SEC Filings

S-1/A
AVEXIS, INC. filed this Form S-1/A on 02/09/2016
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Table of Contents


AveXis, Inc.

Notes to Consolidated Financial Statements (Continued)

11. Convertible Notes (Continued)

          The outstanding principal and interest on the Deerfield Note was convertible, at the option of Deerfield, upon consummation of a qualified financing (a "Deerfield Qualified Financing") or at any time in which amounts remain unpaid under the Deerfield Note into shares of the same class and series of capital stock of the Company issued to the other investors in the Deerfield Qualified Financing at a conversion price per share equal to the lowest price per share at which the Deerfield Qualified Financing securities are sold by the Company to the investors in the Deerfield Qualified Financing. If the Company failed to complete a Deerfield Qualified Financing, Deerfield would be entitled to a 2.5% origination fee on the principal amount of the Deerfield Note, as well as reimbursement of out of its out of pocket expenses.

          The Company recorded the Deerfield Note in accordance with the guidance found in ASC 470-20. The conversion feature in the Deerfield Note qualifies for the exception from derivative accounting in accordance with ASC 815-40. Under ASC 470-20, the fair value of the liability component of the Deerfield Note was determined to be the principal amount of $500,000 as the Deerfield Note contained no additional conversion or embedded features.

          On August, 11, 2014, the Company completed a Deerfield Qualified Financing with Deerfield and the outstanding principal amount of, and interest and unpaid interest on, the Deerfield Note were converted into 126,991 shares of Class C preferred stock at a conversion price of $3.96 per share.

12. Stock-based Compensation

Mr. Carbona Purchase Right Agreement

          On October 9, 2013, the Company and Mr. Carbona entered into a Purchase Right Agreement. Under the agreement, the Company provided Mr. Carbona an option to purchase 1,176,588 shares of the Company's common stock, par value $0.0001, for an aggregate purchase price of $0.02 (the "Purchase Right"). The Purchase Right was exercisable until October 11, 2013.

          The Purchase Right was exercised by Mr. Carbona in the allotted time and settled in cash. As a result, the Company issued 1,176,588 shares of common stock to Mr. Carbona.

          As the award was fully vested on the date of grant and there was no service to be performed by Mr. Carbona in order to retain the shares, the Company recognized compensation expense in the amount of $1,227,744 representing the difference between the fair value of the shares on the date of grant and the $0.02 paid by Mr. Carbona. Such amount is included within general and administrative expense in the consolidated statement of operations and comprehensive loss for the year ended December 31, 2013. The Company estimated the fair value of the common stock underlying the award to be $1.04 per share utilizing the framework of the American Institute of Certified Public Accountants Practice Aid, Valuation of Privately-Held-Company Equity Securities Issued as Compensation (the "AICPA Practice Guide"), including an independent third party valuation (see the discussion regarding the Company's October 9, 2013 common stock valuation below).

Mr. Carbona Stock Purchase and Option Agreement

          On January 30, 2014, JDH, West Summit and Mr. Carbona entered into a Stock Purchase and Option Agreement. Under the agreement, JDH and West Summit sold 392,287 common shares to

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