Axogen, Inc. Annual report pursuant to Section 13 and 15(d)

Annual report pursuant to Section 13 and 15(d)

Income Taxes

Income Taxes

12 Months Ended

Dec. 31, 2016

11. Income Taxes

The Company has temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and their respective income tax basis, as measured by enacted state and federal rates as follows:


December 31		2016		2015

Deferred tax assets:
Net operating loss carryforwards	$	38,299,400	$	33,424,100
Charitable contributions		500		500
Inventory reserves		361,300		267,700
Amortization		89,500		51,400
Allowance for doubtful accounts		102,300		72,300
Stock-based compensation		341,400		260,600
Total deferred tax assets		39,194,400		34,076,600
Deferred tax liabilities:
Depreciation		(83,300)		(62,400)
Net deferred tax assets		39,111,100		34,014,200
Valuation allowance	$	(39,111,100)	$	(34,014,200)

As of December 31, 2016, the Company had net operating loss carry forwards of approximately $101.3 million to offset future taxable income which expire in various years through 2036. A valuation allowance is recorded to reduce the deferred tax assets reported if, based on the weight of the evidence, it is more likely than not that a portion or none of the deferred tax assets will be realized. After consideration of all the evidence, including reversal of deferred tax liabilities, future taxable income and other factors, management has determined that a full valuation allowance is necessary as of December 31, 2016 and 2015. The valuation allowance increased by $5,096,900 and $4,452,000 during 2016 and 2015, respectively, to offset the deferred tax benefit in the respective years. The difference between the financial statement income tax and the income tax benefit using statutory rates is primarily due to the increase in the valuation allowance.

The Company had no income tax expense or income tax benefit for 2015 and 2016 due to incurrence of net operating losses. The Company does not believe there are any additional tax refund opportunities currently available.