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Preferred stock
12 Months Ended
Dec. 31, 2015
Temporary Equity Disclosure [Abstract]  
Preferred stock

7. Preferred stock

(a) Authorized

On March 12, 2014, the Company adopted an amended and restated certificate of incorporation for Aquinox USA. Aquinox USA is authorized to issue 5,000,000 shares of preferred stock with a par value of $0.000001 per share (December 31, 2014 – 5,000,000). Prior to the Company’s IPO in March 2014, the Company had outstanding shares of preferred stock in Series A, B and C. Upon the Company’s IPO, all shares of Series A, B and C preferred stock were converted to common shares of Aquinox USA. As of December 31, 2015 and December 31, 2014, no shares of preferred stock were issued or outstanding.

(b) Issuances of Series C preferred stock

On March 19, 2013, AQXP Canada issued 378,786 shares of Series C preferred stock at $10.56 per share for total consideration of $4,000 before issue costs of $50. In addition to the Series C preferred stock, in 2013 Aquinox USA also issued 378,786 shares of Series C Aquinox USA special voting stock, and AQXP Canada also issued 378,786 shares of Series C AQXP Canada special voting shares. Upon issuance of Series C the redemption date of Series A and B was reset to March 19, 2018.

On March 19, 2013, Aquinox USA issued 1,325,753 shares of Series C preferred stock at $10.56 per share for total consideration of $14,000 before issue costs of $174. In addition to the Series C preferred stock, in 2013 AQXP Canada also issued 1,325,753 shares of Series C AQXP Canada special voting shares. Upon issuance of Series C the redemption date of Series A and B was reset to March 19, 2018. Concurrent with the issuance of Series C preferred stock in March 2013, Aquinox USA also issued 17,671 warrants to holders of the Series C preferred stock. On December 23, 2013, the holders of the 17,671 warrants exercised their warrants into 17,671 shares of Series C preferred stock and equal number of Series C AQXP Canada special voting common shares.

 

(c) Accounting for Series A, B and C preferred stock

The Series A, Series B and Series C preferred stock and Series A, Series B and Series C exchangeable preferred shares, collectively, the “preferred stock” were redeemable convertible preferred stock which were convertible into the Company’s common stock and were classified as mezzanine equity for accounting purposes as they were redeemable on contingent events, and were redeemable at the option of the holder. The preferred stock were labeled within the convertible preferred stock and stockholders’ deficit as AQXP Canada exchangeable preferred shares, and Aquinox USA preferred stock.

Management evaluated the Series A and Series B preferred stock agreements and determined that there were no embedded conversion features and redemption options that were required to be bifurcated and accounted for separately as derivative financial instruments in the consolidated and combined financial statements. The Company recorded the Series A, Series B and Series C preferred stock at fair value upon issuance, with their carrying value increased by periodic accretion to their redemption value. The accretion was calculated using the liquidation preference of 8% per annum of the original issue price compounded annually over the period through the respective redemption dates.

Concurrent with the issuance of Series C preferred stock in March 2013, the Company also amended their respective certificates of incorporation, revising the terms, rights, and liquidation preferences for Series A and B preferred stock which required the Company to re-assess its previous embedded derivative analyses with respect to previous preferred stock offerings.

As a result the Company bifurcated the embedded mandatory redemption option based on contingent events in Series A, Series B and Series C preferred stock as it was determined the redemption option was no longer clearly and closely related to preferred stock host contract on March 19, 2013. The Company recorded the fair value of the embedded redemption options for Series A, Series B and Series C as derivative liabilities with changes in fair value of the liabilities reflected in the consolidated and combined statements of operations and comprehensive loss as changes in fair value of derivative liabilities.

The table below discloses the accounting values assigned to the Series A, Series B and Series C preferred stock for the years ended December 31, 2015, 2014 and 2013. The Company recorded the Series A, Series B and Series C redeemable convertible stock at fair value upon issuance, with their carrying value increased by periodic accretion to their redemption value.

 

     SERIES A PREFERRED STOCK  
     AQXP CANADA
EXCHANGEABLE PREFERRED
SHARES
     AQUINOX USA
PREFERRED STOCK
 
     NUMBER      AMOUNT      NUMBER      AMOUNT  

BALANCE – December 31, 2012

     791,016       $ 12,320         662,875       $ 10,308   

Accretion for liquidation preference on preferred stock

     —           988         —           831   

Accretion for share issuance costs on preferred stock

     —           21         —           18   
  

 

 

    

 

 

    

 

 

    

 

 

 

BALANCE – December 31, 2013

     791,016         13,329         662,875         11,157   

Accretion for liquidation preference on preferred stock

     —           190         —           160   

Accretion for share issuance costs on preferred stock

     —           75         —           50   

Conversion of preferred stock into Aquinox USA common stock

     (791,016      (13,594      (662,875      (11,367
  

 

 

    

 

 

    

 

 

    

 

 

 

BALANCE – December 31, 2014

     —         $ —           —         $ —     
  

 

 

    

 

 

    

 

 

    

 

 

 

BALANCE – December 31, 2015

     —         $ —           —         $ —     
  

 

 

    

 

 

    

 

 

    

 

 

 

 

     SERIES B PREFERRED STOCK  
     AQXP CANADA
EXCHANGEABLE PREFERRED
SHARES
    AQUINOX USA
PREFERRED STOCK
 
     NUMBER     AMOUNT     NUMBER     AMOUNT  

BALANCE – December 31, 2012

     793,617      $ 9,863        1,573,797      $ 19,483   

Accretion for liquidation preference on preferred stock

     —          781        —          1,551   

Accretion for share issuance costs on preferred stock

     —          18        —          33   

Amortization of warrant discount

     —          22        —          24   
  

 

 

   

 

 

   

 

 

   

 

 

 

BALANCE – December 31, 2013

     793,617        10,684        1,573,797        21,091   

Accretion for liquidation preference on preferred stock

     —          154        —          298   

Accretion for share issuance costs on preferred stock

     —          44        —          99   

Amortization of warrant discount

     —          27        —          85   

Conversion of preferred stock into Aquinox USA common stock

     (793,617     (10,909     (1,573,797     (21,573
  

 

 

   

 

 

   

 

 

   

 

 

 

BALANCE – December 31, 2014

     —        $ —          —        $ —     
  

 

 

   

 

 

   

 

 

   

 

 

 

BALANCE – December 31, 2015

     —        $ —          —        $ —     
  

 

 

   

 

 

   

 

 

   

 

 

 

 

     SERIES C PREFERRED STOCK  
     AQXP CANADA
EXCHANGEABLE PREFERRED
SHARES
    AQUINOX USA
PREFERRED STOCK
 
     NUMBER     AMOUNT     NUMBER     AMOUNT  

BALANCE – December 31, 2013

     378,786      $ 3,831        1,343,424      $ 13,766   

Accretion for liquidation preference on preferred stock

     —          61        —          273   

Accretion for share issuance costs on preferred stock

     —          42        —          149   

Amortization of redemption option discount

     —          393        —          1,379   

Conversion of preferred stock into Aquinox USA common stock

     (378,786     (4,327     (1,343,424     (15,567
  

 

 

   

 

 

   

 

 

   

 

 

 

BALANCE – December 31, 2014

     —        $ —          —        $ —     
  

 

 

   

 

 

   

 

 

   

 

 

 

BALANCE – December 31, 2015

     —        $ —          —        $ —     
  

 

 

   

 

 

   

 

 

   

 

 

 

(d) Redeemable convertible preferred stock and stockholders’ (deficit) equity

On February 27, 2014, the Company effected a 1-for-19.2 reverse stock split of Aquinox USA’s common stock and convertible preferred stock and AQXP Canada’s common exchangeable shares and exchangeable preferred shares. All per share amounts and numbers of shares within the consolidated and combined financial statements and notes are presented on a post-split basis.

On March 12, 2014, immediately prior to the closing of the IPO, the Company underwent a reorganization, which resulted in a simplification of its capital structure. Each of the 301,745 outstanding common exchangeable shares of AQXP Canada was transferred to Aquinox USA in exchange for one share of common stock of Aquinox USA. Each of the 791,016 outstanding Series A exchangeable preferred shares, 793,617 outstanding Series B exchangeable preferred shares and 378,786 outstanding Series C exchangeable preferred share of AQXP Canada was transferred to Aquinox USA in exchange for one share of Series A, B and C convertible preferred stock of Aquinox USA, respectively. As a result, following such exchange, there were 1,453,891 shares of Series A, 2,367,414 shares of Series B and 1,722,210 shares of Series C convertible preferred stock of Aquinox USA. Following the completion of the exchange and conversion, all special voting shares of AQXP Canada and all special voting stock of Aquinox USA were redeemed for a nominal amount and all exchangeable preferred shares of AQXP Canada, now held by Aquinox USA, were converted to common exchangeable shares of AQXP Canada. As a result of the reorganization, AQXP Canada became a 100% owned subsidiary of Aquinox USA. Subsequent to this reorganization, all 5,543,515 of the outstanding shares of redeemable convertible preferred stock of Aquinox USA converted to an equivalent number of shares of common stock of Aquinox USA. The exchange and conversion resulted in the derecognition of non-cash accrued tax payable of $1,797 and the derecognition of the derivative liability for the redemption option on preferred stock of $800.

On March 12, 2014, the Company adopted an amended and restated certificate of incorporation for Aquinox USA, which authorized two classes of stock, common and preferred. The total number of shares Aquinox USA is authorized to issue is 55,000,000 shares, comprised of 50,000,000 shares of common stock and 5,000,000 shares of preferred stock both with a par value of $0.000001 per share. As of December 31, 2015 and December 31, 2014, no shares of preferred stock were issued or outstanding.