Table of Contents
Vitae Pharmaceuticals, Inc.
Notes to Unaudited Condensed Financial Statements (Continued)
As of June 30, 2014 and December 31, 2013 and
for the Six Months Ended June 30, 2014 and 2013
2. Summary of Significant Accounting Policies and Basis of Accounting (Continued)
Unaudited Interim Financial Information
The accompanying condensed balance sheet as of June 30, 2014, condensed statements of operations and comprehensive loss and
condensed statements of cash flows for the six months ended June 30, 2014 and 2013 are unaudited. The interim unaudited condensed financial statements have been prepared on the same basis as
the annual audited financial statements and, in the opinion of management, reflect all adjustments, which include only normal recurring adjustments, necessary for the fair statement of the Company's
financial position as of June 30, 2014 and the results of its operations, its comprehensive loss and its cash flows for the six months ended June 30, 2014 and 2013. The results for the
six months ended June 30, 2014 are not necessarily indicative of results to be expected for the year ending December 31, 2014, any other interim periods, or any future year or period.
Unaudited Pro Forma Information
In March 2014, the Company's board of directors (the "Board") authorized management of the Company to pursue the filing of a
registration statement with the Securities and Exchange Commission ("SEC") for the Company to sell shares of its common stock to the public in an initial public offering ("IPO"). The unaudited pro
forma balance sheet information as of June 30, 2014 assumes the conversion of all outstanding shares of the Company's preferred stock, which convert automatically upon the closing of the IPO,
as of that date into 218,309,741 shares of common stock. The unaudited pro forma net loss per share is computed using the weighted-average number of common shares outstanding and gives effect to the
conversion of all outstanding shares of the Company's preferred stock as of that date into 218,309,741 shares of common stock as if they had occurred at January 1, 2014. Upon conversion of the
convertible preferred stock into shares of the Company's common stock in the event of an IPO, the holders of the convertible preferred stock are not entitled to receive undeclared dividends.
Accordingly, the impact of the cumulative preferred stock dividends has been excluded from the determination of net loss per share.
Fair Value of Financial Instruments
At June 30, 2014 and December 31, 2013, the Company's financial instruments included cash and cash equivalents,
restricted cash, marketable securities, accounts payable, accrued expenses, notes payable and a preferred stock warrant liability. The carrying amounts reported in the Company's financial statements
for cash and cash equivalents, restricted cash, accounts payable and accrued expenses approximates their respective fair values because of the short-term nature of these accounts. The Company's short-
and long-term marketable securities are carried at fair value based on quoted market prices and other observable inputs. Notes payable approximates fair value
because the interest rate is reflective of the rate the Company could obtain on debt with similar terms and conditions. The carrying value of the preferred stock warrant liability is the estimated
fair value of the liability (Note 5). The Company has evaluated the estimated fair value of financial instruments using available market information and management's estimates. The use of
different market assumptions and/or estimation methodologies could have a significant effect on the estimated fair value amounts.