EXHIBIT 99.2
PROFOUND MEDICAL CORP.
INTERIM CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
JUNE 30, 2021
PRESENTED IN US DOLLARS (000s)
Profound Medical Corp.
Interim Condensed Consolidated Balance Sheets
In USD (000s)
(Unaudited)
June 30, 2021 $ | December 31, 2020 $ | |||||||
Assets | ||||||||
Current assets | ||||||||
Cash | 73,771 | 83,913 | ||||||
Trade and other receivables (note 3) | 7,535 | 7,431 | ||||||
Inventory (note 4) | 7,386 | 5,331 | ||||||
Prepaid expenses and deposits | 446 | 1,067 | ||||||
Total current assets | 89,138 | 97,742 | ||||||
Property and equipment (note 5) | 888 | 859 | ||||||
Intangible assets (note 6) | 1,754 | 1,898 | ||||||
Right-of-use assets (note 7) | 1,310 | 1,424 | ||||||
Goodwill | 2,751 | 2,678 | ||||||
Total assets | 95,841 | 104,601 | ||||||
Liabilities | ||||||||
Current liabilities | ||||||||
Accounts payable and accrued liabilities | 2,307 | 3,382 | ||||||
Deferred revenue | 852 | 358 | ||||||
Provisions | 187 | 195 | ||||||
Other liabilities (note 8) | - | 99 | ||||||
Derivative financial instrument | 316 | 450 | ||||||
Lease liabilities (note 9) | 407 | 312 | ||||||
Income taxes payable | - | 13 | ||||||
Total current liabilities | 4,069 | 4,809 | ||||||
Deferred revenue | 723 | 1,078 | ||||||
Lease liabilities (note 9) | 1,168 | 1,364 | ||||||
Total liabilities | 5,960 | 7,251 | ||||||
Shareholders’ Equity | ||||||||
Share capital (note 10) | 219,056 | 211,527 | ||||||
Contributed surplus | 13,708 | 11,250 | ||||||
Accumulated other comprehensive loss | 1,653 | 4,567 | ||||||
Deficit | (144,536 | ) | (129,994 | ) | ||||
Total Shareholders’ Equity | 89,881 | 97,350 | ||||||
Total Liabilities and Shareholders’ Equity | 95,841 | 104,601 |
The accompanying notes are an integral part of these interim condensed consolidated financial statements.
Profound Medical Corp.
Interim Condensed Consolidated Statements of Loss and Comprehensive Loss
In USD (000s)
(Unaudited)
Three months ended June 30, 2021 $ | Three months ended June 30, 2020 $ | Six months ended June 30, 2021 $ | Six months ended June 30, 2020 $ | |||||||||||||
Revenue (note 12) | ||||||||||||||||
Capital equipment | 1,459 | 426 | 1,693 | 1,166 | ||||||||||||
Non-capital - recurring | 1,168 | 600 | 1,645 | 1,020 | ||||||||||||
2,627 | 1,026 | 3,338 | 2,186 | |||||||||||||
Cost of sales (note 13) | 1,411 | 610 | 1,870 | 1,328 | ||||||||||||
Gross profit | 1,216 | 416 | 1,468 | 858 | ||||||||||||
Operating expenses (note 13) | ||||||||||||||||
Research and development | 3,419 | 1,721 | 6,524 | 3,832 | ||||||||||||
General and administrative | 2,453 | 1,642 | 4,585 | 3,912 | ||||||||||||
Selling and distribution | 1,728 | 993 | 3,315 | 1,926 | ||||||||||||
Total operating expenses | 7,600 | 4,356 | 14,424 | 9,670 | ||||||||||||
Operating Loss | 6,384 | 3,940 | 12,956 | 8,812 | ||||||||||||
Net finance costs/(income) (note 14) | 602 | 1,225 | 1,502 | (1,056 | ) | |||||||||||
Loss before taxes | 6,986 | 5,165 | 14,458 | 7,756 | ||||||||||||
Income taxes | 57 | 138 | 84 | 230 | ||||||||||||
Net loss attributed to shareholders for the period | 7,043 | 5,303 | 14,542 | 7,986 | ||||||||||||
Other comprehensive loss | ||||||||||||||||
Item that may be reclassified to loss | ||||||||||||||||
Foreign currency translation adjustment | (1,929 | ) | (3,998 | ) | (2,914 | ) | 4,808 | |||||||||
Net loss and comprehensive loss for the period | 8,972 | 9,301 | 17,456 | 3,178 | ||||||||||||
Loss per share (note 15) | ||||||||||||||||
Basic and diluted loss per common share | 0.35 | 0.33 | 0.72 | 0.52 |
The accompanying notes are an integral part of these interim condensed consolidated financial statements.
Profound Medical Corp.
Interim Condensed Consolidated Statements of Changes in Shareholders’ Equity
In USD (000s)
(Unaudited)
Number of shares | Share capital $ | Contributed surplus $ | Accumulated other comprehensive income (loss) $ | Deficit $ | Total $ | |||||||||||||||||||
Balance – January 1, 2020 | 11,852,749 | 100,298 | 15,076 | 7,369 | (108,372 | ) | 14,371 | |||||||||||||||||
Net loss for the period | - | - | - | - | (7,986 | ) | (7,986 | ) | ||||||||||||||||
Cumulative translation adjustment | - | (5,880 | ) | (712 | ) | 4,808 | - | (1,784 | ) | |||||||||||||||
Exercise of share options | 140,282 | 1,862 | (734 | ) | - | - | 1,128 | |||||||||||||||||
Exercise of warrants | 752,732 | 10,429 | (2,627 | ) | - | - | 7,802 | |||||||||||||||||
Share-based compensation (note 11) | - | - | 1,092 | - | - | 1,092 | ||||||||||||||||||
Issuance of units from offering (note 10) | 3,392,500 | 36,373 | - | - | - | 36,373 | ||||||||||||||||||
Balance – June 30, 2020 | 16,138,263 | 143,082 | 12,095 | 12,177 | (116,358 | ) | 50,996 | |||||||||||||||||
Balance – January 1, 2021 | 20,208,948 | 211,527 | 11,250 | 4,567 | (129,994 | ) | 97,350 | |||||||||||||||||
Net loss for the period | - | - | - | - | (14,542 | ) | (14,542 | ) | ||||||||||||||||
Cumulative translation adjustment | - | 5,056 | 280 | (2,914 | ) | - | 2,422 | |||||||||||||||||
Exercise of share options | 40,084 | 565 | (223 | ) | - | - | 342 | |||||||||||||||||
Exercise of warrants | 130,036 | 1,890 | (379 | ) | - | - | 1,511 | |||||||||||||||||
Vesting of RSUs | 1,234 | 18 | (18 | ) | - | - | - | |||||||||||||||||
Share-based compensation (note 11) | - | - | 2,798 | - | - | 2,798 | ||||||||||||||||||
Balance – June 30, 2021 | 20,380,302 | 219,056 | 13,708 | 1,653 | 144,536 | 89,881 |
The accompanying notes are an integral part of these interim condensed consolidated financial statements.
Profound Medical Corp.
Interim Condensed Consolidated Statements of Cash Flows
In USD (000s)
(Unaudited)
Six June 30, 2021 $ | Six June 30, 2020 $ | |||||||
Operating activities | ||||||||
Net loss for the period | (14,542 | ) | (7,986 | ) | ||||
Adjustments to reconcile net loss to net cash flows from operating activities: | ||||||||
Depreciation of property and equipment (note 5) | 229 | 180 | ||||||
Amortization of intangible assets (note 6) | 502 | 423 | ||||||
Depreciation of right-of-use assets (note 7) | 165 | 149 | ||||||
Share-based compensation (note 11) | 2,798 | 1,092 | ||||||
Interest and accretion expense (note 14) | 46 | 517 | ||||||
Deferred revenue | 107 | 26 | ||||||
Change in fair value of derivative financial instrument | (149 | ) | 170 | |||||
Change in fair value of contingent consideration | - | 8 | ||||||
Changes in non-cash working capital balances | ||||||||
Trade and other receivables | 56 | (393 | ) | |||||
Prepaid expenses and deposits | 640 | 551 | ||||||
Inventory | (2,135 | ) | (1,616 | ) | ||||
Accounts payable and accrued liabilities | (1,168 | ) | (693 | ) | ||||
Provisions | (12 | ) | 3 | |||||
Income taxes payable | (13 | ) | (7 | ) | ||||
Foreign exchange on cash | 1,188 | (1,250 | ) | |||||
Total cash used in operating activities | (12,288 | ) | (8,826 | ) | ||||
Investing activities | ||||||||
Purchase of property and equipment | (32 | ) | - | |||||
Purchase of intangible assets | (313 | ) | - | |||||
Total cash used in investing activities | (345 | ) | - | |||||
Financing activities | ||||||||
Issuance of common shares | - | 39,523 | ||||||
Transaction costs paid | - | (3,150 | ) | |||||
Payment of other liabilities (note 8) | (99 | ) | (141 | ) | ||||
Payment of long-term debt and interest | - | (9,293 | ) | |||||
Proceeds from share options exercised | 342 | 1,128 | ||||||
Proceeds from warrants exercised | 1,511 | 7,802 | ||||||
Payment of lease liabilities (note 9) | (197 | ) | (128 | ) | ||||
Total cash from financing activities | 1,557 | 35,741 | ||||||
Net change in cash during the period | (11,076 | ) | 26,915 | |||||
Foreign exchange on cash | 934 | (649 | ) | |||||
Cash – Beginning of period | 83,913 | 14,800 | ||||||
Cash – End of period | 73,771 | 41,066 |
The accompanying notes are an integral part of these interim condensed consolidated financial statements.
Profound Medical Corp.
Notes to Interim Condensed Consolidated Financial Statements
June 30, 2021
In USD (000s)
(Unaudited)
1 | Description of business |
Profound Medical Corp. (Profound) and its subsidiaries (together, the Company) were incorporated under the Ontario Business Corporations Act on July 16, 2014. The Company is a medical technology Company developing treatments to ablate the prostate gland, uterine fibroids, osteoid osteoma and nerves for palliative pain relief for patients with metastatic bone disease.
The Company’s registered address is 2400 Skymark Avenue, Unit 6, Mississauga, Ontario, L4W 5K5.
2 | Summary of significant accounting policies and basis of preparation |
Basis of preparation
The Company prepares its consolidated financial statements in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board (IFRS), applicable to the preparation of interim condensed consolidated financial statements, including International Accounting Standards (IAS) 34, Interim Financial Reporting. These interim condensed consolidated financial statements are presented in US dollars and should be read in conjunction with the Company’s annual financial statements for the year ended December 31, 2020, which were prepared in accordance with IFRS.
The Board of Directors approved these consolidated financial statements on August 4, 2021. These consolidated financial statements comply with IFRS.
The interim condensed consolidated financial statements were prepared on a going concern basis under the historical cost convention, except for the derivative financial instrument and other liabilities which are measured at fair value. Certain current period amounts have been reclassified to conform with the current year presentation.
COVID-19
The COVID-19 outbreak has been declared a pandemic by the World Health Organization. COVID-19 is altering business and consumer activity in affected areas and beyond. The global response to the COVID-19 pandemic has resulted in, among other things, border closures, severe travel restrictions, the temporary shut-down of non-essential services and extreme fluctuations in financial and commodity markets. Additional measures may be implemented by one or more governments in jurisdictions where the Company operates. These measures have caused material disruption to businesses globally, resulting in an economic slowdown. The extent to which COVID-19 and any other pandemic or public health crisis impacts the Company’s business, affairs, operations, financial condition, liquidity, availability of credit and results of operations will depend on future developments that are highly uncertain and cannot be predicted with any meaningful precision, including new information which may emerge concerning the severity of the COVID-19 virus and the actions required to contain the COVID-19 virus or remedy its impact, among others.
(1)
Profound Medical Corp.
Interim Condensed Consolidated Statements of Cash Flows
In USD (000s)
(Unaudited)
Further, from an operational perspective, the Company’s employees, direct sales and marketing teams and distribution partners, as well as the workforce of vendors, services providers and counterparties with which the Company does business, may also be adversely affected by the COVID-19 pandemic or efforts to mitigate the pandemic, including government-mandated shutdowns, requests or orders for employees to work remotely, and other physical distancing measures, which could result in an adverse impact on the Company’ ability to conduct its businesses, including its ability to cultivate adoption of the TULSA-PRO® technology, support clinical customers with the TULSA-PRO® procedures and increase the utilization of the systems and disposable components.
To date, the economic downturn and uncertainty caused by the COVID-19 pandemic and global measures undertaken to contain its spread have affected all of the Company’s operations to some extent and, in particular, have caused volatility in demand for the TULSA-PRO® and SONALLEVE® systems and the disposable components related thereto. This has resulted in a reduction in anticipated sales and led to delays in the Company’s expectations regarding the rate at which agreements for new system user sites will be entered into and when user sites will become operational for the initiation of patient treatments. Despite the COVID-19 pandemic, patient treatments are continuing and Profound continues to identify potential new system user sites. The Company continues to evaluate the current and potential impact of the COVID-19 pandemic on its business, affairs, operations, financial condition, liquidity, availability of credit and results of operations.
In addition, the actual and threatened spread of COVID-19 globally could also have a material adverse effect on the regional economies in which Profound operates, could continue to negatively impact stock markets, including the trading price of the Common Shares, could adversely impact the Company’s ability to raise capital, could cause continued interest rate volatility and movements that could make obtaining financing more challenging or more expensive.
Revenue
The company generates revenue from the lease and sale of medical devices and the sale of certain consumable goods. Capital equipment consists of one-time revenue for the sale of capital equipment including installation fees. Non-capital – recurring revenue consists of the sale of consumables, lease of medical devices, procedures and services associated with extended warranties.
3 | Trade and other receivables |
The trade and other receivables balance comprises the following:
June 30, 2021 $ | December 31, 2020 $ | |||||||
Trade receivables | 6,894 | 6,446 | ||||||
Tax receivables | 319 | 774 | ||||||
Other receivables | 322 | 211 | ||||||
Total trade and other receivables | 7,535 | 7,431 |
(2)
Profound Medical Corp.
Interim Condensed Consolidated Statements of Cash Flows
In USD (000s)
(Unaudited)
Amounts past due represent trade receivables past due based on the customer’s contractual terms. The Company applies the simplified approach to providing for expected credit losses prescribed by IFRS 9, which permits the use of the lifetime expected loss provision for all trade receivables. At June 30, 2021 there were $294 (December 31, 2020 - $695) of trade receivables that were past due but still considered collectible.
4 | Inventory |
June 30, 2021 $ | December 31, 2020 $ | |||||||
Finished goods | 3,862 | 3,573 | ||||||
Raw materials | 3,531 | 1,774 | ||||||
Inventory provision | (7 | ) | (16 | ) | ||||
Total inventory | 7,386 | 5,331 |
During the three and six month periods ended June 30, 2021, $1,564 and $2,004 (three and six month periods ended June 30, 2020 - $603 and $1,302 respectively) of inventory was recognized in cost of sales. The Company decreased its inventory provision by $6 and $9 during the three and six month periods ended June 30, 2021 (increased for the three and six month periods ended June 30, 2020 - $62 and $165). There were no other inventory writedowns charged to cost of sales during the six month period ended June 30, 2021.
5 | Property and equipment |
Property and equipment consist of the following:
Furniture and fittings $ | Research and manufacturing equipment $ | Leasehold improvements $ | Equipment under lease $ | Total $ | ||||||||||||||||
At January 1, 2021 | ||||||||||||||||||||
Cost | 127 | 1,068 | 553 | 633 | 2,381 | |||||||||||||||
Accumulated depreciation | (115 | ) | (1,068 | ) | (240 | ) | (99 | ) | (1,522 | ) | ||||||||||
Net book value | 12 | - | 313 | 534 | 859 | |||||||||||||||
Six months ended June 30, 2021 | ||||||||||||||||||||
Opening net book value | 12 | - | 313 | 534 | 859 | |||||||||||||||
Additions | - | - | 32 | 204 | 236 | |||||||||||||||
Foreign exchange | (2 | ) | - | 9 | 15 | 22 | ||||||||||||||
Depreciation | (10 | ) | - | (30 | ) | (189 | ) | (229 | ) | |||||||||||
Closing net book value | - | - | 324 | 564 | 888 | |||||||||||||||
At June 30, 2021 | ||||||||||||||||||||
Cost | 40 | 1,068 | 591 | 888 | 2,587 | |||||||||||||||
Accumulated depreciation | (40 | ) | (1,068 | ) | (267 | ) | (324 | ) | (1,699 | ) | ||||||||||
Net book value | - | - | 324 | 564 | 888 |
(3)
Profound Medical Corp.
Interim Condensed Consolidated Statements of Cash Flows
In USD (000s)
(Unaudited)
6 | Intangible assets |
Intangible assets consist of the following:
Exclusive licence agreement $ | Software $ | Proprietary technology $ | Brand $ | Total $ | ||||||||||||||||
As at January 1, 2021 | ||||||||||||||||||||
Cost | 231 | 421 | 3,456 | 681 | 4,789 | |||||||||||||||
Accumulated amortization | (45 | ) | (59 | ) | (2,328 | ) | (459 | ) | (2,891 | ) | ||||||||||
Net book value | 186 | 362 | 1,128 | 222 | 1,898 | |||||||||||||||
Six months ended June 30, 2021 | ||||||||||||||||||||
Opening net book value | 186 | 362 | 1,128 | 222 | 1,898 | |||||||||||||||
Additions | - | 313 | - | - | 313 | |||||||||||||||
Foreign exchange | 4 | 16 | 20 | 5 | 45 | |||||||||||||||
Amortization | (11 | ) | (62 | ) | (360 | ) | (69 | ) | (502 | ) | ||||||||||
Closing net book value | 179 | 629 | 788 | 158 | 1,754 | |||||||||||||||
As at June 30, 2021 | ||||||||||||||||||||
Cost | 231 | 752 | 3,456 | 681 | 5,120 | |||||||||||||||
Accumulated amortization | (52 | ) | (123 | ) | (2,668 | ) | (523 | ) | (3,366 | ) | ||||||||||
Net book value | 179 | 629 | 788 | 158 | 1,754 |
7 | Right-of-use assets |
Leased premises $ | ||||
As at January 1, 2021 | ||||
Cost | 1,918 | |||
Accumulated depreciation | (494 | ) | ||
Net book value | 1,424 | |||
Six months ended June 30, 2021 | ||||
Opening net book value | 1,424 | |||
Addition | 18 | |||
Foreign exchange | 33 | |||
Depreciation | (165 | ) | ||
Closing net book value | 1,310 | |||
As at June 30, 2021 | ||||
Cost | 1,918 | |||
Accumulated depreciation | (608 | ) | ||
Net book value | 1,310 |
The Company leases office premises in Mississauga, Canada, Beijing, China and Vantaa, Finland. These lease agreements are typically entered into for three to ten-year periods.
(4)
Profound Medical Corp.
Interim Condensed Consolidated Statements of Cash Flows
In USD (000s)
(Unaudited)
8 | Other liabilities |
Contingent consideration $ | ||||
As at January 1, 2021 | 99 | |||
Amounts paid | (99 | ) | ||
As at June 30, 2021 | - |
Contingent consideration
The final payment in relation to the contingent consideration was made during the period and no further amounts are owing.
On July 31, 2017, the Company entered into an Asset and Share Purchase Agreement (the agreement) to acquire all of the issued and outstanding shares and certain assets of Royal Philips’ (Philips) Sonalleve MR-HIFU business (Sonalleve). The agreement includes certain contingent consideration payments payable monthly in euro tied to revenue levels of the Sonalleve business summarized as follows:
· | 5% of revenue between the date of acquisition and December 31, 2017; |
· | 6% of revenue during the year ending December 31, 2018; |
· | 7% of revenue during the years ending December 31, 2019 and 2020; and |
· | if total revenues are in excess of a defined amount from the date of acquisition to December 31, 2020, then the Company will be required to pay 7% of revenue from the date of acquisition to December 31, 2019. |
9 | Lease liabilities |
June 30, 2021 $ | December 31, 2020 $ | |||||||
Balance – Beginning of period | 1,676 | 1,836 | ||||||
Additions | 15 | - | ||||||
Repayments | (197 | ) | (289 | ) | ||||
Foreign exchange | 35 | 58 | ||||||
Interest and accretion expense | 46 | 71 | ||||||
Balance – End of period | 1,575 | 1,676 | ||||||
Less: Current portion | 407 | 312 | ||||||
Long-term portion | 1,168 | 1,364 |
(5)
Profound Medical Corp.
Interim Condensed Consolidated Statements of Cash Flows
In USD (000s)
(Unaudited)
10 | Share capital |
Common shares
The Company is authorized to issue an unlimited number of common shares.
Issued and outstanding (with no par value)
June 30, 2021 $ | December 31, 2020 $ | |||||||
20,380,302 (December 31, 2020 – 20,208,948) common shares | 219,056 | 211,527 |
On July 21, 2020, the Company closed an offering, resulting in the issuance of 3,172,414 common shares at a price of $14.50, for gross proceeds of $46,000 ($42,721, net of transaction costs).
On January 27, 2020, the Company closed an offering, resulting in the issuance of 3,392,500 common shares at a price of $11.65, for gross proceeds of $39,523 ($36,373, net of transaction costs).
Warrants
A summary of warrants outstanding is shown below:
Number of warrants | Weighted average exercise price C$ | Weighted average remaining contractual life (years) | ||||||||||
Balance - January 1, 2021 | 1,223,744 | 14.45 | 1.68 | |||||||||
Exercised | (130,036 | ) | 14.08 | 1.18 | ||||||||
Balance - June 30, 2021 | 1,093,708 | 14.38 | 1.23 |
11 | Share-based payments |
Share options
Compensation expense related to share options for the three and six month periods ended June 30, 2021 was $1,552 and $2,632, respectively (three and six month periods ended June 30, 2020 - $638 and $1,092, respectively).
(6)
Profound Medical Corp.
Interim Condensed Consolidated Statements of Cash Flows
In USD (000s)
(Unaudited)
A summary of the share option changes during the period presented and the total number of share options outstanding as at June 30, 2021 are set forth below:
Number of options | Weighted average exercise price C$ | |||||||
Balance - January 1, 2021 | 1,522,362 | 13.97 | ||||||
Granted | 568,464 | 22.21 | ||||||
Exercised | (40,084 | ) | 10.11 | |||||
Forfeited/expired | (28,809 | ) | 14.16 | |||||
Balance - June 30, 2021 | 2,021,933 | 16.36 |
The Company estimated the fair value of the share options granted during the period using the Black-Scholes option pricing model with the weighted average assumptions below. Due to the absence of Company-specific volatility rates for the expected life of the share options, the Company chose comparable companies in the medical device industry.
March 11, 2021 | May 21, 2021 | June 17, 2021 | ||||||||||
Exercise price | C$28.16 | C$22.08 | C$23.14 | |||||||||
Expected volatility | 75 | % | 75 | % | 75 | % | ||||||
Expected life of options | 6 years | 6 years | 6 years | |||||||||
Risk-free interest rate | 1.40 | % | 1.21 | % | 1.14 | % | ||||||
Dividend yield | - | - | - | |||||||||
Number of share options issued | 12,000 | 555,464 | 1,000 |
The following table summarizes information about the share options outstanding as at June 30, 2021:
Exercise price C$ | Number of options outstanding | Weighted average remaining contractual life (years) | Number of options exercisable | |||||||||||
2.01 – 4.00 | 11,300 | 1.38 | 11,300 | |||||||||||
8.01 – 10.00 | 491,318 | 6.98 | 242,305 | |||||||||||
10.01 – 12.00 | 138,390 | 6.93 | 94,001 | |||||||||||
12.01 – 14.00 | 8,300 | 5.12 | 8,300 | |||||||||||
14.01 – 16.00 | 160,256 | 6.01 | 150,598 | |||||||||||
16.01 – 18.00 | 536,605 | 8.92 | 143,680 | |||||||||||
20.01 – 22.00 | 2,400 | 9.14 | - | |||||||||||
22.01 – 24.00 | 566,464 | 9.78 | - | |||||||||||
24.01 – 26.00 | 94,900 | 9.44 | - | |||||||||||
28.01 – 30.00 | 12,000 | 9.70 | - | |||||||||||
2,021,933 | 8.43 | 650,184 |
(7)
Profound Medical Corp.
Interim Condensed Consolidated Statements of Cash Flows
In USD (000s)
(Unaudited)
Long-term incentive plan
Share-based compensation expense related to long-term incentive plan (LTIP) for the three and six month periods ended June 30, 2021 was $149 and $166 (three and six month periods ended June 30, 2020 - $2 and $2, respectively).
A summary of the RSUs changes during the period are set forth below:
Number of RSUs | ||||
Balance - January 1, 2021 | 8,717 | |||
Granted | 211,500 | |||
Vested | (1,234 | ) | ||
Balance - June 30, 2021 | 218,983 |
12 | Revenue |
Three months ended June 30, | ||||||||||||||||
2021 $ | 2020 $ | |||||||||||||||
Contracts with customers | Leasing | Contracts with customers | Leasing | |||||||||||||
Capital equipment | 1,459 | - | 426 | - | ||||||||||||
Non-capital - recurring | 1,095 | 73 | 536 | 64 | ||||||||||||
2,554 | 73 | 962 | 64 |
Six months ended June 30, | ||||||||||||||||
2021 $ | 2020 $ | |||||||||||||||
Contracts with customers | Leasing | Contracts with customers | Leasing | |||||||||||||
Capital equipment | 1,693 | - | 1,166 | - | ||||||||||||
Non-capital - recurring | 1,488 | 157 | 925 | 95 | ||||||||||||
3,181 | 157 | 2,091 | 95 |
(8)
Profound Medical Corp.
Interim Condensed Consolidated Statements of Cash Flows
In USD (000s)
(Unaudited)
13 | Nature of expenses |
Three months ended June 30, 2021 $ | Three months ended June 30, 2020 $ | Six months ended June 30, 2021 $ | Six months ended June 30, 2020 $ | |||||||||||||
Production and manufacturing costs | 1,131 | 458 | 1,309 | 937 | ||||||||||||
Salaries and benefits | 3,041 | 1,893 | 5,759 | 4,291 | ||||||||||||
Consulting fees | 949 | 932 | 2,014 | 1,872 | ||||||||||||
Research and development expense | 684 | (29 | ) | 1,392 | 322 | |||||||||||
Sales and marketing expenses (recovery) | 172 | 72 | 334 | 273 | ||||||||||||
Amortization and depreciation | 471 | 374 | 896 | 752 | ||||||||||||
Share-based compensation | 1,701 | 597 | 2,798 | 1,092 | ||||||||||||
Rent | 65 | 51 | 133 | 119 | ||||||||||||
Software/Hardware | 123 | 160 | 275 | 266 | ||||||||||||
Insurance | 326 | 307 | 641 | 632 | ||||||||||||
Other expenses | 348 | 151 | 743 | 442 | ||||||||||||
9,011 | 4,966 | 16,294 | 10,998 |
14 | Net finance costs |
Three ended June 30, 2021 $ | Three ended June 30, 2020 $ | Six ended June 30, 2021 $ | Six ended June 30, 2020 $ | |||||||||||||
Change in fair value of contingent consideration (note 8) | - | (3 | ) | - | 8 | |||||||||||
CIBC loan | - | - | - | 471 | ||||||||||||
Change in fair value of derivative financial instrument | (128 | ) | 194 | (149 | ) | 170 | ||||||||||
Lease liability interest expense (note 9) | 23 | 22 | 45 | 46 | ||||||||||||
Interest income | (46 | ) | (200 | ) | (94 | ) | (233 | ) | ||||||||
Foreign exchange (gain) loss | 753 | 1,212 | 1,700 | (1,519 | ) | |||||||||||
602 | 1,225 | 1,502 | (1,057 | ) |
(9)
Profound Medical Corp.
Interim Condensed Consolidated Statements of Cash Flows
In USD (000s)
(Unaudited)
15 | Loss per share |
The following table shows the calculation of basic and diluted loss per share:
Three ended June 30, 2021 | Three ended June 30, 2020 | Six ended June 30, 2021 | Six ended June 30, 2020 | |||||||||||||
Net loss for the period | $ | 7,043 | $ | 5,303 | $ | 14,542 | $ | 7,986 | ||||||||
Weighted average number of common shares | 20,350,149 | 16,096,990 | 20,318,601 | 15,376,114 | ||||||||||||
Basic and diluted loss per share | $ | 0.35 | $ | 0.33 | $ | 0.72 | $ | 0.52 |
Of the 2,021,933 (June 30, 2020 – 1,538,687) share options, 218,983 (June 30, 2020 – 3,917) RSUs and 1,093,708 (June 30, 2020 – 2,043,747) warrants not included in the calculation of diluted loss per share for the period ended June 30, 2021, 1,743,892 (June 30, 2020 – 2,469,629) were exercisable.
16 | Related party transactions |
Key management includes the Company’s directors and senior management team. The remuneration of directors and the senior management team was as follows:
Three ended June 30, 2021 $ | Three ended June 30, 2020 $ | Six ended June 30, 2021 $ | Six ended June 30, 2020 $ | |||||||||||||
Salaries and employee benefits | 315 | 261 | 1,136 | 910 | ||||||||||||
Directors’ fees | 53 | 20 | 108 | 44 | ||||||||||||
Share-based compensation | 892 | 396 | 1,434 | 709 | ||||||||||||
1,260 | 677 | 2,678 | 1,663 |
Executive employment agreements allow for additional payments in the event of a liquidity event, or if the executive is terminated without cause.
17 | Segment reporting |
The Company’s operations are categorized into one segment, which is medical technology focused on magnetic resonance guided ablation procedures for the treatment of prostate disease, uterine fibroids and palliative pain treatment for patients with metastatic bone disease. The Company sells its products in various countries around the world, the below table shows the entity wide geographic disclosure for revenue based on the location of the legal entity that sold the product.
(10)
Profound Medical Corp.
Interim Condensed Consolidated Statements of Cash Flows
In USD (000s)
(Unaudited)
For the three-months ended June 30, 2021:
Canada $ | USA $ | Germany $ | Total $ | |||||||||||||
Revenue | ||||||||||||||||
Capital equipment | 1,021 | - | 438 | 1,459 | ||||||||||||
Non-capital - recurring | 156 | 601 | 411 | 1,168 | ||||||||||||
1,177 | 601 | 849 | 2,627 |
For the six-months ended June 30, 2021:
Canada $ | USA $ | Germany $ | Total $ | |||||||||||||
Revenue | ||||||||||||||||
Capital equipment | 1,255 | - | 438 | 1,693 | ||||||||||||
Non-capital - recurring | 205 | 828 | 612 | 1,645 | ||||||||||||
1,460 | 828 | 1,050 | 3,338 |
For the three-months ended June 30, 2020:
Canada $ | Germany $ | Total $ | ||||||||||
Revenue | ||||||||||||
Capital equipment | 426 | - | 426 | |||||||||
Non-capital - recurring | 251 | 349 | 600 | |||||||||
677 | 349 | 1,026 |
(11)
Profound Medical Corp.
Interim Condensed Consolidated Statements of Cash Flows
In USD (000s)
(Unaudited)
For the six-months ended June 30, 2020:
Canada $ | Germany $ | Total $ | ||||||||||
Revenue | ||||||||||||
Capital equipment | 623 | 543 | 1,166 | |||||||||
Non-capital - recurring | 405 | 615 | 1,020 | |||||||||
1,028 | 1,158 | 2,186 |
Other entity wide financial information by geography as at June 30, 2021:
Canada $ | USA $ | China $ | Germany $ | Finland $ | Total $ | |||||||||||||||||||
Total assets | 90,983 | 1,035 | 72 | 1,351 | 2,400 | 95,841 | ||||||||||||||||||
Goodwill and intangible assets | 4,505 | - | - | - | - | 4,505 | ||||||||||||||||||
Property and equipment | 704 | 184 | - | - | - | 888 | ||||||||||||||||||
Right-of-use assets | 1,243 | - | 28 | - | 39 | 1,310 |
Other entity wide financial information by geography as at December 31, 2020:
Canada $ | USA $ | Germany $ | Finland $ | Total $ | ||||||||||||||||
Total assets | 98,890 | 456 | 1,682 | 3,573 | 104,601 | |||||||||||||||
Goodwill and intangible assets | 4,576 | - | - | - | 4,576 | |||||||||||||||
Property and equipment | 859 | - | - | - | 859 | |||||||||||||||
Right-of-use assets | 1,325 | - | - | 99 | 1,424 |
(12)
Profound Medical Corp.
Interim Condensed Consolidated Statements of Cash Flows
In USD (000s)
(Unaudited)
18 | Change in presentation currency |
At December 31, 2020, the Company changed its presentation currency from Canadian dollars to United States dollars. The change in presentation currency was made to better reflect the Company's business activities and to improve investor's ability to compare the Company's financial results with other publicly traded businesses in the industry. In making the change to a US dollar presentation currency, the Company followed the guidance in IAS 21, The Effects of Changes in Foreign Exchange Rates (IAS 21) and has applied the change retrospectively as if the new presentation currency had always been the Company's presentation currency. In accordance with IAS 21, the financial statements for all the periods presented have been translated to the new US dollar presentation currency. For comparative balances, assets and liabilities have been translated into the presentation currency at the rate of exchange prevailing at the reporting date, or at the exchange rate prevailing at the date of the transactions. Exchange rate differences arising on translation are taken to other comprehensive loss (income). The Company has presented the effects of the change in the presentation currency below.
June 30, 2020 USD$ | June 30, 2020 CAD$ | |||||||
Assets | ||||||||
Current assets | ||||||||
Cash | 41,066 | 55,964 | ||||||
Trade and other receivables | 3,371 | 4,595 | ||||||
Investment tax credits receivable | 176 | 240 | ||||||
Inventory | 4,977 | 6,782 | ||||||
Prepaid expenses and deposits | 428 | 584 | ||||||
Total current assets | 50,018 | 68,165 | ||||||
Property and equipment | 487 | 663 | ||||||
Intangible assets | 1,873 | 2,552 | ||||||
Right-of-use assets | 1,477 | 2,012 | ||||||
Goodwill | 2,501 | 3,409 | ||||||
Total assets | 56,356 | 76,801 | ||||||
Liabilities | ||||||||
Current liabilities | ||||||||
Accounts payable and accrued liabilities | 2,013 | 2,743 | ||||||
Deferred revenue | 755 | 1,029 | ||||||
Provisions | 95 | 130 | ||||||
Other liabilities | 78 | 107 | ||||||
Derivative financial instrument | 358 | 487 | ||||||
Lease liabilities | 254 | 346 | ||||||
Income taxes payable | 4 | 6 | ||||||
Total current liabilities | 3,557 | 4,848 | ||||||
Deferred revenue | 360 | 491 | ||||||
Provisions | 21 | 29 | ||||||
Lease liabilities | 1,422 | 1,937 | ||||||
Total liabilities | 5,360 | 7,305 | ||||||
Shareholders’ Equity | ||||||||
Share capital | 143,082 | 194,992 | ||||||
Contributed surplus | 12,095 | 16,483 | ||||||
Accumulated other comprehensive loss | 12,177 | 42 | ||||||
Deficit | (116,358 | ) | (142,021 | ) | ||||
Total Shareholders’ Equity | 50,996 | 69,496 | ||||||
Total Liabilities and Shareholders’ Equity | 56,356 | 76,801 |
(13)
Profound Medical Corp.
Interim Condensed Consolidated Statements of Cash Flows
In USD (000s)
(Unaudited)
Three months ended June 30, 2020 USD$ | Three months ended June 30, 2020 CAD$ | |||||||
Revenue | ||||||||
Capital equipment | 426 | 590 | ||||||
Non-capital - recurring | 600 | 831 | ||||||
1,026 | 1,421 | |||||||
Cost of sales | 610 | 845 | ||||||
Gross profit | 416 | 576 | ||||||
Operating expenses | ||||||||
Research and development | 1,721 | 2,384 | ||||||
General and administrative | 1,642 | 2,275 | ||||||
Selling and distribution | 993 | 1,376 | ||||||
Total operating expenses | 4,356 | 6,035 | ||||||
Operating Loss | 3,940 | 5,459 | ||||||
Net finance costs | 1,225 | 1,696 | ||||||
Loss before taxes | 5,165 | 7,155 | ||||||
Income taxes | 138 | 193 | ||||||
Net loss attributed to shareholders for the year | 5,303 | 7,348 | ||||||
Other comprehensive loss (income) | ||||||||
Item that may be reclassified to profit or loss | ||||||||
Foreign currency translation adjustment - net of tax | (3,998 | ) | (26 | ) | ||||
Net loss and comprehensive loss for the year | 9,301 | 7,322 | ||||||
Loss per share | ||||||||
Basic and diluted loss per common share | 0.33 | 0.46 |
(14)