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Subsequent Events | 3 Months Ended
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Mar. 31, 2020
Subsequent Events |
Subsequent Events | 14. Subsequent Events ​ COVID-19 Pandemic ​ In January 2020, there was an outbreak of COVID-19, which the World Health Organization declared as a “pandemic” on March 11, 2020. The pandemic presents significant and unforecastable new risks to the Company and its business plan. The outbreak and any preventative or protective actions that the Company or its customers are taking in respect of this virus will result in a period of some level of disruption. ​ In response to COVID-19, many United States hospitals have had to: 1) reallocate their medical teams and resources to prepare for, and treat, increased COVID-19 patients; 2) defer or limit elective and non-emergency procedures; 3) restrict hospital access to non-essential personnel, including sales and clinical representatives not directly required for a specific procedure; and 4) temporarily discontinued clinical research not related to COVID-19. Accordingly, the Company had advised all field-based teams to enter hospitals or clinics only at the request of a surgeon or hospital staff member (which mandate has since been lifted) and to complete all tasks occurring in hospitals or clinics in a manner that minimizes human interaction (which mandate has since been lifted) and maintains social distancing. Additionally, the Company believes that the incidence of traumatic injuries is likely being reduced by “shelter-in-place” orders that have been issued across the United States. ​ In response to the current restrictions in hospitals and community activity, as well as the anticipated reduction of revenue caused by these factors, on April 23, 2020 the Company announced its cost mitigation initiative designed to defer and reduce certain expenses and capital expenditures. More specifically, the Company has: ​
| ● | Reduced executive cash compensation and board fees by 20%, and reduced cash compensation for all other exempt salaried employees by 10 to 15%.
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| ● | Completed an employee layoff of approximately 10% of its workforce and implemented a hiring freeze;
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| ● | Temporarily suspended recovery and processing of tissue in order to utilize existing inventory, and preserve personal protective equipment.
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| ● | Deferred completion of its new biologics processing center in Vandalia, OH by up to one year, which defers approximately $25,000 of expected 2020 capital expenditures to 2021, and extended its current production facility License and Services agreement with CTS by one year; and
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| ● | Reduced certain discretionary spending, including travel, conference participation, surgeon education (as a result of surgeon travel restrictions), certain clinical trials (excluding our Multicenter, Prospective, Randomized, Subject and Evaluator Blinded Comparative Study of Nerve Cuffs and Avance® Nerve Graft Evaluating Recovery Outcomes for the Repair of Nerve Discontinuities (“RECON℠”), our A Multicenter Retrospective Study of Avance® Nerve Graft Utilization, Evaluations and Outcomes in Peripheral Nerve Injury Repair (“RANGER®”), our Multicenter, Prospective, Randomized and Subject Blinded Study of Axoguard® Nerve Cap as Compared to Neurectomy for the Treatment of Symptomatic Neuroma (“REPOSE℠”) and selected projects across the organization.
​ Employees were notified of the initiatives on April 22, 2020 and the Company will record the severance related to these layoffs in the second quarter of 2020. The CTS agreement was extended through December 31, 2022 and provides the Company the right to terminate the agreement after February 28, 2022, with six-months advance written notice. The CTS agreement has an embedded lease within the agreement and as such, a remeasurement of the lease under ASC 842 will also be performed in the second quarter of 2020. ​ At this date, the Company cannot predict the extent or duration of the impact of the COVID-19 pandemic on its financial results but believes the current environment will negatively impact its revenues for the second quarter of 2020 and potentially longer. ​ The Company’s future capital requirements depend on a number of factors: primarily the point at which our revenues stabilize during the height of COVID-19, the rate at which these revenues increase post this period and our ability to adjust expenses to these revenues, and including, without limitation, cost of future office and manufacturing facilities, products and acquisition and/or development of new products. The Company will face increasing capital needs. Such capital needs could be substantial depending on the extent to which the Company is unable to increase revenue or manage costs. If the Company needs additional capital in the future, it may raise additional funds through public or private equity offerings, debt financings or from other sources. The sale of additional equity would result in dilution to the Company’s shareholders. There is no assurance that the Company will be able to secure funding on terms acceptable to it, or at all. The increasing need for capital could also make it more difficult to obtain funding through either equity or debt. Should additional capital not become available to the Company as needed, the Company may be required to take certain actions, such as slowing sales and marketing expansion, delaying regulatory approvals or reducing headcount. On April 21, 2020, the Court dismissed, without prejudice, the Einhorn Litigation, a class action complaint filed January 9, 2019, finding Plaintiff failed to state a claim upon which relief could be granted. The Plaintiff has 60 days to file an amended complaint or the action will be dismissed with prejudice. ​ On April 23, 2020, the Company received a Small Business Administration (“SBA”) loan under the Paycheck Protection Program (“PPP”) in the amount of $7,820. The loan obtained pursuant to the original guidance of the SBA to preserve positions in the Company by providing necessary economic relief during this period of reduced surgical procedures because of the negative business effects of COVID19. The Company believed it correctly applied for the loan, meets the initial intent of the PPP program to preserve jobs and believed it complied with the representations provided in the loan documents. However, subsequent to obtaining the loan, the United States Treasury Department issued guidance, which the Company believes contradicts the original intent and language of the PPP, providing that public companies are unlikely to be able to meet the standards for receiving the PPP loan. As a result of this change, the Company believed it was in its best business interests to repay the loan on May 5, 2020. As a result of returning the PPP loan, the Company will take additional cost reduction measures as required based upon recovery of surgical volumes and explore other non-dilutive financing alternatives volumes and explore other non-dilutive financing alternatives.

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- Definition The entire disclosure for significant events or transactions that occurred after the balance sheet date through the date the financial statements were issued or the date the financial statements were available to be issued. Examples include: the sale of a capital stock issue, purchase of a business, settlement of litigation, catastrophic loss, significant foreign exchange rate changes, loans to insiders or affiliates, and transactions not in the ordinary course of business. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 855 -URI http://asc.fasb.org/topic&trid=2122774 + Details
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