NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except unit, share, per unit, and per share data)
On July 9, 2015, Exicure OpCo converted from a limited liability company into a C corporation. In connection with the corporate conversion, each common unit, Class A unit, Class B-1 unit, Class B-2 unit and Class C unit of AuraSense Therapeutics, LLC issued and outstanding immediately prior to the effectiveness of the corporate conversion was converted into one share of common stock, Series A preferred stock, Series B-1 preferred stock, Series B-2 preferred stock and Series C preferred stock of Exicure OpCo, respectively. Fractional units of AuraSense Therapeutics, LLC that were outstanding prior to the corporate conversion were not converted to shares of stock in Exicure OpCo, resulting in 46 less aggregate shares of outstanding preferred stock of Exicure OpCo as compared to aggregate outstanding preferred units of AuraSense Therapeutics, LLC in connection with the corporate conversion. Each outstanding option to purchase one common unit of AuraSense Therapeutics, LLC was converted into an option to purchase one share of common stock of Exicure OpCo.
Class A Units/Series A Preferred Stock
On December 12, 2011, the Company entered into agreements with AuraSense, LLC: the Bill of Sale, Assignment and Assumption Agreement and the Partial Assignment of License Agreement. In exchange for the contribution of certain assets and agreeing to certain undertakings, the Company provided to AuraSense, LLC 11,381,611 of its Class A units.
For purposes of determining the value of its initial capital contribution, the members of AuraSense Therapeutics, LLC agreed that the Class A units provided to AuraSense, LLC were to be valued at $2.22 per unit or an aggregate value of $25,217. For accounting purposes, however, as the Company and AuraSense, LLC were under common control, the assets and liabilities transferred and the Class A equity contributions were valued at AuraSense, LLC’s net book value. The net book value of AuraSense, LLC’s contribution at inception was $135.
As further discussed above, in connection with the corporate conversion, 11,381,611 Class A units were converted to 11,381,640 shares of Exicure OpCo Series A preferred stock.
Liquidation preference. The Class A units/Series A preferred stock were senior in right of payment only to the common units until such time as they have received aggregate distributions equal to their unreturned cash contribution.
Class B Units/Series B Preferred Stock
The Class B units/Series B preferred stock were divided into two tranches and have been issued in two series: Class B-1/Series B-1 and Class B-2/Series B-2.
Class B-1/Series B-1. On December 12, 2011, the Company sold 2,451,571 of its Class B-1 units at a price per unit of $2.22. Total gross proceeds raised thereby were $5,432 including a receivable of $500 for 225,677 of the sold units. The receivable was collected in 2012. Net proceeds after associated costs and expenses of $61 were $5,371.
Class B-2/Series B-2. On June 27, 2013, the Company sold 1,403,995 of its Class B-2 units at a price per unit of $2.62. Total gross proceeds raised thereby were $3,676 and proceeds net of $35 in financing costs were $3,641.
As further discussed above, in connection with the corporate conversion, 2,451,571 Class B-1 units and 1,403,995 Class B-2 units were converted to 2,451,560 and 1,403,984 shares of Exicure OpCo Series B-1 and Series B-2 preferred stock, respectively.
Liquidation preference. The Class B units/Series B preferred stock were senior to the Class A units/Series A preferred stock and common units/stock in their right to payment until such time as they have received aggregate distributions equal to their unreturned cash contribution.