FIN 500W Washington University Carna Robotica Case Study
Description
Required Readings
- Venture Capital Deal Algebra by Brad Feld (at Feld Thoughts blog) | Foundry Group
- Understanding Valuation: A Venture Investor’s Perspective by Callow, A Dana Jr. and Michael Larson
Boston Millennia Partners White Paper - What Is A Good VC Return by Fred Wilson (at AVC blog) | Union Square Ventures
- Funds Flail at Valuation by Grind, Kirsten | Wall Street Journal | Oct. 29, 2015
Case Materials
Carna Robotics Audited Financials
Review the balance sheet, income statement, and cash flow statement of Carna Robotics, and the contents of footnote 9 regarding the company’s common and convertible preferred stock. The remainder of the financial statements are provided solely for completeness and future reference.
Case Background
Based upon your recommendation after a review of the business plan, your partner has agreed that the Carna Robotics opportunity may align to the investment strategy of your fund, and has asked you to conduct additional analysis. He is particularly focused on the valuation of the most recent financing and the ability to project long-term revenue and profitability.
Homework Instructions
After reading the required readings and case background, and reviewing the assigned portions of the Carna Robotics business plan and financial statements, use those materials, your own knowledge, and any further research you may wish to conduct, to answer the following questions.
Please be concise in your responses, focusing on key facts and interpretations rather than repeating extensive contents of the readings. The maximum length of your entire response is limited to one page of 12-point text double-spaced. (It is not necessary to repeat the questions in your response.) You may attach an additional page of calculations supporting your answer if you choose.
When solving the homework, please note the following regarding premoney and postmoney valuations:
- The pre-money of a successive round will not necessarily be (in fact most often will not be) the same as the post-money valuation of the prior round.
- The share price of the successive round will not necessarily be (in fact most often will not be) the same as the share price of the prior round.
Homework Assignment
- Unrelated to the Carna Robotics case, consider a planned series B financing in a business that has the following capitalization:
Founders 950,000 common shares
Current Management 300,000 common shares
Series A Investor 750,000 Series A preferred shares
Total shares 2,000,000 fully diluted sharesThe Series A investor provided $1 million of financing. Current management was hired in connection with the Series A financing; assume their shares were issued immediately prior to the closing of Series A.
Your venture fund plan to provide a $3 million Series B financing and have settled upon a $7 million pre-money valuation. Immediately prior to the Series B financing (in other words, at the sole expense of the other pre-existing shareholders), you want to increase current managements ownership share such that it will constitute 17% of the post-transaction capitalization.
Please calculate the following:
(i) The price per share of the Series A financing.
(ii) The postmoney valuation of the Series A financing.
(iii) The premoney valuation of the Series A financing.
(iv) The postmoney valuation of the Series B financing.
(v) The percentage ownership you will acquire in the Series B financing.
(vi) The percentage ownership that will be retained by the combination of the founders, the current management, and the Series A investor.
(vii) The number of additional shares that should be issued to management.
(viii) The number of shares that you should purchase in the Series B financing.
(ix) The price per share of the Series B financing. - Regarding Carna Robotics, estimate the pre- and post-money valuation of the Series E preferred stock financing, treating series E, E1, and E2 as a single series and financing event.
- Propose a method for estimate Carna Robotics’ revenue and profit over the next five years. It is not necessary to develop an actual projection; only to specify the inputs, metrics and/or methods that you would use to do so. You may submit this answer in narrative or tabular numerical form, as you prefer.
- Did any of the information contained in the detailed financial statements and capitalization information cause you to adjust your opinion of the investment opportunity? Please explain why or why not.
Unformatted Attachment Preview
Venture Capital Deal Algebra (from the
blog, Feld Thoughts)
Fred Wilson wrote a useful post on valuation today. It reminded me of a document I had
Dave Jilk write when he was doing some work for me. I decided to write this bladon
(Blog Add-on) post – inspired by Fred. Please read Freds post first – it lays the
groundwork for why VCs do things this way.
Ive found that even sophisticated entrepreneurs didnt necessary grasp how valuation
math (or deal algebra) worked. VCs talk about pre-money, post-money, and share
price as though these were universally defined terms that the average American voter
would understand. To insure everyone is talking about the same thing, I started passing
out this document. Recognize that this is about the math behind the calculations, not the
philosophy of valuation (which Freds blog addresses).
In a venture capital investment, the terminology and mathematics can seem confusing
at first, particularly given that the investors are able to calculate the relevant numbers in
their heads. The concepts are actually not complicated, and with a few simple algebraic
tips you will be able to do the math in your head as well, leading to more effective
negotiation.
The essence of a venture capital transaction is that the investor puts cash in the
company in return for newly-issued shares in the company. The state of affairs
immediately prior to the transaction is referred to as pre-money, and immediately after
the transaction post-money.
The value of the whole company before the transaction, called the pre-money
valuation (and similar to a market capitalization) is just the share price times the
number of shares outstanding before the transaction:
Pre-money Valuation = Share Price * Pre-money Shares
The total amount invested is just the share price times the number of shares purchased:
Investment = Share Price * Shares Issued
Unlike when you buy publicly traded shares, however, the shares purchased in a
venture capital investment are new shares, leading to a change in the number of shares
outstanding:
Post-money Shares = Pre-money Shares + Shares Issued
And because the only immediate effect of the transaction on the value of the company
is to increase the amount of cash it has, the valuation after the transaction is just
increased by the amount of that cash:
Post-money Valuation = Pre-money Valuation + Investment
The portion of the company owned by the investors after the deal will just be the
number of shares they purchased divided by the total shares outstanding:
Fraction Owned = Shares Issued /Post-money Shares
Using some simple algebra (substitute from the earlier equations), we find out that there
is another way to view this:
Fraction Owned = Investment / Post-money Valuation = Investment / (Pre-money
Valuation + Investment)
So when an investor proposes an investment of $2 million at $3 million pre (short for
premoney valuation), this means that the investors will own 40% of the company after
the transaction:
$2m / ($3m + $2m) = 2/5 = 40%
And if you have 1.5 million shares outstanding prior to the investment, you can calculate
the price per share:
Share Price = Pre-money Valuation / Pre-money Shares = $3m / 1.5m = $2.00
As well as the number of shares issued:
Shares Issued = Investment /Share Price = $2m / $2.00 = 1m
The key trick to remember is that share price is easier to calculate with pre-money
numbers, and fraction of ownership is easier to calculate with post-money numbers; you
switch back and forth by adding or subtracting the amount of the investment. It is also
important to note that the share price is the same before and after the deal, which can
also be shown with some simple algebraic manipulations.
A few other points to note:
?
?
?
?
?
Investors will almost always require that the company set aside additional
shares for a stock option plan for employees. Investors will assume and
require that these shares are set aside prior to the investment, thus diluting
the founders.
If there are multiple investors, they must be treated as one in the calculations
above.
To determine an individual ownership fraction, divide the individual investment
by the post-money valuation for the entire deal.
For a subsequent financing, to keep the share price flat the pre-money
valuation of the new investment must be the same as the post-money
valuation of the prior investment.
For early-stage companies, venture investors are normally interested in
owning a particular fraction of the company for an appropriate investment. The
valuation is actually a derived number and does not really mean anything
about what the business is worth.
Report of Independent Registered Public Accounting Firm
The Board of Directors
Carna Robotics, Inc.
We have audited the accompanying balance sheets of Carna Robotics, Inc. (the Company) as of
December 31, 2017 and 2018, and the related statements of operations and cash flows for each of the
three years in the period ended December 31, 2018. These financial statements are the responsibility of
the Companys management. Our responsibility is to express an opinion on these financial statements
based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting
Oversight Board (United States). Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the
financial position of Carna Robotics, Inc. at December 31, 2017 and 2018, and the results of its operations
and its cash flows for each of the three years in the period ended December 31, 2018 in conformity with
U.S. generally accepted accounting principles.
/s/ [REDACTED MAJOR US AUDIT FIRM]
March 26, 2019, except for Note 17
as to which the date is July 15, 2019
CARNA ROBOTICS, INC.
BALANCE SHEETS
December 31
(Unaudited)
2017
Assets
Current assets:
Cash and cash equivalents
Short-term investments
Accounts receivable, net of allowance of $1,650,
$116,725 and $236,584 in 2017, 2018, and June 30,
2019, respectively
$ 21,356,247
5,124,365
436,146
2,360,607
470,277
559,721
155,331
4,430,228
876,264
3,333,658
149,515
4,224,025
2,661,855
32,101,153
699,582
120,137
32,502,156
2,309,467
1,944,444
465,993
101,359
36,567,004
2,178,219
1,877,778
299,030
134,981
$ 32,920,872
$ 37,323,419
$
41,057,012
$
$
$
1,385,203
2,557,369
4,834,254
2,008,110
Total current assets
Property and equipment, net
Intangible assets
Long-term receivables
Other assets
Liabilities and stockholders equity
Current liabilities:
Current maturities of long-term debt
Accounts payable
Accrued liabilities
Deferred contract revenue
Total current liabilities
Long-term debt, less current maturities
Other liabilities
Stockholders equity:
Convertible preferred stock, issued in series, par value
$0.001; 65,000,000 shares authorized at December 31,
2017 and 2018 and 70,000,000 shares authorized at
June 30, 2019 (unaudited); 51,635,017, 61,055,286 and
66,436,116 shares issued and outstanding at
December 31, 2017 and 2018, and June 30, 2019
(unaudited), respectively; liquidation preference of
$111,283,107, $146,819,436, and $168,972,105 at
December 31, 2017 and 2018 and June 30, 2019
(unaudited), respectively
Common stock, par value of $0.001; 80,000,000 shares
authorized at December 31, 2017 and 2018 and
95,000,000 shares authorized at June 30, 2019
(unaudited); 1,389,923, 1,515,150, and
1,598,736 shares issued at December 31, 2017 and
2018, and June 30, 2019 (unaudited), respectively;
1,385,930, 1,496,834, and 1,580,305 shares
outstanding at December 31, 2017 and 2018, and
June 30, 2019 (unaudited), respectively
Additional paid-in capital
Deferred compensation
Treasury stock, 3,993, 18,316, and 18,431 shares at
December 31, 2017 and 2018, and June 30, 2019
(unaudited), respectively
Notes receivable from sale of stock
Accumulated deficit
Accumulated other comprehensive loss
Total stockholders equity
Total liabilities and stockholders equity
June 30 2019
$ 28,834,123
Current portion of long-term receivables
Inventories
Prepaid expenses and other current assets
Total assets
2018
904,311
1,505,361
2,556,332
1,652,000
2,289,314
1,697,497
4,936,233
814,393
$
21,220,777
4,977,174
6,618,004
2,281,321
14,901
9,737,437
2,243,768
75,786
10,784,936
4,646,292
180,089
51,635
61,055
66,436
1,390
88,448,394
(674,344)
1,515
113,921,587
(835,801)
1,599
130,043,230
(551,016)
(2,156)
(439,345)
(63,378,928)
(17,750)
(448,413)
(87,415,765)
(17,840)
(311,606)
(103,631,855)
(153,253)
24,006,646
25,266,428
25,445,695
$ 32,920,872
$ 37,323,419
See accompanying notes.
$
41,057,012
CARNA ROBOTICS, INC.
STATEMENTS OF OPERATIONS
Six Months Ended June 30
(Unaudited)
Year Ended December 31
2016
Systems revenue
Disposables, service and accessories
revenue
Other revenue
$
Costs of revenue
2017
$
2018
$
2018
3,808,036
$ 1,262,031
2019
$
6,147,352
18,900
480,941
725,900
141,109
725,900
835,473
18,900
39,760
5,014,877
4,051,313
2,129,040
1,583,504
6,982,825
4,977,431
(20,860)
963,564
545,536
2,005,394
Operating expenses:
Research and development
Sales and marketing
General and administrative
Stock-based compensation
13,831,016
926,859
2,575,800
622,299
14,325,389
2,230,565
4,461,625
483,638
13,541,398
5,986,518
4,893,830
492,168
5,422,036
2,382,355
2,213,179
246,610
9,614,709
5,426,795
2,974,176
254,541
Total operating expenses
17,955,974
21,501,217
24,913,914
10,264,180
18,270,221
(17,955,974)
950,776
(21,522,077)
434,470
(371,051)
(23,950,350)
375,361
(461,848)
(9,718,644)
177,840
(211,158)
(16,264,827)
271,205
(222,468)
Net loss
$ (17,005,198)
$ (21,458,658)
$ (24,036,837)
$ (9,751,962)
$ (16,216,090)
Net loss per common share:
Basic and diluted
$
$
$
$
$
Operating loss
Interest income
Interest expense
Shares used in computing net loss per
common share:
Basic and diluted
Analysis of stock-based compensation:
Research and development
General and administrative
Sales and marketing
Total stock-based compensation
(23.01)
739,088
(19.21)
1,117,301
(18.37)
1,308,805
(7.76)
1,256,490
1,498,313
215,520
35,156
3,865
$
528,115
69,763
24,421
$
416,626
67,012
$
345,064
134,312
12,792
$
174,402
67,156
5,052
$
622,299
$
483,638
$
492,168
$
246,610
See accompanying notes.
(10.82)
$
254,541
CARNA ROBOTICS, INC.
STATEMENTS OF CASH FLOWS
(Unaudited)
Six Months Ended June 30
Year Ended December 31
Cash flows from operating activities
Net loss
Adjustments to reconcile net loss to cash used
in operating activities:
Depreciation
Amortization
Stock-based compensation
Noncash research and development
services
Interest received on sale of stock
Loss on asset disposal
Changes in operating assets and liabilities:
Accounts receivable
Notes receivable
Inventories
Prepaid expenses and other
current assets
Other assets
Accounts payable
Accrued liabilities
Deferred revenue
Other
2016
2017
2018
2018
2019
$ (17,005,198)
$ (21,458,658)
$ (24,036,837)
$ (9,751,962)
$ (16,216,090)
253,441
622,299
406,766
483,638
447,786
55,556
492,168
49,501
(12,284)
(28,758)
(21,653)
(7,267)
(355,596)
(80,550)
(2,360,607)
(123,575)
(621,324)
(2,069,621)
(478,823)
(1,551,361)
(2,773,937)
172,779
206,203
(47,888)
(27,088)
260,797
1,551,274
547,600
1,912
(368,106)
(77,337)
169,638
468,440
826,000
(9,401)
(405,987)
18,778
192,136
2,379,901
(837,607)
60,885
(562,037)
17,370
325,301
140,595
(733,083)
(3,267)
(1,583,220)
(33,622)
859,872
(101,979)
1,193,717
104,303
(14,161,230)
(22,028,935)
(24,469,394)
(12,122,369)
(17,430,141)
Cash flows from investing activities
Purchase of equipment
Sale (purchase) of short-term investments, net
(665,436)
17,905,006
(308,512)
1,788,105
(2,057,671)
(5,124,365)
(910,771)
(272,531)
(6,062)
Net cash (used in) provided by investing
activities
17,239,570
1,479,593
(7,182,036)
(910,771)
(278,593)
3,874,627
(688,995)
1,829,690
(2,482,240)
366,769
(736,665)
2,000,000
(501,587)
Net cash used in operating activities
Cash flows from financing activities
Proceeds from long-term debt
Payments under long-term debt
Proceeds from issuance of stock and warrants,
net of issuance costs
Purchase of treasury stock
Payments received on notes receivable from
sale of common stock
20,557,273
(2,156)
17,521,148
235,555
246,610
24,829,113
(15,594)
385,679
66,666
254,541
16,847
18,100
15,456,674
15,954,981
(90)
11,500
12,585
12,585
11,500
119,960
20,566,617
20,719,365
24,173,554
15,098,278
17,573,264
Net increase (decrease) in cash and cash
equivalents
Cash and cash equivalents at beginning of
period
23,644,957
170,023
(7,477,876)
2,065,138
5,019,143
28,664,100
28,834,123
28,834,123
21,356,247
Cash and cash equivalents at end of period
$ 28,664,100
$ 28,834,123
$ 21,356,247
$ 30,899,261
$ 21,220,777
Supplemental disclosures of cash flow
information:
Interest paid
$
$
371,051
$
394,287
$
211,158
$
114,615
$
$
$
2,000,000
$
$
Net cash provided by financing activities
Noncash acquisition of purchased
technology upon issuance of convertible
note payable
See accompanying notes.
(135,470)
CARNA ROBOTICS, INC.
NOTES TO FINANCIAL STATEMENTS
(Information as of June 30, 2019 and for the six months ended
June 30, 2018 and 2019 is unaudited)
1.
Description of Business
Carna Robotics, Inc. (the Company) designs, manufactures, and markets an advanced cardiology instrument control system
for the interventional treatment of coronary artery disease and arrhythmias. The Company also markets and sells various
disposable interventional devices, including catheters, guidewires and stent delivery devices, for use in conjunction with its
system. By 2018, the Company had received U.S. and European regulatory approval for the core components of its system.
Prior to 2018, the Companys principal activities involved obtaining capital, business development, performing research
and development activities, and funding prototype development. As such, the Company was classified as a development-stage
company from its inception on June 13, 2005 through December 31, 2017. During 2018, the Company emerged from the
development-stage and began to generate revenue from the commercial launch of its systems.
2.
Summary of Significant Accounting Policies
Unaudited Interim Financial Information
The accompanying balance sheet as of June 30, 2019, the statements of operations and of cash flows for the six months
ended June 30, 2018 and 2019, and the statement of stockholders equity for the six months ended June 30, 2019 are unaudited.
The unaudited interim financial statements have been prepared on the same basis as the annual financial statements and, in the
opinion of management, reflect all adjustments, which include only normal recurring adjustments, necessary to present fairly
the Companys financial position and results of operations and cash flows for the six months ended June 30, 2018 and 2019.
The financial data and other information disclosed in these notes to consolidated financial statements related to the six month
periods are unaudited. The results for the six months ended June 30, 2019 are not necessarily indicative of the results to be
expected for the year ending December 31, 2019 or for any other interim period or for any future year.
Cash and Cash Equivalents
The Company considers all short-term deposits purchased with original maturities of three months or less to be cash
equivalents. The Company places its cash with high-credit-quality financial institutions and invests primarily in money market
accounts.
Short-Term Investments
In accordance with Statement of Financial Accounting Standards (SFAS) No. 115, Accounting for Certain Investments in
Debt and Equity Securities, the Companys investment securities are classified as available-for-sale and are carried at market
value, which approximates cost. Realized gains or losses, calculated based on the specific identification method, were not
material for the years ended December 31, 2016, 2017, and 2018.
Accounts Receivable and Allowance for Uncollectible Accounts
Accounts receivable primarily include amounts due from hospitals and medical centers for acquisition of magnetic systems
and associated disposable device sales. Credit is granted on a limited basis, with most balances due within 30 days of billing.
The provision for bad debts is based upon managements assessment of historical and expected net collections considering
business and economic conditions and other collection indicators.
Financial Instruments
Financial instruments consist of cash and cash equivalents, short-term investments, accounts receivable, accounts payable,
and long-term debt. The carrying value of such amounts reported at the applicable balance sheet dates app
Get Answer Over WhatsApp
Order Paper Now
blog, Feld Thoughts)
Fred Wilson wrote a useful post on valuation today. It reminded me of a document I had
Dave Jilk write when he was doing some work for me. I decided to write this bladon
(Blog Add-on) post – inspired by Fred. Please read Freds post first – it lays the
groundwork for why VCs do things this way.
Ive found that even sophisticated entrepreneurs didnt necessary grasp how valuation
math (or deal algebra) worked. VCs talk about pre-money, post-money, and share
price as though these were universally defined terms that the average American voter
would understand. To insure everyone is talking about the same thing, I started passing
out this document. Recognize that this is about the math behind the calculations, not the
philosophy of valuation (which Freds blog addresses).
In a venture capital investment, the terminology and mathematics can seem confusing
at first, particularly given that the investors are able to calculate the relevant numbers in
their heads. The concepts are actually not complicated, and with a few simple algebraic
tips you will be able to do the math in your head as well, leading to more effective
negotiation.
The essence of a venture capital transaction is that the investor puts cash in the
company in return for newly-issued shares in the company. The state of affairs
immediately prior to the transaction is referred to as pre-money, and immediately after
the transaction post-money.
The value of the whole company before the transaction, called the pre-money
valuation (and similar to a market capitalization) is just the share price times the
number of shares outstanding before the transaction:
Pre-money Valuation = Share Price * Pre-money Shares
The total amount invested is just the share price times the number of shares purchased:
Investment = Share Price * Shares Issued
Unlike when you buy publicly traded shares, however, the shares purchased in a
venture capital investment are new shares, leading to a change in the number of shares
outstanding:
Post-money Shares = Pre-money Shares + Shares Issued
And because the only immediate effect of the transaction on the value of the company
is to increase the amount of cash it has, the valuation after the transaction is just
increased by the amount of that cash:
Post-money Valuation = Pre-money Valuation + Investment
The portion of the company owned by the investors after the deal will just be the
number of shares they purchased divided by the total shares outstanding:
Fraction Owned = Shares Issued /Post-money Shares
Using some simple algebra (substitute from the earlier equations), we find out that there
is another way to view this:
Fraction Owned = Investment / Post-money Valuation = Investment / (Pre-money
Valuation + Investment)
So when an investor proposes an investment of $2 million at $3 million pre (short for
premoney valuation), this means that the investors will own 40% of the company after
the transaction:
$2m / ($3m + $2m) = 2/5 = 40%
And if you have 1.5 million shares outstanding prior to the investment, you can calculate
the price per share:
Share Price = Pre-money Valuation / Pre-money Shares = $3m / 1.5m = $2.00
As well as the number of shares issued:
Shares Issued = Investment /Share Price = $2m / $2.00 = 1m
The key trick to remember is that share price is easier to calculate with pre-money
numbers, and fraction of ownership is easier to calculate with post-money numbers; you
switch back and forth by adding or subtracting the amount of the investment. It is also
important to note that the share price is the same before and after the deal, which can
also be shown with some simple algebraic manipulations.
A few other points to note:
?
?
?
?
?
Investors will almost always require that the company set aside additional
shares for a stock option plan for employees. Investors will assume and
require that these shares are set aside prior to the investment, thus diluting
the founders.
If there are multiple investors, they must be treated as one in the calculations
above.
To determine an individual ownership fraction, divide the individual investment
by the post-money valuation for the entire deal.
For a subsequent financing, to keep the share price flat the pre-money
valuation of the new investment must be the same as the post-money
valuation of the prior investment.
For early-stage companies, venture investors are normally interested in
owning a particular fraction of the company for an appropriate investment. The
valuation is actually a derived number and does not really mean anything
about what the business is worth.
Report of Independent Registered Public Accounting Firm
The Board of Directors
Carna Robotics, Inc.
We have audited the accompanying balance sheets of Carna Robotics, Inc. (the Company) as of
December 31, 2017 and 2018, and the related statements of operations and cash flows for each of the
three years in the period ended December 31, 2018. These financial statements are the responsibility of
the Companys management. Our responsibility is to express an opinion on these financial statements
based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting
Oversight Board (United States). Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the
financial position of Carna Robotics, Inc. at December 31, 2017 and 2018, and the results of its operations
and its cash flows for each of the three years in the period ended December 31, 2018 in conformity with
U.S. generally accepted accounting principles.
/s/ [REDACTED MAJOR US AUDIT FIRM]
March 26, 2019, except for Note 17
as to which the date is July 15, 2019
CARNA ROBOTICS, INC.
BALANCE SHEETS
December 31
(Unaudited)
2017
Assets
Current assets:
Cash and cash equivalents
Short-term investments
Accounts receivable, net of allowance of $1,650,
$116,725 and $236,584 in 2017, 2018, and June 30,
2019, respectively
$ 21,356,247
5,124,365
436,146
2,360,607
470,277
559,721
155,331
4,430,228
876,264
3,333,658
149,515
4,224,025
2,661,855
32,101,153
699,582
120,137
32,502,156
2,309,467
1,944,444
465,993
101,359
36,567,004
2,178,219
1,877,778
299,030
134,981
$ 32,920,872
$ 37,323,419
$
41,057,012
$
$
$
1,385,203
2,557,369
4,834,254
2,008,110
Total current assets
Property and equipment, net
Intangible assets
Long-term receivables
Other assets
Liabilities and stockholders equity
Current liabilities:
Current maturities of long-term debt
Accounts payable
Accrued liabilities
Deferred contract revenue
Total current liabilities
Long-term debt, less current maturities
Other liabilities
Stockholders equity:
Convertible preferred stock, issued in series, par value
$0.001; 65,000,000 shares authorized at December 31,
2017 and 2018 and 70,000,000 shares authorized at
June 30, 2019 (unaudited); 51,635,017, 61,055,286 and
66,436,116 shares issued and outstanding at
December 31, 2017 and 2018, and June 30, 2019
(unaudited), respectively; liquidation preference of
$111,283,107, $146,819,436, and $168,972,105 at
December 31, 2017 and 2018 and June 30, 2019
(unaudited), respectively
Common stock, par value of $0.001; 80,000,000 shares
authorized at December 31, 2017 and 2018 and
95,000,000 shares authorized at June 30, 2019
(unaudited); 1,389,923, 1,515,150, and
1,598,736 shares issued at December 31, 2017 and
2018, and June 30, 2019 (unaudited), respectively;
1,385,930, 1,496,834, and 1,580,305 shares
outstanding at December 31, 2017 and 2018, and
June 30, 2019 (unaudited), respectively
Additional paid-in capital
Deferred compensation
Treasury stock, 3,993, 18,316, and 18,431 shares at
December 31, 2017 and 2018, and June 30, 2019
(unaudited), respectively
Notes receivable from sale of stock
Accumulated deficit
Accumulated other comprehensive loss
Total stockholders equity
Total liabilities and stockholders equity
June 30 2019
$ 28,834,123
Current portion of long-term receivables
Inventories
Prepaid expenses and other current assets
Total assets
2018
904,311
1,505,361
2,556,332
1,652,000
2,289,314
1,697,497
4,936,233
814,393
$
21,220,777
4,977,174
6,618,004
2,281,321
14,901
9,737,437
2,243,768
75,786
10,784,936
4,646,292
180,089
51,635
61,055
66,436
1,390
88,448,394
(674,344)
1,515
113,921,587
(835,801)
1,599
130,043,230
(551,016)
(2,156)
(439,345)
(63,378,928)
(17,750)
(448,413)
(87,415,765)
(17,840)
(311,606)
(103,631,855)
(153,253)
24,006,646
25,266,428
25,445,695
$ 32,920,872
$ 37,323,419
See accompanying notes.
$
41,057,012
CARNA ROBOTICS, INC.
STATEMENTS OF OPERATIONS
Six Months Ended June 30
(Unaudited)
Year Ended December 31
2016
Systems revenue
Disposables, service and accessories
revenue
Other revenue
$
Costs of revenue
2017
$
2018
$
2018
3,808,036
$ 1,262,031
2019
$
6,147,352
18,900
480,941
725,900
141,109
725,900
835,473
18,900
39,760
5,014,877
4,051,313
2,129,040
1,583,504
6,982,825
4,977,431
(20,860)
963,564
545,536
2,005,394
Operating expenses:
Research and development
Sales and marketing
General and administrative
Stock-based compensation
13,831,016
926,859
2,575,800
622,299
14,325,389
2,230,565
4,461,625
483,638
13,541,398
5,986,518
4,893,830
492,168
5,422,036
2,382,355
2,213,179
246,610
9,614,709
5,426,795
2,974,176
254,541
Total operating expenses
17,955,974
21,501,217
24,913,914
10,264,180
18,270,221
(17,955,974)
950,776
(21,522,077)
434,470
(371,051)
(23,950,350)
375,361
(461,848)
(9,718,644)
177,840
(211,158)
(16,264,827)
271,205
(222,468)
Net loss
$ (17,005,198)
$ (21,458,658)
$ (24,036,837)
$ (9,751,962)
$ (16,216,090)
Net loss per common share:
Basic and diluted
$
$
$
$
$
Operating loss
Interest income
Interest expense
Shares used in computing net loss per
common share:
Basic and diluted
Analysis of stock-based compensation:
Research and development
General and administrative
Sales and marketing
Total stock-based compensation
(23.01)
739,088
(19.21)
1,117,301
(18.37)
1,308,805
(7.76)
1,256,490
1,498,313
215,520
35,156
3,865
$
528,115
69,763
24,421
$
416,626
67,012
$
345,064
134,312
12,792
$
174,402
67,156
5,052
$
622,299
$
483,638
$
492,168
$
246,610
See accompanying notes.
(10.82)
$
254,541
CARNA ROBOTICS, INC.
STATEMENTS OF CASH FLOWS
(Unaudited)
Six Months Ended June 30
Year Ended December 31
Cash flows from operating activities
Net loss
Adjustments to reconcile net loss to cash used
in operating activities:
Depreciation
Amortization
Stock-based compensation
Noncash research and development
services
Interest received on sale of stock
Loss on asset disposal
Changes in operating assets and liabilities:
Accounts receivable
Notes receivable
Inventories
Prepaid expenses and other
current assets
Other assets
Accounts payable
Accrued liabilities
Deferred revenue
Other
2016
2017
2018
2018
2019
$ (17,005,198)
$ (21,458,658)
$ (24,036,837)
$ (9,751,962)
$ (16,216,090)
253,441
622,299
406,766
483,638
447,786
55,556
492,168
49,501
(12,284)
(28,758)
(21,653)
(7,267)
(355,596)
(80,550)
(2,360,607)
(123,575)
(621,324)
(2,069,621)
(478,823)
(1,551,361)
(2,773,937)
172,779
206,203
(47,888)
(27,088)
260,797
1,551,274
547,600
1,912
(368,106)
(77,337)
169,638
468,440
826,000
(9,401)
(405,987)
18,778
192,136
2,379,901
(837,607)
60,885
(562,037)
17,370
325,301
140,595
(733,083)
(3,267)
(1,583,220)
(33,622)
859,872
(101,979)
1,193,717
104,303
(14,161,230)
(22,028,935)
(24,469,394)
(12,122,369)
(17,430,141)
Cash flows from investing activities
Purchase of equipment
Sale (purchase) of short-term investments, net
(665,436)
17,905,006
(308,512)
1,788,105
(2,057,671)
(5,124,365)
(910,771)
(272,531)
(6,062)
Net cash (used in) provided by investing
activities
17,239,570
1,479,593
(7,182,036)
(910,771)
(278,593)
3,874,627
(688,995)
1,829,690
(2,482,240)
366,769
(736,665)
2,000,000
(501,587)
Net cash used in operating activities
Cash flows from financing activities
Proceeds from long-term debt
Payments under long-term debt
Proceeds from issuance of stock and warrants,
net of issuance costs
Purchase of treasury stock
Payments received on notes receivable from
sale of common stock
20,557,273
(2,156)
17,521,148
235,555
246,610
24,829,113
(15,594)
385,679
66,666
254,541
16,847
18,100
15,456,674
15,954,981
(90)
11,500
12,585
12,585
11,500
119,960
20,566,617
20,719,365
24,173,554
15,098,278
17,573,264
Net increase (decrease) in cash and cash
equivalents
Cash and cash equivalents at beginning of
period
23,644,957
170,023
(7,477,876)
2,065,138
5,019,143
28,664,100
28,834,123
28,834,123
21,356,247
Cash and cash equivalents at end of period
$ 28,664,100
$ 28,834,123
$ 21,356,247
$ 30,899,261
$ 21,220,777
Supplemental disclosures of cash flow
information:
Interest paid
$
$
371,051
$
394,287
$
211,158
$
114,615
$
$
$
2,000,000
$
$
Net cash provided by financing activities
Noncash acquisition of purchased
technology upon issuance of convertible
note payable
See accompanying notes.
(135,470)
CARNA ROBOTICS, INC.
NOTES TO FINANCIAL STATEMENTS
(Information as of June 30, 2019 and for the six months ended
June 30, 2018 and 2019 is unaudited)
1.
Description of Business
Carna Robotics, Inc. (the Company) designs, manufactures, and markets an advanced cardiology instrument control system
for the interventional treatment of coronary artery disease and arrhythmias. The Company also markets and sells various
disposable interventional devices, including catheters, guidewires and stent delivery devices, for use in conjunction with its
system. By 2018, the Company had received U.S. and European regulatory approval for the core components of its system.
Prior to 2018, the Companys principal activities involved obtaining capital, business development, performing research
and development activities, and funding prototype development. As such, the Company was classified as a development-stage
company from its inception on June 13, 2005 through December 31, 2017. During 2018, the Company emerged from the
development-stage and began to generate revenue from the commercial launch of its systems.
2.
Summary of Significant Accounting Policies
Unaudited Interim Financial Information
The accompanying balance sheet as of June 30, 2019, the statements of operations and of cash flows for the six months
ended June 30, 2018 and 2019, and the statement of stockholders equity for the six months ended June 30, 2019 are unaudited.
The unaudited interim financial statements have been prepared on the same basis as the annual financial statements and, in the
opinion of management, reflect all adjustments, which include only normal recurring adjustments, necessary to present fairly
the Companys financial position and results of operations and cash flows for the six months ended June 30, 2018 and 2019.
The financial data and other information disclosed in these notes to consolidated financial statements related to the six month
periods are unaudited. The results for the six months ended June 30, 2019 are not necessarily indicative of the results to be
expected for the year ending December 31, 2019 or for any other interim period or for any future year.
Cash and Cash Equivalents
The Company considers all short-term deposits purchased with original maturities of three months or less to be cash
equivalents. The Company places its cash with high-credit-quality financial institutions and invests primarily in money market
accounts.
Short-Term Investments
In accordance with Statement of Financial Accounting Standards (SFAS) No. 115, Accounting for Certain Investments in
Debt and Equity Securities, the Companys investment securities are classified as available-for-sale and are carried at market
value, which approximates cost. Realized gains or losses, calculated based on the specific identification method, were not
material for the years ended December 31, 2016, 2017, and 2018.
Accounts Receivable and Allowance for Uncollectible Accounts
Accounts receivable primarily include amounts due from hospitals and medical centers for acquisition of magnetic systems
and associated disposable device sales. Credit is granted on a limited basis, with most balances due within 30 days of billing.
The provision for bad debts is based upon managements assessment of historical and expected net collections considering
business and economic conditions and other collection indicators.
Financial Instruments
Financial instruments consist of cash and cash equivalents, short-term investments, accounts receivable, accounts payable,
and long-term debt. The carrying value of such amounts reported at the applicable balance sheet dates app
Needs help with similar assignment?
We are available 24x7 to deliver the best services and assignment ready within 3-8hours? Order a custom-written, plagiarism-free paper
Get Answer Over WhatsApp
Order Paper Now
We Accept
