TITAN MEDICAL INC.
|
||||
(Registrant)
|
||||
|
||||
Date:
|
July 31, 2019
|
By:
|
/s/ Stephen Randall
|
|
Name:
|
Stephen Randall
|
|||
Title:
|
Chief Financial Officer
|
99.2
|
MD&A |
99.3
|
CEO Certification |
99.4
|
CFO Certification |
Note
|
June 30, 2019
|
December 31, 2018
|
||||||||||
Assets
|
||||||||||||
Current Assets:
|
||||||||||||
Cash and cash equivalents
|
$
|
10,320,183
|
$
|
11,471,243
|
||||||||
Amounts receivable
|
55,208
|
143,225
|
||||||||||
Deposits
|
7
|
8,864,346
|
8,541,630
|
|||||||||
Prepaid expense
|
635,212
|
586,581
|
||||||||||
Total Current Assets
|
$
|
19,874,949
|
$
|
20,742,679
|
||||||||
Patent Rights
|
3
|
1,337,975
|
1,172,485
|
|||||||||
Total Assets
|
$
|
21,212,924
|
$
|
21,915,164
|
||||||||
Liabilities
|
||||||||||||
Current Liabilities:
|
||||||||||||
Accounts payable and accrued liabilities
|
4
|
$
|
12,231,777
|
$
|
6,447,888
|
|||||||
Warrant liability
|
2b, 5
|
27,307,700
|
11,250,167
|
|||||||||
Total Liabilities
|
$
|
39,539,477
|
$
|
17,698,055
|
||||||||
Shareholders' Equity (Deficiency)
|
||||||||||||
Share Capital
|
6
|
$
|
189,723,070
|
$
|
170,502,394
|
|||||||
Contributed Surplus
|
7,643,817
|
6,652,409
|
||||||||||
Deficit
|
(215,693,440
|
)
|
(172,937,694
|
)
|
||||||||
Total Equity / (Deficiency)
|
$
|
(18,326,553
|
)
|
$
|
4,217,109
|
|||||||
Total Liabilities and Equity / (Deficiency)
|
$
|
21,212,924
|
$
|
21,915,164
|
Commitments (Note 7)
|
||
See notes to financial statements
|
||
Approved on behalf of the Board:
|
||
"signed"
|
"signed"
|
|
Charles Federico
|
David McNally
|
|
Chairman
|
President and CEO
|
Share Capital
|
Contributed
|
Total
|
||||||||||||||||||||||||||
Note
|
Number
|
Amount
|
Surplus
|
Warrants
|
Deficit
|
Equity
|
||||||||||||||||||||||
Balance - December 31, 2017
|
12,686,723
|
$
|
154,016,519
|
$
|
5,146,784
|
$
|
741,917
|
$
|
(150,298,422
|
)
|
$
|
9,606,798
|
||||||||||||||||
Issued pursuant to agency agreement
|
1,295,552
|
4,013,710
|
-
|
-
|
-
|
4,013,710
|
||||||||||||||||||||||
Share issue expense
|
(399,107
|
)
|
-
|
-
|
-
|
(399,107
|
)
|
|||||||||||||||||||||
Issued for Services
|
7,500
|
66,234
|
-
|
-
|
-
|
66,234
|
||||||||||||||||||||||
Warrants exercised during the period
|
6,500
|
59,998
|
-
|
-
|
-
|
59,998
|
||||||||||||||||||||||
Warrants expired during the period
|
-
|
741,917
|
-
|
(741,917
|
)
|
-
|
-
|
|||||||||||||||||||||
Stock based compensation
|
-
|
-
|
723,405
|
-
|
-
|
723,405
|
||||||||||||||||||||||
Net and Comprehensive loss
|
-
|
-
|
-
|
-
|
(6,694,114
|
)
|
(6,694,114
|
)
|
||||||||||||||||||||
Balance - June 30, 2018
|
13,996,275
|
$
|
158,499,271
|
$
|
5,870,189
|
$
|
-
|
$
|
(156,992,536
|
)
|
$
|
7,376,924
|
||||||||||||||||
Balance - December 31, 2018
|
21,675,849
|
$
|
170,502,394
|
$
|
6,652,409
|
$
|
-
|
$
|
(172,937,694
|
)
|
$
|
4,217,109
|
||||||||||||||||
Issued pursuant to agency agreement
|
6a
|
|
8,455,882
|
13,717,131
|
-
|
-
|
-
|
13,717,131
|
||||||||||||||||||||
Share issue expense
|
(1,498,498
|
)
|
-
|
-
|
-
|
(1,498,498
|
)
|
|||||||||||||||||||||
Warrants exercised during the period
|
6a
|
|
1,018,506
|
7,002,043
|
-
|
-
|
7,002,043
|
|||||||||||||||||||||
Stock based compensation
|
6b
|
|
-
|
-
|
991,408
|
-
|
-
|
991,408
|
||||||||||||||||||||
Net and Comprehensive loss
|
-
|
-
|
-
|
-
|
(42,755,746
|
)
|
(42,755,746
|
)
|
||||||||||||||||||||
Balance - June 30, 2019
|
31,150,237
|
$
|
189,723,070
|
$
|
7,643,817
|
$
|
-
|
$
|
(215,693,440
|
)
|
$
|
(18,326,553
|
)
|
|||||||||||||||
See notes to financial statements
|
Three Months Ended
|
Six Months Ended
|
Three Months Ended
|
Six Months Ended
|
|||||||||||||||||
Note
|
June 30, 2019
|
June 30, 2019
|
June 30, 2018
|
June 30, 2018
|
||||||||||||||||
Revenue:
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
||||||||||||
Expenses:
|
||||||||||||||||||||
Amortization
|
$
|
7,291
|
$
|
13,466
|
$
|
5,372
|
$
|
17,114
|
||||||||||||
Consulting fees
|
451,068
|
720,497
|
141,076
|
371,188
|
||||||||||||||||
Stock based compensation
|
6b
|
|
740,051
|
991,408
|
356,348
|
723,405
|
||||||||||||||
Insurance
|
116,123
|
234,612
|
6,900
|
15,957
|
||||||||||||||||
Management salaries and fees
|
749,880
|
1,398,466
|
730,975
|
1,439,999
|
||||||||||||||||
Marketing and investor relations
|
102,487
|
208,676
|
126,381
|
170,998
|
||||||||||||||||
Office and general
|
77,136
|
194,407
|
128,453
|
234,627
|
||||||||||||||||
Professional fees
|
303,460
|
406,845
|
178,687
|
324,467
|
||||||||||||||||
Rent
|
16,515
|
28,751
|
24,999
|
49,793
|
||||||||||||||||
Research and Development
|
18,360,674
|
32,769,286
|
6,246,275
|
9,520,349
|
||||||||||||||||
Travel
|
80,631
|
147,995
|
113,610
|
185,897
|
||||||||||||||||
Foreign exchange (gain)/loss
|
148,689
|
41,047
|
(417,244
|
)
|
(932,397
|
)
|
||||||||||||||
$
|
21,154,005
|
$
|
37,155,456
|
$
|
7,641,832
|
$
|
12,121,397
|
|||||||||||||
Finance Income (cost):
|
||||||||||||||||||||
Interest
|
$
|
71,187
|
$
|
94,218
|
$
|
54,691
|
$
|
82,983
|
||||||||||||
Gain (Loss) on change in fair value of warrants
|
2b, 5
|
6,609,952
|
(3,866,673
|
)
|
2,210,537
|
5,853,111
|
||||||||||||||
Warrant liability issue cost
|
-
|
(1,827,835
|
)
|
(508,811
|
)
|
(508,811
|
)
|
|||||||||||||
$
|
6,681,139
|
$
|
(5,600,290
|
)
|
$
|
1,756,417
|
$
|
5,427,283
|
||||||||||||
Net and Comprehensive Loss For The Year
|
$
|
14,472,866
|
$
|
42,755,746
|
$
|
5,885,415
|
$
|
6,694,114
|
||||||||||||
Basic and Diluted Loss Per Share
|
$
|
0.46
|
$
|
1.57
|
$
|
0.43
|
$
|
0.50
|
||||||||||||
Weighted Average Number of Common Shares,
|
||||||||||||||||||||
Basic and Diluted
|
31,150,237
|
27,190,063
|
13,798,229
|
13,250,357
|
||||||||||||||||
See notes to financial statements
|
Three Months Ended
|
Six Months Ended
|
Three Months Ended
|
Six Months Ended
|
|||||||||||||
June 30, 2019
|
June 30, 2019
|
June 30, 2018
|
June 30, 2018
|
|||||||||||||
Cash provided by (used in):
|
||||||||||||||||
Operating activities:
|
||||||||||||||||
Net loss for the period
|
$
|
(14,472,866
|
)
|
$
|
(42,755,746
|
)
|
$
|
(5,885,415
|
)
|
$
|
(6,694,114
|
)
|
||||
Items not involving cash:
|
||||||||||||||||
Amortization
|
7,291
|
13,466
|
5,372
|
17,114
|
||||||||||||
Stock based compensation
|
740,051
|
991,408
|
356,348
|
723,405
|
||||||||||||
Other share compensation
|
-
|
-
|
-
|
66,234
|
||||||||||||
Warrant liability-fair value adjustment
|
(6,609,952
|
)
|
3,866,673
|
(2,210,537
|
)
|
(5,853,111
|
)
|
|||||||||
Warrant liability-foreign exchange adjustment
|
142,682
|
36,625
|
(421,301
|
)
|
(935,656
|
)
|
||||||||||
Changes in non-cash working capital items:
|
||||||||||||||||
Amounts receivable, prepaid expenses and deposits
|
1,294,599
|
(283,330
|
)
|
(10,120
|
)
|
(1,818,430
|
)
|
|||||||||
Accounts payable and accrued liabilities
|
5,736,133
|
5,783,889
|
1,274,644
|
1,970,483
|
||||||||||||
Cash used in operating activities
|
$
|
(13,162,062
|
)
|
$
|
(32,347,015
|
)
|
$
|
(6,891,009
|
)
|
$
|
(12,524,075
|
)
|
||||
Financing activities:
|
||||||||||||||||
Net proceeds from issuance of common shares and warrants
|
(2,997
|
)
|
31,374,911
|
8,828,240
|
8,857,740
|
|||||||||||
Cash provided by financing activities
|
$
|
(2,997
|
)
|
$
|
31,374,911
|
$
|
8,828,240
|
$
|
8,857,740
|
|||||||
Investing Activities:
|
||||||||||||||||
Cost of Patents
|
(125,198
|
)
|
(178,956
|
)
|
(40,491
|
)
|
(97,039
|
)
|
||||||||
Cash used in investing activities
|
$
|
(125,198
|
)
|
$
|
(178,956
|
)
|
$
|
(40,491
|
)
|
$
|
(97,039
|
)
|
||||
Increase (Decrease) in cash and cash equivalents
|
(13,290,257
|
)
|
(1,151,060
|
)
|
1,896,740
|
(3,763,374
|
)
|
|||||||||
Cash and cash equivalents, beginning of the period
|
23,610,440
|
11,471,243
|
20,470,379
|
26,130,493
|
||||||||||||
Cash and cash equivalents, end of the period
|
$
|
10,320,183
|
$
|
10,320,183
|
$
|
22,367,119
|
$
|
22,367,119
|
||||||||
Cash and cash equivalents comprise:
|
||||||||||||||||
Cash
|
$
|
1,392,741
|
$
|
1,392,741
|
$
|
134,243
|
$
|
134,243
|
||||||||
Cash Equivalents
|
8,927,442
|
8,927,442
|
22,232,876
|
22,232,876
|
||||||||||||
$
|
10,320,183
|
$
|
10,320,183
|
$
|
22,367,119
|
$
|
22,367,119
|
|||||||||
See notes to financial statements
|
1.
|
DESCRIPTION OF BUSINESS
|
(a)
|
Statement of Compliance
|
(b)
|
Basis of Measurement
|
(c)
|
Functional and Presentation Currency
|
2.
|
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
|
(a)
|
Use of Estimates and Judgements
|
(b)
|
Warrant Liability
|
(c)
|
Fair Value Measurement
|
(d)
|
Adoption of New Accounting Standard
|
3.
|
PATENT RIGHTS
|
For the six months ended June 30, 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 period
|
178,956
|
-
|
178,956
|
|||||||||
Amortization in the period
|
-
|
(13,466
|
)
|
(13,466
|
)
|
|||||||
Balance at June 30, 2019
|
1,577,669
|
(239,694
|
)
|
1,337,975
|
4.
|
ACCOUNTS PAYABLE AND ACCRUED LIABILITIES
|
|
|
Six Months Ended
June 30, 2019
|
|
Year Ended
December 31, 2018
|
|
|||||||||||
Number of Warrants
|
Amount
|
Number of Warrants
|
Amount
|
|||||||||||||
Opening Balance
|
13,901,859
|
$
|
11,250,167
|
4,933,231
|
$
|
17,849,460
|
||||||||||
Issue of warrants expiring, April 10, 2023
|
-
|
-
|
1,295,554
|
5,212,087
|
||||||||||||
Issue of warrants expiring, August 10, 2023
|
-
|
-
|
7,679,574
|
6,297,251
|
||||||||||||
Issue of warrants expiring, March 21, 2024
|
8,455,882
|
15,897,059
|
-
|
-
|
||||||||||||
Warrants exercised during the period
|
(1,018,506
|
)
|
(3,742,824
|
)
|
(6,500
|
)
|
(28,949
|
)
|
||||||||
Warrants expired during the period
|
(135,824
|
)
|
-
|
-
|
-
|
|||||||||||
Foreign exhange adjustment during the period
|
-
|
36,625
|
-
|
(984,462
|
)
|
|||||||||||
Fair value adjustment during the period
|
-
|
3,866,673
|
-
|
(17,095,220
|
)
|
|||||||||||
Ending Balance
|
21,203,411
|
$
|
27,307,700
|
13,901,859
|
$
|
11,250,167
|
a)
|
Authorized:
|
unlimited number of common shares, no par
|
|
|
|
|
Issued:
|
31,150,237 (December 31, 2018: 21,675,849)
|
May 29, 2019 before the amendments
|
May 29, 2019 after the amendments
|
||||
Fair Value at grant
|
CDN $0.01-$1.40
|
CDN $1.06-$2.10
|
|||
Share price at grant
|
CDN $3.47
|
CDN $3.47
|
|||
Exercise price
|
CDN $12.90-$51.60
|
CDN $4.54
|
|||
Expected Volatility
|
98.6%-99.4%
|
98.6%-99.4%
|
|||
Expected Option Life
|
1.0-3.5 years
|
1.0-3.5 years
|
|||
Expected dividends
|
Nil
|
Nil
|
|||
Risk free interest rate (based on government bonds)
|
1.48%-1.57%
|
1.48%-1.57%
|
Six Months ended
June 30, 2019
|
Year ended
December 31, 2018
|
|||
Number of Stock Options
|
Weighted average
Exercise Price (CDN)
|
Number of Stock Options
|
Weighted average
Exercise Price (CDN)
|
|
Balance Beginning
|
875,433
|
$ 18.20
|
591,609
|
$ 21.30
|
Granted
|
10,000
|
$ 4.54
|
322,517
|
$ 13.51
|
Expired/Forfeited
|
(41,745)
|
$ 31.29
|
(38,693)
|
$ 24.90
|
Balance Ending
|
843,688
|
$ 6.23
|
875,433
|
$ 18.20
|
Six Months ended
June 30, 2019
|
Year ended
December 31, 2018
|
|||
Number of Stock Options
|
Weighted average
Exercise Price (USD)
|
Number of Stock Options
|
Weighted average
Exercise Price (USD)
|
|
Balance Beginning
|
50,349
|
$ 1.55
|
-
|
-
|
Granted
2
|
293,000
|
$ 3.44
|
50,349
|
$ 1.55
|
Expired/Forfeited
|
-
|
-
|
-
|
-
|
Balance Ending
|
343,349
|
$ 3.17
|
50,349
|
$ 1.55
|
1.
|
After giving consideration for 30:1 share consolidation effected June 2018.
|
2.
|
Options granted in the period ending June 30, 2019 will vest in accordance with vesting schedules and milestones over a period up to 7 years.
|
Canadian Dollar Denominated Options
|
||||||||||||
Exercise Price (CDN)
|
Number
Outstanding
|
Weighted-average remaining contractual life (years)
|
Options
Exercisable
|
|||||||||
$3.28
|
31,498
|
6.17
|
31,498
|
|||||||||
$4.50
|
18,936
|
3.78
|
18,936
|
|||||||||
$4.54
|
717,402
|
4.65
|
245,831
|
|||||||||
$4.80
|
3,040
|
1.21
|
3,040
|
|||||||||
$7.49
|
5,590
|
6.02
|
5,590
|
|||||||||
$9.00
|
11,481
|
6.02
|
11,481
|
|||||||||
$9.60
|
1,105
|
1.27
|
1,105
|
|||||||||
$11.70
|
6,667
|
1.44
|
6,667
|
|||||||||
$12.00
|
1,948
|
1.43
|
1,948
|
|||||||||
$30.00
|
34,777
|
2.15
|
23,185
|
|||||||||
$30.60
|
2,625
|
1.48
|
2,625
|
|||||||||
$32.40
|
810
|
1.58
|
810
|
|||||||||
$41.70
|
658
|
0.46
|
658
|
|||||||||
$45.30
|
560
|
1.12
|
560
|
|||||||||
$51.60
|
6,592
|
0.95
|
6,592
|
|||||||||
843,689
|
4.52
|
360,526
|
||||||||||
US Dollar Denominated Options
|
||||||||||||
Exercise Price (USD)
|
Number
Outstanding
|
Weighted-average remaining contractual life (years)
|
Options
Exercisable
|
|||||||||
$1.55
|
50,349
|
2.47
|
50,349
|
|||||||||
$3.72
|
40,000
|
2.63
|
-
|
|||||||||
$3.40
|
253,000
|
6.84
|
156,000
|
|||||||||
343,349
|
5.71
|
206,349
|
Grant date/ Recipient
|
Number of Options
1
|
Vesting Conditions
|
Contractual Life of Options
|
February 14, 2019, options granted to a Consultant
|
40,000
|
Options may vest over a 15-month vesting schedule
|
3 years
|
May 29, 2019, options granted to a Director
|
253,000
|
Options vest over a specified vesting period not exceeding 4 years
|
7 years
|
June 28, 2019, options granted to an Employee
|
10,000
|
Options vest as to 1/3 of the total number of Options granted, every year from Option Date
|
7 years
|
2019
|
2018
|
|||||
Fair Value at grant
|
US $1.76
|
CDN $5.99
|
||||
Share price at grant
|
US $2.84
|
CDN $10.79
|
||||
Exercise price
|
US $3.40
|
CDN $11.97
|
||||
Expected Volatility
|
98.43%
|
90.12%
|
||||
Expected Option Life
|
3.5 years
|
3 years
|
||||
Expected dividends
|
Nil
|
Nil
|
||||
Risk free interest rate (based on government bonds)
|
1.61%
|
1.90%
|
•
|
the Company is committed to developing its robotic surgical system with the objective of substantially improving upon minimally invasive surgery;
|
•
|
the Company’s intent to initially pursue gynecologic surgical indications for use of its single-port robotic surgical system;
|
•
|
the single-port robotic surgical system is being developed with the goal of inserting the multi-articulating instruments and 3D high definition vision system into the patient’s body cavity through a single
incision;
|
•
|
the Company’s technology and research and development objectives and milestones, including estimated costs, schedules for completion and probability of success;
|
•
|
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 expectation with respect to completing and documenting animal and human cadaver studies, and submitting its Investigational Device Exemption (“IDE”) application to the U.S. Food and Drug
Administration (“FDA”) in a timely manner;
|
•
|
the Company’s expectation that it can in a timely manner produce the appropriate preclinical and clinical data required for a 510(k) application to the FDA, and Technical File for the CE mark;
|
•
|
the Company’s expectation with respect to launching a commercial product in certain jurisdictions;
|
•
|
the Company’s intentions to develop a robust training curriculum and post-training assessment tools;
|
•
|
the Company’s plans to develop and commercialize the its single-port robotic surgical system and the estimated incremental costs (including the status, cost and timing of achieving the development and
regulatory milestones disclosed herein);
|
•
|
the Company’s plans to design, create and refine software for production system functionality of the single-port surgical system and the estimated incremental costs (including the status, cost and timing of
achieving the development milestones disclosed herein);
|
•
|
the Company’s intentions to complete formative and summative human factors studies in a timely manner in support of its regulatory applications;
|
•
|
the Company’s belief that existing and planned prototype and production units will be suitable to support human factors studies and activities related to securing confirmatory human data during 2019;
|
•
|
the Company’s intentions with respect to initiating marketing activities following receipt of the applicable regulatory approvals;
|
•
|
the Company’s intention to continue to assess specialized skill and knowledge requirements and recruitment of qualified personnel and partners;
|
•
|
the Company’s belief that the materials and parts necessary for the manufacture of single-port robotic surgical systems for clinical use will be available in the marketplace;
|
•
|
the Company’s plan to lease a facility in Chapel Hill, North Carolina to house its U.S. operations and the anticipated dry lab to host surgeon training following product launch;
|
•
|
the Company’s expectation that it will be able to finance its continuing operations by accessing public markets for its securities and potentially, debt instruments;
|
•
|
the Company’s intended use of proceeds of any offering of securities;
|
•
|
the Company’s intention with respect to not paying any cash dividends on Common Shares in the foreseeable future;
|
•
|
the Company’s intention to retain future earnings, if any, to finance expansion and growth;
|
•
|
the Company’s projected competitive positioning with respect to its products;
|
•
|
the Company continues to explore in-licensing opportunities for technologies that may be used in conjunction with its single-port robotic surgical system;
|
•
|
the Company anticipates that it will continue its pursuit of key strategic relationships;
|
•
|
the Company’s continuing efforts to secure its intellectual property and expand its patent portfolio by filing patent applications as it progresses in the development of its robotic surgical technologies
and potentially by licensing suitable technologies;
|
•
|
the Company’s plan to focus on the development and commercialization of its single-port robotic surgical system at estimated incremental costs and according to its projected timeline; and
|
•
|
the Company intends to utilize a direct sales force and/or distribution partner(s) to initiate marketing its single-port robotic surgical system to hospitals and ambulatory surgery centers.
|
Research and Development Expenditures
|
Three Months
Ended
June 30, 2019
|
Six Months
Ended
June 30, 2019
|
Three Months
Ended
June 30, 2018
|
Six Months
Ended
June 30, 2018
|
||||||||||||
Intellectual property development
|
$
|
2,176
|
$
|
4,636
|
$
|
5,000
|
$
|
9,885
|
||||||||
Product development
|
18,358,498
|
32,764,650
|
6,241,275
|
9,510,464
|
||||||||||||
Total
|
$
|
18,360,674
|
$
|
32,769,286
|
$
|
6,246,275
|
$
|
9,520,349
|
Three
Months
Ended
June
30, 2019
|
Three
Months
Ended
March
31, 2019
|
Three
Months
Ended
December
31, 2018
|
Three
Months
Ended
September
30, 2018
|
Three
Months
Ended
June
30, 2018
|
Three
Months
Ended
March
31, 2018
|
Three
Months
Ended
December
31, 2017
|
Three
Months
Ended
September
30, 2017
|
|||||||||||||||||||||||||
Net sales
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
||||||||||||||||||||||||
Net and Comprehensive Loss (gain) from operations
|
$
|
14,472,866
|
$
|
28,282,880
|
$
|
8,410,702
|
$
|
7,534,456
|
$
|
5,885,415
|
$
|
808,699
|
$
|
12,829,980
|
$
|
13,902,817
|
||||||||||||||||
Basic and diluted loss per share
|
$
|
0.46
|
$
|
1.22
|
$
|
0.41
|
$
|
0.41
|
$
|
0.47
|
$
|
0.07
|
$
|
1.20
|
$
|
1.80
|
|
Issue Date |
Expiry Date
|
Number Issued
|
Number Outstanding
|
Exercise Price
(CDN $)
|
|||||||||||
TMD.WT.F
|
November 16, 2015
|
November 16, 2020
|
233,740
|
233,740
|
$
|
48.00
|
||||||||||
TMD.WT.G
|
February 12, 2016
|
February 12, 2021
|
389,027
|
386,694
|
$
|
30.00
|
||||||||||
TMD.WT.G
|
February 23, 2016
|
February 12, 2021
|
58,226
|
58,226
|
$
|
30.00
|
||||||||||
TMD.WT.H
|
March 31, 2016
|
March 31, 2021
|
501,831
|
501,831
|
$
|
36.00
|
||||||||||
TMD.WT.H
|
April 14, 2016
|
March 31, 2021
|
75,275
|
75,275
|
$
|
36.00
|
||||||||||
TMD.WT.I
|
September 20, 2016
|
September 20, 2021
|
569,444
|
569,444
|
$
|
22.50
|
||||||||||
TMD.WT.I
|
October 27, 2016
|
September 20, 2021
|
67,667
|
67,667
|
$
|
22.50
|
||||||||||
NOT LISTED
|
March 16, 2017
|
March 16, 2021
|
357,787
|
355,253
|
$
|
15.00
|
||||||||||
NOT LISTED
|
June 29, 2017
|
June 29, 2022
|
1,612,955
|
75,810
|
$
|
6.00
|
||||||||||
NOT LISTED
|
July 21, 2017
|
June 29, 2022
|
370,567
|
370,567
|
$
|
6.00
|
||||||||||
NOT LISTED
|
August 24, 2017
|
August 24, 2022
|
563,067
|
563,067
|
$
|
6.00
|
||||||||||
NOT LISTED
|
December 5, 2017
|
December 5, 2022
|
1,533,333
|
1,533,333
|
$
|
18.00
|
||||||||||
NOT LISTED
|
April 10, 2018
|
April 10, 2023
|
1,126,665
|
1,126,665
|
$
|
10.50
|
||||||||||
NOT LISTED
|
May 10, 2018
|
April 10, 2023
|
168,889
|
168,889
|
$
|
10.50
|
||||||||||
NOT LISTED
|
August 10, 2018
|
August 10, 2023
|
7,679,574
|
6,661,068
|
US$
|
3.20 | ||||||||||
NOT LISTED
|
March 21, 2019
|
March 21, 2024
|
8,455,882
|
8,455,882
|
US$
|
4.00 | ||||||||||
TOTAL
|
23,763,929
|
21,203,411
|
Milestone Number
|
Development Milestones
|
Estimated Cost (in U.S. millions $)
|
Schedule for Milestone Completion |
Comments
|
Milestone 1
|
Prototype, test and procure surgeon feedback on revised workstation controls
Complete software and hardware change requirements and finalize computer and software architecture for production systems
Complete revisions to instrument and lens wash system and demonstrate performance
|
Q2 2018
|
Completed
|
|
Milestone 2
|
Complete Camera Insertion Tube (CIT) engineering confidence build based on improved design
Complete design of surgeon workstation and patient cart for engineering confidence build
Complete and demonstrate full suite of simulation software for beta test
|
Q3 2018
|
Completed
|
|
Milestone 3
|
Complete capital equipment engineering confidence build based on improved design
|
Q4 2018
|
Completed
|
|
Milestone 4
|
Document results of confidence build unit testing, implement subsystem design improvements and schedule preliminary audit of quality system by European Notified Body
|
Q1 2019
|
Completed
|
|
Milestone 5
|
Update system design and related hardware and software documentation
|
Q2 2019
|
Completed
|
|
Initiate Design Freeze
|
Completed
|
|||
Initiate preclinical live animal (swine) and cadaver studies according to final protocols for FDA submittal
|
Completed | |||
Submit draft protocols to FDA in Q-submission(s) for comment
|
Completed
|
Milestone Number
|
Development Milestones
|
Estimated Cost (in U.S. millions $)
|
Schedule
for Milestone Completion
|
Comments
|
Milestone 6
|
Complete and document preclinical live animal (swine) and cadaver studies according to final protocols for FDA submittal
Verify production system operation with clinical experts under rigorous formal (summative) human factors evaluation under simulated robotic manipulation exercises
Submit Investigational Device Exemption (IDE) application to FDA
Obtain ISO 13485 Certification
Receive IDE approval from FDA
|
25.7
(1)
|
Q3 2019
|
|
Milestone 7
|
Complete and document human confirmatory studies under IDE protocols for FDA submittal
Submit Technical File to European Notified Body for review for CE Mark
Submit 510(k) application to FDA
|
16.6
(2)
|
Q4 2019
|
|
Milestone 8
|
Ongoing software development and implementation
Planning and preparation for manufacturing and commercialization
|
6.1
(3)
|
Q1 2020
|
|
Milestone 9
|
Planning and preparation for manufacturing and commercialization
|
5.4
(4)
|
Q2 2020
|
|
|
TOTAL
|
53.8
|
(1) |
Includes research and development costs estimated at approximately US $23.8 million, and general and administrative costs estimated at approximately US $1.9 million.
|
(2) |
Includes research and development costs estimated at approximately US $14.6 million, and general and administrative costs estimated at approximately US $2.0 million.
|
(3) |
Includes research and development costs estimated at approximately US $3.8 million, and general and administrative costs estimated at approximately US $2.3 million.
|
(4) |
Includes research and development costs estimated at approximately US $3.0 million, and general and administrative costs estimated at approximately US $2.4 million.
|
Type of Securities
|
Number of Common Shares issued or issuable upon conversion
|
|
Common Shares
|
31,150,237
|
|
Stock options
(1)(2)
|
1,723,449
|
|
Warrants
|
21,203,411
|
|
Broker warrants
(2)
|
1,324,626
|
(1) |
The Company has outstanding options enabling certain employees, directors, officers and consultants to purchase Common Shares. Please refer to note 6(b) of the Unaudited Condensed Interim Financial Statements
for terms of such options.
|
(2) |
A total of 536,412 stock options were issued in the month of July 2019 to two directors, an employee and a consultant.
|
(3) |
A total of 1,510,104 broker warrants were issued in connection with the March 2017, June 2017, December 2017, April 2018, August 2018 and March 2019 offerings. As of the date hereof, 1,324,626 broker warrants
remain outstanding. Details include the following:
|
•
|
Pursuant to the agency agreement in respect of the March 2017 offering, in addition to the cash commission paid to the agents, 50,005 broker warrants were issued to the agents. Each broker warrant entitles the
holder thereof to acquire one Common Share at the price of CDN $10.50 for a period of 24 months following the closing date. These warrants expired in March 2019.
|
•
|
Pursuant to the agency agreement in respect of the June 2017 offering, in addition to the cash commission paid to the agents, 135,473 broker warrants were issued to the agents. Of these broker warrants, 106,070
were exercised and the balance of 3,463 expired in the three months ended June 30, 2019.
|
•
|
Pursuant to the agency agreement in respect of the December 2017 offering, in addition to the cash commission paid to the agents, 105,350 broker warrants were issued to the agents. Each broker warrant entitles the
holder thereof to acquire one Common Share at the price of CDN $15.00 for a period of 24 months following the closing date.
|
•
|
Pursuant to the agency agreement in respect of the April 2018 offering, in addition to the cash commission paid to the agents, 89,795 broker warrants were issued to the agents. Each broker warrant entitles the
holder thereof to acquire one Common Share at the price of CDN $9.00 for a period of 24 months following the closing date.
|
•
|
Pursuant to the agency agreement in respect of the August 2018 offering, in addition to the cash commission paid to the agents, 537,570 broker warrants were issued to the agents. Each broker warrant entitles the
holder thereof to acquire one Common Share at the price of US $2.50 for a period of 24 months following the closing date.
|
•
|
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.
|
(a)
|
Stock Options
|
(b)
|
Warrant Liability
|
1. |
Review:
I have reviewed the interim
financial report and interim MD&A (together, the “interim filings”) of Titan Medical Inc.
(the “issuer”) for the interim period
ended June 30, 2019.
|
2. |
No misrepresentations:
Based on my
knowledge, having exercised reasonable diligence, the interim filings do not contain any untrue statement of a material fact or omit to state a material fact required to be stated or that is necessary to make a statement not misleading in
light of the circumstances under which it was made, with respect to the period covered by the interim filings.
|
3. |
Fair presentation:
Based on my
knowledge, having exercised reasonable diligence, the interim financial report together with the other financial information included in the interim filings fairly present in all material respects the financial condition, financial
performance and cash flows of the issuer, as of the date of and for the periods presented in the interim filings.
|
4. |
Responsibility:
The issuer’s other
certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (DC&P) and internal control over financial reporting (ICFR), as those terms are defined in National Instrument 52-109
Certification of
Disclosure in Issuers’
Annual and Interim Filings,
for the issuer.
|
5. |
Design:
Subject to the limitations, if
any, described in paragraphs 5.2 and 5.3, the issuer’s other certifying officer and I have, as at the end of the period covered by the interim filings
|
|
(a) |
designed DC&P, or caused it to be designed under our supervision, to provide reasonable assurance that
|
|
(i) |
material information relating to the issuer is made known to us by others, particularly during the period in which the interim filings are being prepared; and
|
|
(ii) |
information required to be disclosed by the issuer in its annual filings, interim filings or other reports filed or submitted by it under securities legislation is
recorded, processed, summarized and reported within the time periods specifiedin securities legislation; and
|
|
(b) |
designed ICFR, or caused it to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in accordance with the issuer’s GAAP.
|
5.1 |
Control framework:
The control framework
the issuer’s other certifying officer and I used to design the issuer’s ICFR is Integrated Framework (COSO).
|
5.2 |
ICFR – material weakness relating to design:
N/A
|
5.3 |
Limitation on scope of design:
N/A
|
6. |
Reporting changes in ICFR:
The issuer
has disclosed in its interim MD&A any change in the issuer’s ICFR that occurred during the period beginning on January 1, 2019
and
ended on June 30, 2019 that has materially affected, or is reasonably likely to materially affect, the issuer’s ICFR.
|
David McNally
Chief Executive Officer
Titan Medical Inc.
|
1. |
Review:
I have reviewed the interim
financial report and interim MD&A (together, the “interim filings”) of Titan Medical Inc.
(the “issuer”) for the interim period
ended June 30, 2019.
|
2. |
No misrepresentations:
Based on my
knowledge, having exercised reasonable diligence, the interim filings do not contain any untrue statement of a material fact or omit to state a material fact required to be stated or that is necessary to make a statement not misleading in
light of the circumstances under which it was made, with respect to the period covered by the interim filings.
|
3. |
Fair presentation:
Based on my
knowledge, having exercised reasonable diligence, the interim financial report together with the other financial information included in the interim filings fairly present in all material respects the financial condition, financial
performance and cash flows of the issuer, as of the date of and for the periods presented in the interim filings.
|
4. |
Responsibility:
The issuer’s other
certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (DC&P) and internal control over financial reporting (ICFR), as those terms are defined in National Instrument 52-109
Certification of
Disclosure in Issuers’
Annual and Interim Filings,
for the issuer.
|
5. |
Design:
Subject to the limitations, if
any, described in paragraphs 5.2 and 5.3, the issuer’s other certifying officer and I have, as at the end of the period covered by the interim filings
|
|
(a) |
designed DC&P, or caused it to be designed under our supervision, to provide reasonable assurance that
|
|
(i) |
material information relating to the issuer is made known to us by others, particularly during the period in which the interim filings are being prepared; and
|
|
(ii) |
information required to be disclosed by the issuer in its annual filings, interim filings or other reports filed or submitted by it under securities legislation is
recorded, processed, summarized and reported within the time periods specifiedin securities legislation; and
|
|
(b) |
designed ICFR, or caused it to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in accordance with the issuer’s GAAP.
|
5.1 |
Control framework:
The control framework
the issuer’s other certifying officer and I used to design the issuer’s ICFR is Integrated Framework (COSO).
|
5.2 |
ICFR – material weakness relating to design:
N/A
|
5.3 |
Limitation on scope of design:
N/A
|
6. |
Reporting changes in ICFR:
The issuer
has disclosed in its interim MD&A any change in the issuer’s ICFR that occurred during the period beginning on January 1, 2019
and
ended on June 30, 2019
that has materially affected, or is reasonably likely to materially affect, the issuer’s ICFR.
|
Stephen D. Randall
Chief Financial Officer
Titan Medical Inc.
|