Earn-out Milestone Liability

6 Months Ended

Jun. 30, 2018

Earn-out Milestone Liability

Earn-out Milestone Liability

Note 13. 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 financial statements.

As of June 30, 2018, March 31, 2018 and December 31, 2017, the Company fair valued these milestones at $13.1 million, $12.8 million and $12.5 million, respectively, and recognized a non-cash charge of $270,195 and $547,324 during the three and six months ended June 30, 2018 as a result of the change in the fair value of these milestones from the beginning of each period respectively.

As of June 30, 2017, March 31, 2017 and December 31, 2016, the Company fair valued these milestones at $13.8 million, $13.5 million and $13.2 million, respectively, and recognized a non-cash charge of $292,228 and $575,979 during the three and six months ended June 30, 2017 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 2018:

Balance at January 1, 2018	$	12,538,525
Non-cash charge from the adjustment for the change in fair value included in net loss		547,324
Balance at June 30, 2018	$	13,085,849

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
June 30, 2018	35% to 80%	9%	0.83 to 1.00 year
March 31, 2018	35% to 80%	9%	1.08 to 1.25 years
December 31, 2017	35% to 80%	9%	1.33 to 1.50 years
June 30, 2017	50% to 80%	9%	1.50 to 2.00 years
March 31, 2017	50% to 80%	9%	1.75 to 2.25 years
December 31, 2016	50% to 80%	9%	2.00 to 2.50 years