0001558370-21-011161 | 10-Q | XBRL Viewer

Document and Entity Information - shares	6 Months Ended
Document and Entity Information - shares	Jun. 30, 2021	Aug. 09, 2021
Document Information [Line Items]
Document Type	10-Q
Document Quarterly Report	true
Document Transition Report	false
Document Period End Date	Jun. 30, 2021
Entity File Number	001-39577
Entity Registrant Name	Aziyo Biologics, Inc.
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	47-4790334
Entity Address State Or Province	MD
Entity Address, Address Line One	Delaware
Entity Address, City or Town	Silver Spring
Entity Address, Postal Zip Code	20904
City Area Code	240
Local Phone Number	247-1170
Title of 12(b) Security	Class A Common Stock, par value $0.001 per share
Trading Symbol	AZYO
Security Exchange Name	NASDAQ
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Non-accelerated Filer
Entity Small Business	true
Entity Emerging Growth Company	true
Entity Ex Transition Period	false
Entity Shell Company	false
Entity Central Index Key	0001708527
Current Fiscal Year End Date	--12-31
Document Fiscal Year Focus	2021
Document Fiscal Period Focus	Q2
Amendment Flag	false
Class A Common stock
Document Information [Line Items]
Entity Common Stock, Shares Outstanding		7,095,265
Class B Common stock
Document Information [Line Items]
Entity Common Stock, Shares Outstanding		3,134,162

CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Jun. 30, 2021	Dec. 31, 2020
Current assets:
Cash	$ 28,302	$ 39,150
Restricted cash	66	382
Accounts receivable, net	7,749	7,166
Inventory	10,341	10,117
Prepaid expenses and other current assets	1,759	2,892
Total current assets	48,217	59,707
Property and equipment, net	1,243	1,162
Intangible assets, net	20,166	21,865
Other assets	76	76
Total assets	69,702	82,810
Current liabilities:
Accounts payable	1,633	2,054
Accrued expenses	6,348	6,323
Payables to tissue suppliers	2,206	2,295
Current portion of long-term debt	7,504	6,310
Current portion of revenue interest obligation	2,750	2,750
Revolving line of credit	2,904	6,514
Deferred revenue and other current liabilities	251	533
Total current liabilities	23,596	26,779
Long-term debt	13,682	17,811
Long-term revenue interest obligation	16,587	16,633
Deferred revenue and other long-term liabilities	870	756
Total liabilities	54,735	61,979
Commitments and contingencies (Note 8)
Stockholders' equity (deficit):
Additional paid-in capital	102,668	101,080
Accumulated deficit	(87,711)	(80,259)
Total stockholders' equity	14,967	20,831
Total liabilities and stockholders' equity	69,702	82,810
Class A Common stock
Stockholders' equity (deficit):
Common stock	7	7
Total stockholders' equity	7	7
Class B Common stock
Stockholders' equity (deficit):
Common stock	3	3
Total stockholders' equity	$ 3	$ 3

CONDENSED CONSOLIDATED BALANCE SHEETS (Parentheticals) - $ / shares	Jun. 30, 2021	Dec. 31, 2020
Class A Common stock
Common stock, par value	$ 0.001	$ 0.001
Common stock, shares authorized	200,000,000	200,000,000
Common stock, shares issued	7,095,265	7,091,960
Common stock, shares outstanding	7,095,265	7,091,960
Class B Common stock
Common stock, par value	$ 0.001	$ 0.001
Common stock, shares authorized	20,000,000	20,000,000
Common stock, shares issued	3,134,162	3,134,162
Common stock, shares outstanding	3,134,162	3,134,162

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
Net sales	$ 12,160	$ 8,579	$ 25,044	$ 18,442
Cost of goods sold	6,546	4,795	13,101	9,443
Gross Profit	5,614	3,784	11,943	8,999
Sales and marketing	4,799	4,062	9,502	8,544
General and administrative	3,529	2,077	7,134	4,683
Research and development	1,881	1,408	3,601	2,717
Total operating expenses	10,209	7,547	20,237	15,944
Loss from operations	(4,595)	(3,763)	(8,294)	(6,945)
Interest expense	1,351	1,410	2,706	2,783
Other (income) expense, net	(3,579)		(3,579)
Loss before provision for income taxes	(2,367)	(5,173)	(7,421)	(9,728)
Income tax expense	18	5	31	10
Net loss	$ (2,385)	$ (5,178)	$ (7,452)	$ (9,738)
Net loss per share - basic	$ (0.23)	$ (7.99)	$ (0.73)	$ (15.02)
Net loss per share - diluted	$ (0.23)	$ (7.99)	$ (0.73)	$ (15.02)
Weighted average common shares outstanding - basic	10,228,296	648,277	10,227,240	648,277
Weighted average common shares outstanding - diluted	10,228,296	648,277	10,227,240	648,277

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS' EQUITY (DEFICIT) - USD ($) $ in Thousands	Common Stock	Additional Paid-in Capital	Accumulated Deficit	Convertible Preferred Stock	Class A Common stock	Class B Common stock	Total
Balance at the beginning at Dec. 31, 2019				$ 44,449
Balance at the beginning (in shares) at Dec. 31, 2019				44,550,230
Increase (Decrease) in Temporary Equity [Roll Forward]
Issuance of Convertible Preferred Stock				$ 450
Issuance of Convertible Preferred Stock (in shares)				449,770
Balance at the ending at Jun. 30, 2020				$ 44,899
Balance at the ending (in shares) at Jun. 30, 2020				45,000,000
Balance at the beginning at Dec. 31, 2019	$ 1	$ 1,826	$ (56,938)				$ (55,111)
Balance at the beginning (in shares) at Dec. 31, 2019	648,277
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Stock-based compensation		126					126
Net loss			(9,738)				(9,738)
Balance at the ending at Jun. 30, 2020	$ 1	1,952	(66,676)				(64,723)
Balance at the ending (in shares) at Jun. 30, 2020	648,277
Balance at the beginning at Mar. 31, 2020				$ 44,899
Balance at the beginning (in shares) at Mar. 31, 2020				45,000,000
Balance at the ending at Jun. 30, 2020				$ 44,899
Balance at the ending (in shares) at Jun. 30, 2020				45,000,000
Balance at the beginning at Mar. 31, 2020	$ 1	1,880	(61,498)				(59,617)
Balance at the beginning (in shares) at Mar. 31, 2020	648,277
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Stock-based compensation		72					72
Net loss			(5,178)				(5,178)
Balance at the ending at Jun. 30, 2020	$ 1	1,952	(66,676)				(64,723)
Balance at the ending (in shares) at Jun. 30, 2020	648,277
Balance at the beginning at Dec. 31, 2020		101,080	(80,259)		$ 7	$ 3	20,831
Balance at the beginning (in shares) at Dec. 31, 2020					7,091,960	3,134,162
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Proceeds from stock option exercises		26					26
Proceeds from stock option exercises (in shares)					3,305
Stock-based compensation		1,562					1,562
Net loss			(7,452)				(7,452)
Balance at the ending at Jun. 30, 2021		102,668	(87,711)		$ 7	$ 3	14,967
Balance at the ending (in shares) at Jun. 30, 2021					7,095,265	3,134,162
Balance at the beginning at Mar. 31, 2021		101,760	(85,326)		$ 7	$ 3	16,444
Balance at the beginning (in shares) at Mar. 31, 2021					7,092,521	3,134,162
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Proceeds from stock option exercises		23					23
Proceeds from stock option exercises (in shares)					2,744
Stock-based compensation		885					885
Net loss			(2,385)				(2,385)
Balance at the ending at Jun. 30, 2021		$ 102,668	$ (87,711)		$ 7	$ 3	$ 14,967
Balance at the ending (in shares) at Jun. 30, 2021					7,095,265	3,134,162

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020
OPERATING ACTIVITIES:
Net loss	$ (7,452)	$ (9,738)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization	1,865	1,949
Gain on forgiveness of debt	(3,029)
Amortization of deferred financing costs	60	62
Interest expense recorded as additional revenue interest obligation	1,326	1,334
Stock-based compensation	1,562	126
Changes in operating assets and liabilities:
Accounts receivable	(583)	1,360
Inventory	(224)	(2,429)
Prepaid expenses and other	1,133	235
Accounts payable and accrued expenses	(396)	311
Obligations to tissue suppliers	(89)	(61)
Deferred revenue and other liabilities	(134)	(178)
Net cash used in operating activities	(5,961)	(7,029)
INVESTING ACTIVITIES:
Expenditures for property, plant and equipment	(247)	(89)
Net cash used in investing activities	(247)	(89)
FINANCING ACTIVITIES:
Proceeds from Convertible Promissory Note		2,000
Net borrowings (repayments) under revolving line of credit	(3,610)	1,670
Proceeds from Convertible Preferred Stock issuance, net		450
Proceeds from stock option exercises	26
Proceeds from long-term debt		2,995
Repayments of long-term debt		(300)
Payments on revenue interest obligation	(1,372)	(1,247)
Net cash (used in) provided by financing activities	(4,956)	5,568
Net decrease in cash and restricted cash	(11,164)	(1,550)
Cash and restricted cash, beginning of period	39,532	2,590
Cash and restricted cash, end of period	28,368	1,040
Supplemental Cash Flow and Non-Cash Financing Activities Disclosures:
Cash paid for interest	2,522	$ 2,457
Cash paid for taxes	37
Forgiveness of SBA PPP loan	$ 3,029

Organization and Description of Business

6 Months Ended

Jun. 30, 2021

Organization and Description of Business

Organization and Description of Business

Note 1. Organization and Description of Business

Aziyo Biologics, Inc. (together with its consolidated subsidiaries, "Aziyo” or the “Company”) is a regenerative medicine company, with a focus on patients receiving implantable medical devices. The Company has developed a portfolio of regenerative products using both human and porcine tissue that are designed to be as close to natural biological material as possible. Aziyo’s portfolio of core products span the implantable electronic devices/cardiovascular-related market, the orthopedic/spinal repair market and the soft tissue reconstruction market (“Core Products”). These products are primarily sold to healthcare providers or commercial partners. The Company also sells human tissue products under contract manufacturing and certain other arrangements (“Non-Core Products”) with corporate customers.

Reverse Stock Split and Initial Public Offering

On September 25, 2020, the Company's Board of Directors and stockholders approved an amendment to the Company's amended and restated certificate of incorporation to effect a 1-for-13.9549 reverse stock split of the Company's common stock, which was effected on September 29, 2020. The par value of the common stock was not adjusted as a result of the reverse stock split. Accordingly, all share and share-related information presented in these condensed consolidated financial statements and the accompanying notes has been retroactively adjusted for all periods presented to give effect to the reverse stock split.

On October 13, 2020, in connection with the Company’s initial public offering ("IPO"), we issued and sold 2,941,176 shares of common stock, consisting of 2,205,882 shares of Class A common stock and 735,294 shares of Class B common stock, at a price to the public of $17.00 per share, resulting in net proceeds to the Company of approximately $43.0 million, after deducting the underwriting discount of approximately $3.5 million and offering expenses of approximately $3.5 million.

Summary of Significant Accounting Policies

6 Months Ended

Jun. 30, 2021

Summary of Significant Accounting Policies

Summary of Significant Accounting Policies

Note 2. Summary of Significant Accounting Policies

Basis of Presentation

The unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all the information and footnotes required by GAAP for complete financial statements and should be read in conjunction with the Company’s consolidated financial statements and accompanying notes included in the Company's annual report on Form 10-K (Annual Report) for the fiscal year ended December 31, 2020. The financial information as of June 30, 2021 and for the three and six months ended June 30, 2021 and 2020 is unaudited, but in the opinion of management, all adjustments considered necessary for a fair statement of the results for these interim periods have been included. The condensed consolidated balance sheet data as of December 31, 2020 was derived from audited financial statements but does not include all disclosures required by GAAP. The results of the Company’s operations for any interim period are not necessarily indicative of the results that may be expected for any other interim period or any future year or period.

The condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. Intercompany accounts and transactions have been eliminated in consolidation.

In accordance with Accounting Standards Update (“ASU”) 2014-15, Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern (Subtopic 205-40), the Company has evaluated whether there are conditions and events, considered in the aggregate, that raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date that the consolidated financial statements are issued. The Company believes

that the net proceeds from its IPO, together with its existing cash, availability under its Revolving Line of Credit (the “Revolver”) and cash generated from expected future commercial sales, will be sufficient to fund its operating expenses and capital expenditure requirements through at least one year after the issuance date of the accompanying condensed consolidated financial statements.

The Company expects its losses to continue for the foreseeable future and these losses will continue to have an adverse effect on our financial position. Because of the numerous risks and uncertainties associated with the Company’s commercialization and development efforts, the Company is unable to predict when it will become profitable, and it may never become profitable. The Company’s inability to achieve and then maintain profitability would negatively affect its business, financial condition, results of operations and cash flows. As such, the Company may need additional funding to support its continuing operations and pursue its growth strategy.

Reclassifications

Certain reclassifications have been made to prior year amounts to conform with current year financial statement presentation. The reclassifications relate to certain executive compensation costs and technical operations expenses at the Company’s Richmond, California plant. As follows are the total amounts reclassified for the three and six months ended June 30, 2020 along with the line items in the condensed consolidated statement of operations that were impacted (in thousands).


	Increase (Decrease) From Previously Reported Amounts
		Three Months Ended		Six Months Ended
	June 30,		June 30,
	2020		2020
Sales and marketing	$	100	$	247
General and administrative		(442)		(1,016)
Research and development		342		769

These reclassifications did not impact the Company’s consolidated earnings or assets for the three and six months ended June 30, 2020.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Estimates and assumptions relating to inventory, receivables, long-lived assets, the valuation of stock-based awards, the valuation of the preferred stock warrant liability and deferred income taxes are made at the end of each financial reporting period by management. Management continually re-evaluates its estimates, judgments and assumptions, and management's evaluation could change. Actual results could differ from those estimates.

Impact of COVID-19

The Company continues to closely monitor the impact of the COVID-19 pandemic on its business. In March 2020, the World Health Organization declared COVID-19 a global pandemic and recommended various containment and mitigation measures worldwide. Since that time, the number of procedures performed using the Company's products has decreased significantly, as governmental authorities in the United States have recommended, and in certain cases required, that elective, specialty and other non-emergency procedures and appointments be suspended or canceled in order to avoid patient exposure to medical environments and the risk of potential infection with COVID-19, and to focus limited resources and personnel capacity on the treatment of COVID-19 patients. As a result, beginning in March 2020, a significant number of procedures using the Company's products have been postponed or cancelled, which has negatively impacted sales of its products. These measures and challenges will likely continue for the duration of the pandemic, which is uncertain, and will likely continue to reduce the Company's net sales and negatively impact its business, financial condition and results of operations while the pandemic continues.

Net Loss per Share Attributable to Common Stockholders

The Company calculates basic and diluted net loss per share attributable to common stockholders in conformity with the two-class method required for participating securities. The Convertible Preferred Stock was considered a participating security through the completion of the IPO. The two-class method requires income (loss) available to common stockholders for the period to be allocated between common and participating securities based upon their respective rights to share in the earnings as if all income (loss) for the period had been distributed. Under the two-class method, the net loss attributable to common stockholders is not allocated to the Convertible Preferred Stock as the holders of the preferred stock do not have a contractual obligation to share in losses.

Our common stock has a dual class structure, consisting of Class A common stock and Class B common stock. Other than voting rights, the Class B common stock has the same rights as the Class A common stock, and therefore both are treated as the same class of stock for purposes of the earnings per share calculation. Basic net loss per share attributable to common stockholders is calculated by dividing the net loss attributable to common stockholders by the weighted-average shares outstanding during the period. For purposes of the diluted net income (loss) per share attributable to common stockholders’ calculation, Convertible Preferred Stock, stock options, and preferred and common stock warrants are considered to be common stock equivalents. All common stock equivalents have been excluded from the calculation of diluted net loss per share attributable to common stockholders, as their effect would be anti-dilutive for all periods presented. Therefore, basic and diluted net loss per share were the same for both periods presented.

Fair Value of Financial Instruments

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. To increase the comparability of fair value measures, the following hierarchy prioritizes the inputs to valuation methodologies used to measure fair value:

Level 1 - Valuations based on quoted prices for identical assets and liabilities in active markets.

Level 2 - Valuations based on observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data.

Level 3 - Valuations based on unobservable inputs reflecting the Company’s own assumptions, consistent with reasonably available assumptions made by other market participants. These valuations require significant judgment.

The estimated fair value of financial instruments disclosed in the financial statements has been determined by using available market information and appropriate valuation methodologies. The carrying value of all current assets and current liabilities approximates fair value because of their short-term nature.

Cash and Restricted Cash

The Company maintains its cash balances at banks and financial institutions. The balances are insured up to the legal limit. The Company maintains cash balances that may, at times, exceed this insured limit.

Under the provisions of the Revolving Credit Facility (see Note 6), the Company has a lockbox arrangement with the banking institution whereby daily lockbox receipts are contractually utilized to pay down outstanding balances on the Revolving Credit Facility debt. Lockbox receipts that have not yet been applied to the Revolving Credit Facility are classified as restricted cash in the accompanying condensed consolidated balance sheets. The following table provides a

reconciliation of cash and restricted cash included in the condensed consolidated balance sheets to the amounts included in the statements of cash flows (in thousands).


	June 30,
	2021		2020
Cash	$	28,302	$	990
Restricted cash		66		50
Total cash and restricted cash shown in statements of cash flows	$	28,368	$	1,040

Accounts Receivable and Allowances

Accounts receivable in the accompanying balance sheets are presented net of allowances for doubtful accounts and other credits. The Company grants credit to customers in the normal course of business, but generally does not require collateral or any other security to support its receivables.

The Company evaluates the collectability of accounts receivable based on a combination of factors. In circumstances where a specific customer is unable to meet its financial obligations to the Company, a provision to the allowance for doubtful accounts is recorded to reduce the net recognized receivable to the amount that is reasonably expected to be collected. For all other customers, a provision to the allowance for doubtful accounts is recorded based on factors including the length of time the receivables are past due, the current business environment and the Company’s historical experience. Provisions to the allowance for doubtful accounts are recorded to general and administrative expenses. Account balances are charged off against the allowance when it is probable that the receivable will not be recovered.

Inventory

Inventory, consisting of purchased materials, direct labor and manufacturing overhead, are stated at the lower of cost or net realizable value, with cost determined generally using the average cost method. Inventory write-downs for unprocessed and certain processed donor tissue are recorded based on the estimated amount of inventory that will not pass the quality control process based on historical data. At each balance sheet date, the Company also evaluates inventory for excess quantities, obsolescence or shelf life expiration. This evaluation includes analysis of the Company’s current and future strategic plans, historical sales levels by product, projections of future demand, the risk of technological or competitive obsolescence for products, general market conditions and a review of the shelf life expiration dates for products. To the extent that management determines there is excess or obsolete inventory or quantities with a shelf life that is too near its expiration for the Company to reasonably expect that it can sell those products prior to their expiration, the Company adjusts the carrying value to estimated net realizable value.

Property and Equipment

Property and equipment are stated at cost less accumulated depreciation. Depreciation is computed on the straight-line method over the following estimated useful lives of the assets:


Processing and research equipment		5 to 10 years
Office equipment and furniture		3 to 5 years
Computer hardware and software		3 years

Leasehold improvements are amortized on the straight-line method over the shorter of the lease term or the estimated useful life of the asset.

Repairs and maintenance costs are expensed as incurred.

Long-Lived Assets

Purchased intangible assets with finite lives are carried at acquired fair value, less accumulated amortization. Amortization is computed over the estimated useful lives of the respective assets.

The Company periodically evaluates the period of depreciation or amortization for long-lived assets to determine whether current circumstances warrant revised estimates of useful lives. The Company reviews its property and equipment and intangible assets for impairment whenever events or changes in circumstances indicate the carrying value of an asset may not be recoverable. Impairment exists when the carrying value of the company’s asset exceeds the related estimated undiscounted future cash flows expected to be derived from the asset. If impairment exists, the carrying value of that asset is adjusted to its fair value. A discounted cash flow analysis is used to estimate an asset’s fair value, using assumptions that market participants would apply. The results of impairment tests are subject to management’s estimates and assumptions of projected cash flows and operating results. Changes in assumptions or market conditions could result in a change in estimated future cash flows and could result in a lower fair value and therefore an impairment, which could impact reported results. There were no impairment losses for the three and six months ended June 30, 2021 or 2020.

Revenue Recognition

The Company’s revenue is generated from contracts with customers in accordance with Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) No. 606, “Revenue from Contracts with Customers”. The core principle of ASC 606 is that the Company recognizes revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services. The ASC 606 revenue recognition model consists of the following five steps: (1) identify the contracts with a customer, (2) identify the performance obligations in the contract, (3) determine the transaction price, (4) allocate the transaction price to the performance obligations in the contract and (5) recognize revenue when (or as) the entity satisfies a performance obligation.

As noted above, the Company enters into contracts to primarily sell and distribute products to healthcare providers or commercial partners, or are produced and sold under contract manufacturing arrangements with corporate customers which are billed under ship and bill contract terms. Revenue is recognized when the Company has met its performance obligations pursuant to its contracts with its customers in an amount that the Company expects to be entitled to in exchange for the transfer of control of the products to the Company’s customers. For all product sales, the Company has no further performance obligations and revenue is recognized at the point control transfers which occurs either when: i) the product is shipped via common carrier; or ii) the product is delivered to the customer or distributor, in accordance with the terms of the agreement.

A portion of the Company’s product revenue is generated from consigned inventory maintained at hospitals and from inventory physically held by direct sales representatives. For these types of products sales, the Company retains control until the product has been used or implanted, at which time revenue is recognized.

The Company elected to account for shipping and handling activities as a fulfillment cost rather than a separate performance obligation. Amounts billed to customers for shipping and handling are included as part of the transaction price and recognized as revenue when control of the underlying products is transferred to the customer. The related shipping and freight charges incurred by the Company are included in sales and marketing costs.

Contracts with customers state the final terms of the sale, including the description, quantity, and price of each implant distributed. The payment terms and conditions in the Company’s contracts vary; however, as a common business practice, payment terms are typically due in full within 30 to 60 days of delivery. The Company, at times, extends volume discounts to customers.

The Company permits returns of its products in accordance with the terms of contractual agreements with customers. Allowances for returns are provided based upon analysis of the Company’s historical patterns of returns matched against the revenues from which they originated. The Company records estimated returns as a reduction of revenue in the same period revenue is recognized.

Deferred Rent

The Company recognizes rent expense by the straight-line method over the lease term. Funds received from the lessor used to reimburse the Company for the cost of leasehold improvements are recorded as a deferred credit resulting from a lease incentive and are amortized over the lease term as a reduction of rent expense.

Stock-Based Compensation Plans

The Company accounts for its stock-based compensation plans in accordance with FASB Accounting Standards Codification (“ASC”) 718, Accounting for Stock Compensation. FASB ASC 718 requires the measurement and recognition of compensation expense for all stock-based awards made to employees and directors, including employee stock options and restricted stock. Stock-based compensation cost is measured at the grant date, based on the calculated fair value of the award, and is recognized as an expense on a straight-line basis over the requisite service period of the entire award.

Research and Development Costs

Research and development costs, which include mainly salaries, outside services and supplies, are expensed as incurred.

Concentration of Credit Risk

Financial instruments that potentially subject the Company to significant concentrations of credit risk consist primarily of cash. At June 30, 2021, the Company maintained $28.8 million in bank deposit accounts that are in excess of the $0.25 million insurance provided by the Federal Deposit Insurance Corporation in one federally insured financial institution. The Company has not experienced any losses in such accounts.

Comprehensive Income (Loss)

Comprehensive income (loss) comprises net income (loss) and other changes in equity that are excluded from net income (loss). For the three and six months ended June 30, 2021 and 2020, the Company’s net loss equaled its comprehensive loss and accordingly, no additional disclosure is presented.

Income Taxes

The Company uses the asset and liability method of accounting for income taxes. Deferred income taxes are recorded to reflect the tax consequences on future years for differences between the tax basis of assets and liabilities and their financial reporting amounts at each year-end based on enacted tax laws and statutory tax rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established when necessary to reduce deferred tax assets to amounts that are more likely than not to be realized.

The Company is subject to income taxes in the federal and state jurisdictions. Tax regulations within each jurisdiction are subject to the interpretation of the related tax laws and regulations and require significant judgment to apply. In accordance with the authoritative guidance on accounting for uncertainty in income taxes, the Company recognizes tax liabilities for uncertain tax positions when it is more likely than not that a tax position will not be sustained upon examination and settlement with various taxing authorities. Liabilities for uncertain tax positions are measured based upon the largest amount of benefit that is more likely than not (greater than 50%) of being realized upon settlement. The Company’s policy is to recognize interest and/or penalties related to income tax matters in income tax expense.

Recently Issued Accounting Standards

6 Months Ended

Jun. 30, 2021

Recently Issued Accounting Standards

Recently Issued Accounting Standards

Note 3. Recently Issued Accounting Standards

In March 2020, the Financial Accounting Standards Board (“FASB”) issued ASU 2020-04, Reference Rate Reform (Topic 848), Facilitation of the Effects of Reference Rate Reform on Financial Reporting. The ASU provides temporary relief from some of the existing rules governing contract modifications when the modification is related to the

replacement of the London Interbank Offered Rate (“LIBOR”) or other reference rates discontinued as a result of reference rate reform. The ASU specifically provides optional practical expedients for contract modification accounting related to contracts subject to ASC 310, Receivables, ASC 470, Debt, ASC 842, Leases, and ASC 815, Derivatives and Hedging. The ASU also establishes a general contract modification principle that entities can apply in other areas that may be affected by reference rate reform and certain elective hedge accounting expedients. For eligible contract modifications, the principle generally allows an entity to account for and present modifications as an event that does not require contract remeasurement at the modification date or reassessment of a previous accounting determination. That is, the modified contract is accounted for as a continuation of the existing contract. The standard was effective upon issuance on March 12, 2020, and the optional practical expedients can generally be applied to contract modifications made and hedging relationships entered into on or before December 31, 2022. Borrowings under the Company’s term loan facility and revolving line of credit bear interest based on LIBOR or an alternate rate. Provisions currently provide the Company with the ability to replace LIBOR with a different reference rate in the event that LIBOR ceases to exist.

In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740), Simplifying the Accounting for Income Taxes, which clarifies and simplifies certain aspects of the accounting for income taxes. The standard is effective for years beginning after December 15, 2020, and interim periods within annual periods beginning after December 15, 2020. The adoption of this standard on January 1, 2021 did not have a material impact on the Company’s consolidated financial statements.

In November 2019, the FASB issued ASU 2019-10, “Instruments - Credit Losses (Topic 326), Derivative and Hedging (Topic 815), and Leases (Topic 842), Effective Dates.” The FASB deferred the effective dates of the new credit losses standard for all entities except filers with the Securities and Exchange Commission (the “SEC”) that are not smaller reporting companies (SRCs) to fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. The Board also aligned the effective dates of ASU 2017-04 on goodwill impairment with the new effective dates of the credit losses standard. The FASB deferred the effective dates of its new standards on hedging and leases for entities that are not public business entities (PBEs) (and for leases, for entities that are not non-for-profit (NFP) entities that have issues, or are conduit bond obligors for, certain securities; and are not employee benefit plans (EBPs) that file or furnish financial statements with or to the SEC) to fiscal years beginning after December 15, 2020, and interim periods in the following year. The FASB is also reconsidering its philosophy on establishing effective dates for major standards for private companies, NFPs, EBPs and smaller public companies. The board has developed a two-bucket approach that would give these entities more time to implement major new standards. The Company is evaluating this standard to determine if adoption will have a material impact on the Company’s consolidated financial statements.

In February 2016, the FASB issued ASU 2016-02, Leases. The standard requires that lessees recognize a right-of-use asset and a lease liability for virtually all of their leases (other than leases that meet the definition of a short-term lease). The liability will be equal to the present value of lease payments. The asset will be based on the liability subject to certain adjustments. For income statement purposes, the FASB retained a dual model, requiring leases to be classified as either operating or finance. Operating leases will result in straight-line expense (similar to current operating leases) while finance leases will result in a front-loaded expense pattern (similar to current capital leases). In November 2019, the FASB issued 2019-10 which extended the adoption of ASU 2016-02 for the Company to be effective periods ending after December 15, 2022. While early adoption is permitted, the Company intends to adopt in accordance with the revised timeline provided by the FASB. The Company is evaluating this standard to determine if adoption will have a material impact on the Company’s consolidated financial statements.

- Definition

The entire disclosure for change in accounting principle. Includes, but is not limited to, nature, reason, and method of adopting amendment to accounting standards or other change in accounting principle.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
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-Subparagraph (g)(2)
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Reference 2: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
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-URI http://asc.fasb.org/topic&trid=2122394

Reference 3: http://www.xbrl.org/2003/role/disclosureRef
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Reference 4: http://www.xbrl.org/2003/role/disclosureRef
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Reference 5: http://www.xbrl.org/2003/role/disclosureRef
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Reference 6: http://www.xbrl.org/2003/role/disclosureRef
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Reference 7: http://www.xbrl.org/2003/role/disclosureRef
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Reference 8: http://www.xbrl.org/2003/role/disclosureRef
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Reference 9: http://www.xbrl.org/2003/role/disclosureRef
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Reference 10: http://www.xbrl.org/2003/role/disclosureRef
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-Paragraph 15
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Reference 12: http://www.xbrl.org/2003/role/disclosureRef
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Reference 13: http://www.xbrl.org/2003/role/disclosureRef
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Reference 14: http://www.xbrl.org/2003/role/disclosureRef
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Reference 15: http://www.xbrl.org/2003/role/disclosureRef
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Reference 18: http://www.xbrl.org/2003/role/disclosureRef
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Reference 19: http://www.xbrl.org/2003/role/disclosureRef
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Reference 24: http://www.xbrl.org/2003/role/disclosureRef
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+ Details

Stock-Based Compensation

6 Months Ended

Jun. 30, 2021

Stock-Based Compensation

Stock-Based Compensation

Note 4. Stock-Based Compensation

In 2015, the Company established the Aziyo Biologics, Inc. 2015 Stock Option/Stock Issuance Plan, as amended (the “2015 Plan”) which provided for the granting of incentive and non-qualified stock options to employees, directors and consultants of the Company. On October 7, 2020, in connection with the Company’s IPO, the Company adopted the Aziyo Biologics, Inc. 2020 Incentive Award Plan (the “2020 Plan”), which authorizes the grant of incentive and non-qualified stock options, restricted stock, restricted stock units and stock appreciation rights to employees, directors and consultants. Shares of Class A common stock totaling 1,636,000 were initially reserved for issuance pursuant to the 2020 Plan. In addition, the shares reserved for issuance under the 2020 Plan will also include shares reserved but not issued

under the 2015 Plan as well as an annual increase as set forth in the 2020 Plan. As of June 30, 2021, the Company had 432,864 shares of Class A common stock available for issuance under the 2020 Plan.

Stock Options

The Company’s policy is to grant stock options at an exercise price equal to 100% of the market value of a share of Class A common stock at closing on the date of the grant. The Company’s stock options have contractual terms of seven to ten years, and vest over a four-year period from the date of grant.

A summary of stock option activity under the Company’s 2015 Plan and 2020 Plan for the six months ended June 30, 2021 is as follows:


				Weighted-
				Average
		Weighted-		Remaining		Aggregate
		Average		Contractual		Intrinsic
		Exercise		Term		Value
	Number of Shares	Price		(years)		(in thousands)
Outstanding, December 31, 2020	917,437	$	13.68		8.1	$	2,070
Granted	395,417	$	13.80
Exercised	(3,305)	$	7.91
Forfeited	(6,093)	$	16.32
Outstanding, June 30, 2021	1,303,456	$	13.72		8.2	$	945
Vested and exercisable, June 30, 2021	208,505	$	6.01		3.5	$	765

As of June 30, 2021, there was approximately $7.7 million of total unrecognized compensation expense related to unvested stock options. These costs are expected to be recognized over a weighted-average period of 3.2 years. The weighted average grant date fair value of options granted during the six months ended June 30, 2021 was $7.98.

Restricted Stock Units

Restricted stock units (“RSUs”) represent rights to receive common shares at a future date. There is no exercise price and no monetary payment is required for receipt of restricted stock units or the shares issued in settlement of the award.

A summary of the RSU activity under the Company’s 2020 Plan for the six months ended June 30, 2021 is as follows:


	Number of	Weighted-
	Shares	Average
	Underlying	Grant Date
	RSUs	Fair Value
Unvested, December 31, 2020	147,883	$	17.00
Granted	86,115	$	14.46
Vested	—	$	—
Forfeited	(200)	$	11.50
Unvested, June 30, 2021	233,798	$	16.07

The total fair value of the RSUs granted during the six months ended June 30, 2021 of $1.2 million was based on the fair market value of the Company's Class A common stock on the date of grant. The fair value at the time of the grant is amortized to expense on a straight-line basis over the vesting period of three to four years. As of June 30, 2021, $3.3 million of unrecognized compensation costs related to RSUs is expected to be recognized over a weighted average period of 3.0 years.

Stock-Based Compensation Expense

Stock-based compensation expense recognized during the three and six months ended June 30, 2021 and 2020 was comprised of the following (in thousands):


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2021		2020		2021		2020
Sales and marketing	$	175	$	—	$	303	$	—
General and administrative		524		72		935		126
Research and development		143		—		251		—
Cost of goods sold		43		—		73		—
Total stock-based compensation expense	$	885	$	72	$	1,562	$	126

The Company uses the Black-Scholes model to value its stock option grants and expenses the related compensation cost using the straight-line method over the vesting period. The fair value of stock options is determined on the grant date using assumptions for the estimated fair value of the underlying common stock, expected term, expected volatility, dividend yield, and the risk-free interest rate. Before the completion of the Company’s IPO, the Board of Directors determined the fair value of common stock considering the state of the business, input from management, third party valuations and other considerations. The Company uses the simplified method for estimating the expected term used to determine the fair value of options. The expected volatility of the Class A common stock is primarily based on the historical volatility of comparable companies in the industry whose share prices are publicly available. The Company uses a zero-dividend yield assumption as the Company has not paid dividends since inception nor does it anticipate paying dividends in the future. The risk-free interest rate approximates recent U.S. Treasury note auction results with a similar life to that of the option. The period expense is then determined based on the valuation of the options, and is recognized on a straight-line basis over the requisite service period for the entire award.

The following weighted-average assumptions were used to determine the fair value of options during the six months ended June 30, 2021 and 2020:


	Six Months Ended
	June 30,
	2021		2020
Expected term (years)	6.0		5.0
Risk-free interest rate	0.99	%	1.89	%
Volatility factor	64	%	55	%
Dividend yield	—		—

Inventory

6 Months Ended

Jun. 30, 2021

Inventory

Inventory

Note 5. Inventory

Inventory was comprised of the following (in thousands):


	June 30,		December 31,
	2021		2020
Raw materials	$	1,714	$	1,507
Work in process		1,254		708
Finished goods		7,373		7,902
Total	$	10,341	$	10,117

Long-Term Debt

6 Months Ended

Jun. 30, 2021

Long-Term Debt

Long-Term Debt

Note 6. Long-Term Debt

On May 31, 2017, in connection with the Company’s acquisition of CorMatrix described in Note 7, Aziyo entered into a $10 million term loan facility (the “Term Loan Facility”) and an $8 million asset-backed revolving line of credit (the “Revolving Credit Facility”), under which the Company’s borrowing capacity is limited by certain qualifying assets, with a financial institution (the “May 2017 Financing”). As of both June 30, 2021 and December 31, 2020, the Company’s borrowing capacity under its Revolving Credit Facility was $8.0 million. The Term Loan Facility was amended in December 2017, February 2018 and July 2019 (all amendments being considered modifications) such that an additional $1.5 million, $3.0 million, and $3.5 million, respectively were received by the Company bringing the total aggregate principal amount outstanding under the Term Loan Facility to $20 million. Borrowings under the Term Loan Facility, as amended, bear interest at a rate per annum equal to the sum of (x) the greater of (i) 2.25% and (ii) the applicable London Interbank Offered Rate for U.S. dollar deposits divided by 1.00 minus the maximum effective reserve percentage for Eurocurrency funding (“LIBOR”) plus (y) 7.25%. In January 2021, based on its IPO, the Company exercised its right to extend the interest-only payment period for the Term Loan Facility to August 1, 2021 and, accordingly, interest and equal principal payments will be made beginning August 1, 2021 through maturity in July 2024.

The agreement that governs the Term Loan Facility, as amended, requires certain mandatory prepayments, subject to certain exceptions, with: (1) 100% of any net casualty proceeds in excess of $250,000 with respect to assets upon which the agent maintains a lien and (2) 100% of the net cash proceeds of non-ordinary course asset sales or sales pertaining to collateral upon which the borrowing base of the Revolving Credit Facility is calculated. In addition, the Company is required to prepay all outstanding obligations under the Term Loan Facility upon the termination of all commitments under the Revolving Credit Facility and the repayment of the outstanding borrowings thereunder. No such mandatory prepayments were required during the three and six months ended June 30, 2021 and 2020.

Both the Term Loan Facility and the Revolving Credit Facility also permit optional prepayments.

The agreement governing the Term Loan Facility also includes an exit fee of 6.5% of the aggregate principal amount and prepayment penalties of 2% to 4% if repaid prior to maturity. The weighted average interest rate on Term Loan Facility borrowings was 7.3% and 7.6%, respectively, for the three months ended June 30, 2021 and 2020 and 7.4% and 8.1%, respectively for the six months ended June 30 2021 and 2020. Borrowings under the Revolving Credit Facility bear interest at a rate per annum equal to the sum of (x) the greater of (i) 2.25% and (ii) LIBOR plus (y) 4.95%. The agreement governing the Revolving Credit Facility includes an unused line fee in an amount equal to 0.5% per annum of the unused borrowing capacity and prepayment penalties of 2% to 4% on the $8 million borrowing capacity if terminated by the Company prior to its expiration in July 2024. The weighted average interest rate on Revolving Credit Facility borrowings was 5.0% and 5.3%, respectively, for the three months ended June 30, 2021 and 2020 and 5.1% and 5.8%, respectively, for the six months ended June 30, 2021 and 2020 . Both debt instruments contain events of default, including, most significantly, a failure to timely pay interest or principal, insolvency, or an action by the United States Food and Drug Administration or such other material adverse event impacting the operations of Aziyo. The debt instruments also include a financial covenant based on cumulative minimum net product revenue, as defined, restrictions as to payment of dividends, and are secured by all assets of the Company. As of June 30, 2021, Aziyo was in compliance with this financial covenant.

In conjunction with the May 2017 Financing and the amendment thereto, the Company issued to the financial institution warrants to purchase 405,000 shares of Aziyo’s Convertible Preferred Stock at $1.00 per share. The warrants were exercisable through the first to occur of (a) May 31, 2027 (in the case of warrants to purchase 360,000 shares of Convertible Preferred Stock) or December 14, 2027 (in the case of warrants to purchase 45,000 shares of Convertible Preferred Stock), and (b) the earlier of (i) a Sale Transaction (as defined in the Company’s Certificate of Incorporation) or (ii) an initial public offering of the Company’s common stock. All warrants were exercised in connection with the IPO noted in Note 1. Upon issuance, the Company valued such warrants at $286,267. The recognition of these warrants served to reduce the recorded value of the associated Term Loan Facility borrowings. This resulting debt discount will be recognized as interest expense through the maturity of the Term Loan Facility.

During 2017, the Company restructured certain of its liabilities with a tissue supplier and entered into an unsecured promissory note totaling $2.1 million. The note bears interest at 5% and includes quarterly interest-only

payments in 2017 and quarterly interest and principal payments from March 31, 2018 through August 31, 2020. The notes are subordinated in payment to the Term Loan Facility and Revolving Credit Facility and in both 2021 and 2020, the Company’s senior lender restricted payment of the amounts due.

In May 2020, Aziyo entered into a promissory note with Silicon Valley Bank that provided for the receipt by the Company of loan proceeds totaling approximately $3.0 million (the “PPP Loan”) pursuant to the Paycheck Protection Program under the Coronavirus Aid, Relief and Economic Security Act (the “CARES Act”). In June 2021, Aziyo was notified by the U.S. Small Business Administration that the entire balance of the Company’s PPP Loan and all related accrued interest was forgiven. Such forgiveness resulted in a gain to the Company of approximately $3.0 million which has been recorded as other income in the accompanying condensed consolidated statements of operations for the three and six months ended June 30, 2021.

Long-term debt was comprised of the following (in thousands):


	June 30,		December 31,
	2021		2020
Term Loan Facility, net of unamortized discount and deferred financing costs	$	19,794	$	19,734
Note to Tissue Supplier		1,392		1,392
PPP loan		—		2,995
Total		21,186		24,121
Current Portion		(7,504)		(6,310)
Long-Term Debt	$	13,682	$	17,811

The fair value of all debt instruments, which is based on inputs considered to be Level 2 under the fair value hierarchy, approximates the respective carrying values as of June 30, 2021 and December 31, 2020.

Revenue Interest Obligation

6 Months Ended

Jun. 30, 2021

Revenue Interest Obligation

Revenue Interest Obligation

Note 7. Revenue Interest Obligation

On May 31, 2017, the Company completed an asset purchase agreement with CorMatrix Cardiovascular, Inc. ("CorMatrix") and acquired all CorMatrix commercial assets and related intellectual property (the "CorMatrix Acquisition"). As part of the CorMatrix Acquisition, the Company assumed a restructured, long-term obligation (the “Revenue Interest Obligation”) to Ligand Pharmaceuticals (“Ligand”) with an estimated present value on the acquisition date of $27.7 million. Subject to annual minimum payments of $2.75 million per year, the terms of the Revenue Interest Obligation require Aziyo to pay Ligand, 5% of future sales of the products Aziyo acquired from CorMatrix, including CanGaroo, ProxiCor, Tyke and Vascure, as well as products substantially similar to those products, such as the version of CanGaroo Aziyo is currently developing that is designed to have anti-infective properties.

Furthermore, a $5.0 million payment will be due to Ligand if cumulative sales of these products exceed $100.0 million and a second $5.0 million will be due if cumulative sales exceed $300.0 million during the ten-year term of the agreement which expires on May 31, 2027.

The Company has recorded the present value of the estimated total future payments under the Revenue Interest Obligation as a long-term obligation, with the annual minimum payments serving to establish the short-term portion. Total future payments, including contingent milestone payments and estimated sales-based payments, are based on assumptions related to future sales of the acquired products. At each reporting period, the value of the Revenue Interest Obligation is re-measured based on current estimates of future payments, with changes to be recorded in the condensed consolidated statements of operations using the catch-up method. There was no change to estimated future payments during the three and six months ended June 30, 2021 and 2020, and thus, no re-measurement gain or loss was recognized. Interest expense related to the Revenue Interest Obligation was approximately $0.7 million for both the three months ended June 30, 2021 and 2020, respectively, and approximately $1.3 million for both the six months ended June 30, 2021 and 2020, respectively.

Commitment and Contingencies

6 Months Ended

Jun. 30, 2021

Commitment and Contingencies

Commitment and Contingencies

Note 8. Commitments and Contingencies

Operating Leases

The Company leases two production facilities and one administrative and research facility under non-cancelable operating lease arrangements that expire through November 2025. All leases contain renewal options and escalation clauses based upon increases in the lessors’ operating expenses and other charges.

The Company records rent expense on a straight-line basis over the life of the lease and the difference between the average rent expense and cash payments for rent is recorded as deferred rent and is included in other current and long-term liabilities on the balance sheet. Rent expense was approximately $0.3 million for both the three months ended June 30, 2021 and 2020, respectively, and was approximately $0.6 million for both the six months ended June 30, 2021 and 2020, respectively, and is included as a component of either cost of goods sold or general and administrative expenses.

Cook Biotech License and Supply Agreements

Aziyo has entered into a license agreement with Cook Biotech (“Cook”) for an exclusive, worldwide license to the porcine tissue for use in the Company’s Cardiac Patch and CanGaroo products, subject to certain co-exclusive rights retained by Cook. The term of such license is through the date of the last to expire of the licensed Cook patents, which is anticipated to be July 2031. Along with this license agreement, Aziyo entered into a supply agreement whereby Cook would be the exclusive supplier to Aziyo of the licensed porcine tissue. Under certain limited circumstances, Aziyo has the right to manufacture the licensed product and pay Cook a royalty of 3% of sales of the Aziyo-manufactured tissue. The supply agreement expires on the same date as the related license agreement. No royalties were paid to Cook during the three and six months ended June 31, 2021 or 2020. Aziyo has also entered into an amendment to the Cook license agreement (the “Cook Amendment”) in order to add fields of exclusive use. Specifically, the Cook Amendment provides for a worldwide exclusive license to the porcine tissue for use with neuromodulation devices in addition to cardiovascular devices. The Cook Amendment includes license fee payments of $0.1 million per year in each of the years 2020 through 2026. Such license payments would accelerate if a change in control, as defined, occurs within Aziyo. The Company, in its sole discretion, can terminate the license agreement at any time.

Legal Proceedings

From time to time, we may be involved in claims and proceedings arising in the course of our business. The outcome of any such claims or proceedings, regardless of the merits, is inherently uncertain. The Company records accruals for contingencies when it is probable that a liability has been incurred and the amount can be reasonably estimated. These accruals are adjusted periodically as assessments change or additional information becomes available.

Between June 21, 2021 to present, 27 lawsuits in Indiana, Delaware, Florida, and Maryland have been filed against Aziyo Biologics Inc., certain Medtronic entities, and others alleging that the plaintiffs contracted tuberculosis and suffered substantial symptoms and complications following the implantation of FiberCel during spinal fusion operations. Thirteen lawsuits were filed in Indiana state court, captioned, respectively: (1) John Dukes and Kimberly Smith v. Aziyo Biologics, Inc., et al., Case No. 49D06-2106- CT-020915; (2) Tamara and Richard Marksberry v. Aziyo Biologics, Inc., et al., Case No. 49D04-2106-CT-021649; (3) Ramon Cabello v. Aziyo Biologics, Inc., et al., Case No. 49D13-2106-CT-021650; (4) Luis Caban v. Aziyo Biologics, Inc., Case No. 49D13-2107-CT-022413; (5) Machell and Samuel Hargrave v. Aziyo Biologics, Inc., et al., Case No. 49D01-2106-CT-021275; (6) Georgia Flinn as Personal Representative of the Estate of Gregory Flinn v. Aziyo Biologics, Inc., et al., Case No. 49D12-2107-CT-024051; (7) Ruth and William Flynn v. v. Aziyo Biologics, Inc., et al., Case No. 49D12-2107-CT-024624; (8) Tracy Warner and Kristin Foate v. v. Aziyo Biologics, Inc., et al., Case No. 49D04-2107-CT-024631; (9) Donna Schilling v. v. Aziyo Biologics, Inc., et al., Case No. 49D04-2107-CT-024443; (10)Robby and Stephanie Anderson v. v. Aziyo Biologics, Inc., et al., Case No. 49D13-2107-CT-025221; (11) Max Shepard v. v. Aziyo Biologics, Inc., et al., Case No. 49D11-2108-CT-025984; (12) Leon Chew v. Aziyo Biologics, Inc., et al., Case No. 49D12-2108-CT-025967; and (13) Candace Kozor, Kenneth Largin and Anthony Young v. Aziyo Biologics, Inc., et al., Case No. 49D04-2107-CT-024626 (collectively, the “Indiana State Complaints”). One lawsuit was filed in the United States District Court for the Southern District of Indiana, Indianapolis Division, captioned, James and Lauri Ann Jackson v. v. Aziyo Biologics, Inc., et al., Case No. 1:21-cv-01823 (the “Indiana Federal

Complaint”). Ten lawsuits were filed in the Superior Court of the State of Delaware, captioned respectively: (1) Richard Williams v. Aziyo, Biologics Inc., et al., C.A. No. N21C-06-166 EMD; (2) George and Jean Shante v. Aziyo, Biologics Inc., et al., C.A. No. N21C-06-256-DJB; (3) Marjorie Hitchens v. Aziyo, Biologics Inc., et al., C.A. No. N21C-06-214-DJB; (4) Larry and Joanne Fortner v. Aziyo, Biologics Inc., et al., C.A. No. N21C-06-215-DJB; (5) Nancy and John Smith v. Aziyo, Biologics Inc., et al., C.A. No. N21C-06-219-DJB; (6) Joan Trincia v. Aziyo, Biologics Inc., et al., C.A. No. N21C-06-220-DJB; (7) Bernadette Burgess v. Aziyo, Biologics Inc., et al., C.A. No. N21C-06-264-DJB; (8) Summer Fitzhugh v. Aziyo, Biologics Inc., et al., C.A. No. N21C-06-221-DJB; (9) Linda Shields v. Aziyo, Biologics Inc., et al., C.A. No. N21C-06-166-DJB; and (10) Sharon Riddick v. Aziyo, Biologics Inc., et al., C.A. No. N21C-07-005-EMD (collectively, the “Delaware State Complaints”). One lawsuit has been filed in the U.S. District Court for the Northern District of Florida and one lawsuit is pending in the U.S. District Court of Maryland. Those cases are captioned: Deborah Rice v. Aziyo Biologics, Inc., et al., Case No. 5:21-cv-00135-MW-MJF (“Florida Federal Complaint”) and Diana and James Hanson v. Aziyo Biologics, Inc., et al., Case No. 1:21-cv-01807-ADC (“Maryland Federal Complaint”) respectively. Lastly, one lawsuit has been filed in the state court of Maryland, captioned Tracey and Stan Gearhart v. Aziyo Biologics, Inc., et al., Case No. C-02-CV-21-000997. (“Maryland State Complaint.”)

Plaintiffs in the Indiana State Complaints allege a cause of action under Indiana’s Product Liability Act, citing manufacturing defects, defective design and failure to properly warn and instruct, and several of the complaints allege loss of consortium. Plaintiffs in these actions assert that the defendants are strictly liable or have breached the duty of care owed to plaintiffs by failing to exercise reasonable care in designing, manufacturing, marketing and labeling FiberCel and are seeking various types of damages, including economic damages, non-economic damages and loss of consortium. Plaintiffs in the Indiana Federal Complaint have asserted causes of action for product liability, negligence, and breaches of implied and express warranties and allege as part of the negligence claim, that defendants breached their duty of care owed to plaintiffs. Plaintiffs in the Indiana Federal Complaint are seeking damages for loss of services, society and consortium. Each of the plaintiffs in the Delaware State Complaints allege negligence, breach of implied warranty, breach of express warranty, medical monitoring and punitive damages, and two also allege loss of consortium. Plaintiffs in the Delaware State Complaints are seeking economic, consequential, and punitive damages. Both the Florida and Maryland Federal Complaints assert claims of negligence, breach of implied warranty, breach of express warranty and claims for costs of medical monitoring. The Florida Federal Complaint also contains three strict liability claims for defective design, defective manufacture, and failure to warn. A claim for punitive damages is also pled. The Maryland State Complaint pleads eight counts against Aziyo; three strict liability claims alleging defective design, manufacturing and failure to warn; one count of negligence; breaches of express and implied warranties, and one claim of loss of consortium. The Maryland State Complaint also pleads punitive damages. We refer to all of the aforementioned litigation collectively as the “FiberCel Litigation.”

In order to reasonably estimate a possible loss or range of possible loss for the FiberCel Litigation, the Company must assess a variety of factors, including, (i) what claims, if any, will survive dispositive motion practice, (ii) the extent of the claims, particularly when damages are not specified or are indeterminate, (iii) how the discovery process will affect the litigation, (iv) the settlement posture of the other parties to the litigation and (v) any other factors that may have a material effect on the litigation. At present, it is not possible for Aziyo to estimate a range of possible loss in the FiberCel Litigation; however, while unknown, the possible loss could have a material effect on the Company’s financial position and results of operations.

Should Aziyo be required to pay claims related to the FiberCel Litigation, the Company believes that certain settlements and judgments, as well as legal defense costs, may be covered in whole or in part under our insurance policies with two insurance carriers. In certain circumstances, insurance carriers reserve their rights to contest or deny coverage. We intend to contest vigorously any disputes with our insurance carriers and to enforce our rights under the terms of our insurance policies. Accordingly, we will record receivables with respect to amounts due under these policies only when the realization of the potential claim for recovery is considered probable. Amounts recovered under our insurance policies could be materially less than stated coverage limits and may not be adequate to cover damages, other relief and/or costs relating to claims. In addition, there is no guarantee that insurers will pay claims or that coverage will otherwise be available.

As of both June 30, 2021 and December 31, 2020, the Company was not a party to, or aware of, any material legal matters or claims except for the FiberCel Litigation.

Net Loss Per Share Attributable to Common Stockholders

6 Months Ended

Jun. 30, 2021

Net Loss Per Share Attributable to Common Stockholders

Net Loss Per Share Attributable to Common Stockholders

Note 9. Net Loss Per Share Attributable to Common Stockholders


	Three Months Ended				Six Months Ended
(in thousands, except share and per share data)	June 30,				June 30,
	2021		2020		2021		2020
Numerator:
Net loss attributable to common stockholders	$	(2,385)	$	(5,178)	$	(7,452)	$	(9,738)
Denominator:
Weighted average number of common shares, basic and diluted		10,228,296		648,277		10,227,240		648,277
Net loss per common share attributable to common stockholders, basic and diluted	$	(0.23)	$	(7.99)	$	(0.73)	$	(15.02)

The Company’s potential dilutive securities have been excluded from the computation of diluted net loss per share as the effect would be anti-dilutive. Therefore, the weighted average number of common shares outstanding used to calculate both basic and diluted net loss per share attributable to common stockholders is the same. The Company excluded the following potential common shares, presented based on amounts outstanding at period end, from the computation of diluted net loss per share attributable to common stockholders:


	June 30,
	2021	2020
Convertible Preferred Stock	—	3,224,674
Options to purchase common stock	1,303,456	307,102
Restricted stock units	233,798	—
Common stock warrants	—	7,656
Preferred stock warrants	—	29,022
Total	1,537,254	3,568,454

Related Party Transactions

6 Months Ended

Jun. 30, 2021

Related Party Transactions

Related Party Transactions

Note 10. Related Party Transactions

Prior to the IPO, the Company had a management services agreement with an affiliate of HighCape Partners through which strategic, operational and management consulting services are provided to the Company. During the three and six months ended June 30, 2020, the Company recorded expenses totaling $0.1 million. The management services agreement terminated upon completion of the IPO and all amounts due thereunder were paid as of December 31, 2020.

As part of the contribution of assets transacted from Tissue Banks International, now KeraLink International, to Aziyo upon formation of the Company, a provision existed which guaranteed a certain level of working capital, as defined, on the opening balance sheet of Aziyo. Such guarantee was largely finalized in 2016; however, an additional $0.4 million was received by the Company in connection with a settlement reached in 2018. Furthermore, as part of the 2018 settlement, it was agreed that when Keralink sells its Aziyo common shares for net proceeds greater than $550,000, Keralink is obligated to pay Aziyo $550,000 within three days of such cash being received. In May 2021, Keralink sold Aziyo common shares for proceeds in excess of $550,000, and as such, remitted $550,000 to Aziyo in full satisfaction of the 2018 settlement. Amounts received in connection with this settlement were recorded as other income in the accompanying condensed consolidated statements of operations for the three and six months ended June 30, 2021.

Segment Information

6 Months Ended

Jun. 30, 2021

Segment Information

Segment Information

Note 11. Segment Information

The Company operates as one segment, regenerative medicines. The segment is based on financial information that is utilized by the Company’s Chief Operating Decision Maker (“CODM”), who is the Company’s Chief Executive Officer, to assess performance and allocate resources.

For the three and six months ended June 30, 2021 and 2020, the Company’s net sales disaggregated by the major sources - Core Products and Non-Core Products (see Note 1) - were as follows (in thousands):


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2021		2020		2021		2020
Sales by product
Core Products	$	9,979	$	7,375	$	20,642	$	15,611
Non-Core Products		2,181		1,204		4,402		2,831
Total Net Sales	$	12,160	$	8,579	$	25,044	$	18,442

- Definition

The entire disclosure for reporting segments including data and tables. Reportable segments include those that meet any of the following quantitative thresholds a) it's reported revenue, including sales to external customers and intersegment sales or transfers is 10 percent or more of the combined revenue, internal and external, of all operating segments b) the absolute amount of its reported profit or loss is 10 percent or more of the greater, in absolute amount of 1) the combined reported profit of all operating segments that did not report a loss or 2) the combined reported loss of all operating segments that did report a loss c) its assets are 10 percent or more of the combined assets of all operating segments.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 31
-URI http://asc.fasb.org/extlink&oid=120311839&loc=d3e8924-108599

Reference 2: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 34
-URI http://asc.fasb.org/extlink&oid=120311839&loc=d3e8981-108599

Reference 3: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 21
-Subparagraph (a)
-URI http://asc.fasb.org/extlink&oid=120311839&loc=d3e8721-108599

Reference 4: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
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-Paragraph 40
-URI http://asc.fasb.org/extlink&oid=120311839&loc=d3e9031-108599

Reference 5: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 32
-Subparagraph (f)
-URI http://asc.fasb.org/extlink&oid=120311839&loc=d3e8933-108599

Reference 6: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 32
-Subparagraph (e)
-URI http://asc.fasb.org/extlink&oid=120311839&loc=d3e8933-108599

Reference 7: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 26
-URI http://asc.fasb.org/extlink&oid=120311839&loc=d3e8844-108599

Reference 8: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 41
-URI http://asc.fasb.org/extlink&oid=120311839&loc=d3e9038-108599

Reference 9: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 32
-Subparagraph (d)
-URI http://asc.fasb.org/extlink&oid=120311839&loc=d3e8933-108599

Reference 10: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 22
-URI http://asc.fasb.org/extlink&oid=120311839&loc=d3e8736-108599

Reference 11: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
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-Paragraph 42
-URI http://asc.fasb.org/extlink&oid=120311839&loc=d3e9054-108599

Reference 12: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
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-URI http://asc.fasb.org/extlink&oid=120311839&loc=d3e8657-108599

Reference 13: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
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-URI http://asc.fasb.org/extlink&oid=120311839&loc=d3e8721-108599

Reference 14: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-URI http://asc.fasb.org/topic&trid=2134510

+ Details

Summary of Significant Accounting Policies (Policies)

6 Months Ended

Jun. 30, 2021

Summary of Significant Accounting Policies

Basis of Presentation

The condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. Intercompany accounts and transactions have been eliminated in consolidation.

Reclassifications


	Increase (Decrease) From Previously Reported Amounts
		Three Months Ended		Six Months Ended
	June 30,		June 30,
	2020		2020
Sales and marketing	$	100	$	247
General and administrative		(442)		(1,016)
Research and development		342		769

These reclassifications did not impact the Company’s consolidated earnings or assets for the three and six months ended June 30, 2020.

Use of Estimates

Impact of COVID-19

Net Loss per Share Attributable to Common Stockholders

Fair Value of Financial Instruments

Level 1 - Valuations based on quoted prices for identical assets and liabilities in active markets.

Cash and Restricted Cash

reconciliation of cash and restricted cash included in the condensed consolidated balance sheets to the amounts included in the statements of cash flows (in thousands).


	June 30,
	2021		2020
Cash	$	28,302	$	990
Restricted cash		66		50
Total cash and restricted cash shown in statements of cash flows	$	28,368	$	1,040

Accounts Receivable and Allowances

Inventory

Property and Equipment

Property and equipment are stated at cost less accumulated depreciation. Depreciation is computed on the straight-line method over the following estimated useful lives of the assets:


Processing and research equipment		5 to 10 years
Office equipment and furniture		3 to 5 years
Computer hardware and software		3 years

Leasehold improvements are amortized on the straight-line method over the shorter of the lease term or the estimated useful life of the asset.

Repairs and maintenance costs are expensed as incurred.

Long-Lived Assets

Purchased intangible assets with finite lives are carried at acquired fair value, less accumulated amortization. Amortization is computed over the estimated useful lives of the respective assets.

Revenue Recognition

Deferred Rent

Stock-Based Compensation Plans

Research and Development Costs

Research and development costs, which include mainly salaries, outside services and supplies, are expensed as incurred.

Concentration of Credit Risk

Comprehensive Income (Loss)

Income Taxes

Summary of Significant Accounting Policies (Tables)

6 Months Ended

Jun. 30, 2021

Summary of Significant Accounting Policies

Schedule of total amount reclassed along with the line items in the condensed consolidated statement of operations

As follows are the total amounts reclassified for the three and six months ended June 30, 2020 along with the line items in the condensed consolidated statement of operations that were impacted (in thousands).


	Increase (Decrease) From Previously Reported Amounts
		Three Months Ended		Six Months Ended
	June 30,		June 30,
	2020		2020
Sales and marketing	$	100	$	247
General and administrative		(442)		(1,016)
Research and development		342		769

Summary of reconciliation of cash and restricted cash included in the consolidated balance sheets

The following table provides a reconciliation of cash and restricted cash included in the condensed consolidated balance sheets to the amounts included in the statements of cash flows (in thousands).


	June 30,
	2021		2020
Cash	$	28,302	$	990
Restricted cash		66		50
Total cash and restricted cash shown in statements of cash flows	$	28,368	$	1,040

Summary of estimated useful lives of the assets


Processing and research equipment		5 to 10 years
Office equipment and furniture		3 to 5 years
Computer hardware and software		3 years

Stock-Based Compensation (Tables)

6 Months Ended

Jun. 30, 2021

Stock-Based Compensation

Summary of stock options outstanding, exercisable and vested or expected to vest

A summary of stock option activity under the Company’s 2015 Plan and 2020 Plan for the six months ended June 30, 2021 is as follows:


				Weighted-
				Average
		Weighted-		Remaining		Aggregate
		Average		Contractual		Intrinsic
		Exercise		Term		Value
	Number of Shares	Price		(years)		(in thousands)
Outstanding, December 31, 2020	917,437	$	13.68		8.1	$	2,070
Granted	395,417	$	13.80
Exercised	(3,305)	$	7.91
Forfeited	(6,093)	$	16.32
Outstanding, June 30, 2021	1,303,456	$	13.72		8.2	$	945
Vested and exercisable, June 30, 2021	208,505	$	6.01		3.5	$	765

Schedule of RSU activity

A summary of the RSU activity under the Company’s 2020 Plan for the six months ended June 30, 2021 is as follows:


	Number of	Weighted-
	Shares	Average
	Underlying	Grant Date
	RSUs	Fair Value
Unvested, December 31, 2020	147,883	$	17.00
Granted	86,115	$	14.46
Vested	—	$	—
Forfeited	(200)	$	11.50
Unvested, June 30, 2021	233,798	$	16.07

Schedule of stock-based compensation expense recognized

Stock-based compensation expense recognized during the three and six months ended June 30, 2021 and 2020 was comprised of the following (in thousands):


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2021		2020		2021		2020
Sales and marketing	$	175	$	—	$	303	$	—
General and administrative		524		72		935		126
Research and development		143		—		251		—
Cost of goods sold		43		—		73		—
Total stock-based compensation expense	$	885	$	72	$	1,562	$	126

Summary of weighted-average assumptions were used to determine the fair value of options


	Six Months Ended
	June 30,
	2021		2020
Expected term (years)	6.0		5.0
Risk-free interest rate	0.99	%	1.89	%
Volatility factor	64	%	55	%
Dividend yield	—		—

Inventory (Tables)

6 Months Ended

Jun. 30, 2021

Inventory

Summary of inventory

Inventory was comprised of the following (in thousands):


	June 30,		December 31,
	2021		2020
Raw materials	$	1,714	$	1,507
Work in process		1,254		708
Finished goods		7,373		7,902
Total	$	10,341	$	10,117

Long-Term Debt (Tables)

6 Months Ended

Jun. 30, 2021

Long-Term Debt

Summary of PPP loan recorded within long-term debt

Long-term debt was comprised of the following (in thousands):


	June 30,		December 31,
	2021		2020
Term Loan Facility, net of unamortized discount and deferred financing costs	$	19,794	$	19,734
Note to Tissue Supplier		1,392		1,392
PPP loan		—		2,995
Total		21,186		24,121
Current Portion		(7,504)		(6,310)
Long-Term Debt	$	13,682	$	17,811

Net Loss Per Share Attributable to Common Stockholders (Tables)

6 Months Ended

Jun. 30, 2021

Net Loss Per Share Attributable to Common Stockholders

Schedule of net loss per share attributable to common stockholders


	Three Months Ended				Six Months Ended
(in thousands, except share and per share data)	June 30,				June 30,
	2021		2020		2021		2020
Numerator:
Net loss attributable to common stockholders	$	(2,385)	$	(5,178)	$	(7,452)	$	(9,738)
Denominator:
Weighted average number of common shares, basic and diluted		10,228,296		648,277		10,227,240		648,277
Net loss per common share attributable to common stockholders, basic and diluted	$	(0.23)	$	(7.99)	$	(0.73)	$	(15.02)

Schedule of potential common shares excluded from calculation, presented based on amounts outstanding at period end, from the computation of diluted net loss per share attributable to common stockholders


	June 30,
	2021	2020
Convertible Preferred Stock	—	3,224,674
Options to purchase common stock	1,303,456	307,102
Restricted stock units	233,798	—
Common stock warrants	—	7,656
Preferred stock warrants	—	29,022
Total	1,537,254	3,568,454

Segment Information (Tables)

6 Months Ended

Jun. 30, 2021

Segment Information

Schedule of sales information


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2021		2020		2021		2020
Sales by product
Core Products	$	9,979	$	7,375	$	20,642	$	15,611
Non-Core Products		2,181		1,204		4,402		2,831
Total Net Sales	$	12,160	$	8,579	$	25,044	$	18,442

Organization and Description of Business (Details) $ / shares in Units, $ in Millions	Oct. 13, 2020 USD ($) $ / shares shares	Sep. 25, 2020	Jun. 30, 2021 shares	Dec. 31, 2020 shares
Subsidiary, Sale of Stock [Line Items]
Reverse stock split ratio		13.9549
Common stock, shares issued \| shares	2,941,176
IPO price per share \| $ / shares	$ 17.00
Net proceeds on IPO issue \| $	$ 43.0
Underwriting discount \| $	3.5
Offering expenses \| $	$ 3.5
Class A Common stock
Subsidiary, Sale of Stock [Line Items]
Common stock, shares issued \| shares	2,205,882		7,095,265	7,091,960
Class B Common stock
Subsidiary, Sale of Stock [Line Items]
Common stock, shares issued \| shares	735,294		3,134,162	3,134,162

Summary of Significant Accounting Policies - Reclassifications (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020
Reclassification [Line Items]
Sales and marketing	$ 4,799	$ 4,062	$ 9,502	$ 8,544
General and administrative	3,529	2,077	7,134	4,683
Research and development	$ 1,881	1,408	$ 3,601	2,717
Reclassification adjustment
Reclassification [Line Items]
Sales and marketing		100		247
General and administrative		(442)		(1,016)
Research and development		$ 342		$ 769

Summary of Significant Accounting Policies - Cash and Restricted Cash (Details) - USD ($) $ in Thousands	Jun. 30, 2021	Dec. 31, 2020	Jun. 30, 2020	Dec. 31, 2019
Cash and Restricted Cash
Cash	$ 28,302	$ 39,150	$ 990
Restricted cash	66	382	50
Total cash and restricted cash shown in statements of cash flows	$ 28,368	$ 39,532	$ 1,040	$ 2,590

Summary of Significant Accounting Policies - Property and Equipment (Details)	6 Months Ended
	Jun. 30, 2021
Computer hardware and software
Property, Plant and Equipment [Line Items]
Estimated useful lives	3 years
Minimum \| Processing and research equipment
Property, Plant and Equipment [Line Items]
Estimated useful lives	5 years
Minimum \| Office equipment and furniture
Property, Plant and Equipment [Line Items]
Estimated useful lives	3 years
Maximum \| Processing and research equipment
Property, Plant and Equipment [Line Items]
Estimated useful lives	10 years
Maximum \| Office equipment and furniture
Property, Plant and Equipment [Line Items]
Estimated useful lives	5 years

Summary of Significant Accounting Policies - Long-Lived Assets (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020
Long-Lived Assets
Impairment losses	$ 0	$ 0	$ 0	$ 0

Summary of Significant Accounting Policies - Revenue Recognition (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020
Disaggregation of Revenue [Line Items]
Sales and marketing	$ 4,799	$ 4,062	$ 9,502	$ 8,544
Minimum
Disaggregation of Revenue [Line Items]
Term of payment			30 days
Maximum
Disaggregation of Revenue [Line Items]
Term of payment			60 days

Summary of Significant Accounting Policies - Concentration of Credit risk (Details) $ in Millions	Jun. 30, 2021 USD ($)
Summary of Significant Accounting Policies
Bank deposit accounts	$ 28.8

Stock-Based Compensation - 2020 Plan (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020	Oct. 07, 2020
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock-based compensation expense	$ 885	$ 72	$ 1,562	$ 126
Options to purchase common stock
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Exercise price as a percentage of market value of share of common stock at closing on the date of the grant			100.00%
Vesting term			4 years
Options to purchase common stock \| Minimum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Contractual term			7 years
Options to purchase common stock \| Maximum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Contractual term			10 years
2020 Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares reserved for future issuance	432,864		432,864		1,636,000
2020 Plan \| Stock option and restricted stock units
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Total unrecognized compensation expense	$ 7,700		$ 7,700
Weighted-average period			3 years 2 months 12 days
2020 Plan \| Restricted stock units
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Total unrecognized compensation expense	$ 3,300		$ 3,300
Weighted-average period			3 years
2020 Plan \| Restricted stock units \| Minimum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting term			0 years
2020 Plan \| Restricted stock units \| Maximum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting term			4 years

Stock-Based Compensation - Outstanding (Details) - 2020 Plan $ / shares in Units, $ in Thousands	6 Months Ended	12 Months Ended
	Jun. 30, 2021 USD ($) $ / shares shares	Dec. 31, 2020 USD ($) $ / shares shares
Number of Shares
Outstanding at the beginning \| shares	917,437
Granted \| shares	395,417
Exercised \| shares	(3,305)
Forfeited \| shares	(6,093)
Outstanding at the end \| shares	1,303,456	917,437
Exercisable at the end \| shares	208,505
Weighted- Average Exercise Price
Outstanding at the beginning (in dollars per share)	$ 13.68
Granted (in dollars per share)	13.80
Exercised (in dollars per share)	7.91
Forfeited (in dollars per share)	16.32
Outstanding at the end (in dollars per share)	13.72	$ 13.68
Exercisable at the end (in dollars per share)	$ 6.01
Weighted- Average Remaining Contractual Term (years) and Aggregate Intrinsic Value
Outstanding (in years)	8 years 2 months 12 days	8 years 1 month 6 days
Exercisable (in years)	3 years 6 months
Aggregate Intrinsic Value
Outstanding at the end (in dollars) \| $	$ 945	$ 2,070
Exercisable at the end (in dollars) \| $	$ 765
Other Disclosures
Weighted average grant date fair value of options granted	$ 7.98

Stock-Based Compensation - Restricted Stock Units (Details) $ / shares in Units, $ in Millions	6 Months Ended
	Jun. 30, 2021 USD ($) $ / shares shares
Number of Shares Underlying RSUs
Unvested at the beginning \| shares	147,883
Granted \| shares	86,115
Forfeited \| shares	(200)
Outstanding at the end \| shares	233,798
Weighted-Average Grant Date Fair Value
Unvested at the beginning (in dollars per share) \| $ / shares	$ 17.00
Granted (in dollars per share) \| $ / shares	14.46
Forfeited (in dollars per share) \| $ / shares	11.50
Unvested at the ending (in dollars per share) \| $ / shares	$ 16.07
Restricted stock units \| 2020 Plan
Weighted-Average Grant Date Fair Value
Total fair value of the restricted stock units granted \| $	$ 1.2
Unrecognized compensation costs \| $	$ 3.3
Weighted-average period	3 years
Restricted stock units \| 2020 Plan \| Minimum
Weighted-Average Grant Date Fair Value
Vesting period	0 years
Restricted stock units \| 2020 Plan \| Maximum
Weighted-Average Grant Date Fair Value
Vesting period	4 years

Stock-Based Compensation - Stock-Based Compensation Expense (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items]
Total	$ 885	$ 72	$ 1,562	$ 126
Sales and marketing
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items]
Total	175		303
General and administrative
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items]
Total	524	$ 72	935	$ 126
Research and development
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items]
Total	143		251
Cost of goods sold
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items]
Total	$ 43		$ 73

Stock-Based Compensation - Assumption (Details)	6 Months Ended
Stock-Based Compensation - Assumption (Details)	Jun. 30, 2021	Jun. 30, 2020
Weighted-average assumptions were used to determine the fair value of options
Expected term (years)	6 years	5 years
Risk-free interest rate	0.99%	1.89%
Volatility factor	64.00%	55.00%
Dividend yield	0.00%	0.00%

Inventory (Details) - USD ($) $ in Thousands	Jun. 30, 2021	Dec. 31, 2020
Inventory
Raw materials	$ 1,714	$ 1,507
Work in process	1,254	708
Finished goods	7,373	7,902
Total	$ 10,341	$ 10,117

Long-Term Debt - Term Loan Facility (Details) - USD ($) $ in Millions		1 Months Ended	3 Months Ended		6 Months Ended
	May 31, 2017	Aug. 31, 2019	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020	Jul. 31, 2019	Feb. 28, 2018	Dec. 31, 2017
Long-Term Debt
Face amount of debt	$ 10.0
Term Loan Facility
Long-Term Debt
Face amount of debt							$ 3.5	$ 3.0	$ 1.5
Total amount outstanding		$ 20.0
Interest rate	2.25%
Variable rate divider	1.00%
Exit fee (as a percent)	6.50%
Weighted average interest rate			7.30%	7.60%	7.40%	8.10%
Term Loan Facility \| Minimum
Long-Term Debt
Prepayment penalties (as a percent)	2.00%
Term Loan Facility \| Maximum
Long-Term Debt
Prepayment penalties (as a percent)	4.00%
Term Loan Facility \| LIBOR
Long-Term Debt
Basis spread on variable rate		7.25%

Long-Term Debt - Revolving Credit (Details) - USD ($)		3 Months Ended		6 Months Ended
Long-Term Debt - Revolving Credit (Details) - USD ($)	May 31, 2017	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020	Dec. 31, 2020	Jul. 31, 2019
Long-Term Debt
Maximum borrowing capacity	$ 8,000,000
Amount over which casualty proceeds are applied to prepayment of loan							$ 250,000
Percentage of proceeds from casualty in excess of $25,000 to apply to prepayment of loan							100.00%
Non-ordinary sale of assets or borrowing base proceeds to apply to prepayments							100.00%
Revolving Credit Facility
Long-Term Debt
Maximum borrowing capacity	$ 8,000,000	$ 8,000,000.0		$ 8,000,000.0		$ 8,000,000.0
Interest rate	2.25%
Unused line fee (as a percent)	0.50%
Weighted average interest rate		5.00%	5.30%	5.10%	5.80%
Revolving Credit Facility \| Minimum
Long-Term Debt
Prepayment penalties (as a percent)	2.00%
Revolving Credit Facility \| Maximum
Long-Term Debt
Prepayment penalties (as a percent)	4.00%
Revolving Credit Facility \| LIBOR
Long-Term Debt
Basis spread on variable rate	4.95%

Long-Term Debt - Convertible Preferred Stock (Details) - USD ($)	Oct. 13, 2020	May 31, 2017
Class of Warrant or Right [Line Items]
Price per share	$ 17.00
Exercisable on May 31, 2027
Class of Warrant or Right [Line Items]
Warrants to purchase shares of convertible preferred stock		360,000
Exercisable on December 14, 2027
Class of Warrant or Right [Line Items]
Warrants to purchase shares of convertible preferred stock		45,000
Convertible Preferred Stock
Class of Warrant or Right [Line Items]
Warrants to purchase shares of convertible preferred stock		405,000
Price per share		$ 1.00
Warrants outstanding		$ 286,267

Long-Term Debt - Unsecured Promissory Notes (Details) - USD ($) $ in Millions	Dec. 31, 2017	May 31, 2017
Debt Instrument [Line Items]
Face amount of debt		$ 10.0
Unsecured promissory note two
Debt Instrument [Line Items]
Face amount of debt	$ 2.1
Interest rate	5.00%

Long-Term Debt - Paycheck Protection Program, CARES Act (Details) - USD ($) $ in Thousands		1 Months Ended	6 Months Ended
	May 07, 2020	Jun. 30, 2021	Jun. 30, 2021
Debt Instrument [Line Items]
Gain on forgiveness of debt			$ 3,029
PPP loan
Debt Instrument [Line Items]
Proceeds from issuance of debt	$ 3,000
Gain on forgiveness of debt		$ 3,000

Long-Term Debt - PPP Loan Recorded Within Long-Term Debt (Details) - USD ($) $ in Thousands	Jun. 30, 2021	Dec. 31, 2020
Contractual maturities of the long-term debt
Total, net	$ 21,186	$ 24,121
Current Portion	(7,504)	(6,310)
Long-term debt	13,682	17,811
Term Loan Facility
Contractual maturities of the long-term debt
Total, net	19,794	19,734
Note to Tissue Supplier
Contractual maturities of the long-term debt
Total, net	$ 1,392	1,392
PPP loan
Contractual maturities of the long-term debt
Total, net		$ 2,995

Revenue Interest Obligation - (Details) - USD ($) $ in Thousands		3 Months Ended		6 Months Ended
	May 31, 2017	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020
Debt Instrument [Line Items]
Interest accrued to Revenue Interest Obligation		$ 700	$ 700	$ 1,326	$ 1,334
Ligand Pharmaceuticals
Debt Instrument [Line Items]
Estimated present value on the acquisition date	$ 27,700
Annual minimum sale	$ 2,750
Percentage of future sales	5.00%
Term of agreement	10 years
Cumulative sales of products exceed $100.0 \| Ligand Pharmaceuticals
Debt Instrument [Line Items]
Payments due based on cumulative sales	$ 5,000
Cumulative sales	100,000
Cumulative sales of products exceed $300.0 \| Ligand Pharmaceuticals
Debt Instrument [Line Items]
Payments due based on cumulative sales	5,000
Cumulative sales	$ 300,000

Commitment and Contingencies (Details) $ in Thousands	3 Months Ended		6 Months Ended
Commitment and Contingencies (Details) $ in Thousands	Jun. 30, 2021 USD ($)	Jun. 30, 2020 USD ($)	Jun. 30, 2021 USD ($) product	Jun. 30, 2020 USD ($)
Other Commitments [Line Items]
Number of production facilities under operating lease \| product			2
Number of administrative and research facility under operating lease \| product			1
Rent expense	$ 300	$ 300	$ 600	$ 600
License agreement with Cook Biotech
Future minimum lease commitments under non-cancelable operating leases
Percentage of royalty on sales			3.00%
Royalty expense	0	$ 0	$ 0	$ 0
Payment of license fee per year	$ 100		$ 100

Net Loss Per Share Attributable to Common Stockholders (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020
Numerator:
Net loss attributable to common stockholders	$ (2,385)	$ (5,178)	$ (7,452)	$ (9,738)
Denominator:
Weighted average number of common shares, basic	10,228,296	648,277	10,227,240	648,277
Weighted average number of common shares, diluted	10,228,296	648,277	10,227,240	648,277
Net loss per common share attributable to common stockholders, basic	$ (0.23)	$ (7.99)	$ (0.73)	$ (15.02)
Net loss per common share attributable to common stockholders, diluted	$ (0.23)	$ (7.99)	$ (0.73)	$ (15.02)

- Definition

The amount of net income (loss) for the period per each share of common stock or unit outstanding during the reporting period.

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The amount of net income (loss) for the period available to each share of common stock or common unit outstanding during the reporting period and to each share or unit that would have been outstanding assuming the issuance of common shares or units for all dilutive potential common shares or units outstanding during the reporting period.

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Amount, after deduction of tax, noncontrolling interests, dividends on preferred stock and participating securities; of income (loss) available to common shareholders.

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Net Loss Per Share Attributable to Common Stockholders - Anti-dilutive securities (Details) - shares	6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Anti-dilutive securities	1,537,254	3,568,454
Convertible Preferred Stock
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Anti-dilutive securities		3,224,674
Options to purchase common stock
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Anti-dilutive securities	1,303,456	307,102
Restricted stock units
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Anti-dilutive securities	233,798
Common stock warrant
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Anti-dilutive securities		7,656
Preferred stock warrants
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Anti-dilutive securities		29,022

Related Party Transactions (Details) - USD ($)	3 Months Ended	6 Months Ended	12 Months Ended
Related Party Transactions (Details) - USD ($)	Jun. 30, 2020	Jun. 30, 2020	Dec. 31, 2018	Jun. 30, 2021	May 31, 2021	Dec. 31, 2020
Related Party Transaction [Line Items]
Accrued expenses				$ 6,348,000		$ 6,323,000
High cape \| Operational and management consulting services
Related Party Transaction [Line Items]
Expenses for services	$ 100,000	$ 100,000
KeraLink International
Related Party Transaction [Line Items]
Amount of settlement received			$ 400,000
Shares sale proceeds over which Keralink to pay Aziyo			550,000		$ 550,000
Amount to receive from KeraLink upon sale of shares over $550,000			$ 550,000
Amount remitted from sale of shares					$ 550,000
Period for Keralink to pay Aziyo			3 days

Segment Information (Details) $ in Thousands	3 Months Ended		6 Months Ended
Segment Information (Details) $ in Thousands	Jun. 30, 2021 USD ($)	Jun. 30, 2020 USD ($)	Jun. 30, 2021 USD ($) segment	Jun. 30, 2020 USD ($)
Segment Reporting Information [Line Items]
Number of operating segments \| segment			1
Total sales	$ 12,160	$ 8,579	$ 25,044	$ 18,442
Core Products
Segment Reporting Information [Line Items]
Total sales	9,979	7,375	20,642	15,611
Non-Core Products
Segment Reporting Information [Line Items]
Total sales	$ 2,181	$ 1,204	$ 4,402	$ 2,831

- Definition

Amount, including tax collected from customer, of revenue from satisfaction of performance obligation by transferring promised good or service to customer. Tax collected from customer is tax assessed by governmental authority that is both imposed on and concurrent with specific revenue-producing transaction, including, but not limited to, sales, use, value-added and excise.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
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Reference 2: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
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-URI http://asc.fasb.org/extlink&oid=121604090&loc=SL49130545-203045

Reference 3: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
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Reference 4: http://www.xbrl.org/2003/role/disclosureRef
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Reference 6: http://www.xbrl.org/2003/role/disclosureRef
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Reference 7: http://www.xbrl.org/2003/role/disclosureRef
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Reference 8: http://www.xbrl.org/2003/role/disclosureRef
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Reference 9: http://www.xbrl.org/2003/role/disclosureRef
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Reference 10: http://www.xbrl.org/2003/role/disclosureRef
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-URI http://asc.fasb.org/extlink&oid=120311839&loc=d3e9031-108599

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-Name Accounting Standards Codification
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+ Details