Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Dec. 31, 2017 | Feb. 26, 2018 | Jun. 30, 2017 | |
Document and Entity Information | |||
Entity Registrant Name | AxoGen, Inc. | ||
Entity Central Index Key | 805,928 | ||
Document Type | 10-K | ||
Document Period End Date | Dec. 31, 2017 | ||
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 | Accelerated Filer | ||
Entity Public Float | $ 454,058,298 | ||
Entity Common Stock, Shares Outstanding | 34,496,854 | ||
Document Fiscal Year Focus | 2,017 | ||
Document Fiscal Period Focus | FY |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 |
Current assets: | ||
Cash and cash equivalents | $ 36,506,624 | $ 30,014,405 |
Accounts receivable, net of allowance for doubtful accounts of approximately $461,000 and $272,000, respectively | 11,064,720 | 8,052,203 |
Inventory | 7,315,942 | 5,458,840 |
Prepaid expenses and other | 853,381 | 511,804 |
Total current assets | 55,740,667 | 44,037,252 |
Property and equipment, net | 2,197,039 | 1,494,247 |
Intangible assets | 936,992 | 828,979 |
Total Assets | 58,874,698 | 46,360,478 |
Current liabilities: | ||
Borrowings under revolving loan agreement | 4,000,000 | 4,025,023 |
Accounts payable and accrued expenses | 8,952,061 | 7,002,165 |
Current maturities of long term obligations | 735,017 | 20,899 |
Deferred revenue, current | 31,668 | 33,282 |
Total current liabilities | 13,718,746 | 11,081,369 |
Long Term Obligations, net of current maturities and deferred financing fees | 19,905,286 | 20,265,745 |
Deferred revenue, noncurrent | 68,631 | 92,215 |
Total liabilities | 33,692,663 | 31,439,329 |
Shareholders' equity: | ||
Common stock, $0.01 par value per share; 50,000,000 shares authorized; 34,350,329 and 33,008,865 shares issued and outstanding | 343,503 | 330,088 |
Additional paid-in capital | 153,167,817 | 132,474,884 |
Accumulated deficit | (128,329,285) | (117,883,823) |
Total shareholders' equity | 25,182,035 | 14,921,149 |
Total Liabilities and Shareholders' equity | $ 58,874,698 | $ 46,360,478 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 |
Consolidated Balance Sheets | ||
Accounts receivable, allowance for doubtful accounts | $ 461,000 | $ 272,000 |
Common stock, par value | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 50,000,000 | 50,000,000 |
Common stock, shares issued | 34,350,329 | 33,008,865 |
Common stock, shares outstanding | 34,350,329 | 33,008,865 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Consolidated Statements of Operations | |||
Revenues | $ 60,426,395 | $ 41,107,538 | $ 27,331,092 |
Cost of goods sold | 9,311,585 | 6,467,250 | 4,848,396 |
Gross profit | 51,114,810 | 34,640,288 | 22,482,696 |
Costs and expenses: | |||
Sales and marketing | 37,635,871 | 28,425,503 | 20,089,369 |
Research and development | 6,699,120 | 4,212,023 | 3,237,171 |
General and administrative | 14,731,105 | 10,132,624 | 8,422,866 |
Total costs and expenses | 59,066,096 | 42,770,150 | 31,749,406 |
Loss from operations | (7,951,286) | (8,129,862) | (9,266,710) |
Other income (expense): | |||
Interest expense | (2,216,845) | (5,386,268) | (3,988,619) |
Interest expense - deferred financing costs | (246,557) | (875,389) | (127,912) |
Other (expense) | (30,774) | (19,625) | 26,816 |
Total other income (expense) | (2,494,176) | (6,281,282) | (4,089,715) |
Net Loss | $ (10,445,462) | $ (14,411,144) | $ (13,356,425) |
Weighted Average Common Shares outstanding - basic and diluted | 33,322,767 | 30,702,164 | 26,075,670 |
Loss Per Common share - basic and diluted (in dollars per share) | $ (0.31) | $ (0.47) | $ (0.51) |
CONSOLIDATED STATEMENTS OF SHAR
CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY - USD ($) | Common Stock [Member] | Additional Paid-in Capital [Member] | Retained Earnings [Member] | Total |
Beginning Balance at Dec. 31, 2014 | $ 194,888 | $ 78,675,686 | $ (90,116,254) | $ (11,245,680) |
Beginning Balance (in shares) at Dec. 31, 2014 | 19,488,814 | |||
Increase (Decrease) in Stockholders' Equity | ||||
Stock-based compensation | 1,316,509 | 1,316,509 | ||
Exercise of stock options | $ 1,975 | 510,826 | 512,801 | |
Exercise of stock options (in shares) | 197,466 | |||
Issuance of common shares | $ 102,983 | 30,865,403 | 30,968,386 | |
Issuance of common shares (in shares) | 10,298,311 | |||
Net loss | (13,356,425) | (13,356,425) | ||
Ending Balance at Dec. 31, 2015 | $ 299,846 | 111,368,424 | (103,472,679) | 8,195,591 |
Ending Balance (in shares) at Dec. 31, 2015 | 29,984,591 | |||
Increase (Decrease) in Stockholders' Equity | ||||
Stock-based compensation | 1,390,277 | 1,390,277 | ||
Exercise of stock options | $ 3,409 | 1,074,924 | 1,078,333 | |
Exercise of stock options (in shares) | 340,940 | |||
Issuance of common shares | $ 26,833 | 18,641,259 | 18,668,092 | |
Issuance of common shares (in shares) | 2,683,334 | |||
Net loss | (14,411,144) | (14,411,144) | ||
Ending Balance at Dec. 31, 2016 | $ 330,088 | 132,474,884 | (117,883,823) | $ 14,921,149 |
Ending Balance (in shares) at Dec. 31, 2016 | 33,008,865 | 33,008,865 | ||
Increase (Decrease) in Stockholders' Equity | ||||
Stock-based compensation | 3,608,918 | $ 3,608,918 | ||
Exercise of stock options | $ 5,365 | 1,429,160 | 1,434,525 | |
Exercise of stock options (in shares) | 536,464 | |||
Issuance of common shares | $ 8,050 | 15,654,855 | 15,662,905 | |
Issuance of common shares (in shares) | 805,000 | |||
Net loss | (10,445,462) | (10,445,462) | ||
Ending Balance at Dec. 31, 2017 | $ 343,503 | $ 153,167,817 | $ (128,329,285) | $ 25,182,035 |
Ending Balance (in shares) at Dec. 31, 2017 | 34,350,329 | 34,350,329 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Cash flows from operating activities: | |||
Net loss | $ (10,445,462) | $ (14,411,144) | $ (13,356,425) |
Adjustments to reconcile net loss to net cash used for operating activities: | |||
Depreciation | 487,611 | 361,617 | 203,140 |
Amortization of intangible assets | 78,993 | 74,871 | 45,828 |
Amortization of deferred financing costs | 246,557 | 124,915 | 127,913 |
Write off of deferred financing costs | 750,474 | ||
Provision for bad debt | 223,323 | 79,593 | 125,371 |
Stock-based compensation | 3,608,918 | 1,390,277 | 1,316,509 |
Interest added to note payable | 1,924,279 | 461,643 | |
Change in assets and liabilities: | |||
Accounts receivable | (3,235,840) | (3,348,807) | (2,036,052) |
Inventory | (1,857,102) | (1,524,880) | (720,340) |
Prepaid expenses and other | (341,577) | (86,879) | (315,556) |
Accounts payable and accrued expenses | 1,926,664 | 3,411,507 | 1,117,733 |
Deferred liabilities | 70,316 | 17,582 | (21,583) |
Net cash used for operating activities | (9,237,599) | (11,236,595) | (13,051,819) |
Cash flows from investing activities: | |||
Purchase of property and equipment | (1,105,212) | (931,634) | (408,782) |
Acquisition of intangible assets | (187,006) | (225,768) | (146,736) |
Net cash used for investing activities | (1,292,218) | (1,157,402) | (555,518) |
Cash flows from financing activities: | |||
Proceeds from issuance of common stock | 15,662,905 | 18,668,092 | 30,968,386 |
Borrowing on revolving loan | 57,599,165 | 6,684,894 | |
Payments on revolving loan | (57,624,188) | (6,684,894) | |
Repayments of long-term debt | (20,899) | (2,446,676) | |
Debt issuance costs | (29,472) | (800,847) | (180,139) |
Proceeds from exercise of stock options | 1,434,525 | 1,078,333 | 512,799 |
Net cash provided by financing activities | 17,022,036 | 16,498,902 | 31,301,046 |
Net increase in cash and cash equivalents | 6,492,219 | 4,104,905 | 17,693,709 |
Cash and cash equivalents, beginning of year | 30,014,405 | 25,909,500 | 8,215,791 |
Cash and cash equivalents, end of period | 36,506,624 | 30,014,405 | 25,909,500 |
Supplemental disclosures of cash flow activity: | |||
Cash paid for interest | 2,198,286 | 5,769,372 | 3,525,978 |
Supplemental disclosure of non-cash investing and financing activities: | |||
Payments of fixed assets in accounts payable | 55,385 | 32,153 | $ 168,775 |
Payments of long term debt with proceeds from term loan of $21,000,000 and revolver loan of $4,000,000 | $ 25,000,000 | ||
Capital lease additions | $ 61,959 |
CONSOLIDATED STATEMENTS OF CAS7
CONSOLIDATED STATEMENTS OF CASH FLOWS (Parenthetical) | 12 Months Ended |
Dec. 31, 2017USD ($) | |
Term Loan Agreement | |
Proceeds from Issuance of Debt | $ 21,000,000 |
Revolver Loan Agreement | |
Proceeds from Issuance of Debt | $ 4,000,000 |
Basis of Presentation
Basis of Presentation | 12 Months Ended |
Dec. 31, 2017 | |
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 subsidiaries, AxoGen Corporation (“AC”) and AxoGen Europe GmbH, established in the fourth quarter of 2016, as of December 31, 2017 and December 31, 2016 and for the three years ended December 31, 2017. 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, 2017 | |
Organization and Business | |
Organization and Business | 2. Organization and Business We are a global leader in innovative surgical solutions for physical damage or discontinuity to peripheral nerves. AxoGen is the leading company focused specifically on the science, development and commercialization of technologies for peripheral nerve regeneration and repair. We are passionate about restoring nerve function and quality of life to patients with physical damage or discontinuity to peripheral nerves by providing innovative, clinically proven and economically effective repair solutions for surgeons and health care providers. Peripheral nerves provide the pathways for both motor and sensory signals throughout the body. Every day, people suffer traumatic injuries or undergo surgical procedures that impact the function of their peripheral nerves. Physical damage to a peripheral nerve or the inabiltiy to properly reconnect peripheral nerves can result in the loss of muscle or organ function, the loss of sensory feeling, or the initiation of pain. Our portfolio of products includes Avance ® Nerve Graft, an off-the-shelf processed human nerve allograft for bridging severed peripheral nerves without the comorbidities associated with a second surgical site, AxoGuard ® Nerve Connector, a porcine submucosa extracellular matrix (“ECM”) coaptation aid for tensionless repair of severed peripheral nerves, AxoGuard ® Nerve Protector, a porcine submucosa ECM product used to wrap and protect injured peripheral nerves and reinforce the nerve reconstruction while preventing soft tissue attachments and Avive ® Soft Tissue Membrane, a minimally processed human umbilical cord membrane that may be used as a resorbable soft tissue covering to separate tissues and modulate inflammation in the surgical bed. Along with these core surgical products, we also offer the AxoTouch ® Two-Point Discriminator and AcroVal ® Neurosensory and Motor Testing System. These evaluation and measurement tools assist healthcare professionals in detecting changes in sensation, assessing return of sensory, grip and pinch function, evaluating effective treatment interventions, and providing feedback to patients on peripheral nerve function. Our portfolio of products is available in the United States, Canada, the United Kingdom and several European and other international countries. Avance ® Nerve Graft and Avive ® Soft Tissue Membrane are processed in the United States by AxoGen at its processing facility in Dayton, Ohio. AxoGuard ® Nerve Connector and AxoGuard ® Nerve Protector are manufactured in the United States by Cook Biotech Incorporated and are distributed worldwide exclusively by AxoGen. The AcroVal ® Neurosensory and Motor Testing System and AxoTouch ® Two Point Discriminator are contract manufactured by Viron Technologies, LLC. (formerly Cybernetics Research Laboratories) (“Viron”) Tucson, Arizona. Viron supplies the AcroVal ® and AxoTouch ® unpackaged and they are packaged at AxoGen’s distribution facility in Burleson, Texas. AxoGen maintains its corporate offices in Alachua, Florida and is the parent company of its wholly owned operating subsidiary, AC. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2017 | |
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, services 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. Revenues from research grants are recognized in the period the associated costs are incurred. Cash and Cash Equivalents and Concentration For purposes of the statement of cash flows, the Company considers any 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. 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 receivables due to our past successful experience in collectability. Specific accounts that are deemed uncollectible are reserved at 100% of their outstanding balance. In the event that we exhaust all collection efforts and deem an account uncollectible, we would subsequently write off the account. The allowance for doubtful accounts reserve balance was approximately $461,000 and $272,000 at December 31, 2017 and 2016, 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 and monitoring procedures. Inventories Inventories are comprised of unprocessed tissue, work-in-process, Avance ® Nerve Graft, AxoGuard ® Nerve Connector, AxoGuard ® Nerve Protector, Avive ® Soft Tissue Membrane, AcroVal ® Neurosensory and Motor Testing System, AxoTouch ® Two-Point Discriminator and supplies and are valued at the lower of cost (first-in, first-out) or net realizable value. We regularly review the inventory status to determine the expected reserve level required. The Company policy is to monitor the shelf life of its products and reserve amounts based on the expiration date of the finished goods inventory. We also reserve a portion of raw materials based on our historical experience of tissue that fails during the inspection and debridement stage due to medical history, serology compliance or poor quality. Our inventory reserve balance was approximately $812,000 and $960,000 at December 31, 2017 and 2016, 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 years (or lease term if less) Processing equipment - 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 6 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, 2017 and 2016, the Company did not record any impairment loss. Deferred Financing Costs The Company records as a discount to debt 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 $204,000, $40,000 and $31,000 for the years ended December 31, 2017, 2016 and 2015, 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 $6.7 million, $4.2 million and $3.2 million for the years ended December 31, 2017, 2016 and 2015, 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 the 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, 2014 through 2016; however, 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 The Company measures all employee stock-based compensation awards using a fair value method and records such expense in its consolidated financial statements. The estimated value of the portion of the award that is ultimately expected to vest, with forfeitures accounted for as they occur, is recognized as expense over the requisite service periods in the Company’s consolidated statements of operations. The Company estimates the grant date fair value of stock option awards generally on the date of grant using the Black-Scholes option pricing models. With respect to performance stock units (“PSUs”), the number of shares that vest and are issued to the recipient is based upon the Company’s performance as measured against specified targets over the measurement period. The fair value of the PSUs is based on the Company’s closing stock price on the grant date and its estimate of achieving such performance targets. For further discussion and disclosures, see Note 10, “Stock Incentive Plan.” Earnings (Loss) Per Share of Common Stock Earnings (loss) per share of common stock (EPS) is calculated for basic EPS by dividing net income (loss) available to common stockholders by the weighted average number of shares of common stock outstanding during the period. There were no dilutive instruments as of December 31, 2017, 2016 and 2015. The basic and diluted weighted average shares outstanding were 33,322,767 and 30,702,164 for the years ended December 31, 2017 and 2016, respectively. Basic and diluted net loss per commons share for all periods presented is computed by dividing the net loss attributable to common shareholders by the weighted-average number of common shares outstanding and common share equivalents outstanding, when dilutive. Potentially dilutive common share equivalents include common shares which would potentially be issued pursuant to stock warrants and stock options. Common share equivalents are not included in determining the fully diluted loss per share if their effect is antidilutive. 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 materially from those estimates. Recent Accounting Pronouncements In May 2014, the Financial Accounting Standards Board, or FASB, issued a new standard on revenue recognition which outlines a single comprehensive model to use in accounting for revenue arising from contracts with customers and supersedes most current revenue recognition guidance, including industry-specific guidance. The core principle of the revenue model is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The standard is designed to create greater comparability for financial statement users across industries and jurisdictions and also requires enhanced disclosures. The guidance is effective for the Company beginning on January 1, 2018, including interim reporting periods during the year ending December 31, 2018. The standard may be applied retrospectively to each prior period presented or retrospectively with the cumulative effect recognized as of the adoption date. During the quarter ended December 31, 2017, we completed our evaluation of the new standard, including an assessment of existing revenue contracts with our customers on our most significant revenue streams, business practices and processes, and our controls over financial reporting, and we do not believe there will be a material change to the timing and amounts of our revenue, processes or internal controls. During 2018, we will be required to provided additional disclosures in the notes to the consolidated financial statements. We will utilize the modified retrospective method upon adoption. In February 2016, the FASB issued ASU 2016-02, “Leases (Topic 842)”. This update will increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. This update is effective for annual and interim reporting periods beginning after December 15, 2018, including interim periods within those fiscal years. Early adoption is permitted. We are currently evaluating the impact this standard will have on our consolidated financial statements. In August 2016, the FASB issued ASU No. 2016-15, Classification of Certain Cash Receipts and Cash Payments (Topic 230). The ASU was issued intending to reduce diversity in practice in how certain cash receipts and cash payments are presented and classified in the Consolidated Statement of Cash Flows by providing guidance on eight specific cash flow issues. The guidance is effective for the Company on January 1, 2018, including interim reporting periods during the year ending December 31, 2018. We do not believe the adoption of this standard will have a material impact on our consolidated financial statements. In November 2016, the FASB issued ASU No. 2016-18, Statement of Cash Flows (Topic 230), guidance that a statement of cash flows explains the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. The guidance is effective for the Company on January 1, 2018, including interim reporting periods during the year ending December 31, 2018. We do not believe the adoption of this guidance will have a material impact on our Statement of Cash Flows. In May 2017, the FASB issued ASU 2017-09, “Compensation – Stock Compensation (Topic 718): Scope of Modification Accounting.” ASU 2017-09 provides clarity on which changes to the terms or conditions of share-based payment awards require entities to apply the modification accounting provisions required in Topic 718. ASU 2017-09 is effective for the Company on January 1, 2018, including interim reporting periods during the year ending December 31, 2018. We do not believe the adoption of this guidance will have a material impact on our consolidated financial statements. The Company’s management has reviewed and considered all other 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. |
Inventories
Inventories | 12 Months Ended |
Dec. 31, 2017 | |
Inventories | |
Inventories | 4. Inventories Inventories are comprised of unprocessed tissue, work-in-process, Avance ® Nerve Graft, AxoGuard ® Nerve Connector, AxoGuard ® Nerve Protector, Avive ® Soft Tissue Membrane, AcroVal ® Neurosensory and Motor Testing System, AxoTouch ® Two-Point Discriminator and supplies and are valued at the lower of cost (first-in, first-out) or net realizable value and consist of the following: December 31, December 31, 2017 2016 Finished goods $ 5,489,360 $ 4,132,036 Work in process 470,187 205,116 Raw materials 1,356,395 1,121,688 Inventories $ 7,315,942 $ 5,458,840 Inventories are net of reserve of approximately $812,000 and $960,000 at December 31, 2017 and 2016, respectively. |
Property and Equipment
Property and Equipment | 12 Months Ended |
Dec. 31, 2017 | |
Property and Equipment | |
Property and Equipment | 5. Property and Equipment Property and equipment consist of the following: December 31, December 31, 2017 2016 Furniture and equipment $ 1,934,669 $ 1,270,173 Leasehold improvements 711,319 447,650 Processing equipment 1,839,800 1,577,561 Less: accumulated depreciation and amortization (2,288,749) (1,801,137) Property and equipment, net $ 2,197,039 $ 1,494,247 |
Intangible Assets
Intangible Assets | 12 Months Ended |
Dec. 31, 2017 | |
Intangible Assets | |
Intangible Assets | 6. Intangible Assets The Company’s intangible assets consist of the following: December 31, December 31, 2017 2016 License agreements $ 1,007,566 $ 984,342 Patents 459,903 308,212 Less: accumulated amortization (530,477) (463,575) Intangible assets, net $ 936,992 $ 828,979 License agreements are being amortized over periods ranging from 17-20 years. Certain patent costs of $22,000 were being amortized over three years. As of December 31, 2017, these patents were fully amortized, and the remaining patents of $460,000 are a combination of pending and issued patent costs, $102,000 of which is being amortized over periods up to 20 years. Amortization expense for 2017, 2016 and 2015 was approximately $79,000, $75,000 and $46,000, respectively. As of December 31, 2017, future amortization of license agreements is expected to be $74,000 for 2018 through 2023 and $134,000, thereafter . License Agreements The Company has entered into multiple license agreements (together, the “License Agreements”) with the University of Florida Research Foundation (“UFRF”) and University of Texas at Austin (“UTA”). 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%; · 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 the UTA agreement, 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. A milestone fee to the UFRF of $2,000 is due if AxoGen receives FDA approval of its Avance ® Nerve Graft, a milestone fee of $25,000 is due upon the first commercial use of certain licensed technology to provide services to manufacture products for third parties and a milestone fee of $10,000 is due upon the first use to manufacture products that utilize certain technology that is not currently incorporated into AxoGen products. Royalty fees were approximately $1.2 million, $812,000 and $526,000 during 2017, 2016 and 2015, respectively, and are included in sales and marketing expense on the accompanying consolidated statements of operations. |
Accounts Payable and Accrued Ex
Accounts Payable and Accrued Expenses | 12 Months Ended |
Dec. 31, 2017 | |
Accounts Payable and Accrued Expenses | |
Accounts Payable and Accrued Expenses | 7. Accounts Payable and Accrued Expenses Accounts payable and accrued expenses consists of the following: December 31, December 31, 2017 2016 Accounts payable $ 3,237,962 $ 3,614,015 Accrued expenses 1,770,956 804,691 Accrued compensation 3,943,143 2,583,459 Accounts Payable and Accrued Expenses $ 8,952,061 $ 7,002,165 |
Term Loan Agreements and Long T
Term Loan Agreements and Long Term Debt | 12 Months Ended |
Dec. 31, 2017 | |
Term Loan Agreements and Long Term Debt | |
Term Loan Agreements and Long Term Debt | 8. Term Loan Agreements and Long-Term Debt Term Loan Agreements and Long Term Debt consist of the following: December 31, December 31, 2017 2016 Term Loan Agreement with MidCap Financial Trust (“MidCap”) for a total of $21,000,000, net of $554,100 of unamortized deferred financing fees at December 31, 2017, and $771,185 at December 31, 2016. Interest is payable monthly at 8.0% per annum plus the greater of LIBOR or 0.5% which as of December 31, 2017 resulted in a 9.36% rate. $ 20,445,900 $ 20,228,815 Revolving Loan Agreement with MidCap for up to $10,000,000 with borrowings based upon eligible accounts receivable and inventory. Interest is payable monthly at 4.5% per annum plus the greater of LIBOR or 0.5% which as of December 31, 2017 resulted in a 5.86% rate. 4,000,000 4,025,023 Equipment Lease Agreement with Cisco Capital for a total lease amount of $58,875 which has a 36 month term and requires no lease payments for the first three months of the lease and 33 equal payments of principal and interest until the end of the term. Interest on the lease is payable monthly at 3.5% per annum. 36,930 57,829 Equipment Lease Agreement with Raymond Leasing Corporation for a total lease amount of $29,998 which has a 48 month term with equal payments for principal and interest until the end of the term. Interest on the lease is payable monthly at 6.7% per annum. 29,998 — Equipment Lease Agreement with B&B Office Systems for a total lease amount of $31,961 which has a 60 month term with equal payments for principal and interest until the end of the term. Interest on the lease is payable monthly at 8.5% per annum. 31,961 — Total 24,544,789 24,311,667 Less current revolving loan (4,000,000) (4,025,023) Less current maturities of long term debt (735,017) (20,899) Long-term portion $ 19,809,772 $ 20,265,745 Term and Revolving Loans Three Peaks Term Loan Agreement and Revenue Interest Agreement On November 12, 2014, AxoGen, as borrower, and AC, as guarantor, entered into that certain Term Loan Agreement, (the “Three Peaks Term Loan Agreement”), dated November 12, 2014, by and among AxoGen, as borrower, AC, as guarantor, the lenders party thereto and Three Peaks Capital S.a.r.l. (“Three Peaks”), an indirect wholly-owned subsidiary of Oberland Capital Healthcare Master Fund LP, as administrative and collateral agent for the lenders. Under the Three Peaks Term Loan Agreement, Three Peaks provided AxoGen a term loan of $25 million which had a six-year term and required interest only payments and a final principal payment due at the end of the term. Interest was payable quarterly at 9.00% per annum plus the greater of LIBOR or 1.0% which as of November 13, 2014 resulted in a 10% rate. In addition, on November 12, 2014, AxoGen entered into the Revenue Interest Agreement (the “Revenue Interest Agreement”) with Three Peaks. Royalty payments were based on a royalty rate of 3.75% of AxoGen’s revenues up to a maximum of $30 million in revenues in any 12 month period. On October 26, 2016, the Three Peaks Term Loan Agreement and Revenue Interest Agreement were paid in full and the Company had no further obligations pursuant to such agreements. MidCap Term Loan Agreement On October 25, 2016 (the “Closing Date”), AxoGen and AC, each as borrowers, entered into a Credit and Security Agreement (Term Loan) (the ''MC Term Loan Agreement") with the lenders party thereto and MidCap Financial Trust (“MidCap”), as administrative agent and a lender. Under the MC Term Loan Agreement, MidCap provided the Company a term loan in the aggregate principal amount of $21 million (the "Term Loan") which has a maturity date of May 1, 2021 and requires interest only payments through December 1, 2018, and thereafter, 30 monthly payments of principal and interest resulting in the Term Loan being fully paid by the maturity date. Interest is payable monthly at 8.00% per annum plus the greater of LIBOR or 0.5%, which, as of December 31, 2017, resulted in an 9.36% rate. In addition to the interest charged on the Term Loan, the Company is also obligated to pay certain fees, including an annual agency fee of 0.25% of the aggregate principal amount of the Term Loan. Under the MC Term Loan Agreement, the Company has the option at any time to prepay the Term Loan in whole or in part, provided that prepayments shall be: (i) in an amount equal to $2,500,000 or a higher integral multiple of $1,000,000; and (ii) accompanied by certain prepayment and exit fees. There can be no more than three partial voluntary prepayments allowed during the term of the MC Term Loan Agreement. MidCap and certain of the lenders have the right to demand prepayment, along with prepayment and exit fees upon an event of default which includes, but is not limited to: (i) default of the Revolving Loan (as defined below); (ii) a change of control of the Company; (iii) sale of the majority of the Company's assets; or (iv) a material adverse change to the Company. The prepayment fee is determined by multiplying the amount being prepaid by the following applicable percentage amount: (a) 3.0% during the first year following the Closing Date; (b) 2.0% during the second year following the Closing Date, and (c) 1.0% thereafter. No prepayment fee is due in the event the prepayment is a result of refinancing the Term Loan and Revolving Loan with MidCap or an affiliate of MidCap. Upon any repayment of any portion of the Term Loan (whether voluntary, involuntary or mandatory), other than scheduled amortization payments, and on the final payment of principal of the Term Loan, an exit fee of 5.0% of the principal amount of the Term Loan is also owed based on the portion of any prepayment made and at maturity upon the original principal amount less any prepayments of the Term Loan. The Company used the aggregate proceeds of $25 million from the MidCap Term Loan and the Revolving Loan to pay the outstanding indebtedness owed to Three Peaks and the other lenders to terminate the Term Loan Agreement and the Revenue Interest Agreement. Expenses and fees of approximately $800,000 to complete the negotiation and documentation of the MidCap Term Loan and the Revolving Loan and prepayment fees of approximately $2.3 million owed to Three Peaks were paid from the Company’s own funds. MidCap Revolving Loan Agreement On October 25, 2016, AxoGen and AC, each as borrowers, also entered into a Credit and Security Agreement (Revolving Loan) (the ''Revolving Loan Agreement") with the lenders party thereto and MidCap, as administrative agent and a lender. Under the Revolving Loan Agreement, MidCap agreed to lend to the Company up to $10 million under a revolving credit facility (the "Revolving Loan") which amount may be drawn down by the Company based upon an available borrowing base which includes certain accounts receivable and inventory. The Revolving Loan may be increased to up to $15 million at the Company’s request and with the approval of MidCap. As of December 31, 2017, the Company’s borrowing base under the Revolving Loan provided availability of approximately $7.7 million. As of December 31, 2017, the Company had borrowed $4.0 million of the Revolving Loan. The maturity date of the Revolving Loan is May 1, 2021. Interest is payable monthly at 4.5% per annum plus the greater of LIBOR or 0.5% on outstanding advances, which, as of December 31, 2017, resulted in an 5.86% rate. In addition to the interest charged on the Revolving Loan, the Company is also obligated to pay certain fees, including a collateral management fee of 0.5% per annum of the principal amount outstanding on the Revolving Loan from time to time and an unused line fee of 0.5% per annum on the difference between the average amount outstanding on the Revolving Loan minus the total amount of the Revolving Loan commitment. The Revolving Loan is subject to a minimum balance, such that the Company pays the greater of: (i) interest accrued on the actual amount drawn under the Revolving Loan Facility; and (ii) interest accrued on 30% of the average borrowing base. If the Revolving Loan is terminated or permanently reduced prior to the maturity date, MidCap is owed a deferred revolving loan origination fee determined by multiplying the agreed total lending amount by the following applicable percentage amount: (a) 3.0% during the first year following the Closing Date; (b) 2.0% during the second year following the Closing Date, and (c) 1.0% thereafter. No deferred revolving loan origination fee is due in the event the Revolving Loan is paid in full or the termination of the revolving credit facility is a result of refinancing the Term Loan and Revolving Loan with MidCap or an affiliate of MidCap. Termination of the Revolving Loan may occur, at the option of MidCap and certain of the lenders, upon an event of default which includes, but is not limited to: (i) default in payment of the Term Loan; (ii) a change of control of the Company; (iii) sale of the majority of the Company's assets; or (iv) a material adverse change to the Company. The MC Term Loan Agreement and the Revolving Loan Agreement each contain covenants that place restrictions on AxoGen’s operations, including, without limitation, covenants related to debt restrictions, investment restrictions, dividend restrictions, restrictions on transactions with affiliates and certain revenue covenants. As of December 31, 2017, the Company was in compliance with the agreements’ covenants. MidCap, on behalf of the lenders under the agreements, has a first perfected security interest in the assets of the Company to guarantee the payment in full of the agreements. Upon the payment in full to MidCap and the lenders of the Term Loan Agreement and Revolving Loan Agreement, the Company would have no further obligations to MidCap or the lenders under the Term Loan Agreement or the Revolving Loan Agreement. Interest expense for the year ended December 31, 2017 was $2.2 million compared to $5.4 million for the year ended December 31, 2016. The 2016 amount included a final payment to Three Peaks of approximately $2.4 million inclusive of prepayment fees and accrued interest through October 25, 2016. In addition, as a result of the accounting treatment for the Three Peaks transaction, the Company had previously recorded a total of $750,000 of deferred interest charges which were offset against those prepayment fees. The net impact of those transactions resulted in a net interest charge of approximately $1.7 million in 2016, which is included in interest expense. Additionally, as the result of the extinguishment of the debt facility with Three Peaks, the Company wrote off approximately $750,000 of prepaid financing fees to interest expense – deferred financing costs in 2016. Annual maturities of the Company’s long-term obligations are as follows: Year Ending December 31 Amount 2018 $ 735,017 2019 8,427,916 2020 8,413,817 2021 3,514,892 2022 7,247 21,098,889 Less unamortized debt issuance costs (554,100) TOTAL $ 20,544,789 |
Shareholders' Equity (Deficit)
Shareholders' Equity (Deficit) | 12 Months Ended |
Dec. 31, 2017 | |
Public Offering of Common Stock | |
Shareholders’ Equity (Deficit) | 9. Shareholders’ Equity (Deficit) AxoGen, Inc. Classes of Stock AxoGen, Inc.’s authorized capital stock consists of 50,000,000 shares of common stock, 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 establish from time to time. Unless otherwise designated by the AxoGen Board of Directors, all shares are common stock. AxoGen has not designated any shares other than common stock. Public Offering On February 5, 2015, AxoGen entered into an underwriting agreement with Wedbush Securities Inc., as underwriter (the “Wedbush”), in connection with the offering, issuance and sale of 4,728,000 shares of the Company’s common stock, par value $0.01 per share, at a price to the public of $2.75 per share (the “February 2015 Offering”). The Company also granted to Wedbush a 30-day option to purchase up to an aggregate of 709,200 additional shares of common stock to cover over-allotments, if any. On February 13, 2015, the February 2015 Offering was completed with the sale of 5,437,200 shares of common stock, which included the full exercise of the over-allotment option, at $2.75 per share, resulting in gross proceeds to AxoGen from the February 2015 Offering of approximately $15.0 million, before deducting underwriting discounts and commissions and other estimated offering expenses payable by AxoGen estimated at approximately $1.4 million. The shares of common stock were listed on the NASDAQ Capital Market. The February 2015 Offering was made pursuant to the Company’s effective shelf registration statement on Form S-3 (Registration No. 333-195588) previously filed with the SEC on April 30, 2014, and pursuant to the prospectus supplement and the accompanying prospectus describing the terms of the February 2015 Offering, dated February 5, 2015. On August 26, 2015, the Company entered into the Purchase Agreement with EW Healthcare Partners L.P. (formerly Essex Woodlands Fund IX, L.P.)(“Essex”) for the purchase of 4,861,111 shares of common stock at a public offering price of $3.60 per share, raising approximately $17.5 million in gross proceeds (the “August 2015 Offering”). The expenses directly related to the August 2015 Offering were approximately $300,000 and were paid as of December 31, 2015. Those expenses include the Company’s legal and accounting fees, printing expenses, transfer agent fees and miscellaneous fees and costs related to the August 2015 Offering. The Company provided certain demand and “piggy-back” registration rights in connection with that sale of common stock. The August 2015 Offering was made pursuant to the Company’s effective shelf registration statement on Form S-3 (Registration No. 333-195588) previously filed with the SEC on April 30, 2014 and pursuant to the prospectus supplement and the accompanying prospectus describing the terms of the August 2015 Offering, dated August 26, 2015. On October 7, 2016, AxoGen entered into an underwriting agreement with JMP Securities LLC, as representative of the several underwriters (collectively, the “2016 Offering Underwriters”), to issue and sell 2,333,334 shares of the Company’s common stock in an underwritten registered public offering (the “2016 Offering”) at an offering price of $7.50 per share. Pursuant to the underwriting agreement, the Company also granted the 2016 Offering Underwriters a 30-day option to purchase up to an additional 350,000 shares of common stock, which the underwriters exercised in full on October 7, 2016. Five of the Company’s directors and officers purchased an aggregate of approximately 32,666 Shares in the 2016 Offering and such purchases were made on the same terms and conditions as purchases by the public in the 2016 Offering. The 2016 Offering closed on October 13, 2016, and the Company received net proceeds of approximately $18.67 million from the sale of 2,683,334 shares of common stock, which included the additional 350,000 shares of common stock, after deducting the underwriting discounts and commissions and estimated offering expenses. The 2016 Offering was pursuant to a prospectus supplement dated October 7, 2016, which was filed with the SEC in connection with the Company’s shelf registration statement on Form S-3 (File No. 333-207829) that was filed with the SEC on November 5, 2015 and declared effective on December 11, 2015 and the related prospectus dated December 11, 2015. On November 16, 2017, AxoGen entered into a certain underwriting agreement (the “Leerink Underwriting Agreement”) with Leerink Partners LLC, as representative of the several underwriters named therein (collectively, the “2017 Offering Underwriters”) and Essex, pursuant to which (i) the Company agreed to issue and sell 700,000 shares of the Company’s common stock pursuant to a registration statement on Form S-3 (File No. 333-207829), filed with the SEC on November 5, 2015, and declared effective by the SEC on December 11, 2015, and the prospectus contained therein, as supplemented by the prospectus supplement dated November 16, 2017, and (ii) Essex agreed to sell 1,000,000 shares of the Company’s common stock pursuant to a registration statement on Form S-3 (File No. 333-220770), filed with the SEC on October 2, 2017, and declared effective by the SEC on October 11, 2017, and the prospectus contained therein, as supplemented by the Prospectus Supplement, in an underwritten registered public offering at an offering price of $21.00 per share. The Company and Essex granted the 2017 Offering Underwriters a 30-day option to purchase up to an aggregate of 255,000 additional shares of common stock, at the public offering price, less the underwriting discounts and commissions, which was exercised in full on November 16, 2017. The Company received net proceeds of approximately $15.65 million after deducting the underwriting discounts and commissions and estimated offering expenses. The Company intends to use the net proceeds of this offering for general working capital purposes; however, the Company’s management will retain broad discretion over the allocation of the net proceeds. |
Stock Incentive Plan
Stock Incentive Plan | 12 Months Ended |
Dec. 31, 2017 | |
Stock Incentive Plan | |
Stock Incentive Plan | 10. Stock Incentive Plan The Company maintains the AxoGen 2010 Stock Incentive Plan, as amended (the “AxoGen Plan”), which allows for issuance of incentive stock options, non-qualified stock options, performance stock units (PSU) and restricted stock awards (RSU) to employees, directors and consultants at exercise prices not less than the fair market value at the date of grant. At the 2016 Annual Meeting of Shareholders the AxoGen Plan was amended to increase the number of shares of common stock authorized for issuance under the AxoGen Plan to 5,500,000 shares, and at the 2017 Annual Meeting of Shareholders, the AxoGen Plan was amended to increase the number of shares of common stock authorized for issuance under the AxoGen Plan to 7,700,000 shares. At the 2017 Annual Meeting of Shareholders, the shareholders approved the adoption of the AxoGen 2017 Employee Stock Purchase Plan (the “2017 ESPP”), which allows for eligible employees to acquire shares of our common stock through payroll deductions at a discount from market value. The 2017 ESPP authorized a total of 600,000 shares of our common stock with the first offering period beginning January 1, 2018. The options to employees typically vest 25% one year after the grant date and 12.5% every six months thereafter for the remaining three-year period until fully vested after four years and those to directors and certain executive officers have vested 25% per quarter over one year or had no vesting period. Beginning in June 2017, options to employees typically vest 50% two years after the grant and 12.5% every six months thereafter for the remaining four-year period until fully vested after five years. Options issued to consultants have vesting provisions based on the engagement ranging from no vesting to vesting over the service period ranging from three to ten years. Options have terms ranging from seven to ten years. The Company recognized stock-based compensation expense of $3.6 million, $1.4 million and $1.3 million for the years ended December 31, 2017, 2016 and 2015, respectively, which consisted of compensation expense related to employee stock options, PSUs and RSUs based on the value of share-based payment awards that are ultimately expected to vest during the period. The Company estimates the fair value of each option award issued under such plans on the date of grant using a Black-Scholes-Merton option-pricing models that use 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 Company’s merger with LecTec Corporation in 2011 (the “Merger”), and based on the Company’s common stock for periods subsequent to the Merger. However for options granted on and after December 29, 2016, the Company began using a Multiple Point Black-Scholes option-pricing model which uses a weighted average of historical volatility and peer company volatility. The Company determines the expected life 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 used the following weighted-average assumptions for stock awards granted during the year ended December 31: Year ended December 31, 2017 2016 2015 Expected term (in years) 6.16 4.60 4.00 Expected volatility 50.43 % 59.58 % 69.08 % Risk free rate 2.12 % 1.72 % 1.40 % Expected dividends — % — % — % The weighted average fair value of options granted at market during 2017 and 2016 was $8.40 and $3.84 per option, respectively. The following is a summary of stock award activity: Weighted Average Weighted Remaining Average Contractual Stock Awards Exercise Price Term(Years) Outstanding at December 31, 2014: 2,743,818 3.03 5.94 Granted 946,250 4.31 Forfeited (290,478) (3.12) Exercised (171,563) (2.99) Outstanding at December 31, 2015: 3,228,027 3.40 5.43 Granted 1,529,850 7.67 Forfeited (75,938) (3.74) Exercised (340,942) (3.16) Outstanding at December 31, 2016: 4,340,997 4.92 5.93 Granted 1,298,355 19.99 Forfeited (94,777) (6.29) Exercised (568,135) (3.43) Outstanding at December 31, 2017 4,976,440 8.99 6.39 Exercisable at December 31, 2017 2,343,796 4.12 4.26 The intrinsic value of equity awards exercised during the years ended December 31, 2017 and 2016 was approximately $7.8 million and $1.5 million, respectively. The intrinsic value of equity awards outstanding at December 31, 2017 and 2016 was approximately $96.1 million and $17.7 million, respectively. The intrinsic value of equity awards exercisable at December 31, 2017 and 2016 was approximately $56.7 million and $12.9 million, respectively. The increase in the intrinsic values of the equity awards was primarily the result of the increase in the Company’s stock price to $28.30 per share as of the last trading day for the year ended December 31, 2017 as compared to $9.00 per share for the year ended December 31, 2016. Total future compensation expense related to nonvested awards is expected to be approximately $16.8 million at December 31, 2017 which is expected to be recognized over a weighted average period of 4.00 years. The following table represents non-vested share-based payment activity: Weighted Average Number of Awards Exercise Price Nonvested options - December 31, 2014: 1,159,486 3.37 Granted 946,250 4.31 Vested (635,289) (3.32) Forfeited (290,478) (3.12) Nonvested options - December 31, 2015: 1,179,969 4.21 Granted 1,529,850 7.67 Vested (512,562) (4.21) Forfeited (75,938) (3.74) Nonvested options - December 31, 2016: 2,121,319 6.72 Granted 1,298,355 19.99 Vested (6.49) Forfeited (6.29) Nonvested options - December 31, 2017: 2,632,644 13.33 On December 18, 2017, the Compensation Committee of the Board of Directors approved a PSU to certain Company’s officers. The performance measure is based on achieving 2019 specified revenues and the PSUs vest one-third each February 15, 2020, 2021 and 2022. The PSUs have payout opportunities of between 0% and 150%. The performance measure is a target revenue amount for the year ended December 31, 2019. The Company estimated the fair value of the PSUs based on its closing stock price at the time of grant and its estimate of achieving such performance target and records compensation expense on a graded vesting attribution method, which recognizes compensation cost on a straight-line basis over each separately vesting portion of the award. Over the performance period, the number of shares of common stock that will ultimately vest and be issued and the related compensation expense is adjusted based upon the Company’s estimate of achieving such performance target. The number of shares delivered to recipients and the related compensation cost recognized as an expense will be based on the actual performance metrics as set forth in the applicable PSU award agreement. The December 18, 2017 PSU awards consisted of a total target award of 114,700 shares. The amount actually awarded will be based upon achievement of the performance measure and can range from 0 to 172,050, or up to 150% of the target award. The grant date fair value of the common stock on December 18, 2017 was $27.00. The total unrecognized future compensation expense related to this PSU assuming achievement of 100% of the target award is $3.1 million. Assuming the minimum of 0% and the maximum of 150% payout opportunity for the PSU, the range of total future compensation expense related to this PSU award is between $0 and $4.6 million as of December 31, 2017. On December 18, 2017 the Compensation Committee of the Board of Directors also approved PSU awards to certain executives related to their work on the Company’s BLA. The PSU awards consist of a targeted total award of 200,000 shares. The number of shares are allocated to certain milestones related to the BLA submission to and approval by the FDA. The performance measure is based upon achieving each of the specific milestones and will vest 100% upon achieving each of the milestones. The Company estimated the fair value of the PSUs based on its closing stock price at the time of grant and its estimate of achieving such performance target and will record compensation expense as the milestones are achieved. Over the performance period, the number of shares of common stock that will ultimately vest and be issued and the related compensation expense will be adjusted based upon the Company’s estimate of achieving such performance target. The number of shares delivered to recipients and the related compensation cost recognized as an expense will be based on the actual performance metrics as set forth in the applicable PSU award agreement. The amount actually awarded will be based upon achievement of the performance measures and can range from 0 to 200,000 shares. The grant date fair value of the common stock on December 18, 2017 was $27.00. The total unrecognized future compensation expense related to this PSU, assuming achievement of 100% of the target award is $5.4 million. Assuming the minimum of 0% and the maximum of 100% payout opportunity for the PSU, the range of total future compensation expense related to this PSU award is between $0 and $5.4 million as of December 31, 2017. On December 29, 2017, the Compensation Committee of the Board of Directors approved a separate PSU award to the Company’s Vice President of Sales. This award amounted to a target payout of 2,500 shares. The grant date fair value of the common stock on December 29, 2017 was $28.30. The amount actually awarded will be based upon achievement of certain quarterly revenue targets in 2018. Assuming a minimum of 0% and a maximum of 150% payout opportunity for the PSU, the range of future compensation expense related to this PSU award is between $0 and $106,000. |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2017 | |
Income Taxes | |
Income Taxes | 11. Income Taxes The Tax Reform, which was signed into law on December 22, 2017, has resulted in significant changes in the U.S. corporate income tax system. The Tax Reform reduces the corporate income tax rate from 35% to 21%. The effects of changes in tax rates and laws are recognized in the period in which the new legislation is enacted. As a result, we have remeasured our deferred tax assets and liabilities at December 31, 2017 based on the new Federal income tax rate of 21%. 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 2017 2016 2015 Deferred tax assets: Net operating loss carryforwards $ 27,578,200 $ 38,299,400 $ 33,424,100 Charitable contributions 300 500 500 Inventory reserves 205,800 361,300 267,700 Amortization 22,800 89,500 51,400 Allowance for doubtful accounts 116,900 102,300 72,300 Stock-based compensation 519,900 341,400 260,600 Total deferred tax assets 28,443,900 39,194,400 34,076,600 Deferred tax liabilities: Depreciation (80,500) (83,300) (62,400) Deferred revenue (6,400) - - Net deferred tax assets 28,357,000 39,111,100 34,014,200 Valuation allowance $ (28,357,000) $ (39,111,100) $ (34,014,200) As of December 31, 2017, the Company had net operating loss carry forwards of approximately $108.8 million to offset future taxable income which expire in various years through 2037. 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, 2017, 2016 and 2015. The valuation allowance decreased by $10.8 million during 2017, primarily due to the remeasurement of our deferred tax assets and liabilities as a result of the Tax Reform, which amounted to $14.5 million, offset by the current year’s net operating loss of $3.7 million. During 2016 and 2015, the valuation allowance increased $5.1 million and $4.5 million, respectively, to offset the deferred tax benefit in the respective years. The difference between the financial statement income tax and the income tax benefit using statutory rates is primarily due to the decrease in the valuation allowance. The Company had no income tax expense or income tax benefit for 2015, 2016 and 2017 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, 2017 | |
Retirement Plan | |
Employee Benefit Plan | 12. Employee Benefit Plan The Company adopted the AxoGen 401(k) plan (the “401(k) Plan”) in December 2015 with contributions starting in January 2016. All full-time employees who have attained the age of 18 are eligible to participate in the 401(k) 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 401(k) Plan requires the Company to make matching contributions of 3% on the first 3% of the employee’s annual salary and 1% of the next 2% of the employee’s annual salary as long as the employee participates in the 401(k) Plan. Both employee contributions and Company contributions vest immediately. The Company contributed $439,000 and $334,000 in matching funds during the years ended December 31, 2017 and 2016, respectively. During the year ended December 31, 2015, the Company contributed matching funds of $172,000 to the AxoGen Simple IRA plan which was replaced by The 401(k) Plan in December 2015. |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Dec. 31, 2017 | |
Commitments and Contingencies | |
Commitments and Contingencies | 13. Commitments and Contingencies Operating Leases On March 16, 2016 AC entered into the Fourth Amendment to Lease (“Fourth Amendment”) with SNH Medical Office Properties Trust, a Maryland real estate investment trust (“SNH”). SNH is the landlord of AC’s currently leased 11,761 square foot corporate headquarters facility at 13631 Progress Boulevard, Suite 400, Alachua, Florida 32615 (the “Current Premises”) pursuant to that certain lease dated as of February 6, 2007, as amended (the “Lease”). The Fourth Amendment expands the Current Premises by 7,050 square feet (the “Expansion Premises”). The Fourth Amendment also provides that the Expiration Date (as defined in the Fourth Amendment) of the Lease will be extended to approximately five years from the Occupancy Date (as defined in the Fourth Amendment) which was June 2016. The original expiration date of the Current Premises remains unchanged; provided, however, that AC shall have the right to extend the Current Premises Term (as defined in the Fourth Amendment) for three additional periods (the “Current Premises Extended Term”), the first such Current Premises Extended Term to commence on November 1, 2018 and end on October 31, 2019, the second such Current Premises Extended Term to commence on November 1, 2019 and end on October 31, 2020, and the third such Current Premises Extended Term to commence on November 1, 2020 and end on the Expiration Date. AC also has the right to extend the term of the then current Leased Premises (as defined in the Fourth Amendment) for an additional period of five years commencing on the day immediately after the Expiration Date. AxoGen’s annual cost of such property ranges from approximately $248,000 to $324,000 per year. On January 23, 2017 AC entered into a lease (the “New SHN Lease”) for a five-year term commencing on April 1, 2017 with SNH, for 1,431 square feet at 13709 Progress Boulevard, Alachua, Florida 32615. Pursuant to the New SHN Lease, AC is to use the space for general office and biomedical research uses. SNH is the landlord of AC’s currently leased corporate headquarters facility at 13631 Progress Boulevard, Alachua, Florida 32615. AC’s additional annual cost of the Premises will range from approximately $26,000 to $29,000 over the life of the lease. On October 25, 2013, AC entered into a commercial lease with Ja-Cole L.P. (“Ja-Cole”). Under the terms of the commercial lease, AC occupied 5,400 square feet of warehouse/office space comprising the Burleson, Texas Distribution Facility until November 30, 2016 at an annual cost of $43,200. On April 21, 2015, AC entered into a new commercial lease, as amended by the addendum on such date (as amended, the “Commercial Lease”), with Ja-Cole. The Commercial Lease superseded and replaced the original lease with Ja-Cole dated October 25, 2013. Under the terms of the Commercial Lease, AC leased an additional 2,100 square feet of warehouse space at the Distribution Facility. The Commercial Lease is for a three-year term expiring April 21, 2018. On October 25, 2016, AC entered into Commercial Lease Amendment 2 (the “Ja-Cole Amendment”) to the Commercial Lease. Under the terms of the Ja-Cole Amendment, AC leased an additional 2,500 square feet of warehouse/office space at the Distribution Facility. The Distribution Facility now comprises a total of 10,000 square feet, all of which, pursuant to the Ja-Cole Amendment, will be leased until March 31, 2019. The annual rental cost of the Distribution Facility is now approximately $88,000. The Distribution Facility houses raw material storage and product distribution while allowing same day order fulfillment for both the east and west coasts of the United States. In addition, AxoGen leases space and maintains records at certain other facilities, including the Company’s prior corporate headquarters at 1407 South Kings Highway, Texarkana, Texas 75501. 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 Amount 2018 437,900 2019 182,251 2020 165,116 2021 86,638 2022 - TOTAL $ 871,905 Total rent expense for the Company’s leased office and lab space for the years ended December 31, 2017, 2016 and 2015 was $494,000, $433,000 and $351,000, respectively. Service Agreements On August 6, 2015, AxoGen entered into a License and Services Agreement with Community Blood Center (d/b/a Community Tissue Services) (“CTS”), Dayton, Ohio, an FDA registered tissue establishment. Processing of the Avance ® Nerve Graft pursuant to the CTS agreement began in February 2016. The CTS agreement is for a five-year term, subject to earlier termination by either party at any time for cause (subject to the non-terminating party’s right to cure, in certain circumstances), or without cause upon 18 months’ prior notice. Under the CTS agreement AxoGen pays CTS a facility fee for clean room/manufacturing, storage and office space. CTS also provides services in support of AxoGen’s manufacturing such as routine sterilization of daily supplies, providing disposable supplies, microbial services and office support. Pursuant to the CTS Agreement, AxoGen pays license fees on a monthly basis to CTS which total an annual amount of approximately $1.4 million. 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 on February 26, 2018. Pursuant to the February 2018 amendment, the agreement expires on June 30, 2027. 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. Under the agreement, AxoGen provides purchase orders to Cook Biotech, and Cook Biotech fulfills the purchase orders. 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 the remainder monthly based on activities associated with the execution of AxoGen’s phase 3 pivotal clinical trial to support a BLA for Avance ® Nerve Graft. Certain executive officers of the Company are parties to employment contracts. Such contracts have severance payments for certain conditions including change of control. Concentrations Vendor Substantially all of AxoGen’s revenue is currently derived from four products, Avance ® Nerve Graft, AxoGuard ® Nerve Protector, AxoGuard ® Nerve Connector and Avive ® Soft Tissue Membrane. AxoGen has an exclusive distribution agreement with Cook Biotech for the purchase of AxoGuard ® which expires June 30, 2027. 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. 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 CTS 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. The CTS agreement is for a five-year term, subject to earlier termination by either party at any time for cause (subject to the non-terminating party’s right to cure, in certain circumstances), or without cause, upon 18 months’ prior notice. 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. |
Quarterly Results of Operations
Quarterly Results of Operations (Unaudited) | 12 Months Ended |
Dec. 31, 2017 | |
Quarterly Results of Operations (Unaudited) | |
Quarterly Results of Operations (Unaudited) | 14. Quarterly Results of Operations (Unaudited) The following is a summary of the quarterly results of operations for the years ended December 31, 2017 and 2016: Quarter First Second Third Fourth Total 2017 Revenues $ 12,241,073 $ 15,168,064 $ 16,046,253 $ 16,971,005 $ 60,426,395 Gross profit 10,325,425 12,890,863 13,541,975 14,356,547 51,114,810 Net loss (3,762,025) (2,060,179) (2,124,079) (2,499,179) (10,445,462) Loss per common share - basic and diluted (0.11) (0.06) (0.06) (0.07) (0.31) 2016 Revenues $ 8,111,759 $ 10,381,883 $ 11,205,224 $ 11,408,672 $ 41,107,538 Gross profit 6,706,168 8,847,471 9,507,781 9,578,868 34,640,288 Net loss (3,676,091) (2,802,696) (2,305,373) (5,626,984) (14,411,144) Loss per common share - basic and diluted (0.12) (0.09) (0.08) (0.17) (0.47) |
Schedule II - Valuation and Qua
Schedule II - Valuation and Qualifying Accounts | 12 Months Ended |
Dec. 31, 2017 | |
Schedule II - Valuation and Qualifying Accounts | |
Schedule II - Valuation and Qualifying Accounts | Schedule II – Valuation and Qualifying Accounts AXOGEN, INC. SCHEDULE II – VALUATION AND QUALIFYING ACCOUNTS THREE YEARS ENDED DECEMBER 31, 2017, 2016 AND 2015 Balance at Beginning of Year Charged to Costs and Expenses Deductions (Chargeoffs) Balance at End of Year Allowance for doubtful accounts 2015 94,095 125,371 (27,204) 192,262 2016 192,262 103,355 (23,762) 271,855 2017 271,855 223,323 (33,839) 461,339 Allowance for expiring inventory 2015 404,211 1,002,919 (695,765) 711,365 2016 711,365 1,036,969 (788,269) 960,065 2017 960,065 1,290,076 (1,438,000) 812,141 |
Summary of Significant Accoun23
Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2017 | |
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, services 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. Revenues from research grants are recognized in the period the associated costs are incurred. |
Cash and Cash Equivalents and Concentration | Cash and Cash Equivalents and Concentration For purposes of the statement of cash flows, the Company considers any 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. 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 receivables due to our past successful experience in collectability. Specific accounts that are deemed uncollectible are reserved at 100% of their outstanding balance. In the event that we exhaust all collection efforts and deem an account uncollectible, we would subsequently write off the account. The allowance for doubtful accounts reserve balance was approximately $461,000 and $272,000 at December 31, 2017 and 2016, 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 and monitoring procedures. |
Inventories | Inventories Inventories are comprised of unprocessed tissue, work-in-process, Avance ® Nerve Graft, AxoGuard ® Nerve Connector, AxoGuard ® Nerve Protector, Avive ® Soft Tissue Membrane, AcroVal ® Neurosensory and Motor Testing System, AxoTouch ® Two-Point Discriminator and supplies and are valued at the lower of cost (first-in, first-out) or net realizable value. We regularly review the inventory status to determine the expected reserve level required. The Company policy is to monitor the shelf life of its products and reserve amounts based on the expiration date of the finished goods inventory. We also reserve a portion of raw materials based on our historical experience of tissue that fails during the inspection and debridement stage due to medical history, serology compliance or poor quality. Our inventory reserve balance was approximately $812,000 and $960,000 at December 31, 2017 and 2016, 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 years (or lease term if less) Processing equipment - 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 6 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, 2017 and 2016, the Company did not record any impairment loss. |
Deferred Financing Costs | Deferred Financing Costs The Company records as a discount to debt 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 $204,000, $40,000 and $31,000 for the years ended December 31, 2017, 2016 and 2015, 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 $6.7 million, $4.2 million and $3.2 million for the years ended December 31, 2017, 2016 and 2015, 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 the 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, 2014 through 2016; however, 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 The Company measures all employee stock-based compensation awards using a fair value method and records such expense in its consolidated financial statements. The estimated value of the portion of the award that is ultimately expected to vest, with forfeitures accounted for as they occur, is recognized as expense over the requisite service periods in the Company’s consolidated statements of operations. The Company estimates the grant date fair value of stock option awards generally on the date of grant using the Black-Scholes option pricing models. With respect to performance stock units (“PSUs”), the number of shares that vest and are issued to the recipient is based upon the Company’s performance as measured against specified targets over the measurement period. The fair value of the PSUs is based on the Company’s closing stock price on the grant date and its estimate of achieving such performance targets. For further discussion and disclosures, see Note 10, “Stock Incentive Plan.” |
Earnings (Loss) Per Share of Common Stock | Earnings (Loss) Per Share of Common Stock Earnings (loss) per share of common stock (EPS) is calculated for basic EPS by dividing net income (loss) available to common stockholders by the weighted average number of shares of common stock outstanding during the period. There were no dilutive instruments as of December 31, 2017, 2016 and 2015. The basic and diluted weighted average shares outstanding were 33,322,767 and 30,702,164 for the years ended December 31, 2017 and 2016, respectively. Basic and diluted net loss per commons share for all periods presented is computed by dividing the net loss attributable to common shareholders by the weighted-average number of common shares outstanding and common share equivalents outstanding, when dilutive. Potentially dilutive common share equivalents include common shares which would potentially be issued pursuant to stock warrants and stock options. Common share equivalents are not included in determining the fully diluted loss per share if their effect is antidilutive. |
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 materially from those estimates. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In May 2014, the Financial Accounting Standards Board, or FASB, issued a new standard on revenue recognition which outlines a single comprehensive model to use in accounting for revenue arising from contracts with customers and supersedes most current revenue recognition guidance, including industry-specific guidance. The core principle of the revenue model is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The standard is designed to create greater comparability for financial statement users across industries and jurisdictions and also requires enhanced disclosures. The guidance is effective for the Company beginning on January 1, 2018, including interim reporting periods during the year ending December 31, 2018. The standard may be applied retrospectively to each prior period presented or retrospectively with the cumulative effect recognized as of the adoption date. During the quarter ended December 31, 2017, we completed our evaluation of the new standard, including an assessment of existing revenue contracts with our customers on our most significant revenue streams, business practices and processes, and our controls over financial reporting, and we do not believe there will be a material change to the timing and amounts of our revenue, processes or internal controls. During 2018, we will be required to provided additional disclosures in the notes to the consolidated financial statements. We will utilize the modified retrospective method upon adoption. In February 2016, the FASB issued ASU 2016-02, “Leases (Topic 842)”. This update will increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. This update is effective for annual and interim reporting periods beginning after December 15, 2018, including interim periods within those fiscal years. Early adoption is permitted. We are currently evaluating the impact this standard will have on our consolidated financial statements. In August 2016, the FASB issued ASU No. 2016-15, Classification of Certain Cash Receipts and Cash Payments (Topic 230). The ASU was issued intending to reduce diversity in practice in how certain cash receipts and cash payments are presented and classified in the Consolidated Statement of Cash Flows by providing guidance on eight specific cash flow issues. The guidance is effective for the Company on January 1, 2018, including interim reporting periods during the year ending December 31, 2018. We do not believe the adoption of this standard will have a material impact on our consolidated financial statements. In November 2016, the FASB issued ASU No. 2016-18, Statement of Cash Flows (Topic 230), guidance that a statement of cash flows explains the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. The guidance is effective for the Company on January 1, 2018, including interim reporting periods during the year ending December 31, 2018. We do not believe the adoption of this guidance will have a material impact on our Statement of Cash Flows. In May 2017, the FASB issued ASU 2017-09, “Compensation – Stock Compensation (Topic 718): Scope of Modification Accounting.” ASU 2017-09 provides clarity on which changes to the terms or conditions of share-based payment awards require entities to apply the modification accounting provisions required in Topic 718. ASU 2017-09 is effective for the Company on January 1, 2018, including interim reporting periods during the year ending December 31, 2018. We do not believe the adoption of this guidance will have a material impact on our consolidated financial statements. The Company’s management has reviewed and considered all other 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 Accoun24
Summary of Significant Accounting Policies (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Summary of Significant Accounting Policies | |
Depreciation and amortization estimated useful life | Furniture and equipment 2 - 5 years Leasehold improvements years (or lease term if less) Processing equipment - 7 years |
Inventories (Tables)
Inventories (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Inventories | |
Schedule of inventories | December 31, December 31, 2017 2016 Finished goods $ 5,489,360 $ 4,132,036 Work in process 470,187 205,116 Raw materials 1,356,395 1,121,688 Inventories $ 7,315,942 $ 5,458,840 |
Property and Equipment (Tables)
Property and Equipment (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Property and Equipment | |
Schedule of Property and equipment | December 31, December 31, 2017 2016 Furniture and equipment $ 1,934,669 $ 1,270,173 Leasehold improvements 711,319 447,650 Processing equipment 1,839,800 1,577,561 Less: accumulated depreciation and amortization (2,288,749) (1,801,137) Property and equipment, net $ 2,197,039 $ 1,494,247 |
Intangible Assets (Tables)
Intangible Assets (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Intangible Assets | |
Schedule of intangible assets | December 31, December 31, 2017 2016 License agreements $ 1,007,566 $ 984,342 Patents 459,903 308,212 Less: accumulated amortization (530,477) (463,575) Intangible assets, net $ 936,992 $ 828,979 |
Accounts Payable and Accrued 28
Accounts Payable and Accrued Expenses (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Accounts Payable and Accrued Expenses | |
Schedule of accounts payable and accrued expenses | December 31, December 31, 2017 2016 Accounts payable $ 3,237,962 $ 3,614,015 Accrued expenses 1,770,956 804,691 Accrued compensation 3,943,143 2,583,459 Accounts Payable and Accrued Expenses $ 8,952,061 $ 7,002,165 |
Term Loan Agreements and Long29
Term Loan Agreements and Long Term Debt (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Term Loan Agreements and Long Term Debt | |
Schedule of Term Loan Agreements and Long Term Debt | December 31, December 31, 2017 2016 Term Loan Agreement with MidCap Financial Trust (“MidCap”) for a total of $21,000,000, net of $554,100 of unamortized deferred financing fees at December 31, 2017, and $771,185 at December 31, 2016. Interest is payable monthly at 8.0% per annum plus the greater of LIBOR or 0.5% which as of December 31, 2017 resulted in a 9.36% rate. $ 20,445,900 $ 20,228,815 Revolving Loan Agreement with MidCap for up to $10,000,000 with borrowings based upon eligible accounts receivable and inventory. Interest is payable monthly at 4.5% per annum plus the greater of LIBOR or 0.5% which as of December 31, 2017 resulted in a 5.86% rate. 4,000,000 4,025,023 Equipment Lease Agreement with Cisco Capital for a total lease amount of $58,875 which has a 36 month term and requires no lease payments for the first three months of the lease and 33 equal payments of principal and interest until the end of the term. Interest on the lease is payable monthly at 3.5% per annum. 36,930 57,829 Equipment Lease Agreement with Raymond Leasing Corporation for a total lease amount of $29,998 which has a 48 month term with equal payments for principal and interest until the end of the term. Interest on the lease is payable monthly at 6.7% per annum. 29,998 — Equipment Lease Agreement with B&B Office Systems for a total lease amount of $31,961 which has a 60 month term with equal payments for principal and interest until the end of the term. Interest on the lease is payable monthly at 8.5% per annum. 31,961 — Total 24,544,789 24,311,667 Less current revolving loan (4,000,000) (4,025,023) Less current maturities of long term debt (735,017) (20,899) Long-term portion $ 19,809,772 $ 20,265,745 |
Schedule of Maturities of Long Term Debt | Year Ending December 31 Amount 2018 $ 735,017 2019 8,427,916 2020 8,413,817 2021 3,514,892 2022 7,247 21,098,889 Less unamortized debt issuance costs (554,100) TOTAL $ 20,544,789 |
Stock Incentive Plan (Tables)
Stock Incentive Plan (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Stock Incentive Plan | |
Schedule of weighted-average assumptions for options granted | Year ended December 31, 2017 2016 2015 Expected term (in years) 6.16 4.60 4.00 Expected volatility 50.43 % 59.58 % 69.08 % Risk free rate 2.12 % 1.72 % 1.40 % Expected dividends — % — % — % |
Summary of stock option activity | Weighted Average Weighted Remaining Average Contractual Stock Awards Exercise Price Term(Years) Outstanding at December 31, 2014: 2,743,818 3.03 5.94 Granted 946,250 4.31 Forfeited (290,478) (3.12) Exercised (171,563) (2.99) Outstanding at December 31, 2015: 3,228,027 3.40 5.43 Granted 1,529,850 7.67 Forfeited (75,938) (3.74) Exercised (340,942) (3.16) Outstanding at December 31, 2016: 4,340,997 4.92 5.93 Granted 1,298,355 19.99 Forfeited (94,777) (6.29) Exercised (568,135) (3.43) Outstanding at December 31, 2017 4,976,440 8.99 6.39 Exercisable at December 31, 2017 2,343,796 4.12 4.26 |
Schedule of non-vested share-based payment activity with employees | Weighted Average Number of Awards Exercise Price Nonvested options - December 31, 2014: 1,159,486 3.37 Granted 946,250 4.31 Vested (635,289) (3.32) Forfeited (290,478) (3.12) Nonvested options - December 31, 2015: 1,179,969 4.21 Granted 1,529,850 7.67 Vested (512,562) (4.21) Forfeited (75,938) (3.74) Nonvested options - December 31, 2016: 2,121,319 6.72 Granted 1,298,355 19.99 Vested (6.49) Forfeited (6.29) Nonvested options - December 31, 2017: 2,632,644 13.33 |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Income Taxes | |
Schedule of differences between the carrying amount of assets and liabilities for financial reporting purposes and their respective income tax basis | December 31 2017 2016 2015 Deferred tax assets: Net operating loss carryforwards $ 27,578,200 $ 38,299,400 $ 33,424,100 Charitable contributions 300 500 500 Inventory reserves 205,800 361,300 267,700 Amortization 22,800 89,500 51,400 Allowance for doubtful accounts 116,900 102,300 72,300 Stock-based compensation 519,900 341,400 260,600 Total deferred tax assets 28,443,900 39,194,400 34,076,600 Deferred tax liabilities: Depreciation (80,500) (83,300) (62,400) Deferred revenue (6,400) - - Net deferred tax assets 28,357,000 39,111,100 34,014,200 Valuation allowance $ (28,357,000) $ (39,111,100) $ (34,014,200) |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Commitments and Contingencies | |
Schedule of estimated future minimum rental payments | Year Ending December 31 Amount 2018 437,900 2019 182,251 2020 165,116 2021 86,638 2022 - TOTAL $ 871,905 |
Quarterly Results of Operatio33
Quarterly Results of Operations (Unaudited) (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Quarterly Results of Operations (Unaudited) | |
Summary of quarterly results of operations | Quarter First Second Third Fourth Total 2017 Revenues $ 12,241,073 $ 15,168,064 $ 16,046,253 $ 16,971,005 $ 60,426,395 Gross profit 10,325,425 12,890,863 13,541,975 14,356,547 51,114,810 Net loss (3,762,025) (2,060,179) (2,124,079) (2,499,179) (10,445,462) Loss per common share - basic and diluted (0.11) (0.06) (0.06) (0.07) (0.31) 2016 Revenues $ 8,111,759 $ 10,381,883 $ 11,205,224 $ 11,408,672 $ 41,107,538 Gross profit 6,706,168 8,847,471 9,507,781 9,578,868 34,640,288 Net loss (3,676,091) (2,802,696) (2,305,373) (5,626,984) (14,411,144) Loss per common share - basic and diluted (0.12) (0.09) (0.08) (0.17) (0.47) |
Summary of Significant Accoun34
Summary of Significant Accounting Policies (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Reserve for accounts deemed uncollectible (as a percent) | 100.00% | ||
Allowance for doubtful accounts reserve balance | $ 461,000 | $ 272,000 | |
Inventory valuation reserves | 812,000 | 960,000 | |
Impairment charges of long lived assets | 0 | 0 | |
Advertising costs | 204,000 | 40,000 | $ 31,000 |
Research and development | $ 6,699,120 | $ 4,212,023 | $ 3,237,171 |
Dilutive instruments outstanding | 0 | 0 | |
Weighted Average Common Shares outstanding - basic and diluted | 33,322,767 | 30,702,164 | 26,075,670 |
Minimum | |||
Age of doubtful accounts | 60 days | ||
Licensing Agreements And Patents | Minimum | |||
Estimated useful life | 5 years | ||
Licensing Agreements And Patents | Maximum | |||
Estimated useful life | 20 years | ||
Furniture and Equipment | Minimum | |||
Estimated useful life | 2 years | ||
Furniture and Equipment | Maximum | |||
Estimated useful life | 5 years | ||
Leasehold Improvements | |||
Estimated useful life | 5 years | ||
Processing Equipment | Minimum | |||
Estimated useful life | 5 years | ||
Processing Equipment | Maximum | |||
Estimated useful life | 7 years |
Inventories (Details)
Inventories (Details) - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 |
Inventories | ||
Finished goods | $ 5,489,360 | $ 4,132,036 |
Work in process | 470,187 | 205,116 |
Raw materials | 1,356,395 | 1,121,688 |
Inventories | 7,315,942 | 5,458,840 |
Inventory valuation reserves | $ 812,000 | $ 960,000 |
Property and Equipment (Details
Property and Equipment (Details) - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 |
Property and equipment | ||
Less: accumulated depreciation and amortization | $ (2,288,749) | $ (1,801,137) |
Property and equipment, net | 2,197,039 | 1,494,247 |
Furniture and Equipment | ||
Property and equipment | ||
Property and equipment, Gross | 1,934,669 | 1,270,173 |
Leasehold Improvements | ||
Property and equipment | ||
Property and equipment, Gross | 711,319 | 447,650 |
Processing Equipment | ||
Property and equipment | ||
Property and equipment, Gross | $ 1,839,800 | $ 1,577,561 |
Intangible Assets - Components
Intangible Assets - Components of Intangible Assets (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Intangible assets consist of: | |||
Less: accumulated amortization | $ (530,477) | $ (463,575) | |
Intangible assets, net | 936,992 | 828,979 | |
Amortization of Intangible Assets | 78,993 | 74,871 | $ 45,828 |
Future amortization of license and patent agreements | |||
2,018 | 74,000 | ||
2,019 | 74,000 | ||
2,020 | 74,000 | ||
2,021 | 74,000 | ||
2,022 | 74,000 | ||
2,023 | 74,000 | ||
Thereafter | 134,000 | ||
License Agreements | |||
Intangible assets consist of: | |||
Finite-lived intangible assets, gross | $ 1,007,566 | 984,342 | |
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 | $ 459,903 | $ 308,212 | |
Amortization period of intangible assets | 3 years | ||
Patent costs | $ 22,000 | ||
Pending and issued license costs | 460,000 | ||
Pending and issued license costs amortized over period of 20 years | $ 102,000 | ||
Patents | Maximum | |||
Intangible assets consist of: | |||
Amortization period of intangible assets | 20 years |
Intangible Assets - License Agr
Intangible Assets - License Agreements (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Sales and Marketing Expense | |||
Intangible assets | |||
Royalty fees included in sales and marketing expense | $ 1,200,000 | $ 812,000 | $ 526,000 |
License Agreements | |||
Intangible assets | |||
License agreements extended period | 60 days | ||
Minimum royalty of agreements | $ 12,500 | ||
Milestone fee upon receiving a Phase II Small Business Innovation Research | 15,000 | ||
Milestone fee upon FDA approval | 2,000 | ||
Milestone fee upon first commercial use of certain licensed technology | 25,000 | ||
Milestone fee upon first use to manufacture products that utilize certain technology not currently incorporated into AxoGen products | $ 10,000 | ||
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 39
Accounts Payable and Accrued Expenses (Details) - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 |
Accounts Payable and Accrued Liabilities | ||
Accounts payable | $ 3,237,962 | $ 3,614,015 |
Accrued expenses | 1,770,956 | 804,691 |
Accrued compensation | 3,943,143 | 2,583,459 |
Accounts Payable and Accrued Expenses | $ 8,952,061 | $ 7,002,165 |
Term Loan Agreements and Long40
Term Loan Agreements and Long Term Debt - Schedule of Debt (Details) - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 |
Note Payable | ||
Long term debt | $ 24,544,789 | $ 24,311,667 |
Less current revolving loan | (4,000,000) | (4,025,023) |
Less current maturities of long term debt | (735,017) | (20,899) |
Long-term portion | 19,809,772 | 20,265,745 |
Cisco Capital | Equipment Lease Agreement | ||
Note Payable | ||
Long term debt | 36,930 | 57,829 |
Raymond Leasing Corporation | Equipment Lease Agreement | ||
Note Payable | ||
Long term debt | 29,998 | |
B and B Office Systems | Equipment Lease Agreement | ||
Note Payable | ||
Long term debt | 31,961 | |
MidCap Loan | Term Loan Agreement | ||
Note Payable | ||
Long term debt | 20,445,900 | 20,228,815 |
MidCap Loan | Revolver Loan Agreement | ||
Note Payable | ||
Long term debt | $ 4,000,000 | $ 4,025,023 |
Term Loan Agreements and Long41
Term Loan Agreements and Long Term Debt - Schedule of Debt - Terms (Details) - USD ($) | Oct. 25, 2016 | Dec. 31, 2017 | Dec. 31, 2016 |
Equipment Lease Agreement | Cisco Capital | |||
Note Payable | |||
Face amount | $ 58,875 | $ 58,875 | |
Interest payable, percent | 3.50% | 3.50% | |
Term of debt | 36 months | 36 months | |
No payments required, term | 3 months | 3 months | |
Interest and principal payments, term | 33 months | 33 months | |
Equipment Lease Agreement | Raymond Leasing Corporation | |||
Note Payable | |||
Face amount | $ 29,998 | $ 29,998 | |
Interest payable, percent | 6.70% | 6.70% | |
Term of debt | 48 months | 48 months | |
Equipment Lease Agreement | B and B Office Systems | |||
Note Payable | |||
Face amount | $ 31,961 | $ 31,961 | |
Interest payable, percent | 8.50% | 8.50% | |
Term of debt | 60 months | 60 months | |
MidCap Loan | Term Loan Agreement | |||
Note Payable | |||
Face amount | $ 21,000,000 | $ 21,000,000 | $ 21,000,000 |
Unamortized deferred financing fees | $ 554,100 | $ 771,185 | |
Interest payable, percent | 8.00% | 8.00% | 8.00% |
Interest rate spread | 0.50% | 0.50% | 0.50% |
Effective interest rate (as a percent) | 9.36% | 9.36% | |
MidCap Loan | Revolver Loan Agreement | |||
Note Payable | |||
Maximum line of credit amount | $ 10,000,000 | $ 10,000,000 | $ 10,000,000 |
Interest payable, percent | 4.50% | 4.50% | 4.50% |
Interest rate spread | 0.50% | 0.50% | 0.50% |
Effective interest rate (as a percent) | 5.86% | 5.86% |
Term Loan Agreements and Long42
Term Loan Agreements and Long Term Debt - Term Loan Agreement and Revenue Interest Agreement (Details) - Three Peaks Loan - USD ($) $ in Millions | Nov. 12, 2014 | Nov. 13, 2014 |
Term Loan | ||
Debt Instrument [Line Items] | ||
Face amount | $ 25 | |
Term of debt | 6 years | |
Interest payable, percent | 9.00% | |
Interest rate spread | 1.00% | |
Effective interest rate (as a percent) | 10.00% | |
Revenue Interest Purchase Agreement | ||
Debt Instrument [Line Items] | ||
Royalty percentage on net revenue | 3.75% | |
Maximum revenue subject to royalties payable calculation | $ 30 | |
Aggregate revenues subject to royalties payable, term | 12 months |
Term Loan Agreements and Long43
Term Loan Agreements and Long Term Debt - Term Loan Agreement and Revolving Loan (Details) | Oct. 26, 2016 | Oct. 25, 2016USD ($)item | Dec. 31, 2017USD ($) | Dec. 31, 2016USD ($) | Dec. 31, 2015USD ($) |
Debt Instrument [Line Items] | |||||
Exit fee percent | 5.00% | ||||
Debt issuance costs | $ 29,472 | $ 800,847 | $ 180,139 | ||
Three Peaks Loan | |||||
Debt Instrument [Line Items] | |||||
Payments of Debt Extinguishment Costs | $ 2,300,000 | ||||
MidCap Loan | |||||
Debt Instrument [Line Items] | |||||
Proceeds from issuance of debt | 25,000,000 | ||||
Debt issuance costs | 800,000 | ||||
Term Loan Agreement | MidCap Loan | |||||
Debt Instrument [Line Items] | |||||
Face amount | $ 21,000,000 | $ 21,000,000 | $ 21,000,000 | ||
Number of months requiring principal and interest payments | item | 30 | ||||
Interest payable, percent | 8.00% | 8.00% | 8.00% | ||
Interest rate spread | 0.50% | 0.50% | 0.50% | ||
Effective interest rate (as a percent) | 9.36% | 9.36% | |||
Annual agency fee, percent of aggregate principal amount | (0.25%) | ||||
Minimum prepayment amount | $ 2,500,000 | ||||
Integral multiple of the minimum prepayment amount | $ 1,000,000 | ||||
Maximum number of partial voluntary prepayments allowed | item | 3 | ||||
Prepayment fee percent, year one | 3.00% | ||||
Prepayment fee percent, year two | 2.00% | ||||
Prepayment fee percent, thereafter | 1.00% | ||||
Revolver Loan Agreement | MidCap Loan | |||||
Debt Instrument [Line Items] | |||||
Interest payable, percent | 4.50% | 4.50% | 4.50% | ||
Interest rate spread | 0.50% | 0.50% | 0.50% | ||
Effective interest rate (as a percent) | 5.86% | 5.86% | |||
Prepayment fee percent, year one | 3.00% | ||||
Prepayment fee percent, year two | 2.00% | ||||
Prepayment fee percent, thereafter | 1.00% | ||||
Percent of Borrowing Base which accrues interest | 30.00% | ||||
Maximum line of credit amount | $ 10,000,000 | $ 10,000,000 | $ 10,000,000 | ||
Borrowing amount available | $ 7,700,000 | $ 4,000,000 | |||
Collateral management fee, percent | (0.50%) | ||||
Unused line fee, percent | 0.50% | ||||
Revolver Loan Agreement | MidCap Loan | Maximum | |||||
Debt Instrument [Line Items] | |||||
Maximum line of credit amount | $ 15,000,000 |
Term Loan Agreements and Long44
Term Loan Agreements and Long Term Debt - Additional Information (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Debt Instrument [Line Items] | |||
Interest Expense | $ 2,216,845 | $ 5,386,268 | $ 3,988,619 |
Repayments of Long-term Debt | 20,899 | 2,446,676 | |
Amortization of Financing Costs and Discounts | 246,557 | 875,389 | $ 127,912 |
Write Off Of Deferred Financing Costs | $ 750,474 | ||
Three Peaks Loan | |||
Debt Instrument [Line Items] | |||
Interest Expense | 1,700,000 | ||
Repayments of Long-term Debt | 2,400,000 | ||
Amortization of Financing Costs and Discounts | 750,000 | ||
Write Off Of Deferred Financing Costs | $ 750,000 |
Term Loan Agreements and Long45
Term Loan Agreements and Long Term Debt - Annual Maturities (Details) | Dec. 31, 2017USD ($) |
Minimum annual payment amounts | |
2,018 | $ 735,017 |
2,019 | 8,427,916 |
2,020 | 8,413,817 |
2,021 | 3,514,892 |
2,022 | 7,247 |
Total, before debt issuance costs | 21,098,889 |
Less unamortized debt issuance costs | (554,100) |
Total | $ 20,544,789 |
Shareholders' Equity (Deficit)
Shareholders' Equity (Deficit) - Class of Stock and Warrants (Details) - $ / shares | Dec. 31, 2017 | Dec. 31, 2016 |
Public Offering of Common Stock | ||
Authorized capital stock | 50,000,000 | 50,000,000 |
Common stock, par value | $ 0.01 | $ 0.01 |
Stockholders' Equity (Deficit)
Stockholders' Equity (Deficit) - Public Offering (Details) | Nov. 16, 2017USD ($)$ / sharesshares | Oct. 13, 2016USD ($)shares | Oct. 07, 2016item$ / sharesshares | Aug. 26, 2015USD ($)$ / sharesshares | Feb. 13, 2015USD ($)$ / sharesshares | Feb. 05, 2015$ / sharesshares | Dec. 31, 2017USD ($)$ / sharesshares | Dec. 31, 2016USD ($)$ / sharesshares | Dec. 31, 2015USD ($) |
Shares of common stock sold | 34,350,329 | 33,008,865 | |||||||
Par value of common stock | $ / shares | $ 0.01 | $ 0.01 | |||||||
Public offering price (in dollars per share) | $ / shares | $ 28.30 | $ 9 | |||||||
Net proceeds from issuance of common stock | $ | $ 15,662,905 | $ 18,668,092 | $ 30,968,386 | ||||||
Offering expenses | $ | $ 300,000 | ||||||||
February 2015 Offering | |||||||||
Shares of common stock sold | 5,437,200 | 4,728,000 | |||||||
Par value of common stock | $ / shares | $ 2.75 | $ 0.01 | |||||||
Public offering price (in dollars per share) | $ / shares | $ 2.75 | ||||||||
Number of days to underwriter to sell additional common shares | 30 days | ||||||||
Underwriting discounts, commissions and other estimated offering expenses | $ | $ 15,000,000 | ||||||||
Offering expenses paid | $ | $ 1,400,000 | ||||||||
August 2015 Offering | |||||||||
Shares of common stock sold | 4,861,111 | ||||||||
Par value of common stock | $ / shares | $ 3.60 | ||||||||
Gross proceeds from issuance of common stock | $ | $ 17,500,000 | ||||||||
October 2016 Offering | |||||||||
Shares of common stock sold | 2,333,334 | ||||||||
Public offering price (in dollars per share) | $ / shares | $ 7.50 | ||||||||
Number of days to underwriter to sell additional common shares | 30 days | ||||||||
October 2016 Offering | Directors and officers | |||||||||
Shares of common stock sold | 32,666 | ||||||||
Number of directors and officers who purchased common stock | item | 5 | ||||||||
October 2016 Offering inclusive of over-allotment option | |||||||||
Shares of common stock sold | 2,683,334 | ||||||||
Net proceeds from issuance of common stock | $ | $ 18,670,000 | ||||||||
November 2017 Offering | |||||||||
Shares of common stock sold | 700,000 | ||||||||
Number of days to underwriter to sell additional common shares | 30 days | ||||||||
Offering expenses | $ | $ 15,650,000 | ||||||||
Underwriting Agreement | |||||||||
Shares of common stock sold | 255,000 | 350,000 | 350,000 | 709,200 | |||||
ESSEX | November 2017 Offering | |||||||||
Shares of common stock sold | 1,000,000 | ||||||||
Public offering price (in dollars per share) | $ / shares | $ 21 |
Stock Incentive Plan - Narrativ
Stock Incentive Plan - Narrative (Details) - USD ($) | Dec. 29, 2017 | Dec. 18, 2017 | Jun. 30, 2017 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | May 24, 2017 |
Stock Option disclosures | |||||||
Total future stock compensation expense related to nonvested awards | $ 16,800,000 | ||||||
Share Price | $ 28.30 | $ 9 | |||||
Employee Consultants and Directors Stock Options [Member] | |||||||
Stock Option disclosures | |||||||
Options, Granted (in shares) | 1,298,355 | 1,529,850 | 946,250 | ||||
Weighted average grant-date fair value of options granted (in dollars per share) | $ 19.99 | $ 7.67 | $ 4.31 | ||||
Stock Options | |||||||
Stock Option disclosures | |||||||
Weighted average grant-date fair value of options granted (in dollars per share) | $ 8.40 | $ 3.84 | |||||
PSUs | Board of Directors | Minimum | |||||||
Stock Option disclosures | |||||||
Payout opportunity | 0.00% | ||||||
PSUs | Board of Directors | Maximum | |||||||
Stock Option disclosures | |||||||
Payout opportunity | 150.00% | ||||||
PSUs | Certain officers, excluding VP of Sales | |||||||
Stock Option disclosures | |||||||
Granted (in shares) | 114,700 | ||||||
Grant date fair value (per share) | $ 27 | ||||||
Unrecognized compensation expense | $ 3,100,000 | ||||||
PSUs | Certain officers, excluding VP of Sales | Minimum | |||||||
Stock Option disclosures | |||||||
Payout opportunity | 0.00% | ||||||
Granted (in shares) | 0 | ||||||
Unrecognized compensation expense | $ 0 | ||||||
PSUs | Certain officers, excluding VP of Sales | Maximum | |||||||
Stock Option disclosures | |||||||
Payout opportunity | 150.00% | ||||||
Assumed achievement percentage of PSUs to calculate unrecognized cost | 100.00% | ||||||
Granted (in shares) | 172,050 | ||||||
Unrecognized compensation expense | $ 4,600,000 | ||||||
PSUs | Vice President of Sales | |||||||
Stock Option disclosures | |||||||
Granted (in shares) | 2,500 | ||||||
Grant date fair value (per share) | $ 28.30 | ||||||
PSUs | Vice President of Sales | Minimum | |||||||
Stock Option disclosures | |||||||
Payout opportunity | 0.00% | ||||||
Unrecognized compensation expense | $ 0 | ||||||
PSUs | Vice President of Sales | Maximum | |||||||
Stock Option disclosures | |||||||
Payout opportunity | 150.00% | ||||||
Unrecognized compensation expense | $ 106,000 | ||||||
PSU - BLA Milestones [Member] | |||||||
Stock Option disclosures | |||||||
Vesting percentage | 100.00% | ||||||
Assumed achievement percentage of PSUs to calculate unrecognized cost | 100.00% | ||||||
Granted (in shares) | 200,000 | ||||||
Grant date fair value (per share) | $ 27 | ||||||
Unrecognized compensation expense | $ 5,400,000 | ||||||
PSU - BLA Milestones [Member] | Minimum | |||||||
Stock Option disclosures | |||||||
Payout opportunity | 0.00% | ||||||
Granted (in shares) | 0 | ||||||
Unrecognized compensation expense | $ 0 | ||||||
PSU - BLA Milestones [Member] | Maximum | |||||||
Stock Option disclosures | |||||||
Payout opportunity | 100.00% | ||||||
Granted (in shares) | 200,000 | ||||||
Unrecognized compensation expense | $ 5,400,000 | ||||||
AxoGen 2010 Stock Incentive Plan [Member] | |||||||
Stock Option disclosures | |||||||
Shares authorized for issuance | 5,500,000 | 7,700,000 | |||||
AxoGen 2010 Stock Incentive Plan [Member] | Employee Consultants and Directors Stock Options [Member] | Minimum | |||||||
Stock Option disclosures | |||||||
Option term | 7 years | ||||||
AxoGen 2010 Stock Incentive Plan [Member] | Employee Consultants and Directors Stock Options [Member] | Maximum | |||||||
Stock Option disclosures | |||||||
Option term | 10 years | ||||||
AxoGen 2010 Stock Incentive Plan [Member] | Stock Options | |||||||
Stock Option disclosures | |||||||
Vesting percentage | 50.00% | ||||||
Vesting period | 5 years | 4 years | |||||
Share-based compensation expense | $ 3,600,000 | $ 1,400,000 | $ 1,300,000 | ||||
AxoGen 2010 Stock Incentive Plan [Member] | Stock Options | One Year After Grant Date | |||||||
Stock Option disclosures | |||||||
Vesting percentage | 25.00% | ||||||
Vesting period | 1 year | ||||||
AxoGen 2010 Stock Incentive Plan [Member] | Stock Options | Every Six Months | |||||||
Stock Option disclosures | |||||||
Vesting percentage | 12.50% | ||||||
Vesting period | 4 years | 3 years | |||||
AxoGen 2010 Stock Incentive Plan [Member] | Stock Options | Two Years After Grant Date | |||||||
Stock Option disclosures | |||||||
Vesting period | 2 years | ||||||
AxoGen 2010 Stock Incentive Plan [Member] | Directors and Officers Stock Options [Member] | |||||||
Stock Option disclosures | |||||||
Vesting percentage | 25.00% | ||||||
Vesting period | 1 year | ||||||
AxoGen 2010 Stock Incentive Plan [Member] | Consultant Stock Options [Member] | Minimum | |||||||
Stock Option disclosures | |||||||
Vesting period | 3 years | ||||||
AxoGen 2010 Stock Incentive Plan [Member] | Consultant Stock Options [Member] | Maximum | |||||||
Stock Option disclosures | |||||||
Vesting period | 10 years | ||||||
AxoGen 2017 Employee Stock Purchase Plan [Member] | |||||||
Stock Option disclosures | |||||||
Shares authorized for issuance | 600,000 |
Stock Incentive Plan - Summary
Stock Incentive Plan - Summary of Weighted-Average Assumptions Used (Details) | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Weighted-average assumptions | |||
Expected term | 6 years 1 month 28 days | 4 years 7 months 6 days | 4 years |
Expected volatility (as a percent) | 50.43% | 59.58% | 69.08% |
Risk free rate (as a percent) | 2.12% | 1.72% | 1.40% |
Stock Incentive Plan - Stock Aw
Stock Incentive Plan - Stock Award Activity (Details) - USD ($) $ / shares in Units, $ in Millions | 12 Months Ended | |||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Additional option disclosures | ||||
Total future stock compensation expense related to nonvested awards | $ 16.8 | |||
Weighted average period of recognition of future stock compensation expense | 4 years | |||
Employee Consultants and Directors Stock Options [Member] | ||||
Stock option activity | ||||
Options, Outstanding at the beginning of the period (in shares) | 4,340,997 | 3,228,027 | 2,743,818 | |
Options, Granted (in shares) | 1,298,355 | 1,529,850 | 946,250 | |
Options, Forfeited (in shares) | (94,777) | (75,938) | (290,478) | |
Options, Exercised (in shares) | (568,135) | (340,942) | (171,563) | |
Options, Outstanding at the end of the period (in shares) | 4,976,440 | 4,340,997 | 3,228,027 | 2,743,818 |
Options, Exercisable (in shares) | 2,343,796 | |||
Weighted Average Exercise Price, Outstanding at the beginning of the period (in dollars per share) | $ 4.92 | $ 3.40 | $ 3.03 | |
Weighted Average Exercise Price, Granted (in dollars per share) | 19.99 | 7.67 | 4.31 | |
Weighted Average Exercise Price, Forfeited (in dollars per share) | (6.29) | (3.74) | (3.12) | |
Weighted Average Exercise Price, Exercised (in dollars per share) | (3.43) | (3.16) | (2.99) | |
Weighted Average Exercise Price, Outstanding at the end of the period (in dollars per share) | 8.99 | $ 4.92 | $ 3.40 | $ 3.03 |
Weighted Average Exercise Price, Exercisable (in dollars per share) | $ 4.12 | |||
Weighted Average Remaining Contractual Term, Outstanding | 6 years 4 months 21 days | 5 years 11 months 5 days | 5 years 5 months 5 days | 5 years 11 months 9 days |
Weighted Average Remaining Contractual Term, Exercisable | 4 years 3 months 4 days | |||
Additional option disclosures | ||||
Average fair value of options granted | $ 19.99 | $ 7.67 | $ 4.31 | |
Intrinsic value of options exercised | $ 7.8 | $ 1.5 | ||
Intrinsic value of options outstanding | 96.1 | 17.7 | ||
Intrinsic value of options exercisable | $ 56.7 | $ 12.9 | ||
Stock Options | ||||
Additional option disclosures | ||||
Average fair value of options granted | $ 8.40 | $ 3.84 |
Stock Incentive Plan - Non-vest
Stock Incentive Plan - Non-vested Share-based Activity (Details) - Employee Consultants and Directors Stock Options [Member] - $ / shares | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Non-vested share-based payment activity with employees | |||
Number of non-vested options outstanding at the beginning of the period (in shares) | 2,121,319 | 1,179,969 | 1,159,486 |
Number of non-vested options granted (in shares) | 1,298,355 | 1,529,850 | 946,250 |
Number of options vested (in shares) | (692,253) | (512,562) | (635,289) |
Number of non-vested options forfeited (in shares) | (94,777) | (75,938) | (290,478) |
Number of non-vested options outstanding at the end of the period (in shares) | 2,632,644 | 2,121,319 | 1,179,969 |
Weighted average grant-date fair value of non-vested options outstanding at the beginning of the period (in dollars per share) | $ 6.72 | $ 4.21 | $ 3.37 |
Weighted average grant-date fair value of options granted (in dollars per share) | 19.99 | 7.67 | 4.31 |
Weighted average grant-date fair value of options vested (in dollars per share) | (6.49) | (4.21) | (3.32) |
Weighted average grant-date fair value of non-vested options forfeited (in dollars per share) | (6.29) | (3.74) | (3.12) |
Weighted average grant-date fair value of non-vested options outstanding at the end of the period (in dollars per share) | $ 13.33 | $ 6.72 | $ 4.21 |
Income Taxes - Temporary Differ
Income Taxes - Temporary Differences (Details) - USD ($) | 12 Months Ended | |||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Deferred tax assets: | ||||
Net operating loss carryforwards | $ 27,578,200 | $ 38,299,400 | $ 33,424,100 | |
Charitable contributions | 300 | 500 | 500 | |
Inventory Reserves | 205,800 | 361,300 | 267,700 | |
Amortization | 22,800 | 89,500 | 51,400 | |
Allowance for doubtful accounts | 116,900 | 102,300 | 72,300 | |
Stock-based compensation | 519,900 | 341,400 | 260,600 | |
Total deferred tax assets | 28,443,900 | 39,194,400 | 34,076,600 | |
Deferred tax liabilities: | ||||
Depreciation | (80,500) | (83,300) | (62,400) | |
Deferred revenue | (6,400) | |||
Net deferred tax assets | 28,357,000 | 39,111,100 | 34,014,200 | |
Valuation allowance | $ (28,357,000) | $ (39,111,100) | $ (34,014,200) | |
Corporate income tax rate | 35.00% | |||
Forecast | ||||
Deferred tax liabilities: | ||||
Corporate income tax rate | 21.00% |
Income Taxes - Net Operating Lo
Income Taxes - Net Operating Loss Carryforwards (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Income Taxes | |||
Net operating loss carryforwards | $ 108,800,000 | ||
Change in valuation allowance | 10,800,000 | $ 5,100,000 | $ 4,500,000 |
Impact of Tax Reform | 14,500,000 | ||
Offset net operating loss | 3,700,000 | ||
Income tax (expense) benefit | $ 0 | $ 0 |
Employee Benefit Plan (Details)
Employee Benefit Plan (Details) | 1 Months Ended | 12 Months Ended | ||
Dec. 31, 2015item | Dec. 31, 2017USD ($) | Dec. 31, 2016USD ($) | Dec. 31, 2015USD ($) | |
AxoGen Simple IRA Plan | ||||
Defined Benefit Plan | ||||
Employer contributions | $ 172,000 | |||
AxoGen 401K Plan | ||||
Defined Benefit Plan | ||||
Age limit for eligibility to participate in the plan | item | 18 | |||
Employer contributions | $ 439,000 | $ 334,000 | ||
Axogen 401K Plan, employee's contribution of first 3% of annual salary | ||||
Defined Benefit Plan | ||||
Employee contribution matched, percent | 3.00% | |||
Matching contributions | 3.00% | |||
Axogen 401K Plan, employee's contribution of next 2% of annual salary | ||||
Defined Benefit Plan | ||||
Employee contribution matched, percent | 2.00% | |||
Matching contributions | 1.00% |
Commitments and Contingencies -
Commitments and Contingencies - Operating Leases (Details) | Jan. 23, 2017USD ($)ft² | Oct. 25, 2016USD ($)ft² | Mar. 16, 2016USD ($)ft² | Oct. 25, 2013USD ($)ft² |
SNH | 13631 Progress Boulevard, Suite 400, Alachua, Florida 32615 | ||||
Commitments and Contingencies | ||||
Additional leased office space in square feet | ft² | 7,050 | |||
Leased office space in square feet | ft² | 11,761 | |||
Term of agreement | 5 years | |||
Agreement extension term | 5 years | |||
Additional term of agreement, if extended | 3 years | |||
SNH | 13709 Progress Boulevard, Alachua, Florida 32615 | ||||
Commitments and Contingencies | ||||
Leased office space in square feet | ft² | 1,431 | |||
Term of agreement | 5 years | |||
SNH | Minimum | 13631 Progress Boulevard, Suite 400, Alachua, Florida 32615 | ||||
Commitments and Contingencies | ||||
Annual lease expense | $ | $ 248,000 | |||
SNH | Minimum | 13709 Progress Boulevard, Alachua, Florida 32615 | ||||
Commitments and Contingencies | ||||
Annual lease expense | $ | $ 26,000 | |||
SNH | Maximum | 13631 Progress Boulevard, Suite 400, Alachua, Florida 32615 | ||||
Commitments and Contingencies | ||||
Annual lease expense | $ | $ 324,000 | |||
SNH | Maximum | 13709 Progress Boulevard, Alachua, Florida 32615 | ||||
Commitments and Contingencies | ||||
Annual lease expense | $ | $ 29,000 | |||
Ja-Cole | ||||
Commitments and Contingencies | ||||
Additional leased office space in square feet | ft² | 2,500 | 2,100 | ||
Leased office space in square feet | ft² | 10,000 | 5,400 | ||
Term of agreement | 3 years | |||
Annual lease expense | $ | $ 88,000 | $ 43,200 |
Commitments and Contingencies56
Commitments and Contingencies - Estimated Future Minimum Rental Payments (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Estimated future minimum rental payments on the leases | |||
2,018 | $ 437,900 | ||
2,019 | 182,251 | ||
2,020 | 165,116 | ||
2,021 | 86,638 | ||
TOTAL | 871,905 | ||
Total rent expense | $ 494,000 | $ 433,000 | $ 351,000 |
Commitments and Contingencies57
Commitments and Contingencies - Service Agreements (Details) - USD ($) | Aug. 06, 2015 | Dec. 31, 2017 | Dec. 31, 2011 |
Tissue Processing Agreement [Member] | |||
Service Agreements | |||
Term of agreement | 5 years | ||
Commitment extension period | 18 months | ||
Annual license fee amount | $ 1,400,000 | ||
Master Services Agreement For Clinical Research and Related Services [Member] | |||
Service Agreements | |||
Company is required to pay execution of the agreement | $ 151,318 |
Commitments and Contingencies58
Commitments and Contingencies - Concentrations (Details) | 12 Months Ended |
Dec. 31, 2017item | |
Vendor | Exclusive Distribution Agreement [Member] | |
Concentrations | |
Number of products from which revenue is derived | 4 |
Processor | |
Concentrations | |
Initial term of contract | 5 years |
Notice period for termination | 18 months |
Period within which new facility can be found and made operational | 6 months |
Quarterly Results of Operatio59
Quarterly Results of Operations (Unaudited) (Details) - USD ($) | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Quarterly Results of Operations (Unaudited) | |||||||||||
Revenues | $ 16,971,005 | $ 16,046,253 | $ 15,168,064 | $ 12,241,073 | $ 11,408,672 | $ 11,205,224 | $ 10,381,883 | $ 8,111,759 | $ 60,426,395 | $ 41,107,538 | $ 27,331,092 |
Gross profit | 14,356,547 | 13,541,975 | 12,890,863 | 10,325,425 | 9,578,868 | 9,507,781 | 8,847,471 | 6,706,168 | 51,114,810 | 34,640,288 | 22,482,696 |
Net loss | $ (2,499,179) | $ (2,124,079) | $ (2,060,179) | $ (3,762,025) | $ (5,626,984) | $ (2,305,373) | $ (2,802,696) | $ (3,676,091) | $ (10,445,462) | $ (14,411,144) | $ (13,356,425) |
Loss Per Common share - basic and diluted (in dollars per share) | $ (0.07) | $ (0.06) | $ (0.06) | $ (0.11) | $ (0.17) | $ (0.08) | $ (0.09) | $ (0.12) | $ (0.31) | $ (0.47) | $ (0.51) |
Schedule II - Valuation and Q60
Schedule II - Valuation and Qualifying Accounts (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Allowance for doubtful accounts | |||
Valuation and Qualifying Accounts Disclosure [Line Items] | |||
Balance | $ 271,855 | $ 192,262 | $ 94,095 |
Charges to Costs and Expenses | 223,323 | 103,355 | 125,371 |
Deductions (Chargeoffs) | (33,839) | (23,762) | (27,204) |
Balance | 461,339 | 271,855 | 192,262 |
Allowance for expiring inventory | |||
Valuation and Qualifying Accounts Disclosure [Line Items] | |||
Balance | 960,065 | 711,365 | 404,211 |
Charges to Costs and Expenses | 1,290,076 | 1,036,969 | 1,002,919 |
Deductions (Chargeoffs) | (1,438,000) | (788,269) | (695,765) |
Balance | $ 812,141 | $ 960,065 | $ 711,365 |