Part I—Financial Information

Item

1. Interim Financial Statements

Bionik Laboratories Corp.

Condensed Consolidated Balance Sheets

(unaudited) December 31, 2020 March 31,
2020
Assets
Current assets
Cash and cash equivalents $ 895,697 $ 2,269,747
Accounts receivable 174,305 846,964
Prepaid expenses and other current assets 1,658,477 1,632,555
Inventories 839,552 1,059,462
Due from related parties 20,154 17,840
Total current assets 3,588,185 5,826,568
Equipment 105,220 154,144
Intangible assets, net 1,000,131 1,449,924
Goodwill 4,282,984 11,085,984
Total assets $ 8,976,520 $ 18,516,620

Liabilities and Stockholders' Equity
Current liabilities
Accounts payable $ 544,204 $ 857,093
Accrued liabilities 2,067,795 1,647,656
PPP loan 459,912 -
Convertible loans 3,841,384 2,078,833
Deferred revenue, current portion 301,302 200,437
Total current liabilities 7,214,597 4,784,019
Deferred revenue, net of current portion 311,479 415,626
Total liabilities 7,526,076 5,199,645
Commitments and contingencies (Note 10)
Stockholders' Equity
Preferred stock, $0.001 par value; Authorized 5,000,000; (March 31, 2020 – 10,000,000), Issued none
Special voting preferred stock, $0.001 par value; Authorized; Issued – 1 - -
Common stock, $0.001 par value; Authorized – 13,000,000; (March 31, 2020 – 500,000,000) Issued 5,009,151 and 117,683 Exchangeable Shares at December 31, 2020 and March 31, 2020 5,126 5,126
Additional paid-in capital 85,362,618 84,643,570
Accumulated deficit (83,959,449 ) (71,373,870 )
Accumulated other comprehensive income 42,149 42,149
Total stockholders' equity 1,450,444 13,316,975
Total liabilities and stockholders' equity $ 8,976,520 $ 18,516,620


	(unaudited)		March 31,
	September 30, 2021		2021
Assets
Current assets
Cash and cash equivalents	$	4,774,663	$	608,348
Accounts receivable		71,470		451,905
Prepaid expenses and other current assets		1,549,265		1,680,557
Inventories		788,871		692,163
Total current assets		7,184,269		3,432,973
Equipment		57,570		93,577
Intangible assets, net		937,271		976,551
Goodwill		4,282,984		4,282,984
Total assets	$	12,462,094	$	8,786,085

Liabilities and Stockholders' Equity
Current liabilities
Accounts payable	$	377,908	$	454,809
Accrued liabilities		779,901		760,026
PPP loan		0		459,912
Convertible notes		8,491,627		0
Demand loans, current portion		—		2,152,334
Deferred revenue, current portion		195,063		268,083
Total current liabilities		9,844,499		4,095,164
Deferred revenue, net of current portion		280,063		303,917
Demand loans, net of current portion		0		1,105,974
Total liabilities		10,124,562		5,505,055
Commitments and contingencies (Note 9)
Stockholders' Equity
Preferred stock, $0.001 par value; Authorized 5,000,000; Authorized and Issued-1 Special voting preferred stock, $0.001 par value		—		—
Common stock, $0.001 par value; Authorized – 13,000,000; Issued 5,790,920 and 112,440 Exchangeable Shares (March 31, 2021– 5,589,375 and 112,440 Exchangeable Shares)		5,903		5,702
Additional paid-in capital		89,016,953		88,227,506
Accumulated deficit		(86,713,228)		(84,994,327)
Accumulated other comprehensive income		27,904		42,149
Total stockholders' equity		2,337,532		3,281,030
Total liabilities and stockholders' equity	$	12,462,094	$	8,786,085

The accompanying notes are an integral part of these condensed consolidated financial statements.

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Bionik Laboratories Corp.

Condensed Consolidated Statements of Operations ~~and Comprehensive Loss~~

(unaudited)


	Three months ended September 30,				Six months ended September 30,
	2021		2020		2021		2020
Revenues, net	$	227,905	$	292,381	$	899,188	$	550,289
Cost of revenues		80,922		70,047		211,429		132,602
Gross Profit		146,983		222,334		687,759		417,687

Operating expenses
Sales and marketing		438,957		255,756		768,430		494,921
Research and development		85,085		419,606		266,052		803,826
General and administrative		664,523		1,090,379		1,496,744		2,620,883
Total operating expenses		1,188,565		1,765,741		2,531,226		3,919,630

Loss from operations		(1,041,582)		(1,543,407)		(1,843,467)		(3,501,943)
Interest expense, net		225,184		111,408		327,480		186,383
Other expense (income), net		1,223		(27,193)		(452,046)		(53,628)
Total other expense (income)		226,407		84,215		(124,566)		132,755
Net loss	$	(1,267,989)	$	(1,627,622)	$	(1,718,901)	$	(3,634,698)
Loss per share - basic and diluted	$	(0.22)	$	(0.32)	$	(0.30)	$	(0.71)
Weighted average number of shares outstanding – basic and diluted		5,855,512		5,126,834		5,779,076		5,126,834

Three months ended December 31, Nine months ended December 31,
2020 2019 2020 2019
Revenues, net $ 180,409 $ 158,005 $ 730,698 $ 1,230,074
Cost of revenues 9,581 143,595 142,183 562,887
Gross Profit 170,828 14,410 588,515 667,187

Operating expenses
Sales and marketing 325,175 480,834 792,622 1,649,340
Research and development 449,580 1,021,418 1,213,350 2,724,000
General and administrative 983,858 1,193,391 3,052,017 3,440,305
Impairment of goodwill & intangible assets 7,182,053 -- 7,182,053 --
Share-based compensation expense 98,794 447,219 719,048 1,373,195
Total operating expenses 9,039,460 3,142,862 12,959,090 9,186,840

Loss from operations (8,868,632 ) (3,128,452 ) (12,370,575 ) (8,519,653 )
Interest expense, net 79,183 2,788 265,566 172,485
Other expense (income), net 3,066 (161,291 ) (50,562 ) (218,860 )
Total other expense (income) 82,249 (158,503 ) 215,004 (46,375 )
Net loss and comprehensive loss $ (8,950,881 ) $ (2,969,949 ) $ (12,585,579 ) $ (8,473,278 )
Loss per share - basic and diluted $ (1.75 ) $ (0.58 ) $ (2.45 ) $ (1.99 )
Weighted average number of shares outstanding – basic and diluted 5,126,834 5,126,834 5,126,834 4,264,723

The accompanying notes are an integral part of these condensed consolidated financial statements.

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Bionik Laboratories Corp.
Condensed Consolidated Statements of Comprehensive Loss
(unaudited)


Three Months Ended September 30,

Six Months Ended September 30,


2021

2020

2021

2020
Net loss

$
(1,267,989)

$
(1,627,622)

$
(1,718,901)

$
(3,634,698)

Other comprehensive loss components:





Cumulative translation adjustment

(6,447)

0

(14,245)

Total other comprehensive loss

(6,447)

0

(14,245)

—

Comprehensive loss

$
(1,274,436)

$
(1,627,622)

$
(1,733,146)

$
(3,634,698)

The accompanying notes are an integral part of these consolidated financial statements.

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Bionik Laboratories Corp.
Condensed Consolidated Statements of Cash Flows

For the ~~nine~~six month periods ended ~~December 31,~~September 30, 2021 and 2020 ~~and 2019~~
~~(unaudited)~~

(unaudited)

Nine months ended Nine months ended
December 31, 2020 December 31, 2019
Operating activities:
Net loss $ (12,585,579 ) $ (8,473,278 )
Reconciliation of net loss to net cash from operating activities:
Depreciation and amortization 119,664 286,608
Interest expense 265,566 146,144
Allowance for doubtful accounts -- 167,500
Impairment of goodwill & intangible assets 7,182,053 --
Share based compensation expense 719,048 1,373,195
Changes in non-cash working capital items
Accounts receivable 672,659 1,057,564
Prepaid expenses and other current assets (25,922 ) (374,802 )
Due from related parties (2,314 ) (809 )
Inventories 219,910 (1,029,739 )
Accounts payable (318,480 ) (424,805 )
Accrued liabilities 420,139 (465,084 )
Deferred revenue (3,282 ) 209,974
Net cash used in operating activities (3,336,537 ) (7,527,532 )
Investing activities:
Purchases of equipment -- (95,730 )
Net cash used in investing activities -- (95,730 )
Financing activities:
Proceeds from convertible loans 1,502,575 9,070,000
Proceeds from PPP Loan 459,912 --
Repayment of term loan -- (500,000 )
Proceeds from term loan - 500,000
Net cash provided by financing activities 1,962,487 9,070,000
Net (decrease) increase in cash and cash equivalents (1,374,050 ) 1,446,738
Cash and cash equivalents, beginning of the period 2,269,747 446,779
Cash and cash equivalents, end of the period $ 895,697 $ 1,893,517


	Six months ended		Six months ended
	September 30,2021		September 30, 2020
Operating activities:
Net loss	$	(1,718,901)	$	(3,634,698)
Reconciliation of net loss to net cash from operating activities:
Depreciation and amortization		59,039		81,239
Interest expense		325,361		181,481
Share based compensation expense		115,419		620,254
Extinguishment of debt		(459,912)		0
Issuance of common shares in lieu of services		33,000		0
Changes in non-cash working capital items
Accounts receivable		380,435		189,349
Prepaid expenses and other current assets		131,130		(38,743)
Net book value of demonstration inventory sold		16,248		0
Due from related parties		0		(1,311)
Inventories		(96,708)		169,141
Accounts payable		(76,009)		(327,475)
Accrued liabilities		11,974		(31,031)
Deferred revenue		(96,874)		(89,813)
Net cash used in operating activities		(1,375,798)		(2,881,607)
Investing activities:
Purchases of equipment		0		0
Net cash used in investing activities		0		0
Financing activities:
Proceeds from convertible loans		5,000,000		1,502,575
Proceeds from PPP loan		0		459,912
Proceeds from term loan		550,000		0
Net cash provided by financing activities		5,550,000		1,962,487
Effect of exchange rate changes on cash and cash equivalents		(7,887)		0
Net increase (decrease) in cash and cash equivalents		4,166,315		(919,120)
Cash and cash equivalents, beginning of the period		608,348		2,269,747
Cash and cash equivalents, end of the period	$	4,774,663	$	1,350,627

Supplemental noncash financing activities:
Conversion of term loans into option exercises	$	642,153	$	0
Conversion of demand loans into convertible notes	$	3,286,791	$	0

The accompanying notes are an integral part of these condensed consolidated financial statements.

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BIONIK LABORATORIES CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

~~Interim Condensed Consolidated Financial Statements~~

1.Interim Condensed Consolidated Financial Statements

The accompanying unaudited interim condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) for interim information and pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”) for reporting on Form 10-Q. Accordingly, certain information and footnote disclosures required for complete financial statements are not included herein. It is recommended that these financial statements be read in conjunction with the consolidated financial statements and related notes that appear in the Annual Report on Form 10-K of Bionik Laboratories Corp. (“Bionik” or the “Company”) for the fiscal year ended March 31, ~~2020~~2021 filed with the SEC on June ~~30, 2020 (the “2020 Annual Report”).~~24, 2021. In the opinion of the Company, the accompanying unaudited condensed consolidated financial statements contain all adjustments, consisting of only normal recurring adjustments, necessary for a fair statement of its financial position as of ~~December 31, 2020,~~September 30, 2021, and its results of operations for the three and ~~nine~~six months ended ~~December 31,~~September 30, 2021 and 2020, ~~and 2019,~~ and cash flows for the ~~nine~~six months ended ~~December 31, 2020~~September 30, 2021 and ~~2019.~~2020. The condensed consolidated balance sheet at March 31, ~~2020~~2021 was derived from audited annual financial statements, but does not contain all of the footnote disclosures from the annual financial statements. Results of operations for the three and ~~nine~~six months ended ~~December 31, 2020~~September 30, 2021 are not necessarily indicative of the results for the year ending March 31, ~~2021~~2022 or any period thereafter.

Reclassifications

For comparability purposes, certain prior period amounts in the condensed consolidated financial statements have been reclassified to conform to the current period’s presentation within the condensed consolidated statements of operations and comprehensive ~~loss, condensed consolidated statement of cash flows and condensed consolidated balance sheets.~~loss.

Management Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses and related disclosures at the date of the financial statements during the reporting period. Significant estimates are used for, but are not limited to, revenue recognition, allowance for doubtful accounts, inventory reserves, impairment analysis of goodwill and intangibles including their useful lives, research and development accruals, deferred tax assets, liabilities and valuation allowances, and fair value of stock options. The Company assessed certain accounting matters that generally require consideration of forecasted financial information in context with the information reasonably available to the Company and the unknown future impacts of COVID-19 as of ~~December 31, 2020~~September 30, 2021 and through the date of this report filing. On an ongoing basis, management evaluates its estimates and actual results could differ from those estimates.

All adjustments, consisting only of normal recurring items, considered necessary for fair presentation have been included in these consolidated financial statements.

Critical Accounting Policies

The following accounting policies have been updated and adopted as of April 1, 2021 which differ from the accounting policies disclosed in Form 10-K for the year ended March 31, 2021, filed with the SEC on June 24, 2021:

Property and Equipment

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Bionik continually evaluates whether events or circumstances have occurred that indicate that the estimated remaining useful life of its long-lived assets may warrant revision or that the carrying value of these assets may be impaired. Bionik evaluates the realizability of its long-lived assets based on profitability and cash flow expectations for the related asset. Any write-downs are treated as permanent reductions in the carrying amount of the assets. Based on this evaluation, Bionik believes that, as of each of the balance sheet dates presented, none of Bionik��s long-lived assets were impaired.

The useful lives for property and equipment is as follows:


		Useful Life (in years)
Computers and electronics		3
Furniture and fixtures		5
Demonstration equipment		3
Manufacturing equipment		5
Tools and parts		3
Assets under capital lease		Life of lease

Foreign Currency Translation

A portion of Bionik’s operations is conducted through operations in countries other than the United States. Since the Company conduct its business in U.S. dollars, the main exposure, if any, results from changes in the exchange rate between the Canadian dollar and the U.S. dollar. Bionik’s functional currency is the U.S. dollar. The Company’s policy is to reduce exposure to exchange rate fluctuations by having most of Bionik’s assets and liabilities, as well as most of Bionik’s revenues and expenditures, in U.S. dollars, or U.S. dollar linked. The Company has not historically engaged in hedging activities relating to its non-U.S. dollar operations. The Company may incur negative foreign currency conversion charges as a result of changes in currency exchange rates.

The remainder of Bionik’s critical accounting policies and the related judgments and estimates affecting the preparation of its condensed consolidated financial statements are included in our Annual Report on Form 10-K for the year ended March 31, 2021. There have been no other material changes to the Company’s critical accounting policies as of September 30, 2021.

Going Concern

At ~~December 31, 2020,~~September 30, 2021, cash and cash equivalents were ~~$896,000.~~$4.8 million. At ~~December 31, 2020,~~September 30, 2021, the Company had a working capital deficit of ~~$3.6~~$2.7 million and at March 31, ~~2020,~~2021, the Company had a working capital deficit of ~~$1.0~~$0.7 million. At ~~December 31, 2020~~September 30, 2021 and March 31, ~~2020,~~2021, the Company has accumulated deficits of ~~$84.0~~$86.7 million and ~~$71.4 million.~~$85.0 million, respectively. The Company has incurred a net loss and comprehensive loss for the ~~nine~~three months ended ~~December 31,~~September 30, 2021 and 2020 ~~and 2019~~ of ~~$12.6~~$1.3 million and ~~$8.5~~$1.6 million respectively, and for the six months ended September 30, 2021 and 2020 of $1.7 million and $3.6 million, respectively.

On July 15, 2021, the Company commenced a refinancing of its existing indebtedness and launched a new secured convertible promissory note offering of up to $10.0 million. As of September 30, 2021, the Company issued an aggregate of $8.3 million in principal of convertible notes of which an aggregate of $5.0 million was purchased for cash and the remainder was issued as a result of consolidating existing debt. Refer to Note 5- Loans & PPP Loans, for more information.

The Company’s future funding requirements depend on a number of factors, including the rate of market acceptance of its current and future products and the resources the Company devotes to developing and supporting the same. There is no certainty that the Company will be successful in generating sufficient cash flow from operations or achieving and maintaining profitable operations in the future to enable it to meet its obligations as they come due and consequently continue as a going concern.

The Company will require additional financing to fund its operations and it is currently working on securing ~~this~~additional funding through corporate collaborations, public or private equity offerings or debt financings. Sales of additional equity securities by the Company would result in the dilution of the interests of existing stockholders. There can be no assurance that financing will be available when required. In the event that the necessary additional financing is not obtained, the Company would reduce its discretionary overhead costs substantially or otherwise curtail operations.

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The Company expects to raise additional funds to meet the Company’s anticipated cash requirements for the next 12 months; however, these conditions raise substantial doubt about the Company’s ability to continue as a going concern. The accompanying condensed consolidated financial statements do not include any adjustments to reflect the possible future effects on recoverability and classification of assets or the amounts and classification of liabilities that may result from the outcome of this uncertainty.

~~Canada Emergency Wage Subsidy (CEWS)~~

~~CEWS is recognized as other income in the consolidated statement of operations in the period in which the Company recognizes expenses for which CEWS is intended to compensate.~~

~~Goodwill and Intangible Assets~~

2. Goodwill and Intangible Assets

Goodwill represents the excess of the purchase price over the fair value of assets acquired and liabilities assumed in a business combination. The Company does not amortize its goodwill, but instead tests for impairment annually in the fourth quarter and more frequently whenever events or changes in circumstances indicate that fair value of the asset may be less than the carrying value of the asset.

Following the decline of Company sales associated with the global pandemic, management determined there are events and changes in circumstances that indicate the goodwill and other intangible assets are impaired. Accordingly, at December 31, 2020, the Company evaluated the ongoing value of the goodwill and other intangible assets. Based on this evaluation, the Company determined that certain intangible assets were no longer recoverable and were in fact impaired and recorded an impairment charge of $379,000 in the three months ended December 31, 2020. Further, the Company determined that the goodwill with the carrying value of $11.1 million was impaired and recorded an impairment charge of $6.8 million to the estimated value of $4.3 million. Fair value was based on expected future cash flows using Level 3 inputs under ASC 820. The cash flows are those expected to be generated by the market participants, discounted at the weighted average cost of capital.

As noted in the Company’s significant accounting policies, the Company has one reporting unit and its carrying value was compared to its estimated fair value. At December 31, 2020, the Company estimated its fair value using an income approach. The income approach is based on the present value of future cash flows, which are derived from long term financial forecasts, and requires significant assumptions and judgement including among others, a discount rate and a terminal value.

The present value of future cash flows was determined by discounting estimated future cash flows, which included long-term growth rate of 3%, at a weighted average cost of capital (discount rate) of 27%, which considered the risk of achieving the projected cash flows, including the risk applicable to the reporting unit, industry and market as a whole.

Changes to goodwill during the ~~nine~~six months ended ~~December 31, 2020~~September 30, 2021 were as follows:

Total
Balance—March 31, 2020 $ 11,085,984
Impairment of goodwill in period 6,803,000
Balance—December 31, 2020 $ 4,282,984


	Total
Balance—March 31, 2021	$	4,282,984
Adjustments to goodwill		—
Balance— September 30, 2021	$	4,282,984

The Company capitalizes and includes in intangible assets the costs of trademark, patents, exclusive license arrangements and customer relationships. Intangible assets are recorded at fair value at the time of their acquisition and stated net of accumulated amortization. The Company amortizes its intangible assets that have finite lives using either the straight-line or accelerated method, based on the useful life of the asset over which it is expected to be consumed utilizing expected undiscounted future cash flows. Amortization is recorded over the estimated useful lives ranging from 1 to 10 years. The Company evaluates the realizability of its definite lived intangible assets whenever events or changes in circumstances or business conditions indicate that the carrying value of these assets may not be recoverable based on expectations of future undiscounted cash flows for each asset group. If the carrying value of an asset or asset group exceeds its undiscounted cash flows, the Company estimates the fair value of the assets, generally utilizing a discounted cash flow analysis based on the present value of estimated future cash flows to be generated by the assets using a risk-adjusted discount rate. To estimate the fair value of the assets, the Company uses market participant assumptions pursuant to Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 820, ~~Fair Value Measurement and Disclosures,~~ (“ASC 820”). If the estimate of an intangible asset’s revised useful life is changed, the Company will amortize the remaining carrying value of the intangible asset prospectively over the revised useful life.

Intangible assets consist of the following at ~~December 31, 2020~~September 30, 2021 and March 31, ~~2020:~~2021:

	Patents & Exclusive
	License						Customer			Non-Compete			Assembled
	Agreement			Trademark			Relationships			Agreement			Workforce			Total

																			Patents &
																			Exclusive
																			License				Customer		Non-Compete		Assembled
																			Agreement		Trademark		Relationships		Agreement		Workforce		Total
Useful Life	9.74 years			Indefinite			10 years			2 years			1 year						9.74 years		Indefinite		10 years		2 years		1 year
Gross carrying amount	$	1,306,031		$	2,505,907		$	1,431,680		$	61,366		$	275,720		$	5,580,704		$	1,306,031	$	2,505,907	$	1,431,680	$	61,366	$	275,720	$	5,580,704
Impairment		(316,388	)		(1,905,907	)		(857,298	)		--			--			(3,079,593	)		(316,388)		(1,905,907)		(857,298)		—		—		(3,079,593)
Accumulated amortization		(589,512	)		--			(574,382	)		(61,366	)		(275,720	)		(1,500,980	)		(652,372)		—		(574,382)		(61,366)		(275,720)		(1,563,840)
Balance—December 31, 2020	$	400,131		$	600,000		$	--		$	--		$	--		$	1,000,131
Balance—September 30, 2021																			$	337,271	$	600,000	$	—	$	—	$	—	$	937,271

Patents &
Exclusive
License Customer Non-Compete Assembled
Agreement Trademark Relationships Agreement Workforce Total
Useful Life 9.74 years Indefinite 10 years 2 years 1 year
Gross carrying amount $ 1,306,031 $ 2,505,907 $ 1,431,680 $ 61,366 $ 275,720 $ 5,580,704
Impairment (307,388 ) (1,605,907 ) (787,245 ) -- -- (2,700,540 )
Accumulated amortization (528,681 ) -- (564,473 ) (61,366 ) (275,720 ) (1,430,240 )
Balance—March 31, 2020 $ 469,962 $ 900,000 $ 79,962 $ -- $ -- $ 1,449,924


	Patents &
	Exclusive
	License				Customer		Non-Compete		Assembled
	Agreement		Trademark		Relationships		Agreement		Workforce		Total
Useful Life	9.74 years		Indefinite		10 years		2 years		1 year
Gross carrying amount	$	1,306,031	$	2,505,907	$	1,431,680	$	61,366	$	275,720	$	5,580,704
Impairment		(316,388)		(1,905,907)		(857,298)		—		—		(3,079,593)
Accumulated amortization		(613,092)		—		(574,382)		(61,366)		(275,720)		(1,524,560)
Balance—March 31, 2021	$	376,551	$	600,000	$	—	$	—	$	—	$	976,551

Amortization ~~expense~~ for the three months ended ~~December 31,~~September 30, 2021 and September 30, 2020 was $19,000 and ~~2019 was $24,000 and $69,000,~~$23,000, respectively. Amortization expense for the ~~nine~~six months ended ~~December 31,~~September 30, 2021 and September 30, 2020 was $39,000 and ~~2019 was $71,000 and $208,000,~~$47,000, respectively. Amortization expense is classified as a component of general and administrative expenses in the accompanying condensed consolidated statements of operations.

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3. Balance Sheet Accounts

~~Balance Sheet Accounts~~

Prepaid Expenses and Other Current Assets


	September 30,		March 31,
	2021		2021
Prepaid inventory	$	1,325,495	$	1,466,466
Prepaid insurance		113,861		52,573
Other prepaid expenses		109,909		161,518
	$	1,549,265	$	1,680,557

December 31, March 31,
2020 2020
Prepaid inventory $ 1,499,042 $ 1,450,024
Prepaid insurance 116,825 57,226
Other prepaid expenses 42,610 125,305
$ 1,658,477 $ 1,632,555

Equipment

Equipment consisted of the following at ~~December 31, 2020~~September 30, 2021 and March 31, ~~2020:~~2021:

	December 31, 2020						March 31, 2020
			Accumulated						Accumulated
	Cost		Depreciation		Net		Cost		Depreciation		Net

													September 30, 2021						March 31, 2021
													Accumulated						Accumulated
													Cost		Depreciation		Net		Cost		Depreciation		Net
Computers and electronics	$	303,337	$	276,928	$	26,409	$	303,337	$	264,520	$	38,817	$	303,337	$	303,337	$	—	$	303,337	$	303,337	$	—
Furniture and fixtures		36,795		32,046		4,749		36,795		30,953		5,842		36,795		36,795		—		36,795		36,795		—
Demonstration equipment		135,543		68,809		66,734		135,543		37,662		97,881		123,301		65,731		57,570		170,386		76,809		93,577
Manufacturing equipment		88,742		86,977		1,765		88,742		86,688		2,054		88,742		88,742		—		88,742		88,742		—
Tools and parts		11,422		8,161		3,261		11,422		7,627		3,795		11,422		11,422		—		11,422		11,422		—
Assets under capital lease		68,453		66,151		2,302		68,453		62,698		5,755		68,453		68,453		—		68,453		68,453		—
	$	644,292	$	539,072	$	105,220	$	644,292	$	490,148	$	154,144
													$	632,050	$	574,480	$	57,570	$	679,135	$	585,558	$	93,577

Depreciation expense for the three months ended ~~December 31,~~September 30, 2021 and September 30, 2020 was $11,000 and ~~2019 was $15,000 and $28,000,~~$16,000, respectively. Depreciation expense for the ~~nine~~six months ended ~~December 31,~~September 30, 2021 and September 30, 2020 was $20,000 and ~~2019 was $49,000 and $79,000,~~$34,000, respectively.

Accrued Expenses

Accrued expenses consist of the following at ~~December 31, 2020~~September 30, 2021 and March 31, ~~2020:~~

December 31,
2020

March 31,
2020

Accrued personnel costs $ 951,556 $ 591,380
Accrued director fees 647,629 325,129 ��
Accrued commissions 5,800 30,523
Accrued professional fees 175,000 253,831
Accrued warranty costs 45,936 162,449
Accrued other 241,874 284,344
$ 2,067,795 $ 1,647,656

2021:


	September 30,		March 31,
	2021		2021
Accrued personnel costs	$	345,747	$	371,886
Accrued director fees		265,672		50,672
Accrued commissions		—		51,080
Accrued professional fees		73,763		127,211
Accrued warranty costs		16,016		45,936
Accrued other		78,703		113,241
	$	779,901	$	760,026

The Company provides a one-year warranty as part of its normal sales offering. When products are sold, the Company provides warranty reserves, which, based on the historical experience of the Company are sufficient to cover warranty claims. Accrued warranty costs are included in accrued liabilities on the condensed consolidated interim balance sheets and amounted to ~~$46,000~~$16,000 at ~~December 31, 2020~~September 30, 2021 and ~~$162,000~~$46,000 at March 31, ~~2020. The significant decrease in the accrued warranty costs relates to a reduction in the number~~2021.

Table of ~~units sold due to the COVID-19 pandemic.~~Contents

The significant increase in accrued personnel costs relates to the deferral of certain salary and bonus payments that are owed to senior management. The significant increase in accrued director fees relates to the deferral of certain payments owed to the Company’s independent board of directors.

~~Inventories~~

4. Inventories

Bionik states all inventories at the lower of cost or net realizable value, determined on a first-in, first-out method. Inventory includes finished goods at actual costs from its outsourced manufacturing ~~partners.~~partners as well as work-in-process for goods that are in the manufacturing process.

December 31,
2020

March 31,
2020

Finished goods $ 839,552 $ 1,059,462

~~Notes Payable~~

5.Loans & PPP Loans

Refinancing and 2021 Convertible ~~Loans Payable~~Promissory Note Offering

During the ~~nine~~quarter end September 30, 2021, the Company commenced a refinancing of its existing indebtedness and launched a new secured convertible promissory note offering of up to $10.0 million (the “2021 Offering”). Pursuant to the terms of the 2021 Offering, the Company is offering for sale up to $10.0 million in convertible promissory notes (the “2021 Notes”) to accredited investors and non-U.S. persons. As a result, the Company issued an aggregate of $8.3 million in principal of 2021 Notes of which an aggregate of $5.0 million was purchased for cash and the remainder was issued as a result of consolidating existing debt.

Under the Company’s existing term loan and security agreement as well as the existing shareholder loan as mentioned below, a portion of the outstanding principal and unpaid interest were used as consideration to acquire 2021 Notes in the 2021 Offering and, as a result and with the option exercises described below, the term loan agreement and the existing shareholder loan were deemed paid in full and terminated. Accordingly, an aggregate of $1.1 million in outstanding principal and accrued unpaid interest under the term loan agreement was used to purchase a like amount of 2021 Notes in the 2021 Offering and an aggregate of $2.2 million in outstanding principal and accrued and unpaid interest under the shareholder loan was used to purchase a like amount of 2021 Notes in the 2021 Offering. The remaining $0.6 million of the outstanding principal and accrued and unpaid interest under the term loan agreement was applied towards the purchase price to exercise outstanding options of certain debtholders.

Pursuant to the terms of the 2021 Offering, the Company issued an aggregate of $5.0 million in principal of additional 2021 Notes, which was purchased for cash. The Company intends to use the net cash proceeds from the 2021 Offering for the Company’s working capital requirements. The 2021 Notes bear interest at a fixed rate of 1% per month, computed based on a 360-day year of twelve 30-day months and will be payable, along with the principal amount, on the earlier of (the “Maturity Date”): (a) March 31, 2022 and (b) the consummation of the 2021 Offering, provided that the Company raises in one or more tranches aggregate gross proceeds of no less than $10,000,000.

Interest expense associated with the 2021 Notes for the three and six months ended ~~December 31,~~September 30, 2021, was $0.2 million.

The 2021 Note will be convertible either on the Maturity Date without any action on the part of the Lender into shares of common stock at a conversion price of $9.50 per share (the “Conversion Price”), or upon a change of control transaction prior to the Maturity Date at the election of the holders of a majority of the outstanding principal of the 2021 Notes under the 2021 Offering, be either (i) payable upon demand as of the closing of such change of control transaction or (ii) convertible into shares of the Company’s common stock immediately prior to such change of control transaction at a price per share equal to the lesser of (x) the Conversion Price, or (y) the per share consideration to be received by the holders of the common stock in such change of control transaction.

2020 Convertible Note Offering

During the six months ended September 30, 2020, the Company received $1.5 million, inIn addition to ~~$70,000~~$0.1 million previously loaned to the Company, pursuant to a $7.0 million ~~(previously $3.0 million)~~ convertible note offering (the ~~“Convertible~~"2020 Convertible Note ~~Offering”~~Offering"). The convertible notes issued in the 2020 Convertible Note Offering (the ~~“Convertible Notes”~~"2020 Convertible Notes") bear interest at a fixed rate at 1%

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per month. The 2020 Convertible Notes ~~will be convertible~~were converted into ~~equity~~common stock of the Company ~~upon~~at March 31, 2021 in accordance with the ~~following events:~~

~~(i)~~

On the maturity date of March 31, 2021 (the “Maturity Date”), the outstanding principal and accrued and unpaid interest under the Convertible Notes will be converted into shares of common stock at a conversion price of $8.55 per shares in the event of an investment on or prior to December 31, 2019, and $9.50 per share in the event of an investment after December 31, 2019 (the “Conversion Price”).

~~(ii)~~

Upon a change of control transaction prior to the Maturity Date, the outstanding principal and accrued and unpaid interest under the Convertible Notes would, at the election of the holders of a majority of the outstanding principal of the loans under the Convertible Note Offering, be either (i) payable upon demand as of the closing of such change of control transaction or (ii) convertible into shares of the Company’s common stock immediately prior to such change of control transaction at a price per share equal to the lesser of (x) the Conversion Price or (y) the per share consideration to be received by the holders of the common stock in such change of control transaction.

terms of the 2020 Convertible Note Offering.

In the event the Company raises capital through the sale of common stock for cash during the period ending on the three year anniversary of the issuance date of the ~~convertible notes,~~2020 Convertible Notes, and the price per share thereof (the “Offering Price”) minus 20% is less than the original ~~Conversion Price,~~conversion price, then in such event the Company shall issue to all Convertible Noteholders, ~~at,~~ at no further cost, additional shares of common stock equal to the number of conversion shares the holders would have received upon conversion if the ~~Conversion Price~~conversion price equaled to a 20% discount to the Offering Price, less the number of ~~shares of~~ conversion shares actually issued on or as of the ~~Maturity Date.~~maturity date of the 2020 Convertible Notes. Since the Company has ~~early~~ adopted ASU 2017-11, the anti-dilution protection clause does not contribute to the conversion feature to be a derivative liability.

~~Interest~~The Company did not incur interest expense associated with ~~these~~the 2020 Convertible Notes for the three and ~~nine~~six months ended ~~December 31,~~September 30, 2021. For the three and six month periods ended September 30, 2020, ~~was $47,000 and $104,000, respectively. Interest payable~~the Company did incur interest expense associated with ~~these~~the 2020 Convertible Notes ~~at December 31, 2020 was $104,000~~ of $46,000 and $0.1 million respectively.

Shareholder loan

On March 23, 2020, the Company received a $2.0 million loan from an existing shareholder. The promissory note evidencing the loan bears interest at a fixed rate of 1% per month and has a maturity date of the earlier of (i) March 31, 2022 and (ii) the date of receipt of a minimum of $5.0 million from a “Subsequent Financing.” The accrued interest shall be payable in cash commencing on March 31, 2021 with the quarterly payments accrued for the first three payment dates (3-month, 6-month and 9-month anniversaries of the issue date), and then quarterly thereafter. The remaining half of the interest accrued will be paid upon the maturity date. The loan is repayable or convertible to common shares at the loan holder’s option on March 31, 2022 at a price per share equal to the price per share of the Company’s then most recent capital raise or debt conversion, or any other valuation as agreed in writing between the loan holder and the Company.

On February 24, 2021, and in addition to the shareholder loan above, the Company entered into a term loan and security agreement dated February 12, 2021 where Bionik may borrow up to $3.0 million from lenders from time to time. Pursuant to the terms of the agreement, the loan bears interest at a fixed rate of 1% per month. The principal amount and interest on the loan will be due and payable on the earlier of (i) February 12, 2023 and (ii) the date of receipt by the Company of a minimum of $3.0 million in equity. During the six months ended September 30, 2021, the Company received term loan proceeds totaling $0.6 million.

Interest expense associated with ~~this loan~~these loans for the three and ~~nine~~six months ended ~~December 31,~~September 30, 2020 was ~~$60,000 and $165,000.~~$0.1 million for both periods. Interest ~~payable~~expense associated with these loans for the three and six months ended September 30, 2021 was $18,000 and $0.1 million, respectively.

As noted above, on July 15, 2021 this ~~loan at December 31, 2020~~indebtedness was ~~$165,000.~~

consolidated into the Company’s 2021 Notes. An aggregate of $3.3 million in outstanding principal and accrued unpaid interest was used to purchase a like amount of 2021 Notes in the 2021 Offering. The remaining $0.6 million of the outstanding principal and accrued and unpaid interest was applied towards the purchase price to exercise outstanding options of the debtholders.

Paycheck Protection Program Loan

In May 2020, the Company signed a promissory note for ~~$459,912~~$0.5 million pursuant to the federal Paycheck Protection Program under the Coronavirus Aid, Relief and Economic Security Act, which is administered by the U.S. Small Business Administration. The loan is unsecured, bears interest of 1% per annum and a deferment period of 6 months. The loan is to be used primarily for payroll related costs, lease, and utility payments. The Company has applied for forgiveness and ~~is awaiting a response for~~as such forgiveness was granted in May 2021. The extinguishment of the ~~whole loan amount in accordance with applicable law. If the~~PPP loan is ~~not forgiven,~~recorded in the statement of operations as other income.

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6. Stockholders’ Equity

Common Stock Authorized


	September 30, 2021			March 31, 2021
	Number of shares	$		Number of shares	$
Exchangeable Shares
Balance beginning of period	112,440	$	113	117,683	$	118
Converted into common shares	0		0	(5,243)		(5)
Balance at end of period	112,440		113	112,440		113
Common Shares
Balance at beginning of the period	5,589,375		5,589	5,009,151		5,008
Shares issued to exchangeable shareholders	0		0	5,243		5
Shares issued on conversion of loans	1,408		1	181,463		182
Shares issued for in lieu of services	20,000		20	397,685		398
Options exercised in conjunction with 2021 Notes	180,137		180
Cancellation of shares by shareholders	0		0	(4,167)		(4)
Balance at end of the period	5,790,920		5,790	5,589,375		5,589
Total Shares	5,903,360	$	5,903	5,701,815	$	5,702

With the 2021 Notes as discussed in Note 5 above, $0.6 million of the outstanding principal and accrued and unpaid interest under the term loan agreement was applied towards the purchase price to exercise 180,137 outstanding options of certain debtholders. The Company ~~will be obligated~~also issued 20,000 shares for expenses to ~~repay~~support the ~~loan during a period~~Company’s investor relations strategy. The Company issued the remaining 1,408 shares of ~~2 years.~~

~~Related Party Transactions~~

~~At December 31, 2020 and March 31, 2020 there was an outstanding loan~~the Company's common stock which were issued to the ~~Chief Technology Officer (“CTO”)~~noteholders pursuant to the terms of the ~~Company of $20,000 and $18,000, respectively. The loan has an interest rate of 2% based on the Canada Revenue Agency’s prescribed rate for such advances and is denominated~~2020 Convertible Notes as discussed in Canadian dollars. During the three and nine months ended December 31, 2020, the Company recorded interest income of $300 and $900, respectively. The remaining fluctuation in the balance from the prior year is due to changes in foreign exchange.

~~Stockholders’ Equity~~

~~Common Stock Authorized~~

December 31, 2020 March 31, 2020
Number of shares $ Number of shares $
Exchangeable Shares
Balance beginning of period 117,683 $ 118 196,799 $ 197
Converted into common shares - - (79,116 ) (79 )
Balance at end of period 117,683 118 117,683 118
Common Shares
Balance at beginning of the period 5,009,151 5,008 3,661,838 3,661
Shares issued to exchangeable shareholders - - 79,116 79
Shares issued on conversion of loans - - 1,268,191 1,268
Share consolidation rounding adjustment - - 6 -
Balance at end of the period 5,009,151 5,008 5,009,151 5,008
Total Shares 5,126,834 $ 5,126 5,126,834 $ 5,126

Note 5 above.

As approved by the stockholders of the Company at the annual meeting of stockholders held on October 5, 2020, the Company filed a certificate of amendment to its Amended and Restated Certificate of Incorporation, as amended with the Secretary of State of Delaware to decrease the authorized number of shares of (i) common stock of the Company from 500,000,000 to 13,000,000 and (ii) preferred stock of the Company from 10,000,000 to 5,000,000.

With the 2020 Convertible Notes, as discussed in Note 5 above, and pursuant to the terms of the 2020 Convertible Notes, the principal and interest of $1.7 million converted into 181,463 shares of the Company's common stock which were issued to the noteholders. The Company also issued shares in lieu of certain liabilities that it owed of which 262,125 shares of Bionik's common stock were issued in lieu of paying $0.7 million in director fees to its board of directors and 135,560 shares of common stock were issued for consideration consisting of the forgiveness and satisfaction of an aggregate of $0.3 million of deferred salary and bonus liabilities to two of its executives.

Special Voting Preferred Share

In February 2015, the Company entered into a voting and exchange trust agreement (the “Trust Agreement”). Pursuant to the Trust Agreement, the Company issued one Special Voting Preferred Share to a Trustee, and the parties created a trust for the Trustee to hold the Special Voting Preferred Share for the benefit of the holders of the Exchangeable Shares of a subsidiary of the ~~Company (the “Beneficiaries”).~~Company. The Special Voting Preferred Share entitles the Trustee to exercise the number of votes equal to the number of Exchangeable Shares outstanding on a one-for-one basis during the term of the Trust Agreement. The Special Voting Preferred Share is not entitled to receive any dividends or to receive any assets of the Company upon liquidation and is not convertible into shares of common stock of the Company. The voting rights of the Special Voting Preferred Share will terminate pursuant to and in accordance with the Trust Agreement and the Special Voting Preferred Share will be automatically cancelled.

8.	~~Stock-Based Compensation~~

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7. Stock-Based Compensation

Total stock-based compensation expense for the three months ended ~~December 31,~~September 30, 2021 and September 30, 2020 was $20,000 and ~~2019 was $99,000 and $447,000,~~$0.2 million, respectively. Total stock-based compensation expense for the ~~nine~~six months ended ~~December 31,~~September 30, 2021 and September 30, 2020 was $0.1 million and ~~2019 was $719,000 and $1.4~~$0.6 million, respectively.

Bionik ~~granted~~did not grant any stock options ~~to purchase 76,902 and 221,838 shares of common stock to employees~~ during the ~~nine~~six months ended ~~December 31, 2020~~September 30, 2021 and 2019, respectively. Bionik granted options to purchase 341,190 shares of common stock to non-employees during the nine months ended December 31, 2019. There were no options granted to non-employees during the nine months ended December 31, 2020. Stock options granted to employees or non-employees typically vest over a 1 to 5 year period.

Performance Based Units (“PSUs”) granted to employees vest annually based on time and continued performance and the achievement of performance goals as determined by the board of directors.

The Company uses the Black-Scholes option pricing model to determine the estimated grant date fair values for stock-based awards. The Black-Scholes option pricing model requires the input of various subjective assumptions, including the option’s expected life and the price volatility of the underlying stock. The Company’s assumptions do not include an estimated forfeiture rate.

The weighted-average grant date fair values of options granted to employees during the nine months ended December 31, 2020 and 2019 were $1.05 and $3.05, respectively. During the nine months ended December 31, 2019, 96,466 PSUs were granted with a weighted-average grant date fair value of $3.15. All grants awarded during the periods presented used the following assumptions:

Nine Months Ended
December 31,

2020 2019
Risk free interest rate 0.62 % 1.59 %
Expected term 7 years 7 years
Dividend yield — —
Expected volatility 114 % 114 %
Forfeiture rate 0 % 0 %

Option-pricing models require the input of various subjective assumptions, including the option’s expected life and the price volatility of the underlying stock. As it relates to grants previously issued, Bionik’s estimated expected stock price volatility is based on past grants that have been made. Bionik’s expected term of options granted ~~during the nine months ended December 31, 2020 and 2019~~ was derived from looking at the Company’s exercise history of its awards granted. The risk-free rate for the expected term of the options is based on the U.S. Treasury yield curve in effect at the time of the grant.

As of ~~December 31, 2020,~~September 30, 2021, the total unrecognized compensation cost related to outstanding stock options and PSUs expected to vest was ~~$595,000,~~$0.2 million, which the Company expects to recognize over a weighted-average period of ~~1.94~~1.60 years.

~~Warrants~~

8.Warrants

The following is a continuity schedule of the Company’s common share purchase warrants:

	Number of			Weighted Average Exercise
	Warrants			Price
Outstanding and exercisable, March 31, 2019		288,517			40.27
Expired		(163,483	)		(38.91	)

								Weighted
								Average
							Number of	Exercise
							Warrants	Price
Outstanding and exercisable, March 31, 2020		125,034			20.07		125,034	20.07
Expired		(2,667	)		(37.50	)	(2,667)	(37.50)
Outstanding and exercisable December 31, 2020		122,367			19.69
Outstanding and exercisable, March 31, 2021							122,367	19.69
Expired							0	0
Outstanding and exercisable September 30, 2021							122,367	19.69

~~During the nine months ended December 31, 2020, 2,667 warrants expired in accordance with their terms.~~

~~Common share purchase warrants~~

The following is a summary of common share purchase warrants outstanding as of ~~December 31, 2020.~~September 30, 2021.


Exercise	Number of
Price ($)	Warrants	Expiry Date
90.00	15,658	March 31, 2023
9.375	64,025	August 14, 2022
9.375	42,684	March 31, 2022
	122,367

Exercise
Price ($) Number of
Warrants Expiry Date
90.00 15,658 March 31, 2023
9.375 64,025 August 14, 2022
9.375 42,684 March 31, 2022
122,367

The weighted-average remaining contractual term of the outstanding warrants was ~~1.57~~0.82 years.

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9.Commitments and Contingencies

~~10.~~

~~Commitments and Contingencies~~

Contingencies

From time to time, the Company may be involved in a variety of claims, suits, investigations and proceedings arising in the ordinary course of our business, collections claims, breach of contract claims, labor and employment claims, tax and other matters. Although claims, suits, investigations and proceedings are inherently uncertain and their results cannot be predicted with certainty, the Company believes that the resolution of current pending matters will not have a material adverse effect on its business, financial position, results of operations or cash flow. Regardless of the outcome, litigation can have an adverse impact on the Company because of legal costs, diversion of management resources and other factors.

Commitments

On February 25, 2015, 1,753 common shares were issued to two former lenders connected with a $241,185 loan received and repaid during fiscal 2013. The common shares were valued at $210,323 based on the value of the concurrent private placement and recorded in stock-based compensation on the consolidated statement of operations and comprehensive loss. As part of the consideration for the initial loan, the Company’s then-CTO and COO had transferred 2,098 common shares to the lenders. For contributing the common shares to the lenders, the Company intends to reimburse the former CTO and COO 2,134 common shares. As of December 31, 2020 these shares have not yet been issued.

~~In May 2020, the Company gave notice to its JV Partner, Ginger Capital Investment Holding, Ltd. That it was terminating the licensing and distribution agreements.~~

In connection with the Company’s April 2016 acquisition of Interactive Motion Technologies, Inc., the Company acquired a license agreement dated September 8, 2009, with a former director as a co-licenser, pursuant to which the Company is obligated to pay the former director and the co-licenser an aggregate royalty of 1% of sales based on patent #8,613,691 Dynamic Lower Limb Rehabilitation Robotic Apparatus and Method of Rehabilitating Human Gait). No sales have been made, as the technology under this patent has not been commercialized.

~~11.~~●

~~Recent Accounting Pronouncements~~On February 25, 2015, 1,753 common shares were issued to two former lenders connected with a $0.2 million loan received and repaid during fiscal 2013. The common shares were valued at $210,323 based on the value of the concurrent private placement and recorded in stock-based compensation on the consolidated statement of operations and comprehensive loss. As part of the consideration for the initial loan, the Company's then-CTO and COO had transferred 2,098 common shares to the lenders. For contributing the common shares to the lenders, the Company intends to reimburse the former CTO and COO 2,134 common shares. As of September 30, 2021 these shares have not yet been issued.

●

In May 2020, the Company gave notice to its JV Partner, Ginger Capital Investment Holding, Ltd. that it was terminating the licensing and distribution agreements in accordance with its terms. The China JV was originally established for purposes of strengthening the economic cooperation and technical exchange between the parties and adopting advanced technology and scientific management methods through the distribution and promotion of the Company's products in the People's Republic of China, Hong Kong and Macau.

●

In connection with the Company’s April 2016 acquisition of Interactive Motion Technologies, Inc. the Company acquired a license agreement dated September 8, 2009, with a former director as a co-licensor, pursuant to which the Company is obligated to pay the former director and co-licensor an aggregate royalty of 1% of sales based on patent #8,613,691 Dynamic Lower Limb Rehabilitation Robotic Apparatus and Method of Rehabilitating Human Gait). No sales have been made, as the technology under this patent has not been commercialized.

10.Recent Accounting Pronouncements

Accounting Standards Update 2020-06—Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity: simplifies accounting for convertible instruments by removing major separation models required under current ~~Generally Accepted Accounting Principles (“GAAP”).~~U.S. GAAP. Consequently, more convertible debt instruments will be reported as a single liability instrument and more convertible preferred stock as a single equity instrument with no separate accounting for embedded conversion features. The ASU removes certain settlement conditions that are required for equity contracts to qualify for the derivative scope exception, which will permit more equity contracts to qualify for it. The ASU also simplifies the diluted earnings per share (EPS) calculation in certain areas. The amendments in this Update are effective for public business entities that meet the definition of ~~a Securities and Exchange Commission (SEC)~~an SEC filer, excluding entities eligible to be smaller reporting companies as defined by the SEC, for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. For all other entities, the amendments are effective for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years. Early adoption is permitted, but no earlier than fiscal years beginning after December 15, 2020, including interim periods within those fiscal years. The Company is currently evaluating the impact the adoption of ASU 2020-06 will have on the Company’s consolidated financial statements and related disclosures.

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In December 2019, the FASB issued ASU 2019-12 - Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes, an authoritative guidance that simplifies the accounting for income taxes by removing certain exceptions and making simplifications in other areas. It is effective from the first quarter of fiscal year 2022, with early adoption permitted in any interim period. If adopted early, the Company must adopt all the amendments in the same period. The amendments have differing adoption methods including retrospectively, prospectively and/or modified retrospective basis through a cumulative-effect adjustment to retained earnings as of the beginning of the fiscal year of adoption, depending on the specific change. The Company does not anticipate the new guidance will have a material impact on the consolidated balance sheet and consolidated statement of operations and comprehensive loss.

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ITEM 2. ~~Management’s~~Management's Discussion and Analysis of Financial Condition and Results of Operations

Forward-Looking Statements

This Quarterly Report on Form 10-Q contains statements that involve substantial risks and uncertainties and that reflect assumptions, expectations, projections, intentions, or beliefs about future events that are intended as ~~“forward-looking statements”~~"forward-looking statements". All statements included or incorporated by reference in this Quarterly Report on Form 10-Q, other than statements of historical fact, that address activities, events or developments that we expect, believe or anticipate will or may occur in the future are forward- looking statements. These statements appear in several places, including, but not limited to in this ~~“Management’s~~"Management's Discussion and Analysis of Financial Condition and Results of ~~Operations”~~Operations". These statements represent our reasonable judgment of the future based on various factors and using numerous assumptions and are subject to known and unknown risks, uncertainties and other factors that could cause our actual results and financial position to differ materially from those contemplated by the statements. You can identify these statements by the fact that they do not relate strictly to historical or current facts, and use words such as ~~“anticipate,” “believe,” “estimate,” “expect,” “forecast,” “may,” “will”~~"anticipate," "believe," "estimate," "expect," "forecast," "may," "will", ~~“should,” “plan,” “project”~~"should," "plan," "project" and other words of similar meaning. These forward-looking statements include, among other things, statements about:

·●

our ability to identify and penetrate new markets for our products and technology;

·●

our estimates regarding expenses, future revenues, capital requirements and needs for additional funding;

·●

our ability to obtain and maintain regulatory clearances;

·●

our sales and marketing capabilities and strategy in the United States and internationally;

·●

our ability to retain key management personnel on whom we depend;

·●

our expectations with respect to our acquisition activity;

·●

our intellectual property portfolio; and

·●

our ability to innovate, develop and commercialize new products.

We may not actually achieve the plans, intentions or expectations disclosed in our forward-looking statements, and you should not place undue reliance on our forward-looking statements. Actual results or events could differ materially from the plans, intentions and expectations disclosed in the forward-looking statements we make. We have included important factors in the cautionary statements included in this Quarterly Report and in our other public filings with the Securities and Exchange Commission, or the SEC, that could cause actual results or events to differ materially from the forward-looking statements that we make.

You should read this Quarterly Report and the documents that we have filed as exhibits to this Quarterly Report completely and with the understanding that our actual future results may be materially different from what we expect. It is routine for internal projections and expectations to change as the year or each quarter in the year progresses, and therefore it should be clearly understood that the internal projections and beliefs upon which we base our expectations are made as of the date of this Quarterly Report and may change prior to the end of each quarter or the year. While we may elect to update forward-looking statements at some point in the future, we do not undertake any obligation to update any forward-looking statements whether as a result of new information, future events or otherwise, except as required by law.

The following discussion should be read in conjunction with, and is qualified in its entirety by, the condensed consolidated financial statements and notes thereto included in Part I, Item 1 of this Quarterly Report and the consolidated financial statements and notes thereto and ~~Management’s~~Management's Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K filed with the SEC on June ~~30, 2020.~~24, 2021. Historical results and percentage relationships among any amounts in the financial statements are not necessarily indicative of trends in operating results for any future periods. The discussion and analysis of the financial condition and results of operations are based upon the financial statements, which have been prepared in accordance with accounting principles generally accepted in the United ~~States (“U.S. GAAP”).~~States.

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Company Overview

Bionik Laboratories Corp. is a healthcare company focused on improving the quality of life of millions of people with neurological or mobility impairments by combining artificial intelligence and innovative robotics technology and data solutions to help individuals from hospital to home to regain mobility, enhance autonomy, and regain self- esteem.

The Company uses artificial intelligence and machine learning technologies to make rehabilitation methods and processes smarter and more intuitive to deliver greater recovery for patients with neurological or mobility impairments. These technologies allow large amounts of data to be collected and processed in real-time, enabling appropriately challenging and individualized therapy during every treatment session. This is the foundation of the ~~InMotion®~~InMotion^® therapy. The ~~Company’s~~Company's rehabilitation therapy robots are built on an artificial intelligence platform, measuring the position, the speed, and the acceleration of the ~~patients’~~patients' arm 200 times per second. The artificial intelligence platform is designed to adapt in real time to the ~~patient’s~~patient's needs and progress while providing quantifiable feedback of a ~~patient’s~~patient's progress and performance, in a way that the Company believes a trained clinician cannot.

Based on this foundational work, the Company has a portfolio of products and solutions focused on upper extremity rehabilitation for stroke and other mobility-impaired individuals, including ~~InMotion®~~InMotion robots currently in the market. Additionally, we launched our new software platform, InMotion Connect^TM is providing the ability for hospital management to access remotely to management dashboards presenting the utilization data of each of their ~~InMotion®~~InMotion robotic devices and their robotic devices productivity. Customized reporting capabilities in the platform focus on facility and organization measurement dashboards to support effective decision making for clinicians and for hospital management.

Currently, we receive revenues from the sale of our InMotion robots to our customers both in the U.S. and internationally. We also record revenues associated with our extended warranties that customers will purchase with the sale of our InMotion robots as well as from the sale of the InMotion Connect^TM hardware and the subscription fees associated with the utilization of the InMotion Connect^TM solution.

We currently sell our products directly or can introduce customers to a third-party finance company to lease at a monthly fee over the term or other fee structure for our products to hospitals, clinics, distribution companies and/or buying groups that supply those rehabilitation facilities.

Our strategic business focus is on the following key areas:

·●

Continuing to expand our distribution channels in the United States and internationally;

·●

Continue to enhance our InMotion Connect software with solutions that serve clinical rehabilitation providers; and

·●

Continue to drive efficiencies with our outsourced manufacturing partner to support the expected increase in product demand and introduction of new products.

We believe our business provides a platform for growth. We continue to make investments in our enhancements of our existing products and the future development of new products.

We currently hold an intellectual property portfolio that includes 5 U.S. patents and 21 U.S. ~~patents~~patent pending, 5 of which are pending internationally, as well as other patents under development. We may file provisional patents from time to time, which may expire if we do not pursue full patents within 12 months of the filing date. ~~Three~~Two provisional patents have recently been converted into full patents, pertaining to ~~Bionik’s InMotion® Home™~~Bionik's InMotion Home^TM, ~~InMotion® ARM/HAND~~ and ~~InMotion® Connect™~~InMotion Connect^TM platform, each of which has been filed as a full patent prior to the 12-month provisional deadline. The provisional patents may not be filed as full patents and new provisional patents may be filed as the technology changes. Additionally, we hold exclusive licenses to three additional patents.

We have filed trademarks in the U.S. and European Union for InMotion®, InMotion® Home™, InMotion® Connect, InMotion® Pulse™, and InMotion® Insights™; the trademark for InMotion® is registered in the European Union and in the U.S., the trademark for InMotion® Connect™ is registered in the European Union and pending in the US, while InMotion® Home™, InMotion® Pulse™, and InMotion® Insights™ are pending in both jurisdictions. InMotion® Connect™ and InMotion® Insights™ were issued an allowance and are pending for final registration.Table of Contents

Business Developments

In December 2018, we entered into a Sale of Goods Agreement (the ~~“Agreement”~~"Agreement") with CHC Management Services, LLC, or Kindred, pursuant to which, among other things, Kindred agreed to purchase from us ~~in a first phase a minimum of 21 of the Company’s InMotion®~~our InMotion^® ARM Interactive Therapy Systems –- a minimum of one for each of ~~Kindred’s~~Kindred's existing and soon-to-open affiliated inpatient rehabilitation hospitals and similar facilities described in the Agreement, and in a second phase a minimum of one ~~InMotion®~~InMotion^® ARM Interactive Therapy System for each future inpatient rehabilitation facilities of Kindred, during the four-year minimum term of the Agreement. ~~21 InMotion® robots were sold in total to Kindred by March 31, 2019 and 1 robot, 22 Connect™ and 22 Pulse™ subscriptions were sold during the nine month period ended December 31, 2020.~~

In ~~September 2019,~~June 2020, we launched our InMotion Connect platform, which consists of a hardware device connected to the InMotion Robot as well as a subscription to InMotion Connect Pulse. This platform provides anonymized data allowing us to focus activity to increase adoption and utilization of InMotion robotic technologies across healthcare systems.

During 2021, we implemented a machine learning prototype predictive model for the classification of the level of responsiveness of the InMotion^® therapy outcomes. This solution was developed with Bitstrapped, a Toronto-based data engineering firm specializing in machine learning infrastructure through their partnership with Google Cloud Platform. This prototype enables us to continually train the model on anonymized data collected in real-time with InMotion Connect in rehabilitation facilities and track improvements in performance. This is the first step to a machine learning platform being developed as funds allow.

On July 15, 2021, we commenced ana refinancing of our existing indebtedness and launched a new secured convertible promissory note offering of up to ~~$7.0~~$10.0 million. Pursuant to the terms of the offering, we were offering for sale up to $10.0 million in convertible ~~note offering (previously set at $3.0 million),~~notes to accredited investors and non-U.S. persons. As a result, we issued an aggregate of $8.3 million in principal of convertible notes of which ~~$1.6~~an aggregate of $5.0 million was ~~raised through December 31, 2020. In addition, on March 23, 2020, we borrowed $2,000,000 evidenced by~~purchased for cash and the remainder was issued as a ~~term promissory note from an~~result of consolidating existing ~~stockholder and lender of the Company.~~debt.

On October 5, 2020 as approved by the stockholders of the Company at the annual meeting of stockholders held on October 5, 2020, the Company filed a Certificate of Amendment to its Amended and Restated Certificate of Incorporation, as amended with the Secretary of State of Delaware to decrease the authorized number of shares of (i) common stock of the Company from 500,000,000 to 13,000,000 and (ii) preferred stock of the Company from 10,000,000 to 5,000,000.

Covid-19 Pandemic

As a result of extended shutdowns of businesses around the world due to the COVID-19 pandemic, we have seen a slowdown in our business as most of the capital expenditure programs of the healthcare facilities that make up our customer base have been put on hold or has been significantly curtailed. This, along with our typically long sales cycle, has affected our ability to generate revenues in recent months. As a result, we have taken steps to address the decrease in revenue, as follows:

Effective April 1, 2020, we furloughed nine employees in the United States and temporarily laid-off one employee in Canada. Additionally, our senior management agreed to a salary deferral of between 30-50%. Our remaining employees in the U.S. received base salary reductions of between 30%-50%. In Canada, our remaining employees received a reduction in base salary and hours of 45%. As a result of obtaining the U.S. and Canadian ~~government’s~~government's programs described below U.S. employees with salaries less than $100,000 annually were returned to full salary and with salaries exceeding $100,000 annually were increased to 75% of their normal base salary. ~~As of~~Senior managements salaries were restored in December ~~31,~~ 2020 ~~all employees, including~~until March 2021, when certain senior management ~~within~~salaries were reduced between 30%-50% for 3 months.

On May 6, 2020, our U.S. subsidiary received funding in the ~~organization~~original principal amount of $0.5 million pursuant to the federal Paycheck Protection Program under the Coronavirus Aid, Relief and Economic Security Act, which is administered by the U.S. Small Business Administration. The loan was funded by Bank of America, N.A. pursuant to the terms of a Promissory Note dated as of May 1, 2020. We have ~~now returned~~used the proceeds from this funding for eligible purposes, including to retain workers and maintain payroll or make mortgage interest payments, lease payments, and utility payments. We applied for forgiveness of this debt with the SBA and as of May 23, 2021, have received forgiveness of the loan and all interest of $0.5 million which is included in other income, net in the condensed consolidated statement of operations.

Our Canada operations secured $84,000 of government financial relief under the Canadian Emergency Wage Subsidy in the six months ended September 30, 2020, which is available monthly until May 2022, which was used to return the salaries of many of our Canadian non-management employees back to their ~~normal base salary.~~

On May 6, 2020, our U.S. subsidiary received funding in the original principal amount of $459,912 pursuant to the federal Paycheck Protection Program under the Coronavirus Aid, Relief and Economic Security Act, which is administered by the U.S. Small Business Administration. We are using the proceeds from this funding for eligible purposes, including to retain workers and maintain payroll or make mortgage interest payments, lease payments, and utility payments. The loan was funded by Bank of America, N.A. pursuant to the terms of a Promissory Note dated as of May 1, 2020. During the third quarter of fiscal year 2021, we have applied for forgiveness for all of the loan in accordance with the applicable law and we await the decision of the U.S. Small Business Administration.

Our Canada operations secured $93,000 of government financial relief under the Canadian Emergency Wage Subsidy, which is available monthly until March 2021, which was used to return the salaries of many of our Canadian non-management employees back to their full amount.

~~The Company has reduced working on its research and development projects to focus only on the development of InMotion® Connect™.~~

full amount. There was no relief received in the six months ended September 30, 2021.

Although, we can not predict what the next stages of the COVID-19 pandemic will be, we do believe that worst is behind us as restrictions all over the world are slowly lifted and vaccines become more widely distributed.

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Results of Operations

Three Months Ended ~~December 31,~~September 30, 2021 and 2020 ~~and 2019~~

The following table contains selected statement of operations data, which serve as the basis of the discussion of our results of operations for the three months ended ~~December 31,~~September 30, 2021 and 2020, ~~and 2019,~~ respectively:

	Three Months Ended December 31,
	2020						2019
	Amount			As a % of Total Revenues			Amount			As a % of Total Revenues			$ Change			% Change

																			Three Months Ended
																			September 30,
																			2021				2020
																					As a % of				As a % of
																					Total				Total		$		%
																			Amount		Revenues		Amount		Revenues		Change		Change
Revenues, net	$	180,409			100	%	$	158,005			100	%	$	22,404			14	%	$	227,905	100	%	$	292,381	100	%	$	(64,476)	(22)	%
Cost of revenues		9,581			5			143,595			91			(134,014	)		(93	)		80,922	36			70,047	24			10,875	16
Gross profit		170,828			95			14,410			9			156,418			1,085			146,983	64			222,334	76			(75,351)	(34)
Operating expenses
Sales and marketing		325,175			180			480,834			304			(155,659	)		(32	)		438,957	193			255,756	87			183,201	72
Research and development		449,580			249			1,021,418			646			(571,838	)		(56	)		85,085	37			419,606	144			(334,521)	(80)
General and administrative		983,858			545			1,193,391			755			(209,533	)		(18	)		664,523	292			1,090,379	373			(425,856)	(39)
Impairment of goodwill & intangible assets		7,182,053			3,981			--			--			7,182,053			100
Share-based compensation expense		98,794			55			447,219			283			(348,425	)		(78	)
Total operating expenses		9,039,460			5,011			3,142,862			1,989			5,896,598			188			1,188,565	522			1,765,741	604			(577,176)	(33)
Loss from operations		(8,868,632	)		(4,916	)		(3,128,452	)		(1,980	)		(5,740,180	)		(183	)		(1,041,582)	(457)			(1,543,407)	(528)			501,825	(33)
Interest expense, net		79,183			44			2,788			2			76,395			2,740			225,184	99			111,408	38			113,776	102
Other expense (income), net		3,066			2			(161,291	)		(102	)		164,357			102			1,223	1			(27,193)	(9)			28,416	(104)
Total other expense (income)		82,249			46			(158,503	)		(100	)		240,752			152
Total other (income) expense																				226,407	99			84,215	29			142,192	169
Net loss	$	(8,950,881	)		(4,961	)%	$	(2,969,949	)		(1,880	)%	$	(5,980,932	)		(201	)%	$	(1,267,989)	(556)	%	$	(1,627,622)	(557)	%	$	359,733	(22)	%

Revenues

Total revenues for the three months ended ~~December 31, 2020 increased~~September 30, 2021 decreased by ~~$22,000,~~$0.1 million, or ~~14%~~22%, to ~~$180,000,~~$0.2 million, as compared to revenues of ~~$158,000~~$0.3 million for the three months ended ~~December 31, 2019.~~September 30, 2020.

	Three Months Ended December 31,
	2020		2019		$ Change			% Change

											Three Months Ended
											September 30,
																$	%
											2021		2020		Change		Change
Product	$	68,250	$	119,500	$	(51,250	)		(43	)%	$	129,676	$	229,600	$	(99,924)	(44)	%
Subscriptions		50,250		--		50,250			100			58,000		6,750		51,250	759
Service, extended warranty & other		61,909		38,505		23,404			61			40,229		56,031		(15,802)	(28)
Total revenues	$	180,409	$	158,005	$	22,404			14	%	$	227,905	$	292,381	$	(64,476)	(22)	%

The change in total revenues was attributable to a number of factors:

·●

~~The same number of robots were sold in the two periods shown, however the robot sold~~Product revenue decreased by $0.1 million in the three months ended ~~December 31, 2020 was sold to our South Korean distributor and therefore has a distributor pricing model~~September 30, 2021 as compared to ~~selling direct~~the three month period ended September 30, 2020. Although we sold 1 more unit in the ~~three months~~2021 period compared to the 2020 period, our geographic mix was more distributor based in the 2021 period as compared to direct sales during the 2020 period. The period ended ~~December 31, 2019. This revenue decreased from~~September 30, 2020 also included the ~~units~~InMotion Connect hardware sold, ~~is offset~~associated with the ~~increase in revenues in~~Kindred agreement, due to the ~~other categories.~~June 2020 launch of InMotion Connect.

·●

The increase in our subscription sales is due to our 22 InMotion ~~Connect™ Pulse™~~Connect Pulse solutions subscriptions that were ~~sold to Kindred.~~sold. This product was launched ~~during the nine months ended December 31,~~in June 2020.

·●

Our service, extended warranty and other revenues ~~were up 61% primarily due to our~~decreased as a direct result of a reduced number of service ~~offerings for our robots as well as additional extended warranties sold that are being recognized over~~calls during the ~~service~~2021 period.

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Cost of Revenues

Three Months Ended
December 31,
2020 2019 $
Change %
Change
Cost of revenues $ 9,581 $ 143,595 $ (134,014 ) (93 )%
Cost of revenues (as a percentage of total revenues) 5 % 91 %


	Three Months Ended
	September 30,
							$		%
	2021			2020			Change		Change
Cost of revenues	$	80,922		$	70,047		$	10,875	16	%
Cost of revenues (as a percentage of total revenues)		36	%		24	%

Total cost of revenues ~~decreased $134,000,~~increased $11,000, or ~~93%~~16%, to ~~$10,000~~$81,000 for the ~~2020~~2021 period, as compared to ~~$144,000~~$70,000 for the ~~2019~~2020 period. The ~~decrease was associated with 2 robots being provided as upgrades at no~~increase is due to the mix of product sales ~~value, in connection with a commitment made by the Company~~ in the ~~2019 period. In~~2021 period as compared to the 2020 period ~~an adjustment was made to decrease the warranty reserve in conjunction~~coupled with the ~~lower number of units~~InMotion Connect hardware sold ~~over~~in the ~~last 12 months due to the COVID-19 pandemic.~~2020 period.

Sales and Marketing

Three Months Ended
December 31,
2020 2019 $
Change %
Change
Sales and marketing $ 325,175 $ 480,834 $ (155,659 ) (32 )%
Sales and marketing (as a percentage of total revenues) 180 % 304 %


	Three Months Ended
	September 30,
							$		%
	2021			2020			Change		Change
Sales and marketing	$	438,957		$	255,756		$	183,201	72	%
Sales and marketing (as a percentage of total revenues)		193	%		87	%

Sales and marketing expenses ~~decreased $156,000,~~increased $0.2 million, or ~~32%~~72%, to ~~$325,000~~$0.4 million for the ~~2020~~2021 period, as compared to ~~$481,000~~$0.3 million for the ~~2019~~2020 period. The increase was due to higher consulting and personnel related expenses related to our sales and marketing strategies.

Research and Development


	Three Months Ended
	September 30,
							$		%
	2021			2020			Change		Change
Research and development	$	85,085		$	419,606		$	(334,521)	(80)	%
Research and development (as a percentage of total revenues)		37	%		144	%

Research and development expenses decreased $0.3 million, or 80%, to $0.1 million for the 2021 period, as compared to $0.4 million for the 2020 period. The decrease was due to a ~~$76,000~~$0.3 million decrease in ~~payroll and payroll~~personnel related expenses as our research and development headcount was reduced due to the COVID-19 pandemic. Our sales and marketing efforts decreased $24,000 from expenses related to trade shows and other marketing efforts as the pandemic prevented any of these from happening in the field during the 2020 period and virtual events are much lower in cost. Installation expenses were down by $49,000 from the 2019 period due to a reduced number of robots installed at customer sites.

~~Research and Development~~

Three Months Ended
December 31,
2020 2019 $
Change %
Change
Research and development $ 449,580 $ 1,021,418 $ (571,838 ) (56 )%
Research and development (as a percentage of total revenues) 249 % 646 %

Research and development expenses decreased $572,000, or 56%, to $450,000 for the 2020 period, as compared to $1.0 million for the 2019 period. The decrease was due to a $259,000 decrease in payroll and payroll related expenses as our headcount was reduced due to the COVID-19 pandemic. Our research and development efforts also decreased $275,000 from expenses related to the InMotion Connect^TM ~~solution development in the 2019 period compared to having it completed by the 2020 period.~~

General and Administrative

Three Months Ended
December 31,
2020 2019 $
Change %
Change
General and administrative $ 983,858 $ 1,193,391 $ (209,533 ) (18 )%
General and administrative (as a percentage of total revenues) 545 % 755 %


	Three Months Ended
	September 30,
							$		%
	2021			2020			Change		Change
General and administrative	$	664,523		$	1,090,379		$	(425,856)	(39)	%
General and administrative (as a percentage of total revenues)		292	%		373	%

General and administrative expenses decreased ~~$210,000,~~$0.4 million, or ~~17%~~39%, to ~~$1.0~~$0.7 million for the 2021 period, as compared to $1.1 million for the 2020 ~~period, as compared to $1.2 million for the 2019~~ period. ~~Our bad debt~~Share based compensation expense decreased by ~~$168,000 in the 2020 period due to a charge~~$0.2 million and personnel related expenses decreased by $0.1 million associated with a ~~receivable balance owed by our Chinese JV partner in the 2019 period, that was subsequently terminated in May 2020.~~

~~Impairment of Goodwill & Intangible Assets~~

Three Months Ended
December 31,
2020 2019 $
Change %
Change
Impairment of goodwill & intangible assets $ 7,182,053 $ -- $ 7,182,053 100 %
Impairment of goodwill & intangible assets (as a percentage of total revenues) 3,981 % -- %

Following the decline of Company sales associated with the global pandemic, we determined there are events and changes in circumstances that indicate the goodwill and other intangible assets are impaired. Accordingly, at December 31, 2020, we evaluated the ongoing value of our goodwill and other intangible assets. Based on this evaluation, we determined that the intangible assets were no longer recoverable and were in fact impaired and recorded an impairment charge of $379,000 in the three months ended December 31, 2020. Further, we determined that the goodwill with the carrying value of $11.1 million was impaired and recorded an impairment charge to the estimated fair value of $6.8 million in the three months ended December 31, 2020. Fair value was based on expected future cash flows using Level 3 inputs under ASC 820. The cash flows are those expected to be generated by the market participants, discounted at the weighted average cost of capital.

~~As noted~~reduction in our significant accounting policies, we have one reporting unit and its carrying value was compared to its estimated fair value. At December 31, 2020, we estimated its fair value using an income approach. The income approach is based on the present value of future cash flows, which are derived from long term financial forecasts, and requires significant assumptions and judgement including among others, a discount rate and a terminal value.

There was no impairment charge in the three months ended December 31, 2019. Based on our significant accounting policy we monitor our intangible assets annually and more regularly as factors and other indicators warrant to determine if any impairment of these assets is needed.

~~Share-based Compensation expense~~

Three Months Ended
December 31,
2020 2019 $
Change %
Change
Share-based compensation expense $ 98,794 $ 447,219 $ (348,425 ) (78 )%
Share-based compensation expense (as a percentage of total revenues) 55 % 283 %

Share-based compensation expense decreased $348,000, or 78%, to $99,000 for the 2020 period, as compared to $447,000 for the 2019 period. The decrease is associated with fewer options outstanding in the current year period compared to the prior year periodheadcount due to the COVID-19 pandemic. Professional service fees were reduced ~~headcount as well as~~by $0.1 million associated with a ~~lower number~~decrease in consultants, legal fees and accounting fees.

Table of ~~options vesting in the current period compared to the prior period.~~Contents

Interest Expense, net

Three Months Ended
December 31,
2020 2019 $
Change %
Change
Interest expense, net $ 79,183 $ 2,788 $ 76,395 2,740 %
Interest expense, net (as a percentage of total revenues) 44 % 2 %


	Three Months Ended
	September 30,
							$		%
	2021			2020			Change		Change
Interest expense, net	$	225,184		$	111,408		$	113,776	102	%
Interest expense, net (as a percentage of total revenues)		99	%		38	%

The interest expense for the three month period ending ~~December 31, 2020 is associated with~~September 30, 2021 increased by $0.1 million due to more debt outstanding during the ~~loans and convertible loans that the company has with certain of its shareholders compared~~period leading to ~~no loans that existed~~more interest expense than in the ~~same period in 2019.~~2020 period.

Other expense (income), net

Three Months Ended
December 31, $ %
2020 2019 Change Change
Other expense (income), net $ 3,066 $ (161,291 ) $ 164,357 102 %
Other expense (income), net (as a percentage of total revenues) 2 % (102 )%


	Three Months Ended
	September 30,
							$		%
	2021			2020			Change		Change
Other expense (income), net	$	1,223		$	(27,193)		$	28,416	(105)	%
Other expense (income), net (as a percentage of total revenues)		1	%		(9)	%

For the three month period ending ~~December 31, 2020~~September 30, 2021, other expense (income)~~, net consists of net~~ includes the foreign currency ~~losses as compared~~impact of changes in the exchange rate between the Canadian dollar and the US dollar. In the 2020 period, we received Canadian government grants relating to ~~net~~the COVID-19 pandemic, used for payroll in Canada (CEWS) of $46,000 which was partially offset by the foreign currency ~~gains~~impact of changes in the ~~same period in 2019. In the 2019 period, we also received a research and development tax credit from~~exchange rate between the Canadian ~~Revenue Agency for $108,000.~~dollar and US dollar.

~~Nine~~Six Months Ended ~~December 31,~~September 30, 2021 and 2020 ~~and 2019~~

The following table contains selected statement of operations data, which serve as the basis of the discussion of our results of operations for the ~~nine~~six months ended ~~December 31,~~September 30, 2021 and 2020, ~~and 2019,~~ respectively:


	Six Months Ended
	September 30,
	2021				2020
			As a % of				As a % of
			Total				Total		$		%
	Amount		Revenues		Amount		Revenues		Change		Change
Revenues, net	$	899,188	100	%	$	550,289	100	%	$	348,899	63	%
Cost of revenues		211,429	24			132,602	24			78,827	59
Gross profit		687,759	76			417,687	76			270,072	65
Operating expenses
Sales and marketing		768,430	85			494,921	90			273,509	55
Research and development		266,052	30			803,826	146			(537,774)	(67)
General and administrative		1,496,744	166			2,620,883	476			(1,124,139)	(43)
Total operating expenses		2,531,226	282			3,919,630	712			(1,388,404)	(35)
Loss from operations		(1,843,467)	(205)			(3,501,943)	(636)			1,658,476	(47)
Interest expense, net		327,480	36			186,383	34			141,097	76
Other (income), net		(452,046)	(50)			(53,628)	(10)			(398,418)	743
Total other (income) expense		(124,566)	(14)			132,755	24			(257,321)	(194)
Net loss	$	(1,718,901)	(191)	%	$	(3,634,698)	(661)	%	$	1,915,797	(53)	%

Nine Months Ended
December 31,
2020 2019
Amount As a % of
Total
Revenues Amount As a % of
Total
Revenues $
Change %
Change
Revenues, net $ 730,698 100 % $ 1,230,074 100 % $ (499,376 ) (41 )%
Cost of revenues 142,183 19 562,887 46 (420,704 ) (75 )
Gross profit 588,515 81 667,187 54 (78,672 ) (12 )
Operating expenses
Sales and marketing 792,622 108 1,649,340 134 (856,718 ) (52 )
Research and development 1,213,350 166 2,724,000 221 (1,510,650 ) (55 )
General and administrative 3,052,017 418 3,440,305 280 (388,288 ) (11 )
Impairment of goodwill & intangible assets 7,182,053 983 -- -- 7,182,053 100
Share-based compensation expense 719,048 98 1,373,195 112 (654,147 ) (48 )
Total operating expenses 12,959,090 1,774 9,186,840 747 3,772,250 41
Loss from operations (12,370,575 ) (1,693 ) (8,519,653 ) (693 ) (3,850,922 ) (45 )
Interest expense, net 265,566 36 172,485 14 93,081 54
Other (income), net (50,562 ) (7 ) (218,860 ) (18 ) 168,298 77
Total other expense (income) 215,004 29 (46,375 ) (4 ) 261,379 564
Net loss $ (12,585,579 ) (1,722 )% $ (8,473,278 ) (689 )% $ (4,112,301 ) (49 )%

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Revenues

Total revenues for the ~~nine~~six months ended ~~December 31, 2020 decreased~~September 30, 2021 increased by ~~$499,000,~~$0.3 million, or ~~41%~~63%, to ~~$731,000,~~$0.9 million, as compared to revenues of ~~$1.2~~$0.6 million for the ~~nine~~six months ended ~~December 31, 2019.~~September 30, 2020.

	Nine Months Ended
	December 31,				$			%
	2020		2019		Change			Change

											Six Months Ended
											September 30,
															$		%
											2021		2020		Change		Change
Product	$	497,351	$	1,115,166	$	(617,815	)		(55	)%	$	692,814	$	429,100	$	263,714	61	%
Subscriptions		57,000		--		57,000			100			112,750		6,750		106,000	1,570
Service, extended warranty & other		176,347		114,908		61,439			53			93,624		114,439		(20,815)	(18)
Total revenues	$	730,698	$	1,230,074	$	(499,376	)		(41	)%	$	899,188	$	550,289	$	348,899	63	%

The change in total revenues was attributable to a number of factors:

·●

~~Our product revenues decreased~~Product revenue increased by ~~$618,000, or 55%, for~~$0.3 million due to 7 units being shipped in the ~~nine~~six months ended ~~December 31, 2020~~September 30, 2021 as compared to 3 units in the ~~nine months~~six month period ended December 31, 2019 due to the decrease in units sold. The decrease is primarily driven by the COVID-19 pandemic, however our average selling price per unit has increased during the 2020 period as compared to the 2019 period.September 30, 2020.

·●

The increase in our subscription sales is due to our 22 InMotion ~~Connect™ Pulse™~~Connect Pulse solutions subscriptions that were ~~sold to Kindred as this~~sold. This product was launched ~~during the nine months ended December 31,~~in June 2020.

·●

Our service, extended warranty and other revenues ~~were up 53% primarily~~decreased due to ~~our~~a reduced number of service ~~offerings for our robots as well as additional extended warranties sold that are being recognized over~~calls required during the ~~service~~2021 period.

Cost of Revenues

Nine Months Ended
December 31, $ %
2020 2019 Change Change
Cost of revenues $ 142,183 $ 562,887 $ (420,704 ) (75 )%
Cost of revenues (as a percentage of total revenues) 19 % 46 %


Six Months Ended





September 30,

$

%

2021

2020

Change

Change

Cost of revenues

$
211,429

$
132,602

$
78,827

59
%
Cost of revenues (as a percentage of total revenues)

24
%

24
%





Total cost of revenues ~~decreased $421,000,~~increased $0.1 million, or ~~75%~~59%, to ~~$142,000~~$0.2 million for the 2021 period, as compared to $0.1 million for the 2020 period. The increase was associated with selling more units in the 2021 period as compared to the 2020 period as ~~compared to $563,000 for the 2019 period. The decrease was primarily~~well as selling certain demonstration inventory which has a lower cost associated with a decrease in unit product sales along with 2 robots being provided as upgrades at no sales value during the 2019 period, in connection with a commitment made by the Company. In the 2020 period, an adjustment was made to decrease the warranty reserve in conjunction with the lower number of units sold over the last 12 months due to the COVID-19 pandemic.it.
Sales and Marketing

Nine Months Ended
December 31, $ %
2020 2019 Change Change


Six Months Ended





September 30,

$

%


2021

2020

Change

Change

Sales and marketing $ 792,622 $ 1,649,340 $ (856,718 ) (52 )%

$
768,430

$
494,921

$
273,509

55
%
Sales and marketing (as a percentage of total revenues) 108 % 134 %

85
%

90
%





Sales and marketing expenses ~~decreased $857,000,~~increased $0.3 million, or ~~52%~~55%, to ~~$793,000~~$0.8 million for the ~~2020~~2021 period, as compared to ~~$1.6~~$0.5 million for the ~~2019~~2020 period. The increase was due to higher consulting and personnel related expenses for our sales and marketing strategies.
Research and Development


Six Months Ended





September 30,

$

%


2021

2020

Change

Change

Research and development

$
266,052

$
803,826

$
(537,774)

(67)
%
Research and development (as a percentage of total revenues)

30
%

146
%

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Research and development expenses decreased $0.5 million, or 67%, to $0.3 million for the 2021 period, as compared to $0.8 million for the 2020 period. The decrease was due to a ~~$412,000~~ decrease in ~~payroll and payroll~~personnel related expenses as our research and development headcount was reduced due to the COVID-19 pandemic. Our sales and marketing efforts decreased $93,000 from expenses related to trade shows and other marketing efforts as the pandemic prevented any of these from happening in the field during the 2020 period. Commission expense decreased $81,000 due to the decrease in sales in the 2020 period compared to the 2019 period. Installation expenses were down by $121,000 from the 2019 period due to a reduced number of robots installed at customer sites.

~~Research and Development~~

Nine Months Ended
December 31, $ %
2020 2019 Change Change
Research and development $ 1,213,350 $ 2,724,000 $ (1,510,650 ) (55 )%
Research and development (as a percentage of total revenues) 249 % 646 %
Research and development expenses decreased $1.5 million, or 55%, to $1.2 million for the 2020 period, as compared to $2.7 million for the 2019 period. The decrease was due to a $714,000 decrease in payroll and payroll related expenses as our headcount was reduced due to the COVID-19 pandemic. Our research and development efforts decreased $608,000 from expenses related to the development of the InMotion Connect^TM ~~in the 2019 period compared to having it completed by the 2020 period.~~
General and Administrative
Nine Months Ended
December 31, $ %
2020 2019 Change Change
General and administrative $ 3,052,017 $ 3,440,305 $ (388,288 ) (11 )%
General and administrative (as a percentage of total revenues) 418 % 280 %


Six Months Ended





September 30,

$

%


2021

2020

Change

Change

General and administrative

$
1,496,744

$
2,620,883

$
(1,124,139)

(43)
%
General and administrative (as a percentage of total revenues)

166
%

476
%





General and administrative expenses decreased ~~$388,000,~~$1.1 million, or ~~11%~~43%, to ~~$3.1~~$1.5 million for the 2021 period, as compared to $2.6 million for the 2020 ~~period, as compared to $3.4~~period. Share based compensation expense decreased by $0.5 million ~~for the 2019 period. The decrease is~~ associated with a ~~$227,000 decrease~~reduction in ~~payroll and payroll related expenses as~~ our headcount ~~was reduced~~ due to the COVID-19 pandemic. ~~Our bad debt expense decreased~~Professional service fees were reduced by ~~$168,000 in the 2020 period due to a charge~~$0.6 million associated with a ~~receivable balance owed by our Chinese JV partner~~decrease in ~~the 2019 period, that was subsequently terminated in May 2020.~~
19
consultants, legal fees and accounting fees.
~~Impairment of Goodwill & Intangible Assets~~
Nine Months Ended
December 31, $ %
2020 2019 Change Change
Impairment of goodwill & intangible assets $ 7,182,053 $ -- $ 7,182,053 100 %
Impairment of goodwill & intangible assets (as a percentage of total revenues) 983 % -- %
Following the decline of Company sales associated with the global pandemic, we determined there are events and changes in circumstances that indicate the goodwill and other intangible assets are impaired. Accordingly, at December 31, 2020, we evaluated the ongoing value of our goodwill and other intangible assets. Based on this evaluation, we determined that the intangible assets were no longer recoverable and were in fact impaired and recorded an impairment charge of $379,000 in the nine months ended December 31, 2020. Further, we determined that the goodwill with the carrying value of $11.1 million was impaired and recorded an impairment charge to the estimated fair value of $6.8 million in the nine months ended December 31, 2020. Fair value was based on expected future cash flows using Level 3 inputs under ASC 820. The cash flows are those expected to be generated by the market participants, discounted at the weighted average cost of capital.
As noted in our significant accounting policies, we have one reporting unit and its carrying value was compared to its estimated fair value. At December 31, 2020, we estimated its fair value using an income approach. The income approach is based on the present value of future cash flows, which are derived from long term financial forecasts, and requires significant assumptions and judgement including among others, a discount rate and a terminal value.
The present value of future cash flows was determined by discounting estimated future cash flows, which included long-term growth rate of 3%, at a weighted average cost of capital (discount rate) of 27%, which considered the risk of achieving the projected cash flows, including the risk applicable to the reporting unit, industry and market as a whole.
There was no impairment charge in the nine months ended December 31, 2019. Based on our significant accounting policy we monitor our intangible assets annually and more regularly as factors and other indicators warrant to determine if any impairment of these assets is needed.
~~Share-based Compensation expense~~
Nine Months Ended
December 31, $ %
2020 2019 Change Change
Share-based compensation expense $ 719,048 $ 1,373,195 $ (654,147 ) (48 )%
Share-based compensation expense (as a percentage of total revenues) 98 % 112 %
Share-based compensation expense decreased $654,000, or 48%, to $719,000 for the 2020 period, as compared to $1.4 million for the 2019 period. The decrease is associated with fewer options outstanding in the current year period compared to the prior year period due to the reduced headcount as well as a lower number of options vesting in the current period compared to the prior period.

Interest Expense, net

Nine Months Ended
December 31, $ %
2020 2019 Change Change
Interest expense, net $ 265,566 $ 172,485 $ 93,081 54 %
Interest expense, net (as a percentage of total revenues) 36 % 14 %


	Six Months Ended
	September 30,
							$		%
	2021			2020			Change		Change
Interest expense, net	$	327,480		$	186,383		$	141,097	76	%
Interest expense, net (as a percentage of total revenues)		36	%		34	%

The interest expense for ~~both periods represents~~ the six month period ending September 30, 2021 increased by $0.1 million due to more debt outstanding during the period leading to more interest expense than in the 2020 period.

Other (income), net


	Six Months Ended
	September 30,
							$		%
	2021			2020			Change		Change
Other (income), net	$	(452,046)		$	(53,628)		$	(398,418)	(743)	%
Other (income), net (as a percentage of total revenues)		(50)	%		(10)	%

For the six month period ending September 30, 2021 other (income) consisted of the extinguishment of the PPP loan associated with the ~~loans and convertible loans that~~forgiveness from the ~~company has with certain~~federal government of ~~its shareholders. Interest expense, net increased by $93,000 due to loans being outstanding longer in~~$0.5. In the 2020 period, ~~as compared~~we received Canadian government grants relating to ~~the 2019 period.~~

~~Other (income), net~~

Nine Months Ended
December 31, $ %
2020 2019 Change Change
Other (income), net $ (50,562 ) $ (218,860 ) $ 168,298 77 %
Other (income), net (as a percentage of total revenues) (7 )% (18 )%

~~For the nine month period ending December 31, 2020 other (income), net consists of net foreign currency losses offset with CEWS relief from the Canadian authorities associated with~~ the COVID-19 pandemic, ~~relief bill. For~~used for payroll in Canada (CEWS) of $0.1 million which was partially offset by the ~~nine month period ending December 31, 2019, other income, net consisted of net~~ foreign currency ~~gains along with a research and development tax credit from~~impact of changes in the exchange rate between the Canadian ~~Revenue Agency for $108,000.~~dollar and US dollar.

Liquidity and Capital Resources

We have funded operations through the issuance of capital stock, loans, grants, and investment tax credits and forgivable loans received from the ~~Government of Canada.~~U.S. and Canada governments. We require cash to pay our operating expenses, including research and development activities, fund working capital needs and make capital expenditures. At ~~December 31, 2020,~~September 30, 2021, our cash and cash equivalents were ~~$896,000.~~$4.8 million. Our cash and cash equivalents are predominantly cash in operating accounts.

~~During~~On July 15, 2021, we commenced a refinancing of its existing indebtedness and launched a new secured convertible promissory note offering of up to $10.0 million. Pursuant to the ~~nine months ended December 31, 2020,~~terms of the offering, we ~~received $1.5~~are offering for sale up to $10.0 million in ~~addition to a $70,000 previously loaned to us, pursuant to a $7.0 million convertible note offering. The~~ convertible notes ~~bear interest at~~to accredited investors and non-U.S. persons. As a ~~fixed rate at 1% per month. The~~result, we issued an aggregate of $8.3 million in principal of convertible ~~loans will be convertible into equity~~notes of ~~our common stock upon the following events:~~

~~(i)~~

On the March 31, 2021 maturity date, the outstanding principal and accrued and unpaid interest under the convertible note will be converted into shares of common stock at a conversion price of $8.55 per shares in the event of an investment on or prior to December 31, 2019, and $9.50 per share in the event of an investment after December 31, 2019 (the “Conversion Price”).

~~(ii)~~

Upon a change of control transaction prior to the maturity date, the outstanding principal and accrued and unpaid interest under the convertible notes would, at the election of the holders of a majority of the outstanding principal of the loans under the offering, be either (i) payable upon demand as of the closing of such change of control transaction or (ii) convertible into shares of the Company’s common stock immediately prior to such change of control transaction at a price per share equal to the lesser of (x) the Conversion Price or (y) the per share consideration to be received by the holders of the common stock in such change of control transaction.

~~In March 2020, we received a $2.0 million loan from~~which an ~~existing shareholder. The promissory note bears interest at a fixed rate of 1% per month and has a maturity date of the earlier of (i) March 31, 2022 and (ii) the date of receipt of a minimum~~aggregate of $5.0 million ~~from~~was purchased for cash and the remainder was issued as a ~~“Subsequent Financing.” The accrued~~result of consolidating existing debt.

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Under our then-existing term loan and security agreement as well as the then existing shareholder loan, a portion of the outstanding principal and unpaid interest ~~shall be payable~~were used as consideration to acquire new convertible promissory notes in ~~cash commencing on March 31,~~the July 2021 offering and, as a result and with the ~~quarterly payments~~option exercises described below, the term loan agreement and the existing shareholder loan were deemed paid in full and terminated. Accordingly, an aggregate of $1.1 million in outstanding principal and accrued ~~for~~unpaid interest under the ~~first three payment dates (3-month, 6-month~~term loan agreement was used to purchase a like amount of convertible notes in the July 2021 offering and ~~9-month anniversaries~~an aggregate of $2.2 million in outstanding principal and accrued and unpaid interest under the shareholder loan was used to purchase a like amount of convertible notes in the July 2021 offering. The remaining $0.6 million of the ~~issue date),~~outstanding principal and ~~then quarterly thereafter. The remaining half~~accrued and unpaid interest under the term loan agreement was applied towards the purchase price to exercise outstanding options held by certain of the interest accrued will be paid upon the maturity date. The loan is repayable or convertible to common shares at the loan holder’s option on March 31, 2022 at a price per share equal to the price per share of our then most recent capital raise or debt conversion, or any other valuation as agreed in writing between the loan holder and us.

Additionally, in May 2020 we received funding of $459,912 pursuant to the federal Paycheck Protection Program under the Coronavirus Aid, Relief and Economic Security Act. The loan is unsecured, bears interest of 1% per annum and a deferment period of 6 months. The loan is to be used primarily for payroll related costs, lease, and utility payments. We have applied for forgiveness for the whole loan in accordance with applicable law. If the loan is not forgiven, we will be obligated to repay the loan during the period of 2 years.

debtholders.

Based on our current burn rate, we need to raise additional capital ~~in the short term~~ to fund operations, hire necessary employees we lost as a result of COVID-19 related furloughs and other terminations, and meet expected future liquidity requirements, as well as to repay our remaining existing indebtedness (including our funding from the CARES Act, if and to the extent the loan is not forgiven), or we will be required to curtail or terminate some or all of our product lines or our operations.requirements. We are continuously in discussions to raise additional capital, which may include or be a combination of convertible or term loans and equity which, if successful, will enable us to continue operations based on our current burn rate, for the next 12 months; however, we cannot give any assurance at this time that we will successfully raise all or some of such capital or any other capital.

There can be no assurance that necessary debt or equity financing will be available, or will be available on terms acceptable to us, in which case we may be unable to meet our obligations or fully implement our business plan, if at all. These conditions raise substantial doubt about the ~~Company's~~Company’s ability to continue as a going concern. The accompanying condensed consolidated financial statements do not include any adjustments to reflect the possible future effects on recoverability and classification of assets or the amounts and classification of liabilities that may result from the outcome of this uncertainty.

Additionally, we will need additional funds to respond to business opportunities including potential acquisitions of complementary technologies, protect our intellectual property, develop new lines of business, and enhance our operating infrastructure. While we may need to seek additional funding for any such purposes, we may not be able to obtain financing on acceptable terms, or at all. In addition, the terms of our financings may be dilutive to, or otherwise adversely affect, holders of our common stock. We will also seek additional funds through arrangements with collaborators or other third parties. However, the recent COVID-19 pandemic has presented unprecedented challenges to businesses and the investing landscape around the world. Therefore, there can be no assurance that our plans will be successful. We may not be able to negotiate any such arrangements on acceptable terms, if at all. If we are unable to obtain additional funding on a timely basis, we may be required to curtail or terminate some or all of our product lines or our operations.

As a result of the COVID-19 pandemic and actions taken to slow its spread, the global credit and financial markets have experienced extreme volatility, including diminished liquidity and credit availability, declines in consumer confidence, declines in economic growth, increases in unemployment rates and uncertainty about economic stability. There can be no assurance that further deterioration in credit and financial markets and confidence in economic conditions will not occur. If equity and credit markets deteriorate, it may make any necessary debt or equity financing more difficult to obtain, more costly and/or more dilutive. Any of these actions could materially harm our business, results of operations and future prospects.

Cash Flows

Net cash used in operating activities was ~~$3.3~~$1.4 million for the ~~nine~~six months ended ~~December 31, 2020,~~September 30, 2021, and resulted primarily from ~~$12.6~~$1.7 million in net loss and $0.5 million relating to the extinguishment of the PPP loan offset by approximately ~~$1.1~~$0.5 million in depreciation and amortization, interest expense and stock-based compensation expense ~~as well as a $7.2 million in impairment of our goodwill and intangible assets~~ for the period. Net changes in working capital items increased cash from operating activities by approximately ~~$1.0~~$0.3 million, primarily related to ~~decreases~~a decrease in accounts receivable ~~associated with payments collected from our customers and a decrease in our inventory associated with product shipments during the period.~~due to cash collection efforts. There was no net cash used in or provided by investing activities for the ~~2020~~2021 period. Net cash provided by financing activities during the ~~nine~~six months ended ~~December 31, 2020~~September 30, 2021 was ~~$2.0~~$5.5 million, related to proceeds received from the ~~convertible loans~~2021 notes and ~~PPP loans.~~

term loan.

Net cash used in operating activities was ~~$7.5~~$2.9 million for the ~~nine~~six months ended ~~December 31, 2019,~~September 30, 2020, and resulted primarily from the ~~$8.5~~$3.6 million of net loss offset by ~~$1.8~~$0.9 million in depreciation and amortization, interest expense and stock-based compensation expense for the ~~period, along with a $168,000 increase to our bad debt expense associated with the termination of our Chinese JV.~~period. Net changes in working capital items decreased cash from operating activities by ~~$1.0~~$0.2 million, primarily related to ~~increases~~a decrease in accounts payable and deferred revenue partially offset by an decrease in inventory and ~~prepaid expenses and decreases in our~~ accounts ~~payable and accrued liabilities, partially offset by decreases in our accounts receivable associated with cash collection efforts with our customers. Net~~receivable. There was no net cash used in investing activities ~~was $96,000~~ for the ~~nine months ended December 31, 2019, which consisted of purchases of equipment.~~2020 period. Net cash provided by financing activities during the ~~nine~~three months ended ~~December 31, 2019~~September 30, 2020 was ~~$9.1~~$1.9 million, relating to proceeds received from convertible ~~loans.~~loans as well as funds received from the PPP loan.

Critical Accounting Policies and Estimates

The discussion and analysis of our financial condition and results of operations set forth above are based on our financial statements, which have been prepared in accordance with U.S. generally accepted accounting principles. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and

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expenses. On an ongoing basis, we evaluate our estimates and judgments, including those described in our Annual Report on Form 10-K for the year ended March 31, ~~2020.~~2021. We base our estimates on historical experience and on various assumptions that we believe to be reasonable under the circumstances. These estimates and assumptions form the basis for making judgments about the carrying values of assets and liabilities, and the reported amounts of revenues and expenses, that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

The following accounting policies have been updated and adopted as of April 1, 2021:

Property and Equipment

Property and equipment are recorded at cost less accumulated depreciation. Depreciation is computed using the straight-line method over the estimated useful lives of the assets as compared to the double-declining the method the Company had previously used. Assets under capital leases and leasehold improvements are amortized using the straight-line method over the shorter of the estimated useful life of the asset or the respective lease term. Included in property and equipment are certain robots that are used for demonstration purposes. Maintenance and repairs are charged to expense as incurred. Bionik continually evaluates whether events or circumstances have occurred that indicate that the estimated remaining useful life of its long-lived assets may warrant revision or that the carrying value of these assets may be impaired. Bionik evaluates the realizability of its long-lived assets based on profitability and cash flow expectations for the related asset. Any write-downs are treated as permanent reductions in the carrying amount of the assets. Based on this evaluation, Bionik believes that, as of each of the balance sheet dates presented, none of Bionik’s long-lived assets were impaired.

Foreign Currency Translation

A portion of our operations is conducted through operations in countries other than the United States. Since we conduct our business in U.S. dollars, the main exposure, if any, results from changes in the exchange rate between the Canadian dollar and the U.S. dollar. Our functional currency is the U.S. dollar. Our policy is to reduce exposure to exchange rate fluctuations by having most of our assets and liabilities, as well as most of our revenues and expenditures, in U.S. dollars, or U.S. dollar linked. We have not historically engaged in hedging activities relating to our non-U.S. dollar operations. We may incur negative foreign currency conversion charges as a result of changes in currency exchange rates.

The remainder of our critical accounting policies and the related judgments and estimates affecting the preparation of our condensed consolidated financial statements are included in our Annual Report on Form 10-K for the year ended March 31, 2021. There have been no other material changes to our critical accounting policies as of September 30, 2021.

A discussion of our critical accounting policies and the related judgments and estimates affecting the preparation of our consolidated financial statements is included in our Annual Report on Form 10-K for the fiscal year ended March 31, ~~2020.~~2021. There have been no material changes to our critical accounting policies as of ~~December 31, 2020.~~September 30, 2021.

Recent Accounting Pronouncements

See Note 1110 to our condensed consolidated financial statements included in this Quarterly Report for information regarding recent accounting pronouncements that are of significance or potential significance to us.

Off-Balance Sheet Arrangements

We had no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Not applicable for smaller reporting companies.

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Item 4. Controls and Procedures.

Disclosure Controls and Procedures

We maintain “disclosure controls and procedures” as such term is defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act that are designed to ensure that information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in SEC rules and forms, and such information is accumulated and communicated to our management, including our chief executive officer and chief financial officer, as appropriate, to allow timely decisions regarding required disclosure.

As of the end of the period covered by this Quarterly Report, we carried out an evaluation, under the supervision and with the participation of our interim Chief Executive Officer and our Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures pursuant to Exchange Act Rules 13a-15(b) and 15d-15(b). Based upon this evaluation, our ~~chief executive officer~~interim Chief Executive Officer and ~~chief financial officer~~Chief Financial Officer concluded that our disclosure controls and procedures as of the end of the period covered by this Quarterly Report were effective.

~~Changes in Internal Control over Financial Reporting~~

Changes in Internal Control over Financial Reporting

During the ~~nine~~three months ended ~~December 31, 2020,~~September 30, 2021, there were no changes in our internal controls over financial reporting (as defined in Rule 13a-15(f) and 15d-15(f) under the Exchange Act) that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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Part II- OTHER INFORMATION

Item 1. Legal Proceedings

None

Item 1A. Risk Factors

Not applicable for smaller reporting companies

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

On September 23^rd, 2021, we issued 20,000 shares of our common stock to a consultant as partial consideration for services. The securities were issued in a private transaction in reliance upon an exemption from registration pursuant to Section 4(a)(2) of the Securities Act, as a transaction not involving any public offering.

~~None~~On July 1^st, 2021, we issued 1,408 shares of our common stock to an existing stockholder, which shares were due to the stockholder but not issued pursuant to the terms of our formerly-outstanding convertible promissory notes which converted on March 31, 2021. The shares were issued in reliance on the exemption from registration provided by Section 4(a)(2) of the Securities Act, Section 3(a)(9) of the Securities Act and/or Regulation S under the Securities Act.

All other unregistered issuances of equity securities during the period covered by this quarterly report have been previously disclosed on our Current Reports on Form 8-K.

Item 3. Defaults Upon Senior Securities.

None

Item 4. Mine Safety Disclosures

Not applicable

Item 5. Other Information

None

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Item 6. Exhibits

The following exhibits, which are numbered in accordance with Item 601 of Regulation S-K, are filed herewith or, as noted, incorporated by reference herein.


	Exhibit Number		Description of Exhibits

	~~3.1~~10.1		~~Certificate of~~First Amendment to ~~Amended and Restated Certificate of Incorporation, as amended~~Employment Agreement (incorporated by reference to the registrant’s Current Report on Form 8-K filed on October ~~8, 2020)~~15, 2021)

	~~10.1~~31.1		~~Employment Agreement with Rich Russo, Jr. (incorporated by reference to the registrant’s Current Report on Form 8-K filed on November 30, 2020)~~

	~~10.2~~		~~Letter Agreement with Leslie Markow (incorporated by reference to the registrant’s Current Report on Form 8-K filed on November 30, 2020)~~

	~~10.3~~		~~Allonge to Promissory Note, dated December 17, 2020 (incorporated by reference to the registrant’s Current Report on Form 8-K filed on December 18, 2020)~~

	~~31.1~~		Certificate of Chief Executive Officer as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

	31.2		Certificate of Chief Financial Officer as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

	32.1		Certification of Chief Executive Officer as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

	32.2		Certification of Chief Financial Officer as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

	101.INS		Inline XBRL Instance Document - The instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.

	101.SCH		Inline XBRL Taxonomy Extension Schema Document

	101.CAL		Inline XBRL Taxonomy Extension Calculation Linkbase Document

	101.DEF		Inline XBRL Taxonomy Extension Definition Linkbase Document

	101.LAB		Inline XBRL Taxonomy Extension Label Linkbase Document

	101.PRE		Inline XBRL Taxonomy Extension Presentation Linkbase Document

	104		Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Date: ~~February 11,~~November 10, 2021

	Bionik Laboratories Corp.

	By:	/s/ ~~Eric Dusseux~~ Rich Russo Jr.
		~~Eric Dusseux~~ Rich Russo Jr.
		Chief Financial Officer and Interim Chief Executive Officer
		(Principal Executive ~~Officer)~~

	~~By:~~	~~/s/ Richard Russo Jr.~~
		~~Richard Russo Jr.~~
		~~Chief Financial~~ Officer
		( & Principal Financial and Accounting Officer)

Delaware		27-1340346
(State or other jurisdiction of	~~(I.R.S. Employer~~
incorporation or organization)		(I.R.S. Employer Identification No.)


Title of each class	Trading Symbol(s)	Name of Exchange on which registered
N/A	N/A	N/A

Large accelerated filer	¨	☐	Accelerated filer	¨ ☐
Non-accelerated filer	x	☒	Smaller reporting company	x ☒
			Emerging Growth Company	¨ ☐


PART I – FINANCIAL INFORMATION
Item 1. Interim Financial Statements
Condensed Consolidated Balance Sheets as of ~~December 31, 2020~~September 30, 2021 and March 31, ~~2020~~2021	3 2
Condensed Consolidated Statements of Operations for the three and six month periods ended September 30, 2021 and 2020	3
Condensed Consolidated Statements of Comprehensive Loss for the three and ~~nine months~~six month periods ended ~~December 31,~~September 30, 2021 and 2020 ~~and 2019~~	4
Condensed Consolidated Statements of Cash Flows for the ~~nine~~six months ended ~~December 31,~~September 30, 2021 and 2020 ~~and 2019~~	5
Notes to Condensed Consolidated Financial Statements	6
Item 2. Management’s Discussion and Analysis of Financial Conditions and Results of Operations	13 16
Item 3. Quantitative and Qualitative Disclosures about Market Risk	22 25
Item 4. Controls and Procedures	22 26
PART II – OTHER INFORMATION
I~~tem~~Item 1. Legal Proceedings	23 27
Item 1A. Risk Factors	23 27
Item 2. Unregistered Sales of Equity Securities ad Use of Proceeds	23 27
Item 3. Defaults Upon Senior Securities	23 27
Item 4. Mine Safety Disclosures	23 27
Item 5. Other Information	23 27
Item 6. Exhibits	24 28
SIGNATURES	25 29

	(unaudited) December 31, 2020			March 31, 2020
Assets
Current assets
Cash and cash equivalents	$	895,697		$	2,269,747
Accounts receivable		174,305			846,964
Prepaid expenses and other current assets		1,658,477			1,632,555
Inventories		839,552			1,059,462
Due from related parties		20,154			17,840
Total current assets		3,588,185			5,826,568
Equipment		105,220			154,144
Intangible assets, net		1,000,131			1,449,924
Goodwill		4,282,984			11,085,984
Total assets	$	8,976,520		$	18,516,620

Liabilities and Stockholders' Equity
Current liabilities
Accounts payable	$	544,204		$	857,093
Accrued liabilities		2,067,795			1,647,656
PPP loan		459,912			-
Convertible loans		3,841,384			2,078,833
Deferred revenue, current portion		301,302			200,437
Total current liabilities		7,214,597			4,784,019
Deferred revenue, net of current portion		311,479			415,626
Total liabilities		7,526,076			5,199,645
Commitments and contingencies (Note 10)
Stockholders' Equity
Preferred stock, $0.001 par value; Authorized 5,000,000; (March 31, 2020 – 10,000,000), Issued none Special voting preferred stock, $0.001 par value; Authorized; Issued – 1		-			-
Common stock, $0.001 par value; Authorized – 13,000,000; (March 31, 2020 – 500,000,000) Issued 5,009,151 and 117,683 Exchangeable Shares at December 31, 2020 and March 31, 2020		5,126			5,126
Additional paid-in capital		85,362,618			84,643,570
Accumulated deficit		(83,959,449	)		(71,373,870	)
Accumulated other comprehensive income		42,149			42,149
Total stockholders' equity		1,450,444			13,316,975
Total liabilities and stockholders' equity	$	8,976,520		$	18,516,620

	Three months ended December 31,						Nine months ended December 31,
	2020			2019			2020			2019
Revenues, net	$	180,409		$	158,005		$	730,698		$	1,230,074
Cost of revenues		9,581			143,595			142,183			562,887
Gross Profit		170,828			14,410			588,515			667,187

Operating expenses
Sales and marketing		325,175			480,834			792,622			1,649,340
Research and development		449,580			1,021,418			1,213,350			2,724,000
General and administrative		983,858			1,193,391			3,052,017			3,440,305
Impairment of goodwill & intangible assets		7,182,053			--			7,182,053			--
Share-based compensation expense		98,794			447,219			719,048			1,373,195
Total operating expenses		9,039,460			3,142,862			12,959,090			9,186,840

Loss from operations		(8,868,632	)		(3,128,452	)		(12,370,575	)		(8,519,653	)
Interest expense, net		79,183			2,788			265,566			172,485
Other expense (income), net		3,066			(161,291	)		(50,562	)		(218,860	)
Total other expense (income)		82,249			(158,503	)		215,004			(46,375	)
Net loss and comprehensive loss	$	(8,950,881	)	$	(2,969,949	)	$	(12,585,579	)	$	(8,473,278	)
Loss per share - basic and diluted	$	(1.75	)	$	(0.58	)	$	(2.45	)	$	(1.99	)
Weighted average number of shares outstanding – basic and diluted		5,126,834			5,126,834			5,126,834			4,264,723

		Total
Balance—March 31, 2020	$	11,085,984
Impairment of goodwill in period		6,803,000
Balance—December 31, 2020	$	4,282,984

		December 31,		March 31,
		2020		2020
Prepaid inventory	$	1,499,042	$	1,450,024
Prepaid insurance		116,825		57,226
Other prepaid expenses		42,610		125,305
	$	1,658,477	$	1,632,555

	December 31, 2020		March 31, 2020
Accrued personnel costs	$	951,556	$	591,380
Accrued director fees		647,629		325,129	��
Accrued commissions		5,800		30,523
Accrued professional fees		175,000		253,831
Accrued warranty costs		45,936		162,449
Accrued other		241,874		284,344
	$	2,067,795	$	1,647,656

	December 31, 2020				March 31, 2020
	Number of shares		$		Number of shares			$
Exchangeable Shares
Balance beginning of period		117,683	$	118		196,799		$	197
Converted into common shares		-		-		(79,116	)		(79	)
Balance at end of period		117,683		118		117,683			118
Common Shares
Balance at beginning of the period		5,009,151		5,008		3,661,838			3,661
Shares issued to exchangeable shareholders		-		-		79,116			79
Shares issued on conversion of loans		-		-		1,268,191			1,268
Share consolidation rounding adjustment		-		-		6			-
Balance at end of the period		5,009,151		5,008		5,009,151			5,008
Total Shares		5,126,834	$	5,126		5,126,834		$	5,126

	Nine Months Ended December 31,
	2020			2019
Risk free interest rate		0.62	%		1.59	%
Expected term		7 years			7 years
Dividend yield		—			—
Expected volatility		114	%		114	%
Forfeiture rate		0	%		0	%

Exercise Price ($)	Number of Warrants	Expiry Date
90.00	15,658	March 31, 2023
9.375	64,025	August 14, 2022
9.375	42,684	March 31, 2022
	122,367

September 30,

March 31,

Finished goods