Attached files
| file | filename |
|---|---|
| 8-K/A - FORM 8-K/A - Wright Medical Group N.V. | d661912d8ka.htm |
| EX-99.3 - EX-99.3 - Wright Medical Group N.V. | d661912dex993.htm |
| EX-99.2 - EX-99.2 - Wright Medical Group N.V. | d661912dex992.htm |
| EX-23.1 - EX-23.1 - Wright Medical Group N.V. | d661912dex231.htm |
Exhibit 99.1
Cartiva, Inc.
Financial Statements as of September 30, 2018 and for the Nine Months Ended September 30, 2018 and 2017
Cartiva, Inc.
Unaudited Balance Sheets
September 30, 2018
| 2018 | ||||
| Assets |
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| Current assets: |
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| Cash and cash equivalents |
$ | 13,832,832 | ||
| Accounts receivable, net |
4,670,278 | |||
| Inventory |
1,143,732 | |||
| Prepaid expenses and other current assets |
450,134 | |||
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|
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| Total current assets |
20,096,976 | |||
| Property and equipment, net |
1,489,541 | |||
| Other assets |
80,036 | |||
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| Total assets |
$ | 21,666,553 | ||
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| Liabilities and Stockholders’ Equity |
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| Current liabilities: |
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| Accounts payable |
$ | 371,431 | ||
| Accrued expenses |
2,533,584 | |||
| Current portion of long-term debt |
2,200,000 | |||
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| Total current liabilities |
5,105,015 | |||
| Long-term debt, net |
2,617,989 | |||
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| Total liabilities |
7,723,004 | |||
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| Commitments and Contingencies |
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| Stockholders’ equity: |
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| Convertible preferred stock, $0.0001 par value: 69,903,035 shares authorized; 68,213,933 shares issued and outstanding |
6,822 | |||
| Common stock, $0.0001 par value: 100,000,000 shares authorized; 7,755,283 shares issued and outstanding |
761 | |||
| Additional paid-in capital |
28,450,283 | |||
| Accumulated deficit |
(14,514,317 | ) | ||
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|
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| Total stockholders’ equity |
13,943,549 | |||
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| Total liabilities and stockholders’ equity |
$ | 21,666,553 | ||
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See accompanying notes.
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Cartiva, Inc.
Unaudited Statements of Operations
For the Nine Months Ended September 30, 2018 and 2017
| 2018 | 2017 | |||||||
| REVENUE |
$ | 24,714,204 | $ | 12,720,564 | ||||
| COST OF REVENUE |
1,280,550 | 665,695 | ||||||
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| GROSS MARGIN |
23,433,654 | 12,054,869 | ||||||
| OPERATING EXPENSES: |
||||||||
| General and administrative |
5,155,062 | 2,247,672 | ||||||
| Sales and marketing |
10,365,316 | 5,837,448 | ||||||
| Research and development |
3,352,314 | 2,445,029 | ||||||
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| Total operating expenses |
18,872,692 | 10,530,149 | ||||||
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| Net income from operations |
4,560,962 | 1,524,720 | ||||||
| Interest expense |
94,493 | 179,110 | ||||||
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| Net income before taxes |
4,466,469 | 1,345,610 | ||||||
| Provision for taxes |
148,718 | 2,350 | ||||||
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| Net income |
$ | 4,317,751 | $ | 1,343,260 | ||||
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See accompanying notes.
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Cartiva, Inc.
Unaudited Statements of Cash Flows
For the Nine Months Ended September 30, 2018 and 2017
| 2018 | 2017 | |||||||
| Cash flows from operating activities: |
||||||||
| Net income |
$ | 4,317,751 | $ | 1,343,260 | ||||
| Adjustments to reconcile net income to net cash provided by (used in) operating activities: |
||||||||
| Depreciation and amortization |
443,959 | 358,707 | ||||||
| Stock-based compensation |
203,767 | 168,908 | ||||||
| Non-cash interest expense |
91,157 | 91,157 | ||||||
| Loss on sale of fixed assets |
37,000 | — | ||||||
| Changes in assets and liabilities: |
||||||||
| Accounts receivable |
2,690,570 | (3,087,891 | ) | |||||
| Inventory |
(677,846 | ) | (132,002 | ) | ||||
| Prepaid expenses and other current assets |
(224,912 | ) | 63,961 | |||||
| Other assets |
232,114 | (45,000 | ) | |||||
| Accounts payable |
(227,015 | ) | 62,011 | |||||
| Accrued liabilities |
(1,518,185 | ) | 916,805 | |||||
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| Net cash provided by (used in) operating activities |
5,368,360 | (260,082 | ) | |||||
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| Cash flows from investing activities: |
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| Proceeds from sale of fixed assets |
3,000 | — | ||||||
| Purchases of property and equipment |
(1,132,072 | ) | (430,014 | ) | ||||
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| Net cash used in investing activities |
(1,129,072 | ) | (430,014 | ) | ||||
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| Cash flows from financing activities: |
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| Proceeds from long-term debt |
— | 250,000 | ||||||
| Principal payments of long-term debt |
(549,999 | ) | — | |||||
| Purchase and retirement of common stock |
— | (12,000 | ) | |||||
| Proceeds from sale of preferred stock |
— | (7,965 | ) | |||||
| Proceeds from exercise of stock options |
766,614 | 14,300 | ||||||
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| Net cash provided by financing activities |
216,615 | 244,335 | ||||||
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| Net change in cash and cash equivalents |
4,455,903 | (445,761 | ) | |||||
| Cash and cash equivalents - beginning of period |
9,376,929 | 7,720,410 | ||||||
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| Cash and cash equivalents - end of period |
$ | 13,832,832 | $ | 7,274,649 | ||||
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See accompanying notes.
- 3 -
CARTIVA, INC.
NOTES TO UNAUDITED FINANCIAL STATEMENTS
AS OF SEPTEMBER 30, 2018 AND FOR THE NINE MONTHS ENDED
SEPTEMBER 30, 2018 AND 2017
| 1. | ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
Organization and Nature of Business — Cartiva, Inc., (the “Company”), a Delaware corporation, is a medical device company focused on the development, manufacturing and marketing of products for the treatment of osteoarthritis of the extremities. The Company’s first commercialized product is Cartiva Synthetic Cartilage Implant (“SCI”), an implant designed to replace the damaged cartilage surface of arthritic joints. In July 2016, the Company received pre-market approval from the U.S. Food and Drug Administration (“FDA”) for the use of Cartiva SCI in the treatment of osteoarthritis at the base of the great toe. The Company commenced selling Cartiva SCI in the United States following FDA approval.
Basis of Presentation — The accompanying financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and include all adjustments necessary for the fair presentation of the Company’s financial position for the periods presented.
Subsequent Events — The Company evaluates events and transactions occurring subsequent to the date of the accompanying balance sheets for potential recognition or disclosure in the financial statements. All subsequent events requiring recognition or disclosure have been incorporated into the accompanying financial statements.
Use of Estimates — Preparation of the accompanying financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates.
Revenue Recognition — The Company’s revenues are primarily generated through two types of customers, hospitals and surgery centers and stocking distributors, with the majority of its revenue derived from sales to hospitals and surgery centers. The Company’s products are sold through a network of employees and independent sales representatives in the United States and by stocking distributors outside the United States. In the United States, the Company generates a significant portion of its revenue from consigned inventory maintained by its independent sales representatives. For these products, the Company records revenues when it receives appropriate notification that the product has been used or surgically implanted in a patient. For all other transactions, the Company recognizes revenue when title to the goods and risk of loss transfer to customers, provided there are no remaining performance obligations that will affect the customer’s final acceptance of the sale.
The Company records revenues from sales to its stocking distributors outside the United States at the time the product is shipped to the distributor. Stocking distributors, who sell the products to their customers, take title to the products and assume all risks of ownership. The Company’s distributors are obligated to pay within specified terms regardless of when, if ever, they sell the products. The distributor can only reject products for an obvious defect or shipping error, generally within 30 days of receipt, and in such cases, replacement products would be sent. Since the distributor’s remedy is the replacement of the product and not a refund or credit, the Company does not defer revenue associated with these sales. The Company’s standard sales arrangements in the United States do not have a return provision.
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Accounts Receivable —The Company maintains allowances for estimated losses resulting from the inability of its customers to make required payments. At September 30, 2018, the allowance for doubtful accounts was $1,373,000.
Inventories —Inventories consisted of the following at September 30,:
| 2018 | ||||
| Raw materials |
$ | 186,568 | ||
| Finished goods |
957,164 | |||
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| Total inventories |
$ | 1,143,732 | ||
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| 2. | DEBT |
As of September 30, 2018, all outstanding debt relates to the Company’s loan agreement with Silicon Valley Bank (“SVB”) and is net of debt issuance costs and discounts of $132,011.
| 3. | RELATED PARTY TRANSACTIONS |
The Company is related to Carticept Medical, Inc. (“Carticept”) through common ownership. Prior to December 31, 2017, the Company and Carticept were party to certain agreements related to shared employees and activities. For the nine months ended September 30, 2017, the Company incurred expense of $412,213 pursuant to the agreements.
| 4. | LICENSE AGREEMENT |
The Company is party to a royalty agreement related to the sale of products incorporating certain intellectual property. Royalty expense was $682,963 and $335,041 during the nine months ended September 30, 2018 and 2017, respectively.
* * * * * *
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