TMD Titan Medical Inc

Titan Medical Inc. (“Titan”) (TSX: TMD; OTC: TMDIF) is pleased to announce that it has entered into a definitive amalgamation agreement (the “Amalgamation Agreement”) dated March 17, 2024 with Conavi Medical Inc. (“Conavi”) to combine the companies in an all-stock transaction. The combined company will focus on continuing to commercialize Conavi’s Novasight Hybrid™ System designed to guide common minimally invasive coronary procedures.

Under the terms of the Agreement, Titan will acquire all of the issued and outstanding shares of Conavi (the “Conavi Shares”) and in exchange Conavi shareholders will be issued common shares of Titan (the “Combined Entity Shares”). This transaction (the “Transaction”) will constitute a reverse takeover of Titan and will be carried out subject to the terms and conditions outlined below.

In connection with the Transaction, Titan expects to delist its common shares from the Toronto Stock Exchange (the “TSX”) and apply to have them listed instead on the TSX Venture Exchange (the “TSXV”). The Transaction is anticipated to close on or around July 15, 2024.

Conavi (www.conavi.com) is focused on designing, manufacturing, and marketing imaging technologies to guide common minimally invasive cardiovascular procedures. Its patented Novasight Hybrid™ System is the first system to combine both intravascular ultrasound (IVUS) and optical coherence tomography (OCT) to enable simultaneous and co-registered imaging of coronary arteries (www.novasighthybrid.com). The Novasight Hybrid™ System has 510(k) clearance from the U.S. Food and Drug Administration; and regulatory approval for clinical use from Health Canada, China’s National Medical Products Administration, and Japan’s Ministry of Health, Labor and Welfare. Conavi is organized under the Business Corporations Act (Ontario) and headquartered in Toronto, Ontario.

“This planned merger comes at a pivotal moment in the evolution of our company as we continue to advance the Novasight Hybrid System, which provides simultaneous and complementary data with which to better inform patient care, while offering providers a more cost- and space-effective option when purchasing intravascular imaging equipment,” said Conavi’s Chief Executive Officer, Thomas Looby. “Gaining access to the public capital markets will enhance our financial strength and fuel our growth strategy, enabling us to unlock the full potential of our hybrid imaging technology in the United States and globally.”

“This merger is the result of a thoughtful and careful review of strategic options and reflects the continued commitment of our management team and Board of Directors to deliver value to shareholders,” commented Paul Cataford, Titan’s Interim CEO and Board Chair. “Conavi is an exciting commercial-stage company with groundbreaking technology and an accomplished management team. We are confident in their ability to continue to drive adoption of the Novasight Hybrid System.”

Transaction Highlights

Provided the Transaction is completed in accordance with the provisions of the Amalgamation Agreement (see “Conditions to Completion of the Transaction Below”), the following benefits are anticipated for the combined entity (the “Combined Entity”):

• Strong Balance Sheet (as a result of a concurrent financing) with institutional investor support;
• Established product development and manufacturing capability;
• Proven product being commercialized in the coronary imaging space;
• A large and diverse market opportunity addressed with a proprietary product offering which provides patient benefit and a sustainable economic value proposition to users; and
• Increasing market traction and key opinion leader engagement.

Amalgamation Agreement Background

The journey to this announcement started over 15 months ago, when Titan announced the commencement of a strategic review process and the engagement of Raymond James Ltd. (“Raymond James”) as financial advisor. With limited cash resources and limited access to new capital, Titan announced a series of cost-cutting measures to extend the runway for the strategic review process. After outreach to over 40 potential counterparties and concerns expressed by potential counterparties on Titan’s stage of development, financial circumstances, and time to commercialization, Titan announced a further cost reduction and a halt to all expenditures related to the development of its ENOS single access robotic-assisted surgery (“RAS”) system in February of 2023. To generate cash and avert the possibility of insolvency, Titan also announced a strategic pivot to asset sales and licensing of its IP. This pivot has proven successful as Titan announced non-exclusive licensing and intellectual property sales agreements with established players in the RAS industry in May, June and August of 2023. Throughout 2023, it was made clear to Titan that a merger with another RAS company was not a viable option and Titan broadened its search for a merger partner beyond RAS. This expanded search resulted in a number of proposals and after careful evaluation, Titan’s management and board of directors (the “Titan Board”) decided on a merger with Conavi.   The Titan Board is unanimous in its decision to execute the Amalgamation Agreement and to recommend this Transaction to its shareholders (the “Titan Shareholders”).

Transaction Terms

Under the terms of the Agreement, Titan will effect a consolidation of the Titan Shares based on a ratio of pre-consolidation shares to post-consolidation shares to be mutually agreed upon (the “Consolidation”).

As a condition to the completion of the Transaction, Conavi will complete a concurrent financing of subscription receipts, the terms of which will be announced at a later date (the “Concurrent Financing”), for minimum gross proceeds of US$15 million up to a maximum of US$20 million. The subscription receipts are expected to convert into Conavi Shares (“Subscription Receipts Shares”) immediately prior to completion of the Transaction.

Following the Consolidation and the Concurrent Financing, a wholly-owned subsidiary of Titan will amalgamate with Conavi, pursuant to which issued and outstanding post-Consolidation Titan Shares will be issued to holders of Conavi Shares (including the Subscription Receipts Shares) on the basis of an exchange ratio to be determined using the pre-money valuation of Conavi of US$69,840,000 (minus the amounts of certain trade payables and Conavi’s transaction expenses) and a pre-transaction valuation of Titan including an allocation of US$5,000,000 plus the amount of cash held in Titan at the closing of the Transaction less certain liabilities of Titan. However, the exchange ratio will be adjusted, if necessary, strictly to the extent required to result in the holders of Titan Shares prior to the closing of the Transaction holding at least 10% of the Combined Entity Shares following completion of the Transaction (including Combined Entity Shares underlying certain options, warrants and RSUs, Subscription Receipts Shares, and Combined Entity Shares issued in exchange for Conavi Shares issued in any bridge financing completed by Conavi prior to the completion of the Transaction).

In addition, the Combined Entity will establish a new equity incentive plan for key employees, directors and officers of the Combined Entity and will issue stock options in exchange for the outstanding Conavi outstanding stock options under the plan.

The parties to the Transaction are at arm’s length.

Transaction Timetable

Titan intends to hold a special and annual meeting of shareholders (the “Titan Shareholder Meeting”), at which, among other things, the Titan Shareholders will be asked to approve: (i) the change of name from Titan Medical Inc. to Conavi Medical Inc., or such other name as Conavi may determine and the Titan Board may approve, (ii) the Consolidation, (iii) a new equity incentive plan for the Combined Entity, and (iv) the Transaction. Copies of the management information circular of Titan (the “Titan Circular”), and certain related documents and agreements, will be filed with the Canadian securities regulators and will be available on SEDAR+ at www.sedarplus.com under Titan’s profile at least 21 days prior to the date of the Titan Shareholder Meeting.

Recommendation by the Board of Directors and Fairness Opinion

After consultation with its financial and legal advisors, the Titan Board unanimously approved the entering into of the Agreement and will recommend that Titan Shareholders vote in favour of the Transaction at the Titan Shareholder Meeting. Raymond James provided a fairness opinion to the board of directors of Titan, stating that, as of the date of such opinion and based upon and subject to the assumptions, limitations and qualifications stated in such opinion, the consideration payable pursuant to the Transaction is fair, from a financial point of view, to the Titan Shareholders.

Conditions to Completion of the Transaction

The completion of the Transaction is subject to the satisfaction of various conditions as are standard for a transaction of this nature, including, but not limited to: (i) receipt of all requisite regulatory, TSX, and TSXV approvals and all government approvals, authorizations or consents; (ii) the absence of any material change or change in a material fact or a new material fact affecting Titan or Conavi; (iii) the approvals of both the Titan Shareholders and the Conavi shareholders; (iv) the completion of the Concurrent Financing for aggregate gross proceeds of at least $15,000,000; (v) Titan having the net cash balance set forth in the Agreement immediately prior to closing the Transaction; and (vi) certain other conditions set forth in the Agreement. There can be no assurance that the Transaction will be completed on the terms proposed above or at all.

Concurrently with signing the Agreement, the directors and officers of Conavi have agreed to support the proposed Transaction and have either entered into or are expected to enter into lock-up agreements with Titan to vote in favour of the Transaction at the special meeting of Conavi shareholders.   All of the directors and officers of Titan have agreed to support the proposed Transaction and have each entered into lock-up agreements with Conavi to vote in favour of the Transaction at the Titan Shareholder Meeting.

The Combined Entity

        TSXV Listing

The Combined Entity is expected to be a Tier 1 technology issuer under the policies of the TSXV. In connection with the application to list the Combined Entity Shares on the TSXV, the Titan Circular will be prepared using the Form 3D1 Information Required in an Information Circular for a Reverse Take-Over and will be available on SEDAR+ at www.sedarplus.com under Titan’s profile once finalized.

        10% Shareholder

It is anticipated that immediately following the Transaction, the only shareholder that will hold greater than 10% of the issued and outstanding Combined Entity shares will be Carlyle Services Limited Liability Company.

Officers and Directors of the Combined Entity

Concurrent with the completion of the Transaction, all officers and certain directors of Titan will resign and be replaced by nominees and appointees put forth by Conavi.

Advisors and Counsel

In connection with the Transaction, Raymond James Ltd. is acting as financial advisor to Titan and Borden Ladner Gervais LLP is acting as legal counsel to Titan.

Mintz LLP is acting as legal counsel to Conavi.

About Titan Medical

Titan Medical Inc. (TSX: TMD; OTC: TMDIF), a medical technology company incorporated under the Business Corporations Act (Ontario) and headquartered in Toronto, Ontario, has developed an expansive patent portfolio related to the enhancement of robotic assisted surgery (RAS), including through a single access point, and is currently focused on evaluating new opportunities to further develop and license its intellectual property.

Cautionary Note

Completion of the Transaction is subject to a number of conditions, including but not limited to, TSXV acceptance and shareholder approval of both Conavi and Titan. The Transaction cannot close until the required shareholder approvals are obtained. There can be no assurance that the Transaction will be completed as proposed or at all.

Investors are cautioned that, except as disclosed in the management information circular to be prepared in connection with the Transaction, any information released or received with respect to the Transaction may not be accurate or complete and should not be relied upon. Trading in the securities of Titan should be considered highly speculative.

This news release shall not constitute an offer to sell or the solicitation of an offer to buy any securities in any jurisdiction.

The TSXV has in no way passed upon the merits of the proposed Transaction and has neither approved nor disapproved the contents of this news release.

Cautionary Statement Regarding Forward-Looking Information

This news release contains “forward-looking statements” within the meaning of applicable Canadian and U.S. securities laws, which reflect the current expectations of management of Titan’s future growth, results of operations, performance and business prospects and opportunities. Forward-looking statements are frequently, but not always, identified by words such as “may”, “would”, “could”, “will”, “anticipate”, “believe”, “plan”, “expect”, “intend”, “estimate”, “potential for” and similar expressions, although these words may not be present in all forward-looking statements. Forward-looking statements that appear in this release may include, without limitation, references to: Titan evaluating new opportunities to further develop and license its intellectual property, the anticipated closing date and completion of the Transaction on the terms as announced or at all, the execution of lock-up agreements by certain directors and officers of Conavi, the expected timing and matters to be considered at the Titan Shareholder Meeting, the anticipated benefits of the Transaction, completion of the Concurrent Financing, matters related to the expected business of the Combined Entity, and the delisting of the Titan Shares from the TSX and the listing of the Combined Entity on the TSXV.

These forward-looking statements reflect management’s current beliefs with respect to future events, and are based on information currently available to management that, while considered reasonable by management as of the date on which the statements are made, are inherently subject to significant business, economic and competitive uncertainties and contingencies which could result in actions, events, conditions, results, performance or achievements to be materially different from those projected in the forward-looking statements. Forward-looking statements involve significant risks, uncertainties and assumptions and many factors could cause Titan’s actual results, performance or achievements to be materially different from any future results, performance or achievements that may be expressed or implied by such forward-looking statements. Such factors and assumptions include, but are not limited to, Titan’s ability to retain key personnel; its ability to execute on its business plans and strategies; its ability to continue to license some or all its intellectual property to third parties and receive any material consideration and other factors listed in the “Risk Factors” section of Titan’s Annual Information Form for the fiscal year ended December 31, 2022 (which may be viewed at www.sedarplus.com). Should one or more of these risks or uncertainties materialize, or should assumptions underlying the forward-looking statements prove incorrect, actual results, performance, or achievements may vary materially from those expressed or implied by the forward-looking statements contained in this news release. These factors should be considered carefully, and prospective investors should not place undue reliance on the forward-looking statements.

Although the forward-looking statements contained in the news release are based upon what management currently believes to be reasonable assumptions and Titan has attempted to identify important factors that could cause actual actions, events, conditions, results, performance or achievements to differ materially from those described in forward-looking statements, Titan cannot assure prospective investors that actual results, performance or achievements will be consistent with these forward-looking statements. Except as required by law, Titan expressly disclaims any intention or obligation to update or revise any forward-looking statements whether as a result of new information, future events or otherwise. Accordingly, investors should not place undue reliance on forward-looking statements. All the forward-looking statements are expressly qualified by the foregoing cautionary statements.

ContactTitan Medical Inc.                                                Conavi Medical Inc.Chien Huang                                                        Stephen KilmerChief Financial Officer                                          Investor Relationsinvestors@titanmedicalinc.com                            stephen@kilmerlucas.com

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