Investors

TruSpine Technologies plc, (AQSE: TSP) the medical device company focused on the development of its pioneering "screwless," spinal (vertebral) stabilisation systems, reports its full year results for the year ended 29 March 2022.

The Company continues to be in a pre-revenue development phase and remains loss making at this stage of its development. The loss before taxation for the year was £941k (2021: £651k) after administrative expenses of £938k (2021: £645k). The R&D tax credit was £88k (2021: £107k) bringing the loss after tax to £853k (2021: £544k). Development spend for the year was £851k (2021: £426k).

Consolidated net assets at 29 March 2022 amounted to £2.642 million (2021: £2.746 million) including cash and cash equivalents of £3k (2021: £544k). On 31 May 2022, the Company announced that it had raised an additional £700,000 through a placing and subscription of new ordinary shares.

The independent audit report draws attention to note 2.4 in the financial statements, which indicates that the Group is reliant upon Food and Drug Administration (FDA) approval of its product, subsequent sales and/or further financing to meet its working capital needs. There is no guarantee that these will be achieved. As stated in note 2.4, these events or conditions, indicate that a material uncertainty exists that may cast significant doubt on the Group's and Parent Company's ability to continue as a going concern. The auditor's opinion is not modified in respect of this matter. The Independent Auditor's Report is set out in full below.

The Company continues to carefully manage its working capital position.

The Annual Report and Financial Statements for the year ended 29 March 2022 will shortly be available on the Company's website.  Copies of the Annual Report and Financial Statements will be posted to shareholders shortly.

This announcement contains inside information for the purposes of the UK Market Abuse Regulation and the Directors of the Company are responsible for the release of this announcement.

Enquiries:

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 development of Cervi-LOK, with the implant and instrument sets currently undergoing the final verification and validation testing required to submit our 510k application to the FDA. All our Regulatory and Quality Management systems have been completed, and I must give a special mention to our regulatory team for completing circa 300 documents which are required by the FDA. We will be one of the first Spinal companies to offer Sterile Packaged single use implants and instrument sets, and I must thank our implants and instrument packaging partners for their enthusiasm and professionalism throughout the process.

During the year, the company has continued to strengthen its Intellectual Property with the following additions:

• A US provisional application # 63 /189, 785 pertaining to the unique rod positioner was filed on 8 April 2021.
• In June 2021, applications for the Cervi-LOK were filed in China, and the EU.
• The Cervi-LOK trademark was issued: Issue Date: 22 June 2021, 2021/U.S. Serial Number: 88958492 - Mark: Cervi-LOK
• Several Office Actions regarding the Cervi-LOK were responded to throughout the fiscal year under consideration.
• On 21 July 2021, an application for the Cervi-LOK was filed in India.
• On 1 July 2021, an application for the Cervi-LOK was filed in Japan.
• Additional Filings to broaden the IP protection for the Cervi-LOK on 9 September 2021
• On 27 September 2021, additional Office Actions regarding the Cervi-LOK were responded to.
• Additional work on the European Filing for the Cervi-LOK also on 27 September 2021.
• Additional filings for instrumentation for the Cervi-LOK filed on 12 December 2022.
• Chinese Application for Cervi-LOK filed on 25 January 2022.
• Additional claims for laminoplasty on 25 February 2022.

The Global Spinal Implants and Surgery Devices Market size was estimated at USD 11.19 billion in 2021, USD 12.3 billion in 2022, and is projected to grow at a compound annual growth rate of 10.21% to reach USD 20.06 billion by 2027 (Source Research and Markets.com). 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 USA. 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 continues to be in a pre-revenue development phase and remains loss making at this stage of its development. The loss before taxation for the year was £941k (2021: £651k) after administrative expenses of £938k (2021: £645k). The R&D tax credit was £88k (2021: £107k) bringing the loss after tax to £853k (2021: £544k). Development spend for the year was £851k (2021: £426k).

Consolidated net assets at 29 March 2022 amounted to £2.642 million (2021: £2.746 million) including cash and cash equivalents of £3k (2021: £544k).

In April 2022 the Company entered into a master agreement ('Funding Agreement') with Proffitt Brothers Investments, LLC ('Proffitt Brothers') and Spartan Medical, Incorporated ('Spartan Medical') setting out an agreement on a strategic partnership and to provide funding, and an exclusive US Reseller Agreement ('Reseller Agreement') to market and distribute the Cervi-LOK^TM device to US Government healthcare facilities once the Cervi-LOK^TM has completed FDA clearance.  The funding agreement provided the Company with $400,000 of funding, $100,000 was received on signing of the master agreement with two further investments totalling $US300,000, payable at FDA 510k lodgement ($US100,000) and FDA 510k Clearance ($US200,000).  The Funding & Reseller Agreements are validation of our ground-breaking first spinal stabilisation device and will allow a rapid 'go to market' strategy subject to 510k clearance of the Cervi-LOK^TM.

In addition, on 31 May 2022, the Company announced that it had raised an additional £700,000 through a placing and subscription of new ordinary shares.

Further, on 10 June 2022, the Company appointed a new regulatory consultant, MCRA, to prepare and file a submission to the FDA for Cervi-LOK^TM. MCRA are in advance stages of preparing our full 510K application, and they have a very strong relationship with the FDA.

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.  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 2022.

Review of the business and future developments

TruSpine Technologies Plc was incorporated on 8 December 2014. 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. The Company re-registered as a public limited company on 28 May 2020. On 20 August 2020 the Company was admitted to the Aquis Stock Exchange Growth Market with the issue of 3,700,442 new ordinary shares at the IPO raising gross proceeds of circa £1.4m. Since then, the Company has raised a further £2,048,500 through the subscription of 27,485,000 new ordinary shares.

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 2022. Once this has been achieved the Company will concentrate on further development work on its other two products and will subsequently seek clearance for Faci-LOK and GRASP Laminoplasty.

The Company is in the final phase of testing and Validation and Verification testing. The final testing is being completed by Element Materials Technology, implant packaging and sterilisation by Guardian Medical and Instrument packaging and sterilisation by Puracon. Both Guardian and Puracon are at an advanced stage in this process.

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. We have entered into a distribution agreement with Spartan Medical, and negotiations are ongoing with further distributors in the USA.

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$11.2 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.

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. We will be one of the first Spine companies to offer single use sterile packaged implants AND instruments, which will position the company very favourably, especially in the ever expanding ambulatory surgical centres in the USA.

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 2023. 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 a number of key commercial partners to develop, design and manufacture its Products, and assist it through the regulatory process. Emergo Group ('Emergo'), a regulatory consultant and MCRA for our FDA application are retained by the Company to provide it with regulatory advice. Lincotek Medical LLC ('Lincotek') is retained by the Company to provide product development and manufacturing. University of Toledo will be performing our independent product testing, and Element Medical will be providing our comparative data.

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.

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. TruSpine's partnership with

Spartan Medical will also prove to be invaluable, with Spartan handling the logistics and distribution of our products to their existing customer base.

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 and are set out in the primary statements.

Key performance indicators

Key performance indicators for the Group as a measure of financial control are as follows:

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 Conformit Europ'enne (CE) mark in Europe, which affirms conformity with European health, safety and environmental protection standards. 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 the 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.

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 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. COVID-19 may have had an adverse effect on the Company's business, financial situation, growth and prospects and though it has already had a material adverse effect on overall business sentiment and the global economy in the past it does not carry such a considerable threat as it once did. 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.

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 early 2023 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. Distribution agreements are also a way in which to help secure future sales and mitigate the risk

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 our products 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. However, TruSpine's devices are novel in their design in that they represent a potentially significant development in spinal fixation, by providing stabilisation while not altering the bony spinal anatomy of patients as compared with the use of screws, staples or other devices which currently dominate the spinal market.

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. Management has successfully raised money to date, but there is no guarantee that adequate funds will be available when needed in the future. 

DIRECTORS' REPORT

The Directors present their report and the audited financial statements for the year ended 29 March 2022.

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 Group is incorporated and domiciled in the United Kingdom.

Future developments

The Company continues to progress the development of the company's three pioneering Spinal Stabilization products, with a specific focus on completing the FDA submission for the first product to market, the Cervi-LOK in 2022. The FDA clearance process normally takes up to 90 days, after which marketing and commercial sales are expected to commence in early 2023. For further details please refer to the Chief Executive's Statement and Strategic Report.

Research and development

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.

For further details please refer to the Strategic Report.

The Group's capitalised development spend during the year was £851,000 (2021: £426,000)

Dividends

The Directors do not propose a dividend in respect of the year ended 29 March 2022 (2021: Nil).

Directors and directors' interests

The directors who have held office during the year and to the date of this report are as follows:

M C Armstrong
I A Roberts
N A C Lott
A M Schild
T H D Evans
N K Patel - appointed 4 June 2021

The interests (as defined in the Companies Act) of the Directors holding office during the period in the share capital are shown below:

*    Includes shares held by family members

Board of Directors:

Martin Armstrong, Non-executive Chairman

Mr. Armstrong is a senior partner of accountancy and corporate insolvency firm Turpin Barker Armstrong. He has significant experience in corporate and financial management, financial systems, accounting, audit and strategic planning, as well as turnaround and corporate insolvency.

Ian Roberts, Chief Executive Officer

Mr. Roberts has over 25 years' experience in the medical technology and medical device sector, with more than half of this time spent in the orthopaedic industry covering marketing, sales manufacturing and distribution. Mr Roberts started his orthopaedic sales career with Stratec Synthes (AO) Limited, before joining Howmedica as Marketing Manager for the trauma and spine division. Following Stryker Orthopaedics' (part of leading medical technology group Stryker Corporation) acquisition of Howmedica, Mr Roberts continued to develop the trauma and spine division in the UK and Europe for Stryker Orthopaedics. Following his time at Stryker, he became Country Manager for Hospira Inc (an American global medical device company) for the UK and Ireland, managing large manufacturing, sales and administration teams of approximately 250 employees. More recently, he has been advising investment funds on alternative investments with a focus on life sciences.

Norman Lott, Chief Financial Officer

Mr. Lott is an experienced CFO with significant public company experience, having held multiple roles with AIM companies quoted on the London Stock Exchange. He is a member of the Institute of Chartered Accountants in England and Wales having qualified in 1980 and aside from his experience as a CFO, he has also held positions in business management including that of deputy CEO. He has also been involved in several international corporate transactions and has experience in the healthcare sector.

Dr Timothy Evans, Non-executive Director

Dr Evans qualified in 1979 from the Westminster Hospital Medical School, and runs a private, independent general practice in London. He specialises in women's health, and also has an interest in functional and musculoskeletal medicine. Dr Evans has a wealth of experience in his 40-year career, including setting up a specialist practice in the care of women and children, as well as a fully integrated practice in conventional, complementary and alternative healthcare. He has worked extensively in Africa and re-established primary health clinics in rural areas of Zimbabwe after ten years of civil war. In 2003, he was appointed to the position of Apothecary to HM the Queen and The Royal Households of London. In 2016 HM The Queen awarded him as a Lieutenant of the Royal Victorian Order (LVO) for his services.

Annabel Schild, Non-executive Director

Ms. Schild is an entrepreneur, having invested in multiple companies in finance, technology and hospitality over the last 31 years. In addition to her wealth of investment experience, Ms. Schild has also held directorships including non-executive roles across a range of industries including hospitality. Her father was the founder of Huntleigh Technology plc from 1985, the London-listed global healthcare business, which was sold to the Swedish medical equipment group Getinge AB for £409 million in 2006. She is a founding shareholder and investor in ClearBank Ltd, the UK's first new clearing bank in more than 250 years, providing open competition and transparency to the UK financial services marketplace.

Mr Nikunj Patel, Non-executive Director

Mr Patel has been a practising Consultant Neurosurgeon and Honorary Senior Clinical Lecturer at the Institute of Clinical Neurosciences (University of Bristol) since his appointment in 2005, where he has developed specialist interests and expertise in surgical treatments for spinal pain, cranial nerve hyperactive disorders and functional brain disorders. His surgical and research interests have focused on developing innovations, and advancing less-invasive and stream-lined procedural solutions. He has been recognised for his neurosurgical research excellence with a Medical Research Council fellowship; awards from both the American and the European Associations of Neurological Surgeons; and a Hunterian Professorship from the Royal College of Surgeons of England.

Issues of shares, options and warrants

During the year, 8,129,902 ordinary shares of 0.01p each were issued as detailed in Note 22

During the year, 7,405,000 warrants were granted as detailed in Note 22

Financial instruments

An explanation of the Company's financial risk management objectives, policies and strategies is set out in Note 3.

Internal financial control

The Board is responsible for establishing and maintaining the Group's system of internal financial control. Internal financial control systems are designed to meet the particular needs of the Group and the risk to which it is exposed, and by their nature can provide reasonable assurance but not absolute assurance against material misstatement or loss. The Directors are conscious of the need to keep effective internal financial control.

Due to the relatively small size of the Group's operations, the executive Directors are now closely involved in the day-to-day running of the business and as such have less need for a detailed formal system of internal financial control. The Board has reviewed the effectiveness of the procedures presently in place and considers that they remain appropriate to the nature and scale of the operations of the Group.

Going concern

The Financial Information has 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 and perform scenario planning thereon. This information includes management prepared cash flows forecasts and available sources of funding.

In the prior year the Company raised £1.4m at the time of the Company's Listing and an additional £620,500 in the year to March 2021. In the year to March 2022 the Company raised £813,983 by share subscriptions and shares issued to settle liabilities. Subsequent to the year-end it has raised further funds of £874,700 in May 2022 by way of share subscriptions and shares issued to settle liabilities and directors fees, the monies being used to further fund the Company's development programme.

Management have considered a variety of scenarios in reaching their going concern conclusion including consideration of the success of achieving FDA approval and their ability to raise money.  Based on these scenarios and the Board's assessment that the Company will be able to raise additional funds, as and when required, to meet its working capital and development expenditure requirements the Board of Directors have concluded that they 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. The auditors have made reference to going concern by way of a material uncertainty within their audit report.

Events after the balance sheet date

Events after the reporting date have been disclosed in Note 27 to the Financial Statements.

Statement as to the disclosure of information to the auditors

Each of the Directors at the date of approval of this Annual Report confirms that:

• so far as the Director is aware, there is no relevant audit information of which the Company's auditor is unaware; and
• the Director has taken all the steps that he ought to have taken to make themselves aware of any relevant audit information and to establish that the Company's auditor is aware of that information.

Auditors

PKF Littlejohn LLP have expressed their willingness to continue in office as auditors.

A resolution proposing the re-appointment of the auditors PKF Littlejohn LLP will be put to shareholders at the Annual General Meeting.

This report was approved by the board of Directors on 29 September 2022 and signed on its behalf by:

I A Roberts

INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF TRUSPINE TECHNOLOGIES PLC

Opinion

We have audited the financial statements of TruSpine Technologies Plc (the 'Parent Company') and its subsidiaries (the 'group') for the year ended 29 March 2022 which comprise the Group  Statement of Comprehensive Income, the Group Statement of Financial Position, the Group Statement of Changes in Equity, the Consolidated Statement of Cash Flows, the Company Statement of Financial Position, the Company Statement of Changes in Equity, the Company Statement of Cashflows and notes to the financial statements, including significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and UK-adopted international accounting standards and as regards the Parent Company financial statements, as applied in accordance with the provisions of the Companies Act 2006.

In our opinion:

• the financial statements give a true and fair view of the state of the group's and of the Parent Company's affairs as at 29 March 2022 and of the group's loss for the year then ended;
• the group financial statements have been properly prepared in accordance with UK-adopted international accounting standards;
• the Parent Company financial statements have been properly prepared in accordance with UK-adopted international accounting standards and as applied in accordance with the provisions of the Companies Act 2006; and
• the financial statements have been prepared in accordance with the requirements of the Companies Act 2006.

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the financial statements section of our report. We are independent of the group and Parent Company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC's Ethical Standard as applied to listed entities, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Material uncertainty relating to going concern

We draw attention to note 2.4 in the financial statements, which indicates that the group is reliant upon Food and Drug Administration (FDA) approval of its product, subsequent sales and/or further financing to meet its working capital needs. There is no guarantee that these will be achieved. As stated in note 2.4, these events or conditions, indicate that a material uncertainty exists that may cast significant doubt on the Group's and Parent Company's ability to continue as a going concern. Our opinion is not modified in respect of this matter.

In auditing the financial statements, we have concluded that the directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate. Our evaluation of the directors' assessment of the group's and Parent Company's ability to continue to adopt the going concern basis of accounting included:

• Obtaining cash flow forecasts, management accounts and budgets from management for a period of at least 12 months from the date of signing the financial statements to give an indication of the expected financial returns in future months;
• Ensuring the mathematical accuracy of the cash flow forecasts;
• Reviewing supporting documents to assess the reasonableness of management's cash flow forecasts and comparing previous forecasts to actual results;
• Reviewing future plans for fund raises and the dependence of the group on these to continue as a going concern;
• Challenging management's key assumptions for going concern assessment to supporting documents;
• Reviewing board meeting minutes for any references to financial difficulties or evidence over other costs and expenses that have not been included in the forecasts; and
• Reviewing Regulatory News Service ('RNS') releases and discussing subsequent events and future plans with management.

Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.

Our application of materiality

The key driver of the business is the intangible assets that relate to the development of the product lines and their patents, and this will be the driver of future revenues. We therefore have considered net assets to be the most significant determinant of the group's financial position and performance used by shareholders and the most appropriate benchmark of materiality as the potential investors are most concerned about net assets. The going concern of the Group and Parent Company are dependent on the ability to fund operations going forward, as well as on the valuation of its assets, which represent the underlying value of the group.

We applied the concept of materiality both in planning and performing our audit, and in evaluating the effect of misstatements.

We agreed with the audit committee that we would report to the committee all audit differences identified during the course of our audit in excess of £6,600 for the group and £6,550 for the Parent Company.

Our approach to the audit

In designing our audit, we determined materiality and assessed the risk of material misstatement in the financial statements. In particular, we looked at areas requiring the directors to make subjective judgements, for example in respect of assessing the carrying value of intangible assets comprising of the development assets and patents; the accounting treatment with respect to the capitalisation of development cost and patent related costs; and the consideration of future events such as FDA approval that are inherently uncertain. We also addressed the risk of management override of internal controls. This involved evaluating whether there was evidence of bias on accounting estimates by the directors that represented a risk of material misstatement due to fraud and the risk of inadequate disclosures of related parties in the financial statements.

An audit was performed on the financial information of the group's significant operating component TruSpine Technologies Plc ('Parent Company'), which for the year ended 29 March 2022, was located in the United Kingdom. Analytical procedures were performed on components that were not considered material.

Key audit matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements of the current period and include the most significant assessed risks of material misstatement (whether or not due to fraud) we identified, including those which had the greatest effect on: the overall audit strategy, the allocation of resources in the audit; and directing the efforts of the engagement team. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.  

Other information

The other information comprises the information included in the annual report, other than the financial statements and our auditor's report thereon. The directors are responsible for the other information contained within the annual report Our opinion on the group and Parent Company financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.

We have nothing to report in this regard.

Opinions on other matters prescribed by the Companies Act 2006

In our opinion, based on the work undertaken in the course of the audit:

• the information given in the strategic report and the directors' report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
• the strategic report and the directors' report have been prepared in accordance with applicable legal requirements.

Matters on which we are required to report by exception

In the light of the knowledge and understanding of the group and the Parent Company and their environment obtained in the course of the audit, we have not identified material misstatements in the strategic report or the directors' report.

We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion:

• adequate accounting records have not been kept by the Parent Company, or returns adequate for our audit have not been received from branches not visited by us; or
• the Parent Company financial statements are not in agreement with the accounting records and returns; or
• certain disclosures of directors' remuneration specified by law are not made; or
• we have not received all the information and explanations we require for our audit.

Responsibilities of directors

As explained more fully in the Statement of Directors' Responsibilities, the directors are responsible for the preparation of the group and Parent Company financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the group and Parent Company financial statements, the directors are responsible for assessing the group and the Parent Company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the group or the Parent Company or to cease operations, or have no realistic alternative but to do so.

Auditor's responsibilities for the audit of the financial statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below:

• We obtained an understanding of the group and Parent Company and the sector in which they operate to identify laws and regulations that could reasonably be expected to have a direct effect on the financial statements. We obtained our understanding in this regard through discussions with management, industry research, application of cumulative audit knowledge and experience of the sector.
• We determined the principal laws and regulations relevant to the group and Parent Company in this regard to be those arising from UK-adopted international accounting standards, Companies Act 2006, AQSE Listing Rules, Disclosure and Transparency Rules, Bribery Act 2011, UK employment laws, UK tax legislation and QCA Code.
• We designed our audit procedures to ensure the audit team considered whether there were any indications of non-compliance by the group and Parent Company with those laws and regulations. These procedures included, but were not limited to:
  • Enquiring of management, reviewing minutes of board meetings and regulatory correspondence.
• We also identified the risks of material misstatement of the financial statements due to fraud. We considered, in addition to the non-rebuttable presumption of a risk of fraud arising from management override of controls, we did not identify any significant fraud risk.
• As in all of our audits, we addressed the risk of fraud arising from management override of controls by performing audit procedures which included, but were not limited to: the testing of journals; reviewing accounting estimates for evidence of bias; and evaluating the business rationale of any significant transactions that are unusual or outside the normal course of business. We view the key assumptions underlying the value in use calculations in the assessment of whether to impair intangible assets as a significant estimate.

Because of the inherent limitations of an audit, there is a risk that we will not detect all irregularities, including those leading to a material misstatement in the financial statements or non-compliance with regulation. This risk increases the more that compliance with a law or regulation is removed from the events and transactions reflected in the financial statements, as we will be less likely to become aware of instances of non-compliance. The risk is also greater regarding irregularities occurring due to fraud rather than error, as fraud involves intentional concealment, forgery, collusion, omission or misrepresentation.

A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council's website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor's report.

Use of our report

This report is made solely to the company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company's members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone, other than the company and the company's members as a body, for our audit work, for this report, or for the opinions we have formed.

GROUP STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 29 MARCH 2022

The notes are an integral part of these financial statements

GROUP STATEMENT OF FINANCIAL POSITION
AS AT 29 MARCH 2022

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 £940,125 (2021: £651,848).

The financial statements were approved by the Board of Directors and authorised for issue on 29 September 2022 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
FOR THE YEAR ENDED 29 MARCH 2022

Year ended 29 March 2022

Retained earnings Ð The retained earnings reserve includes all current and prior periods retained profits and losses.

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.

Share based payment reserve - amount arising on the issue of warrants and share options during the year

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 2022

The notes are an integral part of these Financial Statements.

COMPANY STATEMENT OF FINANCIAL POSITION
AS AT 29 MARCH 2022

The financial statements were approved by the Board of Directors and authorised for issue on 29 September 2022 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
FOR THE YEAR ENDED 29 MARCH 2022

Year ended 29 March 2022

Retained earnings - The retained earnings reserve includes all current and prior periods retained profits and losses.

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.

Share based payment reserve - amount arising on the issue of warrants and share options during the year

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.

COMPANY STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 29 MARCH 2022