USE OF PROCEEDS
Unless otherwise indicated in a prospectus supplement, the Company currently intends to use the net proceeds from the sale of the securities for the manufacture of 11 clinical-grade prototypes of its SPORTTM Surgical System, pre- clinical trial and regulatory costs, and for working capital and other general corporate purposes.
Additional funding will be required for the development and commercialization of the SPORTTM Surgical System, currently estimated at approximately U.S. $57 million. At July 31, 2015, the Company had approximately U.S. $16.8 million in cash and cash equivalents and working capital of approximately U.S. $13.8 million. The Company anticipates that it will be able to continue to operate for four months from August 1, 2015 based on the current amount of its cash on hand and short term securities and its current rate of expenditures. The Company expects that approximately U.S. $37 million in incremental funding will be required by the end of 2016 to maintain it’s currently anticipated pace of development. If additional funding is not available, the pace of the Company’s development plan may be reduced. See “Risk Factors”.
For the fiscal year ended December 31, 2014, cash used in operating activities by us was U.S. $12,875,254 and we had a net loss of U.S. $ 13,450,261. For the six months ended June 30, 2015, cash used in operating activities by us was U.S. $14,039,599 and we had a net loss of U.S. $17,377,091 for such period. Our working capital as at June 30, 2015 was approximately U.S. $15,100,000. We have not generated any revenue from product sales to date and it is possible that we will never have sufficient product sales revenue to achieve profitability and positive cash flow. We expect to continue to incur losses for at least the next several years as we and our development contractors pursue further development of the SPORTTM Surgical System, clinical trials and research and development efforts. To become profitable, we must successfully develop, manufacture, market and sell the SPORTTM Surgical System, as well as continue to identify, develop, manufacture and market new products. It is possible that we will never have significant product sales revenue. If funding is insufficient at any time in the future, we may not be able to develop or commercialize our products, take advantage of business opportunities or respond to competitive pressures. It is expected that proceeds of distributions of securities under this prospectus will be used to fund anticipated negative cash flow from operating activities, as described above.
More detailed information regarding the use of proceeds from the sale of securities will be described in the applicable prospectus supplement. Pending the application of the net proceeds, the Company intends to invest substantially all of the net proceeds in term deposits and high interest savings accounts with a major Canadian chartered bank, or in investment-grade, interest-bearing securities, the primary objectives of which are liquidity and capital preservation.
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