x
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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¨
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Florida
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26-2792552
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(State or other jurisdiction of incorporation)
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(I.R.S. Employer Identification Number)
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1775 West Oak Commons Ct NE
Marietta, GA
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30062
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(Address of principal executive offices)
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(Zip Code)
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Large accelerated filer
x
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Accelerated filer
¨
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Non-accelerated filer
¨
(Do not check if a smaller reporting company)
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Smaller reporting company
¨
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Part I FINANCIAL INFORMATION
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|
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Item 1
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Condensed Consolidated Financial Statements
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|
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Condensed Consolidated Balance Sheets (unaudited) June 30, 2016 and December 31, 2015
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|
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Condensed Consolidated Statements of Operations (unaudited) Three and Six Months Ended June 30, 2016 and 2015
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Condensed Consolidated Statements of Stockholders' Equity (unaudited) for Six Months Ended June 30, 2016
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Condensed Consolidated Statements of Cash Flows (unaudited) Six Months Ended June 30, 2016 and 2015
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Notes to the Unaudited Condensed Consolidated Financial Statements Three and Six Months Ended June 30, 2016 and 2015
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8
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Item 2
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Management’s Discussion and Analysis of Financial Condition and Results of Operations
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Item 3
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Quantitative and Qualitative Disclosures About Market Risk
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Item 4
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Controls and Procedures
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Part II OTHER INFORMATION
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|||
Item 1
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Legal Proceedings
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Item 1A
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Risk Factors
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Item 2
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Unregistered Sales of Equity Securities and Use of Proceeds
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Item 3
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Defaults upon Senior Securities
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Item 4
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Mine Safety Disclosures
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Item 5
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Other Information
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Item 6
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Exhibits
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Signatures
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June 30, 2016
(unaudited) |
|
December 31, 2015
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||||
ASSETS
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
23,803
|
|
|
$
|
28,486
|
|
Short term investments
|
—
|
|
|
3,000
|
|
||
Accounts receivable, net
|
54,861
|
|
|
53,755
|
|
||
Inventory, net
|
17,207
|
|
|
7,460
|
|
||
Prepaid expenses and other current assets
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5,970
|
|
|
3,609
|
|
||
Total current assets
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101,841
|
|
|
96,310
|
|
||
Property and equipment, net of accumulated depreciation
|
13,049
|
|
|
9,475
|
|
||
Goodwill
|
26,951
|
|
|
4,040
|
|
||
Intangible assets, net of accumulated amortization
|
27,693
|
|
|
10,763
|
|
||
Deferred tax asset, net
|
7,077
|
|
|
14,838
|
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||
Deferred financing costs and other assets
|
444
|
|
|
487
|
|
||
Total assets
|
$
|
177,055
|
|
|
$
|
135,913
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY
|
|
|
|
||||
Current liabilities:
|
|
|
|
||||
Accounts payable
|
$
|
9,678
|
|
|
$
|
6,633
|
|
Accrued compensation
|
10,245
|
|
|
15,034
|
|
||
Accrued expenses
|
6,988
|
|
|
4,644
|
|
||
Current portion of earn out liability
|
9,642
|
|
|
—
|
|
||
Other current liabilities
|
1,985
|
|
|
466
|
|
||
Total current liabilities
|
38,538
|
|
|
26,777
|
|
||
Earn out liability
|
15,978
|
|
|
—
|
|
||
Other liabilities
|
934
|
|
|
1,148
|
|
||
Total liabilities
|
55,450
|
|
|
27,925
|
|
||
Commitments and contingencies (Note 14)
|
|
|
|
|
|
||
Stockholders' equity:
|
|
|
|
||||
Preferred stock; $.001 par value; 5,000,000 shares authorized and 0 shares issued and outstanding
|
—
|
|
|
—
|
|
||
Common stock; $.001 par value; 150,000,000 shares authorized;
110,025,697 issued and 110,022,283 outstanding at June 30, 2016 and 109,467,416 issued and 107,361,471 outstanding at December 31, 2015 |
110
|
|
|
109
|
|
||
Additional paid-in capital
|
156,457
|
|
|
163,133
|
|
||
Treasury stock at cost:
3,414 shares at June 30, 2016 and 2,105,945 shares at December 31, 2015 |
(4
|
)
|
|
(17,124
|
)
|
||
Accumulated deficit
|
(34,958
|
)
|
|
(38,130
|
)
|
||
Total stockholders' equity
|
121,605
|
|
|
107,988
|
|
||
Total liabilities and stockholders' equity
|
$
|
177,055
|
|
|
$
|
135,913
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
|
|
|
|
|
|
|
|
||||||||
Net sales
|
$
|
57,342
|
|
|
$
|
45,679
|
|
|
$
|
110,710
|
|
|
$
|
86,446
|
|
Cost of sales
|
7,394
|
|
|
5,089
|
|
|
15,341
|
|
|
10,237
|
|
||||
Gross margin
|
49,948
|
|
|
40,590
|
|
|
95,369
|
|
|
76,209
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Operating expenses:
|
|
|
|
|
|
|
|
||||||||
Research and development expenses
|
3,168
|
|
|
2,054
|
|
|
5,664
|
|
|
3,885
|
|
||||
Selling, general and administrative expenses
|
42,772
|
|
|
32,651
|
|
|
83,420
|
|
|
61,960
|
|
||||
Amortization of intangible assets
|
447
|
|
|
233
|
|
|
1,257
|
|
|
465
|
|
||||
Operating income
|
3,561
|
|
|
5,652
|
|
|
5,028
|
|
|
9,899
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Other income (expense), net
|
|
|
|
|
|
|
|
||||||||
Interest income (expense), net
|
(111
|
)
|
|
1
|
|
|
(167
|
)
|
|
(13
|
)
|
||||
|
|
|
|
|
|
|
|
||||||||
Income before income tax provision
|
3,450
|
|
|
5,653
|
|
|
4,861
|
|
|
9,886
|
|
||||
Income tax provision
|
(1,475
|
)
|
|
(223
|
)
|
|
(1,689
|
)
|
|
(369
|
)
|
||||
|
|
|
|
|
|
|
|
||||||||
Net income
|
$
|
1,975
|
|
|
$
|
5,430
|
|
|
$
|
3,172
|
|
|
$
|
9,517
|
|
|
|
|
|
|
|
|
|
||||||||
Net income per common share - basic
|
$
|
0.02
|
|
|
$
|
0.05
|
|
|
$
|
0.03
|
|
|
$
|
0.09
|
|
|
|
|
|
|
|
|
|
||||||||
Net income per common share - diluted
|
$
|
0.02
|
|
|
$
|
0.05
|
|
|
$
|
0.03
|
|
|
$
|
0.08
|
|
|
|
|
|
|
|
|
|
||||||||
Weighted average shares outstanding - basic
|
106,191,932
|
|
|
106,211,120
|
|
|
105,873,727
|
|
|
106,013,752
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Weighted average shares outstanding - diluted
|
112,148,415
|
|
|
114,186,329
|
|
|
112,095,051
|
|
|
113,892,087
|
|
|
|
Common Stock Issued
|
|
Treasury Stock
|
|
|
||||||||||||||
|
|
Shares
|
Amount
|
Additional Paid - in Capital
|
Shares
|
Amount
|
Accumulated Deficit
|
Total
|
||||||||||||
Balance December 31, 2015
|
|
109,467,416
|
|
$
|
109
|
|
$
|
163,133
|
|
2,105,945
|
|
$
|
(17,124
|
)
|
$
|
(38,130
|
)
|
$
|
107,988
|
|
Share-based compensation expense
|
|
—
|
|
—
|
|
9,124
|
|
—
|
|
—
|
|
—
|
|
9,124
|
|
|||||
Exercise of stock options
|
|
223,928
|
|
—
|
|
(2,745
|
)
|
(580,113
|
)
|
4,761
|
|
—
|
|
2,016
|
|
|||||
Issuance of restricted stock
|
|
334,353
|
|
1
|
|
(13,422
|
)
|
(1,660,079
|
)
|
13,421
|
|
—
|
|
—
|
|
|||||
Restricted stock shares cancelled/forfeited
|
|
—
|
|
—
|
|
825
|
|
102,230
|
|
(825
|
)
|
—
|
|
—
|
|
|||||
Shares issued for services performed
|
|
|
—
|
|
4
|
|
(20,406
|
)
|
169
|
|
—
|
|
173
|
|
||||||
Stock repurchase
|
|
—
|
|
—
|
|
—
|
|
415,252
|
|
(3,530
|
)
|
—
|
|
(3,530
|
)
|
|||||
Shares repurchased for tax withholding
|
|
—
|
|
—
|
|
—
|
|
81,594
|
|
(684
|
)
|
|
(684
|
)
|
||||||
Shares issued in conjunction with acquisition
|
|
—
|
|
—
|
|
(462
|
)
|
(441,009
|
)
|
3,808
|
|
|
3,346
|
|
||||||
Net income
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
3,172
|
|
3,172
|
|
|||||
Balance June 30, 2016
|
|
110,025,697
|
|
$
|
110
|
|
$
|
156,457
|
|
3,414
|
|
$
|
(4
|
)
|
$
|
(34,958
|
)
|
$
|
121,605
|
|
|
Six Months Ended June 30,
|
||||||
|
2016
|
|
2015
|
||||
Cash flows from operating activities:
|
|
|
|
||||
Net income
|
$
|
3,172
|
|
|
$
|
9,517
|
|
Adjustments to reconcile net income to net cash from operating activities:
|
|
|
|
||||
Depreciation
|
1,555
|
|
|
776
|
|
||
Amortization of intangible assets
|
1,257
|
|
|
465
|
|
||
Amortization of inventory fair value step-up
|
1,224
|
|
|
—
|
|
||
Amortization of deferred financing costs
|
91
|
|
|
—
|
|
||
Share-based compensation
|
9,124
|
|
|
8,186
|
|
||
Increase (decrease) in cash, net of effects of acquisition, resulting from changes in:
|
|
|
|
||||
Accounts receivable
|
894
|
|
|
(12,776
|
)
|
||
Inventory
|
(2,245
|
)
|
|
1,274
|
|
||
Prepaid expenses and other current assets
|
(1,781
|
)
|
|
(1,106
|
)
|
||
Other assets
|
(264
|
)
|
|
(26
|
)
|
||
Accounts payable
|
(5,597
|
)
|
|
2,060
|
|
||
Accrued compensation
|
(4,789
|
)
|
|
(1,862
|
)
|
||
Accrued expenses
|
2,344
|
|
|
1,221
|
|
||
Other liabilities
|
1,318
|
|
|
(586
|
)
|
||
Net cash flows from operating activities
|
6,303
|
|
|
7,143
|
|
||
|
|
|
|
||||
Cash flows from investing activities:
|
|
|
|
||||
Purchases of equipment
|
(3,755
|
)
|
|
(2,513
|
)
|
||
Purchase of Stability Inc., net of cash acquired
|
(7,631
|
)
|
|
—
|
|
||
Fixed maturity securities redemption
|
3,000
|
|
|
1,750
|
|
||
Patent application costs
|
(327
|
)
|
|
(402
|
)
|
||
Net cash flows from investing activities
|
(8,713
|
)
|
|
(1,165
|
)
|
||
|
|
|
|
||||
Cash flows from financing activities:
|
|
|
|
||||
Proceeds from exercise of stock options
|
2,016
|
|
|
2,741
|
|
||
Stock repurchase under repurchase plan
|
(3,530
|
)
|
|
(16,641
|
)
|
||
Stock repurchase for tax withholdings on vesting of restricted stock
|
(684
|
)
|
|
—
|
|
||
Deferred financing costs
|
(61
|
)
|
|
—
|
|
||
Payments under capital lease obligations
|
(14
|
)
|
|
(59
|
)
|
||
Net cash flows from financing activities
|
(2,273
|
)
|
|
(13,959
|
)
|
||
|
|
|
|
||||
Net change in cash
|
(4,683
|
)
|
|
(7,981
|
)
|
||
|
|
|
|
||||
Cash and cash equivalents, beginning of period
|
28,486
|
|
|
46,582
|
|
||
Cash and cash equivalents, end of period
|
$
|
23,803
|
|
|
$
|
38,601
|
|
1.
|
Basis of Presentation
|
2.
|
Significant Accounting Policies
|
3.
|
Liquidity and Management’s Plans
|
Cash paid at closing
|
|
$
|
6,000
|
|
Working capital adjustment
|
|
(480
|
)
|
|
Common stock issued (441,009 shares valued at $9.07 per share)
|
|
3,346
|
|
|
Assumed debt
|
|
1,771
|
|
|
Fair value of earn-out
|
|
25,620
|
|
|
Total fair value of purchase price
|
|
$
|
36,257
|
|
|
|
|
||
Net assets acquired:
|
|
|
||
Debt-free working capital
|
|
$
|
2,179
|
|
Other assets, net
|
|
199
|
|
|
Property, plant and equipment
|
|
1,375
|
|
|
Deferred tax liability
|
|
(8,268
|
)
|
|
Subtotal
|
|
(4,515
|
)
|
|
Intangible assets:
|
|
|
||
Customer relationships
|
|
6,090
|
|
|
Patents and know-how
|
|
9,170
|
|
|
Trade names and trademarks
|
|
830
|
|
|
Non compete agreements
|
|
1,080
|
|
|
Licenses and permits
|
|
690
|
|
|
Subtotal
|
|
17,860
|
|
|
Goodwill
|
|
22,912
|
|
|
Total Assets Purchased
|
|
$
|
36,257
|
|
|
|
|
||
Working capital and other assets were composed of the following (in thousands):
|
|
|
||
Working capital
|
|
|
||
Cash
|
|
$
|
140
|
|
Prepaid Expenses and other current assets
|
|
100
|
|
|
Accounts receivable
|
|
2,001
|
|
|
Federal and state taxes receivable
|
|
28
|
|
|
Inventory
|
|
8,725
|
|
|
Accounts payable and accrued expenses
|
|
(8,815
|
)
|
|
Debt-free working capital
|
|
$
|
2,179
|
|
|
|
|
||
Current portion of long term debt
|
|
$
|
(194
|
)
|
Long-term debt
|
|
(560
|
)
|
|
Line of Credit
|
|
(932
|
)
|
|
Shareholder loan
|
|
(85
|
)
|
|
Net working capital
|
|
$
|
408
|
|
|
|
|
||
Other assets:
|
|
|
||
Other long term assets
|
|
$
|
199
|
|
|
|
Estimated useful life (in years)
|
Intangible asset:
|
|
|
Customer relationships
|
|
12
|
Patents and know-how
|
|
20
|
Trade name and Trademarks
|
|
Indefinite
|
Non compete agreements
|
|
4
|
Licenses and permits
|
|
2
|
|
|
Three months ended June 30,
|
|
Six months ended June 30,
|
||||||||||
|
|
2016
|
2015
|
|
2016
|
2015
|
||||||||
Revenue
|
|
$
|
57,342
|
|
$
|
50,492
|
|
|
$
|
111,258
|
|
$
|
96,413
|
|
|
|
|
|
|
|
|
||||||||
Net income
|
|
$
|
2,057
|
|
$
|
4,919
|
|
|
$
|
3,668
|
|
$
|
7,975
|
|
|
|
|
|
|
|
|
||||||||
Income per share, fully diluted
|
|
$
|
0.02
|
|
$
|
0.04
|
|
|
$
|
0.03
|
|
$
|
0.07
|
|
|
June 30, 2016
|
|
December 31, 2015
|
||||
Raw materials
|
$
|
1,154
|
|
|
$
|
602
|
|
Work in process
|
5,888
|
|
|
3,850
|
|
||
Finished goods
|
11,945
|
|
|
3,405
|
|
||
Inventory, gross
|
18,987
|
|
|
7,857
|
|
||
Reserve for obsolescence
|
(1,780
|
)
|
|
(397
|
)
|
||
Inventory, net
|
$
|
17,207
|
|
|
$
|
7,460
|
|
7.
|
Property and Equipment
|
|
June 30,
2016 |
|
December 31,
2015 |
||||
Leasehold improvements
|
$
|
3,245
|
|
|
$
|
2,684
|
|
Lab and clean room equipment
|
8,196
|
|
|
4,564
|
|
||
Furniture and office equipment
|
6,167
|
|
|
4,577
|
|
||
Construction in progress
|
2,169
|
|
|
2,629
|
|
||
Property and equipment, gross
|
19,777
|
|
|
14,454
|
|
||
Less accumulated depreciation
|
(6,728
|
)
|
|
(4,979
|
)
|
||
Property and equipment, net
|
$
|
13,049
|
|
|
$
|
9,475
|
|
8.
|
Intangible Assets and Royalty Agreement
|
|
Weighted
Average Amortization Lives |
|
June 30, 2016
|
|
December 31, 2015
|
||||
|
|
|
Cost
|
|
Cost
|
||||
Licenses (a) (b) (d)
|
7 years
|
|
$
|
1,699
|
|
|
$
|
1,009
|
|
Patents & Know How (b) (d)
|
19 years
|
|
17,176
|
|
|
8,001
|
|
||
Customer & Supplier Relationships (b) (d)
|
13 years
|
|
9,851
|
|
|
3,761
|
|
||
Tradenames & Trademarks (b) (d)
|
indefinite
|
|
1,838
|
|
|
1,008
|
|
||
Non-compete agreements (d)
|
4 years
|
|
1,080
|
|
|
—
|
|
||
In Process Research & Development (b)
|
n/a
|
|
25
|
|
|
25
|
|
||
Patents in Process (c)
|
n/a
|
|
2,146
|
|
|
1,823
|
|
||
Total
|
|
|
33,815
|
|
|
15,627
|
|
||
Less Accumulated amortization and impairment charges
|
|
|
(6,122
|
)
|
|
(4,864
|
)
|
||
Net
|
|
|
$
|
27,693
|
|
|
$
|
10,763
|
|
(a)
|
On January 29, 2007, the Company acquired a license from Shriners Hospitals for Children and University of South Florida Research Foundation, Inc. in the amount of
$996,000
. Within
30 days
after the receipt by the Company of approval by the FDA allowing the sale of the first licensed product, the Company is required to pay an additional
$200,000
to the licensor. Due to its contingent nature, this amount is not recorded as a liability. The Company will also be required to pay a royalty of
3%
on all commercial sales revenue from the licensed products. The Company is also obligated to pay a
$50,000
minimum annual royalty payment over the life of the license.
|
(b)
|
On January 5, 2011, the Company acquired Surgical Biologics, LLC. As a result, the Company recorded intangible assets for Customer & Supplier Relationships of
$3,761,000
, Patents & Know-How of
$7,690,000
, Licenses of
$13,000
, Tradenames & Trademarks of
$1,008,000
and In-Process Research & Development of
$25,000
. For the six months ended June 30, 2016, approximately
$4,000
of costs associated with patents granted during the period were capitalized and included in Patents & Know-How subject to amortization.
|
(c)
|
Patents in Process consist of capitalized external legal and other registration costs in connection with internally developed tissue-based patents that are pending. Once issued, the costs associated with a given patent will be included in Patents & Know-How under intangible assets subject to amortization.
|
(d)
|
On January 13, 2016, the Company acquired Stability Inc. As a result, the Company recorded intangible assets for Patents & Know - How of
$9,170,000
, Customer Relationships of
$6,090,000
, Non - compete agreements of
$1,080,000
, Tradenames & Trademarks of
$830,000
and Licenses of
$690,000
.
|
Year ending December 31,
|
Estimated
Amortization
Expense
|
||
2016 (a)
|
$
|
1,259
|
|
2017
|
2,427
|
|
|
2018
|
2,072
|
|
|
2019
|
2,072
|
|
|
2020
|
1,802
|
|
|
Thereafter
|
16,223
|
|
|
|
$
|
25,855
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
Net income
|
$
|
1,975
|
|
|
$
|
5,430
|
|
|
$
|
3,172
|
|
|
$
|
9,517
|
|
Denominator for basic earnings per share - weighted average shares
|
106,191,932
|
|
|
106,211,120
|
|
|
105,873,727
|
|
|
106,013,752
|
|
||||
Effect of dilutive securities: Stock options, restricted stock, and warrants outstanding(a)
|
5,956,483
|
|
|
7,975,209
|
|
|
6,221,324
|
|
|
7,878,335
|
|
||||
Denominator for diluted earnings per share - weighted average shares adjusted for dilutive securities
|
112,148,415
|
|
|
114,186,329
|
|
|
112,095,051
|
|
|
113,892,087
|
|
||||
Income per common share - basic
|
$
|
0.02
|
|
|
$
|
0.05
|
|
|
$
|
0.03
|
|
|
$
|
0.09
|
|
Income per common share - diluted
|
$
|
0.02
|
|
|
$
|
0.05
|
|
|
$
|
0.03
|
|
|
$
|
0.08
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||
Outstanding Stock Options
|
5,644,128
|
|
|
7,411,271
|
|
|
5,805,870
|
|
|
7,393,698
|
|
Outstanding Warrants
|
—
|
|
|
37,909
|
|
|
—
|
|
|
37,708
|
|
Restricted Stock Awards
|
312,355
|
|
|
526,029
|
|
|
415,454
|
|
|
446,929
|
|
|
5,956,483
|
|
|
7,975,209
|
|
|
6,221,324
|
|
|
7,878,335
|
|
|
Number
of
Shares
|
|
Weighted-
Average
Exercise
Price
|
|
Weighted-Average
Remaining
Contractual Term
(in years)
|
|
Aggregate
Intrinsic
Value
|
|||||
Outstanding at January 1, 2016
|
14,019,629
|
|
|
$
|
3.62
|
|
|
|
|
|
||
Granted
|
—
|
|
|
$
|
—
|
|
|
|
|
|
||
Exercised
|
(804,041
|
)
|
|
$
|
2.51
|
|
|
|
|
|
||
Unvested options forfeited
|
(79,810
|
)
|
|
$
|
6.44
|
|
|
|
|
|
||
Vested options expired
|
(29,191
|
)
|
|
$
|
6.44
|
|
|
|
|
|
|
|
Outstanding at June 30, 2016
|
13,106,587
|
|
|
$
|
3.67
|
|
|
6.0
|
|
$
|
56,844,050
|
|
Vested at June 30, 2016
|
11,710,880
|
|
|
$
|
3.27
|
|
|
5.8
|
|
$
|
55,362,178
|
|
Vested or expected to vest at June 30, 2016 (a)
|
13,047,941
|
|
|
$
|
3.66
|
|
|
6.0
|
|
$
|
56,809,041
|
|
(a)
|
Includes forfeiture adjusted unvested shares.
|
|
Options Outstanding
|
|
Options Exercisable
|
||||||||||||
Range of Exercise Prices
|
Number outstanding
|
|
Weighted-Average
Remaining
Contractual Term
(in years)
|
|
Weighted-
Average
Exercise
Price
|
|
Number Exercisable
|
|
Weighted-
Average
Exercise Price
|
||||||
$0.50 - $0.76
|
441,429
|
|
|
2.9
|
|
$
|
0.72
|
|
|
441,429
|
|
|
$
|
0.72
|
|
$0.87 - $1.35
|
4,420,470
|
|
|
5.2
|
|
1.19
|
|
|
4,420,470
|
|
|
1.19
|
|
||
$1.40 - $2.45
|
1,458,424
|
|
|
4.4
|
|
1.92
|
|
|
1,458,424
|
|
|
1.92
|
|
||
$2.66 - $3.99
|
889,430
|
|
|
6.3
|
|
3.06
|
|
|
889,430
|
|
|
3.06
|
|
||
$4.19 - $6.38
|
3,310,253
|
|
|
6.9
|
|
5.36
|
|
|
2,898,133
|
|
|
5.28
|
|
||
$6.45 - $9.78
|
2,479,415
|
|
|
7.6
|
|
7.29
|
|
|
1,586,502
|
|
|
7.23
|
|
||
$9.90- $10.99
|
107,166
|
|
|
8.4
|
|
10.43
|
|
|
36,492
|
|
|
10.44
|
|
||
|
13,106,587
|
|
|
6.0
|
|
$
|
3.67
|
|
|
11,730,880
|
|
|
$
|
3.27
|
|
|
Six Months Ended June 30,
|
|||
|
2016
|
|
2015
|
|
Expected volatility
|
n/a
|
|
54.4 - 58.1 %
|
|
Expected life (in years)
|
n/a
|
|
6.0
|
|
Expected dividend yield
|
n/a
|
|
—
|
|
Risk-free interest rate
|
n/a
|
|
1.51% - 1.68%
|
|
|
Number
of
Shares |
|
Weighted-Average Grant Date
Fair Value |
||
Unvested at January 1, 2016
|
2,613,267
|
|
|
$9.14
|
|
Granted
|
2,014,838
|
|
|
8.04
|
|
Vested
|
(825,595
|
)
|
|
8.63
|
|
Forfeited
|
(102,230
|
)
|
|
8.85
|
|
Unvested at June 30, 2016
|
3,700,280
|
|
|
$8.66
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
Cost of sales
|
$
|
95
|
|
|
$
|
90
|
|
|
$
|
190
|
|
|
$
|
184
|
|
Research and development
|
155
|
|
|
203
|
|
|
360
|
|
|
389
|
|
||||
Selling, general and administrative
|
4,253
|
|
|
3,962
|
|
|
8,574
|
|
|
7,613
|
|
||||
|
$
|
4,503
|
|
|
$
|
4,255
|
|
|
$
|
9,124
|
|
|
$
|
8,186
|
|
|
Six Months Ended June 30,
|
||||||
|
2016
|
|
2015
|
||||
Cash paid for interest
|
$
|
76
|
|
|
$
|
29
|
|
Income taxes paid
|
631
|
|
|
874
|
|
||
Stock issuance of 441,009 shares in connection with acquisition
|
3,346
|
|
|
—
|
|
||
Retirement of fixed assets
|
—
|
|
|
308
|
|
||
Stock issuance of 20,406 and 11,321 shares in exchange for services performed, respectively
|
173
|
|
|
108
|
|
MIMEDX GROUP, INC. AND SUBSIDIARIES
SCHEDULE II VALUATION AND QUALIFYING ACCOUNTS
|
|||||||||||||
Three and Six Months Ended June 30, 2016 and 2015 (in thousands)
|
|||||||||||||
|
|
|
|
|
|
||||||||
|
|
Balance at
Beginning of Period |
Additions charged to Expense or Revenue
|
Deductions
and write-offs |
Balance at
End of Period |
||||||||
|
|
|
|
|
|
||||||||
For the three months ended June 30, 2016
|
|
|
|
|
|
||||||||
Allowance for doubtful accounts
|
|
$
|
3,872
|
|
$
|
233
|
|
$
|
(19
|
)
|
$
|
4,086
|
|
Allowance for product returns
|
|
1,708
|
|
2,106
|
|
(1,623
|
)
|
2,191
|
|
||||
Allowance for obsolescence
|
|
604
|
|
1,335
|
|
(159
|
)
|
1,780
|
|
||||
|
|
|
|
|
|
||||||||
For the three months ended June 30, 2015
|
|
|
|
|
|
||||||||
Allowance for doubtful accounts
|
|
$
|
2,010
|
|
$
|
500
|
|
$
|
(6
|
)
|
$
|
2,504
|
|
Allowance for product returns
|
|
944
|
|
734
|
|
(648
|
)
|
1,030
|
|
||||
Allowance for obsolescence
|
|
552
|
|
90
|
|
(89
|
)
|
553
|
|
||||
|
|
|
|
|
|
||||||||
For the six months ended June 30, 2016
|
|
|
|
|
|
||||||||
Allowance for doubtful accounts
|
|
$
|
3,270
|
|
$
|
835
|
|
$
|
(19
|
)
|
$
|
4,086
|
|
Allowance for product returns
|
|
1,262
|
|
3,467
|
|
(2,538
|
)
|
2,191
|
|
||||
Allowance for obsolescence
|
|
397
|
|
1,570
|
|
(187
|
)
|
1,780
|
|
||||
|
|
|
|
|
|
||||||||
For the six months ended June 30, 2015
|
|
|
|
|
|
||||||||
Allowance for doubtful accounts
|
|
$
|
1,750
|
|
$
|
760
|
|
$
|
(6
|
)
|
$
|
2,504
|
|
Allowance for product returns
|
|
841
|
|
1,443
|
|
(1,254
|
)
|
1,030
|
|
||||
Allowance for obsolescence
|
|
527
|
|
221
|
|
(195
|
)
|
553
|
|
|
|
|
Less than
|
|
|
|
|
|
|
||||||||||
Contractual Obligations
|
TOTAL
|
|
1 year
|
|
1-3 years
|
|
3-5 years
|
|
Thereafter
|
||||||||||
Capital lease obligations
|
$
|
72
|
|
|
$
|
57
|
|
|
$
|
15
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Operating lease obligations
|
8,033
|
|
|
2,097
|
|
|
3,972
|
|
|
1,518
|
|
|
446
|
|
|||||
Charitable contribution obligations
|
475
|
|
|
475
|
|
|
—
|
|
|
—
|
|
|
|
||||||
Software license
|
331
|
|
|
95
|
|
|
189
|
|
|
47
|
|
|
|
||||||
Meeting space commitments
|
1,661
|
|
|
643
|
|
|
1,018
|
|
|
—
|
|
|
|
||||||
|
$
|
10,572
|
|
|
$
|
3,367
|
|
|
$
|
5,194
|
|
|
$
|
1,565
|
|
|
$
|
446
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
Net Income (Per GAAP)
|
$
|
1,975
|
|
|
$
|
5,430
|
|
|
$
|
3,172
|
|
|
$
|
9,517
|
|
|
|
|
|
|
|
|
|
||||||||
Add back:
|
|
|
|
|
|
|
|
|
|||||||
Income taxes
|
1,475
|
|
|
223
|
|
|
1,689
|
|
|
369
|
|
||||
One time costs incurred in connection with acquisition
|
138
|
|
|
—
|
|
|
851
|
|
|
—
|
|
||||
One time inventory costs incurred in connection with acquisition
|
597
|
|
|
—
|
|
|
1,331
|
|
|
—
|
|
||||
Other interest (income) expense, net
|
111
|
|
|
(1
|
)
|
|
167
|
|
|
13
|
|
||||
Depreciation expense
|
821
|
|
|
422
|
|
|
1,555
|
|
|
776
|
|
||||
Amortization of intangible assets
|
447
|
|
|
233
|
|
|
1,257
|
|
|
465
|
|
||||
Share-based compensation
|
4,509
|
|
|
4,254
|
|
|
9,124
|
|
|
8,186
|
|
||||
Adjusted EBITDA
|
$
|
10,073
|
|
|
$
|
10,561
|
|
|
$
|
19,146
|
|
|
$
|
19,326
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
Gross Margin (Per GAAP)
|
$
|
49,948
|
|
|
$
|
40,590
|
|
|
$
|
95,369
|
|
|
$
|
76,209
|
|
|
|
|
|
|
|
|
|
||||||||
Non-GAAP Adjustments:
|
|
|
|
|
|
|
|
||||||||
One time inventory costs incurred in connection with acquisition
|
597
|
|
|
—
|
|
|
1,331
|
|
|
—
|
|
||||
Gross Margin before Amortization of inventory fair value step-up
|
$
|
50,545
|
|
|
$
|
40,590
|
|
|
$
|
96,700
|
|
|
$
|
76,209
|
|
Adjusted Gross Margin
|
88.2
|
%
|
|
88.9
|
%
|
|
87.3
|
%
|
|
88.2
|
%
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
Net Income (Per GAAP)
|
$
|
1,975
|
|
|
$
|
5,430
|
|
|
$
|
3,172
|
|
|
$
|
9,517
|
|
|
|
|
|
|
|
|
|
||||||||
Non-GAAP Adjustments:
|
|
|
|
|
|
|
|
|
|
|
|||||
Tax rate normalization*
|
(12
|
)
|
|
(2,153
|
)
|
|
(362
|
)
|
|
(3,787
|
)
|
||||
One time costs incurred in connection with acquisition
|
138
|
|
|
—
|
|
|
851
|
|
|
—
|
|
||||
One time inventory costs incurred in connection with acquisition
|
597
|
|
|
—
|
|
|
1,331
|
|
|
—
|
|
||||
Amortization of intangible assets
|
447
|
|
|
233
|
|
|
1,257
|
|
|
465
|
|
||||
Share - based compensation
|
4,509
|
|
|
4,254
|
|
|
9,124
|
|
|
8,186
|
|
||||
Estimated income tax impact from adjustments*
|
(2,525
|
)
|
|
(1,886
|
)
|
|
(5,302
|
)
|
|
(3,637
|
)
|
||||
Adjusted Net Income
|
$
|
5,129
|
|
|
$
|
5,878
|
|
|
$
|
10,071
|
|
|
$
|
10,744
|
|
Adjusted diluted net income per share
|
$
|
0.05
|
|
|
$
|
0.05
|
|
|
$
|
0.09
|
|
|
$
|
0.09
|
|
Denominator for diluted earnings per share - weighted average shares adjusted for dilutive securities
|
112,148,415
|
|
|
114,186,329
|
|
|
112,095,051
|
|
|
113,892,087
|
|
Exhibit
Number
|
Reference
|
Description
|
|
|
|
2.1##
|
|
Agreement and Plan of Merger dated January 10, 2016, by and among MiMedx Group, Inc., Titan Acquisition Sub I, Inc., Titan Acquisition Sub II, LLC, Stability Inc., certain stockholders of Stability Inc. and Brian Martin as representative of the Stability stockholders (incorporated by reference to Exhibit 2.1 filed with Registrant's Form 8-K filed on January 13, 2016)
|
3.1
|
|
Articles of Incorporation as filed with the Secretary of State of Florida on March 31, 2008 (incorporated by reference to Exhibit 3.1 filed with the Registrant's Form 10-Q on August 8, 2013)
|
3.2
|
|
Articles of Amendment to Articles of Incorporation as filed with the Secretary of the State of Florida on May 14, 2010 (incorporated by reference to Exhibit 3.2 filed with the Registrant's Form 10-Q on August 8, 2013)
|
3.3
|
|
Articles of Amendment to Articles of Incorporation as filed with the Secretary of the State of Florida on August 8, 2012 (incorporated by reference to Exhibit 3.3 filed with the Registrant's Form 10-Q on August 8, 2013)
|
3.4
|
|
Articles of Amendment to Articles of Incorporation as filed with the Secretary of the State of Florida on November 8, 2012 (incorporated by reference to Exhibit 3.4 filed with the Registrant's Form 10-Q on August 8, 2013)
|
3.5
|
|
Articles of Amendment to Articles of Incorporation as filed with the Secretary of the State of Florida on May 15, 2015 (incorporated by reference to Exhibit 3.5 filed with the Registrant's Form 10-Q on August 7, 2015)
|
3.6
|
|
Bylaws of MiMedx Group, Inc. (incorporated by reference to Exhibit 3.2 filed with Registrant's Form 8-K filed on April 2, 2008)
|
3.7
|
|
Amendment to the Bylaws of MiMedx Group, Inc. adopted by the Board of Directors on May 11, 2010 (incorporated by reference to Exhibit 3.2 to the Registrant's Form 8-K filed on May 14, 2010)
|
10.1*
|
|
MiMedx Group, Inc. 2016 Equity and Cash Incentive Plan (incorporated herein by reference to Appendix A to the Company’s Definitive Proxy Statement on Schedule 14A (File No. 001-35887), filed April 12, 2016)
|
10.2#*
|
|
Form of Incentive Stock Option Agreement
|
10.3#*
|
|
Form of Restricted Stock Agreement
|
10.4#*
|
|
Form of Nonqualified Stock Option Agreement
|
10.5*
|
|
Change in Control Severance Compensation and Restrictive Covenant Agreement dated as of May 20, 2016 by and between MiMedx Group, Inc. and Alexandra O. Haden (incorporated by reference to Exhibit 10.1 filed with Registrant's Form 8-K filed on May 25, 2016)
|
31.1 #
|
|
Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|
31.2 #
|
|
Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|
32.1 #
|
|
Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|
32.2 #
|
|
Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|
101.INS
|
|
XBRL Instance Document
|
101.SCH
|
|
XBRL Taxonomy Extension Schema Document
|
101.CAL
|
|
XBRL Taxonomy Extension Calculation Linkbase Document
|
101.DEF
|
|
XBRL Taxonomy Extension Definition Linkbase Document
|
101.LAB
|
|
XBRL Taxonomy Extension Label Linkbase Document
|
101.PRE
|
|
XBRL Taxonomy Extension Presentation Linkbase Document
|
|
#
|
Filed herewith
|
##
|
Certain exhibits and schedules have been omitted pursuant to Item 601(b)(2) of Regulation S-K, but a copy will be furnished supplementally to the Securities and Exchange Commission upon request)
|
*
|
Indicates a management contract or compensatory plan or arrangement
|
August 2, 2016
|
|
|
|
By:
|
/s/ Michael J. Senken
|
|
|
Michael J. Senken
|
|
|
Chief Financial Officer
|
|
|
(principal financial and accounting officer)
|
Date:
|
August 2, 2016
|
/s/ Parker H. Petit
|
|
|
Parker H. Petit
|
|
|
Chief Executive Officer
|
Date:
|
August 2, 2016
|
/s/ Michael J. Senken
|
|
|
Michael J. Senken
|
|
|
Chief Financial Officer
|
Date:
|
August 2, 2016
|
/s/ Parker H. Petit
|
|
|
Parker H. Petit
|
|
|
Chief Executive Officer
|
Date:
|
August 2, 2016
|
/s/ Michael J. Senken
|
|
|
Michael J. Senken
|
|
|
Chief Financial Officer
|