Note 12 - Earn-out Milestone Liability

9 Months Ended

Sep. 30, 2017

Notes to Financial Statements

Earn-out Milestone Liability Disclosure [Text Block]

Note 1 2 . Earn-out Milestone Liability

The total aggregate purchase price for the EGEN Acquisition included potential future Earn-out Payments contingent upon achievement of certain milestones. The difference between the aggregate

$30.4

million in future Earn-out Payments

and the

$13.9

million included in the fair value of the acquisition consideration at

June 20, 2014

was based on the Company's risk-adjusted assessment of each milestone (

10%

to

67%

) and utilizing a discount rate based on the estimated time to achieve the milestone (

1.5

to

2.5

years). The earn-out milestone liability will be fair valued at the end of each quarter and any change in their value will be recognized in the condensed consolidated financial statements.

As of

September 30, 2017,

June 30, 2017

and

December 31, 2016,

the Company fair valued these milestones at

$12.5

million,

$13.8

million and

$13.2

million, respectively, and recognized a non-cash benefit of

$1,246,151

and

$670,172

during the

three

and

nine

months ended

September 30, 2017

as a result of the change in the fair value of these milestones from the beginning of each period respectively.

As of

September 30, 2016,

June 30, 2016

and

December 31, 2015,

the Company fair valued these milestones at

$14.5

million,

$13.8

million and

$13.9

million, respectively, and recognized a non-cash charge of

$662,410

and

$556,382

during the

three

and

nine

month periods ended

September 30, 2016,

respectively, as a result of the change in the fair value of these milestones from the beginning of each period respectively.

The

following is a summary of the changes in the earn-out milestone liability for

2017:

Balance at January 1, 2017	$	13,188,226
Non-cash benefit from the adjustment for the change in fair value included in net loss		(1,246,151	)
Balance at September 30, 2017	$	12,518,054

The following is a schedule of the Company

’s risk-adjustment assessment of each milestone:

Date	Risk-adjustment Assessment of each Milestone				Discount Rate			Estimated Time to Achieve (years)
September 30, 2017		35%	to	80%		9	%		1.25	to	1.75
June 30, 2017		50%	to	80%		9	%		1.50	to	2.00
December 31, 2016		50%	to	80%		9	%		2.00	to	2.50
September 30, 2016		10%	to	75%		9	%		0.50	to	1.75
June 30, 2016		10%	to	75%		9	%		0.50	to	2.00
December 31, 2015		10%	to	75%		9	%		0.50	to	2.50