Rapid7, Inc 8-K/A, filed Jul 13, 2020

Rapid7, Inc. (RPD)

8-K/A 2020-07-13 For: 2020-04-28

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Added on April 07, 2026

About this 8-K/A

Rapid7, Inc filed this 8-K/A on July 13, 2020, reporting on events of April 28, 2020.

Items reported

Item 9.01: Financial statements and exhibits

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Exhibit No.						Description

23.1						Consent of Deloitte & Touche LLP, independent accountants
99.1						Audited consolidated financial statements of DivvyCloud as of and for the year ended December 31, 2019
99.2						Unaudited pro forma condensed combined financial statements of DivvyCloud and the Company as of and for the year ended December 31, 2019
104						Cover Page Interactive Data File (embedded within the inline XBRL document)


DivvyCloud Corporation
Table of Contents
December 31, 2019
						Page No.
Independent Auditors' Report						1
Consolidated Balance Sheet						2
Consolidated Statement of Operations						3
Consolidated Statement of Redeemable Preferred Stock and Stockholders' Deficit						4
Consolidated Statement of Cash Flows						5
Notes to Consolidated Financial Statements						6-19


	December 31, 2019
Assets
Current Assets
Cash and cash equivalents	$	10,026
Restricted cash	196
Accounts receivable, net of allowances of $0 at December 31, 2019	4,418
Deferred contract acquisition costs, net	280
Prepaid expense and other assets	242
Total Current Assets	15,162
Property and equipment, net (Note 4)	624
Long-term deferred contract acquisition costs, net	968
Other non-current assets	67
Total Assets	$	16,821
Liabilities, Redeemable Preferred Stock and Stockholders’ Deficit
Current Liabilities
Accounts payable	$	350
Accrued expenses	506
Short-term contract liabilities	5,538
Other current liabilities	122
Total Current Liabilities	6,516
Long-term deferred rent	293
Long-term contract liabilities	2,558
Warrant liability (Note 7)	116
Total Liabilities	9,483
Commitments and contingencies (Note 5)
Redeemable Preferred Stock
Series A-1 Preferred stock, $0.0001 par value; 11,086,513 shares authorized, 8,878,136 shares issued and outstanding with liquidation preference of $23,274 as of December 31, 2019.	22,989
Series A Preferred stock, $0.0001 par value; 13,317,683 authorized shares as of December 31, 2019; 11,670,574 shares issued and outstanding with liquidation preference of $11,450 as of December 31, 2019	11,364
Total Redeemable Preferred Stock	34,353
Stockholders’ Deficit (Note 8)
Common stock, $0.0001 par value; 37,000,000 authorized shares as of December 31, 2019; 5,232,897 issued and outstanding as of December 31, 2019	1
Treasury stock, at cost (1,550,000 Common Stock at $1.13 and 1,606,232 Preferred Stock at $.84)	(3,099)
Additional paid-in-capital	681
Accumulated deficit	(24,598)
Total Stockholders’ Deficit	(27,015)
Total Liabilities, Redeemable Preferred Stock and Stockholders’ Deficit	$	16,821


	Year Ended December 31, 2019
Revenues	$	6,371
Cost of revenue	1,007
Gross profit	5,364
Operating expenses:
Sales and marketing	8,042
Research and development	4,454
General and administrative	6,550
Total operating expenses	19,046
Loss from Operations:	(13,682)
Other Income (Expense):
Interest income/(expense)	140
Other expense, net	(1)
Total other income, net	139
Net loss before provision for income taxes	(13,543)
Income taxes	(3)
Net Loss	$	(13,546)


	Preferred Stock Series A				Preferred Stock Series A-1							Total Redeemable Preferred Stock		Common Stock						Treasury Stock					Accumulated Deficit	Total Stockholders' Deficit
	Shares	Dollars		Shares	Dollars				Shares	Dollars				Shares			Dollars			APIC
Balance as of December 31, 2018	13,276,806	$	12,940	—	$	—	$	12,940	6,450,710	$	1		—		$	—		$	132		$	(11,451)	$	(11,318)
Series A-1 Preferred Stock issuance	—	—		8,878,136	23,274		23,274		—	—			—		—			—			—		—
Preferred Stock issuance costs	—	—		—	(285)		(285)		—	—			—		—			—			—		—
Exercise of common stock options	—	—		—	—		—		22,187	—			—		—			14			—		14
Restricted stock vested upon Series A-1 Financing	—	—		—	—		—		310,000	—			—		—			—			—		—
Common Stock repurchase	—	—		—	—		—		(1,550,000)	—			1,550,000		(1,752)			—			—		(1,752)
Preferred Stock redemption	(1,606,232)	(1,576)		—	—		(1,576)		—	—			1,606,232		(1,347)			—			—		(1,347)
ASC 606 adoption	—	—		—	—		—		—	—			—		—			—			399		399
Compensation expense for stock options granted	—	—		—	—		—		—	—			—		—			185			—		185
Restricted stock compensation expense	—	—		—	—		—		—	—			—		—			350			—		350
Net loss							—														(13,546)		(13,546)
Balance as of December 31, 2019	11,670,574	$	11,364	8,878,136	$	22,989	$	34,353	5,232,897	$	1		3,156,232		$	(3,099)		$	681		$	(24,598)	$	(27,015)


☐			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))


	Year Ended December 31, 2019
CASH FLOW FROM OPERATING ACTIVITIES
Net loss	$	(13,546)
Adjustments to reconcile net loss to cash flows:
Depreciation and amortization of property and equipment	52
Amortization of capitalized commissions	125
Debt issuance costs amortization	34
Stock based compensation expense	536
Changes in operating assets and liabilities:
Accounts receivable	(3,689)
Prepaid expenses and other assets	3
Other non-current assets	113
Deferred contract acquisition costs	(973)
Accounts payable	311
Accrued expenses	245
Deferred contract liabilities	5,948
Long term deferred rent	293
Other liabilities	112
Net cash used in operating activities	(10,436)
CASH FLOW FROM INVESTING ACTIVITIES
Purchases of property and equipment	(539)
Net cash used in investing activities	(539)
CASH FLOW FROM FINANCING ACTIVITIES
Exercise of common stock options	14
Common Stock repurchase	(1,752)
Preferred Stock redemption	(2,923)
Series A-1 Preferred Stock issuance	23,274
Preferred stock issuance costs	(285)
Net cash provided by financing activities	18,328
Net change in cash and cash equivalents and restricted cash	7,353
Cash and cash equivalents and restricted cash, beginning of period	2,869
Cash and cash equivalents and restricted cash, end of period	$	10,222
Supplemental disclosures of non-cash activities:
Issuance of warrants	$	68


	2019
Cash and cash equivalent	$	10,026
Restricted cash	196
Total cash and cash equivalents and restricted cash	$	10,222


Balance as of January 1, 2019, net	$	399
Additions to deferred contract costs	973
Amortization of deferred contract costs	(125)
Balance as of December 31, 2019, net	$	1,247


Balance - beginning of period	$	47
Fair value at issuance	69
Balance - end of period	$	116


Account Balance	As previously reported as of December 31, 2018		New revenue standard (Topic 606) adjustments		As adjusted as of January 1, 2019
Current contract acquisition costs	$	—	$	86	$	86
Non-current contract acquisition costs	$	—	$	313	$	313
Stockholders' deficit	$	11,319	$	399	$	10,920


Impact of Changes on Accounting Policies
Account Balance	As Reported as of December 31, 2019		Adjustments		Balance without adoption of Topic 606
Current contract acquisition costs	$	280	$	280	$	—
Non-current contract acquisition costs	$	967	$	967	$	—
Total contract acquisition costs	$	1,247	$	1,247	$	—
Accumulated deficit	$	24,598	$	1,247	$	25,845


	Estimated Useful Lives	2019
Computer equipment and software	3 Years	$	192
Furniture and office equipment	3 Year	592
Leasehold improvements	10 Years	50
		$	834
Less: accumulated depreciation		(210)
Property and equipment, net		$	624


Item 9.01			Financial Statements and Exhibits.


Years Ending December 31	Operating Leases
2020	$	449
2021	554
2022	570
2023	587
2024	605
Thereafter	1,478
	$	4,243


	2019
Risk-Free Interest rate	1.92	%
Expected Term (in years)	10.00
Expected Volatility	43.00	%
Dividend Yield	0.00	%


	2019
Risk-Free Interest rate	1.53	%
Expected Term (in years)	5.84
Expected Volatility	35.67	%
Dividend Yield	0.00	%


	Number of Shares	Weighted Average Exercise Price		Weighted Average Contractual Term (Years)	Aggregate Intrinsic Value (in thousands)
Outstanding at January 1, 2019	1,061,364	$	0.69
Granted	881,000	$	0.81
Exercised	22,187	$	0.63
Forfeited or Expired	202,188	$	0.68
Outstanding at December 31, 2019	1,717,989	$	0.74	9.14	$	669

Options exercisable at December 31, 2019	658,960	$	0.69	8.87	$	292
Vested and Expected to Vest	1,717,989	$	0.74	9.14	$	669


	Number of Shares	Weighted Average Fair Value
Issued as of January 1, 2019	1,120,856	$	0.28
Granted	—	—
Vested	310,000	0.23
Forfeited or Expired	—	—
Issued as of December 31, 2019	810,856	$	0.28


Statutory federal income tax rate	21.00	%
State taxes	6.01	%
Non-deductible stock repurchase	(3.43)	%
Other	0.70	%
Valuation allowance	(24.28)	%
Effective income tax rate	0.00	%


	2019
Current:
Federal	$	—
State and local	3
Total current tax expense	$	3
Deferred:
Federal	$	—
State and local	—
Total deferred tax benefit	$	—
Income tax expense (benefit)	$	3


	2019
Deferred tax assets:
Accruals	$	1,292
Stock Compensation	46
Depreciation	8
Charitable contributions	—
Net operating loss	4,132
Total deferred tax assets	5,478
Deferred Tax Liabilities:
Depreciation	—
Financing costs	(3)
Total deferred tax liabilities	(3)
Less: Valuation allowance	(5,475)
Net deferred tax asset	$	—


	Rapid7, Inc. Historical		DivvyCloud Historical		Pro Forma Adjustments			Pro Forma Combined
Assets
Current assets:
Cash and cash equivalents	$	123,413	$	10,026	$	(130,834)	(a)	$	2,605
Restricted cash	—		196					196
Short-term investments	116,158		—					116,158
Accounts receivable, net	87,927		4,418					92,345
Deferred contract acquisition and fulfillment costs, current portion	17,047		280		(280)		(j)	17,047
Prepaid expenses and other current assets	20,051		242					20,293
Total current assets	364,596		15,162		(131,114)			248,644
Long-term investments	22,887		—					22,887
Property and equipment, net	50,670		624					51,294
Operating lease right-of-use assets	60,984		—		3,335		(k)	64,319
Deferred contract acquisition and fulfillment costs, non-current portion	34,213		968		(968)		(j)	34,213
Goodwill	97,866		—		106,757		(b)	204,623
Intangible assets, net	28,561		—		21,200		(c)	49,761
Other assets	5,136		67					5,203
Total assets	$	664,913	$	16,821	$	(790)		$	680,944
Liabilities, Redeemable Preferred Stock and Stockholders’ Deficit
Current liabilities:
Accounts payable	$	6,836	$	350	$	1,182	(a), (e)	8,368
Accrued expenses	41,021		506					41,527
Operating lease liabilities, current portion	7,179		—		235		(k)	7,414
Deferred revenue, current portion	231,518		5,538		(2,387)		(d)	234,669
Other current liabilities	119		122		104		(k)	345
Total current liabilities	286,673		6,516		(866)			292,323
Convertible senior notes, net	185,200		—					185,200
Operating lease liabilities, non-current portion	72,294		—		3,100		(k)	75,394
Deferred revenue, non-current portion	36,226		2,558		(1,102)		(d)	37,682
Other long-term liabilities	1,352		409		6,554		(a), (i), (k)	8,315
Total liabilities	581,745		9,483		7,686			598,914
Redeemable preferred stock	—		34,353		(34,353)		(f)	—
Stockholders’ equity (deficit):
Common stock	499		1		(1)		(f)	499
Treasury stock	(4,764)		(3,099)		3,099		(f)	(4,764)
Additional paid-in-capital	605,650		681		(681)		(f)	605,650
Accumulated other comprehensive (loss) income	213		—					213
Accumulated deficit	(518,430)		(24,598)		23,460		(e), (f)	(519,568)
Total stockholders’ equity (deficit)	83,168		(27,015)		25,877			82,030
Total liabilities, redeemable preferred stock and stockholders’ equity (deficit)	$	664,913	$	16,821	$	(790)		$	680,944


Consideration:
Cash	$	130,834
Deferred cash consideration	6,963
Estimated working capital and other purchase price adjustments	44
Fair value of total consideration transferred	$	137,841

Recognized amounts of identifiable assets and liabilities assumed:
Cash, cash equivalents and restricted cash	$	10,222
Accounts receivable, net	4,418
Prepaid expenses and other current assets	242
Property and equipment, net	624
Other assets	67
Accounts payable	(350)
Accrued expenses	(506)
Deferred revenue, current portion	(3,151)
Other current liabilities	(226)
Deferred revenue, non-current portion	(1,456)
Intangible assets	21,200
Total identifiable net assets assumed	$	31,084
Goodwill	106,757
Net purchase price	$	137,841


	Amount		Estimated Useful Life
	(in thousands)		(in years)
Developed technology	$	18,600	6
Customer relationships	1,700		6
Trade name	900		5
Total identifiable intangible assets	$	21,200


	Preliminary Fair Values		Estimated Useful Life (in years)	Annual Amortization Based on Preliminary Fair Values
Developed technology	$	18,600	6	$	3,100
Customer relationships	1,700		6	283
Trade name	900		5	180
Total identifiable intangible assets	$	21,200		$	3,563


	For the Year Ended December 31, 2019
	Cost of revenue		Research and development		Sales and marketing		General and administrative
Stock-based compensation expense	$	145	$	6,304	$	2,273	$	19
Less: Stock-based compensation expense recorded by DivvyCloud	(6)		(82)		(97)		(72)
Adjustments to stock-based compensation expense	$	139	$	6,222	$	2,176	$	(53)