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Pro Forma Unaudited Consolidated Financial Information
The following unaudited pro forma consolidated financial statements have been prepared
from the historical financial statements of Cardo Medical, Inc., as adjusted, to give effect to the
sale of substantially all of the assets of the Spine Division, which we refer to as the Spine Asset
Sale below. The Spine Asset Sale was consummated on April 4, 2011 pursuant to the Asset Purchase
Agreement, dated as of April 4, 2011, entered into by Cardo Medical, Inc., Cardo Medical, LLC
(Cardo Medical, Inc. and Cardo Medical, LLC are collectively referred to as the Sellers ) and
Altus Partners, LLC (the Buyer ) pursuant to which the Sellers agreed to sell substantially all of
the assets of the Sellers spine division to the Buyer in exchange for cash consideration of
$3,000,000. The unaudited pro forma consolidated balance sheet as of December 31, 2010 reflects
adjustments as if the Spine Asset Sale had occurred on December 31, 2010. The unaudited pro forma
consolidated statement of operations for the year ended December 31, 2010 reflect adjustments as if
the Spine Asset Sale had occurred on January 1, 2010.
The unaudited pro forma consolidated financial statements do not purport to present the
financial position or results of operations of Cardo Medical, Inc. had the Spine Asset Sale
occurred on the dates specified, nor are they necessarily indicative of the results of operations
that may be achieved in the future.
These unaudited pro forma consolidated financial statements should be read in conjunction with
Cardo Medical, Inc. s historical consolidated financial statements and accompanying notes included
in its Form 10-K filed on March 31, 2011.
| Pro Forma | ||||||||||||
| Adjustment | ||||||||||||
| Effect of | ||||||||||||
| December 31, | Spine | Pro Forma | ||||||||||
| 2010 | Asset Sale | Combined | ||||||||||
| (unaudited) | (unaudited) | |||||||||||
| A | ||||||||||||
| (in 000s) | ||||||||||||
| Assets | ||||||||||||
| Current assets | ||||||||||||
| Cash | $ | 127 | $ | 3,000 | $ | 3,127 | ||||||
| Accounts receivable, net | 413 | 413 | ||||||||||
| Prepaid expenses and other current assets | 99 | 99 | ||||||||||
| Total current assets | 639 | 3,000 | 3,639 | |||||||||
| Assets held for sale | 4,765 | (713 | ) | 4,052 | ||||||||
| Deposits | 31 | 31 | ||||||||||
| Total assets | $ | 5,435 | $ | 2,287 | $ | 7,722 | ||||||
| Liabilities and Stockholders Equity | ||||||||||||
| Current liabilities | ||||||||||||
| Accounts payable and accrued expenses | $ | 1,656 | $ | $ | 1,656 | |||||||
| Note payable Arthrex | ||||||||||||
| Note payable related party | 300 | 300 | ||||||||||
| Note payable | 200 | 200 | ||||||||||
| Total liabilities | 2,156 | 2,156 | ||||||||||
| Stockholders equity | ||||||||||||
| Common stock | 230 | 230 | ||||||||||
| Additional paid-in capital | 25,773 | 25,773 | ||||||||||
| Note receivable from stockholder | (50 | ) | (50 | ) | ||||||||
| Accumulated deficit | (22,674 | ) | 2,287 | (20,387 | ) | |||||||
| Total stockholders equity | 3,279 | 2,287 | 5,566 | |||||||||
| Total liabilities and stockholders equity | $ | 5,435 | $ | 2,287 | $ | 7,722 |
| Pro Forma Adjustment | ||||||||||||
| Year Ended | Gain on | |||||||||||
| December 31, | Spine | Pro Forma | ||||||||||
| 2010 | Asset Sale | Combined | ||||||||||
| (unaudited) | (unaudited) | |||||||||||
| A | ||||||||||||
| (in 000s) | ||||||||||||
| Net sales | $ | $ | $ | |||||||||
| Cost of sales | ||||||||||||
| Gross profit | ||||||||||||
| Research and development expenses | ||||||||||||
| Selling, general and administrative expenses | 583 | 583 | ||||||||||
| Loss from operations | (583 | ) | (583 | ) | ||||||||
| Interest income (expense), net | 27 | 27 | ||||||||||
| Loss from continuing operations before income tax provision | (556 | ) | (556 | ) | ||||||||
| Provision for income taxes | ||||||||||||
| Loss from continuing operations | (556 | ) | (556 | ) | ||||||||
| Discontinued operations | ||||||||||||
| Loss from discontinued operations | (10,953 | ) | (10,953 | ) | ||||||||
| Gain on disposal | 2,287 | 2,287 | ||||||||||
| Net (loss) income | $ | (11,509 | ) | $ | 2,287 | $ | (9,222 | ) | ||||
| Basic and diluted (loss) income per share before discontinued operations | (0.00 | ) | (0.00 | ) | ||||||||
| Discontinued operations | (0.05 | ) | 0.01 | (0.04 | ) | |||||||
| Basic and diluted loss per share | $ | (0.06 | ) | $ | 0.01 | $ | (0.04 | ) | ||||
| Weighted average shares outstanding: | ||||||||||||
| Basic and diluted | 230,293,141 | 230,293,141 | 230,293,141 |