MDXG

Business Context and Reporting Period

Company: Alynx, Co. (now operating as MiMedx Group, Inc. following a reverse merger)

Filing Type: Form 8-K (Current Report)

Date of Report: February 8, 2008

Event: Completion of a reverse merger between Alynx, Co. (a Nevada shell company) and MiMedx, Inc. (a Florida-based development-stage medical device company). The transaction resulted in a change of control, with former MiMedx shareholders owning approximately 97.25% of the post-merger company. Alynx ceased to be a shell company upon consummation.

Headquarters Relocation: Corporate headquarters moved from Kaysville, Utah, to Destin, Florida.

Key Financial Metrics

Revenue: $0. The company is a development-stage entity with no commercialized products and no operating revenue to date.

Profit/Loss:

• MiMedx Net Loss (Fiscal Year ended March 31, 2007): $650,777
• MiMedx Net Loss (Six months ended September 30, 2007): $9,991,200 (Includes a one-time charge of approximately $7.18 million for acquired in-process research and development related to the SpineMedica acquisition).

Cash and Liquidity:

• Cash on Hand (as of September 30, 2007): Approximately $9,897,813.
• Runway: Management estimates current cash is sufficient to fund operations for approximately 10 months.

Debt and Contractual Obligations:

• Total Contractual Obligations (as of Sept 30, 2007): $4,005,944 (Includes consulting agreements, employment agreements, and operating leases).
• Related Party Loans (Pre-Merger Alynx): Ken Edwards loaned Alynx up to $40,000 total (interest rates 10-12%).

Capital Structure (Post-Merger):

• Common Stock Outstanding: 55,783,146 shares.
• Series A Preferred Stock: 3,684,040 shares (convertible into 56,944,572 common shares).
• Options and Warrants: Approximately 14,431,010 shares underlying options/warrants at a weighted average exercise price of $0.54.

Material Changes vs. Prior Period

• Corporate Status: Transitioned from an inactive shell company (Alynx) to an active development-stage medical device company (MiMedx).
• Management: Complete turnover of directors and executive officers. Ken Edwards (sole officer of Alynx) resigned; MiMedx management team assumed control.
• Operations: Acquired SpineMedica Corp. (July 2007) and its spinal implant technologies. Expanded R&D focus to include NDGA-polymerized collagen and Salubria® biomaterials.
• Accounting: The merger is accounted for as a reverse merger (MiMedx deemed the accounting acquirer). The SpineMedica acquisition was accounted for using the purchase method, resulting in $858,000 of goodwill and a $7.18 million expense for in-process R&D.
• Fiscal Year: Changed from December 31 to March 31.

Guidance, Outlook, and Risks

Outlook and Strategy:

• Product Pipeline: Focused on musculoskeletal products including soft-tissue reconstructive products, fixation devices, spinal products (cervical total disc replacement, posterior interbody fusion), and joint reconstruction.
• Regulatory Path: No products currently have FDA clearance. Strategy involves pursuing 510(k) clearance for lower-risk products (e.g., hand/wrist) and Premarket Approval (PMA) for higher-risk spinal implants. First human implantation of a lumbar interbody device is anticipated in 2009; cervical disc in 2010.
• Capital Needs: The company expects to incur losses for the foreseeable future and will require significant additional financing (equity or debt) to fund R&D, clinical trials, and commercialization.

Key Risks:

• Development Risk: Products are in early stages; no assurance of safety, efficacy, or regulatory approval.
• Liquidity Risk: Limited cash runway (10 months); failure to secure additional funding could halt operations.
• Regulatory Risk: Extensive FDA oversight; potential for delays or rejection of 510(k) or PMA applications.
• Market Risk: Intense competition from established medical device manufacturers (e.g., DePuy, Medtronic, Synthes).
• Stock Volatility: Stock is subject to "Penny Stock" rules and may be thinly traded.

Investor Verification Checklist

• Cash Runway: Verify the current cash balance and burn rate to confirm the 10-month operational runway estimate.
• Regulatory Status: Confirm the specific FDA pathway (510(k) vs. PMA) for the lead products (cervical disc, lumbar interbody, tendon/ligament repair) and the status of any pre-submission meetings.
• Intellectual Property: Review the terms of the NDGA license (Shriners/USF) and Salubria® license (SaluMedica/Georgia Tech) for royalty obligations, milestone payments, and termination clauses.
• Dilution Potential: Assess the impact of the 56.9 million shares issuable upon conversion of Series A Preferred Stock and the 14.4 million shares underlying options/warrants on future equity value.
• Related Party Transactions: Review the terms of the office lease with Chairman Steve Gorlin and the aircraft usage agreement with Gorlin Aviation, LLC.
• Accounting Treatment: Review the pro forma financial statements (Exhibit 99.3) to understand the impact of the $7.18 million in-process R&D charge on future earnings.