Document_and_Entity_Informatio
Document and Entity Information (USD $) | 12 Months Ended | ||
Dec. 31, 2013 | Mar. 04, 2014 | Jun. 28, 2013 | |
Document and Entity Information | ' | ' | ' |
Entity Registrant Name | 'AxoGen, Inc. | ' | ' |
Entity Central Index Key | '0000805928 | ' | ' |
Document Type | '10-K | ' | ' |
Document Period End Date | 31-Dec-13 | ' | ' |
Amendment Flag | 'false | ' | ' |
Current Fiscal Year End Date | '--12-31 | ' | ' |
Entity Well-known Seasoned Issuer | 'No | ' | ' |
Entity Voluntary Filers | 'No | ' | ' |
Entity Current Reporting Status | 'Yes | ' | ' |
Entity Filer Category | 'Smaller Reporting Company | ' | ' |
Entity Public Float | ' | ' | $25,236,771 |
Entity Common Stock, Shares Outstanding | ' | 17,373,620 | ' |
Document Fiscal Year Focus | '2013 | ' | ' |
Document Fiscal Period Focus | 'FY | ' | ' |
CONSOLIDATED_BALANCE_SHEETS
CONSOLIDATED BALANCE SHEETS (USD $) | Dec. 31, 2013 | Dec. 31, 2012 |
Current assets: | ' | ' |
Cash and cash equivalents | $20,069,750 | $13,907,401 |
Accounts receivable, net of allowance for doubtful accounts of approximately $58,000 and $0, respectively | 1,893,699 | 1,050,089 |
Inventory | 3,398,438 | 3,151,109 |
Prepaid expenses and other | 296,719 | 187,256 |
Total current assets | 25,658,606 | 18,295,855 |
Property and equipment, net | 381,689 | 108,534 |
Intangible assets | 570,396 | 573,731 |
Deferred financing costs | 1,073,579 | 1,252,443 |
Total Assets | 27,684,270 | 20,230,563 |
Current liabilities: | ' | ' |
Accounts payable and accrued expenses | 2,083,942 | 1,479,752 |
Current Deferred Revenue | 14,118 | ' |
Total current liabilities | 2,098,060 | 1,479,752 |
Long-term debt | ' | ' |
Note Payable - Revenue Interest Purchase Agreement | 25,363,695 | 21,580,252 |
Long Term Deferred Revenue | 85,882 | ' |
Total liabilities | 27,547,637 | 23,060,004 |
Shareholders' equity (deficit): | ' | ' |
Common stock, $.01 par value; 50,000,000 shares authorized; 17,339,561 and 11,122,573 shares issued and outstanding | 173,395 | 111,226 |
Additional paid-in capital | 72,369,016 | 54,908,226 |
Accumulated deficit | -72,405,778 | -57,848,893 |
Total shareholders' equity (deficit) | 136,633 | -2,829,441 |
Total Liabilities and Shareholders' equity | $27,684,270 | $20,230,563 |
CONSOLIDATED_BALANCE_SHEETS_Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $) | Dec. 31, 2013 | Dec. 31, 2012 |
CONSOLIDATED BALANCE SHEETS | ' | ' |
Accounts receivable, allowance for doubtful accounts | $58,617 | $0 |
Common stock, par value | $0.01 | $0.01 |
Common stock, shares authorized | 50,000,000 | 50,000,000 |
Common stock, shares issued | 17,339,561 | 11,122,573 |
Common stock, shares outstanding | 17,339,561 | 11,122,573 |
CONSOLIDATED_STATEMENTS_OF_OPE
CONSOLIDATED STATEMENTS OF OPERATIONS (USD $) | 12 Months Ended | |
Dec. 31, 2013 | Dec. 31, 2012 | |
CONSOLIDATED STATEMENTS OF OPERATIONS | ' | ' |
Revenues | $10,947,361 | $7,691,704 |
Cost of goods sold | 2,439,818 | 1,961,877 |
Gross profit | 8,507,543 | 5,729,827 |
Costs and expenses: | ' | ' |
Sales and marketing | 10,259,153 | 6,883,953 |
Research and development | 2,125,476 | 1,427,211 |
General and administrative | 5,715,119 | 5,220,599 |
Total costs and expenses | 18,099,748 | 13,531,763 |
Loss from operations | -9,592,205 | -7,801,936 |
Other income (expense): | ' | ' |
Interest expense | -4,819,708 | -1,391,342 |
Interest expense - deferred financing costs | -178,864 | -986,844 |
Other income | 33,892 | 23,972 |
Total other income (expense) | -4,964,680 | -2,354,214 |
Loss before income taxes | -14,556,885 | -10,156,150 |
Income tax benefit | 0 | 738,192 |
Net Loss | ($14,556,885) | ($9,417,958) |
Weighted Average Common Shares outstanding - basic and diluted | 13,499,793 | 11,089,425 |
Loss Per Common share - basic and diluted | ($1.08) | ($0.85) |
CONSOLIDATED_STATEMENTS_OF_STO
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT) (USD $) | Total | Common Stock | Additional Paid-in Capital | Accumulated Deficit |
Beginning Balance at Dec. 31, 2011 | $6,071,471 | $110,622 | $54,391,784 | ($48,430,935) |
Beginning Balance (in shares) at Dec. 31, 2011 | ' | 11,062,188 | ' | ' |
Increase (Decrease) in Stockholders' Equity | ' | ' | ' | ' |
Stock-based compensation | 495,077 | ' | 495,077 | ' |
Exercise of stock options | 15,652 | 583 | 15,069 | ' |
Exercise of stock options (in shares) | ' | 58,340 | ' | ' |
Stock Grant for Services | 21,375 | 75 | 21,300 | ' |
Stock Grant for Services (in shares) | ' | 7,500 | ' | ' |
Cancellation of shares | -14,999 | -54 | -14,946 | ' |
Cancellation of shares (in shares) | ' | -5,455 | ' | ' |
Merger Closing - Fractional shares | -58 | ' | -58 | ' |
Net loss | -9,417,958 | ' | ' | -9,417,958 |
Ending Balance at Dec. 31, 2012 | -2,829,441 | 111,226 | 54,908,226 | -57,848,893 |
Ending Balance (in shares) at Dec. 31, 2012 | 11,122,573 | 11,122,573 | ' | ' |
Increase (Decrease) in Stockholders' Equity | ' | ' | ' | ' |
Stock-based compensation | 671,887 | ' | 671,887 | ' |
Exercise of stock options | 73,326 | 326 | 73,000 | ' |
Exercise of stock options (in shares) | ' | 32,656 | ' | ' |
Issuance of common shares | 16,777,746 | 61,843 | 16,715,903 | ' |
Issuance of common shares (in shares) | ' | 6,184,332 | ' | ' |
Net loss | -14,556,885 | ' | ' | -14,556,885 |
Ending Balance at Dec. 31, 2013 | $136,633 | $173,395 | $72,369,016 | ($72,405,778) |
Ending Balance (in shares) at Dec. 31, 2013 | 17,339,561 | 17,339,561 | ' | ' |
CONSOLIDATED_STATEMENTS_OF_CAS
CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $) | 12 Months Ended | |
Dec. 31, 2013 | Dec. 31, 2012 | |
Cash flows from operating activities: | ' | ' |
Net loss | ($14,556,885) | ($9,417,958) |
Adjustments to reconcile net loss to net cash used for operating activities: | ' | ' |
Depreciation | 79,232 | 187,749 |
Amortization of intangible assets | 59,100 | 127,080 |
Loss on impairment | 9,424 | 299,654 |
Loss on abandonment of license | ' | 147,826 |
Amortization of deferred financing costs | 178,864 | 352,667 |
Amortization of debt discount | ' | 161,529 |
Provision for bad debt | 58,617 | ' |
Stock-based compensation | 671,887 | 495,077 |
Stock grant for service | ' | 21,375 |
Cancellation of shares | ' | -14,999 |
Interest added to note payable | 3,783,443 | 780,252 |
Change in assets and liabilities: | ' | ' |
Accounts receivable | -902,227 | -252,435 |
Inventory | -247,329 | -1,390,570 |
Prepaid expenses and other | -109,463 | -53,757 |
Accounts payable and accrued expenses | 430,579 | -105,348 |
Deferred Revenue | 100,000 | ' |
Net cash used for operating activities | -10,444,758 | -8,661,858 |
Cash flows from investing activities: | ' | ' |
Purchase of property and equipment | -178,776 | -48,459 |
Acquisition of intangible assets | -65,189 | -78,825 |
Net cash used for investing activities | -243,965 | -127,284 |
Cash flows from financing activities: | ' | ' |
Proceeds from issuance of note payable | ' | 15,961,294 |
Proceeds from issuance of common stock | 16,777,746 | ' |
Repayments of long-term debt | ' | -161,292 |
Debt issuance costs | ' | -1,309,834 |
Proceeds from exercise of stock options | 73,326 | 15,652 |
Merger | ' | -58 |
Net cash provided by financing activities | 16,851,072 | 14,505,762 |
Net increase in cash and cash equivalents | 6,162,349 | 5,716,620 |
Cash and cash equivalents, beginning of year | 13,907,401 | 8,190,781 |
Cash and cash equivalents, end of period | 20,069,750 | 13,907,401 |
Supplemental disclosures of cash flow activity: | ' | ' |
Cash paid for interest | 1,030,219 | 649,108 |
Supplemental disclosure of non-cash investing and financing activities: | ' | ' |
Payments of fixed assets in accounts payable | 173,611 | ' |
Payments of long term debt with proceeds from note payable | ' | $4,838,706 |
Basis_of_Presentation
Basis of Presentation | 12 Months Ended |
Dec. 31, 2013 | |
Basis of Presentation | ' |
Basis of Presentation | ' |
1. Basis of Presentation | |
The accompanying consolidated financial statements include the accounts of AxoGen, Inc. (the “Company” or “AxoGen”) and its wholly owned subsidiary AxoGen Corporation (“AC”) as of December 31, 2013 and December 31, 2012 and for the years then ended. The Company’s consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America. All significant intercompany accounts and transactions have been eliminated in consolidation. | |
Organization_and_Business
Organization and Business | 12 Months Ended |
Dec. 31, 2013 | |
Organization and Business | ' |
Organization and Business | ' |
2. Organization and Business | |
Business Summary | |
The Company is a leading medical technology company dedicated to advancing the science and commercialization of peripheral nerve repair solutions. Peripheral nerves provide the pathways for both motor and sensory signals throughout the body and their damage can result in the loss of muscle function and/or feeling. In order to improve the options available for the surgical repair and regeneration of peripheral nerves, the Company has developed and licensed, patented and patent pending regenerative medicine technologies. The Company’s innovative approach to regenerative medicine has resulted in first-in-class products that the Company believes will define their product categories. AxoGen’s products offer a full suite of surgical nerve repair solutions including Avance® Nerve Graft, the only off-the-shelf commercially available processed nerve allograft human nerve tissue obtained from a donor for bridging severed nerves without the comorbidities of an autograft second surgical site, such resulting in a loss of feeling where the nerve was removed and potential pain at the donor site. The Company’s AxoGuard® line of products are derived from pig tissue and are natural scaffolds of the body called ExtraCellular Matrix, or ECM. AxoGuard® Nerve Connector is used to facilitate the tensionless repair of severed nerves, and AxoGuard® Nerve Protector is used to wrap and protect injured peripheral nerves and reinforce the nerve reconstruction while preventing soft tissue attachments. | |
Summary_of_Significant_Account
Summary of Significant Accounting Policies | 12 Months Ended | |||||||
Dec. 31, 2013 | ||||||||
Summary of Significant Accounting Policies | ' | |||||||
Summary of Significant Accounting Policies | ' | |||||||
3. Summary of Significant Accounting Policies | ||||||||
Revenue Recognition | ||||||||
Revenue is recognized when persuasive evidence of an arrangement exists, the price is fixed and determinable, delivery has occurred and there is a reasonable assurance of collection of the sales proceeds. Revenues for manufactured products and products sold to a customer or under a distribution agreement are recognized when the product is delivered to the customer or distributor, at which time title passes to the customer or distributor, provided, however, that in the case of revenues from consigned sales delivery is determined when the product is utilized in a surgical procedure. Once a product is delivered, the Company has no further performance obligations. Delivery is defined as delivery to a customer location or segregation of product into a contracted distribution location. At such time, this product cannot be sold to any other customer. Fees charged to customers for shipping are recognized as revenues when products are shipped to the customer, distributor or end user. | ||||||||
Cash and Cash Equivalents and Concentration | ||||||||
For purposes of the statement of cash flows, the Company considers all highly liquid debt instruments purchased with a maturity of three months or less to be cash equivalents. Cash and cash equivalents are maintained at financial institutions and, at times, balances may exceed federally insured limits. The Company has never experienced any losses related to these balances and does not believe it is exposed to any significant credit risk on cash and cash equivalents. | ||||||||
Accounts Receivable and Concentration of Credit Risk | ||||||||
Accounts receivable are carried at the original invoice amount less an estimate made for doubtful accounts based on a review of all outstanding amounts on a monthly basis. Management determines the allowance for doubtful accounts by regularly evaluating individual customer receivables and considering a customer’s financial condition, credit history and current economic conditions. Accounts receivable are written off when deemed uncollectible. Recoveries of accounts receivable previously written off are recorded when received. | ||||||||
In 2013, we established a reserve for doubtful accounts as we did have some accounts deemed uncollectible. We regularly review all accounts that exceed 60 days from the invoice date and based on an assessment of current credit worthiness, estimate the portion, if any, of the balance that will not be collected. The analysis excludes certain government related receivables due to our past successful experience in collectability. Specific accounts that are deemed uncollectible are reserved at 100% of their outstanding balance. The remaining balances outstanding over 60 days have a percentage applied by aging category (5% for balances 61-90 days and 20% for balances over 90 days aged), based on a historical valuation that allows us to calculate the total reserve required. The reserve balance was determined by applying a percentage to the cumulative balance between 60 and 90 days and a higher percentage to the balance over 90 days. In the event that we exhaust all collection efforts and deem an account uncollectible, we would subsequently write off the account. The write off process involves approval by senior management based on the write off amount. The allowance for doubtful accounts reserve balance was $58,617 and $0 at December 31, 2013 and 2012, respectively. | ||||||||
Concentrations of credit risk with respect to accounts receivable are limited because a large number of geographically diverse customers make up the Company’s customer base, thus spreading the trade credit risk. The Company also controls credit risk through credit approvals, credit limits and monitoring procedures. | ||||||||
Inventories | ||||||||
Inventories are comprised of implantable tissue, nerve grafts, Avance® Nerve Graft, AxoGuard® Nerve Connector, AxoGuard® Nerve Protector, and supplies and are valued at the lower of cost (first-in, first-out) or market and consist of the following: | ||||||||
December 31, | December 31, | |||||||
2013 | 2012 | |||||||
Finished goods | $ | 2,131,336 | $ | 2,143,176 | ||||
Work in process | 235,966 | 145,156 | ||||||
Raw materials | 1,031,136 | 862,777 | ||||||
$ | 3,398,438 | $ | 3,151,109 | |||||
Inventories are net of reserve of $382,545 and $537,798 at December 31, 2013 and 2012, respectively. | ||||||||
Property and Equipment | ||||||||
Depreciation and amortization is computed using the straight-line method over the estimated useful lives of the assets as follows: | ||||||||
Furniture and equipment | 2-5 years | |||||||
Leasehold improvements | 5 years (or lease term if less) | |||||||
Processing equipment | 5-7 years | |||||||
Major additions and improvements are capitalized, while replacements, maintenance and repairs, which do not improve or extend the life of the respective assets, are expensed as incurred. When assets are retired or otherwise disposed of, related costs and accumulated depreciation and amortization are removed and any gain or loss is reported as other income or expense. | ||||||||
Intangible Assets | ||||||||
Intangible assets consist primarily of license agreements for exclusive rights to use various patented and patent-pending technologies described in Note 5 and other costs related to the license agreements, including patent prosecution and protection costs. Such costs are capitalized and amortized on a straight-line basis over the underlying terms of the license agreements or estimated useful life of patents, ranging from 5 to 20 years. | ||||||||
Impairment of Long-lived Assets, Including License Agreements | ||||||||
The Company reviews its long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to future undiscounted cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets. For the years ended December 31, 2013 and 2012, the Company recorded an impairment loss of $9,424 and $129,667, respectively. | ||||||||
Goodwill | ||||||||
Goodwill represents the excess of the purchase price over the fair value of net assets acquired. Goodwill is not amortized, but is tested for impairment annually. The Company utilizes the income approach in estimating fair value. The Company’s 2012 annual goodwill impairment analysis indicated a significant decrease in the carrying value of goodwill, due to declines in the associated revenues, resulting in a full $169,887 impairment loss being recorded for the year ended December 31, 2012. | ||||||||
Deferred Financing Costs | ||||||||
The Company capitalizes all third-party costs incurred, including equity-based payments, associated with the issuance of long-term debt. The costs are amortized to interest expense over the term of the debt using the effective interest method. | ||||||||
Advertising | ||||||||
Advertising costs are expensed as incurred. Advertising costs were $37,000 and $56,000 for the years ended December 31, 2013 and 2012, respectively, and are included in sales and marketing expense on the accompanying consolidated statements of operations. | ||||||||
Research and Development Costs | ||||||||
Research and Development costs are expensed as incurred and were approximately $2,125,000 and $1,427,000 for the years ended December 31, 2013 and 2012, respectively. | ||||||||
Income Taxes | ||||||||
The Company has not recorded current income tax expense due to the generation of net operating losses. Deferred income taxes are accounted for using the balance sheet approach which requires recognition of deferred tax assets and liabilities for the expected future consequences of temporary differences between the financial reporting basis and the tax basis of assets and liabilities. A valuation allowance is provided when it is more likely than not that a deferred tax asset will not be realized. A full valuation allowance has been established on the deferred tax asset as it is more likely than not that future tax benefit will not be realized. In addition, future utilization of the available net operating loss carryforward may be limited under Internal Revenue Code Section 382 as a result of changes in ownership. | ||||||||
The Company identifies and evaluates uncertain tax positions, if any, and recognizes the impact of uncertain tax positions for which there is a less than more-likely-than-not probability of the position being upheld when reviewed by the relevant taxing authority. Such positions are deemed to be unrecognized tax benefits and a corresponding liability is established on the balance sheet. The Company has not recognized a liability for uncertain tax positions. If there were an unrecognized tax benefit, the Company would recognize interest accrued related to unrecognized tax benefits in interest expense and penalties in operating expenses. The Company’s remaining open tax years subject to examination by the Internal Revenue Service include the years ended December 31, 2009 through 2013; there currently are no examinations in process. | ||||||||
Fair Value of Financial Instruments | ||||||||
The respective carrying value of certain on-balance-sheet financial instruments approximated their fair values due to the short-term nature of these instruments. These financial instruments include cash, accounts receivable, accounts payable and accrued expenses. The fair value of the Company’s long-term debt approximates its carrying value based upon current rates available to the Company. | ||||||||
Stock-Based Compensation | ||||||||
Stock-based compensation cost related to stock options granted under the AC 2002 Stock Option Plan and AxoGen 2010 Stock Incentive Plan (see Note 10) is measured at grant date, based on the fair value of the award, and is recognized as an expense over the employee’s requisite service period. The Company estimates the fair value of each option award issued under the Plan on the date of grant using a Black-Scholes-Merton option-pricing model that uses the assumptions noted in the table below. The Company estimates the volatility of its common stock at the date of grant based on the volatility of comparable peer companies which are publicly traded, for the periods prior to the merger, and based on the Company’s common stock for periods subsequent to the merger. The Company determines the expected life based on historical experience with similar awards, giving consideration to the contractual terms, vesting schedules and post-vesting forfeitures. The Company uses the risk-free interest rate on the implied yield currently available on U.S. Treasury issues with an equivalent remaining term approximately equal to the expected life of the award. The Company has never paid any cash dividends on its common stock and does not anticipate paying any cash dividends in the foreseeable future. The Company used the following weighted-average assumptions for options granted during the year ended December 31: | ||||||||
Years ended December 31, | 2013 | 2012 | ||||||
Expected term (in years) | 4 | 4 | ||||||
Expected volatility | 83.15 | % | 117.2 | % | ||||
Risk free rate | 0.79 | % | 0.61 | % | ||||
Expected dividends | 0 | % | 0 | % | ||||
The Company estimates forfeitures when recognizing compensation expense and this estimate of forfeitures is adjusted over the requisite service period based on the extent to which actual forfeitures differ, or are expected to differ, from such estimates. Changes in estimated forfeitures are recognized through a cumulative catch-up adjustment, which is recognized in the period of change, and also impact the amount of unamortized compensation expense to be recognized in future periods. The Company did not apply a forfeiture allocation to its unvested options outstanding during the years ended December 31, 2013 and 2012 as they were deemed insignificant. | ||||||||
Earnings (Loss) Per Common Share | ||||||||
Earnings (loss) per common share (EPS) is calculated for basic EPS by dividing net income (loss) available to common stockholders by the weighted average number of common shares outstanding during the period. | ||||||||
There were no dilutive instruments as of December 31, 2013 and 2012. The basic and diluted weighted average shares outstanding were 13,499,793 and 11,089,425 for the years ended December 31, 2013 and 2012. | ||||||||
Use of Estimates | ||||||||
The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. | ||||||||
Recent Accounting Pronouncements | ||||||||
The Company’s management has reviewed and considered all recent accounting pronouncements and believe there are none that could potentially have a material impact on the Company’s consolidated financial condition, results of operations, or disclosures. | ||||||||
Property_and_Equipment
Property and Equipment | 12 Months Ended | |||||||
Dec. 31, 2013 | ||||||||
Property and Equipment | ' | |||||||
Property and Equipment | ' | |||||||
4. Property and Equipment | ||||||||
Property and equipment consist of the following: | ||||||||
December 31, | December 31, | |||||||
2013 | 2012 | |||||||
Furniture and equipment | $ | 893,973 | $ | 572,459 | ||||
Leasehold improvements | 53,864 | 42,564 | ||||||
Processing equipment | 1,015,388 | 995,815 | ||||||
Less: accumulated depreciation and amortization | (1,581,536 | ) | (1,502,304 | ) | ||||
Property and equipment | $ | 381,689 | $ | 108,534 |
Intangible_Assets
Intangible Assets | 12 Months Ended | |||||||
Dec. 31, 2013 | ||||||||
Intangible Assets | ' | |||||||
Intangible Assets | ' | |||||||
5. Intangible Assets | ||||||||
The Company’s intangible assets consist of the following: | ||||||||
December 31, | December 31, | |||||||
2013 | 2012 | |||||||
License agreements | $ | 816,300 | $ | 772,230 | ||||
Patents | 62,553 | 63,429 | ||||||
Less: accumulated amortization | (308,457 | ) | (261,928 | ) | ||||
Intangible assets, net | $ | 570,396 | $ | 573,731 | ||||
License agreements are being amortized over periods ranging from 17-20 years. Patent costs were being amortized over three years. As of December 31, 2013, the patents were fully amortized, the remaining patents of $62,553 are pending patent costs and are not amortizable. Amortization expense for 2013 and 2012 was approximately $59,000 and $127,000, respectively. As of December 31, 2013, future amortization of license agreements is expected to be $48,000 for 2014, through 2018. | ||||||||
In 2013 and 2012, the Company performed an evaluation of certain patents and determined that the carrying value of such patents were not recoverable and exceeded their estimated fair value. As a result, the Company recorded in the year ended December 31, 2013 and 2012 an impairment loss of $9,424 and $129,667, respectively, to reduce these patents to their estimated fair value. | ||||||||
License Agreements | ||||||||
The Company has entered into license agreements (the “License Agreements”) with the University of Florida Research Foundation (“UFRF”) and University of Texas at Austin (“UTA”) and Emory University (“Emory”). Under the terms of the License Agreements, the Company acquired exclusive worldwide licenses for underlying technology used in repairing and regenerating nerves. The licensed technologies include the rights to issued patents and patents pending in the United States and international markets. The effective term of the License Agreements extends through the term of the related patents and the agreements may be terminated by the Company with 60 days prior written notice. Additionally, in the event of default, licensors may terminate an agreement if the Company fails to cure a breach after written notice. The License Agreements contain the key terms listed below: | ||||||||
· AxoGen pays royalty fees ranging from 1% to 3% under the License Agreements based on net sales of licensed products. One of the agreements also contains a minimum royalty of $12,500 per quarter, which may include a credit in future quarters in the same calendar year for the amount the minimum royalty exceeds the royalty fees. Also, when AxoGen pays royalties to more than one licensor for sales of the same product, a royalty stack cap applies, capping total royalties at 3.75%; | ||||||||
· Under one of the agreements, if AxoGen does not achieve certain regulatory milestones, which AxoGen has not achieved, AxoGen would have owed an annual license maintenance fee starting on August 31, 2012 of $120,000, escalating to $240,000 on August 31, 2013 and August 31, 2014. In 2012, AxoGen decided to abandon the license and as a result recorded a $147,826 loss on abandonment of license. | ||||||||
· If AxoGen sublicenses technologies covered by the License Agreements to third parties, AxoGen would pay a percentage of sublicense fees received from the third party to the licensor. Currently, AxoGen does not sublicense any technologies covered by License Agreements. The Company is not considered a sub-licensee under the License Agreements and does not owe any sub-licensee fees for its own use of the technologies; | ||||||||
· AxoGen reimburses the licensors for certain legal expenses incurred for patent prosecution and defense of the technologies covered by the License Agreements; and | ||||||||
· Currently, under one of the License Agreements, AxoGen would owe a $15,000 milestone fee upon receiving a Phase II Small Business Innovation Research or Phase II Small Business Technology Transfer grant involving the licensed technology. The Company has not received either grant and does not owe such a milestone fee. Other milestone fees are due if AxoGen develops certain pharmaceutical or medical device products under the License Agreements. No such products are currently under development. | ||||||||
Royalty fees were approximately $230,000 and $167,000 during 2013 and 2012 and are included in sales and marketing expense on the accompanying consolidated statements of operations. | ||||||||
Accounts_Payable_and_Accrued_E
Accounts Payable and Accrued Expenses | 12 Months Ended |
Dec. 31, 2013 | |
Accounts Payable and Accrued Expenses | ' |
Accounts Payable and Accrued Expenses | ' |
6. Accounts Payable and Accrued Expenses | |
Accounts payable and accrued expenses includes $203,380 and $137,329 for accrued payroll at December 31, 2013 and 2012, respectively, and $417,825 and $121,746 for accrued commissions at December 31, 2013 and 2012, respectively. | |
LongTerm_Debt_Note_Payable
Long-Term Debt / Note Payable | 12 Months Ended | |||||||
Dec. 31, 2013 | ||||||||
Long-Term Debt / Note Payable | ' | |||||||
Long-Term Debt / Note Payable | ' | |||||||
7. Long-Term Debt / Note Payable | ||||||||
Long-term debt / note payable consists of the following: | ||||||||
December 31, | December 31, | |||||||
2013 | 2012 | |||||||
Revenue Interest Purchase Agreement with PDL BioPharma, Inc. (“PDL”) for aggregate of $20,800,000 with amounts payable monthly at 9.95% of Net Revenues through September 2014; and the greater of (i) 9.95% of product revenue or (ii) specific quarterly amounts varying from approximately $1.3 million to $2.5 million per quarter through September 2020. The minimum annual payment amounts are as follows: 2014 - $1,250,805, 2015 - $6,781,440, 2016 - $9,232,642, 2017 and 2018 - $9,000,000, 2019 - $9,063,000 and 2020 - $6,939,000. | $ | 25,363,695 | $ | 21,580,252 | ||||
Long-term portion | $ | 25,363,695 | $ | 21,580,252 | ||||
Note Payable | ||||||||
On October 5, 2012, AxoGen entered into a Revenue Interests Purchase Agreement (the “Royalty Contract”) with PDL BioPharma, Inc. (“PDL”), pursuant to which the Company sold to PDL the right to receive royalties equal to 9.95% of the Company’s Net Revenues (as defined in the Royalty Contract) generated by the sale, distribution or other use of AxoGen’s products Avance® Nerve Graft, AxoGuard® Nerve Connector and AxoGuard® Nerve Protector. Proceeds from the PDL transaction were used to fully repay the MidCap Loan, as defined below, and extinguish AxoGen’s long-term debt obligations thereunder. The Royalty Contract has a term of eight years. Under the Royalty Contract, PDL is to receive royalty payments based on a royalty rate 9.95% of the Company’s Net Revenues, subject to certain agreed upon minimum payment requirements, currently anticipated to be operative, of approximately $1.3 to $2.5 million per quarter which begin in the fourth quarter of 2014 through the third quarter of 2020 as provided in the Royalty Contract. The total consideration PDL paid to the Company was $20,800,000 (the “Funded Amount”), including $19,050,000 PDL paid to the Company on October 5, 2012, and $1,750,000 PDL paid to the Company on August 14, 2012 pursuant to an Interim Revenue Interest Purchase Agreement between the Company and PDL, dated August 14, 2012 (the “Interim Royalty Contract”). Upon the closing (the “Closing”) of PDL’s purchase of the specified royalties described above, which was concurrent with the execution of the Royalty Contract, the Interim Royalty Contract was terminated. | ||||||||
The Company records interest using its best estimate of the effective interest rate. Currently the Company is accruing interest using the specified internal rate of return of the put option of 20%. From time to time, the Company will reevaluate the expected cash flows and may adjust the effective interest rate. Determining the effective interest rate requires judgment and is based on significant assumptions related to estimates of the amounts and timing of future revenue streams. | ||||||||
Put Option | ||||||||
Under the Royalty Contract, on October 5, 2016, or in the event of the occurrence of a material adverse event, our transfer of revenue interest or substantially all of our interest in the products or AxoGen’s bankruptcy or material breach of the Royalty Contract, PDL may require AxoGen to repurchase the Assigned Interests at the “Put Price.” The Put Price is equal to the sum of (i) an amount that, when paid to PDL, would generate a specified internal rate of return to PDL of 20% on the Funded Amount, taking into consideration payments made to PDL by the Company, and (ii) any “Delinquent Assigned Interest Payment” (as defined in the Royalty Contract) the Company owed to PDL. | ||||||||
Change of Control; Call Option | ||||||||
In addition, in the event of a “Change of Control” (as defined in the Royalty Contract), the Company must repurchase the assigned Interests from PDL for a repurchase price equal to the “Change of Control Price” on or prior to the third business day after the occurrence of the Change of Control. The Change of Control Price is equal to the sum of (i) an amount that, when paid to PDL, would generate a specified internal rate of return to PDL of thirty-two and one half percent (32.5%) on the Funded Amount, taking into consideration payments made to PDL by the Company, and (ii) any “Delinquent Assigned Interest Payment” (as defined in the Royalty Contract) the Company owed to PDL. In addition, at any time after October 5, 2016, the Company, at its option, can call the Royalty Contract for a price equal to the Change of Control Price. | ||||||||
Board Designee | ||||||||
Under the Royalty Contract, during the term of the Royalty Contract, PDL is entitled to designate, and AxoGen shall appoint an individual designated by PDL, who shall serve on the Board of Directors of the Company (the “Board”). The PDL designee was elected at the Company’s 2013 Annual Meeting of Shareholders. At each annual meeting thereafter during the term of the Royalty Contract, the Board shall nominate and recommend the PDL designee as a director nominee to serve on the Board until the next annual meeting and shall include such nomination in AxoGen’s proxy statement for each annual meeting thereafter, provided that the election of the PDL designee is subject to shareholders’ approval. | ||||||||
Should at any time there become a vacancy on the Board as a result of (i) the resignation, death or removal of the PDL designee or (ii) such PDL designee failing to obtain the requisite approval of the Company’s shareholders at any annual or special meeting of the Company’s shareholders and where no other individual is elected to such vacancy, PDL shall have the right to designate an individual to fill such vacancy, and AxoGen shall take such actions necessary to appoint, such individual to the Board. | ||||||||
Preemptive Rights | ||||||||
Under the Royalty Contract, PDL has preemptive rights with respect to certain new issuances of AxoGen’s equity securities and securities convertible, exchangeable or exercisable into such equity securities. | ||||||||
Restriction on Dividends | ||||||||
Under the Royalty Contract, during the period from the October 5, 2012 to December 4, 2016 (or the payment of the Put Price in the event PDL exercises its put option on or prior to December 4, 2016), AxoGen shall not, nor shall it permit any subsidiary to, declare, pay or make any dividend or distribution on any shares of the common stock or preferred stock of such entity (other than dividends or distributions payable in its stock, or split-ups or reclassifications of its stock) or apply any of its funds, property or assets to the purchase, redemption or other retirement of any common or preferred stock, or of any options to purchase or acquire any such shares of common or preferred stock of any such entity (collectively, “Restricted Payments”), except that: (i) each subsidiary may make direct or indirect Restricted Payments to the Company; and (ii) the Company and each subsidiary may purchase, redeem or otherwise acquire Equity Interests issued by it solely with the proceeds received from the substantially concurrent issue of new shares of its common stock or other common Equity Interests. For purposes of the Royalty Contract, “Equity Interests” of any person means any and all shares, rights to purchase, options, warrants, general, limited or limited liability partnership interests, member interests, participation or other equivalents of or interest in (regardless of how designated) equity of such entity, whether voting or nonvoting, including common stock, preferred stock, convertible securities or any other “equity security” (as such term is defined in Rule 3a11-1under the Securities Exchange Act of 1934, as amended). | ||||||||
Guarantee and Collateral Agreement | ||||||||
In connection with the Royalty Contract, on October 5, 2012, AxoGen and AC, entered into a Guarantee and Collateral Agreement (the “Guarantee and Collateral Agreement”) with PDL, pursuant to which (i) AC unconditionally and irrevocably guarantees to PDL the prompt and complete payment and performance by AxoGen when due of the “Secured Obligations,” which include the Company’s obligations under the Royalty Contract, and any other obligations that AxoGen may owe to PDL under the Royalty Contract and other transaction documents; and (ii) each of the Company and AC grants to PDL a security interest in certain collateral as specified in the Guarantee and Collateral Agreement for the prompt and complete payment and performance when due of the Secured Obligations. | ||||||||
Long-Term Debt | ||||||||
On September 30, 2011, the Company entered into the Loan and Security Agreement with MidCap Financial SBIC, LP (“MidCap”), as administrative agent, and the Lenders listed on Schedule 1 thereto (the “MidCap Loan”). The credit facility under the MidCap loan had a principal amount of $5.0 million and a term of 42 months, and is subject to prepayment penalties. Under the MidCap Loan, AxoGen was required to make interest only payments for the first 12 months, and payments of both interest and straight line amortization of principal for the remaining 30 months. The interest rate was 9.9% per annum, and interest was computed on the basis of a 360-day year and the actual number of days elapsed during which such interest accrues. | ||||||||
The agreement contained customary affirmative and negative covenants, including, without limitation, (i) covenants requiring AxoGen to comply with applicable laws, provide to MidCap copies of AxoGen’s financial statements, maintain appropriate levels of insurance, protect, defend and maintain the validity and enforceability of AxoGen’s material intellectual property, (ii) covenants restricting AxoGen’s ability to dispose of all or any part of its assets (subject to certain exceptions), engage in other lines of business, change its senior management, enter into merger or consolidation transactions, incur or assume additional indebtedness, or incur liens on its assets, and (iii) covenants requiring the Company to meet certain minimum Net Invoiced Revenue as defined in the agreement, or maintain a cash balance of 80% of the loan principal amount. | ||||||||
The MidCap Loan was secured by all of AxoGen’s assets. The lenders also received a ten-year warrant to purchase 89,686 shares of AxoGen’s common stock at $2.23 per share. The fair value of the warrant was $173,736 and was recorded as debt discount and was being amortized through interest expense using the effective interest method over the term of the debt. Amortization of debt discount was $12,207 for 2011. The Company also recorded $317,990 in deferred financing costs which were being amortized over the term of the loan. Amortization of the deferred financing cost was $22,714 for 2011. | ||||||||
Stockholders_Equity_Deficit_an
Stockholders' Equity (Deficit) and Temporary Equity | 12 Months Ended |
Dec. 31, 2013 | |
Stockholders' Equity (Deficit) and Temporary Equity | ' |
Stockholders' Equity (Deficit) and Temporary Equity | ' |
8. Stockholders’ Equity (Deficit) and Temporary Equity | |
AxoGen, Inc. Classes of Stock | |
AxoGen, Inc.’s authorized capital stock consists of 50,000,000 shares, par value $0.01 per share. The authorized capital stock is divisible into the classes and series, has the designation, voting rights, and other rights and preferences and is subject to the restrictions that the AxoGen Board of Directors may from time to time establish. Unless otherwise designated by the AxoGen Board of Directors, all shares are common stock. AxoGen has not designated any shares other than common stock. | |
Stock_Options
Stock Options | 12 Months Ended | |||||||
Dec. 31, 2013 | ||||||||
Stock Options | ' | |||||||
Stock Options | ' | |||||||
9. Stock Options | ||||||||
AC has a 2002 Stock Option Plan (“the AC Plan”), which allows for issuance of incentive stock options and non-qualified stock options to employees, directors and consultants at an exercise price equal to or greater than fair market value. Under the provisions of the AC Plan, AC authorized for issuance 18,144,658 shares for purchase pursuant to options. | ||||||||
AxoGen, Inc. has a AxoGen 2010 Stock Incentive Plan (the “AxoGen Plan”), which allows for issuance of incentive stock options and non-qualified stock options to employees, directors and consultants at an exercise price equal to or greater than fair market value. On September 27, 2011, LecTec amended and restated the AxoGen Plan to, among other things, increase the number of shares of common stock authorized for issuance under the plan by 2,300,000 shares. The total number of shares authorized for issuance under the AxoGen Plan is 2,750,000 shares. As a result of the Merger, options granted under the AC Plan were assumed by the Company so that each stock option pursuant to the AC Plan so assumed continued to have, and be subject to, the same terms and conditions of such stock option immediately prior to the Merger, except that (i) each AC Plan stock option is exercisable for that number of shares of | ||||||||
Company common stock equal to the product of the number of shares of AC common stock that were issuable upon exercise of such stock option immediately prior to the Merger multiplied by the Closing Ratio (“as defined in the Merger Agreement”) and (ii) the per share exercise price for the shares of Company common stock issuable upon the exercise of such assumed stock option will be equal to the quotient determined by dividing the exercise price per share of AC common stock at which such stock option was exercisable immediately prior to the Merger by the Closing Ratio. The options to employees typically vest 12.5% every six months over a four-year period and those to directors and certain executive officers have vested 25% per quarter over one year or had no vesting period. Options issued to consultants vest over the service period ranging from three to ten years. Options have terms ranging from seven to ten years. | ||||||||
Stock-based compensation expense was $671,887 and $495,077 for 2013 and 2012, respectively. | ||||||||
The following is a summary of stock option activity: | ||||||||
Options | Weighted | Weighted | ||||||
Average | Average | |||||||
Exercise Price | Remaining | |||||||
Contractual | ||||||||
Term(Years) | ||||||||
Outstanding at December 31, 2011: | 1,945,688 | 2.41 | 7.35 | |||||
Granted | 267,576 | 2.99 | ||||||
Forfeited | (354,932 | ) | (2.48 | ) | ||||
Exercised | (58,341 | ) | (0.27 | ) | ||||
Outstanding at December 31, 2012: | 1,799,991 | 2.54 | 7.66 | |||||
Granted | 261,000 | 3.72 | ||||||
Forfeited | (58,843 | ) | (3.48 | ) | ||||
Exercised | (32,656 | ) | (2.25 | ) | ||||
Outstanding at December 31, 2013 | 1,969,492 | 2.68 | 6.61 | |||||
Exercisable at December 31, 2013 | 1,294,290 | 2.57 | 6.37 | |||||
The average fair value of options granted at market during 2013 and 2012 was $3.72 and $2.99 per option, respectively. | ||||||||
The intrinsic value of options exercised during the years ended December 31, 2013 and 2012 was approximately $48,000 and $173,000, respectively. The intrinsic value of options outstanding at December 31, 2013 and 2012 was approximately $3,571,000 and $288,000, respectively. The intrinsic value of options exercisable at December 31, 2013 and 2012 was approximately $2,487,000 and $0, respectively. | ||||||||
Total future compensation expense related to nonvested awards is expected to be approximately $1,233,000 at December 31, 2013 which is expected to be recognized over a weighted average period of 2.06 years. The following table represents non-vested share-based payment activity with employees for the year ended December 31, 2013 and 2012: | ||||||||
Number of Options | Weighted Average | |||||||
Grant Date Fair Value | ||||||||
Nonvested options - December 31, 2011: | 1,263,205 | 1.41 | ||||||
Granted | 267,576 | 2.99 | ||||||
Vested | (317,734 | ) | (1.92 | ) | ||||
Forfeited | (354,932 | ) | (2.48 | ) | ||||
Nonvested options - December 31, 2012: | 858,115 | 2.36 | ||||||
Granted | 261,000 | 3.72 | ||||||
Vested | (385,076 | ) | (2.22 | ) | ||||
Forfeited | (58,843 | ) | (3.48 | ) | ||||
Nonvested options - December 31, 2013 | 675,196 | 2.88 | ||||||
Income_Taxes
Income Taxes | 12 Months Ended | |||||
Dec. 31, 2013 | ||||||
Income Taxes | ' | |||||
Income Taxes | ' | |||||
10. Income Taxes | ||||||
The Company has temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and their respective income tax basis, as measured by enacted state and federal rates as follows: | ||||||
December 31 | 2013 | 2012 | ||||
$ | $ | |||||
Deferred tax assets: | ||||||
Net operating loss carryforwards | 23,075,700 | 18,182,000 | ||||
Charitable contributions | 500 | 2,800 | ||||
Inventory Reserves | 144,000 | 365,600 | ||||
Stock-based compensation | 101,500 | 52,300 | ||||
Total deferred tax assets | 23,321,700 | 18,602,700 | ||||
Deferred tax liabilities: | ||||||
Depreciation | (84,100 | ) | (154,900 | ) | ||
Amortization | 121,000 | (51,700 | ) | |||
Total deferred tax assets (liabilities) | 36,900 | (206,600 | ) | |||
Net deferred tax assets | 23,358,600 | 18,396,100 | ||||
Valuation allowance | (23,358,600 | ) | (18,396,100 | ) | ||
As of December 31, 2013, the Company had net operating loss carry forwards of approximately $62 million to offset future taxable income which expire in various years through 2033. A valuation allowance is recorded to reduce the deferred tax assets reported if, based on the weight of the evidence, it is more likely than not that a portion or none of the deferred tax assets will be realized. After consideration of all the evidence, including reversal of deferred tax liabilities, future taxable income and other factors, management has determined that a full valuation allowance is necessary as of December 31, 2013 and 2012. The valuation allowance increased by $4,962,500 and $3,015,100 during 2013 and 2012, respectively. | ||||||
The net income tax benefit of approximately $738,000 for 2012 was the result of the Company’s ability to utilize net operating losses and franchise tax adjustments which resulted in tax refunds. The Company had no income tax expense or income tax benefit for 2013 due to incurrence of net operating losses. The Company does not believe there are any additional tax refund opportunities currently available. | ||||||
Employee_Benefit_Plan
Employee Benefit Plan | 12 Months Ended |
Dec. 31, 2013 | |
Employee Benefit Plan | ' |
Employee Benefit Plan | ' |
11. Employee Benefit Plan | |
The Company adopted the AxoGen Simple IRA plan in 2007. All full-time employees who have attained the age of 18 are eligible to participate in the Plan. Eligibility is immediate upon employment and enrollment is available any time during employment. Participating employees may make annual pretax contributions to their accounts up to a maximum amount as limited by law. The simple IRA plan requires the Company to make matching contributions of between 1% and 3% of the employee’s annual salary as long as the employee participates in the Plan. Additionally, the matching has to be at least 3% for three of the first five years of the Plan. Both employee contributions and Company contributions vest immediately. In 2013 and 2012, the Company match was 3% of the participating employee’s annual salary. The Company contributed $126,322 and $102,189 in matching funds during 2013 and 2012, respectively. |
Commitments_and_Contingencies
Commitments and Contingencies | 12 Months Ended | |||||
Dec. 31, 2013 | ||||||
Commitments and Contingencies | ' | |||||
Commitments and Contingencies | ' | |||||
12. Commitments and Contingencies | ||||||
Operating Leases | ||||||
On November 12, 2013, AxoGen entered into the Third Amendment to Lease with SNH Medical Office Properties Trust (“SNH”). SNH was the landlord of AxoGen’s corporate headquarters leased facility in Alachua, Florida and AxoGen and SNH agreed to the amendment by which AxoGen relocated and expanded its corporate headquarters to a new space owned by SNH within the same office park. The lease amendment provides for 11,761 square feet of office space until October 31, 2018, renewable thereafter by agreement of the parties, subject to AxoGen’s right to earlier termination after three years from the effective date of the lease. AxoGen’s annual cost of such property ranges from approximately $200,000 to $212,000 per year. | ||||||
In addition, on October 25, 2013, AxoGen entered into a Commercial Lease with Ja-Cole. Under the terms of the Commercial Lease, AxoGen leased 5,400 square feet of warehouse/office space in Burleson, Texas until November 30, 2016, renewable thereafter by agreement of the parties, at an annual cost of $43,200 per year. The Burleson facility will house raw material storage, a function that is currently provided by a third party vendor, and product distribution, allowing AxoGen to fulfill same day orders for both coasts of the United States. | ||||||
The Company leases its lab space on a month to month basis. | ||||||
Estimated future minimum rental payments on the leases are as follows: | ||||||
Year ending December 31 | ||||||
2014 | $ | 243,000 | ||||
2015 | 243,000 | |||||
2016 | 241,000 | |||||
2017 | 207,000 | |||||
2018 | 177,000 | |||||
TOTAL | $ | 1,111,000 | ||||
Total rent expense for the Company’s leased office and lab space for the years ended December 31, 2013 and 2012 was approximately $197,000 and $171,000, respectively. | ||||||
Service Agreements | ||||||
In 2008, the Company entered into a biostorage and management services agreement with a vendor. The agreement specifies monthly administration fees, storage fees based on volume, and retrieval fees per specimen based on lead times. The agreement can be terminated with 30 days written notice. | ||||||
In 2009, the Company also entered into a two-year tissue processing agreement with another vendor. Tissue processing fees are based on a combination of a per week and a per donor batch rate. In 2012 the parties agreed to an extension for an additional twelve months and amended the agreement to provide for automatic twelve month renewals. | ||||||
In August 2008, the Company entered into an agreement to distribute the AxoGuard® product worldwide in the field of peripheral nerve repair, and the parties subsequently amended the agreement in March, 2012. The agreement has an initial seven-year term from the date of the original agreement and following such initial term, the agreement automatically renews for an additional seven (7) year period provided that the parties agree to meet at least ninety (90) days before the end of such initial term to review whether the purchase price of the products obtained from Cook Biotech need to be adjusted and reasonably agree to such adjustment in writing, where such agreement shall not be unreasonably withheld. The Cook Biotech agreement also requires certain minimum purchases, although through mutual agreement the parties have not established such minimums and to date have not enforced such provision, and establishes a formula for the transfer cost of the AxoGuard® products. | ||||||
In December 2011, the Company also entered into a Master Services Agreement for Clinical Research and Related Services. The Company was required to pay $151,318 upon execution of this agreement and $20,416 per month for 42 months starting in January 2012 through August 2015. | ||||||
Certain executive officers of the Company are parties to employment contracts. All such contracts have severance payments in the event of a Company change of control, provided certain conditions are met. One contract has a severance provision in the event of termination without cause. | ||||||
Concentrations | ||||||
Vendor | ||||||
All of AxoGen’s revenue is currently derived from three products, the Avance® Nerve Graft, AxoGuard® Nerve Protector and AxoGuard® Nerve Connector. AxoGen has an exclusive distribution agreement with Cook Biotech for the purchase of AxoGuard®. This contract is in year six of the initial seven year term and following such initial term, the agreement automatically renews for an additional seven years provided that the parties have met all the required provisions of the contract. The agreement allows for termination provisions for both parties. Although there are products that AxoGen believes it could develop or obtain that would replace the AxoGuard® products, the loss of the ability to sell the AxoGuard® products could have a material adverse effect on AxoGen’s business until other replacement products would be available. | ||||||
Processor | ||||||
AxoGen is highly dependent on the continued availability of its processing facilities at LifeNet Health and could be harmed if the physical infrastructure of this facility is unavailable for any prolonged period of time. In addition, disruptions could lead to significant costs and reductions in revenues, as well as a potential harm to the AxoGen’s business reputation and financial results. Termination of the LifeNet Health facility lease can occur upon six months’ notice from either party. Although AxoGen believes it can find and make operational a new facility in less than six months, the regulatory process for approval of facilities is time-consuming and unpredictable. AxoGen’s ability to rebuild or find acceptable lease facilities would take a considerable amount of time and expense and could cause a significant disruption in service to its customers. Although AxoGen has business interruption insurance which would, in instances other than lease termination, cover certain costs, it may not cover all costs nor help to regain AxoGen’s standing in the market. |
Summary_of_Significant_Account1
Summary of Significant Accounting Policies (Policies) | 12 Months Ended | |||||||
Dec. 31, 2013 | ||||||||
Summary of Significant Accounting Policies | ' | |||||||
Revenue Recognition | ' | |||||||
Revenue Recognition | ||||||||
Revenue is recognized when persuasive evidence of an arrangement exists, the price is fixed and determinable, delivery has occurred and there is a reasonable assurance of collection of the sales proceeds. Revenues for manufactured products and products sold to a customer or under a distribution agreement are recognized when the product is delivered to the customer or distributor, at which time title passes to the customer or distributor, provided, however, that in the case of revenues from consigned sales delivery is determined when the product is utilized in a surgical procedure. Once a product is delivered, the Company has no further performance obligations. Delivery is defined as delivery to a customer location or segregation of product into a contracted distribution location. At such time, this product cannot be sold to any other customer. Fees charged to customers for shipping are recognized as revenues when products are shipped to the customer, distributor or end user. | ||||||||
Cash and Cash Equivalents and Concentration | ' | |||||||
Cash and Cash Equivalents and Concentration | ||||||||
For purposes of the statement of cash flows, the Company considers all highly liquid debt instruments purchased with a maturity of three months or less to be cash equivalents. Cash and cash equivalents are maintained at financial institutions and, at times, balances may exceed federally insured limits. The Company has never experienced any losses related to these balances and does not believe it is exposed to any significant credit risk on cash and cash equivalents. | ||||||||
Accounts Receivable and Concentration of Credit Risk | ' | |||||||
Accounts Receivable and Concentration of Credit Risk | ||||||||
Accounts receivable are carried at the original invoice amount less an estimate made for doubtful accounts based on a review of all outstanding amounts on a monthly basis. Management determines the allowance for doubtful accounts by regularly evaluating individual customer receivables and considering a customer’s financial condition, credit history and current economic conditions. Accounts receivable are written off when deemed uncollectible. Recoveries of accounts receivable previously written off are recorded when received. | ||||||||
In 2013, we established a reserve for doubtful accounts as we did have some accounts deemed uncollectible. We regularly review all accounts that exceed 60 days from the invoice date and based on an assessment of current credit worthiness, estimate the portion, if any, of the balance that will not be collected. The analysis excludes certain government related receivables due to our past successful experience in collectability. Specific accounts that are deemed uncollectible are reserved at 100% of their outstanding balance. The remaining balances outstanding over 60 days have a percentage applied by aging category (5% for balances 61-90 days and 20% for balances over 90 days aged), based on a historical valuation that allows us to calculate the total reserve required. The reserve balance was determined by applying a percentage to the cumulative balance between 60 and 90 days and a higher percentage to the balance over 90 days. In the event that we exhaust all collection efforts and deem an account uncollectible, we would subsequently write off the account. The write off process involves approval by senior management based on the write off amount. The allowance for doubtful accounts reserve balance was $58,617 and $0 at December 31, 2013 and 2012, respectively. | ||||||||
Concentrations of credit risk with respect to accounts receivable are limited because a large number of geographically diverse customers make up the Company’s customer base, thus spreading the trade credit risk. The Company also controls credit risk through credit approvals, credit limits and monitoring procedures. | ||||||||
Inventories | ' | |||||||
Inventories | ||||||||
Inventories are comprised of implantable tissue, nerve grafts, Avance® Nerve Graft, AxoGuard® Nerve Connector, AxoGuard® Nerve Protector, and supplies and are valued at the lower of cost (first-in, first-out) or market and consist of the following: | ||||||||
December 31, | December 31, | |||||||
2013 | 2012 | |||||||
Finished goods | $ | 2,131,336 | $ | 2,143,176 | ||||
Work in process | 235,966 | 145,156 | ||||||
Raw materials | 1,031,136 | 862,777 | ||||||
$ | 3,398,438 | $ | 3,151,109 | |||||
Inventories are net of reserve of $382,545 and $537,798 at December 31, 2013 and 2012, respectively. | ||||||||
Property and Equipment | ' | |||||||
Property and Equipment | ||||||||
Depreciation and amortization is computed using the straight-line method over the estimated useful lives of the assets as follows: | ||||||||
Furniture and equipment | 2-5 years | |||||||
Leasehold improvements | 5 years (or lease term if less) | |||||||
Processing equipment | 5-7 years | |||||||
Major additions and improvements are capitalized, while replacements, maintenance and repairs, which do not improve or extend the life of the respective assets, are expensed as incurred. When assets are retired or otherwise disposed of, related costs and accumulated depreciation and amortization are removed and any gain or loss is reported as other income or expense. | ||||||||
Intangible Assets | ' | |||||||
Intangible Assets | ||||||||
Intangible assets consist primarily of license agreements for exclusive rights to use various patented and patent-pending technologies described in Note 5 and other costs related to the license agreements, including patent prosecution and protection costs. Such costs are capitalized and amortized on a straight-line basis over the underlying terms of the license agreements or estimated useful life of patents, ranging from 5 to 20 years. | ||||||||
Impairment of Long-lived Assets, Including License Agreements | ' | |||||||
Impairment of Long-lived Assets, Including License Agreements | ||||||||
The Company reviews its long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to future undiscounted cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets. For the years ended December 31, 2013 and 2012, the Company recorded an impairment loss of $9,424 and $129,667, respectively. | ||||||||
Goodwill | ' | |||||||
Goodwill | ||||||||
Goodwill represents the excess of the purchase price over the fair value of net assets acquired. Goodwill is not amortized, but is tested for impairment annually. The Company utilizes the income approach in estimating fair value. The Company’s 2012 annual goodwill impairment analysis indicated a significant decrease in the carrying value of goodwill, due to declines in the associated revenues, resulting in a full $169,887 impairment loss being recorded for the year ended December 31, 2012. | ||||||||
Deferred Financing Costs | ' | |||||||
Deferred Financing Costs | ||||||||
The Company capitalizes all third-party costs incurred, including equity-based payments, associated with the issuance of long-term debt. The costs are amortized to interest expense over the term of the debt using the effective interest method. | ||||||||
Advertising | ' | |||||||
Advertising | ||||||||
Advertising costs are expensed as incurred. Advertising costs were $37,000 and $56,000 for the years ended December 31, 2013 and 2012, respectively, and are included in sales and marketing expense on the accompanying consolidated statements of operations. | ||||||||
Research and Development Costs | ' | |||||||
Research and Development Costs | ||||||||
Research and Development costs are expensed as incurred and were approximately $2,125,000 and $1,427,000 for the years ended December 31, 2013 and 2012, respectively. | ||||||||
Income Taxes | ' | |||||||
Income Taxes | ||||||||
The Company has not recorded current income tax expense due to the generation of net operating losses. Deferred income taxes are accounted for using the balance sheet approach which requires recognition of deferred tax assets and liabilities for the expected future consequences of temporary differences between the financial reporting basis and the tax basis of assets and liabilities. A valuation allowance is provided when it is more likely than not that a deferred tax asset will not be realized. A full valuation allowance has been established on the deferred tax asset as it is more likely than not that future tax benefit will not be realized. In addition, future utilization of the available net operating loss carryforward may be limited under Internal Revenue Code Section 382 as a result of changes in ownership. | ||||||||
The Company identifies and evaluates uncertain tax positions, if any, and recognizes the impact of uncertain tax positions for which there is a less than more-likely-than-not probability of the position being upheld when reviewed by the relevant taxing authority. Such positions are deemed to be unrecognized tax benefits and a corresponding liability is established on the balance sheet. The Company has not recognized a liability for uncertain tax positions. If there were an unrecognized tax benefit, the Company would recognize interest accrued related to unrecognized tax benefits in interest expense and penalties in operating expenses. The Company’s remaining open tax years subject to examination by the Internal Revenue Service include the years ended December 31, 2009 through 2013; there currently are no examinations in process. | ||||||||
Fair Value of Financial Instruments | ' | |||||||
Fair Value of Financial Instruments | ||||||||
The respective carrying value of certain on-balance-sheet financial instruments approximated their fair values due to the short-term nature of these instruments. These financial instruments include cash, accounts receivable, accounts payable and accrued expenses. The fair value of the Company’s long-term debt approximates its carrying value based upon current rates available to the Company. | ||||||||
Stock-Based Compensation | ' | |||||||
Stock-Based Compensation | ||||||||
Stock-based compensation cost related to stock options granted under the AC 2002 Stock Option Plan and AxoGen 2010 Stock Incentive Plan (see Note 10) is measured at grant date, based on the fair value of the award, and is recognized as an expense over the employee’s requisite service period. The Company estimates the fair value of each option award issued under the Plan on the date of grant using a Black-Scholes-Merton option-pricing model that uses the assumptions noted in the table below. The Company estimates the volatility of its common stock at the date of grant based on the volatility of comparable peer companies which are publicly traded, for the periods prior to the merger, and based on the Company’s common stock for periods subsequent to the merger. The Company determines the expected life based on historical experience with similar awards, giving consideration to the contractual terms, vesting schedules and post-vesting forfeitures. The Company uses the risk-free interest rate on the implied yield currently available on U.S. Treasury issues with an equivalent remaining term approximately equal to the expected life of the award. The Company has never paid any cash dividends on its common stock and does not anticipate paying any cash dividends in the foreseeable future. The Company used the following weighted-average assumptions for options granted during the year ended December 31: | ||||||||
Years ended December 31, | 2013 | 2012 | ||||||
Expected term (in years) | 4 | 4 | ||||||
Expected volatility | 83.15 | % | 117.2 | % | ||||
Risk free rate | 0.79 | % | 0.61 | % | ||||
Expected dividends | 0 | % | 0 | % | ||||
The Company estimates forfeitures when recognizing compensation expense and this estimate of forfeitures is adjusted over the requisite service period based on the extent to which actual forfeitures differ, or are expected to differ, from such estimates. Changes in estimated forfeitures are recognized through a cumulative catch-up adjustment, which is recognized in the period of change, and also impact the amount of unamortized compensation expense to be recognized in future periods. The Company did not apply a forfeiture allocation to its unvested options outstanding during the years ended December 31, 2013 and 2012 as they were deemed insignificant. | ||||||||
Earnings (Loss) Per Common Share | ' | |||||||
Earnings (Loss) Per Common Share | ||||||||
Earnings (loss) per common share (EPS) is calculated for basic EPS by dividing net income (loss) available to common stockholders by the weighted average number of common shares outstanding during the period. | ||||||||
There were no dilutive instruments as of December 31, 2013 and 2012. The basic and diluted weighted average shares outstanding were 13,499,793 and 11,089,425 for the years ended December 31, 2013 and 2012. | ||||||||
Use of Estimates | ' | |||||||
Use of Estimates | ||||||||
The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. | ||||||||
Recent Accounting Pronouncements | ' | |||||||
Recent Accounting Pronouncements | ||||||||
The Company’s management has reviewed and considered all recent accounting pronouncements and believe there are none that could potentially have a material impact on the Company’s consolidated financial condition, results of operations, or disclosures. | ||||||||
Summary_of_Significant_Account2
Summary of Significant Accounting Policies (Tables) | 12 Months Ended | |||||||
Dec. 31, 2013 | ||||||||
Summary of Significant Accounting Policies | ' | |||||||
Schedule of inventories | ' | |||||||
December 31, | December 31, | |||||||
2013 | 2012 | |||||||
Finished goods | $ | 2,131,336 | $ | 2,143,176 | ||||
Work in process | 235,966 | 145,156 | ||||||
Raw materials | 1,031,136 | 862,777 | ||||||
$ | 3,398,438 | $ | 3,151,109 | |||||
Depreciation and amortization estimated useful life | ' | |||||||
Furniture and equipment | 2-5 years | |||||||
Leasehold improvements | 5 years (or lease term if less) | |||||||
Processing equipment | 5-7 years | |||||||
Schedule of weighted-average assumptions for options granted | ' | |||||||
Years ended December 31, | 2013 | 2012 | ||||||
Expected term (in years) | 4 | 4 | ||||||
Expected volatility | 83.15 | % | 117.2 | % | ||||
Risk free rate | 0.79 | % | 0.61 | % | ||||
Expected dividends | 0 | % | 0 | % |
Property_and_Equipment_Tables
Property and Equipment (Tables) | 12 Months Ended | |||||||
Dec. 31, 2013 | ||||||||
Property and Equipment | ' | |||||||
Summary of Property and equipment | ' | |||||||
December 31, | December 31, | |||||||
2013 | 2012 | |||||||
Furniture and equipment | $ | 893,973 | $ | 572,459 | ||||
Leasehold improvements | 53,864 | 42,564 | ||||||
Processing equipment | 1,015,388 | 995,815 | ||||||
Less: accumulated depreciation and amortization | (1,581,536 | ) | (1,502,304 | ) | ||||
Property and equipment | $ | 381,689 | $ | 108,534 |
Intangible_Assets_Tables
Intangible Assets (Tables) | 12 Months Ended | |||||||
Dec. 31, 2013 | ||||||||
Intangible Assets | ' | |||||||
Schedule of intangible assets | ' | |||||||
December 31, | December 31, | |||||||
2013 | 2012 | |||||||
License agreements | $ | 816,300 | $ | 772,230 | ||||
Patents | 62,553 | 63,429 | ||||||
Less: accumulated amortization | (308,457 | ) | (261,928 | ) | ||||
Intangible assets, net | $ | 570,396 | $ | 573,731 |
LongTerm_Debt_Note_Payable_Tab
Long-Term Debt / Note Payable (Tables) | 12 Months Ended | |||||||
Dec. 31, 2013 | ||||||||
Long-Term Debt / Note Payable | ' | |||||||
Schedule of long-term debt / note payable | ' | |||||||
December 31, | December 31, | |||||||
2013 | 2012 | |||||||
Revenue Interest Purchase Agreement with PDL BioPharma, Inc. (“PDL”) for aggregate of $20,800,000 with amounts payable monthly at 9.95% of Net Revenues through September 2014; and the greater of (i) 9.95% of product revenue or (ii) specific quarterly amounts varying from approximately $1.3 million to $2.5 million per quarter through September 2020. The minimum annual payment amounts are as follows: 2014 - $1,250,805, 2015 - $6,781,440, 2016 - $9,232,642, 2017 and 2018 - $9,000,000, 2019 - $9,063,000 and 2020 - $6,939,000. | $ | 25,363,695 | $ | 21,580,252 | ||||
Long-term portion | $ | 25,363,695 | $ | 21,580,252 |
Stock_Options_Tables
Stock Options (Tables) | 12 Months Ended | |||||||
Dec. 31, 2013 | ||||||||
Stock Options | ' | |||||||
Summary of stock option activity | ' | |||||||
Options | Weighted | Weighted | ||||||
Average | Average | |||||||
Exercise Price | Remaining | |||||||
Contractual | ||||||||
Term(Years) | ||||||||
Outstanding at December 31, 2011: | 1,945,688 | 2.41 | 7.35 | |||||
Granted | 267,576 | 2.99 | ||||||
Forfeited | (354,932 | ) | (2.48 | ) | ||||
Exercised | (58,341 | ) | (0.27 | ) | ||||
Outstanding at December 31, 2012: | 1,799,991 | 2.54 | 7.66 | |||||
Granted | 261,000 | 3.72 | ||||||
Forfeited | (58,843 | ) | (3.48 | ) | ||||
Exercised | (32,656 | ) | (2.25 | ) | ||||
Outstanding at December 31, 2013 | 1,969,492 | 2.68 | 6.61 | |||||
Exercisable at December 31, 2013 | 1,294,290 | 2.57 | 6.37 | |||||
Schedule of non-vested share-based payment activity with employees | ' | |||||||
Number of Options | Weighted Average | |||||||
Grant Date Fair Value | ||||||||
Nonvested options - December 31, 2011: | 1,263,205 | 1.41 | ||||||
Granted | 267,576 | 2.99 | ||||||
Vested | (317,734 | ) | (1.92 | ) | ||||
Forfeited | (354,932 | ) | (2.48 | ) | ||||
Nonvested options - December 31, 2012: | 858,115 | 2.36 | ||||||
Granted | 261,000 | 3.72 | ||||||
Vested | (385,076 | ) | (2.22 | ) | ||||
Forfeited | (58,843 | ) | (3.48 | ) | ||||
Nonvested options - December 31, 2013 | 675,196 | 2.88 |
Income_Taxes_Tables
Income Taxes (Tables) | 12 Months Ended | |||||
Dec. 31, 2013 | ||||||
Income Taxes | ' | |||||
Schedule of differences between the carrying amount of assets and liabilities for financial reporting purposes | ' | |||||
December 31 | 2013 | 2012 | ||||
$ | $ | |||||
Deferred tax assets: | ||||||
Net operating loss carryforwards | 23,075,700 | 18,182,000 | ||||
Charitable contributions | 500 | 2,800 | ||||
Inventory Reserves | 144,000 | 365,600 | ||||
Stock-based compensation | 101,500 | 52,300 | ||||
Total deferred tax assets | 23,321,700 | 18,602,700 | ||||
Deferred tax liabilities: | ||||||
Depreciation | (84,100 | ) | (154,900 | ) | ||
Amortization | 121,000 | (51,700 | ) | |||
Total deferred tax assets (liabilities) | 36,900 | (206,600 | ) | |||
Net deferred tax assets | 23,358,600 | 18,396,100 | ||||
Valuation allowance | (23,358,600 | ) | (18,396,100 | ) |
Commitments_and_Contingencies_
Commitments and Contingencies (Tables) | 12 Months Ended | |||||
Dec. 31, 2013 | ||||||
Commitments and Contingencies | ' | |||||
Schedule of estimated future minimum rental payments on the leases | ' | |||||
Year ending December 31 | ||||||
2014 | $ | 243,000 | ||||
2015 | 243,000 | |||||
2016 | 241,000 | |||||
2017 | 207,000 | |||||
2018 | 177,000 | |||||
TOTAL | $ | 1,111,000 | ||||
Summary_of_Significant_Account3
Summary of Significant Accounting Policies (Details) (USD $) | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 |
Minimum | 61-90 days | 61-90 days | 61-90 days | Over 90 days | Over 90 days | |||
Minimum | Maximum | Minimum | ||||||
Accounts Receivable and Concentration of Credit Risk | ' | ' | ' | ' | ' | ' | ' | ' |
Reserve for accounts deemed uncollectible (as a percent) | 100.00% | ' | ' | ' | ' | ' | ' | ' |
Age of doubtful accounts | ' | ' | '60 days | ' | '61 days | '90 days | ' | '90 days |
Reserve for doubtful accounts (as a percent) | ' | ' | ' | 5.00% | ' | ' | 20.00% | ' |
Allowance for doubtful accounts reserve balance | $58,617 | $0 | ' | ' | ' | ' | ' | ' |
Summary_of_Significant_Account4
Summary of Significant Accounting Policies (Details 2) (USD $) | Dec. 31, 2013 | Dec. 31, 2012 |
Summary of Significant Accounting Policies | ' | ' |
Finished goods | $2,131,336 | $2,143,176 |
Work in process | 235,966 | 145,156 |
Raw materials | 1,031,136 | 862,777 |
Inventory, Net | 3,398,438 | 3,151,109 |
Inventory valuation reserves | $382,545 | $537,798 |
Summary_of_Significant_Account5
Summary of Significant Accounting Policies (Details 3) | 12 Months Ended |
Dec. 31, 2013 | |
Furniture and equipment | Minimum | ' |
Property and Equipment | ' |
Depreciation and amortization estimated useful life | '2 years |
Furniture and equipment | Maximum | ' |
Property and Equipment | ' |
Depreciation and amortization estimated useful life | '5 years |
Leasehold improvements | ' |
Property and Equipment | ' |
Depreciation and amortization estimated useful life | '5 years |
Processing equipment | Minimum | ' |
Property and Equipment | ' |
Depreciation and amortization estimated useful life | '5 years |
Processing equipment | Maximum | ' |
Property and Equipment | ' |
Depreciation and amortization estimated useful life | '7 years |
Summary_of_Significant_Account6
Summary of Significant Accounting Policies (Details 4) (USD $) | 12 Months Ended | |
Dec. 31, 2013 | Dec. 31, 2012 | |
Intangible Asset disclosures | ' | ' |
Impairment charges of long lived assets | $9,424 | $129,667 |
Impairment charges | ' | 169,887 |
Advertising costs | 37,000 | 56,000 |
Research and development costs | $2,125,476 | $1,427,211 |
License agreements and patents | Minimum | ' | ' |
Intangible Asset disclosures | ' | ' |
Estimated useful life | '5 years | ' |
License agreements and patents | Maximum | ' | ' |
Intangible Asset disclosures | ' | ' |
Estimated useful life | '20 years | ' |
Summary_of_Significant_Account7
Summary of Significant Accounting Policies (Details 5) | 12 Months Ended | |
Dec. 31, 2013 | Dec. 31, 2012 | |
Summary of Significant Accounting Policies | ' | ' |
Expected term | '4 years | '4 years |
Expected volatility (as a percent) | 83.15% | 117.20% |
Risk free rate (as a percent) | 0.79% | 0.61% |
Expected dividends (as a percent) | 0.00% | 0.00% |
Summary_of_Significant_Account8
Summary of Significant Accounting Policies (Details 6) | 12 Months Ended | |
Dec. 31, 2013 | Dec. 31, 2012 | |
Summary of basic loss attributable to common shareholders | ' | ' |
Earnings per share dilutive securities | 0 | 0 |
Weighted Average Common Shares outstanding - basic and diluted | 13,499,793 | 11,089,425 |
Property_and_Equipment_Details
Property and Equipment (Details) (USD $) | Dec. 31, 2013 | Dec. 31, 2012 |
Property and equipment | ' | ' |
Less: accumulated depreciation and amortization | ($1,581,536) | ($1,502,304) |
Property and equipment | 381,689 | 108,534 |
Furniture and equipment | ' | ' |
Property and equipment | ' | ' |
Property and equipment, Gross | 893,973 | 572,459 |
Leasehold improvements | ' | ' |
Property and equipment | ' | ' |
Property and equipment, Gross | 53,864 | 42,564 |
Processing equipment | ' | ' |
Property and equipment | ' | ' |
Property and equipment, Gross | $1,015,388 | $995,815 |
Intangible_Assets_Details
Intangible Assets (Details) (USD $) | 12 Months Ended | |
Dec. 31, 2013 | Dec. 31, 2012 | |
Intangible assets consist of: | ' | ' |
Less: accumulated amortization | ($308,457) | ($261,928) |
Intangible assets, net | 570,396 | 573,731 |
Amortization of intangible assets | 59,100 | 127,080 |
Impairment loss | 9,424 | 129,667 |
License agreements | ' | ' |
Intangible assets consist of: | ' | ' |
Finite-lived intangible assets, gross | 816,300 | 772,230 |
License agreements | Minimum | ' | ' |
Intangible assets consist of: | ' | ' |
Amortization period of intangible assets | '17 years | ' |
License agreements | Maximum | ' | ' |
Intangible assets consist of: | ' | ' |
Amortization period of intangible assets | '20 years | ' |
Patents | ' | ' |
Intangible assets consist of: | ' | ' |
Finite-lived intangible assets, gross | 62,553 | 63,429 |
Amortization period of intangible assets | '3 years | ' |
Non-amortizable pending costs | 62,553 | ' |
Impairment loss | $9,424 | $129,667 |
Intangible_Assets_Details_2
Intangible Assets (Details 2) (USD $) | Dec. 31, 2013 |
Future amortization of license and patent agreements | ' |
2014 | $48,000 |
2015 | 48,000 |
2016 | 48,000 |
2017 | 48,000 |
2018 | $48,000 |
Intangible_Assets_Details_3
Intangible Assets (Details 3) (USD $) | 12 Months Ended | ||
Dec. 31, 2013 | Dec. 31, 2012 | Aug. 31, 2012 | |
item | |||
Intangible assets | ' | ' | ' |
Loss on abandonment of license | ' | $147,826 | ' |
Selling and marketing expense | ' | ' | ' |
Intangible assets | ' | ' | ' |
Royalty fees included in sales and marketing expense | 230,000 | 167,000 | ' |
License agreements | ' | ' | ' |
Intangible assets | ' | ' | ' |
License agreements extended period | '60 days | ' | ' |
Minimum royalty of agreements | 12,500 | ' | ' |
Annual license maintenance fee, 2012 | ' | ' | 120,000 |
Annual license maintenance fee, 2013 and 2014 | ' | ' | 240,000 |
Loss on abandonment of license | ' | 147,826 | ' |
Milestone fee upon receiving a Phase II Small Business Innovation Research | $15,000 | ' | ' |
Number of products under development | 0 | ' | ' |
License agreements | Minimum | ' | ' | ' |
Intangible assets | ' | ' | ' |
Royalty fees range under the license agreements | 1.00% | ' | ' |
License agreements | Maximum | ' | ' | ' |
Intangible assets | ' | ' | ' |
Royalty fees range under the license agreements | 3.00% | ' | ' |
Royalty stack cap for royalties paid to more than one licensor for sales of the same product | 3.75% | ' | ' |
Accounts_Payable_and_Accrued_E1
Accounts Payable and Accrued Expenses (Details) (USD $) | Dec. 31, 2013 | Dec. 31, 2012 |
Accounts Payable and Accrued Expenses | ' | ' |
Accrued payroll | $203,380 | $137,329 |
Accrued commissions | $417,825 | $121,746 |
LongTerm_Debt_Note_Payable_Det
Long-Term Debt / Note Payable (Details) (USD $) | Dec. 31, 2013 | Dec. 31, 2012 |
Long-Term Debt / Note Payable | ' | ' |
Total Debt | $25,363,695 | $21,580,252 |
Long-term Notes Payable | 25,363,695 | 21,580,252 |
Revenue Interest Purchase Agreement | ' | ' |
Long-Term Debt / Note Payable | ' | ' |
Total Debt | $25,363,695 | $21,580,252 |
LongTerm_Debt_Note_Payable_Det1
Long-Term Debt / Note Payable (Details 2) (Revenue Interest Purchase Agreement, USD $) | 1 Months Ended | 2 Months Ended | 12 Months Ended | |
Oct. 31, 2012 | Aug. 31, 2012 | Oct. 05, 2012 | Dec. 31, 2013 | |
Debt Instrument | ' | ' | ' | ' |
Royalty percentage on net revenue | ' | ' | ' | 9.95% |
Royalty payments, frequency through September 2014 | ' | ' | ' | 'monthly |
Royalty percentage on product revenue | ' | ' | ' | 9.95% |
Royalty payments estimated range calculated from September 2014 through September 2020, frequency | ' | ' | ' | 'quarterly |
Total debt | ' | ' | ' | $20,800,000 |
Minimum annual payment amounts | ' | ' | ' | ' |
2014 | ' | ' | ' | 1,250,805 |
2015 | ' | ' | ' | 6,781,440 |
2016 | ' | ' | ' | 9,232,642 |
2017 | ' | ' | ' | 9,000,000 |
2018 | ' | ' | ' | 9,000,000 |
2019 | ' | ' | ' | 9,063,000 |
2020 | ' | ' | ' | 6,939,000 |
Term | '8 years | ' | ' | ' |
Funded amount | 19,050,000 | 1,750,000 | 20,800,000 | ' |
Internal rate of return on funded amount | ' | ' | ' | 20.00% |
Minimum | ' | ' | ' | ' |
Debt Instrument | ' | ' | ' | ' |
Varying amount | ' | ' | ' | 1,300,000 |
Maximum | ' | ' | ' | ' |
Debt Instrument | ' | ' | ' | ' |
Varying amount | ' | ' | ' | $2,500,000 |
LongTerm_Debt_Note_Payable_Det2
Long-Term Debt / Note Payable (Details 3) (Revenue Interest Purchase Agreement) | Dec. 31, 2013 |
Revenue Interest Purchase Agreement | ' |
Long-Term Debt | ' |
Internal rate of return on funded amount | 20.00% |
Internal rate of return on funded amount | 32.50% |
LongTerm_Debt_Note_Payable_Det3
Long-Term Debt / Note Payable (Details 4) (USD $) | 12 Months Ended | 0 Months Ended | 12 Months Ended | |
Dec. 31, 2013 | Dec. 31, 2012 | Sep. 30, 2011 | Dec. 31, 2011 | |
MidCap Loan | MidCap Loan | |||
Credit facility disclosures | ' | ' | ' | ' |
Total debt | ' | ' | $5,000,000 | ' |
Term | ' | ' | '42 months | ' |
Period of time for interest only payments | ' | ' | '12 months | ' |
Period of time for payments of principal and interest | ' | ' | '30 months | ' |
Interest payable | ' | ' | 9.90% | ' |
Period in a fiscal year for calculation of interest rate | ' | ' | '360 days | ' |
Term of warrants | ' | ' | '10 years | ' |
Minimum percentage of loan principal amount required to maintain cash balance | ' | ' | 80.00% | ' |
Lenders warrant purchase | ' | ' | 89,686 | ' |
Exercise price | ' | ' | $2.23 | ' |
Fair value of warrant recorded as debt discount | ' | ' | 173,376 | ' |
Amortization of deferred financing costs related to warrants | ' | 161,529 | ' | 12,207 |
Deferred financing costs of loan and security agreement | ' | ' | 317,990 | ' |
Amortization of deferred financing costs | $178,864 | $352,667 | ' | $22,714 |
Stockholders_Equity_Deficit_an1
Stockholders' Equity (Deficit) and Temporary Equity (Details) (USD $) | Dec. 31, 2013 | Dec. 31, 2012 |
Stockholders' Equity (Deficit) and Temporary Equity | ' | ' |
Authorized capital stock | 50,000,000 | 50,000,000 |
Common stock, Par value | $0.01 | $0.01 |
Stock_Options_Details
Stock Options (Details) (USD $) | 12 Months Ended | 0 Months Ended | |||||||||||||
Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Sep. 27, 2011 | Dec. 31, 2013 | Dec. 31, 2013 | |
Stock options | Stock options | Stock options | Stock options | Stock options | Employee options | Directors and officer options | Directors and officer options | Consultants options | Consultants options | AxoGen Plan | AxoGen Plan | AxoGen Corporation (AC) | |||
Minimum | Maximum | Every six months | Quarterly | Minimum | Maximum | AC Plan | |||||||||
Stock Option disclosures | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Number of shares of common stock authorized for issuance | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 2,300,000 | ' | ' |
Shares authorized for issuance | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 2,750,000 | 18,144,658 |
Vesting percentage | ' | ' | ' | ' | ' | ' | ' | 12.50% | ' | 25.00% | ' | ' | ' | ' | ' |
Vesting period | ' | ' | ' | ' | ' | ' | ' | '4 years | '0 years | '1 year | '3 years | '10 years | ' | ' | ' |
Option term | ' | ' | ' | ' | ' | '7 years | '10 years | ' | ' | ' | ' | ' | ' | ' | ' |
Share-based compensation expense | $671,887 | $495,077 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Stock option activity | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Options, Outstanding at the beginning of the period (in shares) | ' | ' | 1,799,991 | 1,945,688 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Options, Granted (in shares) | ' | ' | 261,000 | 267,576 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Options, Forfeited (in shares) | ' | ' | -58,843 | -354,932 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Options, Exercised (in shares) | ' | ' | -32,656 | -58,341 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Options, Outstanding at the end of the period (in shares) | ' | ' | 1,969,492 | 1,799,991 | 1,945,688 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Options, Exercisable (in shares) | ' | ' | 1,294,290 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Weighted Average Exercise Price, Outstanding at the beginning of the period (in dollars per share) | ' | ' | $2.54 | $2.41 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Weighted Average Exercise Price, Granted (in dollars per share) | ' | ' | $3.72 | $2.99 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Weighted Average Exercise Price, Forfeited (in dollars per share) | ' | ' | ($3.48) | ($2.48) | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Weighted Average Exercise Price, Exercised (in dollars per share) | ' | ' | ($2.25) | ($0.27) | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Weighted Average Exercise Price, Outstanding at the end of the period (in dollars per share) | ' | ' | $2.68 | $2.54 | $2.41 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Weighted Average Exercise Price, Exercisable (in dollars per share) | ' | ' | $2.57 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Weighted Average Remaining Contractual Term, Outstanding | ' | ' | '6 years 7 months 10 days | '7 years 7 months 28 days | '7 years 4 months 6 days | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Weighted Average Remaining Contractual Term, Exercisable | ' | ' | '6 years 4 months 13 days | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Additional option disclosures | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Average fair value of options granted | ' | ' | $3.72 | $2.99 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Intrinsic value of options exercised | ' | ' | 48,000 | 173,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Intrinsic value of options outstanding | ' | ' | 3,571,000 | 288,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Intrinsic value of options exercisable | ' | ' | 2,487,000 | 0 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Total future stock compensation expense related to nonvested awards | $1,233,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Weighted average period of recognition of future stock compensation expense | '2 years 22 days | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Stock_Options_Details_2
Stock Options (Details 2) (Stock options, USD $) | 12 Months Ended | |
Dec. 31, 2013 | Dec. 31, 2012 | |
Stock options | ' | ' |
Non-vested share-based payment activity with employees | ' | ' |
Number of non-vested options outstanding at the beginning of the period (in shares) | 858,115 | 1,263,205 |
Number of non-vested options granted (in shares) | 261,000 | 267,576 |
Number of options vested (in shares) | -385,076 | -317,734 |
Number of non-vested options forfeited (in shares) | -58,843 | -354,932 |
Number of non-vested options outstanding at the end of the period (in shares) | 675,196 | 858,115 |
Weighted average grant-date fair value of non-vested options outstanding at the beginning of the period (in dollars per share) | $2.36 | $1.41 |
Weighted average grant-date fair value of options granted (in dollars per share) | $3.72 | $2.99 |
Weighted average grant-date fair value of options vested (in dollars per share) | ($2.22) | ($1.92) |
Weighted average grant-date fair value of non-vested options forfeited (in dollars per share) | ($3.48) | ($2.48) |
Weighted average grant-date fair value of non-vested options outstanding at the end of the period (in dollars per share) | $2.88 | $2.36 |
Income_Taxes_Details
Income Taxes (Details) (USD $) | Dec. 31, 2013 | Dec. 31, 2012 |
Deferred tax assets: | ' | ' |
Net operating loss carryforwards | $23,075,700 | $18,182,000 |
Charitable contributions | 500 | 2,800 |
Inventory Reserves | 144,000 | 365,600 |
Stock-based compensation | 101,500 | 52,300 |
Total deferred tax assets | 23,321,700 | 18,602,700 |
Deferred tax liabilities: | ' | ' |
Depreciation | -84,100 | -154,900 |
Amortization | 121,000 | -51,700 |
Total deferred tax assets (liabilities) | 36,900 | -206,600 |
Net deferred tax assets | 23,358,600 | 18,396,100 |
Valuation allowance | ($23,358,600) | ($18,396,100) |
Income_Taxes_Details_2
Income Taxes (Details 2) (USD $) | 12 Months Ended | |
Dec. 31, 2013 | Dec. 31, 2012 | |
Income Taxes | ' | ' |
Net operating loss carryforwards | $62,000,000 | ' |
Valuation allowance | 4,962,500 | 3,015,100 |
Income tax (expense) benefit | $0 | $738,192 |
Employee_Benefit_Plan_Details
Employee Benefit Plan (Details) (USD $) | 12 Months Ended | ||
Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2007 | |
Y | Y | ||
Defined Benefit Plan | ' | ' | ' |
Age limit for eligibility to participate in the plan | 18 | ' | ' |
Matching contributions | 3.00% | 3.00% | ' |
Required minimum contribution | ' | ' | 3.00% |
Number of years during period specified | ' | ' | 3 |
Period specified requiring minimum match of 3% | ' | ' | '5 years |
Contributed matching funds | $126,322 | $102,189 | ' |
Minimum | ' | ' | ' |
Defined Benefit Plan | ' | ' | ' |
Matching contributions | 1.00% | ' | ' |
Maximum | ' | ' | ' |
Defined Benefit Plan | ' | ' | ' |
Matching contributions | 3.00% | ' | ' |
Commitments_and_Contingencies_1
Commitments and Contingencies (Details) (USD $) | 12 Months Ended | 0 Months Ended | ||||
Dec. 31, 2013 | Dec. 31, 2012 | Nov. 12, 2013 | Nov. 12, 2013 | Nov. 12, 2013 | Oct. 25, 2013 | |
SNH Medical Office Properties Trust | SNH Medical Office Properties Trust | SNH Medical Office Properties Trust | Ja-Cole | |||
sqft | Minimum | Maximum | sqft | |||
Commitments and Contingencies | ' | ' | ' | ' | ' | ' |
Leased office space in square feet | ' | ' | 11,761 | ' | ' | 5,400 |
Right to early termination of lease | ' | ' | '3 years | ' | ' | ' |
Estimated future minimum rental payments on the leases | ' | ' | ' | ' | ' | ' |
2014 | $243,000 | ' | ' | ' | ' | ' |
2015 | 243,000 | ' | ' | ' | ' | ' |
2016 | 241,000 | ' | ' | ' | ' | ' |
2017 | 207,000 | ' | ' | ' | ' | ' |
2018 | 177,000 | ' | ' | ' | ' | ' |
TOTAL | 1,111,000 | ' | ' | ' | ' | ' |
Annual lease expense | ' | ' | ' | 200,000 | 212,000 | 43,200 |
Total rent expense | $197,000 | $171,000 | ' | ' | ' | ' |
Commitments_and_Contingencies_2
Commitments and Contingencies (Details 2) (USD $) | 12 Months Ended | 1 Months Ended | |||
Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2009 | Aug. 31, 2008 | Dec. 31, 2011 | |
Biostorage and management services agreement | Tissue processing agreement | Tissue processing agreement | AxoGuard distribution agreement | Master Services Agreement for clinical Research and Related Services | |
Service Agreements | ' | ' | ' | ' | ' |
Terminate a renewal term | '30 days | ' | ' | ' | ' |
Term of agreement | ' | ' | '2 years | '7 years | ' |
Commitment extension period | ' | '12 months | ' | ' | ' |
Automatic renewal periods | ' | '12 months | ' | '7 years | ' |
Notice period for review of pricing | ' | ' | ' | '90 days | ' |
Company is required to pay execution of the agreement | ' | ' | ' | ' | $151,318 |
Company is required to pay for the agreement on monthly basis | ' | ' | ' | ' | $20,416 |
Period for agreement | ' | ' | ' | ' | '42 months |
Commitments_and_Contingencies_3
Commitments and Contingencies (Details 3) | 12 Months Ended |
Dec. 31, 2013 | |
item | |
Vendor | Exclusive distribution agreement | ' |
Concentrations | ' |
Number of products from which revenue is derived | 3 |
Current period of initial term of the agreement | 6 |
Initial term of contract | '7 years |
Additional term of agreement | '7 years |
Processor | ' |
Concentrations | ' |
Notice period for termination of the LifeNet Health facility lease | '6 months |
Period within which new facility can be found and made operational | '6 months |