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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Titan Medical Inc | NASDAQ:TMDI | NASDAQ | Common Stock |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 0.14 | 0.1333 | 0.1367 | 0 | 01:00:00 |
Note
|
September 30, 2020
|
December 31, 2019
|
|||||||||
Assets
|
|||||||||||
Current Assets:
|
|||||||||||
Cash and cash equivalents
|
$
|
24,675,913
|
$
|
814,492
|
|||||||
Amounts receivable
|
51,574
|
84,097
|
|||||||||
Deposits
|
10
|
481,400
|
481,400
|
||||||||
Prepaid expense
|
730,923
|
369,453
|
|||||||||
Total Current Assets
|
$
|
25,939,810
|
$
|
1,749,442
|
|||||||
Property, plant and equipment
|
3
|
75,591
|
|||||||||
Right of use assets - Leases
|
4
|
413,262
|
30,394
|
||||||||
Patent rights
|
5
|
1,752,367
|
1,601,745
|
||||||||
Total Assets
|
$
|
28,181,030
|
$
|
3,381,581
|
|||||||
Liabilities
|
|||||||||||
Current Liabilities:
|
|||||||||||
Accounts payable and accrued liabilities
|
6
|
$
|
7,638,801
|
$
|
11,412,896
|
||||||
Current portion of lease liability
|
4
|
90,710
|
21,071
|
||||||||
Note payable
|
8
|
1,686,730
|
-
|
||||||||
Warrant liability
|
7
|
14,698,329
|
3,621,444
|
||||||||
Total Current Liabilities
|
$
|
24,114,570
|
$
|
15,055,411
|
|||||||
Long-term lease liability
|
4
|
$
|
347,286
|
8,001
|
|||||||
Total Liabilities
|
$
|
24,461,856
|
$
|
15,063,412
|
|||||||
Shareholders' Equity (Deficiency)
|
|||||||||||
Share Capital
|
9
|
$
|
213,091,521
|
$
|
194,859,415
|
||||||
Contributed Surplus
|
9,024,301
|
8,303,527
|
|||||||||
Deficit
|
(218,396,648
|
)
|
(214,844,773
|
)
|
|||||||
Shareholders' Equity (Deficiency)
|
$
|
3,719,174
|
$
|
(11,681,831
|
)
|
||||||
Total Liabilities and Deficiency
|
$
|
28,181,030
|
$
|
3,381,581
|
"signed"
|
"signed"
|
||
Paul Cataford
|
David McNally
|
||
Director
|
Chairman and CEO
|
Three Months Ended
|
Nine Months Ended
|
Three Months Ended
|
Nine Months Ended
|
||||||||||||||||
Note
|
September 30, 2020
|
September 30, 2020
|
September 30, 2019
|
September 30, 2019
|
|||||||||||||||
Revenue
|
$
|
-
|
$
|
10,000,000
|
$
|
-
|
$
|
-
|
|||||||||||
Expenses
|
|||||||||||||||||||
Amortization
|
$
|
39,383
|
$
|
88,953
|
$
|
7,300
|
$
|
20,766
|
|||||||||||
Consulting fees
|
122,453
|
318,322
|
317,771
|
1,038,268
|
|||||||||||||||
Stock based compensation
|
9b
|
|
286,111
|
720,774
|
412,956
|
1,404,364
|
|||||||||||||
Insurance
|
224,994
|
470,571
|
122,588
|
357,200
|
|||||||||||||||
Management salaries and fees
|
524,015
|
1,670,887
|
394,978
|
1,793,444
|
|||||||||||||||
Marketing and investor relations
|
63,598
|
81,085
|
72,922
|
281,598
|
|||||||||||||||
Office and general
|
106,897
|
292,739
|
336,609
|
531,016
|
|||||||||||||||
Professional fees
|
234,243
|
1,624,186
|
190,800
|
597,645
|
|||||||||||||||
Rent
|
6,948
|
20,149
|
17,595
|
46,346
|
|||||||||||||||
Research and development
|
2,265,975
|
2,433,557
|
16,570,480
|
49,339,766
|
|||||||||||||||
Travel
|
1,883
|
14,643
|
95,358
|
243,353
|
|||||||||||||||
Interest charges
|
591,702
|
1,056,941
|
-
|
-
|
|||||||||||||||
Foreign exchange loss (gain)
|
55,862
|
6,939
|
(68,045
|
)
|
(26,998
|
)
|
|||||||||||||
$
|
4,524,064
|
$
|
8,799,746
|
$
|
18,471,312
|
$
|
55,626,768
|
||||||||||||
Net Earnings (Loss) from Operations
|
(4,524,064
|
)
|
1,200,254
|
(18,471,312
|
)
|
(55,626,768
|
)
|
||||||||||||
Finance Income (Cost)
|
|||||||||||||||||||
Interest
|
$
|
11,362
|
$
|
17,936
|
$
|
19,314
|
113,532
|
||||||||||||
Gain on settlement
|
6
|
-
|
1,839,626
|
-
|
-
|
||||||||||||||
Gain (loss) on change in fair value of warrants
|
7
|
2,872,069
|
(4,793,375
|
)
|
16,887,802
|
13,021,129
|
|||||||||||||
Warrant liability issue cost
|
-
|
(1,816,316
|
)
|
-
|
(1,827,835
|
)
|
|||||||||||||
$
|
2,883,431
|
$
|
(4,752,129
|
)
|
$
|
16,907,116
|
$
|
11,306,826
|
|||||||||||
Net and Comprehensive Loss for the Period
|
$
|
1,640,633
|
$
|
3,551,875
|
$
|
1,564,196
|
$
|
44,319,942
|
|||||||||||
Basic and Diluted Loss per Share
|
$
|
0.02
|
$
|
0.06
|
$
|
0.05
|
$
|
1.54
|
|||||||||||
Weighted Average Number of Common Shares
|
|||||||||||||||||||
Basic and Diluted
|
80,462,610
|
61,901,265
|
31,990,989
|
28,807,958
|
Note
|
Share Capital
Number
|
Share Capital
Amount
|
Contributed
Surplus
|
Deficit
|
Total Equity
(Deficiency)
|
||||||||||||||||||
Balance - December 31, 2018
|
21,675,849
|
$
|
170,502,394
|
$
|
6,652,409
|
$
|
(172,937,694
|
)
|
$
|
4,217,109
|
|||||||||||||
Issued pursuant to agency agreement
|
9a
|
|
10,873,044
|
16,717,131
|
16,717,131
|
||||||||||||||||||
Share issue expense
|
(1,915,612
|
)
|
(1,915,612
|
)
|
|||||||||||||||||||
Warrants exercised during the period
|
9a
|
|
1,018,506
|
7,002,043
|
7,002,043
|
||||||||||||||||||
Stock based compensation
|
9b
|
|
1,404,363
|
1,404,363
|
|||||||||||||||||||
Net and comprehensive loss
|
(44,319,942
|
)
|
(44,319,942
|
)
|
|||||||||||||||||||
Balance - September 30, 2019
|
33,567,399
|
$
|
192,305,956
|
$
|
8,056,772
|
$
|
(217,257,636
|
)
|
$
|
(16,894,908
|
)
|
||||||||||||
Balance - December 31, 2019
|
39,907,681
|
$
|
194,859,415
|
$
|
8,303,527
|
$
|
(214,844,773
|
)
|
$
|
(11,681,831
|
)
|
||||||||||||
Issued pursuant to agency agreement1
|
9a
|
|
23,923,700
|
12,818,657
|
12,818,657
|
||||||||||||||||||
Share issue expense
|
(487,788
|
)
|
(487,788
|
)
|
|||||||||||||||||||
Common stock equivalents converted
|
9a
|
|
11,500,000
|
1,150
|
1,150
|
||||||||||||||||||
Warrants exercised during the period
|
9a
|
|
6,217,939
|
5,900,087
|
5,900,087
|
||||||||||||||||||
Stock based compensation
|
9b
|
|
720,774
|
720,774
|
|||||||||||||||||||
Net and comprehensive loss
|
(3,551,875
|
)
|
(3,551,875
|
)
|
|||||||||||||||||||
Balance - September 30, 2020
|
81,549,320
|
$
|
213,091,521
|
$
|
9,024,301
|
$
|
(218,396,648
|
)
|
$
|
3,719,174
|
Three Months Ended
|
Nine Months Ended
|
Three Months Ended
|
Nine Months Ended
|
|||||||||||||
September 30, 2020
|
September 30, 2020
|
September 30, 2019
|
September 30, 2019
|
|||||||||||||
Cash provided by (used in):
|
||||||||||||||||
Operating activities:
|
||||||||||||||||
Net and comprehensive loss for the period
|
$
|
(1,640,633
|
)
|
$
|
(3,551,875
|
)
|
$
|
(14,472,866
|
)
|
$
|
(42,755,746
|
)
|
||||
Items not involving cash:
|
||||||||||||||||
Amortization
|
39,383
|
88,953
|
7,291
|
13,466
|
||||||||||||
Stock based compensation
|
286,111
|
720,774
|
740,051
|
991,408
|
||||||||||||
Warrant liability-fair value adjustment
|
(2,872,069
|
)
|
4,793,375
|
(6,609,952
|
)
|
3,866,673
|
||||||||||
Warrant liability-foreign exchange adjustment
|
48,065
|
9,972
|
142,682
|
36,625
|
||||||||||||
Non-cash issue costs
|
-
|
764,132
|
-
|
-
|
||||||||||||
Non-cash settlement included in payables
|
-
|
2,090,200
|
-
|
-
|
||||||||||||
Non-cash note payable expenses and accrued interest
|
32,908
|
186,730
|
-
|
-
|
||||||||||||
Changes in non-cash working capital items:
|
||||||||||||||||
Amounts receivable, prepaid expenses and deposits
|
264,468
|
(328,951
|
)
|
1,294,599
|
(283,330
|
)
|
||||||||||
Accounts payable and accrued liabilities
|
(737,993
|
)
|
(5,613,707
|
)
|
5,736,133
|
5,783,889
|
||||||||||
Cash used in operating activities
|
(4,579,760
|
)
|
(840,397
|
)
|
(13,162,062
|
)
|
(32,347,015
|
)
|
||||||||
Financing activities:
|
||||||||||||||||
Net proceeds from issuance of common shares and warrants1
|
741,225
|
23,490,929
|
(2,997
|
)
|
31,374,911
|
|||||||||||
Proceeds from note payable
|
-
|
1,500,000
|
-
|
-
|
||||||||||||
Repayment of lease liabilities
|
(23,518
|
)
|
(33,761
|
)
|
-
|
-
|
||||||||||
Cash provided by financing activities
|
717,707
|
24,957,168
|
(2,997
|
)
|
31,374,911
|
|||||||||||
Investing Activities:
|
||||||||||||||||
Purchase of property, plant and equipment
|
(79,498
|
)
|
(79,498
|
)
|
-
|
-
|
||||||||||
Additions to patents
|
(72,292
|
)
|
(175,852
|
)
|
(125,198
|
)
|
(178,956
|
)
|
||||||||
Cash used in investing activities
|
(151,790
|
)
|
(255,350
|
)
|
(125,198
|
)
|
(178,956
|
)
|
||||||||
Increase (Decrease) in cash and cash equivalents
|
(4,013,843
|
)
|
23,861,421
|
(13,290,257
|
)
|
(1,151,060
|
)
|
|||||||||
Cash and cash equivalents, beginning of the period
|
28,689,756
|
814,492
|
23,610,440
|
11,471,243
|
||||||||||||
Cash and cash equivalents, end of the period
|
$
|
24,675,913
|
24,675,913
|
$
|
10,320,183
|
$
|
10,320,183
|
|||||||||
Cash and cash equivalents comprise:
|
||||||||||||||||
Cash
|
$
|
20,483
|
20,483
|
$
|
1,392,741
|
$
|
1,392,741
|
|||||||||
Cash equivalents
|
24,655,430
|
24,655,430
|
8,927,442
|
8,927,442
|
||||||||||||
|
$
|
24,675,913
|
24,675,913
|
$
|
10,320,183
|
$
|
10,320,183
|
1.
|
DESCRIPTION OF BUSINESS
|
(a)
|
Statement of Compliance
|
(b)
|
Basis of Measurement
|
(c)
|
Basis of Consolidation
|
(d)
|
Functional and Presentation Currency
|
1.
|
DESCRIPTION OF BUSINESS (continued)
|
(e)
|
Use of Estimates and Judgements
|
(f)
|
COVID-19
|
2.
|
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
|
(a)
|
Revenue Recognition
|
•
|
Revenue from the License Agreement for intellectual property rights and know-how (“Royalty Payment”) is recognized when rights are granted and customer acceptance is established. Compensation received for
the performance of technology transfer services relating to the License Agreement is accounted for separately from the Royalty Payment and will be recognized at the time the service is performed. (see Note 12)
|
•
|
Revenue from the Development Agreement and the allocation of ownership and license rights developed under each milestone is recognized when the rights are granted, and customer acceptance is established.
|
(b)
|
Property, Plant and Equipment
|
|
Computer equipment | 3 years |
|
|
|
|
Furniture and fixtures | 3 years |
|
|
|
|
Leasehold improvements | Remaining term of the lease |
(c)
|
Warrant Liability
|
2.
|
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
|
(d)
|
Fair Value Measurement
|
3.
|
PROPERTY, PLANT AND EQUIPMENT
|
For the nine months ended September 30, 2020
|
Computer equipment
|
Furniture and fixtures
|
Leasehold improvements
|
Total
|
||||||||||||
Cost
|
||||||||||||||||
Balance at December 31, 2019
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
||||||||
Additions during the period
|
46,335
|
16,976
|
16,187
|
79,498
|
||||||||||||
Balance at September 30, 2020
|
46,335
|
16,976
|
16,187
|
79,498
|
||||||||||||
Depreciation and impairment losses
|
||||||||||||||||
Balance at December 31, 2019
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
||||||||
Depreciation in the period
|
(2,853
|
)
|
(496
|
)
|
(558
|
)
|
(3,907
|
)
|
||||||||
Balance at September 30, 2020
|
(2,853
|
)
|
(496
|
)
|
(558
|
)
|
(3,907
|
)
|
||||||||
Net book value at September 30, 2020
|
$
|
43,482
|
$
|
16,480
|
$
|
15,629
|
$
|
75,591
|
||||||||
Net book value at December 31, 2019
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
4.
|
RIGHT OF USE ASSETS – LEASE
|
For the nine months ended September 30, 2020
|
Cost
|
Accumulated Amortization
|
Net Book
Value
|
|||||||||
Balance at December 31, 2019
|
$
|
34,172
|
$
|
(3,778
|
)
|
$
|
30,394
|
|||||
Additions during the period
|
442,684
|
-
|
442,684
|
|||||||||
Amortization in the period
|
-
|
(59,816
|
)
|
(59,816
|
)
|
|||||||
Balance at September 30, 2020
|
$
|
476,856
|
$
|
(63,594
|
)
|
$
|
413,262
|
For the year ended December 31, 2019
|
Cost
|
Accumulated Amortization
|
Net Book
Value
|
|||||||||
Balance at December 31, 2019
|
$
|
-
|
$
|
-
|
$
|
-
|
||||||
Additions during the year
|
34,172
|
-
|
34,172
|
|||||||||
Amortization in the year
|
-
|
(3,778
|
)
|
(3,778
|
)
|
|||||||
Balance at December 31, 2019
|
$
|
34,172
|
$
|
(3,778
|
)
|
$
|
30,394
|
5.
|
PATENT RIGHTS
|
For the nine months ended September 30, 2020
|
Cost
|
Accumulated Amortization & Impairment Losses
|
Net Book
Value
|
|||||||||
Balance at December 31, 2019
|
$
|
1,856,750
|
$
|
(255,005
|
)
|
$
|
1,601,745
|
|||||
Additions during the period
|
175,852
|
-
|
175,852
|
|||||||||
Amortization in the period
|
-
|
(25,230
|
)
|
(25,230
|
)
|
|||||||
Balance at September 30, 2020
|
$
|
2,032,602
|
$
|
(280,235
|
)
|
$
|
1,752,367
|
For the year ended December 31, 2019
|
Cost
|
Accumulated Amortization & Impairment Losses
|
Net Book
Value
|
|||||||||
Balance at December 31, 2018
|
$
|
1,398,713
|
$
|
(226,228
|
)
|
$
|
1,172,485
|
|||||
Additions during the year
|
458,037
|
-
|
458,037
|
|||||||||
Amortization in the year
|
-
|
(28,777
|
)
|
(28,777
|
)
|
|||||||
Balance at December 31, 2019
|
$
|
1,856,750
|
$
|
(255,005
|
)
|
$
|
1,601,745
|
6.
|
ACCOUNTS PAYABLE AND ACCRUED LIABILITIES
|
7.
|
WARRANT LIABILITY
|
Nine Months Ended
|
Year Ended
|
|||||||||||||||
September 30, 2020
|
December 31, 2019
|
|||||||||||||||
Number of
Warrants
|
Amount
|
Number of
Warrants
|
Amount
|
|||||||||||||
Opening Balance
|
21,203,411
|
$
|
3,621,444
|
13,901,859
|
$
|
11,250,167
|
||||||||||
Issue of warrants expiring March 21, 2024
|
-
|
-
|
8,455,882
|
15,897,059
|
||||||||||||
Issue of warrants expiring March 27, 2025
|
3,500,000
|
475,300
|
-
|
-
|
||||||||||||
Issue of warrants expiring November 6, 2025
|
2,757,252
|
508,200
|
-
|
-
|
||||||||||||
Issue of warrants expiring June 10, 2024
|
9,000,000
|
9,709,200
|
-
|
-
|
||||||||||||
Warrants exercised during the period
|
(6,217,939
|
)
|
(4,419,161
|
)
|
(1,018,506
|
)
|
(3,742,824
|
)
|
||||||||
Warrants expired during the period
|
-
|
-
|
(135,824
|
)
|
-
|
|||||||||||
Foreign exchange adjustment during the period
|
-
|
9,972
|
-
|
17,687
|
||||||||||||
Fair value adjustment during the period
|
-
|
4,793,375
|
-
|
(19,800,645
|
)
|
|||||||||||
Ending Balance
|
30,242,724
|
$
|
14,698,330
|
21,203,411
|
$
|
3,621,444
|
8.
|
NOTE PAYABLE
|
9.
|
SHARE CAPITAL
|
(a) | Authorized: | unlimited number of common shares, no par |
|
|
|
|
Issued: | 81,549,320 (December 31, 2019: 39,907,681) |
9.
|
SHARE CAPITAL (continued)
|
9.
|
SHARE CAPITAL (continued)
|
Grant Date
|
Common shares
issued
|
Value
|
||||||
January 3, 2020
|
500,000
|
$
|
219,600
|
|||||
January 6, 2020
|
500,000
|
229,300
|
||||||
January 8, 2020
|
400,000
|
195,160
|
||||||
January 10, 2020
|
500,000
|
247,550
|
||||||
January 17, 2020
|
600,000
|
303,000
|
||||||
January 23, 2020
|
600,000
|
295,320
|
||||||
February 6, 2020
|
600,000
|
282,000
|
||||||
February 13, 2020
|
708,048
|
300,000
|
||||||
4,408,048
|
$
|
2,071,930
|
9.
|
SHARE CAPITAL (continued)
|
Grant Date
|
Common shares
issued |
Value
|
||||||
August 30, 2019
|
2,417,162
|
$
|
3,000,000
|
|||||
November 8, 2019
|
100,000
|
42,560
|
||||||
November 8, 2019
|
100,000
|
42,560
|
||||||
November 12, 2019
|
100,000
|
42,970
|
||||||
November 12, 2019
|
100,000
|
42,000
|
||||||
November 13, 2019
|
100,000
|
42,970
|
||||||
November 14, 2019
|
300,000
|
128,910
|
||||||
November 15, 2019
|
2,500,000
|
1,074,250
|
||||||
November 19, 2019
|
2,067,282
|
888,311
|
||||||
|
7,784,444
|
$
|
5,304,531
|
(b)
|
Stock Options and Compensation Options
|
9.
|
SHARE CAPITAL (continued)
|
Nine Months Ended September 30, 2020
|
Year Ended December 31, 2019
|
|||||||||||||||
Stock Options - CDN $ denominated
|
Number of
Stock Options
|
Weighted average Exercise Price (CDN)
|
Number of
Stock Options
|
Weighted average Exercise Price (CDN)
|
||||||||||||
Balance beginning
|
860,379
|
$
|
5.89
|
875,433
|
$
|
18.20
|
||||||||||
Granted
|
75,494
|
0.94
|
35,719
|
4.54
|
||||||||||||
Expired / forfeited
|
(40,515
|
)
|
11.56
|
(50,773
|
)
|
31.79
|
||||||||||
Balance ending
|
895,358
|
$
|
5.22
|
860,379
|
$
|
5.89
|
Stock Options - USD $ denominated
|
Number of
Stock Options
|
Weighted average Exercise Price (USD)
|
Number of
Stock Options
|
Weighted average Exercise Price (USD)
|
||||||||||||
Balance beginning
|
854,042
|
$
|
2.65
|
50,349
|
$
|
1.55
|
||||||||||
Granted
|
1,374,291
|
-
|
843,693
|
2.72
|
||||||||||||
Expired / forfeited
|
(761,528
|
)
|
2.20
|
(40,000
|
)
|
3.72
|
||||||||||
Balance ending
|
1,466,805
|
$
|
3.19
|
854,042
|
$
|
2.65
|
||||||||||
Total number of stock options
|
2,362,163
|
1,714,421
|
9.
|
SHARE CAPITAL (continued)
|
9.
|
SHARE CAPITAL (continued)
|
2020
|
2019
|
|||
Fair value calculated
|
CDN $0.75
|
USD $0.77
|
USD $1.48
|
|
Share price at grant
|
CDN $0.92
|
USD $0.91
|
USD $2.39
|
|
Exercise price
|
CDN $2.27
|
USD $0.96
|
USD $2.79
|
|
Expected option life
|
3.5 years
|
3.5 years
|
3.5 years
|
|
Risk free interest rate (based on government bonds)
|
0.66%
|
0.27%
|
1.50%
|
|
Expected volatility
|
134.6%
|
152.8%
|
98.02%
|
|
Expected dividends
|
Nil
|
Nil
|
Nil
|
(c)
|
Warrants
|
10.
|
COMMITMENTS
|
11.
|
RELATED PARTY TRANSACTIONS
|
1.
|
Monique Delorme was appointed Chief Financial Officer on October 1, 2020.
|
2.
|
Stephen Randall retired as Chief Financial Officer on September 30, 2020. He remains on the board of directors.
|
3.
|
John Barker and Phillip McStotts retired as directors effective September 30, 2020.
|
4.
|
John Schellhorn retired as a director effective June 4, 2020.
|
12.
|
REVENUES
|
13.
|
CAPITAL MANAGEMENT
|
14.
|
SUBSEQUENT EVENTS
|
•
|
the Company’s ability to raise sufficient financing on a timely basis, secure and restore relationships with its suppliers and development partners and retain qualified personnel;
|
•
|
the Company’s business consists of the design and development of robotic-assisted technologies for application in single access surgery and is presently focused on development of the Enos™ single access
robotic surgical system (the “Enos system”) and development under the Development Agreement (as defined herein);
|
•
|
the Enos under development includes a surgeon-controlled patient cart that includes a 3D high definition vision system and multi-articulating instruments for performing minimally invasive surgery (“MIS”)
procedures;
|
•
|
the Enos system under development includes a surgeon workstation that provides the surgeon with an ergonomic interface to the patient cart and a 3D high-definition view of the MIS procedures;
|
•
|
the Company’s intent to initially pursue gynecologic surgical indications for use of its Enos system;
|
•
|
the Company’s plan to continue development of a robust training curriculum and post-training assessment tools for surgeons and surgical teams;
|
•
|
the training curriculum, which is planned to include cognitive pre-training, psychomotor skills training, surgery simulations, live animal and human cadaver lab training, surgical team training,
troubleshooting and an overview of safety;
|
•
|
post-training assessment, which will include validation of the effectiveness of those assessment tools;
|
•
|
the Company’s filing and prosecution of patents that management believes validate the novelty of its unique technology and support the value of the entire franchise;
|
•
|
the performance of human surgeries with the Enos system will require an Investigational Device Exemption (“IDE”) from the Food and Drug Administration (“FDA”), which must be submitted and approved in
advance;
|
•
|
the need for further Good Laboratory Practice (“GLP”) and human factors evaluation (“HFE”) preclinical studies in order to demonstrate the safety and performance of the system prior to proceeding with IDE
clinical studies;
|
•
|
the recruitment of surgeons from multiple hospital sites will be necessary to perform the surgeries. Each of these sites will require approval of their independent Institutional Review Board (“IRB”) to
approve the studies;
|
•
|
that an application to the IRB of each hospital will be made once the FDA has approved the Company’s IDE application;
|
•
|
the Company’s intention to pursue the De Novo classification process if the 510(k) pathway is not available to the Company;
|
•
|
the outcome of any review by the FDA and the time required to complete activities necessary for regulatory approval or clearance;
|
•
|
the Company’s plan to file one or more additional Pre-Submissions with the FDA to allow it to review specific aspects of the design of the Company’s surgical system, the intended use, and potential
predicate devices, in order to clarify the requirements for the IDE clinical study protocol, confirm the appropriate regulatory pathway, and/or understand any additional special controls which the FDA may apply;
|
•
|
the Company’s ability to secure required capital to fund development and operating costs in a timely manner;
|
•
|
the Company has sufficient cash on hand to satisfy expected costs associated with the deliverables under Medtronic Milestone 3 and upon receipt of the $10 million license payment associated with Medtronic
Milestone 3, it expects to have sufficient cash to satisfy the costs associated with Medtronic Milestone 4, as well as to satisfy the repayment of the Note when it becomes due;
|
•
|
actual costs and development times, which will exceed those previously set forth by the Company, including those set forth in 2019;
|
•
|
the fact that the Company cannot produce an accurate estimate of the future costs of the development milestones and regulatory phases beyond the year 2021;
|
•
|
the Company’s technology and research and development objectives and milestones, including any estimated costs, schedules for completion and probability of success and including without limitation the
table set forth herein under the heading, “Development” and the footnotes thereunder;
|
•
|
the indication of additional specific milestones as the development of the Enos system progresses;
|
•
|
the Company’s intention with respect to updating any forward-looking statement after the date on which such statement is made or to reflect the occurrence of unanticipated events;
|
•
|
the Company’s plans to design, create and refine software for production system functionality of the Enos system and the estimated incremental costs (including the status, cost and timing of achieving the
development milestones disclosed herein);
|
•
|
the Company’s plan to further expand its patent portfolio by filing additional patent applications as it progresses in the development of robotic-assisted surgical technologies and, potentially, by
licensing suitable technologies;
|
•
|
the Company will develop certain robotic-assisted surgery technologies pursuant to a development and license agreement entered into by the Company with Medtronic plc (“Medtronic”) on June 3, 2020;
|
•
|
the Company will receive a series of payments for Medtronic’s license to robotic-assisted surgery technologies;
|
•
|
should there be a change in control or a sale of all or substantially all of the assets of Titan, Titan may assign and transfer its rights and obligations under the Development Agreement and License
Agreement, including the licensed patents and retained intellectual property rights;
|
•
|
the Company will retain the rights to commercialize the developed technology in its own business, including for use with the Enos system;
|
•
|
the Company’s ability to meet the continued listing requirements and initial listing standards for the Nasdaq and the TSX;
|
•
|
the Company’s guidance on the regulatory process and the costs and time that may be involved, including whether it expects to or is required to proceed with a De Novo classification request;
|
•
|
the Company’s expectations with respect to its relationship with its suppliers and product development firms;
|
•
|
the engagement of certain contractors and suppliers and the assurance that those parties will all be agreeable to engage throughout the project on terms satisfactory to the Company;
|
•
|
the Company’s intentions to complete summative human factors studies and complete the design and development of the system and initiate clinical studies;
|
•
|
the surgical indications for, and the benefits of, the Enos system;
|
•
|
the Company’s seeking of licensing opportunities to expand its intellectual property portfolio;
|
•
|
obtaining or maintaining trademark registrations for the marks and names the Company uses in one or more countries and the future use of such marks and names;
|
•
|
the Company’s expected market segments and principal markets;
|
•
|
the Company’s industry and the markets in which it plans to operate or seeks to operate, including its general expectations and market position, market opportunities and market share;
|
•
|
the Company’s ability to arrange further debt financing;
|
•
|
the projected competitive conditions with respect to the Company’s products;
|
•
|
the Company’s intention to confirm with the FDA the relevant regulatory pathway through the Pre-Submission process, and to initiate planning for the implementation of its IDE clinical studies;
|
•
|
the estimated size of the market for the Enos systems; and
|
•
|
the Company’s expectation to implement improvements to its instruments, end-effectors and cameras and related modifications to the central unit of the patient cart, and complete software development for
its Enos system.
|
•
|
dependency on additional financing;
|
•
|
the Medtronic Loan (as defined herein) and the Note (as defined herein) may limit or preclude the Company from arranging further debt financing;
|
•
|
the Company’s history of losses;
|
•
|
reliance on strategic alliances;
|
•
|
the ability to retain key personnel in a highly competitive employment environment;
|
•
|
the possibility of the Company’s inability to augment its management team when required;
|
•
|
the possibility that the Company’s trade secrets, and confidential information may be compromised;
|
•
|
reliance on third parties for important aspects of the Company’s business;
|
•
|
industry competitiveness;
|
•
|
operating without infringement of intellectual property rights of others;
|
•
|
obtaining and enforcing patent protection for the Company’s products;
|
•
|
obtaining or maintaining our trademarks;
|
•
|
conflicts of interest;
|
•
|
fluctuating financial results;
|
•
|
rapidly changing markets;
|
•
|
introduction of more technologically advanced products by competitors;
|
•
|
potential product liability claims;
|
•
|
ability to license other intellectual property rights;
|
•
|
government regulation;
|
•
|
modifications to products requiring new regulatory clearance;
|
•
|
extensive post-market regulation;
|
•
|
the Company’s products causing or contributing to a death or serious injury;
|
•
|
recalls by governmental authorities;
|
•
|
contingent liabilities;
|
•
|
sales cycle for the Enos system;
|
•
|
uncertainty as to product development and commercialization milestones;
|
•
|
uncertainties as to development and manufacturing of a commercially viable product;
|
•
|
manufacturing delays, interruptions and cost overruns;
|
•
|
reliance on external suppliers and development firms;
|
•
|
delays, liability and negative perceptions from product malfunction;
|
•
|
instruments, components and accessories require repeated cleaning and sterilization;
|
•
|
commercial disputes;
|
•
|
additional regulatory burden and controls over financial reporting;
|
•
|
fluctuations in foreign currency;
|
•
|
the possibility that the Company is not able to maintain its “foreign private issuer” status;
|
•
|
the possibility of delisting from the Nasdaq or TSX exchanges;
|
•
|
reduced disclosure requirements applicable to “emerging growth companies”;
|
•
|
cyber-security risks and threats;
|
•
|
adverse impact on the Company’s financial condition and results of operations for fiscal 2020 as a result of COVID-19;
|
•
|
current global financial conditions;
|
•
|
results of operations;
|
•
|
difficulties with forecasting future operating results;
|
•
|
profitability;
|
•
|
obligations as a public company;
|
•
|
stock price volatility;
|
•
|
possible future sales by the Company’s shareholders of their securities;
|
•
|
limited operating history of the Company;
|
•
|
the negative impact of COVID-19 on the ability of suppliers of goods and services to provide resources in a timely manner to support the Company’s milestones;
|
•
|
the negative impact of COVID-19 on present and future demand for robotic-assisted surgeries, equipment, and supplies; and
|
•
|
the negative impact of COVID-19 on the ability of the Company to obtain regulatory approvals as required on a timely basis to accomplish its milestones and objectives.
|
•
|
general business and current global economic conditions;
|
•
|
future success of current research and development activities;
|
•
|
achieving development milestones;
|
•
|
inability to achieve product cost targets;
|
•
|
competition;
|
•
|
potential changes to regulatory clearance processes in the United States and Europe;
|
•
|
changes to tax rates and benefits;
|
•
|
the availability of financing on a timely basis;
|
•
|
the Company’s and competitors’ costs of production and operations;
|
•
|
the Company’s ongoing relations with its third-party service providers;
|
•
|
the design of the Enos system and related platforms and equipment;
|
•
|
the progress and timing of the development of the Enos system;
|
•
|
costs related to the development of the Enos system;
|
•
|
receipt of all applicable regulatory approvals/clearances;
|
•
|
estimates and projections regarding the robotic-assisted surgery equipment industry;
|
•
|
protection of the Company’s intellectual property rights;
|
•
|
market acceptance of the Company’s systems under development;
|
•
|
the Company’s ability to meet the continued listing standards of Nasdaq and the TSX; and
|
•
|
the type of specialized skill and knowledge required to develop the Enos system and the Company’s access to such specialized skill and knowledge.
|
Milestone Number
|
Development Milestones
|
Estimated
Cost (US$ million)(1) |
Schedule for Milestone Completion
|
Comments
|
Milestone 1
|
Design, prototype and test improvements to instruments, cameras and CDU
|
6.9
|
Q4 2020
|
Enos system related costs
|
Milestone 2
|
Launch system and corporate rebranding including trademark pending logos, literature and presentation templates, and new corporate website
|
0.3
|
Q4 2020
|
Completed
|
Milestone 3
|
Iterate electromechanical design, update sterile adaptors and drape
|
4.4
|
Q1 2021
|
Enos system related costs
|
Milestone 4
|
Perform additional software development and test system performance
|
4.9
|
Q1-Q2 2021
|
Enos system related costs
|
Milestone 5
|
Perform animal lab system assessment
|
0.1
|
Q2 2021
|
Enos system related costs
|
Milestone 6
|
Perform independent lab biocompatibility testing of instruments, camera systems and accessories
|
3.9
|
Q2 2021
|
Enos system related costs
|
Milestone Number
|
Development Milestones
|
Estimated
Cost (US$ million )(1) |
Schedule for Milestone Completion
|
Comments
|
Milestone 7
|
Perform independent lab electrical safety testing for surgeon workstation and patient cart, including electromagnetic compatibility (EMC) and electromagnetic
interference (EMI) tests
|
1.9
|
Q3 2021
|
Enos system related costs
|
Milestone 8
|
Perform animal feasibility or GLP study
|
1.7
|
Q3 2021
|
Enos system related costs
|
Milestone 9
|
Complete build of Enos system IDE units
|
10.2
|
Q4 2021
|
Enos system related costs
|
Milestone 10
|
Complete system verification testing
|
2.1
|
Q4 2021
|
Enos system related costs
|
Milestone 11
|
Complete HFE Summative testing
|
0.9
|
Q4 2021
|
Enos system related costs
|
Milestone 12
|
Update application for IDE as additional testing lab data is received and continue preparation for human confirmatory studies
|
TBD
|
Q1 2022
|
-
|
Milestone 13
|
Submit IDE application to FDA
|
TBD
|
TBD
|
-
|
Milestone 14
|
Initiate IDE study
|
TBD
|
TBD
|
-
|
Milestone 15
|
Complete IDE study, data analysis and final report
|
TBD
|
TBD
|
-
|
Milestone 16
|
Submit 510(k) application to FDA
|
TBD
|
TBD
|
-
|
Milestone 17
|
Tentative 510(k) clearance letter from FDA
|
TBD
|
TBD
|
-
|
1.
|
The estimated costs above include an allocation of $1.5 million per quarter of general and administrative costs.
|
Milestone (1)
|
Deadline (2)
|
Payment(3)
|
Comments
|
Medtronic Milestone 1
|
Four (4) months from Development Start Date (4)
|
$10,000,000
|
Complete
|
Medtronic Milestone 2 (5)
|
Four (4) months from Development Start Date
|
-
|
Complete
|
Medtronic Milestone 3
|
Six (6) months from the later of (a) receipt by the Company of Payment for Medtronic Milestone 1, (b) receipt by the Company from Medtronic of
Medtronic deliverables required for Medtronic Milestone 3, and (c) receipt by the Company from Medtronic of confirmation of certain due diligence in respect of the Company’s deliverables for Medtronic Milestone 1
|
$10,000,000
|
-
|
Medtronic Milestone 4
|
Four (4) months from the later of (a) receipt by the Company of Payment for Medtronic Milestone 3, (b) receipt by the Company of Medtronic
deliverables for Medtronic Milestone 4, and (c) receipt by the Company from Medtronic of confirmation of certain due diligence in respect of the Company’s deliverables for Medtronic Milestone 3
|
$11,000,000 (6),(7)
|
-
|
1.
|
Medtronic Milestone 1, Medtronic Milestone 3, and Medtronic Milestone 4 are each defined in the Development Agreement and consist of the completion of the
development of certain robotic assisted surgical technologies as described in the Development Agreement.
|
2.
|
All as further described and qualified in the Development Agreement.
|
3.
|
Each payment is conditional upon the corresponding milestone being completed on a timely basis.
|
4.
|
“Development Start Date” means June 12, 2020.
|
5.
|
Medtronic Milestone 2 is a non-technology milestone defined as the Company raising at least $18,000,000 of capital between the effective date of the Development
Agreement and the date that is four months from the Development Start Date. The Company has met this milestone.
|
6.
|
The amount of the payment will be the sum of $10,000,000 and the amount of certain legal, transaction and intellectual property related expenses to be paid to
the Company up to a maximum of $1,000,000 pursuant to the Development Agreement and License Agreement.
|
7.
|
The balance outstanding under the Medtronic Loan (described below) will be offset against the payment for Medtronic Milestone 4.
|
Contractual Obligations existing at the date of this MD&A
|
Total
$
|
Less than 1 year
|
1 – 3 years
|
4 – 5 years
|
After 5 years
|
Capital Leases
|
500,433
|
114,908
|
312,431
|
73,094
|
--
|
Note Payable(1)
|
1,686,730
|
1,686,730
|
-
|
--
|
--
|
Supplier Agreement
|
5,985,133
|
5,985,133
|
--
|
--
|
--
|
Purchase Order
Commitments
|
13,222,884
|
13,222,884
|
--
|
--
|
--
|
Total Contractual Obligations
|
21,395,180
|
21,009,665
|
312,413
|
73,094
|
--
|
Date of Financing
|
Anticipated Use of Proceeds
|
Actual Use of Proceeds
|
March 25, 2020
|
General corporate purposes including resuming the development of the single access robotic surgical system, instruments, and accessories; funding
working capital (including the reduction of outstanding payables); and capital expenditures.
|
As anticipated.
|
May 6, 2020
|
General corporate purposes including resuming the development of the single access robotic surgical system, instruments, and accessories; funding
working capital (including the reduction of outstanding payables); and capital expenditures.
|
As anticipated.
|
June 10, 2020
|
General corporate purposes including resuming the development of the single access robotic surgical system, instruments, and accessories; funding
working capital (including the reduction of outstanding payables); and capital expenditures.
|
As anticipated. The majority of the proceeds are still available for future periods. The Company does not anticipate alternative use of these
proceeds.
|
Type of Securities
|
Number of Common Shares issued or issuable upon conversion
|
Common Shares
|
82,184,843
|
Stock options(1)
|
2,362,163
|
Warrants
|
30,203,411
|
Broker warrants(2)
|
2,131,716
|
(1)
|
The Company has outstanding options enabling certain employees, directors, officers, and consultants to purchase common shares:
|
•
|
On January 28, 2020, the Company issued 25,765 stock options with an exercise price of CDN $0.657 to a director in exchange for services rendered. The options
vest immediately and have a contractual life of 7 years.
|
•
|
On July 30, 2020, the Company issued 22,425 stock options with an exercise price of CDN $1.266 to a director in exchange for services rendered. The options vest
immediately and have a contractual life of 7 years.
|
•
|
On July 30, 2020, the Company issued 1,350,000 stock options with an exercise price of US $0.962 to certain employees for services rendered. These options vest
25% annually over four years.
|
•
|
On September 29, 2020, the Company issued 27,304 stock options with an exercise price of CDN $0.96 to a director in exchange for services rendered. The options
vest immediately and have a contractual life of 7 years.
|
•
|
On September 29, 2020, the Company issued 19,568 stock options with an exercise price of US $0.73 to a director in exchange for services rendered. The options
vest immediately and have a contractual life of 7 years.
|
•
|
On September 30, 2020, the Company issued 4,723 stock options with an exercise price of US $0.745 to a consultant. The options vest immediately and have a
contractual life of 3 years.
|
(2)
|
A total of 2,131,716 broker warrants previously issued in connection with offerings of securities by the Company in March 2019, March 2020, May 2020 and June
2020 offerings remain outstanding:
|
•
|
Pursuant to the agency agreement in respect of the March 2019 offering, in addition to the cash commission paid to the agents, 591,911 broker warrants were
issued to the agents. Each broker warrant entitles the holder thereof to acquire one common share at the price of US $3.40 for a period of 24 months following the closing date.
|
•
|
Pursuant to the agency agreement in respect of the March 2020 offering, in addition to the cash commission paid to the agents, 490,000 broker warrants were
issued to the agents. Each broker warrant entitles the holder thereof to acquire one common share at the price of US $0.2125 for a period of 5 years following the closing date.
|
•
|
Pursuant to the agency agreement in respect of the May 2020 offering, in addition to the cash commission paid to the agents, 386,015 broker warrants were issued
to the agents. Each broker warrant entitles the holder thereof to acquire one common share at the price of US $0.4534 for a period of five and one half (5.5) years following the closing date.
|
•
|
Pursuant to the agency agreement in respect of the June 2020 offering, in addition to the cash commission paid to the agents, 1,260,000 broker warrants were
issued to the agents. Each broker warrant entitles the holder thereof to acquire one common share at the price of US $1.25 for a period of four years following the closing date.
|
•
|
Revenue from the License Agreement for intellectual property rights and know-how (“Royalty Payment”) is recognized when rights are granted and customer acceptance is established. Compensation received for
the performance of technology transfer services relating to the License Agreement is accounted for separately from the Royalty Payment and will be recognized at the time the service is performed.
|
•
|
Revenue from the Development Agreement and the allocation of ownership and license rights developed under each milestone is recognized when the rights are granted and customer acceptance is established.
|
•
|
Under the terms of the Development Agreement, payment is dependent on when the customer confirms completion of each milestone as defined. Due to the uncertainty of milestone achievements and entitlement
of payments, the Company recognizes revenue only upon acceptance by the customer of work performed and the milestone achieved.
|
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