##### Table of Contents



UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, D.C. 20549
 FORM 10-Q
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended: March 31, 2008
 or
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the transition period from  to
 Commission File Number: 001-33966
 MAKO Surgical Corp.
  Delaware
    
    20-1901148(State or other jurisdiction of incorporation
    
    (I.R.S. Employer Identification No.)or organization)
 2555 Davie Road, Fort Lauderdale, Florida 33317
   (Registrants telephone number, including area code)
  Yes o No þ
  Large Accelerated Filero
    
    Accelerated Filero
    
    Non-accelerated Filerþ
    
    Smaller reporting companyo
  Yes o No þ
  Class
    
    Outstanding at May 8, 2008Common Stock
    
    18,476,919




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##### 



MAKO Surgical Corp
 INDEX TO FORM 10-Q
 Page No.Part I  Financial InformationItem 1 Financial Statements (unaudited)
    
    1Condensed Balance Sheets at March 31, 2008 and December 31, 2007
    
    1Condensed Statements of Operations for the three months ended March
31, 2008 and 2007
    
    2Condensed Statements of Cash Flows for the three months ended March
31, 2008 and 2007
    
    3Item 2 Managements Discussion and Analysis of Financial Condition and
Results of Operations
    
    15Item 3 Quantitative and Qualitative Disclosures about Market Risk
    
    22Item 4T Controls and Procedures
    
    22Part II  Other InformationItem 1 Legal Proceedings
    
    23Item 1A Risk Factors
    
    23Item 2 Unregistered Sale of Equity Securities and Use of Proceeds
    
    23Item 4 Submission of Matters to a Vote of Security Holders
    
    23Item 6 Exhibits
    
    25Signatures
    
    25Exhibit Index
    
    26Exhibit 31.1Exhibit 31.2Exhibit 32.1Exhibit 32.2
   i




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##### Table of Contents



PART I
FINANCIAL INFORMATION
 
 Item 1. FINANCIAL STATEMENTS.
 MAKO SURGICAL CORP.
 
 Condensed Balance Sheets
 March 31,
    
    
    December 31,2008
    
    
    2007ASSETSCurrent Assets:Cash and cash equivalents
    
    $
    44,532
    
    
    $
    9,615Short-term investments
    
    
    1,534
    
    
    
    3,084Accounts receivable
    
    
    1,467
    
    
    
    2,213Inventory
    
    
    2,201
    
    
    
    2,346Prepaids and other assets
    
    
    449
    
    
    
    310Total current assets
    
    
    50,183
    
    
    
    17,568Deferred cost of revenue
    
    
    1,512
    
    
    
    926Long-term investments
    
    
    1,487
    
    
    
    Property and equipment, net
    
    
    2,733
    
    
    
    2,321Intangible assets, net
    
    
    5,312
    
    
    
    5,477Other assets
    
    
    171
    
    
    
    170Deferred initial public offering costs
    
    
    
    
    
    
    2,728Total assets
    
    $
    61,398
    
    
    $
    29,190LIABILITIES AND STOCKHOLDERS EQUITY (DEFICIT)Current Liabilities:Accounts payable
    
    $
    811
    
    
    $
    1,511Accrued compensation and employee benefits
    
    
    748
    
    
    
    1,033Other accrued liabilities
    
    
    1,876
    
    
    
    2,680Deferred revenue
    
    
    50
    
    
    
    50Accrued license fee
    
    
    
    
    
    
    3,955Total current liabilities
    
    
    3,485
    
    
    
    9,229Long-term liabilities:Deferred revenue
    
    
    4,537
    
    
    
    3,311Total liabilities
    
    
    8,022
    
    
    
    12,540Commitments and contingenciesRedeemable convertible preferred stock:Series A redeemable convertible preferred stock,
$0.001 par value; 0 shares authorized as of March
31, 2008 and 5,000,000 shares authorized as of
December 31, 2007; 0 and 4,498,745 shares issued
and outstanding as of March 31, 2008 and December
31, 2007, respectively; including accrued
cumulative dividends of $0 and $1,054 as of March
31, 2008 and December 31, 2007, respectively
    
    
    
    
    
    
    4,806Series B redeemable convertible preferred stock,
$0.001 par value; 0 shares authorized as of March
31, 2008 and 16,500,000 shares authorized as of
December 31, 2007; 0 and 15,151,516 shares issued
and outstanding as of March 31, 2008 and December
31, 2007, respectively; including accrued
cumulative dividends of $0 and $3,162 as of March
31, 2008 and December 31, 2007, respectively
    
    
    
    
    
    
    23,102Series C redeemable convertible preferred stock,
$0.001 par value; 0 shares authorized as of March
31, 2008 and 13,600,000 shares authorized as of
December 31, 2007; 0 and 13,513,514 shares issued
and outstanding as of March 31, 2008 and December
31, 2007, respectively; including accrued
cumulative dividends of $0 and $1,647 as of March
31, 2008 and December 31, 2007, respectively
    
    
    
    
    
    
    31,579Total redeemable convertible preferred stock
    
    
    
    
    
    
    59,487Stockholders equity (deficit):Common stock, $0.001 par value; 135,000,000
authorized as of March 31, 2008 and 60,000,000
shares authorized as of December 31, 2007;
18,072,353 and 1,870,603 shares issued and
outstanding as of March 31, 2008 and December 31,
2007, respectively
    
    
    18
    
    
    
    2Additional paid-in capital
    
    
    104,941
    
    
    
    Accumulated deficit
    
    
    (51,590
    )
    
    
    (42,843
    )Accumulated other comprehensive income
    
    
    7
    
    
    
    4Total stockholders equity (deficit)
    
    
    53,376
    
    
    
    (42,837
    )Total liabilities and stockholders equity (deficit)
    
    $
    61,398
    
    
    $
    29,190




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##### Table of Contents



MAKO SURGICAL CORP.
 
 Condensed Statements of Operations
 Three months ended March 31,2008
    
    
    2007Revenue:Products
    
    $
    415
    
    
    $
    95Tactile Guidance System
    
    
    
    
    
    
    Other
    
    
    83
    
    
    
    5Total revenue
    
    
    498
    
    
    
    100Cost of revenue:Products
    
    
    140
    
    
    
    25Tactile Guidance System
    
    
    230
    
    
    
    10Other
    
    
    
    
    
    
    1Total cost of revenue
    
    
    370
    
    
    
    36Gross profit
    
    
    128
    
    
    
    64Operating costs and expenses:Selling, general and administrative
    
    
    4,648
    
    
    
    1,933Research and development
    
    
    3,610
    
    
    
    1,517Depreciation and amortization
    
    
    422
    
    
    
    270Total operating costs and expenses
    
    
    8,680
    
    
    
    3,720Loss from operations
    
    
    (8,552
    )
    
    
    (3,656
    )Interest and other income
    
    
    160
    
    
    
    236Interest and other expenses
    
    
    (109
    )
    
    
    (76
    )Net loss
    
    
    (8,501
    )
    
    
    (3,496
    )Accretion of redeemable convertible preferred stock
    
    
    (44
    )
    
    
    (72
    )Accrued dividends on redeemable convertible preferred stock
    
    
    (521
    )
    
    
    (683
    )Net loss attributable to common stockholders
    
    $
    (9,066
    )
    
    $
    (4,251
    )Net loss per share  Basic and diluted attributable to common
stockholders
    
    $
    (0.95
    )
    
    $
    (2.73
    )Weighted average common shares outstanding  Basic and diluted
    
    
    9,512
    
    
    
    1,556
   2




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##### Table of Contents



MAKO SURGICAL CORP.
 
 Condensed Statements of Cash Flows
 Three months ended March 31,2008
    
    
    2007Operating activities:Net loss
    
    $
    (8,501
    )
    
    $
    (3,496
    )Adjustments to reconcile net loss to net cash used in operating activities:Depreciation
    
    
    288
    
    
    
    121Amortization of intangible assets
    
    
    165
    
    
    
    153Stock-based compensation
    
    
    1,474
    
    
    
    73Inventory write-down
    
    
    79
    
    
    
    4Loss on investment asset impairment
    
    
    63
    
    
    
    Accrued interest expense on deferred license fee
    
    
    45
    
    
    
    73Changes in operating assets and liabilities:Accounts receivable
    
    
    746
    
    
    
    356Inventory
    
    
    66
    
    
    
    (324
    )Due from related party
    
    
    29
    
    
    
    98Prepaid and other assets
    
    
    (168
    )
    
    
    (87
    )Other assets
    
    
    (587
    )
    
    
    11Accounts payable
    
    
    (700
    )
    
    
    (253
    )Accrued compensation and employee benefits
    
    
    (285
    )
    
    
    361Other accrued liabilities
    
    
    (804
    )
    
    
    (109
    )Deferred revenue
    
    
    1,226
    
    
    
    Net cash used in operating activities
    
    
    (6,864
    )
    
    
    (3,019
    )Investing activities:Purchase of short-term investments
    
    
    (1,990
    )
    
    
    (13,115
    )Proceeds from sales and maturities of short-term investments
    
    
    1,993
    
    
    
    1,266Acquisition of property and equipment
    
    
    (700
    )
    
    
    (351
    )Payment of deferred license fee on IBM license
    
    
    (4,000
    )
    
    
    Acquisition of intangible assets
    
    
    
    
    
    
    (50
    )Net cash used in investing activities
    
    
    (4,697
    )
    
    
    (12,250
    )Financing activities:Proceeds from initial public offering of common stock, net of underwriting fees of $3,570
    
    
    47,430
    
    
    
    Deferred initial public offering costs
    
    
    (970
    )
    
    
    Proceeds from issuance of Series C redeemable convertible preferred stock, net of stock
issuance costs
    
    
    
    
    
    
    29,916Exercise of common stock options for cash
    
    
    18
    
    
    
    Net cash provided by financing activities
    
    
    46,478
    
    
    
    29,916Net increase in cash and cash equivalents
    
    
    34,917
    
    
    
    14,647Cash and cash equivalents at beginning of period
    
    
    9,615
    
    
    
    2,108Cash and cash equivalents at end of period
    
    $
    44,532
    
    
    $
    16,755Non-cash investing and financing activities:Accretion of redeemable convertible preferred stock
    
    $
    44
    
    
    $
    72Accrued dividends on redeemable convertible preferred stock
    
    
    521
    
    
    
    683Conversion of redeemable convertible preferred stock into 10,945,080 common shares
    
    
    53,667
    
    
    
    Reclassification of accrued dividends on redeemable convertible preferred stock to
additional paid-in capital
    
    
    6,385
    
    
    
    Reclassification of deferred initial public offering costs to additional paid-in capital
    
    
    3,698
    
    
    
    Interest on note receivable for common stock
    
    
    
    
    
    
    1
   3




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##### Table of Contents



MAKO SURGICAL CORP.
 Notes to Condensed Financial Statements
(Unaudited)
 1. Description of the Business
    2. Summary of Significant Accounting Policies
 Basis of Presentation
  Risks and Uncertainties
   4




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Revenue Recognition
 Software
Revenue Recognition
     5




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##### Table of Contents



Revenue
Recognition
  Deferred Revenue and Deferred Cost of Revenue
  Intangible Assets
  Deferred Initial Public Offering Costs
  Net Loss Per Share
 Earnings per Share
 March 31,(in thousands)
    
    2008
    
    
    2007Stock options outstanding
    
    
    2,100
    
    
    
    1,266Warrants to purchase common stock
    
    
    463
    
    
    
    463Redeemable convertible preferred stock
    
    
    
    
    
    
    33,164
  6




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Recent Accounting Pronouncements
 Fair Value Measurements
  
    
    Level 1 Inputs- Quoted prices for identical instruments in active markets.
    
    Level 2 Inputs- Quoted prices for similar instruments in active markets; quoted prices
for identical or similar instruments in markets that are not active; and model-derived
valuations whose inputs are observable or whose significant value drivers are observable.
    
    Level 3 Inputs- Instruments with primarily unobservable value drivers.
  The Fair Value Option for
Financial Assets and Financial LiabilitiesIncluding an amendment of FASB Statement No. 115
 Accounting for Nonrefundable Advance Payments for Goods or Services Received for Use in
Future Research and Development Activities
 Business Combinations
  7




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##### Table of Contents



Noncontrolling Interests in Consolidated
Financial Statements
 3. Short-Term Investments and Long-Term Investments
   As of March 31, 2008
 Gross
    
    
    GrossAmortized
    
    
    Unrealized
    
    
    Unrealized
    
    
    Fair(in thousands)
    
    Cost
    
    
    Gains
    
    
    Losses
    
    
    ValueShort-term investments:U.S. treasury notes
    
    $
    1,493
    
    
    $
    7
    
    
    $
    
    
    
    $
    1,500Certificates of deposit
    
    
    34
    
    
    
    
    
    
    
    
    
    
    
    34Total short-term investments
    
    
    1,527
    
    
    
    7
    
    
    
    
    
    
    
    1,534Long-term investments:Variable auction rate securities,
net of impairment charge of $63
    
    
    1,487
    
    
    
    
    
    
    
    
    
    
    
    1,487Total short and long-term investments
    
    $
    3,014
    
    
    $
    7
    
    
    $
    
    
    
    $
    3,021
 As of December 31, 2007
 Gross
    
    
    GrossAmortized
    
    
    Unrealized
    
    
    Unrealized
    
    
    Fair(in thousands)
    
    Cost
    
    
    Gains
    
    
    Losses
    
    
    ValueShort-term investments:Variable auction rate securities
    
    $
    1,550
    
    
    $
    
    
    
    $
    
    
    
    $
    1,550U.S. treasury notes
    
    
    1,505
    
    
    
    4
    
    
    
    
    
    
    
    1,509Certificates of deposit
    
    
    25
    
    
    
    
    
    
    
    
    
    
    
    25Total short-term investments
    
    $
    3,080
    
    
    $
    4
    
    
    $
    
    
    
    $
    3,084
   8




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##### Table of Contents



Fair Value Measurements at the Reporting Date UsingQuotedPrices inActive
    
    
    SignificantMarkets for
    
    
    Other
    
    
    SignificantIdentical
    
    
    Observable
    
    
    UnobservableMarch 31,
    
    
    Assets
    
    
    Inputs
    
    
    Inputs(in thousands)
    
    2008
    
    
    (Level 1)
    
    
    (Level 2)
    
    
    (Level 3)Short-term investments:U.S. treasury notes
    
    $
    1,500
    
    
    $
    1,500
    
    
    $
    
    
    
    $
    Certificates of deposit
    
    
    34
    
    
    
    34
    
    
    
    
    
    
    
    Total short-term investments
    
    
    1,534
    
    
    
    1,534
    
    
    
    
    
    
    
    Long-term investments:Variable auction rate
securities, net of
impairment charge of $63
    
    
    1,487
    
    
    
    
    
    
    
    
    
    
    
    1,487Total short and long-term
investments
    
    $
    3,021
    
    
    $
    1,534
    
    
    $
    
    
    
    $
    1,487
    9




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##### Table of Contents



Fair ValueMeasurements UsingSignificantUnobservable InputsVariable Auction Rate(in thousands)
    
    SecuritiesBeginning balance
    
    $
    1,550Total losses realized included in earnings
    
    
    (63
    )Ending balance
    
    $
    1,487The total amount of gains or losses for the period
included in earnings attributable to the change in
unrealized gains or losses relating to assets still
held at the reporting
date
    
    $
    (63
    )
 4. Inventory
  March 31,
    
    
    December 31,(in thousands)
    
    2008
    
    
    2007Raw materials
    
    $
    993
    
    
    $
    974Work-in-process
    
    
    511
    
    
    
    642Finished goods
    
    
    697
    
    
    
    730Total inventory
    
    $
    2,201
    
    
    $
    2,346
 5. Commitments and Contingencies
 IBM License Agreement
  Contingencies
    10




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##### Table of Contents



6. Redeemable Convertible Preferred Stock and Stockholders Equity (Deficit)


Redeemable
    
    
    
    
    
    
    
    
    
    
    Additional
    
    
    
    
    
    
    Other
    
    
    TotalConvertible Preferred
    
    
    Common
    
    
    Stock
    
    
    Paid-in
    
    
    Accumulated
    
    
    Comprehensive
    
    
    Stockholders(in thousands)
    
    Shares
    
    
    Amount
    
    
    Shares
    
    
    Amount
    
    
    Capital
    
    
    Deficit
    
    
    Income
    
    
    Equity (Deficit)Balance at December 31, 2007
    
    
    33,164
    
    
    $
    59,487
    
    
    
    1,871
    
    
    $
    2
    
    
    $
    
    
    
    $
    (42,843
    )
    
    $
    4
    
    
    $
    (42,837
    )Issuance of common stock
in initial public offering
    
    
    
    
    
    
    
    
    
    
    5,100
    
    
    
    5
    
    
    
    43,727
    
    
    
    
    
    
    
    
    
    
    
    43,732Issuance of common stock
upon exercise of options
    
    
    
    
    
    
    
    
    
    
    21
    
    
    
    
    
    
    
    18
    
    
    
    
    
    
    
    
    
    
    
    18Employee share-based
compensation expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    298
    
    
    
    
    
    
    
    
    
    
    
    298Restricted common stock
compensation expense
    
    
    
    
    
    
    
    
    
    
    135
    
    
    
    
    
    
    
    1,176
    
    
    
    
    
    
    
    
    
    
    
    1,176Accretion to redemption
value of Series A, B and C
redeemable convertible
preferred stock
    
    
    
    
    
    
    44
    
    
    
    
    
    
    
    
    
    
    
    (44
    )
    
    
    
    
    
    
    
    
    
    
    (44
    )Accrued dividends on
Series A, B and C
redeemable convertible
preferred stock
    
    
    
    
    
    
    521
    
    
    
    
    
    
    
    
    
    
    
    (275
    )
    
    
    (246
    )
    
    
    
    
    
    
    (521
    )Conversion of Series A, B
and C redeemable
convertible preferred
shares into common shares
    
    
    (33,164
    )
    
    
    (53,667
    )
    
    
    10,945
    
    
    
    11
    
    
    
    53,656
    
    
    
    
    
    
    
    
    
    
    
    53,667Reclassification of
accrued dividends on
redeemable convertible
preferred stock to
additional paid-in capital
    
    
    
    
    
    
    (6,385
    )
    
    
    
    
    
    
    
    
    
    
    6,385
    
    
    
    
    
    
    
    
    
    
    
    6,385Change in unrealized gain
on available-for-sale
securities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3
    
    
    
    3Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (8,501
    )
    
    
    
    
    
    
    (8,501
    )Total comprehensive loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (8,498
    )Balance at March 31, 2008
    
    
    
    
    
    $
    
    
    
    
    18,072
    
    
    $
    18
    
    
    $
    104,941
    
    
    $
    (51,590
    )
    
    $
    7
    
    
    $
    53,376


Redeemable Convertible Preferred Stock
  Common Stock
    11




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Comprehensive Loss
  Stock Option Plans and Stock-Based Compensation
 Share-Based Payment
      12




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##### Table of Contents



Outstanding OptionsWeightedShares/Options
    
    
    
    
    
    
    AverageAvailable
    
    
    Number of
    
    
    Exercise(in thousands, except per share data)
    
    For Grant
    
    
    Options
    
    
    PriceBalance at December 31, 2007
    
    
    85
    
    
    
    1,917
    
    
    $
    4.81Shares reserved
    
    
    1,000
    
    
    
    
    
    
    $
    Options granted
    
    
    (213
    )
    
    
    213
    
    
    $
    9.30Options exercised
    
    
    
    
    
    
    (22
    )
    
    $
    0.81Options forfeited
    
    
    8
    
    
    
    (8
    )
    
    $
    7.00Balance at March 31, 2008
    
    
    880
    
    
    
    2,100
    
    
    $
    5.37
    Three Months Ended March 31,2008
    
    2007Risk-free interest rate
    
    3.45% - 3.54%
    
    4.51% - 4.89%Expected life
    
    6.25 years
    
    6.25 yearsExpected dividends
    
    
    
    Expected volatility
    
    56.72% - 56.49%
    
    57.10%
 Employee Stock Purchase Plan
  Warrants
   13




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##### Table of Contents



7. Income taxes
   Accounting for Uncertainty in
Income Taxes
  14




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##### Table of Contents



Item 2.
    
    MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
   MAKOplasty®, Tactile Guidance System and TGS, as well as the MAKO logo, whether
standing alone or in connection with the words MAKO Surgical Corp. are trademarks of MAKO
Surgical Corp.
 Overview
    15




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##### Table of Contents




    
    In January 2008, we obtained 510(k) marketing clearance from the FDA for version 1.2 of
our TGS and commercially launched version 1.2 of our TGS in the first quarter of 2008.
    
    In February 2008, we completed the IPO of our common stock, issuing a total of 5.1
million shares at an issue price of $10.00 per share, resulting in net proceeds to the
Company, after expenses, of approximately $43.7 million.
    
    We are finalizing development of a TGS software application to enable a single
MAKO-branded unicompartmental implant system, combining our inlay and onlay system. We
intend to commercially introduce this software version 1.3 of our TGS and the MAKO-branded
implant by the end of 2008. We have received a 510(k) clearance for the MAKO-branded
implant, and we do not anticipate that TGS version 1.3 will require a 510(k) clearance. The
functionality to support the use of the MAKO-branded implant with the TGS was included and
cleared as part of version 1.2 of our TGS.
    
    We are currently developing version 2.0 of our TGS and modular implants, which would
allow multicompartmental knee resurfacing procedures. We intend to commercially introduce
version 2.0 of the TGS and the modular implants in the first half of 2009, subject to
regulatory clearances or approvals. If we were to be denied such clearances or approvals, if
such clearances or approvals were delayed or if the development of version 2.0 is
unsuccessful or delayed, it could have a material adverse impact on our results of
operations.
  Factors Which May Influence Future Results of Operations
  Revenue
    Cost of Revenue
   16




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##### Table of Contents



Selling, General and Administrative Expenses
  Research and Development Expenses
  Critical Accounting Policies
  Results of Operations
 Comparison of the Three Months Ended March 31, 2008 to the Three Months Ended March 31, 2007
 Revenue.
  17




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##### Table of Contents



Cost of Revenue.
 Selling, General and Administrative.
 Research and Development.
 Depreciation and Amortization.
 Interest and Other Income.
 Interest and Other Expense.
 Income Taxes.
  18




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##### Table of Contents



Liquidity and Capital Resources
 Three Months Ended March 31,(in thousands)
    
    2008
    
    
    2007Cash used in operating activities
    
    $
    (6,864
    )
    
    $
    (3,019
    )Cash used in investing activities
    
    
    (4,697
    )
    
    
    (12,250
    )Cash provided by financing activities
    
    
    46,478
    
    
    
    29,916$
    34,917
    
    
    $
    14,647
    Net Cash Used in Operating Activities
  Net Cash Used in Investing Activities
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##### Table of Contents



Net Cash Provided by Financing Activities
  Operating Capital and Capital Expenditure Requirements
     
    
    the revenue generated by sales of our current and future products;
    
    the expenses we incur in selling and marketing our products;
    
    the costs and timing of regulatory clearance or approvals for upgrades or changes to our
products;
    
    the rate of progress and cost of on-going development activities;
    
    the success of our on-going research and development efforts;
    
    the emergence of competing or complementary technological developments;
  20




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##### Table of Contents




    
    the costs of filing, prosecuting, defending and enforcing any patent or license claims
and other intellectual property rights, or participating in litigation-related activities;
    
    the terms and timing of any collaborative, licensing, or other arrangements that we may
establish; and
    
    the acquisition of businesses, products and technologies, although we currently have no
understandings, commitments or agreements relating to any of these types of transactions.
 Contractual Obligations
   Recent Accounting Pronouncements
 Fair Value Measurements
  
    
    Level 1 Inputs- Quoted prices for identical instruments in active markets.
    
    Level 2 Inputs- Quoted prices for similar instruments in active markets; quoted prices
for identical or similar instruments in markets that are not active; and model-derived
valuations whose inputs are observable or whose significant value drivers are observable.
    
    Level 3 Inputs- Instruments with primarily unobservable value drivers.
  The Fair Value Option for Financial Assets
and Financial LiabilitiesIncluding an amendment of FASB Statement No. 115,
 Accounting for Nonrefundable
Advance Payments for Goods or Services Received for Use in Future Research and Development
Activities
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##### Table of Contents



Off-Balance Sheet Arrangements
  
 Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
   
 Item 4T. CONTROLS AND PROCEDURES.
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##### Table of Contents



PART II
 OTHER INFORMATION
 
 Item 1. LEGAL PROCEEDINGS.
 Commitments and Contingencies
 
 Item 1A. RISK FACTORS.
  
 Item 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.
  Commitments and Contingencies
 
    
    Approximately $14.0  $20.0 million for the expansion of sales and marketing activities;
    
    Approximately $12.0  $18.0 million for continuation of research and development
activities;
    
    The remainder to fund working capital and other general corporate purposes, including
the expenses associated with the IPO.
  
 Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
   
    
    The reverse split of our common stock, par value $.001 per share, pursuant to which each
issued and outstanding 3.03 shares of common stock were reclassified and combined into one
share of common stock (the Reverse Split) and the amendment of our Second Amended and
Restated Certificate of Incorporation (the Certificate of Incorporation) to effect the
Reverse Split, thereby reducing the number of outstanding shares of our common stock;
    
    The amendment and restatement of the Certificate of Incorporation following the IPO;
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##### Table of Contents




    
    The amendment and restatement of our Second Amended and Restated Bylaws following the
IPO;
    
    The adoption of the 2008 Omnibus Incentive Plan;
    
    The adoption of the 2008 Employee Stock Purchase Plan;
    
    The approval of a form of Indemnification Agreement for our directors and certain of our
officers; and
    
    The waiver of our obligation, pursuant to the Second Amended and Restated Stockholders
Agreement, dated February 6, 2007, between our stockholders and us listed in the agreement
(the Stockholders Agreement), to provide an operating plan for 2008.
  
    
    The automatic conversion of the outstanding shares of our Series A redeemable
convertible preferred stock (Series A Preferred Stock), Series B redeemable convertible
preferred stock (Series B Preferred Stock) and Series C redeemable convertible preferred
stock (Series C Preferred Stock) into shares of our common stock, as adjusted for the
Reverse Split; and
    
    The termination of the Stockholders Agreement upon the closing of the IPO pursuant to
the pricing terms determined by the underwriters of the IPO.
   
 0
    
 0
  24




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##### Table of Contents



Item 6. EXHIBITS.
 ExhibitNo.
    
    Description3.1
    
    
    Third Amended and Restated Certificate of Incorporation of the
Registrant, dated February 20, 2008 (1)3.2
    
    
    Third Amended and Restated Bylaws of the Registrant effective as of
February 20, 2008 (1)4.1
    
    
    Second Amended and Restated Registration Rights Agreement, dated
February 6, 2007, between the Registrant and certain of its
stockholders (2)31.1
    
    
    Certification of Chief Executive Officer pursuant to Rule 13a-14(a)
of the Exchange Act31.2
    
    
    Certification of Chief Financial Officer pursuant to Rule 13a-14(a)
of the Exchange Act32.1
    
    
    Certification of Chief Executive Officer pursuant to18 U.S.C. §135032.2
    
    
    Certification of Chief Financial Officer pursuant to18 U.S.C. §1350
 (1)
    
    Incorporated by reference to Registrants Annual Report on Form 10-K filed with the SEC
on March 31, 2008(2)
    
    Incorporated by reference to Registrants Registration Statement on Form S-1, as
amended, filed with the SEC on September 19, 2007 
 SIGNATURES
  MAKO Surgical Corp.Date: May 9, 2008
    By:
    /s/ Fritz L. LaPorteFritz L. LaPorteSenior Vice President of Finance and Administration,
Chief Financial Officer and Treasurer  25




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##### Table of Contents



EXHIBIT INDEX
 ExhibitNo.
    
    Description31.1
    
    
    Certification of Chief Executive Officer pursuant to Rule 13a-14(a)
of the Exchange Act31.2
    
    
    Certification of Chief Financial Officer pursuant to Rule 13a-14(a)
of the Exchange Act32.1
    
    
    Certification of Chief Executive Officer pursuant to18 U.S.C. §135032.2
    
    
    Certification of Chief Financial Officer pursuant to18 U.S.C. §1350
  26