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TruSpine Technologies Plc
Interim / Quarterly Report • Oct 30, 2020
10307_rns_2020-10-30_621743f4-3c80-4fd1-8c5e-dff4dd022ebc.html
Interim / Quarterly Report
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National Storage Mechanism | Additional information 
RNS Number : 6809D
TruSpine Technologies PLC
30 October 2020
TruSpine Technologies plc
("TruSpine" or the "Company")
Final Results for period to 29 March 2020
TruSpine Technologies plc (AQSE: TSP), the medical device company focused on the spinal (vertebral) stabilisation market, reports its full year results for the year ended 29 March 2020.
The Annual Report and Financial Statements for the year ended 29 March 2020 will shortly be available on the Company's website. Copies of the Annual Report and Financial Statements will be posted to shareholders shortly, along with a copy of the notice of Annual General Meeting to be held at the Company's registered office, being Spectrum House Af33, Beehive Ring Road, London Gatwick Airport, Gatwick, England, RH6 0LG on Tuesday 24th November 2020 at 11.00 a.m.
This announcement contains inside information for the purposes of Article 7 of Regulation (EU) No 596/2014 ("MAR").
The Directors of the Company take responsibility for this announcement.
Enquiries:
| TruSpine Technologies Plc | Tel: +44 (0)20 3638 5025 | ||
| Ian Roberts, CEO | |||
| Cairn Financial Advisers LLP (AQSE Corporate Adviser) | Tel: +44 (0)20 7213 0880 | ||
| Liam Murray / Ludovico Lazzaretti | |||
| WH Ireland (Broker) | Tel: +44 (0)20 7220 1666 | ||
| Adam Pollock | |||
| Walbrook PR (Financial PR & IR) | Tel: +44 (0) 20 7933 7870 or +44 (0) 7876 741 001 | ||
| Anna Dunphy | [email protected] | ||
CHIEF EXECUTIVE'S STATEMENT
I am pleased to report that in spite of the many challenges presented by Covid-19, TruSpine Technologies plc was able to continue with its IPO plans and was successfully admitted to the Aquis Stock Exchange Growth Market on 20 August 2020 raising gross proceeds of circa £1.4m, at a placing price of £0.36 per share. With 87,778,967 shares in issue at the time of Admission this valued the Company at £31.6m.
The proceeds will principally be used to progress the development of the Company's three pioneering spinal stabilization products, with a specific focus on completing the FDA submission for its first product to market, the Cervi-LOK in Q4 2020. The FDA clearance process normally takes up to 90 days, after which marketing and commercial sales are expected to commence in early 2021.
During the year, product development has progressed well and aside from the general strengthening and expansion of the Company's IP, the pre-submission to the FDA for the Cervi-LOK product was also completed. The Company subsequently received written feedback confirming the pathway for additional testing and validation of the product ahead of making the full 510(k) FDA submission for clearance.
As disclosed in the Company's Admission Document, the Company acquired the patents relating to its technologies from Professor Frank Boehm, (the inventor of the technologies) pursuant to the IP Sale Agreement. The Company protects the intellectual property in its technologies and any future application thereof by submitting patent applications in each country in which it intends to operate. This is an active and ongoing process with new applications being filed to cover revised design, usage and application of the technologies.
The global spinal devices market is currently estimated to be worth USD$10.2 billion and is expected to grow at a compound annual growth rate of 3.1 per cent. to 2026. North America is the single largest and most mature market accounting for around 55 per cent. of the total global revenues. The largest single sector of the global spinal device market is the spinal stabilisation sector, which is currently estimated to be worth USD$7.1 billion. This sector is estimated to grow at a compound annual growth rate of approximately 3 per cent. per annum, with the minimally invasive spine surgery component of the spinal stabilisation sector estimated to grow at a rate of approximately 6.9 per cent. This is specifically the market sector in which the Company's products will be positioned. The Company has a phased product development strategy and is planning, subject to regulatory clearance, to commence initial product marketing of Cervi-LOK in the US in H1 2021. The overall aim is to establish the Company's products as the "go-to solutions" for the spinal stabilisation and fusion market. In addition to the three flagship products, the Company also has a pipeline of additional and complementary IP and product offerings at an early stage of development.
As the Company is in the pre-revenue development phase, the financial performance is that of a loss. The loss before taxation for the year was £344k (2019: £680k) after administrative expenses of £341k (2019: £676k). The R&D tax credit was £162k (2019: £168k) bringing the loss after tax to £182k (2019: £512k). Development spend for the year was £225k (2019: £111k).
Consolidated net assets at 29 March 2020 amounted to £1.694 million (2019: £1.076 million) including cash and cash equivalents of £135,000 (2019: £116).
A number of changes to the Board have occurred during the year as TruSpine realigned and strengthened its leadership team for the IPO and next phase of its growth. This included the addition of myself as Group CEO, and Non-executive Directors Annabel Schild and Tim Evans.
On behalf of the Board, I would also like to thank all shareholders for their support, and TruSpine's staff and commercial partners for their hard work during the year.
We are a lean and progressive company with a suite of products and IP that have the potential to provide a potential quantum shift in patient treatment within the Spinal Fixation market, and with our IPO now recently completed we are very well positioned in terms of funding and corporate profile. The board therefore looks to the future with confidence.
Ian Roberts
Chief Executive
STRATEGIC REPORT
The Directors present their Strategic Report on the Group for the year ended 29 March 2020.
Review of the business and future developments
TruSpine Technologies Plc was incorporated on 8 December 2014. The Company re-registered as a public limited company on 28 May 2020. On 20 August 2020 the Company was admitted to the Acquis Stock Exchange Growth Market.
The Company is developing disruptive technologies for use in the spinal stabilisation market, commencing with the following three devices:
- Cervi-LOK - for the cervical and upper thoracic spine
- Faci-LOK - for the lumbar and lower thoracic spine, and
- GRASP Laminoplasty - a treatment for decompression of the spinal cord.
These devices represent a potentially significant development in spinal fixation, by providing stabilisation while not altering the bony spinal anatomy of patients through the use of screws, staples or other devices which currently dominate the spinal market.
The Company is seeking to obtain regulatory clearance from the US Food and Drug Administration ("FDA") for its Cervi-LOK product in Q1 2021 and will subsequently seek clearance for Faci-LOK and GRASP Laminoplasty.
The Company has made a Pre-Submission to the FDA for its Cervi-LOK product and has received written feedback which provides it with a pathway for testing and validation of the product ahead of making the full 510(k) FDA submission for clearance for Cervi-LOK. The Company is currently undertaking biomechanical testing on Cervi-LOK and anticipates that the FDA 510(k) submission for clearance to market and sell Cervi-LOK in the US will be submitted to the FDA by November 2020.
Once a 510(k) application has been submitted, the FDA's decision to provide clearance normally takes up to 90 days, following which the Company will be able to commence marketing and sales of Cervi-LOK in the US.
The Company acquired the Patents relating to its Technologies from Professor Frank Boehm, (the inventor of the Technologies) pursuant to the IP Sale Agreement. Details of the Patents are set out in paragraph 6 of Part I and details of the IP Sale Agreement are set out at paragraph 9.1 of Part IV in the Company's Admission Document. The Company protects the intellectual property in its Technologies and any future application thereof by submitting patent applications in each country in which it intends to operate. This is an active and ongoing process with new applications being filed to cover revised design, usage and application of the Technologies.
The Global Spinal Devices Market is currently estimated to be worth USD$10.2 billion and is expected to grow at a compound annual growth rate of 3.1 per cent. to 2026. North America is the single largest and most mature market accounting for around 55 per cent. of the total global revenues.
It is important to note that the Products have not yet been used on live patients, as they are still subject to regulatory clearance and approvals by the relevant national medical regulators. The Products still require further independent testing, verification and validation. There is no guarantee that the Products will receive the relevant clearance or approvals, nor that they will work as effectively on live patients as anticipated.
Group Strategy and Business Model
Cervi-LOK and Faci-LOK are spine stabilisation devices used in the fusion of the cervical, thoracic and lumbar spine respectively. They differ from existing methods of vertebrae stabilisation as they are non-intrusive. Cervi-LOK and Faci-LOK clamp onto specific landmarks of the vertebrae bones rather than requiring fixation with screws.
The minimally invasive Products represent a potentially significant development in spinal fixation, fusion and laminoplasty techniques, providing stabilisation without altering the bony spinal anatomy by requiring screws, staples or other such attachments which dominate the current technologies and irreversibly alter the anatomy of the spine. The Company's philosophy is one of "preserving nature's design", and as such, the devices have been designed to be safe, fast and easy to implant, as well as being minimally intrusive.
The Directors believe the Company's Technologies will fill a gap in the market due to its relative health advantages (for example through not altering the patient's anatomy) as well as its overall lower cost per procedure (resulting from the reduced requirement for fluoroscopy, shorter surgery time and faster patient recovery time). The Company's Technologies cause minimal tissue disruption allowing the normal spine anatomy to remain intact and therefore aids the spinal stabilisation and fusion process.
The Company has a phased product development strategy and is planning, subject to regulatory clearance, to commence initial product marketing of Cervi-LOK in H1 2021. The overall aim is to establish the Company's Products as the "go-to solutions" for the spinal stabilisation and fusion market. In addition to the three flagship Products, the Company also has a pipeline of additional and complementary IP and product offerings at an early stage of development.
The Company has retained two key commercial partners to develop, design and manufacture its Products, and assist it through the regulatory process. Emergo Group ("Emergo"), a regulatory consultant in FDA clearance is retained by the Company to provide it with regulatory advice. Lincotek Medical LLC ("Lincotek") is retained by the Company to provide professional product development advisory, regulatory manufacturing and related services. Lincotek has also been retained by the Company to manufacture Cervi-LOK following FDA clearance.
Initially the Company is seeking to obtain clearance for use of its Products in the United States. For the Products to be lawfully marketed and sold in the United States, they are required to have "clearance" from the FDA. The Company will initially seek FDA clearance for its Cervi-LOK Product. The FDA is responsible for protecting the public health in the United States by (amongst other things) ensuring the safety, efficacy, and security of medical devices.
The Company's Products are classified as "Class II" Medical Devices under the FDA's device classification system and therefore require FDA 510(k) clearance, which does not require clinical studies prior to clearing the devices for marketing and sales. The FDA 510(k) clearance process compares a product to a "predicate device", measuring safety, function and strength. Under the notion of "substantially equivalent", if a device performs in testing at least as well as the accepted predicate device, FDA 510(k) clearance will be granted.
On 17 April 2020 our regulatory consultant Emergo, on behalf of the Company submitted a Pre-Submission to the FDA for Cervi-LOK. The Pre-Submission allows the final application to proceed in a more-timely fashion because it mitigates the scope for FDA inquiries that have the effect of restarting the FDA's 90-day period to comment on the device in question. The FDA provided the Company with written Pre-Submission feedback on its Cervi-LOK Pre-Submission in on 29 July 2020. The feedback was in line with the Directors' expectations and provides the Company with a clear pathway to obtain FDA clearance for Cervi-LOK.
The Company estimates that the bio-mechanical testing of Cervi-LOK will be completed by 30 November 2020, at which date it anticipates it will be able to submit its 510(k) application to the FDA in respect of Cervi-LOK. The FDA seeks to complete its clearance process within 90 days of submission. FDA 510(k) clearance for Cervi-LOK is therefore expected to be obtained by 31 March 2021. Following clearance by the FDA the Company will commence contracted manufacturing of Cervi-LOK. It is estimated that the first Cervi-LOK products will be ready for commercial sale within 6-8 weeks following FDA clearance.
Major company analysis in the spinal devices market currently identifies a high number of competitors, who are able to benefit from scale economies. However, these existing competitors' technologies still utilise invasive technologies like lateral mass and pedicle screws and therefore TruSpine should be well placed to compete within the spinal stabilisation market because, crucially, its Products do not alter the bony anatomy of patients.
As far as commercialisation strategy is concerned, the Company intends to acquire strategic input from a select group of surgical key opinion leaders ("KOLs") which will help refine the subtleties of the Products and the surgical approach to their implementation. They will also be involved in the necessary studies, white papers, poster presentations and podium appearances which the Directors believe will help to shape the future of the spine market and create better and safer treatment options. Following FDA clearance, a large proportion of the initial revenues will be derived from the surgical KOLs and Primary User Groups Sites. The Company has identified several Primary User Groups Sites, which will be groups of surgeons who are 'early adopters' of the Products, willing to implant them and to collect necessary data demonstrating their clinical relevance and supporting the Company's claims in relation to them.
The Pre-IPO Subscription monies will be used to finance the development of Cervi-LOK; to progress the regulatory approval of Cervi-LOK; for marketing and sales of Cervi-LOK; and for general working capital purposes.
Promotion of the Company for the benefit of the members as a whole
The Director's believe they have acted in the way most likely to promote the success of the Company for the benefit of its members as a whole, as required by s172 of the Companies Act 2006 as detailed below.
The requirements of s172 are for the Directors to:
- Consider the likely consequences of any decision in the long term
- Act fairly between the members of the Company,
- Maintain a reputation for high standards of business conduct,
- Consider the interests of the Company's employees,
- Foster the Company's relationships with suppliers, customers and others, and
- Consider the impact of the Company's operations on the community and the environment.
Our Board of Directors remain aware of their responsibilities both within and outside of the Group. Within the limitations of a Group with so few employees we endeavour to follow these principles and examples of the application of the s172 are summarised and demonstrated below.
The Company operates as a medical device company developing specific innovative products which is inherently speculative in nature and at times may be dependent upon fund-raising for its continued operation. The nature of the business is well understood by the Company's members, employees and suppliers, and the Directors are transparent about the cash position and funding requirements.
The Company has invested considerable time in developing and fostering its relationships with its key suppliers.
As a medical device company in the spinal fusion market with operations based in the UK and USA, the Board takes seriously its ethical responsibilities to the communities and environment in which it works.
The interests of employees and consultants are a primary consideration for the Board and are planning to introduce an inclusive share-option programme allowing them to share in the future success of the company. Personal development opportunities are encouraged and supported.
Results for the year
The Group's results for the year are included in the Chief Executive's Statement.
Key performance indicators
Key performance indicators for the Group as a measure of financial control are as follows:
| Year ended | Year ended | |
| 29 March 2020 | 29 March 2019 | |
| £ | £ | |
| Total assets | 1,910,620 | 1,545,564 |
| Net assets | 1,693,695 | 1,075,785 |
| Cash and cash equivalents | 135,035 | 116 |
| Trade and other payables | (216,925) | (469,780) |
| Development spend | (225,439) | (110,987) |
| Loss before tax for the year | (343,957) | (679,592) |
| Earnings per share | (0.24)p | (0.68)p |
Principal risks and uncertainties
The Group is subject to various risks similar to all medical device companies operating in overseas locations relating to political, economic, legal, industry and financial conditions, not all of which are within its control. The Group identifies and monitors the key risks and uncertainties affecting the Group and runs its business in a way that minimises the impact of such risks where possible.
The following risks factors, which are not exhaustive, are particularly relevant to the Group's business activities:
Risk Relating to Obtaining Regulatory Approvals
There can be no assurance that the Company will receive the regulatory approvals required in order to manufacture and sell its Products, including approval by the FDA in the US and the granting of CE mark in Europe. If the Products are not approved and cannot be commercialised, the Company will be unable to generate revenue from them, which would materially adversely affect its business, financial condition and the results of its operations. Moreover, any delay or setback in the regulatory approval process could have a material adverse effect on the Company's business and prospects. To mitigate this the Company employs two key commercial partners, Emergo and Lincotek to develop its Products and ensure that they achieve the regulatory approvals necessary for commercialisation.
Acceptance of the Products in clinical settings
If the Company is unable to convince opinion leaders and health professionals of the benefits of its Products, there could be weak penetration of the market, which might have a material adverse effect on the Company, its business, financial situation, growth and prospects. The slow adoption of new methods and technologies could result in timeframes being longer than anticipated by the Company. However the Company has links with a network of professionals and experts operating in these fields who have advised and given positive feedback as to the suitability and acceptability of the products in development.
No Live Patient Testing
Although Cervi-LOK has undergone significant laboratory-based testing, it has not been tested on live patients and there is no certainty that it will be as effective as envisaged, nor that it will receive regulatory clearance for use in humans. Despite this, the feedback from FDA so far in relation to Cervi-LOK has not highlighted any material issues and the Directors expect that it will successfully achieve regulatory clearance.
Research and development and product obsolescence
Rapidly changing markets, technology, emerging industry standards and frequent introduction of new products will characterise the Company's business. The introduction of new products embodying new technologies, including new manufacturing processes, and the emergence of new industry standards may render the Company's products, less competitive or less marketable.
The process of product development is complex and requires significant continuing costs, development efforts and third-party commitments. The Company's failure to develop new technologies and products and the obsolescence of existing technologies and products could adversely affect the business, financial condition and operating results of the Company.
The Company may be unable to anticipate changes in its potential customer requirements that could make its existing technology obsolete. Its success will depend, in part, on its ability to continue to enhance its existing technologies, develop new technology that addresses the increasing sophistication and varied needs of the market, and respond to technological advances and emerging industry standards and practices on a timely and cost-effective basis. The Company may not be successful in using its new technologies or exploiting its niche markets effectively or adapting its business to evolving customer or medical requirements or preferences or emerging industry standards.
Dependence on key executives, personnel and consultants
The Company's future development and prospects are substantially dependent on the continuing services and performance of the Directors, the Consultants and the Medical Advisory Board. J Lee S Consultants LLC is a particularly important consultant for the Company because it includes the services of Professor Frank Boehm, who is the inventor of the Technologies and has the technical knowledge and expertise to continue to innovate and develop the existing Products and to develop new accompanying, similar or related products. If J Lee S Consultants LLC were to terminate their consultancy agreement with the Company, the Company may be unable to appoint a similarly skilled replacement with the necessary knowledge to innovate and develop the existing Products or to develop new Products. The consultancy agreement with J Lee S Consultants LLC has a termination notice period of one year for each party to mitigate the risk of this agreement being terminated. Peter Houghton is also a key consultant of the Company and his departure from the Company may have a significant impact on the Company's ability to promote, market and sell the Products commercially.
The Directors cannot give assurances that they, the Consultants or the Medical Advisory Board will remain with the Company, although the Directors believe that the Company's culture and remuneration packages are attractive. If key members of the Company's management team depart, or are affected by illness, such as COVID-19, and the Company is not be able to find effective replacements in a timely manner or at all, its business may be disrupted or damaged.
Impact of COVID-19
The impact of COVID-19 or any other severe communicable disease, if uncontrolled, on the general economic climate could have an adverse effect on the Company. The recent outbreak of COVID-19 may have an adverse effect on the Company's business, financial situation, growth and prospects and has already had a material adverse effect on overall business sentiment and the global economy. There is no assurance there will not be similar outbreaks of other diseases in the future. The impact of the imposition by governments across the world of stringent measures to prevent the spread of COVID-19 or other diseases, and the effect of COVID-19, or any other severe communicable diseases outbreak in the future, on the employees of the Company, could adversely affect the performance of the business activities of the Company and those of the customers, which could lead to a decrease in the demand for their services. It is too early to tell what the long-term impact of COVID-19 will be on the Company's current and future prospects and to what extent it may have a material and adverse effect on the Company's business, results of operations and financial performance.
The Board has confirmed that Emergo and Lincotek, its key suppliers in achieving FDA and regulatory approval, have robust business continuity plans and are able to continue product development during the COVID-19 pandemic and associated travel restrictions. The Board does not expect there to be a material delay to the launch of the Products as a result of COVID-19.
No Current Revenues
The Products remain under development and no revenue has been generated from them as at the date of this Document. The Company's Cervi-LOK Product is expected to launch in June 2021 and the other Products are expected to be launched the following year. As such, there is no historical data on which to base the Company's estimated revenue and costs. Therefore, given the high degree of uncertainty in the economy currently and the dependency of the Company on development milestones being met and regulatory approval being obtained there cannot be certainty regarding the size of the market for the Products following their launch or whether the Company has the capacity to generate sufficient revenues to be profitable. To mitigate this the Company has engaged consultants who have extensive experience in the marketing and distribution of products in this sector.
Risk of IP infringement
There is no certainty that the Company can protect its proprietary information or intellectual property which is particularly important considering the Company has developed a number of Products that it regards as unique. There is also a risk that should an employee with knowledge of the Products cease to be employed by the Company they may seek to replicate the Products with a competitor. Although the Company intends to vehemently protect its intellectual property there can be no guarantee that such action will be effective (and will be expensive in any case), there is also a risk that the Company may be pursued by a third party for alleged intellectual property infringement. This risk has been mitigated by the Company engaging specialist patent attorneys to analyse the state of the art and report on the likelihood of the Products infringing the intellectual property subsisting in existing technologies. A Freedom to Operate report produced by Schmeiser, Olsen & Watts has concluded that the likelihood of patent infringement in relation to the Patents is low.
RISKS RELATING TO THE INDUSTRY
Competition in the Market for Spinal Devices
There are a number of companies in the spinal device market offering products that would compete with the Company's Products. These larger, well-funded companies are currently gaining a competitive advantage in the spinal device market by reducing costs through economies of scale. The Company may not currently have the capacity to compete with these existing competitors because the smaller scale of their operation leads to a higher unit cost. Major competitors in the spinal device market include Zimmer Biomet, Medtronic, Johnson & Johnson, NuVasive, Life Spine and Globus Medical.
RISKS RELATING TO FINANCIAL MATTERS
Currency and Foreign Exchange Risks
The Company's functional and presentational currency is sterling, and this is the currency of the Company's financial statements. However, a significant proportion of the Company's business is conducted in the United States in $USD and therefore certain amounts will need to be translated into sterling. Due to changes in exchange rates between sterling and $USD this could lead to changes in the Company's reported financial results from period to period. Among the factors that may affect currency values are trade balances, levels of short-term interest rates, difference in relative values of similar assets in different currencies, long term opportunities for investments and capital appreciation and political or regulatory developments.
Financing Risks and Requirements for Further Funds
It is likely that the Company will be required to seek further equity financing. The Company's ability to raise further funds will depend on the success of its strategy and operations. The Company may not be successful in procuring the requisite funds on terms that are acceptable to it, or at all. If such funding is unavailable, the Company may be required to reduce the scope of its operations and investments or anticipated expansion, abandon its strategy, incur financial penalties or miss certain opportunities.
The Directors review the Company's funding requirements on a regular basis, and take such action as may be necessary to either curtail expenditures and / or raise additional funds from available sources including the issuance of debt or equity.
GROUP STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 29 MARCH 2020
| Audited Year ended 29 March 2020 |
Unaudited Year ended 29 March 2019 |
|||
| Note | £ | £ | ||
| From continuing operations | ||||
| Administrative expenses | (340,733) | (675,628) | ||
| Operating loss | (340,733) | (675,628) | ||
| Finance expense | 9 | (3,224) | (3,964) | |
| Loss before tax | (343,957) | (679,592) | ||
| Tax credit | 10 | 162,191 | 167,751 | |
| Loss | (181,766) | (511,841) | ||
| Loss attributable to: | ||||
| Owners of the parent | (181,766) | (511,841) | ||
| Other comprehensive income: | ||||
| Items that will or may be reclassified to profit or loss: | ||||
| Exchange translation differences on foreign operations | (2,565) | (18,244) | ||
| Total comprehensive loss | (184,331) | (530,085) | ||
| Total comprehensive loss attributable to equity shareholders | (184,331) | (530,085) | ||
| Earnings per share basic and diluted (pence) | 11 | (0.24)p | (0.68)p | |
The notes are an integral part of these financial statements
GROUP STATEMENT OF FINANCIAL POSITION
AS AT 29 MARCH 2020
| Year ended 29 March 2020 | Year ended 29 March 2019 | ||
| Note | £ | £ | |
| Non-current assets | |||
| Intangible assets | 12 | 1,614,696 | 1,389,257 |
| 1,614,696 | 1,389,257 | ||
| Current assets | |||
| Trade and other receivables | 14 | 160,889 | 156,200 |
| Cash and cash equivalents | 15 | 135,035 | 107 |
| 295,924 | 156,307 | ||
| Total assets | 1,910,620 | 1,545,564 | |
| Current liabilities | |||
| Trade and other payables | 16 | 216,925 | 469,780 |
| 216,925 | 469,780 | ||
| Total liabilities | 216,925 | 469,780 | |
| Net assets | 1,693,695 | 1,075,785 | |
| Equity attributable to owners of the parent | |||
| Share capital | 17 | 8,385 | 7,580 |
| Share premium | 17 | 3,727,035 | 2,920,599 |
| Other reserves | 17 | (205,000) | (200,000) |
| Translation reserve | (18,609) | (16,044) | |
| Retained earnings | (1,818,116) | (1,636,350) | |
| Total equity attributable to owners of the parent | 1,693,695 | 1,075,785 | |
| Total equity | 1,693,695 | 1,075,785 |
The Company has elected to take the exemption under section 408 of the Companies Act 2006 not to present the Parent Company Statement of Comprehensive Income.
The loss before tax for the Parent Company for the year was £357,796 (2019: £673,028).
The financial statements were approved by the Board of Directors and authorised for issue on 28 October 2020 and were signed on its behalf by
I A Roberts
Director
The notes are an integral part of these Financial Statements.
GROUP STATEMENT OF CHANGES IN EQUITY
YEAR ENDED 29 MARCH 2020
| Attributable to owners of the parent | |||||||||
| Share capital | Share premium | Other reserves | Translation reserve | Retained earnings | Total | ||||
| Note | £ | £ | £ | £ | £ | £ | |||
| Balance as at 29 March 2018 | 7,190 | 2,332,702 | - | 2,200 | (1,124,509) | 1,217,583 | |||
| Loss for the year | - | - | - | - | (511,841) | (511,841) | |||
| Other comprehensive loss | - | - | - | (18,244) | - | (18,244) | |||
| Total comprehensive loss for the year | - | - | - | (18,244) | (511,841) | (530,085) | |||
| Issue of shares, net of issue costs | 390 | 587,897 | - | - | - | 588,287 | |||
| Share exchange | - | - | (200,000) | - | - | (200,000) | |||
| Transactions with owners, recognised directly in equity | 390 | 587,897 | (200,000) | - | - | (388,287) | |||
| Balance as at 29 March 2019 | 7,580 | 2,920,599 | (200,000) | (16,044) | (1,636,350) | 1,075,785 | |||
| Balance as at 29 March 2019 | 7,580 | 2,920,599 | (200,000) | (16,044) | (1,636,350) | 1,075,785 | |||
| Loss for the year | - | - | - | - | (181,766) | (181,766) | |||
| Other comprehensive loss | - | - | - | (2,565) | - | (2,565) | |||
| Total comprehensive loss for the period | - | - | - | (2,565) | (181,766) | (184,331) | |||
| Issue of shares, net of issue costs | 805 | 806,436 | - | - | - | 807,241 | |||
| Share exchange | - | - | (5,000) | - | - | (5,000) | |||
| Transactions with owners, recognised directly in equity | 805 | 806,436 | (5,000) | - | - | 802,241 | |||
| Balance as at 29 March 2020 | 8,385 | 3,727,035 | (205,000) | (18,609) | (1,818,116) | 1,693,695 | |||
Retained earnings - The retained earnings reserve includes all current and prior periods retained profits and losses.
Translation reserve - The translation reserves includes foreign exchange movements on translating the overseas subsidiaries records, denominated in USD, to the presentational currency, GBP.
The notes are an integral part of these Financial Statements.
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 29 MARCH 2020
| Year ended 29 March 2020 | Year ended 29 March 2019 | |||
| Note | £ | £ | ||
| Cash flows from operating activities | ||||
| Loss before tax | (343,957) | (679,592) | ||
| Adjustments for: | ||||
| Depreciation and amortisation | - | - | ||
| (Increase)/decrease in trade and other receivables | (4,689) | 296,207 | ||
| (Decrease)/increase in trade and other payables | (252,854) | 131,464 | ||
| Cash used in operations | (601,500) | (251,921) | ||
| Income tax credit | 162,191 | 167,751 | ||
| Net cash flows from operating activities | (439,309) | (84,170) | ||
| Investing activities | ||||
| Purchase of intangible assets | (225,439) | (110,987) | ||
| Net cash used in investing activities | (225,439) | (110,987) | ||
| Financing activities | ||||
| Proceeds from Issue of shares, net of issue costs | 807,241 | 413,287 | ||
| Acquisition of owner shares | (5,000) | (200,000) | ||
| Net cash generated from financing activities | 802,241 | 213,287 | ||
| Net increase in cash and cash equivalents | 137,493 | 18,130 | ||
| Cash and cash equivalents at beginning of period | 107 | 221 | ||
| Exchange rate differences on cash and cash equivalents | (2,565) | (18,244) | ||
| Cash and cash equivalents and end of period | 15 | 135,035 | 107 |
Included within the cash flow statement are the following non-cash transactions: -
- In the year to 29 Match 2019, 666,667 shares that were acquired from a third party in settlement for a liability owed to the Company by the third party amounting to £200,000.
The notes are an integral part of these Financial Statements.
COMPANY STATEMENT OF FINANCIAL POSITION
AS AT 29 MARCH 2020
| Audited Year ended 29 March 2020 |
Audited Year ended 29 March 2019 |
||
| Note | £ | £ | |
| Non-current assets | |||
| Intangible assets | 12 | 1,576,792 | 1,364,863 |
| 1,576,792 | 1,364,863 | ||
| Current assets | |||
| Trade and other receivables | 14 | 438,498 | 262,660 |
| Cash and cash equivalents | 15 | 135,035 | 116 |
| 573,533 | 262,776 | ||
| Total assets | 2,150,325 | 1,627,640 | |
| Current liabilities | |||
| Trade and other payables | 16 | 212,820 | 302,794 |
| 212,820 | 302,794 | ||
| Total liabilities | 212,820 | 302,794 | |
| Net assets | 1,937,505 | 1,324,846 | |
| Equity attributable to owners of the parent | |||
| Share capital | 17 | 8,385 | 7,580 |
| Share premium | 17 | 3,727,035 | 2,920,599 |
| Other reserves | 17 | (205,000) | (200,000) |
| Translation reserve | (12,511) | (18,535) | |
| Retained earnings | (1,580,404) | (1,384,798) | |
| Total equity attributable to owners of the parent | 1,937,505 | 1,075,785 | |
| Total equity | 1,937,505 | 1,075,785 |
The financial statements were approved by the Board of Directors and authorised for issue on 28 October 2020 and were signed on its behalf by
I A Roberts
Director
The notes are an integral part of these Financial Statements.
COMPANY STATEMENT OF CHANGES IN EQUITY
YEAR ENDED 29 MARCH 2020
| Share capital | Share premium | Other reserves | Translation reserve | Retained earnings | Total | ||||
| Note | £ | £ | £ | £ | £ | £ | |||
| Balance as at 29 March 2018 | 7,190 | 2,332,702 | - | - | (879,521) | 1,460,371 | |||
| Loss for the year | - | - | - | - | (505,277) | (511,841) | |||
| Other comprehensive loss | - | - | - | (18,535) | - | (18,244) | |||
| Total comprehensive loss for the year | - | - | - | (18,535) | (505,277) | (530,085) | |||
| Issue of shares, net of issue costs | 390 | 587,897 | - | - | - | 588,287 | |||
| Share exchange | - | - | (200,000) | - | - | (200,000) | |||
| Transactions with owners, recognised directly in equity | 390 | 587,897 | (200,000) | - | - | (388,287) | |||
| Balance as at 29 March 2019 | 7,580 | 2,920,599 | (200,000) | (18,535) | (1,384,798) | 1,324,846 | |||
| Balance as at 29 March 2019 | 7,580 | 2,920,599 | (200,000) | (18,535) | (1,384,798) | 1,324,846 | |||
| Loss for the year | - | - | - | - | (195,606) | (195,606) | |||
| Other comprehensive loss | - | - | - | 6,024 | - | 6,024 | |||
| Total comprehensive loss for the period | - | - | - | 6,024 | (195,606) | (189,582) | |||
| Issue of shares, net of issue costs | 805 | 806,436 | - | - | - | 807,241 | |||
| Transactions with owners, recognised directly in equity | 805 | 806,436 | - | - | - | 807,241 | |||
| Balance as at 29 March 2020 | 8,385 | 3,727,035 | (205,000) | (12,511) | (1,580,404) | 1,937,505 | |||
The notes are an integral part of these Financial Statements.
COMPANY STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 29 MARCH 2020
| Year ended 29 March 2020 | Year ended 29 March 2019 | |||
| Note | £ | £ | ||
| Cash flows from operating activities | ||||
| Loss before tax | (357,796) | (673,028) | ||
| Adjustments for: | ||||
| Depreciation and amortisation | - | - | ||
| (Increase)/Decrease in trade and other receivables | (175,838) | 218,458 | ||
| (Decrease)/increase in trade and other payables | (89,974) | 3,646 | ||
| Cash used in operations | (623,608) | (450,924) | ||
| Income taxes credit | 162,191 | 167,751 | ||
| Net cash flows used in operating activities | (461,417) | (283,173) | ||
| Investing activities | ||||
| Purchase of intangible assets | (211,929) | (86,593) | ||
| Net cash used in investing activities | (211,929) | (86,593) | ||
| Financing activities | ||||
| Proceeds from Issue of shares, net of issue costs | 807,241 | 588,287 | ||
| Acquisition of owner shares | (5,000) | (200,000) | ||
| Net cash generated from financing activities | 802,241 | 388,287 | ||
| Net increase in cash and cash equivalents | 128,895 | 18,521 | ||
| Cash and cash equivalents at beginning of period | 116 | 130 | ||
| Exchange rate differences on cash and cash equivalents | 6,024 | (18,535) | ||
| Cash and cash equivalents and end of period | 15 | 135,035 | 116 |
Included within the cash flow statement are the following non-cash transactions: -
- In the year to 29 Match 2019, 666,667 shares that were acquired from a third party in settlement for a liability owed to the Company by the third party.
The notes are an integral part of these Financial Statements
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 29 MARCH 2020
1. General Information
The principal activity of TruSpine Technologies Plc (the 'Company') and its subsidiaries (together the 'Group') is the development of products for the spinal fusion market. The Company is a public limited company which is listed on the Aquis Stock Exchange and is incorporated and domiciled in England. The address of its registered office is located at Spectrum House AF33, Beehive Ring Road, Gatwick Airport, Gatwick, RH6 0LG, United Kingdom.
2. Accounting policies
The principal accounting policies applied in the preparation of this Financial Information are set out below ('Accounting Policies' or 'Policies'). These Policies have been consistently applied to all the periods presented, unless otherwise stated.
2.1. Basis of Preparation
The Consolidated Financial Information of TruSpine Technologies Plc has been prepared in accordance with International Financial Reporting Standards ('IFRS') and IFRIC Interpretations Committee ('IFRS IC') as adopted by the European Union. The Consolidated Financial Information has also been prepared under the historical cost convention.
The Financial Information is presented in UK Pounds Sterling rounded to the nearest pound.
The preparation of Financial Information in conformity with IFRS's requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Group's Accounting Policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the Financial Information are disclosed in Note 4.
2.2. Changes in accounting policies and disclosures
(a) New and amended standards mandatory for the first time for the financial period under review
A number of new standards and amendments to standards and interpretations are effective for the financial period beginning on or after 1 April 2019 and have been applied in preparing these Financial Statements. New standards mandated for 2020 have been applied consistently across all periods presented.
The Group has adopted the following standards and amendments for the first time for the periods under review:
· IFRS 16, Leases;
· Annual Improvements to IFRS Standards 2015-2017; and
· IFRIC 23, Uncertainty over Income Tax Treatments.
There was no significant impact as a result of the adoption of these standards.
(b) New standards, amendments and interpretations in issue but not yet effective or not yet endorsed and not early adopted
A number of new standards and amendments to standards and interpretations are effective for the financial period beginning on or after 1 January 2019 and have been applied in preparing these Financial Statements.
The standards and interpretations that are issued, but not yet effective, up to the date of issuance of the Financial Statements are listed below. The Group intends to adopt these standards, if applicable, when they become effective.
| Standard | Impact on initial application | Effective date |
| IAS 1 and IAS 8 | Definition of material | 1 January 2020 |
| IFRS 3 (Amendments) | Business combinations | *1 January 2020 |
| Conceptual Framework | Amendments to References to the Conceptual Framework in the IFRS Standards | *1 January 2020 |
| IAS 1 (Amendments) | Presentation of financial statements: classification of liabilities | *1 January 2022 |
*Subject to EU endorsement
The Group is evaluating the impact of the new and amended standards above. The Directors believe that these new and amended standards are not expected to have a material impact on the Group's results or shareholders' funds.
2.3. Basis of consolidation
The Consolidated Financial Information consolidate the Financial Statements of the Company and of all of its subsidiary undertakings for all periods presented.
Subsidiaries are entities over which the Group has control. The Group controls an entity when the Group is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are deconsolidated from the date that control ceases.
Where necessary, adjustments are made to the financial information of subsidiaries to bring the accounting policies used into line with those used by other members of the Group. All intercompany transactions and balances between Group enterprises are eliminated on consolidation.
2.4. Going concern
The Financial Statements have been prepared on a going concern basis. In assessing whether the going concern assumption is appropriate, the Directors take into account all available information for the foreseeable future, in particular for the twelve months from the date of approval of the Financial Statements. This information includes management prepared cash flows forecasts, available sources of funding and considerations of the impact of COVID-19 including how the global pandemic may impact product launch and sales.
The Directors have a reasonable expectation that the Group and Company have adequate resources to continue in operational existence for the foreseeable future. Thus, they continue to adopt the going concern basis of accounting in preparing the Financial Information. Further information on the Group's borrowing is given in Note 16.
2.5. Segment reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the Board, who is considered to be the Chief Operating Decision Maker ('CODM'). The Board makes the strategic decisions and separates its activities by geographical location.
2.6. Foreign currencies
a) Functional and presentation currency
Items included in the financial statements of each of the Group's entities are measured using the currency of the primary economic environment in which the entity operates (the 'functional currency'). The functional currency of the Group is Pounds Sterling. The consolidated financial statements are presented in Pounds Sterling (£), rounded to the nearest pound, which is the Company's and Group's functional and presentation currency.
b) Transactions and balances
Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions or valuation where such items are re-measured. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the Income Statement. Foreign exchange gains and losses that relate to borrowings and cash and cash equivalents are presented in the income statement within 'finance income or costs. All other foreign exchange gains and losses are presented in the income statement within 'Other net gains/(losses)'.
Translation differences on non-monetary financial assets and liabilities such as equities held at fair value through profit or loss are recognised in profit or loss as part of the fair value gain or loss. Translation differences on non-monetary financial assets measured at fair value, such as equities classified as available for sale, are included in other comprehensive income.
2.7. Intangible assets
Research costs are expensed as incurred. Development expenditures derive from costs incurred by third party contractors and management's view of time spent by individual consultants that are directly attributable to individual projects. These costs are recognised as intangible assets when the Group can demonstrate:
· the technical feasibility of completing the intangible asset so that it will be available for use or sale;
· its intention to complete the intangible asset and its ability to use or sell the asset;
· how the intangible asset will generate future economic benefits;
· the availability of resources to complete the asset; and
· the ability to measure reliably the expenditure attributable to the intangible asset during its development
2.8. Impairment of Non-Financial Assets
Assets that have an indefinite useful life or are not ready to use are not subject to amortisation and are tested annually for impairment. At each year-end date, the Group reviews the carrying amounts of its intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where the asset does not generate cash flows that are independent from other assets, the Group estimates the recoverable amount of the cash-generating unit to which the asset belongs. Recoverable amount is the higher of fair value, less costs to sell, and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value, using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted. If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised as an expense immediately.
2.9. Financial Assets
Initial recognition
A financial asset is recognised in the statement of financial position when it arises or when the Company becomes part of the contractual terms of the financial instrument.
Classification
The Group and Parent Company classifies its financial assets at amortised cost.
The Group and Parent Company measures financial assets at amortised cost if both of the following conditions are met:
· the asset is held within a business model whose objective is to collect contractual cash flows; and
· the contractual terms of the financial asset generating cash flows at specified dates only pertain to capital and interest payments on the balance of the initial capital.
Financial assets which are measured at amortised cost, are measured using the Effective Interest Rate Method (EIR) and are subject to impairment. Gains and losses are recognised in profit or loss when the asset is derecognised, modified or impaired.
Derecognition
A financial asset is derecognised when:
· the rights to receive cash flows from the asset have expired, or
· the Company has transferred its rights to receive cash flows from the asset or has undertaken the commitment to fully pay the cash flows received without significant delay to a third party under an arrangement and has either (a) transferred substantially all the risks and the assets of the asset or (b) has neither transferred nor held substantially all the risks and estimates of the asset but has transferred the control of the asset.
Impairment
The Group and Parent Company recognise a provision for impairment for expected credit losses regarding all financial assets. Expected credit losses are based on the balance between all the payable contractual cash flows and all discounted cash flows that the Group and Parent Company expect to receive. Regarding trade receivables, the Group and Parent Company applies the IFRS 9 simplified approach in order to calculate expected credit losses. Therefore, at every reporting date, provision for losses regarding a financial instrument is measured at an amount equal to the expected credit losses over its lifetime without monitoring changes in credit risk. To measure expected credit losses, trade receivables and contract assets have been grouped based on shared risk characteristics.
2.10. Cash and cash equivalents
Cash and cash equivalents comprise cash at bank and in hand, and are subject to an insignificant risk of changes in value.
2.11. Share capital
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds.
2.12. Financial liabilities including trade and other payables and borrowings
Financial liabilities measured at amortised cost using the effective interest rate method include current borrowings and trade and other payables that are short term in nature. Financial liabilities are derecognised if the Group or Parent Company's obligations specified in the contract expire or are discharged or cancelled.
Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the effective interest rate ("EIR"). The EIR amortisation is included as finance costs in profit or loss. Trade payables other payables are non-interest bearing and are stated at amortised cost using the effective interest method.
Borrowings are recognised initially at fair value, net of transaction costs incurred. Borrowings are subsequently carried at amortised cost: any difference between the proceeds and the redemption value is recognised in the income statement over the period of the borrowings, using the effective interest method. Borrowings are classified as current liabilities unless the Group or Parent Company has an unconditional right to defer settlement of the liability for at least one year after the end of the reporting period.
2.13. Taxation
The tax expense for the period comprises current tax. Tax is recognised in the income statement, except to the extent that it relates to items recognised directly in equity. In this case the tax is also recognised directly in other comprehensive income or directly in equity, respectively.
The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the end of the reporting period in the countries where the Company operates and generates taxable income. Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation. It establishes provisions where appropriate on the basis of amounts expected to be paid to the tax authorities.
Deferred tax represents the tax expected to be payable or recoverable on the temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. The Group has reoccurring tax losses which can be used to offset future profits. A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be available against which the asset can be utilised. No deferred tax asset has been recognised in the current year.
The Group receives small and medium sized enterprises research and development tax relief for their costs incurred in developing, implementing and testing the platform software. The R&D relief is calculated on the basis of the tax laws enacted at the end of the reporting period in the United Kingdom and is recognised in the period in which it is received.
2.14. Earnings per share
Basic and diluted earnings per share is calculated by dividing:
· the profit attributable to owners of the company, excluding any costs of servicing equity other than ordinary shares;
· by the weighted average number of ordinary shares outstanding during the financial year, adjusted for bonus elements in ordinary shares issued during the year and excluding treasury shares (note 17).
3. Financial risk management
3.1. Financial risk factors
The Group's activities expose it to a variety of financial risks. The Group's Board monitors and manages the financial risks relating to the operations of the Group. This note describes the Group's objectives, policies and processes for managing those risks and the methods used to measure them. Further quantitative information in respect of these risks is presented throughout this financial information.
Financial instruments
The financial instruments used by the Group, from which financial instrument risk arises, are trade and other receivables (see note 14), cash (see note 15) and trade and other payables (see note 16). All are held at amortised cost.
General objectives, policies and processes
The Directors have overall responsibility for the determination of the Company's risk management objectives and policies. Further details regarding these policies are set out below:
Credit risk
Credit risk arises from cash and cash equivalents as well as any outstanding receivables. Essentially it is the risk of financial loss to the Group and Parent Company if a customer or counterparty to a financial instrument fails to meet its contractual obligations and arises principally from the Group and Parent Company's receivables from customers. Management does not expect any losses from non-performance of these receivables. To manage this risk, the Board periodically assesses the financial reliability of any counterparties the Group deal with. Essentially it is
The Group considers the credit risk on cash and cash equivalents to be limited because the counterparties are banks with high credit ratings assigned by international credit rating agencies.
The carrying amount of financial assets recorded in the financial statements represent the Group's maximum exposure to credit risk.
Market risk - Foreign exchange risk
The Group is exposed to market risk, primarily relating to foreign exchange from its US subsidiary operation. The Group does not hedge against market risks as the exposure is not deemed sufficient to enter into forward contracts. The Group has not sensitised the figures for fluctuations in foreign exchange as the Directors are of the opinion that these fluctuations would not have a material impact on the Financial Information of the Group at the present time. The Directors will continue to assess the effect of movements in market risks on the Group's financial operations and initiate suitable risk management measures where necessary.
Liquidity risk
The Group's continued future operations depend on its ability to raise sufficient working capital through the issue of share capital and generate revenue.
3.2. Capital risk management
The Group's objectives when managing capital are to safeguard the Group's ability to continue as a going concern.
It is the aim of the Directors to manage the capital structure in order to reduce the overall cost of capital. The capital comprises the shareholders' equity and going forward it is also expected to include cash and cash equivalent, and borrowings.
The Group defines capital based on the total equity of the Company. The Group monitors its level of cash resources available against future planned operational activities and may issue new shares in order to raise further funds from time to time.
There are currently no restrictions on the capital of the Company.
4. Critical accounting estimates and judgements
The preparation of the financial information in conformity with IFRS requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial information and the reported amount of expenses during the year. Actual results may vary from the estimates used to produce this financial information.
Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. Revisions to accounting estimates are recognised in the period in which the estimate is revised where the revision affects only that period, or in the period of the revision and future periods where the revision affects both current and future periods.
Significant accounting judgements, estimates and assumptions
Management has considered the significant accounting judgements, estimates and assumptions and consider the following to be the critical estimate and judgement which would materially affects the Financial Statements.
Valuation of intangible assets
The directors considered whether any impairments were required on the value of the development costs, in accordance with the accounting policy. Where applicable, the recoverable amounts of cash generating units have been determined based on value in use calculations using information from third parties and an internal evaluation of future income streams in conjunction with the development stage the Group has reached at any one stage. These calculations require the entity to estimate future cash flows expected to arise from the cash generating unit and apply a suitable discount rate, based on market conditions in order to calculate present value. The directors have concluded that no impairment charge is necessary.
Intangible assets comprise capitalised development costs in respect of three projects. These costs are considered in the light of the requirements of IAS 38 "Intangible Assets". Development costs are amortised over the life of the project once a product enters the commercial phase. The projected useful lives of intangible assets are based on management estimates of the period that the asset will be able to generate revenue. Future events could cause the assumptions to change and therefore could impact the future results of the Group and Parent Company. Further details of these estimates are available in note 12.
5. Segment information
Management has determined the operating segments based on reports reviewed by the Board of Directors that are used to make strategic decisions. During the periods presented the Group had interests in two key geographical segments, being the UK and the USA. The Group is concentrating on developing one product at a time and is currently focussing on its Cervi-LOK product. However, it has incurred development and patent costs on each of its products and these have been separated out in note 12 on Intangible assets.
Group
| Year to 31 March 2020 | UK £ |
USA £ |
Total £ |
|
| (Loss)/profit from operations per reportable segment | (357,796) | 13,839 | (343,957) | |
| Additions to non-current assets | 211,929 | 13,510 | 225,439 | |
| Reportable segment assets | 1,872,716 | 37,904 | 1,910.620 | |
| Reportable segment liabilities | (212,820) | (4,105) | (216,925) |
| Year to March 2019 | UK £ |
USA £ |
Total £ |
|
| Loss from operations per reportable segment | (673,029) | (6,563) | (679,592) | |
| Additions to non-current assets | 86,593 | 24,394 | 110,987 | |
| Reportable segment assets | 1,521,025 | 24,539 | 1,545,564 | |
| Reportable segment liabilities | (302,795) | (166,985) | (469,780) |
6. Expenses by nature
| Group | Year ended 29 March 2020 | Year ended 29 March 2019 |
| £ | £ | |
| Consultancy fees | 207,833 | 172,778 |
| Salaries | 5,000 | - |
| Professional and legal costs | 9,416 | 36,934 |
| Conference/Registration costs | 1,775 | 2,947 |
| Marketing & PR | 1,900 | - |
| Website costs | 895 | - |
| Bad debt expense | - | 414,500 |
| Office costs | 10,994 | 6,399 |
| Premises costs | 8,396 | 8,578 |
| Travel, entertainment and subsistence costs | 80,492 | 30,646 |
| Meeting expenses | 11,966 | 888 |
| Insurance | - | - |
| Other Administration expenses | 2,066 | 1,958 |
| (340,733) | (675,628) |
7. Auditor Remuneration
Services provided by the group's auditor and its associates
During the year, the Group (including its overseas subsidiaries) obtained the following services from the Company's auditor and its associates:
| Year ended 29 March 2020 | Year ended 29 March 2019 | |
| £ | £ | |
| Fees payable to the Company's auditor and its associates for the audit of the Parent Company and consolidated financial statements | (25,000) | - |
| Fees payable to the Company's auditor and its associates for other services: | ||
| Reporting accountant services | (93,000) | - |
| (118,000) | - |
8. Employee benefits expenses
The Group had no employees in the period under review, except for the directors. All of the research and development was completed by external consultants, whose costs are shown in Note 6. The directors provided consultancy services to the Group, details of their remuneration are detailed below. All amounts are short term in nature:
| Group | Year ended 29 March 2020 | Year ended 29 March 2019 | |
| £ | £ | ||
| Ian Roberts | 8,750 | - | |
| Norman Lott | 48,000 | 38,000 | |
| Simon Stephens | - | 40,000 | |
| Todd Cramer | - | 1,917 | |
| 56,750 | 79,917 | ||
The average number of directors in the year to 29 March 2020 was 3 (March 2019 - 5).
There were no pension benefits paid or payable to any of the directors in any of the periods under review.
9. Finance expense
| Group | Year ended March 2020 | Year ended 29 March 2019 |
| £ | £ | |
| Other interest expense | 1,632 | 1,678 |
| Bank and finance charges | 1,592 | 2,286 |
| 3,224 | 3,964 |
10. Taxation
| Tax recognised in profit or loss | ||||||
| Group | Year ended 29 March 2020 £ |
Year ended 29 March 2019 £ |
||||
| Current tax credit | 162,191 | 167,751 | ||||
| Deferred tax | - | - | ||||
| Net tax credit | 162,191 | 167,751 | ||||
| Year ended March 2020 | Year ended 29 March 2019 | |||||
| £ | £ | |||||
| Loss before tax | (343,957) | (679,592) | ||||
| Standard rate of UK corporation tax | 19% | 19% | ||||
| Loss on ordinary activities before tax multiplied by standard rate UK corporation tax | (65,352) | (129,122) | ||||
| Tax adjustment | (237) | (420) | ||||
| Unrelieved tax losses carried forward | 65,589 | 129,542 | ||||
| UK research and development tax credit | 162,191 | 167,751 | ||||
| Tax credit | 162,191 | 167,751 | ||||
At 29 March 2020, the Group are carrying forward estimated tax losses of £1. 38m (2019: £1.31m) in respect of various activities over the years. The Company did not recognise a deferred income tax credit due to uncertainty concerning the timescale of its recoverability.
11. Earnings per share
Basic and diluted earnings per share is calculated by dividing the profit attributable to equity holders of the Company by the weighted average number of ordinary shares in issue during the year, excluding ordinary shares purchased by the Company and held as treasury shares.
| Profit attributable to equity holders of the Company | Year ended 29 March 2020 | Year ended 29 March 2019 |
| Profit/(Loss) attributable to equity holders of the Company | (181,766) | (511,841) |
| Weighted average number of ordinary shares in issue | 76,773,336 | 74,927,082 |
| Earnings per share basic and diluted (pence) | (0.24) | (0.68) |
12. Intangible assets
| Development costs | Development costs | Development costs | Patent rights | Total | |||
| Cervi-LOK | Faci-LOK | GRASP | |||||
| Group | £ | £ | £ | £ | £ | ||
| Cost | |||||||
| As at 30 March 2018 | 378,123 | 378,123 | 478,648 | 43,376 | 1,278,270 | ||
| Additions | 45,751 | 45,751 | - | 19,485 | 110,987 | ||
| Disposals | - | - | - | - | - | ||
| As at 29 March 2019 | 423,874 | 423,874 | 478,648 | 62,861 | 1,389,257 | ||
| Additions | 193,268 | - | 7,881 | 24,290 | 225,439 | ||
| Disposals | - | - | - | - | - | ||
| As at 29 March 2020 | 617,142 | 423,874 | 486,529 | 87,151 | 1,614,696 | ||
| Amortisation/Impairment | |||||||
| As at 30 March 2019 | - | - | - | - | - | ||
| As at 29 March 2020 | - | - | - | - | - | ||
| Net book value | |||||||
| As at 29 March 2019 | 423,874 | 423,874 | 478,648 | 62,861 | 1,389,257 | ||
| As at 29 March 2020 | 617,142 | 423,874 | 486,529 | 87,151 | 1,614,696 | ||
| Development costs | Development costs | Development costs | Patent rights | Total | ||
| Cervi-LOK | Faci-LOK | GRASP | ||||
| Company | £ | £ | £ | £ | £ | |
| Cost | ||||||
| As at 30 March 2018 | 378,123 | 378,123 | 478,648 | 43,376 | 1,278,270 | |
| Additions | 45,751 | 45,751 | - | - | 110,987 | |
| Disposals | - | - | - | (4,909) | - | |
| As at 29 March 2019 | 423,874 | 423,874 | 478,648 | 38,467 | 1,364,863 | |
| Additions | 185,404 | - | 7,881 | 18,644 | 211,929 | |
| Disposals | - | - | - | - | ||
| As at 29 March 2020 | 609,278 | 423,874 | 486,529 | 57,111 | 1,576,792 | |
| Amortisation/Impairment | ||||||
| As at 30 March 2019 | - | - | - | - | - | |
| As at 29 March 2020 | - | - | - | - | - | |
| Net book value | ||||||
| As at 29 March 2019 | 423,874 | 423,874 | 478,648 | 38,467 | 1,364,863 | |
| As at 29 March 2020 | 617,142 | 423,874 | 486,529 | 57,111 | 1,576,792 | |
The Group is currently actively developing, with a view to commercialising, three key medical products as follows:-
- Faci-LOK spinal system
- Cervi-LOK spinal system
- GRASP Laminoplasty system
Development costs comprise of costs incurred by third party contractors and management's view of time spent by individual consultants The Group and Parent Company capitalise development costs and details of the accounting policy can be found in Note 2.6.
The intangible assets are reviewed for impairment annually and whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. The recoverable amount of intangible assets is determined based on a value in use calculation using cash flow forecasts derived from the most recent financial model information available, using a suitable discount rate based on the cost of capital. As of 29 March 2020, no impairment was recorded.
The intangible assets have not been amortised in the periods covered in these statements as the assets are still in their development stage and not yet been put in to use/commercialised. The key estimate used by management is in respect of the timing of the commercialisation of the products and when the first revenues commence.
13. Investment in Subsidiaries
| Year ended 29 March 2020 | Year ended 29 March 2019 | |
| Company | £ | £ |
| As at 30 March 2019 | - | - |
| Additions | - | - |
| Cost at 29 March 2020 | - | - |
The following are the principal subsidiaries of the Company at 29 March 2020 and at the date of these Financial Statements.
| Name of company | Principal Place of Business | Parent company | Class of shares | Share capital held | Nature of business |
| TruSpine Technologies International Limited | England & Wales | TruSpine Technologies Limited | Ordinary | 100% | Medical Devices Company developing spinal fusion products |
| Critical Flow Technologies International Limited | England & Wales | TruSpine Technologies Limited | Ordinary | 100% | Medical Devices Company developing vascular catheter products |
| TruSpine Technologies International Inc | United States of America | TruSpine Technologies Limited | Ordinary | 100% | Medical Devices Company developing spinal fusion products |
| Critical Flow Technologies International (Dissolved 12 November 2019) | United States of America | TruSpine Technologies Limited | Ordinary | 100% | Medical Devices Company developing vascular catheter products |
14. Trade and other receivables
| Group Year ended 29 March 2020 |
Group Year ended 29 March 2019 |
Company Year ended 29 March 2020 |
Company Year ended 29 March 2019 |
|
| £ | £ | £ | £ | |
| VAT receivable | 30,116 | 471 | 30,116 | 471 |
| Other receivables | 130,773 | 155,729 | 130,773 | 155,575 |
| Amount due from subsidiary company | - | - | 277,609 | 106,614 |
| 160,889 | 156,200 | 438,498 | 262,660 |
Other receivables relate to monies owed by third parties as follows:
Other receivables include monies owed to the Company by Euro SI Ltd as detailed in note 17 on Related parties. None of these are past due.
15. Cash and cash equivalents
| Group and Company | ||
| Year ended 29 March 2020 | Year ended 29 March 2019 | |
| £ | £ | |
| Cash at bank and in hand | 135,035 | 107 |
| 135,035 | 107 |
The majority of the Group and Company's cash at bank is held with institutions with an BAA1 credit rating. No interest rate sensitivity has been applied on the grounds management consider the impact to be immaterial.
16. Trade and other payables
| Group Year ended 29 March 2020 |
Group Year ended 29 March 2019 |
Company Year ended 29 March 2020 |
Company Year ended 29 March 2019 |
|
| £ | £ | £ | £ | |
| Trade payables | 157,946 | 346,701 | 153,841 | 185,665 |
| Director's loans | - | 28,850 | - | 28,850 |
| Accruals | 58,950 | 88,250 | 58,950 | 88,250 |
| Other payables | 29 | 5,979 | 29 | 29 |
| 216,925 | 469,780 | 212,820 | 302,794 |
Loan movements
| Group Year ended 29 March 2020 |
Group Year ended 29 March 2019 |
Company Year ended 29 March 2020 |
Company Year ended 29 March 2019 |
|
| £ | £ | £ | £ | |
| Opening balance | 28,850 | 165,000 | 28,850 | 165,000 |
| Borrowings during the period | - | 28,850 | - | 28,850 |
| Repayments of loans | (28,850) | (165,000) | (28,850) | (165,000) |
| - | 28,850 | - | 28,850 |
No interest rate sensitivity has been applied on the grounds management consider the impact to be immaterial
17. Equity and other reserves
| Group and Company | |||||||
| Group | Number of shares | Share capital |
Share premium | Other reserves | Total | ||
| £ | £ | £ | £ | ||||
| Issued and fully paid | |||||||
| As at 29 March 2018 | 71,901,520 | 7,190 | 2,332,702 | - | 2,339,892 | ||
| Movement during the year | 3,899,229 | 390 | 587,897 | (200,000) | 388,287 | ||
| As at 29 March 2019 | 75,800,749 | 7,580 | 2,920,599 | (200,000) | 2,728,179 | ||
| Movement during the year | 8,044,445 | 805 | 806,436 | (5,000) | 802,241 | ||
| As at 29 March 2020 | 83,845,194 | 8,385 | 3,727,035 | (205,000) | 3,530,420 | ||
Share Capital - Amount subscribed for share capital at nominal value.
Share Premium - Amount subscribed for share capital in excess of nominal value.
Other reserves comprise of 666,667 shares that were acquired from a third party in exchange for monies paid out by the Company on the third party's behalf during the year to 29 March 2019.
No share options or warrants were granted during the year (2019: Nil)
18. Commitments and contingencies
There are no further single matters pending that the Group expects to be material in relation to the Group's business, financial result or results of operations.
19. Related parties
The following transactions were carried out with related parties:
Directors' transactions
The directors provided consultancy services to the Company, details of their remuneration are
covered in note 7.
Loans from directors
Amounts payable as a result of loan funds extended to the Company by directors are as follows:
| Year ended 29 March 2020 | Year ended 29 March 2019 | |
| £ | £ | |
| Simon Stephens | - | 28,850 |
These amounts are repayable on demand, unsecured and interest free.
Loans to Euro SI Limited
Euro SI Limited is a related party of the Group because Norman Lott was a director of the company.
Loan funds were extended to Euro SI Limited by the Company as historically services provided by Linkotec our major supplier in the US were carried out on behalf of Euro SI and payments by Trupine were applied prior to Euro SI Limited being established. The amounts payable at each period end are as follows:
| Year ended 29 March 2020 | Year ended 29 March 2019 | |
| £ | £ | |
| Euro SI Limited | 79,202 | 111,679 |
These amounts are repayable on demand, unsecured and interest free.
Transactions with Copian Capital Partners Limited
Copian Capital Partners Limited is a related party of the Group because Norman Lott is a director of the company.
Copian Capital Partners Limited provide management services to the Company. Copian Capital Partners Limited made the following charges to the Company together with the balances owing as detailed below:
| Year ended 29 March 2020 | Year ended 29 March 2019 | ||
| £ | £ | ||
| Services charged by Copian Capital Partners Limited | 60,000 | 60,500 | |
| Balance owed by Copian Capital Partners Limited to the Company | - | 12,079 | |
| Balance owed by the Company to Copian Capital Partners Limited | 3,706 | - | |
All intra Group transactions are eliminated on consolidation and have not been further disclosed here.
Transaction with Frank Boehm
Frank Boehm is a related party because he is integral to the business and is a consultant to the Group.
The Company entered into a sale and purchase agreement with Frank Boehm on 12 June 2019, whereby Frank Boehm (the seller) sold the technology and Intellectual property of the Laminoplasty system (GRASP) to the Company (the purchaser) in exchange for the technology and intellectual property relating to the Vascular Catheter (VOSC). The products are deemed to be comparable in value and the carrying value of the VOSC product at the date of the trade was £419,641.
20. Ultimate controlling parties
The Directors consider that there is no ultimate controlling party of the Company.
21. Events after the reporting date
Subsequent to the 29 March 2020, the date of this statement, an additional 3,933,773 ordinary shares have been issued giving a total number of ordinary shares in issue of 87,778,967 at the date of the signing of this statement.
On 7 May 2020, a resolution was passed approving a reduction of capital whereby the share premium account of the Company was cancelled by an amount of £2,250,000.
At a meeting of the Company on the 28 May 2020 resolutions were passed to re-register the Company as a public limited company. Re-registration became effective on 5 June 2020 and accordingly new articles of association of the Company were adopted. The name of the Company changed from Truspine Technologies Limited to Truspine Technologies Plc.
On 20 August 2020 the Company was admitted to the Acquis Stock Exchange Growth Market.
On 20 August 2020 the Company granted 877,789 warrants to Cairn the Company's corporate adviser exercisable at a price of £0.36 for a period of up to five years.
Following the year end, the COVID-19 pandemic continues to have a global impact. The situation is continually developing and as at the date of this report the situation will need continual attention and will continue to evolve over time. In our view, consistent with others, COVID-19 is considered to be a non-adjusting post balance sheet event and no adjustment is made in the financial statements as a result.
The rapid development and fluidity of the COVID-19 virus makes it difficult to predict the ultimate impact on the Company at this stage. In line with most experts, we believe that the impact of the virus will be material on the general economy and central banks have already begun to reduce interest rates and taking other measures. Undoubtedly, this will have implications for the Company's operations, for example restricting travel movements and impacting fund raising activities as investors look to delay decisions until the crisis is over. Management is in the process of addressing the impact of COVID-19 on the Company, however given the fluidity and volatility of the situation it is not possible to quantify the impact at this stage.
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NEXFELFWUESSEES