SAFE ORTHOPAEDICS : Full-year 2015 results and first-quarter 2016 revenue

cf23aa95-9fdd-4e7d-b479-fc4e97bd2728.pdf Full-year 2015 results and first-quarter 2016 revenue

► Tight grip on expenses, which are set to decline owing to withdrawal from the United States

► Cash position boosted by €2.1 million subscription commitments

► Adjusted revenue up 2% in the first quarter of 2016

Eragny-sur-Oise, France, April 28, 2016 - SAFE ORTHOPAEDICS (FR0012452746 - SAFOR), a company offering innovative ranges of sterile implants combined with their single-use instruments for back surgery, is announcing its full-year 2015 results and its first-quarter 2016 revenue.

"In 2015, we continued to pursue our R&D efforts, launching trauma and fenestrated screws. A new cervical range is also under development and scheduled for introduction during the second quarter of 2016. In addition, we began to refocus our activities in an effort to reallocate our resources to the most rapidly expanding regions. To this end, we are hiring a new Chief Executive Officer, and our search is making good progress. We plan to move into several new countries in 2016, and very recently we sealed a distribution agreement covering Australia and New Zealand, representing the first concrete achievement as part of our refocusing drive", said Gérard Vaillant, Chairman of Safe Orthopaedics' Board of Directors.

Full-year 2015 results in line with Safe Orthopaedics' expansion strategy

in thousands of euros	2015	2014
Revenue	2,498	2,053
Purchases used and change in inventories	(2,024)	(1,640)
External costs	(2,684)	(2,221)
Personnel costs	(3,905)	(3,048)
Other operating expenses	(1,107)	(710)
Operating income/(loss) before non-recurring items	(7,218)	(5,566)
Operating income/(loss)	(7,218)	(5,566)
Net financial income	656	570
Net income	(6,571)	(4,936)

Over 2015 as a whole, Safe Orthopaedics' revenue rose 25% to €2.5 million, with mixed performance across its various regions. France recorded a strong top-line increase (+65%) despite its limited sales and marketing resources. Conversely, performance fell short of expectations in the highly crowded US market where the health system still tolerates the inherent inefficiencies of reusable instruments.

As announced on March 1, Safe Orthopaedics has decided to refocus its business on the regions expanding most rapidly - France, the rest of Europe and emerging markets.

As a result, the withdrawal from the United States gave rise to €0.1 million in costs that were recognized in 2015, while the expected savings are expected to add up to around €1 million in 2016 and then €1.5 million over a full year.

In 2015, Safe Orthopaedics also continued its sales & marketing and R&D efforts, while keeping a tight grip on its costs and operating expenses, which rose in keeping with the increase in the headcount from 30 employees at December 31, 2014 to 37 at December 31, 2015.

Adjusted revenue up 2% in the first quarter of 2016

in thousands of euros	Q1 2016	Q1 2015	Change
France	303	257	+18%
Export (excluding the United States)	257	293	-12%
Adjusted revenue*	560	550	+2%
United States (discontinued operations)	100	153	-35%
Total consolidated revenue	660	703	-6%

*Adjusted for discontinued operations in the United States.

In the first quarter of 2016, Safe Orthopaedics recorded revenue of €0.56 million adjusted for the United States. This small increase reflected the still limited sales & marketing resources allocated to the new priority regions.

Following its refocusing drive, the Company intends to reallocate the sales & marketing resources that were previously largely devoted to the United States. To this end, an International Sales Manager was recruited at the beginning of the year.

The sales teams will thus undergo further reorganization and strengthening over the year, and this initiative should start to pay off from the second quarter of 2016, with the start-up of business in the Australian and New Zealand markets also providing a boost (see the press release dated April 13, 2016).

Cash position

At March 31, 2016, Safe Orthopaedics had €4.15 million in cash, not including the received subscription commitments totaling €2.1 million, as announced at that date.

Safe Orthopaedics has received subscription commitments totaling €1.6 million in the form of OCABSA convertibles with warrants attached from IdInvest Partners, Kurma Partners and several members of the Board of Directors.

The remainder of €0.5 million is also being raised in the form of OCABSA convertibles with warrants attached from the US-based Yorkville fund, which represents the first tranche of a bond debt planned under an issue contract signed with Yorkville on April 27, 2016, allowing to reach, if necessary, a maximum amount of

€5.0 million of bond debt in nominal value. This flexible bond financing line will immediately strengthen the Company's financial position.

An initial portion (amounting to €1.2 million) of the OCABSA notes with warrants will be subscribed for immediately by IdInvest Partners and the US-based Yorkville fund. The second portion (amounting to

€0.9 million) of the notes with warrants will be subscribed for by the signatories of the aforementioned subscription commitments, subject to the passing at the forthcoming shareholders' meeting of the resolutions authorizing such additional notes with warrants to be issued. The forthcoming shareholders' meeting will also be requested to authorize the issue of additional tranche warrants to the US-based Yorkville fund, obliging the latter, for a period of 36 months, to subscribe for notes with warrants (in a maximum amount of €4.5 million in bond debt) in several successive tranches, which may be drawn at Safe Orthopaedics' discretion (subject to the satisfaction of certain conditions).

Main characteristics of the notes with warrants issued to Yorkville (OCABSAYORKVILLE)

Main terms of theissuance

TheOCABSAYORKVILLE willbe issued in several successive tranches, upon the exercise of tranche warrants issued free of charge by Safe Orthopaedics (the "Tranche Warrants"). If the Tranche Warrants are exercised by Safe Orthopaedics, holders of the Tranche Warrants must, subject to the satisfaction of certain conditions, subscribeto a tranche of OCABSAYORKVILLE.50 Tranche Warrants, representing a total debt debenture of 0.5 million euros, have already been issued under the 17th and 19th resolutions of the January 9, 2015 shareholders' meeting. These 50 Tranche Warrants have already been exercised by Safe Orthopaedics.

450 Tranche Warrants may further be issued, should the next shareholders' meeting approve such issuance.

Should the 500 Tranche Warrants be exercised by Safe Orthopaedics, the maximum total bond debenture will be 5.0 million euros.

It being specified that the issuance will not give rise to the filing of a prospectus with the AMF (French market regulator).

Main characteristics of the notes(OCAYORKVILLE)

The OCAYORKVILLE will be issued at 97.5% of their nominalvalue.

They will have a maturity of 14 months as from issuance date and will not bear interest. On maturity or in case ofdefault, the unconverted OCAYORKVILLE shallbe redeemed by Safe Orthopaedics. The OCAYORKVILLE,will not be subject to a request for admission to trading on the Euronext Paris market and will therefore not be listed.

TheOCAYORKVILLE maybe converted into shares at any time at their holder's discretion according to the following conversion ratio: N = Vn / P

"N": number of Safe Orthopaedics new ordinary shares to be issued upon conversion of one OCAYORKVILLE; "Vn": nominal value of one OCAYORKVILLE;

"P":

• 92% of the daily VWAP of Safe Orthopaedics' share over the pricing period (i.e. those trading days during which the OCAYORKVILLE holder will not have sold shares among the ten trading days immediately preceding the conversion request of the Note) if the Tranche Warrants exceeds 500,000 euros ;

• 95% of the daily VWAP of Safe Orthopaedics' share over the pricing period (i.e. those trading days during which the OCAYORKVILLE holder will not have sold shares among the ten trading days immediately preceding the conversion request of the Note) if the Tranche Warrants is lower or equal to 500,000 euros;

Such amount being the lowest issue price as authorized by the Shareholders' meeting of January 9, 2015 in its 17th and 19th resolutions.

Main characteristics of the Warrants(BSAYORKVILLE)

Thenumber of BSAYORKVILLE tobe issued upon the issuance of each tranche of the OCABSAYORKVILLE willbe such that, multiplied by the exercise price of the BSAYORKVILLE (determinedas described below), the resulting amount shall be equal to the nominal amount of the Tranche Warrants, i.e. 0.5 million euros for the first Tranche Warrants.228,310 BSAYORKVILLE,with an exercise price of 2.19 euros, have been issued today after exercise of the 50 Tranche Warrants of the first tranche.

TheBSAYORKVILLE willnot be subject to a request for admission to trading on the Euronext Paris market and will therefore not be listed. They will be exercisable during a 5-year period starting on their issuance date (the "Exercise Period").

EachBSAYORKVILLE willgive right to its holder, during the Exercise Period, to subscribe to one new Safe Orthopaedics' share (subject to certain potential adjustments). The exercise price of the BSAYORKVILLE willbe equal to 115% of the average daily VWAP of Safe Orthopaedics' share over the ten (10) trading days immediately preceding (i) issue date of the first Tranche Warrants and (ii) the exercise date of the Tranche Warrantgiving rise to the issuance of the OCAYORKVILLE fromwhich the BSAYORKVILLE aredetached for the following Tranches Warrants.

New shares resulting from the conversion of OCAYORKVILLE or the exercise of BSAYORKVILLE

Newshares issued upon conversion of OCAYORKVILLE orexercise of BSAYORKVILLE willcarry immediate and current dividend rights. They will carry the same rights as those attached to the existing ordinary shares of the Company and will be admitted to trading on Euronext Paris market under the same listing line (ISIN FR0012452746).

Safe Orthopaedics will publish and update on its website a table of the outstanding Tranche Warrants, OCAYORKVILLE,BSAYORKVILLE and numberof shares.

On an indicative basis, based on the closing stock price on April 27, 2016, i.e. 2.04 euros, the theoretical impact ofthe conversion of all the OCAYORKVILLE,and of the exercise of all BSAYORKVILLE ona shareholder's position is as follows: a shareholder currently holding 1.0% of Safe Orthopaedics' share capital will hold 0.97% of Safe Orthopaedics'sharecapital after the conversion of all the OCAYORKVILLE,and the exercise of all the BSAYORKVILLE.

Yorkville's Commitments

Until the latest of (i) the end of the commitment period of 36 months and (ii) the full conversion and/or redemptionof all the outstanding OCAYORKVILLE,Yorkville committed:

• not to hold at any time a number of shares higher than 4.99% of the outstanding number of shares of the Safe Orthopaedics (except in case of Safe Orthopaedics's agreement); and

• not to request any seat at the Board of Directors of Safe Orthopaedics.

Theoretical value of theBSAYORKVILLE

Based on the volatility assumption adopted for the share (40%) and the closing price of Safe Orthopaedics' shareson April 26, 2016 (2.01 euros), the theoretical value of the BSAYORKVILLE works outat 0.71 euros.

Main characteristics of the other Notes With Warrants (« OCABSAId »)

Main terms of theissuance

TheOCABSAId havebeen issued pursuant to the 7th resolutionof the June 25, 2015 shareholders' meeting and reserved to funds managed par IdInvest Partners.