42.1 million in proceeds in connection with its initial public offering on May 19, 2010, net of issuance costs. Shares outstanding at the end of the second quarter were 27.8 million.

Business Outlook

“ReachLocal’s operations delivered strong revenue and operating cash flow growth during the second quarter. Looking ahead, ReachLocal has an outlook of 40+% revenue growth for calendar year 2010, with continued investment in its sales force, new product launches and customer service initiatives”, said Ross Landsbaum, CFO of ReachLocal.

The Company’s forecast for the third quarter and the full year 2010 is as follows:

Third Quarter 2010

• Consolidated Revenues in the range of $74.8 to $75.2 million

• Consolidated Adjusted EBITDA in the range of $(0.9) to $(1.1) million

Full Year 2010

• Consolidated Revenues in the range of $288.1 to $288.9 million.

• Consolidated Adjusted EBITDA in the range of $(1.4) to $(1.8) million

• Ending IMC Upperclassmen in the range of 290 to 310

• Ending IMC Underclassmen in the range of 350 to 370

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Conference Call and Webcast Information

The ReachLocal second quarter fiscal 2010 teleconference and webcast is scheduled to begin at 2:00 p.m., Pacific Time, on Tuesday, July 27, 2010, during which the Company will provide forward-looking information. To participate on the live call, analysts and investors should dial 877-941-2069 at least ten minutes prior to the call. ReachLocal will also offer a live and archived webcast of the conference call, accessible from the “Investors” section of the Company’s Web site at www.reachlocal.com.

Use of Non-GAAP Measures

ReachLocal management evaluates and makes operating decisions using various financial and operational metrics. In addition to the Company’s GAAP results, Management also considers non-GAAP measures of net income (loss), net income (loss) per share, and adjusted EBITDA. Management believes that these non-GAAP measures provide useful information about the Company’s core operating results and thus are appropriate to enhance the overall understanding of the Company’s past financial performance and its prospects for the future. The attached tables provide a reconciliation of these non-GAAP financial measures with the most directly comparable GAAP financial measures. Management also tracks and reports on Underclassmen Expense, Active Advertisers, Active Campaigns and the total number of Internet Marketing Consultants, as each of these metrics are important gauges of the progress of the Company’s performance.

The non-GAAP net income is defined as earnings before (a) stock-based compensation related expense (including the related adjustment to amortization of capitalized software development costs) and (b) acquisition related costs (including in the case of the February 2010 acquisition of SMB:Live, the amortization of acquired intangibles and the deferred cash consideration). Adjusted EBITDA is defined as net income (loss) before interest, income taxes, depreciation and amortization expenses, excluding, when applicable, stock-based compensation, the effects of accounting for business combinations and amounts included in other non-operating income or expense.

Each of these non-GAAP measures, while having utility, also have limitations as an analytical tool, and should not be considered in isolation or as a substitute for analysis of the Company’s results as reported under GAAP. Some of these limitations are:

• Adjusted EBITDA does not reflect the Company’s cash expenditures for capital equipment or other contractual commitments;

• Although depreciation and amortization are non-cash charges, the assets being depreciated and amortized may have to be replaced in the future, and Adjusted EBITDA does not reflect capital expenditure requirements for such replacements;

• Adjusted EBITDA does not reflect changes in, or cash requirements for, the Company’s working capital needs;

• Adjusted EBITDA and non-GAAP net income (loss) do not consider the potentially dilutive impact of issuing equity-based compensation to the Company’s management and other employees;

• Adjusted EBITDA does not reflect the potentially significant interest expense or the cash requirements necessary to service interest or principal payments on indebtedness that the Company may incur in the future;

• Adjusted EBITDA does not reflect income and expense items that relate to the Company’s financing and investing activities, any of which could significantly affect the Company’s results of operations or be a significant use of cash;

• Adjusted EBITDA and non-GAAP net income (loss) do not reflect costs or expenses associated with accounting for business combinations;

• Adjusted EBITDA does not reflect certain tax payments that may represent a reduction in cash available to the Company; and

• Other companies, including companies in the same industry, calculate Adjusted EBITDA and non-GAAP net income (loss) measures differently, which reduces their usefulness as a comparative measure.

Adjusted EBITDA is not intended to replace operating income (loss), net income (loss) and other measures of financial performance reported in accordance with GAAP. Rather, Adjusted EBITDA is a measure of operating performance that may be considered in addition to those measures. Because of these limitations, Adjusted EBITDA should not be considered as a measure of discretionary cash available to the Company to invest in the growth of the business.

Underclassmen Expense is a number the Company calculates to approximate its investment in Underclassmen and is comprised of the selling and marketing expenses allocated to Underclassmen during a reporting period. The amount includes the direct salaries and allocated benefits of the Underclassmen (excluding commissions), training and sales organization expenses including depreciation allocated based on relative headcount and marketing expenses allocated based on relative revenue. While management believes that Underclassmen Expense provides useful information regarding the Company’s approximated investment in Underclassmen, the methodology used to arrive at the estimated Underclassmen Expense was developed internally by the Company, is not a concept or method recognized by GAAP and other companies may use different methodologies to calculate or approximate measures similar to Underclassmen Expense. Accordingly, the calculation of Underclassmen Expense may not be comparable to similar measures used by other companies. Management refers to sales through its sales force of Internet Marketing Consultants (IMCs) as its Direct Local channel. As the sale to agencies, resellers and national brands involves negotiations with businesses that generally represent an aggregated group of SMB advertisers, management groups them together as the National Brands, Agencies and Resellers channel (NBAR).

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Active Advertisers is a number the Company calculates to approximate the number of clients directly served through the Company’s Direct Local channel as well as clients served through the Company’s National Brands, Agencies and Resellers channel. The Company calculates Active Advertisers by adjusting the number of Active Campaigns to combine clients with more than one Active Campaign as a single Active Advertiser. Clients with more than one location are generally reflected as multiple Active Advertisers. Because this number includes clients served through the National Brands, Agencies and Resellers channel, Active Advertisers includes entities with which the Company does not have a direct client relationship. Numbers are rounded to the nearest hundred.

Active Campaigns is a number the Company calculates to approximate the number of individual products or services the Company is managing under contract for Active Advertisers. For example, if the Company is performing both ReachSearch and ReachDisplay campaigns for a client, the Company considers that two Active Campaigns. Similarly, if a client purchased ReachSearch campaigns for two different products or purposes, the Company considers that two Active Campaigns. Numbers are rounded to the nearest hundred.

Caution Concerning Forward-Looking Statements

Statements in this press release regarding the Company’s guidance for future periods and the quotes from management constitute “forward-looking” statements within the meaning of the Securities Exchange Act of 1934. These statements reflect the Company’s current views about future events and involve known and unknown risks, uncertainties and other factors that may cause our actual results, levels of activity, performance or achievement to materially differ from those expressed or implied by the forward-looking statements. Actual events or results could differ materially from those expressed or implied by these forward-looking statements as a result of various factors, including: (i) the Company’s ability to purchase media from Google, Yahoo! and Microsoft under commercially reasonable terms; (ii) the Company’s ability to recruit, train and retain our Internet Marketing Consultants; (iii) the Company’s ability to attract and retain customers, (iv) the Company’s ability to successfully enter new markets and manage its international expansion (v) the Company’s ability to successfully develop and offer new products and services in the highly competitive online advertising industry; (iv) the impact of worldwide economic conditions, including the resulting effect on advertising budgets; and (vi) our ability to comply with government regulation affecting our business, including regulations or policies governing consumer privacy. More information about these factors and other potential factors that could affect the Company’s business and financial results is contained in its final Prospectus related to its initial public offering filed pursuant to Rule 424(b) under the Securities Act with the SEC on May 19, 2010. The Company does not intend, and undertakes no duty, to update this information to reflect future events or circumstances.

About ReachLocal, Inc.

ReachLocal, Inc.’s (NASDAQ: RLOC) mission is to help small- and medium-sized businesses (SMBs) acquire, maintain and retain customers via the Internet. ReachLocal offers a comprehensive suite of online marketing solutions, including search engine marketing (ReachSearch^™), display advertising (ReachDisplay^™) and remarketing, customer retention tools (Bizzy^™) and online marketing analytics (TotalTrack^®), each targeted to the SMB market. ReachLocal delivers this suite of services to SMBs through a combination of its proprietary technology platform and its direct, “feet-on-the-street” sales force of Internet Marketing Consultants and select third party agencies and resellers. ReachLocal is headquartered in Woodland Hills, CA, with offices throughout North America and in Australia and the United Kingdom.

Investor Relations:	Media Contact:
Alex Wellins	David Glaubke
The Blueshirt Group	Director of Corporate Communications
(415) 217-5861	ReachLocal, Inc.
alex@blueshirtgroup.com	(818) 936-9908
	dglaubke@reachlocal.com

(Tables to follow)

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REACHLOCAL, INC.

UNAUDITED BALANCE SHEETS

(in thousands, except per share data)

	June 30, 2010			December 31, 2009
ASSETS
Current assets:
Cash and cash equivalents	$	75,779		$	35,379
Short-term investments		8,060			8,037
Accounts receivable, net		3,898			3,229
Prepaid expenses and other current assets		2,119			1,590
Total current assets		89,856			48,235
Property and equipment, net		5,282			4,900
Capitalized software development costs, net		8,053			5,099
Restricted certificates of deposit		1,122			1,131
Intangible assets, net		3,730			2,068
Other assets		1,024			967
Deferred offering costs		—			3,099
Goodwill		34,118			32,388
Total assets	$	143,185		$	97,887
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities:
Accounts payable	$	25,284		$	21,498
Accrued expenses		11,827			10,342
Deferred payment obligations		223			5,955
Deferred revenue		21,399			16,989
Other current liabilities		278			165
Total current liabilities		59,011			54,949
Deferred rent and other liabilities		1,101			820
Total liabilities		60,112			55,769
Stockholders’ Equity:
Convertible preferred stock		—			5
Receivable from stockholder		(99	)		(99	)
Additional paid-in capital		92,860			47,247
Accumulated deficit		(9,545	)		(4,897	)
Accumulated other comprehensive loss		(143	)		(138	)
Total stockholders’ equity		83,073			42,118
Total liabilities and stockholders’ equity	$	143,185		$	97,887

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REACHLOCAL, INC.

UNAUDITED STATEMENT OF OPERATIONS

(in thousands, except per share data)

	Three Months Ended June 30,						Six Months Ended June 30,
	2010			2009			2010			2009
Revenue	$	70,362		$	47,970		$	133,988		$	90,705
Cost of revenue		38,447			26,618			73,286			50,441
Operating expenses:
Selling and marketing		26,341			17,681			50,281			34,761
Product and technology		2,522			1,288			4,866			2,262
General and administrative		5,618			3,362			11,003			6,419
Total operating expenses		34,481			22,331			66,150			43,442
Loss from operations		(2,566	)		(979	)		(5,448	)		(3,178	)
Other income (expense), net		265			26			255			35
Loss before provision for income taxes		(2,301	)		(953	)		(5,193	)		(3,143	)
Provision (benefit) for income taxes		93			57			(545	)		124
Net loss	$	(2,394	)	$	(1,010	)	$	(4,648	)	$	(3,267	)
Net loss per share, basic and diluted	$	(0.09	)	$	(0.04	)	$	(0.19	)	$	(0.14	)
Weighted average common shares used in computation of net loss per share, basic and diluted		25,621			22,794			24,651			22,746
Stock-based compensation, net of capitalization, and depreciation and amortization included in above line items:
Stock-based compensation:
Cost of revenue	$	70		$	15		$	161		$	25
Selling and marketing		260			173			441			242
Product and technology		259			15			523			32
General and administrative		811			554			1,360			1,001
	$	1,400		$	757		$	2,485		$	1,300
Depreciation and amortization:
Cost of revenue	$	98		$	63		$	170		$	126
Selling and marketing		249			196			494			392
Product and technology		838			404			1,508			759
General and administrative		262			58			509			114
	$	1,447		$	721		$	2,681		$	1,391

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REACHLOCAL, INC.

UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands, except per share data)

	Six Months Ended June 30,
	2010			2009
Cash flow from operating activities:
Net loss	$	(4,648	)	$	(3,267	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization		2,681			1,391
Stock-based compensation, net		2,485			1,300
Provision for doubtful accounts		46			62
Interest and foreign currency gain on payment obligations, net		(55	)		—
Provision for deferred income taxes		(702	)		—
Changes in operating assets and liabilities:
Accounts receivable		(573	)		1,120
Prepaid expenses and other current assets		(492	)		(287	)
Other assets		(69	)		(49	)
Accounts payable and accrued liabilities		5,985			5,721
Deferred revenue and other		4,827			2,551
Net cash provided by operating activities		9,485			8,542
Cash flow from investing activities:
Additions to property, equipment and software		(4,166	)		(1,988	)
Purchase of SMB:LIVE, net of acquired cash		(2,753	)		—
Payment deferred obligation		(5,853	)		—
Purchases of short term investments		(24	)		(5	)
Net cash provided by (used in) investing activities		(12,796	)		(1,993	)
Cash flow from financing activities:
Proceeds from exercise of stock options		171			42
Proceeds from initial public offering		47,648			—
Deferred offering costs		(3,816	)		—
Net cash provided by (used in) financing activities		44,003			42
Effect of exchange rates on cash		(292	)		(11	)
Net change in cash and cash equivalents		40,400			6,580
Cash and cash equivalents—beginning of period		35,379			38,820
Cash and cash equivalents—end of period	$	75,779		$	45,400

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Non-GAAP Financial Measures:

Reconciliation of Adjusted EBITDA to Loss from operations (in thousands)	Three Months Ended June 30,						Six Months Ended June 30,
	2010			2009			2010			2009
Loss from operations	$	(2,566	)	$	(979	)	$	(5,448	)	$	(3,178	)
Add:
Depreciation and amortization		1,447			721			2,681			1,391
Stock-based compensation, net		1,400			757			2,485			1300
Acquisition and integration costs		174			—			509			—
Adjusted EBITDA (1)	$	455		$	499		$	227		$	(487	)
Underclassmen Expense (2)	$	8,679		$	5,968		$	16,485		$	12,860

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REACHLOCAL, Inc.

Reconciliation of GAAP to Non-GAAP Operating Results for Three Months Ended June 30, 2009 and 2010

(in thousands, except per share amounts)

	Three Months Ended June 30, 2010												Three Months Ended June 30, 2009
	GAAP Operating Results “As Reported”			Adjustments: Stock-based Compensation Related Expense (3)			Acquisition Related Costs (4)			Non-GAAP Operating Results			GAAP Operating Results “As Reported”			Adjustments: Stock-based Compensation Related Expense (3)			Acquisition Related Costs (4)		Non-GAAP Operating Results
Revenue	$	70,362		$	—		$	—		$	70,362		$	47,970		$	—		$	—	$	47,970
Cost of revenue		38,447			(70	)		—			38,377			26,618			(15	)		—		26,603
Operating expenses:
Sales and marketing		26,341			(260	)		(3	)		26,078			17,681			(173	)		—		17,508
Product and technology		2,522			(308	)		(341	)		1,873			1,288			(34	)		—		1,254
General and administrative		5,618			(811	)		(214	)		4,593			3,362			(554	)		—		2,808
Total Operating expenses		34,481			(1,379	)		(558	)		32,544			22,331			(761	)		—		21,570
Loss from operations		(2,566	)		1,449			558			(559	)		(979	)		776					(203	)
Other income (expense), net		265			—			—			265			26			—			—		26
Loss before provision for income taxes		(2,301	)		1,449			558			(294	)		(953	)		776			—		(177	)
Provision (benefit) for income tax		93			—			—			93			57			—			—		57
Net Loss	$	(2,394	)	$	1,449		$	558		$	(387	)	$	(1,010	)	$	776		$	—	$	(234	)
Net loss per share
Basic	$	(0.09	)							$	(0.02	)	$	(0.04	)						$	(0.01	)
Diluted	$	(0.09	)							$	(0.02	)	$	(0.04	)						$	(0.01	)
Weighted average shares outstanding (5)
Basic		25,621									25,621			22,794								22,794
Diluted		25,621									25,621			22,794								22,794

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REACHLOCAL, Inc.

Reconciliation of GAAP to Non-GAAP Operating Results for Six Months Ended June 30, 2009 and 2010

(in thousands, except per share amounts)

	Six Months Ended June 30, 2010												Six Months Ended June 30, 2009
	GAAP Operating Results “As Reported”			Adjustments: Stock-based Compensation Related Expense (3)			Acquisition Related Costs (4)			Non-GAAP Operating Results			GAAP Operating Results “As Reported”			Adjustments: Stock-based Compensation Related Expense (3)			Acquisition Related Costs (4)		Non-GAAP Operating Results
Revenue	$	133,988		$	—		$	—		$	133,988		$	90,705		$	—		$	—	$	90,705
Cost of revenue		73,286			(161	)		—			73,125			50,441			(25	)		—		50,416
Operating expenses:																				—
Sales and marketing		50,281			(441	)		(7	)		49,833			34,761			(242	)		—		34,519
Product and technology		4,866			(621	)		(472	)		3,773			2,262			(63	)		—		2,199
General and administrative		11,003			(1,360	)		(670	)		8,973			6,419			(1,001	)		—		5,418
Total Operating expenses		66,150			(2,422	)		(1,149	)		62,579			43,442			(1,306	)		—		42,136
Loss from operations		(5,448	)		2,583			1,149			(1,716	)		(3,178	)		1,331			—		(1,847	)
Other income (expense), net		255			—			—			255			35			—			—		35
Loss before provision for income taxes		(5,193	)		2,583			1,149			(1,461	)		(3,143	)		1,331			—		(1,812	)
Provision (benefit) for income tax		(545	)		—			701			156			124			—			—		124
Net Loss	$	(4,648	)	$	2,583		$	448		$	(1,617	)	$	(3,267	)	$	1,331		$	—	$	(1,936	)
Net loss per share
Basic	$	(0.19	)							$	(0.07	)	$	(0.14	)						$	(0.09	)
Diluted	$	(0.19	)							$	(0.07	)	$	(0.14	)						$	(0.09	)
Weighted average shares outstanding (5)
Basic		24,651									24,651			22,746								22,746
Diluted		24,651									24,651			22,746								22,746

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Footnotes

(1) Adjusted EBITDA is defined as net income (loss) before interest, income taxes, depreciation and amortization expenses and excluding, when applicable, non-cash stock-based compensation, the effects of accounting for business combinations and amounts included in other non-operating income or expense.

(2) Underclassmen Expense is a number the Company calculates to approximate its investment in Underclassmen and is comprised of the selling and marketing expenses allocated to Underclassmen during a reporting period. The amount includes the direct salaries and allocated benefits of the Underclassmen (excluding commissions), training and sales organization expenses including depreciation allocated based on relative headcount and marketing expenses allocated based on relative revenue.

(3) Stock-based Compensation Related Expense: Includes stock-based compensation expense and the related adjustment to amortization of capitalized software development costs.

(4) Acquisition Related Costs: Acquisition related costs, including the amortization of acquired intangibles and the deferred cash consideration for the SMB: Live acquisition, are excluded from the Non-GAAP operating results as these are non-recurring charges which the Company would not have incurred as part of continuing operations.

(5) Weighted average shares outstanding: The weighted average shares outstanding prior to the initial public offering date of May 19, 2010 have been retroactively adjusted to reflect the conversion of the Company’s preferred stock into common stock. The periods after the initial public offering reflect the actual shares outstanding.

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