Exhibit 99.2
PROFOUND MEDICAL CORP.
INTERIM CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
MARCH 31, 2023
PRESENTED IN US DOLLARS (000s)
Profound Medical Corp.
Interim Condensed Consolidated Balance Sheets
In USD (000s)
(Unaudited)
March 31, 2023 | December 31, 2022 | |||||||
| Assets | ||||||||
| Current assets | ||||||||
| Cash | 42,984 | 46,517 | ||||||
| Trade and other receivables (note 3) | 6,995 | 6,344 | ||||||
| Inventory (note 4) | 8,125 | 7,941 | ||||||
| Prepaid expenses and deposits | 861 | 1,222 | ||||||
| Total current assets | 58,965 | 62,024 | ||||||
| Property and equipment (note 5) | 882 | 899 | ||||||
| Intangible assets (note 6) | 630 | 680 | ||||||
| Right-of-use assets (note 7) | 765 | 818 | ||||||
| Total assets | 61,242 | 64,421 | ||||||
| Liabilities | ||||||||
| Current liabilities | ||||||||
| Accounts payable and accrued liabilities | 2,056 | 2,033 | ||||||
| Deferred revenue | 698 | 471 | ||||||
| Long-term debt (note 8) | 924 | 523 | ||||||
| Provisions | 65 | 58 | ||||||
| Derivative financial instrument (note 8) | 442 | 563 | ||||||
| Lease liabilities (note 9) | 242 | 239 | ||||||
| Income taxes payable | 347 | 298 | ||||||
| Total current liabilities | 4,774 | 4,185 | ||||||
| Long-term debt (note 8) | 6,226 | 6,651 | ||||||
| Deferred revenue | 752 | 764 | ||||||
| Lease liabilities (note 9) | 755 | 817 | ||||||
| Total liabilities | 12,507 | 12,417 | ||||||
| Shareholders’ Equity | ||||||||
| Share capital (note 10) | 209,404 | 205,825 | ||||||
| Contributed surplus | 18,644 | 18,704 | ||||||
| Accumulated other comprehensive loss | 16,790 | 16,837 | ||||||
| Deficit | (196,103 | ) | (189,362 | ) | ||||
| Total Shareholders’ Equity | 48,735 | 52,004 | ||||||
| Total Liabilities and Shareholders’ Equity | 61,242 | 64,421 | ||||||
The accompanying notes are an integral part of these interim condensed consolidated financial statements.
Profound Medical Corp.
Interim Condensed Consolidated Statements of Loss and Comprehensive Loss
In USD (000s)
(Unaudited)
| Three months ended March 31, 2023 $ | Three months ended March 31, 2022 $ | |||||||
| Revenue (note 12) | ||||||||
| Recurring - non-capital | 1,467 | 1,024 | ||||||
| Capital equipment | 393 | 340 | ||||||
| 1,860 | 1,364 | |||||||
| Cost of sales (note 13) | 647 | 928 | ||||||
| Gross profit | 1,213 | 436 | ||||||
| Operating expenses (note 13) | ||||||||
| Research and development | 3,840 | 3,180 | ||||||
| General and administrative | 2,106 | 2,346 | ||||||
| Selling and distribution | 2,105 | 2,202 | ||||||
| Total operating expenses | 8,051 | 7,728 | ||||||
| Operating Loss | 6,838 | 7,292 | ||||||
| Net finance (income) costs (note 14) | (145 | ) | 892 | |||||
| Loss before income taxes | 6,693 | 8,184 | ||||||
| Income taxes | 48 | 31 | ||||||
| Net loss attributed to shareholders for the period | 6,741 | 8,215 | ||||||
| Other comprehensive loss | ||||||||
| Item that may be reclassified to loss | ||||||||
| Foreign currency translation adjustment - net of tax | 47 | 2,293 | ||||||
| Net loss and comprehensive loss for the period | 6,788 | 10,508 | ||||||
| Loss per share (note 15) | ||||||||
| Basic and diluted loss per common share | 0.32 | 0.40 | ||||||
The accompanying notes are an integral part of these interim condensed consolidated financial statements.
Profound Medical Corp.
Interim Condensed Consolidated Statements of Changes in Shareholders’ Equity
In USD (000s)
(Unaudited)
| Number of shares | Share capital $ | Contributed surplus $ | Accumulated other comprehensive income $ | Deficit $ | Total $ | |||||||||||||||||||
| Balance – January 1, 2022 | 20,776,217 | 219,579 | 16,986 | 4,746 | (160,693 | ) | 80,618 | |||||||||||||||||
| Net loss for the period | - | - | - | - | (8,215 | ) | (8,215 | ) | ||||||||||||||||
| Cumulative translation adjustment – net of tax of $nil | - | 3,210 | 263 | (2,293 | ) | - | 1,180 | |||||||||||||||||
| Exercise of share options | 3,300 | 8 | (2 | ) | - | - | 6 | |||||||||||||||||
| Share-based compensation (note 11) | - | - | 875 | - | - | 875 | ||||||||||||||||||
| Balance – March 31, 2022 | 20,779,517 | 222,797 | 18,122 | 2,453 | (168,908 | ) | 74,464 | |||||||||||||||||
| Balance – January 1, 2023 | 20,879,497 | 205,825 | 18,704 | 16,837 | (189,362 | ) | 52,004 | |||||||||||||||||
| Net loss for the period | - | - | - | - | (6,741 | ) | (6,741 | ) | ||||||||||||||||
| Cumulative translation adjustment – net of tax of $nil | - | 169 | (14 | ) | (47 | ) | - | 108 | ||||||||||||||||
| Exercise of share options | 500 | 1 | (1 | ) | - | - | - | |||||||||||||||||
| Exercise of warrants | 234,335 | 3,409 | (986 | ) | - | - | 2,423 | |||||||||||||||||
| Share-based compensation (note 11) | - | - | 941 | - | - | 941 | ||||||||||||||||||
| Balance – March 31, 2023 | 21,114,332 | 209,404 | 18,644 | 16,790 | (196,103 | ) | 48,735 | |||||||||||||||||
The accompanying notes are an integral part of these interim condensed consolidated financial statements.
Profound Medical Corp.
Interim Condensed Consolidated Statements of Cash Flows
In USD (000s)
(Unaudited)
| Three months ended March 31, 2023 $ | Three months ended March 31, 2022 $ | |||||||
| Operating activities | ||||||||
| Net loss for the period | (6,741 | ) | (8,215 | ) | ||||
| Adjustments to reconcile net loss to net cash flows from operating activities: | ||||||||
| Depreciation of property and equipment (note 5) | 179 | 154 | ||||||
| Amortization of intangible assets (note 6) | 50 | 265 | ||||||
| Depreciation of right-of-use assets (note 7) | 54 | 60 | ||||||
| Share-based compensation (note 11) | 941 | 875 | ||||||
| Interest and accretion expense | 192 | 16 | ||||||
| Deferred revenue | 212 | 127 | ||||||
| Change in fair value of derivative financial instrument (note 14) | (121 | ) | (77 | ) | ||||
| Change in amortized cost of trade and other receivables (note 3) | (39 | ) | (44 | ) | ||||
| Changes in non-cash working capital balances | ||||||||
| Trade and other receivables | (600 | ) | (365 | ) | ||||
| Prepaid expenses and deposits | 364 | 273 | ||||||
| Inventory | (330 | ) | (631 | ) | ||||
| Accounts payable and accrued liabilities | (21 | ) | (433 | ) | ||||
| Provisions | 6 | 13 | ||||||
| Income taxes payable | 48 | - | ||||||
| Foreign exchange on cash | (17 | ) | 123 | |||||
| Net cash flow used in operating activities | (5,823 | ) | (7,859 | ) | ||||
| Financing activities | ||||||||
| Payment of long-term debt (note 8) | (206 | ) | - | |||||
| Proceeds from share options exercised | - | 6 | ||||||
| Proceeds from warrants exercised | 2,423 | - | ||||||
| Payment of lease liabilities (note 9) | (73 | ) | (81 | ) | ||||
| Total cash from (used in) financing activities | 2,144 | (75 | ) | |||||
| Net change in cash during the period | (3,679 | ) | (7,934 | ) | ||||
| Foreign exchange on cash | 146 | 906 | ||||||
| Cash – Beginning of period | 46,517 | 67,152 | ||||||
| Cash – End of period | 42,984 | 60,124 | ||||||
The accompanying notes are an integral part of these interim condensed consolidated financial statements.
Profound Medical Corp.
Notes to Interim Condensed Consolidated Financial Statements
March 31, 2023
In USD (000s)
(Unaudited)
| 1 | Description of business |
Profound Medical Corp. (Profound) and its subsidiaries (together, the Company) were incorporated under the Ontario Business Corporations Act on July 16, 2014. The Company is a medical technology company developing treatments to ablate the prostate gland, uterine fibroids, osteoid osteoma and nerves for palliative pain relief for patients with metastatic bone disease.
The Company’s registered address is 2400 Skymark Avenue, Unit 6, Mississauga, Ontario, L4W 5K5, Canada.
| 2 | Summary of significant accounting policies and basis of preparation |
Basis of preparation
The Company prepares its consolidated financial statements in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board (IFRS), applicable to the preparation of interim condensed consolidated financial statements, including International Accounting Standards (IAS) 34, Interim Financial Reporting. These interim condensed consolidated financial statements are presented in US dollars and should be read in conjunction with the Company’s annual financial statements for the year ended December 31, 2022, which were prepared in accordance with IFRS.
These interim condensed consolidated financial statements are prepared in accordance with the accounting policies as set out in the Company’s annual consolidated financial statements for the year ended December 31, 2022 prepared in accordance with IFRS. The presentation of these interim condensed consolidated financial statements is consistent with the presentation of the annual consolidated financial statements
The Board of Directors approved these consolidated financial statements on May 10, 2023. These consolidated financial statements comply with IFRS.
The interim condensed consolidated financial statements were prepared on a going concern basis under the historical cost convention, except for the derivative financial instrument, which is measured at fair value through profit or loss.
The fair values of cash, trade and other receivables, accounts payable and accrued liabilities and lease liabilities approximate their carrying values, due to their relatively short periods to maturity. The fair value of the long-term debt approximates its carrying amount as it has a floating interest rate.
| (1) |
Profound Medical Corp.
Notes to Interim Condensed Consolidated Financial Statements
March 31, 2023
In USD (000s)
(Unaudited)
| 3 | Trade and other receivables |
The trade and other receivables balance comprises the following:
March 31, 2023 | December 31, 2022 | |||||||
| Trade receivables | 6,839 | 5,837 | ||||||
| Indirect tax receivables | 155 | 494 | ||||||
| Other receivables | 1 | 13 | ||||||
| Total trade and other receivables | 6,995 | 6,344 | ||||||
Trade receivables past due represents amounts not collected beyond the customer’s contractual terms. The Company applies the simplified approach to provide for expected credit losses prescribed by IFRS 9, which permits the use of the lifetime expected loss provision for all trade receivables. At March 31, 2023 and December 31, 2022 there were no trade receivables that were past due.
Management continually reviews the future cash flows used in the calculation of the amortized cost of its trade and other receivables. Due to the COVID-19 pandemic and access to customer locations, certain trade and other receivables are expected to have a longer repayment term due to the payment term being based on installation of the device. The Company recognized $39 of interest income for the three months ended March 31, 2023 ($44 for the three months ended March 31, 2022).
| 4 | Inventory |
March 31, 2023 | December 31, 2022 | |||||||
| Finished goods | 5,672 | 5,455 | ||||||
| Raw materials | 2,464 | 2,491 | ||||||
| Inventory provision | (11 | ) | (5 | ) | ||||
| Total inventory | 8,125 | 7,941 | ||||||
During the three months ended March 31, 2023, $476 (three months ended March 31, 2022 - $627) of inventory was recognized in cost of sales. The Company increased its inventory provision by $6 during the three months ended March 31, 2023 (increased for the three months ended March 31, 2022 - $6). There were no other inventory writedowns charged to cost of sales during the period ended March 31, 2023.
| (2) |
Profound Medical Corp.
Notes to Interim Condensed Consolidated Financial Statements
March 31, 2023
In USD (000s)
(Unaudited)
| 5 | Property and equipment |
| Leasehold improvements $ | Equipment under lease $ | Total $ | ||||||||||
| At January 1, 2023 | ||||||||||||
| Cost | 542 | 1,835 | 2,377 | |||||||||
| Accumulated depreciation | (330 | ) | (1,148 | ) | (1,478 | ) | ||||||
| Net book value | 212 | 687 | 899 | |||||||||
| Three months ended March 31, 2023 | ||||||||||||
| Opening net book value | 212 | 687 | 899 | |||||||||
| Additions | - | 161 | 161 | |||||||||
| Foreign exchange | - | 1 | 1 | |||||||||
| Depreciation | (15 | ) | (164 | ) | (179 | ) | ||||||
| Closing net book value | 197 | 685 | 882 | |||||||||
| At March 31, 2023 | ||||||||||||
| Cost | 542 | 1,996 | 2,538 | |||||||||
| Accumulated depreciation | (345 | ) | (1,311 | ) | (1,656 | ) | ||||||
| Net book value | 197 | 685 | 882 | |||||||||
| 6 | Intangible assets |
| Exclusive licence agreement $ | Software $ | Total $ | ||||||||||
| As at January 1, 2023 | ||||||||||||
| Cost | 231 | 978 | 1,209 | |||||||||
| Accumulated amortization | (96 | ) | (433 | ) | (529 | ) | ||||||
| Net book value | 135 | 545 | 680 | |||||||||
| Three months ended March 31, 2023 | ||||||||||||
| Opening net book value | 135 | 545 | 680 | |||||||||
| Amortization | (5 | ) | (45 | ) | (50 | ) | ||||||
| Closing net book value | 130 | 500 | 630 | |||||||||
| At March 31, 2023 | ||||||||||||
| Cost | 231 | 978 | 1,209 | |||||||||
| Accumulated amortization | (101 | ) | (478 | ) | (579 | ) | ||||||
| Net book value | 130 | 500 | 630 | |||||||||
| (3) |
Profound Medical Corp.
Notes to Interim Condensed Consolidated Financial Statements
March 31, 2023
In USD (000s)
(Unaudited)
| 7 | Right-of-use assets |
| Leased premises $ | ||||
| As at January 1, 2023 | ||||
| Cost | 1,679 | |||
| Accumulated depreciation | (861 | ) | ||
| Net book value | 818 | |||
| Three months ended March 31, 2023 | ||||
| Opening net book value | 818 | |||
| Foreign exchange | 1 | |||
| Depreciation | (54 | ) | ||
| Closing net book value | 765 | |||
| As at March 31, 2023 | ||||
| Cost | 1,679 | |||
| Accumulated depreciation | (914 | ) | ||
| Net book value | 765 | |||
The Company leases office premises in Mississauga, Canada. This lease agreement is entered into for a ten-year period.
| 8 | Long-term debt |
On November 3, 2022, the Company signed a term loan agreement with CIBC Innovation Banking (CIBC) to provide a secured loan for total gross proceeds of C$10,000 maturing on November 3, 2027 with an interest rate based on prime plus 2%. The Company is required to make interest only payments until October 31, 2023 with monthly repayments of the principal of C$208 plus accrued interest commencing on October 31, 2023. All obligations of the Company under the term loan agreement were guaranteed by current and future subsidiaries of the Company and included security of first priority interests in the assets of the Company and its subsidiaries. The Company has financial covenants in relation to the CIBC loan where unrestricted cash is at all times greater than EBITDA for the most recent six month period, reported on a monthly basis and that revenue for any fiscal quarter must be 15% greater than revenue for the same fiscal quarter in the prior fiscal year, reported on a quarterly basis. The Company is in compliance with these financial covenants as at March 31, 2023. Future compliance with the financial covenants included in the CIBC loan is dependent upon achieving certain revenue, EBITDA, and anticipated cash levels. Management considers there is a potential for a breach of these covenants in 2023 due to the volatility and unpredictability of revenues experienced in the last quarters.
| (4) |
Profound Medical Corp.
Notes to Interim Condensed Consolidated Financial Statements
March 31, 2023
In USD (000s)
(Unaudited)
March 31, 2023 | December 31, 2022 | |||||||
| Balance - Beginning of Period | 7,174 | - | ||||||
| Proceeds received, net | - | 7,124 | ||||||
| Fair value of warrants | - | (129 | ) | |||||
| Interest and accretion expense | 180 | 115 | ||||||
| Foreign exchange | 2 | 108 | ||||||
| Repayment | (206 | ) | (44 | ) | ||||
| Balance - End of Period | 7,150 | 7,174 | ||||||
| Less: Current portion | 924 | 523 | ||||||
| Long-term portion | 6,226 | 6,651 | ||||||
In connection with this term loan agreement on November 3, 2022, the Company also issued 47,287 common share purchase warrants to CIBC, with each warrant entitling the holder to acquire one common share at a price of C$5.29 per common share until the date that is 10 years from the closing of the term loan agreement, with a cashless exercise feature. The cashless exercise feature causes the conversion ratio to be variable and the warrants are therefore classified as a financial liability. Gains and losses on the warrants are recorded within net finance (income) costs on the consolidated statements of loss and comprehensive loss. A pricing model with observable market based inputs was used to estimate the fair value of the warrants issued and is considered level 2 in the fair value hierarchy. The estimated fair value of the warrants as at March 31, 2023 was $349 (December 31, 2022 - $418). The variables used to determine the fair values are as follows:
| March 31, 2023 | December 31, 2022 | |||||||
| Share price | C$12.53 | C$14.48 | ||||||
| Volatility | 70 | % | 70 | % | ||||
| Expected life of warrants | 6.6 years | 6.9 years | ||||||
| Risk free interest rate | 2.87 | % | 3.30 | % | ||||
| Dividend yield | - | - | ||||||
In connection with the July 30, 2018 CIBC term loan agreement which was previously repaid, the Company also issued 32,171 common share purchase warrants to CIBC, with each warrant entitling the holder to acquire one common share at a price of C$9.70 per common share until the date that is 60 months from the closing of the term loan agreement, with a cashless exercise feature. The cashless exercise feature causes the conversion ratio to be variable and the warrants are therefore classified as a financial liability. Gains and losses on the warrants are recorded within net finance (income) costs on the consolidated statements of loss and comprehensive loss. A pricing model with observable market based inputs was used to estimate the fair value of the warrants issued and is considered level 2 in the fair value hierarchy. The estimated fair value of the warrants as at March 31, 2023 was $93 (December 31, 2022 - $145). The variables used to determine the fair values are as follows:
| (5) |
Profound Medical Corp.
Notes to Interim Condensed Consolidated Financial Statements
March 31, 2023
In USD (000s)
(Unaudited)
| March 31, 2023 | December 31, 2022 | |||||||
| Share price | C$12.53 | C$14.48 | ||||||
| Volatility | 84 | % | 84 | % | ||||
| Expected life of warrants | 0.3 years | 0.6 years | ||||||
| Risk free interest rate | 3.78 | % | 4.07 | % | ||||
| Dividend yield | - | - | ||||||
| 9 | Lease liabilities |
| March 31, 2023 $ | December 31, 2022 | |||||||
| Balance – Beginning of Period | 1,056 | 1,377 | ||||||
| Repayments | (73 | ) | (312 | ) | ||||
| Foreign exchange | 2 | (68 | ) | |||||
| Interest and accretion expense | 12 | 59 | ||||||
| Balance – End of Period | 997 | 1,056 | ||||||
| Less: Current portion | 242 | 239 | ||||||
| Long-term portion | 755 | 817 | ||||||
| 10 | Share capital |
Common shares
The Company is authorized to issue an unlimited number of common shares.
Issued and outstanding (with no par value)
March 31, 2023 | December 31, 2022 | |||||||
| 21,114,332 (December 31, 2022 – 20,879,497) common shares | 209,404 | 205,825 | ||||||
Warrants
A summary of warrants outstanding is shown below:
| Number of warrants | Weighted average exercise price C$ | Weighted average remaining contractual life (years) | ||||||||||
| Balance - January 1, 2023 | 772,270 | 13.29 | 0.82 | |||||||||
| Expired | (458,477 | ) | 14.00 | - | ||||||||
| Exercised | (234,335 | ) | 14.00 | 0.05 | ||||||||
| Balance - March 31, 2023 | 79,458 | 7.08 | 5.85 | |||||||||
| (6) |
Profound Medical Corp.
Notes to Interim Condensed Consolidated Financial Statements
March 31, 2023
In USD (000s)
(Unaudited)
| 11 | Share-based payments |
Share options
Compensation expense related to share options for the three months ended March 31, 2023 was $415 (three months ended March 31, 2022 – $497). A summary of the share option changes during the period presented and the total number of share options outstanding as at those dates are set forth below:
| Number of options | Weighted average exercise price C$ | |||||||
| Balance - January 1, 2023 | 1,511,773 | 16.07 | ||||||
| Granted | 13,900 | 13.39 | ||||||
| Exercised | (500 | ) | 2.40 | |||||
| Forfeited/expired | (4,148 | ) | 13.44 | |||||
| Balance - March 31, 2023 | 1,521,025 | 16.06 | ||||||
The Company estimated the fair value of the share options granted during the period using the Black-Scholes option pricing model with the weighted average assumptions below.
| March 22, 2023 | ||||
| Exercise price | C$13.39 | |||
| Expected volatility | 70 | % | ||
| Expected life of options | 6 years | |||
| Risk-free interest rate | 3.38 | % | ||
| Dividend yield | - | |||
| Number of share options issued | 13,900 | |||
The following table summarizes information about the share options outstanding as at March 31, 2023:
| Exercise price C$ | Number of options outstanding | Weighted average remaining contractual life (years) | Number of options exercisable | |||||||||
| 2.01 – 4.00 | 1,300 | 0.22 | 1,300 | |||||||||
| 8.01 – 10.00 | 347,197 | 4.35 | 318,197 | |||||||||
| 10.01 – 12.00 | 121,262 | 5.18 | 112,362 | |||||||||
| 12.01 – 14.00 | 26,200 | 7.69 | 8,300 | |||||||||
| 14.01 – 16.00 | 147,956 | 6.02 | 131,754 | |||||||||
| 16.01 – 18.00 | 434,889 | 7.17 | 306,278 | |||||||||
| 20.01 – 22.00 | 600 | 7.39 | 378 | |||||||||
| 22.01 – 24.00 | 429,721 | 8.03 | 197,921 | |||||||||
| 24.01 – 26.00 | 1,900 | 7.68 | 1,091 | |||||||||
| 28.01 – 30.00 | 10,000 | 7.95 | 5,002 | |||||||||
| 1,521,025 | 6.76 | 1,082,583 | ||||||||||
| (7) |
Profound Medical Corp.
Notes to Interim Condensed Consolidated Financial Statements
March 31, 2023
In USD (000s)
(Unaudited)
Long-term incentive plan
Share-based compensation expense related to long-term incentive plan (LTIP) for the three months ended March 31, 2023 was $526 (three months ended March 31, 2022 – $378).
A summary of the RSU changes during the period are set forth below:
| Number of RSUs | Weighted average remaining contractual life (years) | |||||||
| Balance - January 1, 2023 | 443,861 | 2.38 | ||||||
| Granted | 10,000 | 3.00 | ||||||
| Forfeited | (9,000 | ) | 2.38 | |||||
| Balance - March 31, 2023 | 444,861 | 2.14 | ||||||
| 12 | Revenue |
| Three months ended March 31, | ||||||||||||||||||||||||
| 2023 $ | 2022 $ | |||||||||||||||||||||||
| Contracts with customers | Leasing | Total | Contracts with customers | Leasing | Total | |||||||||||||||||||
| Recurring - non-capital | 1,257 | 210 | 1,467 | 894 | 130 | 1,024 | ||||||||||||||||||
| Capital equipment | 393 | - | 393 | 340 | - | 340 | ||||||||||||||||||
| 1,650 | 210 | 1,860 | 1,234 | 130 | 1,364 | |||||||||||||||||||
| 13 | Nature of expenses |
| Three months ended March 31, 2023 $ | Three months ended March 31, 2022 $ | |||||||
| Production and manufacturing costs | 216 | 599 | ||||||
| Salaries and benefits | 3,757 | 3,968 | ||||||
| Consulting fees | 1,018 | 1,123 | ||||||
| Research and development expenses | 816 | 238 | ||||||
| Sales and marketing expenses | 483 | 258 | ||||||
| Amortization and depreciation | 283 | 479 | ||||||
| Share-based compensation | 941 | 875 | ||||||
| Rent | 281 | 97 | ||||||
| Software/hardware | 160 | 276 | ||||||
| Insurance | 360 | 310 | ||||||
| Office and shop supplies | 133 | 238 | ||||||
| Other expenses | 250 | 195 | ||||||
| 8,698 | 8,656 | |||||||
| (8) |
Profound Medical Corp.
Notes to Interim Condensed Consolidated Financial Statements
March 31, 2023
In USD (000s)
(Unaudited)
| 14 | Net finance (income) costs |
| Three months ended March 31, 2023 $ | Three months ended March 31, 2022 $ | |||||||
| Change in fair value of derivative financial instrument | (121 | ) | (77 | ) | ||||
| Lease liability interest expense (note 9) | 12 | 16 | ||||||
| Interest income | (297 | ) | (34 | ) | ||||
| Change in amortized cost of trade and other receivables (note 3) | (39 | ) | (44 | ) | ||||
| CIBC loan interest expense (note 8) | 180 | - | ||||||
| Foreign exchange loss | 120 | 1,031 | ||||||
| (145 | ) | 892 | ||||||
Foreign currency risk occurs as a result of foreign exchange rate fluctuations between the time a transaction is recorded and the time it is settled.
The Company purchases goods and services denominated in foreign currencies and, accordingly, is subject to foreign currency risk. The Company’s financial instruments denominated in foreign currencies are shown below in US dollars.
| March 31, 2023 | ||||||||||||||||||||
| US dollars $ | Euro $ | Canadian dollars $ | Chinese renminbi $ | Total $ | ||||||||||||||||
| Cash | 29,034 | 808 | 12,975 | 167 | 42,984 | |||||||||||||||
| Trade and other receivables | 4,765 | 1,640 | 590 | - | 6,995 | |||||||||||||||
| Accounts payable and accrued liabilities | (145 | ) | (494 | ) | (1,400 | ) | (17 | ) | (2,056 | ) | ||||||||||
| Derivative financial instrument | - | - | (442 | ) | - | (442 | ) | |||||||||||||
| Lease liabilities | - | - | (997 | ) | - | (997 | ) | |||||||||||||
| Long-term debt | - | - | (7,150 | ) | - | (7,150 | ) | |||||||||||||
As at March 31, 2023, if foreign exchange rates had been 5% higher, with all other variables held constant, loss and comprehensive loss would have been $284 higher, mainly as a result of the translation of foreign currency denominated cash, trade and other receivables, accounts payable and accrued liabilities, other liabilities and lease liabilities. The Company does not use derivatives to reduce exposure to foreign currency risk.
| (9) |
Profound Medical Corp.
Notes to Interim Condensed Consolidated Financial Statements
March 31, 2023
In USD (000s)
(Unaudited)
| 15 | Loss per share |
The following table shows the calculation of basic and diluted loss per share:
| Three months ended March 31, 2023 | Three months ended March 31, 2022 | |||||||
| Net loss for the period | $ | 6,741 | $ | 8,215 | ||||
| Weighted average number of common shares | 20,922,209 | 20,776,437 | ||||||
| Basic and diluted loss per share | $ | 0.32 | $ | 0.40 | ||||
The computation of diluted loss per share is equal to the basic loss per share due to the anti-dilutive effect of the share options, RSUs, DSUs and warrants. Of the 1,521,025 share options (March 31, 2022 – 1,887,679), 444,861 RSUs (March 31, 2022 – 213,983), 60,000 DSUs (March 31, 2022 – nil) and 79,458 warrants (March 31, 2022 – 724,983) not included in the calculation of diluted loss per share for the period ended March 31, 2023, 1,162,041 (March 31, 2022 – 1,589,646) were exercisable.
| 16 | Related party transactions |
Key management includes the Company’s directors and senior management team. The remuneration of directors and the senior management team was as follows:
| Three months ended March 31, 2023 $ | Three months ended March 31, 2022 $ | |||||||
| Salaries and employee benefits | 478 | 759 | ||||||
| Directors’ fees | 81 | 63 | ||||||
| Share-based compensation | 777 | 156 | ||||||
| 1,336 | 978 | |||||||
Executive employment agreements allow for additional payments in the event of a liquidity event, or if the executive is terminated without cause.
| 17 | Segment reporting |
The Company’s operations are categorized into one industry segment, which is medical technology focused on magnetic resonance guided ablation procedures for the treatments to ablate the prostate gland, uterine fibroids, osteoid osteoma and nerves for palliative pain relief for patients with metastatic bone disease. The Company is managed geographically in Canada, Germany, USA, China and Finland.
| (10) |
Profound Medical Corp.
Notes to Interim Condensed Consolidated Financial Statements
March 31, 2023
In USD (000s)
(Unaudited)
For the three months ended March 31, 2023:
| Canada $ | USA $ | Germany $ | Total $ | |||||||||||||
| Revenue | ||||||||||||||||
| Recurring - non-capital | 41 | 1,060 | 366 | 1,467 | ||||||||||||
| Capital equipment | - | - | 393 | 393 | ||||||||||||
| 41 | 1,060 | 759 | 1,860 | |||||||||||||
For the three-months ended March 31, 2022:
| Canada $ | USA $ | Germany $ | Total $ | |||||||||||||
| Revenue | ||||||||||||||||
| Recurring - non-capital | 130 | 613 | 281 | 1,024 | ||||||||||||
| Capital equipment | 340 | - | - | 340 | ||||||||||||
| 470 | 613 | 281 | 1,364 | |||||||||||||
Other financial information by segment as at March 31, 2023:
| Canada $ | USA $ | Germany $ | China $ | Finland $ | Total $ | |||||||||||||||||||
| Total assets | 52,556 | 3,733 | 1,867 | 179 | 2,907 | 61,242 | ||||||||||||||||||
| Intangible assets | 630 | - | - | - | - | 630 | ||||||||||||||||||
| Property and equipment | 197 | 685 | - | - | - | 882 | ||||||||||||||||||
| Right-of-use assets | 765 | - | - | - | - | 765 | ||||||||||||||||||
| Amortization of intangible assets | 50 | - | - | - | - | 50 | ||||||||||||||||||
| Depreciation of property and equipment | 14 | 165 | - | - | - | 179 | ||||||||||||||||||
| Depreciation of right-of-use assets | 54 | - | - | - | - | 54 | ||||||||||||||||||
| (11) |
Profound Medical Corp.
Notes to Interim Condensed Consolidated Financial Statements
March 31, 2023
In USD (000s)
(Unaudited)
Other financial information by segment as at December 31, 2022:
| Canada $ | USA $ | Germany $ | China $ | Finland $ | Total $ | |||||||||||||||||||
| Total assets | 57,694 | 3,010 | 1,288 | 56 | 2,373 | 64,421 | ||||||||||||||||||
| Intangible assets | 680 | - | - | - | - | 680 | ||||||||||||||||||
| Property and equipment | 212 | 687 | - | - | - | 899 | ||||||||||||||||||
| Right-of-use assets | 818 | - | - | - | - | 818 | ||||||||||||||||||
| Amortization of intangible assets | 704 | - | - | - | - | 704 | ||||||||||||||||||
| Depreciation of property and equipment | 59 | 613 | - | - | - | 672 | ||||||||||||||||||
| Depreciation of right-of-use assets | 219 | - | - | 9 | - | 228 | ||||||||||||||||||
(12)