11.  Subsequent Events

License and Services Agreement

On August 6, 2015, AxoGen Corporation (“AxoGen”) entered into a License and Services Agreement (the “Agreement”) with CTS.  Headquartered in Dayton, Ohio, CTS is a nonprofit quality, ethical provider of services to recipients, donor families, medical communities, and community partners through the respectful recovery, processing and distribution of tissue grafts.  CTS, an accredited member of the AATB, is one of the largest nonprofit tissue banks in the United States having in 2014 distributed more than 355,000 tissue grafts to over 5,000 hospitals, physicians and surgeons. Pursuant to the Agreement, AxoGen will process and package its Avance® Nerve Graft using its employees and equipment located at CTS.  It is anticipated that processing currently being performed at LifeNet Health, will be transferred completely to the CTS facility by the end of first quarter of 2016.   

The Agreement is for a 5 year term, subject to earlier termination by either party for cause, or after the two year anniversary of the Agreement without cause, upon 180 days’ notice. Under the Agreement AxoGen pays CTS a facility fee for clean room/processing, storage and office space.  CTS also provides services in support of AxoGen’s processing such as routine sterilization of daily supplies, providing disposable supplies, microbial services and office support.  The service fee is based on a per donor batch rate.  It is anticipated that the Company will have approximately $400,000 of capital expenditures for the placement of equipment and build-out at this facility.