Amedica Corporation (NASDAQ:AMDA) Files An 8-K Non-Reliance on Previously Issued Financial Statements or a Related Audit Report or Completed Interim ReviewItem 4.02 Non-Reliance on Previously Issued Financial Statements or a Related Audit Report or Completed Interim Review.
(a) On December 8, 2017, the Audit Committee of the board of directors of Amedica Corporation (the “Company”), following discussions with management, concluded that the Company will restate the audited consolidated financial statements contained in its annual report on Form 10-K for the year ended December 31, 2016, as well as the unaudited condensed consolidated financial statements contained in its Quarterly Reports on Form 10-Q for the quarters ended September 30, 2016, March 31, 2017, June 30, 2017, and September 30, 2017. Accordingly, the financial statements contained in these reports should no longer be relied upon. Further, the Audit Committee concluded that the Report of the Independent Registered Public Accounting Firm for the year ended December 31, 2016 should no longer be relied upon. The Company intends to present the restated financial statements and other financial data in amendments to its Annual Report on Form 10-K for the fiscal year ended December 31, 2016 and its Quarterly Reports on Form 10-Q for the quarters ended September 30, 2016, March 31, 2017, June 30, 2017, and September 30, 2017, (the “Restated Filings”).
The Company has identified errors in these financial statements due to failure to record a derivative liability associated with the issuance of 1,054,167 warrants during July 2016 and 364,708 warrants during January 2017, that were previously recorded as equity. Based on the Company’s reassessment of relevant accounting guidance, the effect of this adjustment results in a non-cash other expense or income (depending on the period) with an offsetting increase or decrease (depending on the period) to a derivative liability. The Company has determined that the net cumulative effect on each of the periods described above is material, and the Company expects to discuss in more detail the impact of the individual errors in the Company’s restated financial statements and other financial data in the Restated Filings.
The effect of the correction of this error in the above mentioned financial statements is expected to be as described in the table below (in thousands, except share and per share data). The Company has not yet completed its final determination and review of the items listed below, and therefore the listed amounts are preliminary and subject to change. While the Company expects to report the estimated adjustments described herein, there can be no assurance that the final adjustments will not differ materially from the estimated amounts discussed herein, or that additional errors will not be identified.
| As of and for the | As of and for the | As of and for the | As of and for the | ||||||||||||||||||||||||||||||
| Nine Months Ended September 30, 2016 | Three Months Ended March 31, 2017 | Six Months Ended June 30, 2017 | Nine Months Ended September 30, 2017 | ||||||||||||||||||||||||||||||
| As Previously | As | As Previously | As | As Previously | As | As Previously | As | ||||||||||||||||||||||||||
| Reported | Adjustment | Adjusted | Reported | Adjustment | Adjusted | Reported | Adjustment | Adjusted | Reported | Adjustment | Adjusted | ||||||||||||||||||||||
| Total net loss/comprehensive loss | $ | (12,790 | ) | $ | (849 | ) | $ | (13,639 | ) | $ | (2,150 | ) | $ | 1,769 | $ | (381 | ) | $ | (4,256 | ) | $ | 2,172 | $ | (2,084 | ) | $ | (7,070 | ) | $ | 2,917 | $ | (4,153 | ) |
| Deemed dividend related to beneficial conversion feature and accretion of a discount on Series A Preferred Stock | (6,278 | ) | – | (6,278 | ) | – | – | – | – | – | – | – | – | – | |||||||||||||||||||
| Net loss attributable to common stockholders | $ | (19,068 | ) | $ | (849 | ) | $ | (19,917 | ) | $ | (2,150 | ) | $ | 1,769 | $ | (381 | ) | $ | (4,256 | ) | $ | 2,172 | $ | (2,084 | ) | $ | (7,070 | ) | $ | 2,917 | $ | (4,153 | ) |
| Net loss per share attributable to common stockholders: | |||||||||||||||||||||||||||||||||
| Basic and diluted | $ | (14.56 | ) | $ | (0.65 | ) | $ | (15.21 | ) | $ | (0.76 | ) | $ | 0.63 | $ | (0.13 | ) | $ | (1.46 | ) | $ | 0.74 | $ | (0.71 | ) | $ | (2.42 | ) | $ | 1.00 | $ | (1.42 | ) |
| Weighted average common shares outstanding: | |||||||||||||||||||||||||||||||||
| Basic and diluted | 1,309,286 | – | 1,309,286 | 2,826,469 | – | 2,826,469 | 2,918,240 | – | 2,918,240 | 2,918,240 | – | 2,918,240 | |||||||||||||||||||||
| Total liabilities | $ | 14,110 | $ | 5,822 | $ | 19,932 | $ | 9,991 | $ | 2,179 | $ | 12,170 | $ | 8,607 | $ | 1,776 | $ | 10,383 | $ | 9,128 | $ | 1,031 | $ | 10,159 | |||||||||
| Total stockholders’ equity | $ | 17,325 | $ | (5,822 | ) | $ | 11,503 | $ | 16,090 | $ | (2,179 | ) | $ | 13,911 | $ | 14,043 | $ | (1,776 | ) | $ | 12,267 | $ | 11,471 | $ | (1,031 | ) | $ | 10,440 |
| As of and for the | As of and for the | As of and for the | |||||||||||||||||||||||
| Three Months Ended September 30, 2016 | Three Months Ended June 30, 2017 | Three Months Ended September 30, 2017 | |||||||||||||||||||||||
| As Previously | As | As Previously | As | As Previously | As | ||||||||||||||||||||
| Reported | Adjustment | Adjusted | Reported | Adjustment | Adjusted | Reported | Adjustment | Adjusted | |||||||||||||||||
| Total net loss/comprehensive loss | $ | (4,338 | ) | $ | (849 | ) | $ | (5,187 | ) | $ | (2,106 | ) | $ | $ | (1,703 | ) | $ | (2,815 | ) | $ | $ | (2,070 | ) | ||
| Deemed dividend related to beneficial conversion feature and accretion of a discount on Series A Preferred Stock | (6,278 | ) | – | (6,278 | ) | – | – | – | – | – | – | ||||||||||||||
| Net loss attributable to common stockholders | $ | (10,616 | ) | $ | (849 | ) | $ | (11,465 | ) | $ | (2,106 | ) | $ | $ | (1,703 | ) | $ | (2,815 | ) | $ | $ | (2,070 | ) | ||
| Net loss per share attributable to common stockholders: | |||||||||||||||||||||||||
| Basic and diluted | $ | (5.53 | ) | $ | (0.44 | ) | $ | (5.97 | ) | $ | (0.70 | ) | $ | 0.13 | $ | (0.56 | ) | $ | (0.93 | ) | $ | 0.25 | $ | (0.68 | ) |
| Weighted average common shares outstanding: | |||||||||||||||||||||||||
| Basic and diluted | 1,920,745 | – | 1,920,745 | 3,022,073 | – | 3,022,073 | 3,022,073 | – | 3,022,073 | ||||||||||||||||
| Total liabilities | $ | 14,110 | $ | 5,822 | $ | 19,932 | $ | 8,606 | $ | 1,776 | $ | 10,382 | $ | 9,128 | $ | 1,031 | $ | 10,159 | |||||||
| Total stockholders’ equity | $ | 17,325 | $ | (5,822 | ) | $ | 11,503 | $ | 14,043 | $ | (1,776 | ) | $ | 12,267 | $ | 11,471 | $ | (1,031 | ) | $ | 10,440 |
| As of and for the | ||||||||
| Twelve Months Ended December 31, 2016 | ||||||||
| As Previously | As | |||||||
| Reported | Adjustment | Adjusted | ||||||
| Total net loss/comprehensive loss | $ | (16,598 | ) | $ | 1,836 | $ | (14,762 | ) |
| Deemed dividend related to beneficial conversion feature and accretion of a discount on Series A Preferred Stock | (6,278 | ) | – | (6,278 | ) | |||
| Net loss attributable to common stockholders | $ | (22,876 | ) | $ | 1,836 | $ | (21,040 | ) |
| Net loss per share attributable to common stockholders: | ||||||||
| Basic and diluted | $ | (14.82 | ) | $ | 1.19 | $ | (13.63 | ) |
| Weighted average common shares outstanding: | ||||||||
| Basic and diluted | 1,543,735 | – | 1,543,735 | |||||
| Total liabilities | $ | 11,888 | $ | 3,137 | $ | 15,025 | ||
| Total stockholders’ equity | $ | 14,373 | $ | (3,137 | ) | $ | 11,236 |
The registrant’s Audit Committee discussed the matters disclosed in this Item 4.02 (a) with the registrant’s predecessor independent registered public accounting firm, BDO USA, LLP, and the registrants current independent registered public accounting firm Tanner LLC.
On November 10, 2017, the Company effected a 1 for 12 reverse stock split of the Company’s common stock. All common stock share, warrants and per-share amounts for all periods outlined above have been adjusted retroactively to reflect the reverse stock split.
About Amedica Corporation (NASDAQ:AMDA)
Amedica Corporation is a commercial biomaterial company. The Company is a vertically integrated silicon nitride orthopedic medical device manufacturer. It is focused on using its silicon nitride ceramic technology platform to develop, manufacture and sell a range of medical devices. It is also engaged in developing wear- and corrosion-resistant implant components for hip and knee arthroplasty. The Company markets its Valeo family of silicon nitride interbody spinal fusion devices in the United States, Europe and Brazil for use in the cervical and thoracolumbar areas of the spine. In addition to its silicon nitride-based spinal fusion products, it markets a line of non-silicon nitride spinal surgery products, which allows the Company to provide surgeons and hospitals with a solution for spinal procedures. Its Valeo interbody spinal fusion devices include Anterior Lumbar, Posterior Lumbar, Oblique Lumbar, Transforaminal Lumbar, Lateral Lumbar, Cervical and Corpectomy.
