Exhibit 99.2 |
• |
the Company’s ability to raise sufficient financing on a timely basis, and attract and retain qualified personnel;
|
• |
the adverse impact on the Company’s contractors and suppliers’ ability to meet their obligations to the Company as a result of COVID-19;
|
• |
The Company’s business consists of the design and development of robotic-assisted surgical technologies for application in MIS and is presently focused on the development of the Enos™ robotic single access 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 Company’s training curriculum 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;
|
• |
the Company’s post-training assessment will include validation of the effectiveness of those assessment tools;
|
• |
the Company’s filing and prosecution of patents will 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 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 will likely proceed with a De Novo classification request for the Enos system, while continuing to evaluate its options for use of the 510(k) submission pathway;
|
• |
the Company’s intention to continue with 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 beyond 2022, in a timely manner;
|
• |
the Company has sufficient cash on hand to satisfy expected costs associated with the deliverables under Medtronic Milestone 3 and 4, as well as to satisfy the repayment of the Note when it becomes due;
|
• |
the Company may require additional funding to complete its submission of its application to the FDA for marketing authorization of its Enos system;
|
• |
the fact that the Company cannot produce an accurate estimate of the future costs of the development milestones and regulatory phases beyond the year 2022;
|
• |
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 Plan” and the footnotes thereunder;
|
• |
the indication of additional specific milestones as the development of the Enos system progresses;
|
• |
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 receive a series of payments for Medtronic’s license to robotic assisted surgical technologies;
|
• |
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 will gradually transition to the new Enos system brand identity, including on its website and in presentations and other corporate material;
|
• |
the Company will transition to an updated corporate brand identity that, while retaining the Titan Medical name, complements the Enos robotic single access surgical system;
|
• |
the Company’s intentions to complete summative human factors studies and complete the design and development of the system and initiate clinical studies;
|
• |
the Company has sufficient capital on hand to complete Milestones 3 through 9 of the table noted under “Development Plan”;
|
• |
the Company expects to be able to continue operations for 16 months and complete Milestones 3 through 14, with its current financial resources and the net proceeds from the February 2021 Offering;
|
• |
with the Company’s current financial resources and the net proceeds from the February 2021 Offering, the Company expects to have the financial resources to be able to continue operations for 22 months and complete
Milestones 3 through 16, if the Company achieves Medtronic Milestones 3 and 4 and receives the payments from Medtronic in respect of those milestones;
|
• |
the expected closing date of the the February 2021 Offering;
|
• |
the surgical indications for, and the benefits of, the Enos system;
|
• |
the Company’s seeking of licensing opportunities to expand its intellectual property portfolio;
|
• |
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 financing;
|
• |
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 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; and
|
• |
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.
|
• |
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;
|
• |
compliance with accounting regulations and tax rules across multiple jurisdictions;
|
• |
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 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 ability to attract and retain skilled employees;
|
• |
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
|
3.2
|
Q4 2020
|
Completed
|
Milestone 2
|
Launch rebranded product line including logos with trademark pending, literature and presentation templates and new website
|
0.3
|
Q4 2020
|
Completed
|
Milestone 3(4)
|
Iterate electromechanical design, update sterile adaptors and drape
|
5.2
|
Q1 2021
|
-
|
Milestone 4(4)
|
Perform additional software development and test system performance
|
5.4
|
Q1-Q2 2021
|
-
|
Milestone 5
|
Perform animal lab assessment
|
0.1
|
Q2 2021
|
-
|
Milestone 6(4)
|
Perform biocompatibility testing of instruments, camera systems and accessories at independent lab
|
3.8
|
Q2 2021
|
-
|
Milestone 7(4)
|
Perform electrical safety testing for surgeon workstations and patient cart, including electromagnetic compatibility (EMC) and electromagnetic interference (EMI) tests at independent lab
|
2.7
|
Q3 2021
|
-
|
Milestone 8(4)
|
Perform animal feasibility or GLP study
|
2.8
|
Q3 2021
|
-
|
Milestone 9(2)
|
Complete initial build of Enos system IDE units
|
10.2
|
Q4 2021
|
-
|
Milestone 10(2)(4)
|
Complete system verification testing
|
3.3
|
Q4 2021
|
-
|
Milestone 11(2)(4)
|
Complete HFE summative testing
|
1.9
|
Q4 2021
|
-
|
Milestone 12
|
Update application for IDE as additional testing lab data is received and continue preparation for human confirmatory studies
|
6.0
|
Q1 2022
|
-
|
Milestone 13
|
Submit IDE application to FDA
|
|||
Milestone 14
|
Complete secondary build of Enos system IDE units
|
|||
Milestone 15
|
Initiate IDE clinical study
|
19.0
|
Q2-Q4 2022
|
-
|
Milestone 16
|
Complete IDE clinical study, data analysis and final report
|
|||
Milestone 17(3)
|
Submit application for FDA marketing authorization
|
TBD
|
TBD(5)
|
-
|
Milestone 18
|
Tentative FDA marketing authorization letter
|
TBD
|
TBD
|
-
|
1.
|
The estimated costs above include an allocation of $1.8-2.8 million per quarter of general and administrative costs.
|
2.
|
Milestones 9, 10 and 11 are expected to be executed during the fourth quarter of 2021 with their projected completion in December 2021. If the Company achieves Medtronic Milestones 3 and 4, it
will be entitled to receive the corresponding payments from Medtronic of $10 million and $11 million, respectively, and assuming the completion of the February 2021 Offering, in those circumstances the Company estimates that it
will have sufficient funds for the execution and completion of Milestones 9, 10 and 11. If the Company does not achieve Medtronic Milestones 3 and 4, the Company will need to raise additional capital to complete Milestones 10
and 11.
|
3.
|
The Company anticipates proceeding with FDA marketing authorization as described in the section titled “The Business – Regulatory”.
|
4.
|
The costs of Milestones 1 through 11 are forecasted to total $38.9 million, a net increase of $1.6 million from amounts previously forecasted and published in the Company’s Management Discussion
and Analysis dated November 16, 2020. The increase is primarily related to general and administrative costs, enhancing internal R&D capabilities and other general R&D related costs.
|
5.
|
The timing of submittal of application for FDA marketing authorization will be determined at a future date, upon completion of IDE clinical studies and following further correspondence with the
FDA as described in the section titled “The Business – Regulatory”.
|
Medtronic Milestone(1)
|
Deadline(2)
|
Payment
(US$)(3) |
Medtronic Milestone 1
|
Four (4) months from Development Start Date(4) (5)
|
$10,000,000
|
Medtronic Milestone 2(6)
|
Four (4) months from Development Start Date
|
-
|
Medtronic Milestone 3
|
Six (6) months from the later of (a) receipt by us of Payment for Medtronic Milestone 1, (b) receipt by us from Medtronic of Medtronic deliverables required for
Medtronic Milestone 3, and (c) receipt by us from Medtronic of confirmation of certain due diligence in respect of our deliverables for Medtronic Milestone 1
|
$10,000,000
|
Medtronic Milestone 4
|
Four (4) months from the later of (a) receipt by us of Payment for Medtronic Milestone 3, (b) receipt by us of Medtronic deliverables for Medtronic Milestone 4,
and (c) receipt by us from Medtronic of confirmation of certain due diligence in respect of our deliverables for Medtronic Milestone 3
|
$11,000,000 (7) (8)
|
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. As of the date of this document, Medtronic Milestone 1 has been achieved.
|
4.
|
“Development Start Date” has the meaning ascribed to it in the Development Agreement and as set out above.
|
5.
|
As of the date of this document, Medtronic Milestone 1 has been achieved on schedule and payment was received.
|
6.
|
Medtronic Milestone 2 is a non-technology milestone defined as Titan 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. Medtronic Milestone 2 was achieved ahead of the deadline in June 2020.
|
7.
|
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.
|
8.
|
The balance outstanding under the Medtronic Loan (described below) will be offset against the payment for Medtronic Milestone 4.
|
2020
|
2019
|
2018
|
|
Net sales
|
$20,000,000
|
-
|
-
|
Net and comprehensive loss
for the year
|
$24,184,657
|
$41,907,079
|
$22,639,272
|
Basic & diluted loss per share
|
$0.36
|
$1.37
|
$1.36
|
Total long-term liabilities
|
($750,791)
|
($8,001)
|
-
|
Total assets
|
$29,838,135
|
$3,381,581
|
$21,915,164
|
Year Ended
December 31, 2020
|
Year Ended
December 31, 2019
|
|
Research and Development Expenditures
|
$ 7,937,171
|
$ 51,418,056
|
For the quarter
|
Net sales
|
Net and comprehensive loss
(gain) from operations
|
Basic and diluted (gain)
loss per share
|
December 31, 2020
|
$10,000,000
|
$20,632,782
|
$0.25
|
September 30, 2020
|
-
|
$1,640,633
|
$0.02
|
June 30, 2020
|
$10,000,000
|
$1,143,199
|
$0.02
|
March 31, 2020
|
-
|
$768,043
|
$0.02
|
December 31, 2019
|
-
|
$(2,412,863)
|
$(0.07)
|
September 30, 2019
|
-
|
$1,564,196
|
$0.05
|
June 30, 2019
|
-
|
$14,472,866
|
$0.46
|
March 31, 2019
|
-
|
$28,282,880
|
$1.22
|
Contractual
Obligations
existing at the date
of this MD&A
|
Total
$
|
Less than 1 year
|
1 – 3 years
|
4 – 5 years
|
After 5 years
|
Lease liability
|
916,560
|
165,772
|
646,477
|
104,310
|
-
|
Note payable (1)
|
1,897,700
|
1,897,700
|
-
|
-
|
-
|
Supplier Agreement
|
1,500,000
|
1,500,000
|
-
|
-
|
-
|
Purchase order
commitments
|
10,390,483
|
10,390,483
|
-
|
-
|
-
|
Total Contractual
Obligations
|
14,704,743
|
13,953,955
|
646,477
|
104,310
|
-
|
1.
|
On April 28, 2020, the Company issued the Note to an affiliate of Medtronic for the Medtronic Loan and executed and delivered the Security Agreement. The Note is in the principal
amount of $1.5 million plus $296,046 equal to certain legal, transaction and intellectual property related expenses incurred by Medtronic pursuant to the Medtronic agreements plus $101,654 of accrued interest to
January 31, 2021. See “Recent Developments”.
|
Issue Date
|
Expiry Date
|
Number
Issued
|
Number
Outstanding
|
Exercise Price
US $
|
Exercise Price
CDN $
|
|
TMD.W.T.H
|
31-Mar-16
|
31-Mar-21
|
501,831
|
501,831
|
36.00
|
|
TMD.W.T.H
|
14-Apr-16
|
31-Mar-21
|
75,275
|
75,275
|
36.00
|
|
TMD.W.T.I
|
20-Sep-16
|
20-Sep-21
|
569,444
|
569,444
|
22.50
|
|
TMD.W.T.I
|
27-Oct-16
|
20-Sep-21
|
67,667
|
67,667
|
22.50
|
|
Not Listed
|
16-Mar-17
|
16-Mar-21
|
357,787
|
355,253
|
15.00
|
|
Not Listed
|
29-Jun-17
|
29-Jun-22
|
1,612,955
|
75,810
|
6.00
|
|
Not Listed
|
21-Jul-17
|
29-Jun-22
|
370,567
|
370,567
|
6.00
|
|
Not Listed
|
24-Aug-17
|
24-Aug-22
|
563,067
|
563,067
|
6.00
|
|
Not Listed
|
5-Dec-17
|
5-Dec-22
|
1,533,333
|
1,533,333
|
18.00
|
|
Not Listed
|
10-Apr-18
|
10-Apr-23
|
1,126,665
|
1,126,665
|
10.50
|
|
Not Listed
|
10-May-18
|
10-Apr-23
|
168,889
|
168,889
|
10.50
|
|
Not Listed1
|
10-Aug-18
|
10-Aug-23
|
7,679,574
|
6,661,068
|
2.9200
|
|
Not Listed2
|
21-Mar-19
|
21-Mar-24
|
8,455,882
|
8,455,882
|
3.9500
|
|
Not Listed
|
27-Mar-20
|
27-Mar-25
|
3,500,000
|
-
|
0.1900
|
|
Not Listed
|
6-May-20
|
6-Nov-25
|
2,757,252
|
-
|
0.3002
|
|
Not Listed
|
10-Jun-20
|
10-Jun-24
|
9,000,000
|
-
|
1.0000
|
|
Not Listed
|
26-Jan-21
|
26-Jan-26
|
3,709,677
|
3,126,427
|
2.0000
|
|
42,049,865
|
23,651,178
|
Note 1 - Includes a ratchet clause triggered August 29, 2019 lowering the exercise price from $3.20 to $2.92.
|
Note 2 - Includes a ratchet clause triggered August 29, 2019 lowering the exercise price from $4.00 to $3.95.
|
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
|
99,939,390
|
Stock options(1)
|
2,894,392
|
Warrants
|
23,651,178
|
Broker warrants(2)
|
1,918,695
|
(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. Subsequent to December 31, 2020, these options were exercised.
|
• |
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.
|
• |
On December 10, 2020, the Company issued 623,000 stock options with an exercise price of US $1.31 and 4,000 stock options with an exercise price of CDN $1.70 to certain employees for services rendered. These
options vest annually over four years and have a contractual life of 7 years.
|
(2) |
A total of 1,918,695 broker warrants previously issued in connection with offerings of securities by the Company in March 2019, March 2020, May 2020, June 2020 and January 2021 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.
|
• |
Pursuant to the January 2021 Offering, in addition to the cash commission paid to the agents, 519,354 broker warrants were issued to the agents. Each broker warrant entitles the holder thereof to acquire one
common share at the price of US $1.9375 for a period of 24 months 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.
|