XML 45 R14.htm IDEA: XBRL DOCUMENT v2.4.0.8
Equity
9 Months Ended
Sep. 30, 2014
Equity [Abstract]  
Equity
Equity
Stock Incentive Plans 
The Company has three share-based compensation plans: the MiMedx Group, Inc. Assumed 2006 Stock Incentive Plan (the “2006 Plan”), the MiMedx Inc. 2007 Assumed Stock Plan (the “Assumed 2007 Plan”) and the MiMedx Group Inc. Amended and Restated Assumed 2005 Stock Plan (the “Assumed 2005 Plan”) which provide for the granting of qualified incentive and non-qualified stock options, stock appreciation awards and restricted stock awards to employees, directors, consultants and advisors. The awards are subject to a vesting schedule as set forth in each individual agreement. The Company intends to use only the 2006 Plan to make future grants. The number of assumed options under the Assumed 2005 Plan and Assumed 2007 Plan outstanding at September 30, 2014, totaled 375,000.  On July 28, 2014, the Company's shareholders approved 4,000,000 additional shares to be made available under the 2006 Plan, bringing the maximum number of shares of common stock that can be issued under the 2006 Plan to 26,500,000 at September 30, 2014.
Activity with respect to the stock options is summarized as follows:
 
Number
 of
Shares
 
Weighted-
Average
Exercise
Price
 
Weighted-Average
Remaining
Contractual Term
(in years)
 
Aggregate
Intrinsic
Value
Outstanding at January 1, 2014
15,375,960

 
$
2.46

 
 
 
 
Granted
2,948,969

 
7.03

 
 
 
 
Exercised
(1,146,987
)
 
1.31

 
 
 
 
Unvested options forfeited
(249,670
)
 
4.04

 
 
 
 
Vested options expired
(84,332
)
 
0.81

 
 
 
 
Outstanding at September 30, 2014
16,843,940

 
3.32

 
7.5
 
$
64,630,326

Vested at September 30, 2014
8,987,368

 
1.87

 
6.7
 
47,252,742

Vested or expected to vest at September 30, 2014 (a)
16,515,621

 
$
3.27

 
7.5
 
$
64,242,362

(a)
Includes forfeiture adjusted unvested shares.
The intrinsic value of the options exercised during the nine months ended September 30, 2014, was approximately $6,517,614
Following is a summary of stock options outstanding and exercisable at September 30, 2014:
 
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
720,364

 
4.7
 
$
0.72

 
720,364

 
$
0.72

$0.87 - $1.35
6,102,250

 
6.9
 
1.20

 
4,911,058

 
1.19

$1.40 - $2.29
1,482,701

 
5.3
 
1.64

 
1,361,032

 
1.65

$2.33 - $3.75
1,842,320

 
8.0
 
2.77

 
889,298

 
2.69

$3.95 - $5.99
3,443,402

 
8.6
 
5.15

 
911,797

 
5.02

$6.02 - $8.34
3,252,903

 
9.0
 
7.03

 
193,819

 
6.37

 
16,843,940

 
7.5
 
$
3.32

 
8,987,368

 
$
1.87

 
Total unrecognized compensation expense related to granted stock options at September 30, 2014, was approximately $16,675,914 and is expected to be recognized over a weighted-average period of 2.0 years. 
The fair value of options granted by the Company is estimated on the date of grant using the Black-Scholes-Merton option-pricing model that uses assumptions for expected volatility, expected dividends, expected term, and the risk-free interest rate.  Expected volatilities are based on historical volatility of peer companies and other factors estimated over the expected term of the options.  The term of employee options granted is derived using the “simplified method,” which computes expected term as the average of the sum of the vesting term plus the contract term.  The term for non-employee options is generally based upon the contractual term of the option.  The risk-free rate is based on the U.S. Treasury yield curve in effect at the time of grant for the period of the expected term or contractual term as described.
The assumptions used in calculating the fair value of options using the Black-Scholes-Merton option-pricing model are set forth in the following table:
 
Nine Months Ended September 30,
 
2014
 
2013
Expected volatility
63.6- 64.5%

 
61.41 - 64.56%

Expected life (in years)
5.0 - 6.0

 
6.0

Expected dividend yield

 

Risk-free interest rate
1.69% - 1.96%

 
0.85% -1.88%


The weighted-average grant date fair value for options granted during the nine months ended September 30, 2014, was approximately $4.09.

Restricted Stock Awards                                                            
Activity with respect to restricted stock awards is summarized as follows: 
 
Number
of
Shares
 
Weighted-Average Grant Date
Fair Value
Unvested at December 31, 2013
576,550

 
$5.53
Granted
592,864

 
7.05
Vested
(154,758
)
 
5.72
Forfeited
(720
)
 
7.24

Unvested at September 30, 2014
1,013,936

 
$6.40

As of September 30, 2014, there was approximately $4,983,312 of total unrecognized stock-based compensation related to time-based, nonvested restricted stock.  That expense is expected to be recognized on a straight-line basis over a weighted-average period of 2.1 years. All shares noted above as unvested are considered issued and outstanding at September 30, 2014.
Additionally, during the nine months ended September 30, 2014, 5,611 shares of common stock valued at approximately $39,000 were issued under the 2006 Plan to a consultant in return for services performed.
For the three and nine months ended September 30, 2014 and 2013, the Company recognized stock-based compensation as follows: 
 
Three Months Ended
September 30,
 
Nine Months Ended
September 30,
 
2014
 
2013
 
2014
 
2013
Cost of sales
$
70,424

 
$
75,287

 
$
242,689

 
$
198,119

Research and development
170,426

 
110,694

 
493,078

 
309,461

Selling, general and administrative
2,781,112

 
1,481,785

 
7,424,911

 
3,647,425

 
$
3,021,962

 
$
1,667,766

 
$
8,160,678

 
$
4,155,005



Warrants
The Company grants common stock warrants in connection with equity share purchases by investors as an additional incentive for providing long term equity capital to the Company and as additional compensation to consultants and advisors.  The warrants are granted at negotiated prices in connection with the equity share purchases and at the market price of the common stock in other instances.  The warrants have been issued for terms of five years.

Following is a summary of the warrant activity for the nine months ended September 30, 2014:
 
Number
 of
Warrants
 
Weighted-Average
Exercise Price
per warrant
Warrants outstanding at January 1, 2014
1,284,816

 
$
0.90

Warrants exercised
(1,079,583
)
 
0.80

Warrants outstanding at September 30, 2014
205,233

 
$
1.42




Warrants may be exercised in whole or in part by notice given by the holder accompanied by payment in cash of an amount equal to the warrant exercise price multiplied by the number of warrant shares being purchased.
These warrants are not mandatorily redeemable, and do not obligate the Company to repurchase its equity shares by transferring assets or issuing a variable number of shares. 
The warrants require that the Company deliver shares as part of a physical settlement and do not provide for a net-cash settlement. 
All of the Company's warrants are classified as equity as of September 30, 2014, and December 31, 2013 and expire at various times through the end of 2016.