Imricor Medical Systems, Inc (ASX:IMR).
(ARBN 633 106 019)
2019
ANNUAL
REPORT
l
y
n
o
e
s
u
l
a
n
o
s
r
e
p
r
o
F
ii
IMRICOR MEDICAL S YSTEMS
IMRICOR
MEDICAL
SYSTEMS, INC.
Imricor Medical Systems, Inc. (ASX:IMR) is a pioneer and
leader in developing innovative MRI-compatible medical
devices which can be used to carry out MRI-guided cardiac
catheter ablation procedures. Imricor is the first company
in the world to bring commercially viable and safe MRI-
compatible products to the cardiac catheter ablation market.
Headquartered in the United States, Imricor seeks to make
a meaningful impact on patients, healthcare professionals
and healthcare facilities around the world by increasing the
success rates and bringing down the overall costs of cardiac
catheter ablation procedures.
ABOUT THIS
REPORT
Imricor Medical Systems, Inc. listed on the Australian
Securities Exchange (ASX) and commenced trading on
30 August 2019. References to “Imricor” or “the Company”
in this Annual Report are references to Imricor Medical
Systems, Inc. The information contained in this report
reflects the results for Imricor for the year ended 31
December 2019.
l
y
n
o
e
s
u
l
a
n
o
s
r
e
p
AGM
DETAILS
r
o
F
Imricor will hold its Annual Meeting of Stockholders
on Wednesday, 13 May 2020 at 9:00am, Sydney time
(Tuesday 12 May 2020 at 6:00pm US Central Daylight
Time). Due to restrictions on travel and public gatherings
associated with the COVID-19 pandemic, this meeting will
be held as a virtual meeting. Stockholders are encouraged
to watch and participate in this meeting via the online
platform using a computer at https://web.lumiagm.com
or a mobile device using the Lumi AGM app which
can be downloaded from the Apple App Store or
Google Play Store.
Further details are provided to stockholders in Imricor’s
Notice of Annual Meeting.
KEY
ACHIEVEMENTS
SINCE IPO
CE MARK
APPROVAL RECEIVED
for Vision-MR Ablation
Catheter & Vision-MR
Dispersive Electrode
KEY LAB
OPERATIONAL
at Dresden Heart Center
also providing training to
future sites
PROCEDURES
UNDERTAKEN
are delivering excellent
outcomes for physicians
& patients
ACTIVE CATHETER
IMAGING ACHIEVED
reducing reliance on third party
3D mapping systems
EXPANDED
WORKFORCE
by 18 FTEs including hires from
high calibre organisations
201 9 ANNUAL R EPORT
CONTENTS
1. Chair’s Message
2. Board of Directors
3. Management Team
4. Operating & Financial Review
5. Directors' Report
a. Remuneration Report
6. Financial Report
7. Additional Stockholder Information
8. Corporate Directory
1
2
4
6
9
11
15
20
46
50
l
y
n
o
e
s
u
l
a
n
o
s
r
e
p
r
o
F
2
IMRICOR ME DICAL SYS TEMS
CHAIR’S MESSAGE
l
y
n
o
e
s
u
l
a
n
o
s
r
e
p
r
o
F
Dear fellow Stockholders,
On behalf of the Board, I am pleased to provide you with
Imricor’s Annual Report for 2019, our first as a company
listed on the Australian Securities Exchange (ASX).
Imricor’s journey throughout 2019 and during the early
part of 2020 has been transformative. In August last year
we commenced trading on the ASX, after a successful
IPO which raised A$13 million in capital. This has provided
us with the funding required to begin the execution of
our growth strategy, and importantly, commence the
commercialisation phase of our journey in 2020.
ACHIEVING PRODUCT
COMMERCIALISATION
Our key focus in 2019 was the pursuit of CE mark approval
to enable us to market and sell our Vision-MR Ablation
Catheter and Vision-MR Dispersive Electrode throughout the
European Union. While we expected to receive this approval
during the third quarter of 2019, substantial delays occurred
associated with increased workload and resource strain
experienced by Imricor's notified body, TÜV SÜD.
However, we did not stand still during this period and over
the course of the year continued to build a solid pipeline of
clinical sites for the establishment of iCMR labs and the sale
of our products. Growing support and awareness across the
medical community was driven by our sales and marketing
efforts and engagement with key opinion leaders in the
electrophysiology field. This was further strengthened by
our collaborative relationship with leading MRI vendors.
Pleasingly, considering the absence of CE mark approval,
we concluded 2019 with agreements for the sale of our
products in place across four sites, a further five sites with
facilities in place to commence procedures pending final
documentation, and discussions across an additional six sites
well progressed.
We established warehouse and logistics facilities in Europe,
building inventory to ensure timely distribution of our
products once CE mark approval was received.
With CE mark approval finally received on 23 January
2020, we were able to swiftly move to the execution of
a commercial launch, with the first procedures using our
products performed at the Dresden Heart Centre in late
January. This was a tremendous milestone for Imricor,
marking the first iCMR ablations anywhere in the world to
be performed with market-approved devices.
The Dresden Heart Centre has been established as a training
Centre of Excellence, supporting our roll out of clinical sites
throughout Europe during the year ahead.
BUILDING THE TEAM
Our workforce continued to expand throughout 2019
and we were fortunate to welcome a number of talented
individuals from high calibre organisations within the
medical technology sector to the Imricor team. In particular
we focused on expanding capability across sales and
marketing to ensure ongoing growth in our pipeline of
clinical sites and to provide on ground support for sites
once operational. Further, our manufacturing and assembly
team was significantly expanded, supporting growth in
production to facilitate product roll out following CE mark
approval.
ACTIVE CATHETER IMAGING
During the latter part of 2019, our engineers and scientists
developed a new imaging technique which we call Active
Catheter Imaging. This technique uses native MR imaging
to easily identify the Vision-MR Ablation Catheter. The use
of this technique opens the door for more clinical sites to
commence atrial flutter ablations guided by real time MRI,
without dependency on mapping system software or active
tracking.
Active Catheter Imaging has proven highly effective in
the procedures undertaken at the Dresden Heart Centre.
Feedback from physicians performing these procedures
has been excellent, with anecdotal outcomes supporting
reduced atrial flutter procedure times compared to
traditional procedures under x-ray guidance.
PRODUCT DEVELOPMENT PIPELINE
Our research and development pipeline focusses on the
expansion of Imricor’s range of products for use in MR
guided cardiac catheter ablation procedures. Development,
along with our regulatory strategy, is well advanced on our
diagnostic catheter. This product, a scaled down version of
our ablation catheter, will be targeted for release during the
middle part of 2021, pending CE mark approval.
We are currently in the prototype phase for our steerable
sheath and transseptal needle which, in the future, will
enable access to the left side of the heart via the intra-atrial
septum. At this stage we are developing our regulatory
strategy and aim to have these products ready for clinical
trial during 2021. The delivery of these products is critical
to expanding indications for our ablation catheter to
procedures in the left side of the heart, including atrial
fibrillation and ventricular tachycardia.
201 9 ANNUAL REPORT
3
Our financial position is strong, with many opportunities
available to implement cash conservation initiatives should
disruptions occur over a longer period of time. We will
continue to monitor potential impacts from COVID-19
on the business and keep our stockholders informed as
appropriate.
After over a decade of effort, my greatest personal reward
has been seeing Imricor’s products at work, delivering
meaningful improvements in people’s lives. The Imricor team
has brought to market something that many considered
to be impossible and something that we think will change
the world of interventional medicine. I am privileged to be
surrounded by a talented team who are passionate about
achieving great outcomes for patients and their healthcare
professionals. I thank our team for their dedication and
determination.
On behalf of the Board, I would like to thank our
stockholders for their ongoing support and look forward
to sharing the next exciting phase of the Imricor journey
with you.
Yours sincerely,
Steve Wedan
Chair
l
y
n
o
e
s
u
l
a
n
o
s
r
e
p
r
o
F
LOOKING TO THE YEAR AHEAD
During the early part of 2020 our focus has been on the
execution of a controlled product launch throughout
Europe. We have continued to work closely with the initial
sites we targeted to be ordering Imricor's products during
the first half of the year, with start up activities ready to
commence at three medical facilities in the Netherlands
and Germany.
We will continue to pursue growth through expansion both
within Europe, where we have CE mark approval, and to
other geographic locations. In Australia, we are assessing
several local agents to facilitate TGA approval and a detailed
strategy to support this process is currently being planned.
Our strategy on FDA approval in the United States is well
progressed and we are targeting discussions with the FDA
in the coming months with the aim of undertaking an IDE
clinical trial during 2021-2022.
As discussed above, our product development pipeline will
support expanding indications, providing us with significant
growth opportunities, and remains a key focus for the year
ahead.
MAINTAINING A STRONG
FINANCIAL POSITION
In February 2020, we successfully completed an institutional
placement to new and existing investors, raising
A$20.3 million to further support our commercialisation
plans and growth initiatives. This has positioned the
Company with a robust balance sheet and a pro-forma cash
position at 31 December 2019 of US$17.9 million.
RESPONDING TO COVID-19
As the situation associated with COVID-19 pandemic has
evolved, our first priority has been the health and welfare of
the Imricor team, their families and the broader communities
in which they live. We have implemented a number of
changes to the way we work, including the establishment of
two separate clean rooms at our manufacturing facility and
encouraging and supporting our employees to work from
home as much as possible.
At this time, we have experienced some delay in start-up
activities due to hospital bans on outside personnel and
have observed a lower rate of procedures across the broader
cardiac catheter ablation market. However, we expect
that the backlog of procedures that is currently building
will result in an increased need for Imricor’s consumable
products once targeted sites are operational.
4
IMRICOR ME DICAL SYS TEMS
BOARD OF DIRECTORS
Director
l
y
n
o
e
s
u
l
a
n
o
s
r
e
p
r
o
F
Summary
Steve Wedan
President and Chief Executive Officer, and Chair
Joined Board in May 2006
Mr Wedan co-founded the Company in 2006 and has served as CEO since that time.
Mr Wedan is responsible for the overall management and strategic direction of the
Company.
Mr Wedan has over 29 years of experience in the medical device industry including design
engineering of MRI and ultrasound systems for GE Healthcare, as well as Vice President
and Chief Technology Officer for Applied Biometrics Inc. Immediately prior to co-founding
Imricor, Mr Wedan founded and operated a technical consulting company, Wedan
Technologies Inc., from 2000-2006. Mr Wedan is a member of various international
standards committees in the fields of MRI safety and the compatibility of implanted and
interventional products in MRI.
Mr Wedan currently serves on the boards of Medical Device Research Forum and Water
Rescue Innovations, Inc.
Mr Wedan holds a Bachelor of Science in Electrical Engineering from Michigan
Technological University (summa cum laude), and a Master of Science in Electrical
Engineering from Marquette University.
Mark Tibbles
Non-executive Director
Chair of the Nomination and Remuneration Committee
Lead Independent Director
Member of the Audit and Risk Committee
Joined Board in September 2014
Mr Tibbles is an entrepreneur, business owner, company director and active venture
investor in and advisor to technology, life science and medical device companies.
Mr Tibbles is currently the Managing Director of Strategic Stage Ventures, LLC and an
owner and managing member of STEM Fuse, LLC one of the largest providers of digital
K-12 STEM curriculum in the U.S.
Prior to his current roles, Mr Tibbles was an owner and member of Intuitive Technology
Group until it was sold in 2017. Mr Tibbles was also President and founder of PRC
Consulting, Inc., a company specialising in the management and implementation of IT
projects for Fortune 1000 companies, from 1998 until 2013, when PRC was sold.
Mr Tibbles currently serves as an independent director of OMEDZA.com, Inc.
Mr Tibbles holds a Bachelor of Arts from Oral Roberts University.
201 9 ANNUAL REPORT
5
Director
Summary
Doris Engibous
Non-executive Director
Member of the Audit and Risk Committee
Member of the Nomination and Remuneration Committee
Joined Board in April 2019
Ms Engibous has over 40 years of experience in the medical device industry. From 2004
to 2010, she served as President and CEO of Hemosphere Inc., an early commercialisation
stage medical technology company, before it was acquired by CryoLife Inc. (NYSE: CRY).
Prior to 2004, Ms Engibous held various roles with Nellcor (a business of Tyco Healthcare
Group/Tyco International Ltd., now Covidien/Medtronic, NYSE: MDT) for 17 years,
including serving as President from 2000 to 2003. From 2004 to 2018, Ms Engibous
served as an independent non-executive director of Nasdaq-listed, Natus Medical
Incorporated.
Ms Engibous currently serves as a director of GI Supply, Inc., a family-owned medical
technology company, a role she has held since 2014. She has also served as its Chair
since 2016. She is also a director of IRIDEX Corporation (NASDAQ:IRIX).
Ms Engibous holds a Bachelor of Science in Chemical Engineering from the University of
Michigan.
Peter McGregor
Non-executive Director
Chair of the Audit and Risk Committee
Member of the Nomination and Remuneration Committee
Joined Board in May 2019
Mr McGregor has over 30 years’ experience in senior finance and management roles,
including having been a partner in the investment banking firm of Goldman Sachs
JBWere and a managing director in the institutional banking & markets division of
Commonwealth Bank of Australia. He is also a former Chief Financial Officer of the ASX50
transport company, Asciano Limited (ASX: AIO), and Chief Operating Officer of ASX listed
Australian Infrastructure Fund Limited (ASX: AIX).
Mr McGregor is an experienced company director and currently serves as a director of
Pivotal Systems Corporation (ASX: PVS).
Mr McGregor holds a Bachelor of Commerce from the University of Melbourne, is a
member of the Australian Institute of Company Directors and a Fellow of the Financial
Services Institute of Australasia.
l
y
n
o
e
s
u
l
a
n
o
s
r
e
p
r
o
F
6
IMRICOR ME DICAL SYS TEMS
MANAGEMENT TEAM
Executive
l
y
n
o
e
s
u
l
a
n
o
s
r
e
p
r
o
F
Summary
Steve Wedan
President and Chief Executive Officer, and Chair
Refer to page 4.
Lori Milbrandt
Vice President of Finance and Chief Financial Officer
Ms Milbrandt has served as the Company’s Chief Financial Officer since 2007, initially on a
contract basis and since May 2018, as a full-time employee of Imricor.
Ms Milbrandt has over 30 years of accounting, finance, and HR experience. Prior to
transitioning to the role of CFO on a full-time basis, Ms Milbrandt was a contract CFO
for several medical device companies. Ms Milbrandt has previously held management
positions with companies including Microvena, ev3, and DiaSorin (FKA Incster) and spent
the first seven years of her career with KPMG.
Ms Milbrandt holds a Bachelor of Business Administration from the University of
Wisconsin-Eau Claire and a Master of Business Administration (Finance) from the
University of St. Thomas.
Gregg Stenzel
Vice President of Operations
Mr Stenzel joined Imricor in 2007 and is responsible for operations and leading the
development of initial manufacturing strategies, including personnel, facilities and
outsourcing.
Mr Stenzel has over 20 years of medical device experience and brings a breadth of
knowledge in new product development, supply chain management, quality/regulatory
systems, and customer support.
Prior to joining the Company, Mr Stenzel was the Manager of Instrument Technical
Operations at Beckman Coulter, Inc., a leading manufacturer of In Vitro Diagnostic
Systems.
Mr Stenzel holds a Bachelor of Science in Electrical Engineering from the University of
Wisconsin-Madison and a Master of Business Administration from the University of
Minnesota-Carlson School of Business.
l
y
n
o
e
s
u
l
a
n
o
s
r
e
p
r
o
F
201 9 ANNUAL REPORT
7
Executive
Summary
Dan Sunnarborg
Vice President of Engineering
Mr Sunnarborg joined Imricor in 2007 and is responsible for all hardware and software
development activities at the Company, including platform development, system control,
image processing, user interface, and outsource partnerships.
Mr Sunnarborg has more than 20 years of engineering experience in fields such as medical
devices, telecommunications, defense, and consumer electronics. Mr Sunnarborg has also
held various design software engineering positions and has led development groups for
more than 15 years.
Mr Sunnarborg holds a Bachelor of Science in Engineering Physics from North Dakota
State University and a Master of Science in Electrical Engineering from Marquette
University.
Jennifer Weisz
Vice President of Regulatory and Quality
Ms Weisz joined Imricor in 2012 and commenced her current role in 2018. Ms Weisz
is responsible for implementing and managing the Company’s regulatory strategy and
quality system.
Ms Weisz has over 19 years of experience in the medical device industry, including
product development, clinical evidence development, quality system implementation, and
regulatory strategy development and implementation.
Prior to joining the Company, Ms Weisz was a member of the Medtronic Global Clinical
Operations Quality team.
Ms Weisz holds a Bachelor of Science in Electrical Engineering from North Dakota State
University and a Master of Science in Technical Management from the University of
St. Thomas.
Tom Lloyd
Vice President of Clinical Research
Mr Lloyd commenced his current role at Imricor in 2012 and is responsible for leading
preclinical and clinical studies, managing intellectual property, and developing new
technologies.
Mr Lloyd began his career at the Company in 2007 as a radio-frequency engineer and is
the lead inventor on many of the Company’s patents.
Mr Lloyd has over 13 years of medical device design experience primarily focused on
interactions between implanted devices and the electromagnetic fields associated with
MRI.
Mr Lloyd holds a Bachelor and Master of Science in Electrical Engineering from Iowa State
University.
8
IMRICOR ME DICAL SYS TEMS
MANAGEMENT TEAM (CONT)
Summary
Greg Englehardt
Director of Sales
Mr Englehardt joined Imricor in 2018 and is responsible for developing and managing the
Company’s global sales strategies and performance.
Mr Englehardt has 18 years of experience working in the medical device industry with
16 years of sales leadership experience. Prior to joining the Company, Mr Englehardt
served as Regional Business Director at Medtronic from 2011 to 2018. Before joining
Medtronic, he worked at NeuroMetrix from 2004 until 2011, where he was promoted to
multiple sales and leadership roles including Director of Global Business Development/
Sales and National Director of Sales.
Mr Englehardt also served as a combat medic in the U.S. army and holds a Bachelor of
Science in Nursing from Louisiana State University.
Nick Twohy
Director of Marketing
Mr Twohy joined Imricor in 2019 and is responsible for global portfolio management,
including the product roadmap, product management, marketing teams and
communications.
Mr Twohy has over 20 years of experience in the medical devices industry. Most
recently he worked as the International Marketing Director for Medtronic in the Cardiac
Resynchronisation Therapies business. There he led business planning and execution for
the International markets. Prior to that role, Mr Twohy led multiple product launches at
Medtronic including various launches in the CareLink remote monitoring business, and in
the Cardiac Rhythm Management business where he led the US launch of the Revo MRI
pacemaker system.
Mr Twohy holds a Bachelor of Arts from Hamline University and a Master of Business
Administration from the University of St. Thomas.
Executive
l
y
n
o
e
s
u
l
a
n
o
s
r
e
p
r
o
F
201 9 ANNUAL REPORT
9
OPERATING AND FINANCIAL REVIEW
l
y
n
o
e
s
u
l
a
n
o
s
r
e
p
r
o
F
OVERVIEW
Imricor is a US-based medical device company that seeks to address the current issues with traditional x-ray guided
ablation procedures through the development of MRI-guided technology. The Company’s principal focus is the design,
manufacturing, sale and distribution of MRI-compatible products for cardiac catheter ablation procedures.
Imricor is a pioneer and leader in developing MRI-compatible products for cardiac catheter ablation procedures and in early
2020, brought the first commercially viable and safe MRI-compatible products to the cardiac catheter ablation market.
In January 2020, Imricor obtained CE mark approval for its key consumable products, the Vision-MR Ablation Catheter
(with an indication for treating type 1 atrial flutter) and the Vision-MR Dispersive Electrode. The Vision-MR Ablation
Catheter is the Company’s prime product offering, specifically designed to work under real-time MRI guidance with the
intent of enabling higher success rates along with a faster and safer treatment compared to conventional procedures using
x-ray guided catheters. The Company also has approval for the sale of its capital product, the Advantage-MR EP Recorder/
Stimulator System in the European Union.
Imricor is in the early stage of commencing the sale of its capital and consumable products to hospitals and clinics for use
in Interventional Cardiac Magnetic Resonance Imaging (iCRM) labs, in which ablation procedures using the Vision-MR
Ablation Catheter can be performed. The installation of iCMR labs is driven primarily by MRI equipment vendors working
collaboratively with Imricor. These vendors help to target certain sites and support the design and construction of iCMR labs
for those sites.
Imricor has joint development agreements with two leading, global MRI vendors and is working towards agreements with
these vendors in relation to the sale and marketing of Imricor’s products.
The Company also performs contract research on and licences some of its IP for use in other MRI compatible devices.
Moving forward, Imricor expects its primary revenue source to be from the sale of its capital and consumable products. Sales
revenue will depend on the number of established clinical sites and the procedure volume at each of those sites, as well as
the types of arrhythmias the products are used to treat.
BUSINESS STRATEGY AND OPPORTUNITIES
Imricor’s products are designed to operate in a global cardiac catheter ablation market which is expected to increase to
US$4.37 billion in 2021 from $US3.03 billion in 2016; growth by a CAGR of 7.6%. The global growth is underpinned by
several favourable drivers, including rising incidences of cardiac disease due to changing demographic trends, a shift towards
minimally invasive procedures and cost savings that have been associated with catheter ablation as a treatment method for
certain arrhythmias.
Following receipt of CE mark approval for the Vision-MR Ablation Catheter, Imricor has commenced a controlled release
of its key products, initially targeting clinical sites in the Netherlands, Austria, Germany and Switzerland. Imricor aims to
then expand its focus to Australia (if and when Australian regulatory approval is obtained), France, Hungary and the United
Kingdom. This second phase will be followed by the Czech Republic, Italy, Spain, Sweden and other EU countries.
The timing of these phases will depend on a number of factors such as the level of adoption in each preceding phase and
when greater growth opportunities are identified in each phase.
These countries have been selected based on a number of factors, including Imricor’s ability to obtain regulatory approval,
reimbursement structures, standard timelines for receiving customer payments and the number of existing ablation centres
in those countries. Within each targeted country, Imricor will first target ablation centres which historically have carried out
larger volumes of procedures. Imricor believes targeting locations which are geographically proximate to existing clinical sites
may also promote growth.
Imricor is also in the early stages of pursuing regulatory approval to sell its keys products in Australia and the United States
and may in the future, pursue regulatory approvals in other jurisdictions.
In conjunction with organic growth across existing products, the Company has identified or is targeting growth through
expansion in its product line, providing the opportunity for Imricor’s products to be used across a broader range of MR
interventional procedures. The Company therefore intends to pursue regulatory approval for its products with expanded
indications (ie. for treating arrhythmias other than typical atrial flutter).
10
IMRICOR ME DICAL SYS TEMS
OPERATING AND FINANCIAL REVIEW (CONT)
l
y
n
o
•
e
s
u
a
n
o
s
r
e
p
MATERIAL BUSINESS RISKS
The material business risks faced by the Company that have the potential to impact the financial prospects of the Company
include:
• Regulatory risk: The sale of Imricor’s products requires regulatory approval in each relevant jurisdiction. The Company is
not assured of receiving future regulatory clearances for its existing products outside of the European Union or approvals
for expanding indications or additional products currently in Imricor’s product pipeline.
• Market adoption risk: The ability of Imricor to generate revenue is dependent on hospitals and clinics with ablation
centres in markets where it obtains the required regulatory approval establishing an iCMR lab and adopting Imricor’s
MRI-compatible technology for cardiac catheter ablation procedures. While Imricor works collaboratively with leading
MRI vendors to drive lab adoption, there can be no guarantee of the outcome.
Integration with third party mapping systems: Active MR Tracking and 3D mapping are required for several expanded
indications Imricor is targeting in the future, such as the treatment of atrial fibrillation and ventricular tachycardia.
Imricor’s ablation system is designed to work with third-party 3D mapping systems developed by leading MRI vendors
which have Active Tracking functionality. In order to be made commercially available, these 3D mapping systems require
certain approvals (CE mark or local ethics committee approval) which have not yet been obtained.
Beyond these risks, the Company maintains general risk exposure associated with market competition, employee capability
and intellectual property as well as potential financial capacity constraints within the healthcare sector.
l
FINANCIAL PERFORMANCE
During 2019, the Company generated revenue of US$0.640 million from the sale of Imricor’s Advantage-MR EP Recorder/
Stimulator systems and a contract with NIH for the development of an injection catheter for chemoablation. Revenue from
the sale of Imricor’s consumable products commenced in January 2020, following receipt of CE mark approval for these
products.
For the year ended 31 December 2019, Imricor reported a net loss of US$13.294 million (FY18 US$5.448 million). This
net loss increased on the prior year primarily due to non-cash interest and note conversion-related charges as part of the
Company’s IPO that are non-recurring. Operating costs increased to US$7.187 million from US$5.820 million in the year due
to higher expenses associated with staffing expansion as well as the incremental costs of being a public company.
FINANCIAL POSITION
For the 12-month period to 31 December 2019, Imricor’s net cash outflow from operations was US$6.628 million. Net
cash outflows from investing activities of US$0.529 million included US$0.365 million for the purchase of property and
equipment. Net cash inflows from financial activities of US$10.5 million were predominantly associated with Imricor’s IPO
completed during the year.
Imricor maintained a cash balance of US$5.049 million at 31 December 2019.
r
o
F
201 9 ANNUAL REPORT
11
DIRECTORS' REPORT
l
y
n
o
e
s
u
l
a
n
o
s
r
e
p
r
o
F
PRINCIPAL ACTIVITIES
Imricor is a US-based medical device company that seeks to address the current issues with traditional x-ray guided ablation
procedures through the development of MRI-guided technology.
The principal activities of Imricor during the course of the year were to design, manufacture and sell MRI-compatible
products for cardiac catheter ablation procedures to treat arrhythmias. There were no significant changes in the nature of
the activities of the Company during the year.
SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS
On 30 August 2019, Imricor successfully listed its CHESS Depositary Interests (CDIs) on the ASX following the issue
of 14,578,313 new CDIs over shares of Class A common stock (Shares) at an issue price of A$0.83 per CDI to raise
A$12.1 million. Concurrently, the Company raised gross proceeds of approximately A$900,000 through a US private
placement and the issue of 1,084,337 Shares (equivalent to the same number of CDIs) at an issue price of A$0.83 per Share.
The capital raised under the above offers provided Imricor with additional funding to execute its growth strategy, including:
• The commercial launch of Imricor’s key products in the European Union;
• Growth in sales, marketing and manufacturing capabilities to support commercialisation in the European Union;
• Progressing regulatory approvals for the Australian and US markets;
• Continuing to develop the Company’s line extensions and additional products; and
• Funding general working capital requirements.
There were no other significant changes in the state of affairs of the Company during the year.
OPERATING AND FINANCIAL REVIEW
The operating and financial review is set out on pages 9 to 10 of this Annual Report.
DIRECTORS QUALIFICATIONS AND EXPERIENCE
The Directors of Imricor at any time during or since the end of the financial year are:
Director
Steve Wedan
Mark Tibbles
Doris Engibous
Peter McGregor
Appointed
May 2006
September 2014
April 2019
May 2019
The specific duties, qualifications and experience of each Director are set out on pages 4 to 5 of this Annual Report.
COMPANY SECRETARY
Mr Kobe Li was appointed as the Australian company secretary and local agent in April 2019. Mr Li provides company
secretarial and corporate governance consulting services to ASX listed companies. Mr Li has previously worked at the ASX
Listings Compliance team for eight years as a Senior Adviser. Mr Li is a member of the Governance Institute of Australia.
12
IMRICOR ME DICAL SYS TEMS
DIRECTORS' REPORT (CONT)
l
y
n
o
e
s
u
a
n
o
s
r
e
p
r
o
F
DIRECTORS MEETINGS
The number of Directors’ meetings (including meetings of Committees of Directors) and number of meetings attended by
each of the Directors of the Company during the financial year are:
Director
Steve Wedan
Mark Tibbles
Doris Engibous
Peter McGregor
Board
Audit & Risk
Committee
Nomination & Remuneration
Committee
Held
Attended
Held
Attended
Held
Attended
1
1
1
1
1
1
1
1
-
1
1
1
-
1
1
1
-
1
1
1
-
1
1
1
Note: the above information is based on meeting attendance since listing on the ASX in August 2019. Mr Wedan is an invitee and attends
the Audit & Risk Committee and Nomination & Remuneration Committee meetings.
l
DIRECTORS’ INTERESTS
In this section, reference is made to Share ownership. The instruments registered for trade on the Australian Securities
Exchange are CHESS Depositary Interests (CDIs). One CDI is equivalent to one Share.
The relevant interest of each Director in the Shares and stock options of Imricor, as notified by the Directors to the Australian
Securities Exchange (ASX) in accordance with ASX Listing Rule 3.19A.2, at the date of this report is as follows:
Director
Steve Wedan
Mark Tibbles
Doris Engibous
Peter McGregor
Number of Shares
Number of Options
4,424,733
4,581,878
Nil
Nil
1,260,800
414,900
135,000
135,000
DIRECTORS’ DIRECTORSHIPS IN OTHER LISTED ENTITIES
Please refer to the Board of Directors section on pages 4 and 5.
DIVIDENDS
No dividends were paid or declared by Imricor during the year.
SUBSEQUENT EVENTS
On 23 January 2020, Imricor obtained CE mark approval to place its key consumable products, the Vision-MR Ablation
Catheter and Vision-MR Dispersive Electrode on the market in the European Union. Following this, the first procedures using
Imricor’s products were performed at the Dresden Heart Centre.
On 21 February 2020, the Company completed an institutional placement, raising A$20.3 million to further support Imricor’s
growth strategy.
LIKELY DEVELOPMENTS
Imricor will continue to pursue its growth strategy and importantly, following receipt of CE mark approval for its Vision-MR
Ablation Catheter, has commenced the commercial launch of its approved products in the European Union.
Currently, Imricor is experiencing delays in the establishment of clinical sites in which its products can be used to perform
cardiac catheter ablation procedures, due to hospital restrictions on external personnel and elective procedures during the
COVID-19 pandemic. Timing of the establishment of clinical sites and ordering of Imricor’s products is at this point difficult to
determine due to these hospital restrictions.
201 9 ANNUAL REPORT
13
l
y
n
o
e
s
u
l
a
n
o
s
r
e
p
r
o
F
Further information about likely developments in the operations of Imricor and the expected results of those operations in
future financial years has not been included in this report because disclosure of the information would be likely to result in
unreasonable prejudice to the Company.
ENVIRONMENTAL REGULATION
Imricor is not subject to any significant environmental regulation under United States legislation.
INDEMNITIES AND INSURANCE OF OFFICERS
As permitted under Delaware law, Imricor indemnifies its Directors and certain officers and is permitted to indemnify
employees for certain events or occurrences that happen by reason of their relationship with, or position held at, Imricor.
The Company’s Certificate of Incorporation and Bylaws provide for the indemnification of its Directors, officers, employees
and other agents to the maximum extent permitted by the Delaware General Corporation Law.
Imricor has entered into indemnification agreements with its Directors and certain officers to this effect, including
advancement of expenses incurred in legal proceedings to which the Director or officer was, or is threatened to be made, a
party by reason of the fact that such Director or officer is or was a Director, officer, employee or agent of Imricor, provided
that such a Director or officer acted in good faith and in a matter that the Director or officer reasonably believed to be in, or
not opposed to, the Company’s best interests. At present, there is no pending litigation or proceedings involving a Director
or officer for which indemnification is sought, nor is the Company aware of any threatened litigation that may result in
claims for indemnification.
Imricor maintains insurance policies that indemnify the Company’s Directors and officers against various liabilities that might
be incurred by any Director or officer in his or her capacity as such. The premium paid has not been disclosed as it is subject
to confidentiality provisions under the insurance policy.
CORPORATE GOVERNANCE
Imricor’s Corporate Governance Statement is available on the Imricor website at https://imricor.com/corporate-governance/.
NON-AUDIT SERVICES
During the year, the Company’s auditor Baker Tilly Virchow Krause, LLP performed certain other services in addition to the
audit and review of the financial statements.
The Board has considered the non-audit services provided during the year by the auditor and in accordance with written
advice provided by resolution of the Audit and Risk Committee, is satisfied that the provision of those non-audit services
during the year is compatible with, and did not compromise, the auditor independence requirements of the Public Company
Accounting Oversight Board (United States) (‘PCAOB’) for the following reasons:
– All non-audit services were subject to the corporate governance procedures adopted by the Company and have been
reviewed by the Audit and Risk Committee to ensure they do not impact the integrity and objectivity of the auditor.
–
The non-audit services provided do not undermine the general principals relating to auditor independence as set out
in PCAOB Rule 3520, as they did not involve reviewing or auditing the auditor’s own work, acting in a management
or decision making capacity for the Company, acting as an advocate for the Company or jointly sharing risks and
rewards.
Details of the amounts paid to the auditor, Baker Tilly Virchow Krause, LLP for audit and non-audit services provided during
the year are set out below:
Fees paid for non-audit services:
Taxation services
2019 US$
7,645
14
IMRICOR ME DICAL SYS TEMS
DIRECTORS' REPORT (CONT)
JURISDICTION OF INCORPORATION
Imricor is a company incorporated in the State of Delaware in the United States and registered in Australia as a foreign
company. As a foreign company registered in Australia, Imricor is subject to different reporting and regulatory regimes than
Australian public companies.
PRESENTATION CURRENCY
The functional and presentation currency of the Company is United States Dollars (US Dollars). The financial report is
presented in US Dollars with all references to dollars, cents or $’s in these financial statements presented in US currency,
unless otherwise stated.
DIRECTORS' AUTHORISATION
This Directors’ Report is made out in accordance with a resolution of the Directors.
l
y
n
o
e
s
u
l
Steve Wedan
Chair
a
n
o
s
r
e
p
r
o
F
201 9 ANNUAL REPORT
15
REMUNERATION REPORT
l
y
n
o
e
s
u
l
a
n
o
s
r
e
p
r
o
F
Imricor is a Delaware domiciled company that is listed on the Australian Securities Exchange and as such is subject
to remuneration disclosure requirements that that are suitable for reporting in both Australia and the United States.
This remuneration report forms part of the Directors’ Report and has been prepared using the requirements of section 300A
of the Australian Corporations Act 2001 (Cth) as a proxy to determine the contents that the Board has chosen to report.
The Report details the remuneration arrangements for Imricor’s key management personnel (KMP):
– Non-Executive Directors (NEDs);
–
President and Chief Executive Officer (CEO), Steve Wedan; and
– Chief Financial Officer (CFO), Lori Milbrandt.
KMP are those persons who, directly or indirectly, have authority and responsibility for planning, directing and controlling
the major activities of the Company.
ROLE OF THE BOARD AND NOMINATION AND REMUNERATION COMMITTEE
The Board and its Nomination and Remuneration Committee are responsible for reviewing and approving remuneration
and incentive policies and practices. The Company has a clear distinction between the structure of Non-Executive Directors’
remuneration and that of the President and CEO, Steve Wedan and CFO, Lori Milbrandt.
The Nomination and Remuneration Committee:
–
–
Establishes processes for the identification of suitable candidates for appointment to the Board;
Establishes processes for reviewing the performance of individual Directors, the Board as a whole,
and Board committees;
– Determines executive remuneration policy and Non-Executive Director remuneration policy;
– Reviews all equity-based incentive plans and makes recommendations to the Board regarding their adoption
and implementation; and
–
Ensures that the remuneration policies of Imricor are balanced and do not reward behaviour that is inconsistent
with its values.
The Nomination and Remuneration Committee comprises three Non-Executive Directors: Mark Tibbles (Chair),
Doris Engibous and Peter McGregor.
The Nomination and Remuneration Committee has a formal charter which can be viewed on the Company’s website
https://imricor.com/corporate-governance/.
USE OF EXTERNAL REMUNERATION ADVISORS
From time to time the Nomination and Remuneration Committee may, at its discretion, appoint external advisors or instruct
management to compile information as an input to decision making.
During the year the Committee appointed 21-Group to provide remuneration benchmarking services used in determining the
remuneration framework for 2020. These services were provided to the Nomination and Remuneration Committee free from
any undue influence by management. The total amount paid to 21-Group in 2019 was US$13,500.
PRINCIPLES OF COMPENSATION
Imricor’s remuneration framework is designed to support and reinforce its principal strategic objectives. The purpose is to
create a reward and incentive framework that produces remuneration outcomes that are aligned to corporate financial and
operational performance, as well as the interest of stockholders, having regard to high standards of corporate governance.
The Company aims to reward executives with a level and mix of remuneration appropriate to their position, experience and
responsibilities, while being market competitive and enabling the Company to structure awards that may conserve cash
reserves due to the Company’s current stage of development.
16
IMRICOR ME DICAL SYS TEMS
REMUNERATION REPORT (CONT)
l
y
n
o
e
s
u
l
a
n
o
s
r
e
p
r
o
F
2019 REMUNERATION STRUCTURE
Imricor’s executive compensation packages include a mix of fixed and variable compensation, and short and long-term
performance-based incentives.
FIXED COMPONENT
The Company aims to provide a competitive base salary with reference to the role, market and experience of the individual.
The performance of the Company and the individual are considered during the annual remuneration review.
SHORT-TERM INCENTIVE COMPONENT
The Company allocates cash bonuses linked to annual performance targets determined by the Board. These targets are
established to promote and reward outstanding performance, beyond what is expected in the ordinary course of business.
The target STI opportunity is set as a percentage of fixed remuneration. For 2019 the maximum target opportunity was 45%
for the President and CEO, Steve Wedan and 30% for the CFO, Lori Milbrandt.
Performance targets determined by the Board in relation to 2019, were based on Imricor receiving CE mark approval for
its core products and were therefore focused on early commercialisation outcomes, including sales revenue, the number
of clinical sites established, and the number of clinical cases performed. Significant delays in receiving CE mark approval
occurred in 2019 associated with increased workload and resource strain experienced by Imricor’s notified body, TÜV
SÜD. As such the Board exercised discretion in granting short-term incentives for 2019 in recognition of the achievements
delivered by the management team during the year, including the Company’s successful IPO.
LONG-TERM INCENTIVES COMPONENT
Imricor’s 2019 Equity Incentive Plan (2019 Plan) provides equity-based compensation for individuals that is linked to service,
the growth and profitability of the Company and increases in stockholder value. The 2019 Plan is designed to align the
interests of management with its stockholders, while maintaining a total remuneration opportunity that enables the
Company to retain, attract and motivate qualified and high-performing executives.
Options granted under the 2019 Plan during the year had time-based vesting conditions only. Further options were
granted in 2020, or in the case of the CEO are proposed to be granted, in relation to 2019 remuneration that incorporate
both time-based and performance-based vesting conditions. All vesting is subject to continuous service and options expire
10 years following the grant date.
The 2019 Plan replaced the 2016 Stock Option Plan, with the Company ceasing to grant new awards under the 2016 Plan
in February 2019. The predecessor to the 2016 Plan was the 2006 Plan. The rules of all plans were released to the ASX
on 30 August 2019 and copies are available on the ASX Announcements section of the Company’s website
https://imricor.com/investors/.
OTHER BENEFITS
Certain other benefits are afforded to the executives including medical insurance, life and disability insurance, health savings
and flexible spending account, and participation in the Company’s 401(k) Plan. Since listing on the ASX, the Company
matches 50% of employee contributions made to the 401(k) Plan to a maximum of 4% of the employee’s annual income.
201 9 ANNUAL REPORT
17
l
y
n
o
e
s
u
l
a
n
o
s
r
e
p
r
o
F
SHARE OPTIONS
OPTIONS GRANTED
The following options were granted post the Company’s IPO and prior to 31 December 2019:
• 460,000 options with exercise price of US$0.75, expiring 17 December 2029
UNISSUED SHARES
At the date of this report, unissued Shares under option are:
Expiry date
20 May 2020
20 July 2020
10 August 2020
28 October 2020
26 January 2021
21 March 2022
17 June 2023
19 May 2024
15 July 2025
15 March 2029
30 August 2029
17 December 2029
6 January 2030
18 January 2030
20 February 2030
Exercise price US$
Number of Shares
0.341
0.341
0.500
0.500
0.500
0.600
0.600
0.600
0.730
0.520
0.980
0.750
0.800
0.800
1.140
100,000
50,000
98,333
25,000
200,000
505,000
60,000
60,000
124,000
5,456,500
770,000
460,000
497,714
25,000
125,000
The options (with the exception of those expiring on 6 January 2030) are subject to time-based vesting and have been issued
under one of the 2006 Plan, 2016 Plan or 2019 Plan as discussed above. The options expiring on 6 January 2030 are subject
to time-based and performance-based vesting and have been issued under the 2019 Plan.
These options do not entitle the holder to participate in any share issue of the Company.
SHARES ISSUED ON EXERCISE OF OPTIONS
Post IPO through 31 December 2019 the Company issued Shares as a result of the exercise of options as follows (there are
no amounts unpaid on the Shares issued):
Number of Shares
Amount paid on each Share
90,000
US$0.341
18
IMRICOR ME DICAL SYS TEMS
REMUNERATION REPORT (CONT)
l
y
n
o
e
s
u
CFO
l
a
n
o
s
r
e
p
1
2
r
o
F
EXECUTIVE REMUNERATION DURING THE YEAR
The remuneration of key management personnel in respect of the financial year ended 31 December 2019
(including remuneration yet to be paid) is summarised below. The options to be granted under the long-term incentive plan
for the CEO in relation to 2019 remuneration must be approved by stockholders at the 2020 Annual Meeting of Stockholders
(AGM).
Executive
Steve Wedan
President and CEO
Lori Milbrandt
Base salary
Short-term Incentive1
Long-term incentive
US$349,333
US$60,784
17% of base salary
US$283,333
US$56,667
20% of base salary
200,000 options granted on 30 August
2019 at an exercise price of US$0.982
Options to the value of US$69,867 to be
granted following stockholder approval3,5
200,000 options granted on 30 August
2019 at an exercise price of US$0.982
150,000 options granted on
17 December 2019 at an exercise price
of US$0.754
134,920 options granted on 6 January
2020 at an exercise price of US$0.805
1. Determined at the discretion of the Board as discussed above and paid in January 2020.
2. Granted on the successful completion of the Company’s IPO, vesting over four years with 25% vesting on the first anniversary of grant
date and the remainder in equal monthly instalments over the following 36 months.
3. Options value determined based on 20% of base salary for 2019, subject to stockholder approval at Imricor’s 2020 AGM. As set out
in the Company’s Notice of Meeting, the number of options granted will be determined by reference to the Black Scholes value of
an option at the date they are granted. The exercise price of the options will be equal to the closing sale price of the Company’s CDI
on the trading day prior to grant date, converted from Australian dollars to US dollars using the prevailing exchange rate. Vesting
conditions are set out in footnote 5 below.
4. Granted by the Board in recognition of outstanding service with immediate vesting.
5. Granted in relation to 2019 remuneration subject to the vesting conditions set out below:
Tranche
Percentage of
2019 Options
Vesting Conditions
50%
30%
Options will vest over a four year period, with 25% vesting on each anniversary of the grant date.
Options will vest based on absolute total stockholder return (TSR) over a three year period
commencing on the grant date. TSR growth will be calculated using the volume weighted average
market price of the CDIs (in Australian dollars) for the five trading days prior to:
(a) the grant date (to calculate the baseline price); and
(b) the three year anniversary of the grant date (to calculate TSR at the vesting date).
Vesting will occur in accordance with the following table:
TSR Growth Rate
Percentage Vesting
Below 8%
8% to <20%
0%
25+6.5*(TSR Rate - 8))%
20% or greater
100%
3
4
10%
10%
Options will vest upon the approval of the Therapeutic Goods Administration of the Company’s
first device in Australia on or prior to the expiration of the Options.
Options will vest upon the approval of the US Food and Drug Administration of the Company’s
first device in the US on or prior to the expiration of the Options.
201 9 ANNUAL REPORT
19
NON-EXECUTIVE DIRECTORS
Under Imricor’s Bylaws, the Directors decide the total amount paid to all Directors for their services as a Director of Imricor.
However, under the ASX Listing Rules, the total amount paid to all Directors (excluding the salary of any executive Director)
for their services must not exceed in aggregate in any financial year, the amount fixed by Imricor in a general meeting.
This amount has been fixed at US$400,000.
The Board seeks to set Non-Executive Directors’ fees at a level that provides the Company with the ability to attract and
retain Non-Executive Directors of high calibre with relevant professional expertise and reflects the demands that are made
on, and the responsibilities of, the Non-Executive Directors, while incurring a cost that is acceptable to stockholders.
As Imricor’s operations are in the initial stages of commercialisation, the Company has structured Non-Executive Director
fees to include both cash remuneration and options in order to maintain appropriate remuneration structures and preserve
cash flow. Options issued to Non-Executive Directors do not have performance hurdles attached.
Fees paid by Imricor to its Non-Executive Directors are US$60,000 per annum. In the case of the Australian Non-Executive
Director, this amount is inclusive of statutory superannuation.
In addition, each Chair of a Board committee receives an annual fee of US$10,000 (inclusive of statutory superannuation,
if applicable) for his/her services as Chair of that committee. During the 2019 financial year, directors did not receive
additional fees for being a member of a Board committee. The Chair, Mr Steve Wedan, receives no remuneration in his
capacity as a Director.
The remuneration of Non-Executive Directors in respect of the financial year ended 31 December 2019 is summarised below:
Non-Executive Director
Cash fees
Options Granted6
Peter McGregor
Doris Engibous
Mark Tibbles
US$17,500
US$15,000
US$17,500
135,000
135,000
100,000
6. Following Imricor’s IPO in August 2019, each Non-Executive Director received a grant of options under Imricor’s 2019 Plan.
These options vest over four years with 25% vesting on the first anniversary of grant date and the remainder in equal monthly
instalments over the following 36 months.
l
y
n
o
e
s
u
l
a
n
o
s
r
e
p
r
o
F
20
IMRICOR ME DICAL SYS TEMS
IMRICOR MEDICAL SYSTEMS INC.
Minneapolis, Minnesota
Including Independent Auditors' Report
As of and for the years December 31, 2019 and 2018
IMRICOR MEDICAL SYSTEMS INC.
TABLE OF CONTENTS
Independent Auditors' Report
Financial Statements
Balance Sheets
Statements of Operations
Statements of Stockholders' Equity (Deficit)
Statements of Cash Flows
Notes to Financial Statements
1
2
3
4
5
6 - 24
l
y
n
o
e
s
u
l
a
n
o
s
r
e
p
r
o
F
201 9 ANNUAL REPORT
21
CONTENTS
IMRICOR MEDICAL SYSTEMS INC.
TABLE OF CONTENTS
Independent Auditors' Report
Financial Statements
Balance Sheets
Statements of Operations
Statements of Stockholders' Equity (Deficit)
Statements of Cash Flows
Notes to Financial Statements
1
2
3
4
5
6 - 24
l
y
n
o
e
s
u
l
a
n
o
s
r
e
p
r
o
F
22
IMRICOR ME DICAL SYS TEMS
INDEPENDENT AUDITORS' REPORT
l
y
n
o
e
s
u
l
a
n
o
s
r
e
p
r
o
F
INDEPENDENT AUDITORS' REPORT
Stockholders and Board of Directors
Imricor Medical Systems Inc.
Minneapolis, Minnesota
We have audited the accompanying financial statements of Imricor Medical Systems Inc., which comprise the balance
sheets as of December 31, 2019 and 2018, and the related statements of operations, stockholders' equity (deficit), and
cash flows for the years then ended, and the related notes to the financial statements.
Management’s Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these financial statements in accordance with
accounting principles generally accepted in the United States of America; this includes the design, implementation, and
maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from
material misstatement, whether due to fraud or error.
Auditors' Responsibility
Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in
accordance with auditing standards generally accepted in the United States of America. Those standards require that we
plan and perform the audits to obtain reasonable assurance about whether the financial statements are free from material
misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial
statements. The procedures selected depend on the auditors' judgment, including the assessment of the risks of material
misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor
considers internal control relevant to the entity's preparation and fair presentation of the financial statements in order to
design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on
the effectiveness of the entity's internal control. Accordingly, we express no such opinion. An audit also includes
evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates
made by management, as well as evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Opinion
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of
Imricor Medical Systems Inc. as of December 31, 2019 and 2018 and the results of its operations and cash flows for the
years then ended, in accordance with accounting principles generally accepted in the United States of America.
Emphasis of Matter Regarding Going Concern
The accompanying financial statements have been prepared assuming the company will continue as a going concern. As
discussed in Note 3 to the financial statements, the company's accumulated deficit and need for additional working
capital raise substantial doubt about its ability to continue as a going concern. Management's plans with regard to these
matters are also described in Note 3 to the financial statements. The financial statements do not include any adjustments
that might result from this uncertainty. Our opinion is not modified with respect to that matter.
Minneapolis, Minnesota
February 19, 2020
IMRICOR MEDICAL SYSTEMS INC.
BALANCE SHEETS
As of December 31, 2019 and 2018
ACCOUNTS RECEIVABLE-LONG TERM
277,070
316,540
CURRENT ASSETS
Cash
Accounts receivable
Inventory
Prepaid expenses and other current assets
Total Current Assets
PROPERTY AND EQUIPMENT, NET
OTHER ASSETS
OPERATING LEASE RIGHT OF USE ASSETS
PREPAID SERVICE AGREEMENT
TOTAL ASSETS
CURRENT LIABILITIES
Accounts payable
Accrued expenses
Current portion of contract liabilities
Current portion of operating lease liabilities
Current portion of finance lease liability
Current portion of financing obligation
Total Current Liabilities
LONG-TERM LIABILITIES
Contract liabilities, net of current portion
Accrued interest
Convertible notes, net of discount
Operating lease liabilities, net of current portion
Finance lease liability, net of current portion
2019
2018
$ 5,048,893
$ 1,588,348
256,294
1,220,616
287,787
6,813,590
2,285,390
192,174
453,305
500,000
367,497
14,557
118,843
8,420
-
-
330,803
28,160
55,856
374,316
67,405
2,085,925
2,115,102
211,375
-
500,000
150,026
3,004
506,147
9,596,609
-
-
-
-
$
10,521,529
$
5,228,942
$ 540,980
$ 274,314
374,023
-
1,424,320
427,344
592,853
592,853
Financing obligation, net of current portion
1,111,976
-
Total Liabilities
3,488,112
11,122,953
COMMITMENTS AND CONTINGENCIES (NOTE 7)
STOCKHOLDERS' EQUITY (DEFICIT)
Preferred stock, $0.0001 par value:
25,000,000 shares authorized and 0 shares outstanding as of both
December 31, 2019 and 2018
Common stock, $0.0001 and $0.01 par value as of December 31, 2019 and
2018, respectively:
535,000,000 and 120,000,000 shares authorized as of December 31, 2019
and 2018, respectively and 92,682,535 and 44,002,813 shares issued and
outstanding as of December 31, 2019 and 2018, respectively
Additional paid-in capital, common stock
Accumulated deficit
Total Stockholders' Equity (Deficit)
-
-
9,268
47,449,853
(40,425,704)
7,033,417
420,028
20,817,689
(27,131,728)
(5,894,011)
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
$
10,521,529
$
5,228,942
Page 1
See accompanying notes to financial statements
Page 2
Baker Tilly Virchow Krause, LLP trading as Baker Tilly is a member of the global network of Baker Tilly International Ltd., the members of which are separate and independent legal entities. © 2018 Baker Tilly Virchow Krause, LLP
201 9 ANNUAL REPORT
23
BALANCE SHEETS
AS OF DECEMBER 31, 2019 AND 2018
IMRICOR MEDICAL SYSTEMS INC.
BALANCE SHEETS
As of December 31, 2019 and 2018
ASSETS
2019
2018
CURRENT ASSETS
Cash
Accounts receivable
Inventory
Prepaid expenses and other current assets
Total Current Assets
$ 5,048,893
256,294
1,220,616
287,787
$ 1,588,348
55,856
374,316
67,405
6,813,590
2,085,925
ACCOUNTS RECEIVABLE-LONG TERM
277,070
316,540
PROPERTY AND EQUIPMENT, NET
OTHER ASSETS
OPERATING LEASE RIGHT OF USE ASSETS
PREPAID SERVICE AGREEMENT
TOTAL ASSETS
2,285,390
192,174
453,305
500,000
2,115,102
211,375
-
500,000
$
10,521,529
$
5,228,942
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES
Accounts payable
Accrued expenses
Current portion of contract liabilities
Current portion of operating lease liabilities
Current portion of finance lease liability
Current portion of financing obligation
Total Current Liabilities
LONG-TERM LIABILITIES
$ 540,980
367,497
14,557
118,843
8,420
374,023
$ 274,314
150,026
-
-
3,004
-
1,424,320
427,344
Contract liabilities, net of current portion
Accrued interest
Convertible notes, net of discount
Operating lease liabilities, net of current portion
Finance lease liability, net of current portion
Financing obligation, net of current portion
592,853
-
-
330,803
28,160
1,111,976
592,853
506,147
9,596,609
-
-
-
Total Liabilities
3,488,112
11,122,953
COMMITMENTS AND CONTINGENCIES (NOTE 7)
STOCKHOLDERS' EQUITY (DEFICIT)
Preferred stock, $0.0001 par value:
25,000,000 shares authorized and 0 shares outstanding as of both
December 31, 2019 and 2018
Common stock, $0.0001 and $0.01 par value as of December 31, 2019 and
2018, respectively:
-
-
535,000,000 and 120,000,000 shares authorized as of December 31, 2019
and 2018, respectively and 92,682,535 and 44,002,813 shares issued and
outstanding as of December 31, 2019 and 2018, respectively
Additional paid-in capital, common stock
Accumulated deficit
Total Stockholders' Equity (Deficit)
9,268
47,449,853
(40,425,704)
7,033,417
420,028
20,817,689
(27,131,728)
(5,894,011)
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
$
10,521,529
$
5,228,942
l
y
n
o
e
s
u
l
a
n
o
s
r
e
p
r
o
F
See accompanying notes to financial statements
Page 2
24
IMRICOR ME DICAL SYS TEMS
STATEMENTS OF OPERATIONS
AS OF DECEMBER 31, 2019 AND 2018
IMRICOR MEDICAL SYSTEMS INC.
STATEMENTS OF OPERATIONS
For the Years Ended December 31, 2019 and 2018
REVENUES
Product sales
Royalties and license fees
Contract revenue
Total Revenue
COSTS AND EXPENSES
Cost of goods sold
Sales and marketing
Research and development
General and administrative
2019
$ 376,321
-
263,383
639,704
377,365
573,058
3,601,203
2,635,453
2018
$ -
811,538
190,911
1,002,449
-
703,532
3,526,193
1,589,962
Total Operating Expenses
7,187,079
5,819,687
Loss from Operations
(6,547,375)
(4,817,238)
OTHER INCOME (EXPENSE)
Interest income
Foreign currency exchange gain
Down round expense (NOTE 5)
Beneficial conversion feature expense (NOTE 5)
Interest expense
Other expense
13,856
216,139
(1,802,129)
(4,129,856)
(1,030,732)
(13,879)
13,009
158,257
-
-
(799,760)
(2,750)
Total Other Income (Expense)
(6,746,601)
(631,244)
l
y
n
o
e
s
u
l
a
n
o
s
r
e
p
NET LOSS
EARNINGS PER SHARE:
Basic and diluted loss per common share
Basic and diluted weighted average shares
$ (13,293,976)
$ (5,448,482)
Net loss
-
(13,293,976)
(13,293,976)
$ (0.22)
$ (0.13)
outstanding
60,526,541
41,997,662
IMRICOR MEDICAL SYSTEMS INC.
STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
For the Years Ended December 31, 2019 and 2018
Common Stock
Additional
Shares
Amount
Paid-in
Capital
Accumulated
Deficit
Equity
(Deficit)
Total
Stockholders'
BALANCES, December 31, 2017
41,982,813
$419,828
$20,369,729
$(24,897,618)
$(4,108,061)
Cumulative effect of adopting ASC 606 (Note 2)
BALANCES, January 1, 2018
Stock-based compensation expense
Exercise of stock options
20,000
200
41,982,813
419,828
20,369,729
(21,683,246)
(893,689)
Net loss
BALANCES, December 31, 2018
Stock-based compensation expense
Exercise of warrants
Exercise of stock options
42,002,813
420,028
(27,131,728)
150,000
2,281,538
1,500
21,924
Change in par value from $0.01 to $0.0001
-
(439,009 )
Issuance of common stock for convertible notes
and accrued interest 29,217,437
2,922
12,530,842
12,533,764
Issuance of common stock, net of issuance
costs paid in cash of $1,752,176
15,662,650
1,566
7,014,739
7,016,305
-
-
-
-
-
-
437,120
10,840
20,817,689
533,110
49,650
133,166
439,009
3,214,372
3,214,372
-
-
437,120
11,040
(5,448,482)
(5,448,482)
-
-
-
-
-
-
-
-
-
(5,894,011)
533,110
51,150
155,090
-
-
1,802,129
4,129,856
Issuance of common stock for services related to
equity financing
Issuance of down round common stock
Beneficial conversion feature of convertible notes
180,722
3,187,375
18
319
-
-
(18)
1,801,810
4,129,856
-
-
-
-
-
-
BALANCES, December 31, 2019
92,682,535
$9,268
$47,449,853
$(40,425,704)
$7,033,417
r
o
F
See accompanying notes to financial statements
Page 3
See accompanying notes to financial statements
Page 4
201 9 ANNUAL REPORT
25
STATEMENTS OF STOCKHOLDERS'
IMRICOR MEDICAL SYSTEMS INC.
STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
EQUITY (DEFICIT)
For the Years Ended December 31, 2019 and 2018
AS OF DECEMBER 31, 2019 AND 2018
BALANCES, January 1, 2018
41,982,813
419,828
20,369,729
(21,683,246)
(893,689)
Common Stock
Additional
Total
Stockholders'
Shares
Amount
Paid-in
Capital
Accumulated
Deficit
Equity
(Deficit)
41,982,813
-
$419,828
-
$20,369,729
$(24,897,618)
$(4,108,061)
-
3,214,372
3,214,372
-
20,000
-
-
200
-
437,120
10,840
-
-
437,120
11,040
-
(5,448,482)
(5,448,482)
42,002,813
-
420,028
-
20,817,689
533,110
(27,131,728)
-
(5,894,011)
533,110
BALANCES, December 31, 2017
Cumulative effect of adopting ASC 606 (Note 2)
Stock-based compensation expense
Exercise of stock options
Net loss
BALANCES, December 31, 2018
Stock-based compensation expense
Exercise of warrants
Exercise of stock options
Change in par value from $0.01 to $0.0001
-
(439,009 )
Issuance of common stock for convertible notes
and accrued interest 29,217,437
2,922
12,530,842
150,000
2,281,538
1,500
21,924
49,650
133,166
439,009
Issuance of common stock, net of issuance
costs paid in cash of $1,752,176
15,662,650
1,566
7,014,739
Issuance of common stock for services related to
equity financing
Issuance of down round common stock
Beneficial conversion feature of convertible notes
Net loss
180,722
3,187,375
-
-
18
319
-
-
(18)
1,801,810
4,129,856
-
-
-
-
-
-
-
-
51,150
155,090
-
12,533,764
7,016,305
-
1,802,129
4,129,856
BALANCES, December 31, 2019
92,682,535
$9,268
$47,449,853
$(40,425,704)
$7,033,417
-
(13,293,976)
(13,293,976)
l
y
n
o
e
s
u
l
a
n
o
s
r
e
p
r
o
F
See accompanying notes to financial statements
Page 4
26
IMRICOR ME DICAL SYS TEMS
STATEMENTS OF CASH FLOWS
AS OF DECEMBER 31, 2019 AND 2018
IMRICOR MEDICAL SYSTEMS INC.
STATEMENTS OF CASH FLOWS
For the Years Ended December 31, 2019 and 2018
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss
Adjustments to reconcile net loss to net cash flows from operating
activities
l
y
n
o
e
s
u
l
a
n
o
s
r
e
p
r
o
F
Depreciation
Stock-based compensation expense
Gain on disposal of property and equipment
Amortization of debt issuance costs
Accrued interest
Beneficial conversion feature expense
Down round expense
Foreign currency exchange gain
Changes in assets and liabilities
Accounts receivable
Inventory
Prepaid expenses and other assets
Accounts payable
Accrued expenses
Contract liabilities
Net Cash Flows from Operating Activities
CASH FLOWS FROM INVESTING ACTIVITIES
Payment of security deposit
Purchases of property and equipment
Net Cash Flows from Investing Activities
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from exercise of options and warrants
Proceeds from convertible notes
Proceeds from financing obligation
Payments on financing obligation
Debt issuance costs associated with convertible notes
Proceeds from issuance of common stock, net
Payments on finance lease liability
Net Cash Flows from Financing Activities
Net Change in Cash
CASH - Beginning of Year
Effect of foreign currency exchange rate changes on cash
CASH - End of Year
Supplemental cash flow disclosure
Cash paid for interest
Noncash investing and financing activities
2019
2018
$ (13,293,976)
$ (5,448,482
257,300
533,110
(26,250)
174,044
578,295
4,129,856
1,802,129
(216,139)
(160,968)
(846,300)
(40,260)
249,138
217,471
14,557
(6,627,993)
(164,580)
(364,758)
(529,338)
206,240
1,745,932
1,700,000
(214,001)
-
7,016,305
(3,004)
10,451,472
77,531
437,120
-
103,963
542,073
153,071
-
(158,257)
26,673
(226,395)
7,570
58,740
4,084
(311,539)
(4,733,848)
(3,861)
(146,732)
(150,593)
11,040
4,750,760
-
-
(49,347)
-
(8,744)
4,703,709
3,294,141
1,588,348
166,404
$ 5,048,893
(180,732)
1,769,080
-
$ 1,588,348
$ 278,393
$ 353
2018 Convertible notes issued in exchange for 2017 Notes and accrued
interest
Convertible notes issued in exchange for debt issuance costs
Service agreement received in exchange for convertible notes
Property and equipment received in exchange for convertible notes
Common stock issued for 2019 and 2018 Notes and accrued interest
$ -
$ -
$ -
$ -
$ 12,533,764
$ 2,551,186
$ 228,660
$ 500,000
$ 1,900,000
$ -
See accompanying notes to financial statements
Page 5
IMRICOR MEDICAL SYSTEMS INC.
STATEMENTS OF CASH FLOWS
For the Years Ended December 31, 2019 and 2018
CASH FLOWS FROM OPERATING ACTIVITIES
Adjustments to reconcile net loss to net cash flows from operating
Net loss
activities
Depreciation
2019
2018
$ (13,293,976)
$ (5,448,482
Stock-based compensation expense
Gain on disposal of property and equipment
Amortization of debt issuance costs
Accrued interest
Beneficial conversion feature expense
Down round expense
Foreign currency exchange gain
Changes in assets and liabilities
Accounts receivable
Inventory
Prepaid expenses and other assets
Accounts payable
Accrued expenses
Contract liabilities
Net Cash Flows from Operating Activities
CASH FLOWS FROM INVESTING ACTIVITIES
Payment of security deposit
Purchases of property and equipment
Net Cash Flows from Investing Activities
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from exercise of options and warrants
Proceeds from convertible notes
Proceeds from financing obligation
Payments on financing obligation
Debt issuance costs associated with convertible notes
Proceeds from issuance of common stock, net
Payments on finance lease liability
Net Cash Flows from Financing Activities
Net Change in Cash
CASH - Beginning of Year
Effect of foreign currency exchange rate changes on cash
CASH - End of Year
Supplemental cash flow disclosure
Cash paid for interest
Noncash investing and financing activities
257,300
533,110
(26,250)
174,044
578,295
4,129,856
1,802,129
(216,139)
(160,968)
(846,300)
(40,260)
249,138
217,471
14,557
(6,627,993)
(164,580)
(364,758)
(529,338)
206,240
1,745,932
1,700,000
(214,001)
-
7,016,305
(3,004)
10,451,472
3,294,141
1,588,348
166,404
77,531
437,120
103,963
542,073
153,071
-
-
(158,257)
26,673
(226,395)
7,570
58,740
4,084
(311,539)
(4,733,848)
(3,861)
(146,732)
(150,593)
11,040
4,750,760
(49,347)
(8,744)
4,703,709
(180,732)
1,769,080
-
-
-
-
$ 5,048,893
$ 1,588,348
$ 278,393
$ 353
2018 Convertible notes issued in exchange for 2017 Notes and accrued
interest
Convertible notes issued in exchange for debt issuance costs
Service agreement received in exchange for convertible notes
Property and equipment received in exchange for convertible notes
$ -
$ -
$ -
$ -
Common stock issued for 2019 and 2018 Notes and accrued interest
$ 12,533,764
$ 2,551,186
$ 228,660
$ 500,000
$ 1,900,000
$ -
201 9 ANNUAL REPORT
27
NOTES TO FINANCIAL STATEMENTS
AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2019 AND 2018
IMRICOR MEDICAL SYSTEMS INC.
NOTES TO FINANCIAL STATEMENTS
As of and for the years ended December 31, 2019 and 2018
NOTE 1 - Summary of Significant Accounting Policies
Nature of Operations and Basis of Presentation
Imricor Medical Systems, Inc. (“Imricor” and the “Company”) is a U.S.-based medical device company that
seeks to address the current issues with traditional x-ray-guided ablation procedures through the
development of MRI-guided technology. Incorporated in the State of Delaware in 2006, the Company’s
principal focus is the design, manufacturing, sale and distribution of MRI-compatible products for cardiac
catheter ablation procedures. Imricor’s unique technology utilizes an intellectual property (IP) portfolio that
includes technology developed in-house, as well as IP originating from Johns Hopkins University and
Koninklijke Philips N.V. The Company is headquartered in Burnsville, Minnesota, where it has development
and manufacturing facilities. Imricor is a pioneer and leader in developing MRI-compatible products for cardiac
catheter ablation procedures and will be the first company in the world to bring commercially viable and safe
MRI-compatible products to the cardiac catheter ablation market. The Company’s primary product offering,
the Vision-MR Ablation Catheter is specifically designed to work under real-time MRI guidance, with the intent
of enabling higher success rates along with a faster and safer treatment compared to conventional procedures
using x-ray guided catheters. Historically, Imricor generated income from licensing some of its IP for use in
implantable devices and performing contract research, but expects to generate most of its future income from
the sale of the MRI-compatible products it has developed for use in cardiac catheter ablation procedures
(comprising single-use consumables and capital goods). On January 13, 2016, Imricor obtained CE mark
approval to place one of its key products, the Advantage-MR EP Recorder/Stimulator System, on the market
in the European Union. On January 23, 2020, the Company obtained CE mark approval for its other key
products, the Vision-MR Ablation Catheter (with an indication for treating type I atrial flutter) and the Vision-
MR Dispersive Electrode.
The Company has prepared the accompanying financial statements and notes in conformity with accounting
principles generally accepted in the United States of America (US GAAP).
The Company’s financial statements and notes are presented in United States dollar.
Cash
Cash consists of funds in depository accounts. The Company holds cash with high quality financial institutions
and at times, such balances may be in excess of federal insurance limits.
Accounts Receivable
Accounts receivable are unsecured, are recorded at net realizable value, and do not bear interest except if a
revenue transaction has a significant financing component (see NOTE 2). The Company makes judgments
as to its ability to collect outstanding receivables based upon significant patterns of uncollectability, historical
experience, and managements’ evaluation of specific accounts and will provide an allowance for credit losses
when collection becomes doubtful. The Company performs credit evaluations of its customers’ financial
condition on an as-needed basis. Payment is generally due 30 days from the invoice date and accounts past
30 days are individually analyzed for collectability. When all collection efforts have been exhausted, the
account is written off against the related allowance. To date the Company has not experienced any write-offs
or significant deterioration of its accounts receivable aging, and therefore, no allowance for doubtful accounts
was considered necessary as of December 31, 2019 or 2018.
Accounts receivable includes unbilled receivables of $39,470 and $40,655 as of December 31, 2019 and
2018, respectively, which represents the current portion of minimum royalties due to the Company during the
years ended December 31, 2020 and 2019. The long-term accounts receivable relates to minimum royalties
due to the Company for years ending after December 31, 2020 (see NOTE 2).
l
y
n
o
e
s
u
l
a
n
o
s
r
e
p
r
o
F
See accompanying notes to financial statements
Page 5
Page 6
28
IMRICOR ME DICAL SYS TEMS
NOTES TO FINANCIAL STATEMENTS (CONT)
AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2019 AND 2018
IMRICOR MEDICAL SYSTEMS INC.
NOTES TO FINANCIAL STATEMENTS
As of and for the years ended December 31, 2019 and 2018
NOTE 1 - Summary of Significant Accounting Policies (cont.)
l
y
n
o
Inventory
a
n
o
s
r
e
p
Inventories are stated at the lower of cost or net realizable value, with cost determined on the first-in, first-out
(“FIFO”) method. The establishment of allowances for excess and obsolete inventories is based on historical
usage and estimated exposure on specific inventory items. The Company has reserved $76,910 and $0 as
an allowance for excess or obsolete inventory as of December 31, 2019 and 2018, respectively. Inventories
are as follows as of December 31, 2019 and December 31, 2018:
e
s
u
Raw materials
Work in process
Finish goods
Less: obsolescence reserve
l
Property and Equipment
December 31,
2019
$ 822,217
65,765
409,544
(76,910)
$ 1,220,616
2018
$ 320,847
32,778
20,691
-
$ 374,316
Property and equipment are stated at cost. Additions and improvements that extend the lives of assets are
capitalized, while expenditures for repairs and maintenance are expensed as incurred. Depreciation is
computed using the straight-line method over the estimated useful lives of the assets. Amortization of
leasehold improvements is computed on a straight-line basis over the shorter of the estimated useful lives of
the related assets or life of the lease.
The standard estimated useful lives of property and equipment are as follows:
Office furniture and equipment
Lab and production equipment
Computer equipment
MRI scanner
Leasehold improvements
5 years
5 years
3 years
7 years
7 years
The Company reviews property and equipment for impairment whenever events or changes in circumstances
indicate that the carrying amount of an asset may not be recoverable. If the impairment tests indicate that the
carrying value of the asset, or asset group, is greater than the expected undiscounted cash flows to be
generated by such asset or asset group, further analysis is performed to determine the fair value of the asset
or asset group. To the extent the fair value of the asset or asset group is less than its carrying value, an
impairment loss is recognized equal to the amount the carrying value of the asset or asset group exceeds its
fair value. The Company generally measures fair value by considering sale prices for similar assets or asset
groups, or by discounting estimated future cash flows from such assets or asset groups using an appropriate
discount rate. Considerable management judgment is necessary to estimate the fair value of assets or asset
groups, and accordingly, actual results could vary significantly from such estimates. Assets to be disposed of
are reported at the lower of the carrying amount or fair value less costs to sell. To date, the Company has not
recognized any impairment loss for property and equipment.
r
o
F
Page 7
201 9 ANNUAL REPORT
29
l
y
n
o
e
s
u
l
a
n
o
s
r
e
p
r
o
F
IMRICOR MEDICAL SYSTEMS INC.
NOTES TO FINANCIAL STATEMENTS
As of and for the years ended December 31, 2019 and 2018
NOTE 1 - Summary of Significant Accounting Policies (cont.)
Research and Development Costs
The Company expenses research and development costs as incurred.
Other Assets
Other assets on the balance sheet include security deposits related to the Company’s operating leases and
financing obligation.
Patents
Expenditures for patent costs are charged to operations as incurred.
Income Taxes
Income taxes are recorded under the liability method. Deferred income taxes are provided for temporary
differences between financial reporting and tax bases of assets and liabilities. Deferred tax assets are reduced
by a valuation allowance to the extent the realization of the related deferred tax asset is not assured.
The Company recognizes the financial statement benefit of a tax position only after determining that the
relevant tax authority would more likely than not sustain the position following an audit. For tax positions
meeting the more-likely-than not threshold, the amount recognized in the financial statements is the largest
benefit that has a greater than 50 percent likelihood of being realized upon ultimate settlement with the
relevant tax authority.
Loss per Share
Basic loss per share is computed by dividing net loss by the weighted average shares outstanding during the
reporting period. The weighted average common shares outstanding were 60,526,541 and 41,977,662 for
the years ended December 31, 2019 and 2018, respectively.
Dilutive net income (loss) per share assumes the exercise and issuance of all potential common stock
equivalents in computing the weighted-average number of common shares outstanding, unless their effect is
antidilutive. The effects of including incremental shares associated with convertible notes, options, warrants
and unvested royalty conversion rights are anti-dilutive due to the net loss incurred and are not included in
the diluted weighted average number of shares of common stock outstanding for the years ending December
31, 2019 and 2018.
Foreign currency exchange gains (losses)
During the years ended December 31, 2019 and 2018, the Company had various transactions in foreign
currency, including convertible note investments from Australian investors (see NOTE 5) denominated in
Australian dollars, accounts payable for certain expenses to Australian vendors that are denominated in
Australian dollars, accounts receivable denominated in Euros, and cash accounts denominated in both
Australian dollars and Euros. These assets and liabilities have been translated into U.S. dollars at year-end
exchange rates. Foreign currency exchange gains and losses are included in the statements of operations
within other income (expense).
Page 8
30
IMRICOR ME DICAL SYS TEMS
NOTES TO FINANCIAL STATEMENTS (CONT)
AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2019 AND 2018
IMRICOR MEDICAL SYSTEMS INC.
NOTES TO FINANCIAL STATEMENTS
As of and for the years ended December 31, 2019 and 2018
l
y
n
o
e
s
u
l
a
n
o
s
r
e
p
r
o
F
NOTE 1 - Summary of Significant Accounting Policies (cont.)
Financial Instruments
The carrying amounts for all financial instruments approximate fair value. The carrying amounts for cash,
accounts payable and accrued expenses approximate fair value because of the short maturity of these
instruments. The fair value of convertible notes approximates carrying value and have been estimated based
on discounted cash flows using interest rates being offered for similar instruments having the same or similar
maturities and collateral requirements.
Revenue Recognition
The Company recognizes revenue in accordance with Accounting Standards Codification, Topic 606,
Revenue from Contracts with Customers (ASC 606), which the Company adopted effective January 1, 2018.
The Company recognizes revenue for product sales when its customers obtain control of the products, which
occurs at a point in time, in an amount that reflects the consideration that the Company expects to receive in
exchange for those goods. Control is transferred to customers when title to the goods and risk of loss
transfers, which was upon shipment for products sales recognized during the year ended December 31, 2019.
The Company’s product sales contain a single performance obligation and the transaction price is based on
invoice price as there is no variable consideration impacting the transaction price.
Sales tax and value added taxes in foreign jurisdictions that are collected from customers and remitted to
governmental authorities are accounted for on a net basis and therefore are excluded from net sales. Product
sales include shipment and handling fees charged to customers. Shipping and handling costs associated with
outbound freight after control over a product has transferred to a customer are accounted for as a fulfillment
cost and are included in cost of goods sold.
Revenue from service contracts is recognized over the contract period on a straight-line basis.
Historically, the Company has generated revenue principally from technology licenses, research and
development services and government contracts. Consideration received for revenue arrangements with
multiple components is allocated among the separate performance obligations based upon their relative
estimated standalone selling price.
In determining the appropriate amount of revenue to be recognized as we fulfill our obligations under
our agreements, we perform the following steps: (i) identify the contract with the customer; (ii) identify the
performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction
price to the performance obligations; and (v) recognize revenue when (or as) each performance
obligation is satisfied.
The Company enters into collaboration agreements for research and development services that are
within the scope of ASC 606, under which it licenses certain rights to its intellectual property to third
parties. The terms of these arrangements typically include payment to the Company of one or more of
the following: upfront non-refundable license fees; reimbursement of certain costs; development
milestone payments; and royalties on net sales of licensed products. The amount of variable
consideration is constrained until it is probable that the revenue is not at a significant risk of reversal in
a future period. The contracts into which the Company enters generally do not include significant
financing components.
Page 9
201 9 ANNUAL REPORT
31
l
y
n
o
e
s
u
l
a
n
o
s
r
e
p
r
o
F
IMRICOR MEDICAL SYSTEMS INC.
NOTES TO FINANCIAL STATEMENTS
As of and for the years ended December 31, 2019 and 2018
NOTE 1 - Summary of Significant Accounting Policies (cont.)
As part of the accounting for these arrangements, the Company must use significant judgment to
determine: (a) the transaction price under step (iii) above and (b) the timing of revenue recognition,
including the appropriate measure of progress in step (v) above. The Company uses judgment to
determine whether milestones or other variable consideration, except for royalties, should be included
in the transaction price, as described further below. The transaction price is allocated to each
performance obligation on a relative stand-alone selling price basis, for which the Company recognizes
revenue as or when the performance obligations under the contract are satisfied. If a milestone or other
variable consideration relates specifically to the Company’s efforts to satisfy a single performance
obligation or to a specific outcome from satisfying the performance obligation, the Company generally
allocates the milestone amount entirely to that performance obligation once it is probable that a
significant revenue reversal would not occur.
Amounts received prior to revenue recognition are recorded as a contract liability. Amounts expected to
be recognized as revenue within the 12 months following the balance sheet date are classified as current
portion of contract liabilities in the accompanying balance sheets. Amounts not expected to be
recognized as revenue within the 12 months following the balance sheet date are classified as contract
liabilities, net of current portion.
Licenses of Intellectual Property
In assessing whether a right to use license is distinct from the other promises, the Company considers
factors such as the research and development capabilities of the collaboration partner and the availability
of the associated expertise in the general marketplace. In addition, the Company considers whether the
collaboration partner can benefit from a license for its intended purpose without the receipt of the
remaining promise(s), whether the value of the license is dependent on the unsatisfied promise(s),
whether there are other vendors that could provide the remaining promise(s), and whether it is separately
identifiable from the remaining promise(s). For licenses that are combined with other promises, the
Company utilizes judgment to assess the nature of the combined performance obligation to determine
whether the combined performance obligation is satisfied over time or at a point in time and, if over time,
the appropriate method of measuring progress for purposes of recognizing revenue.
The Company evaluates the measure of progress each reporting period and, if necessary, adjusts the
measure of performance and related revenue recognition.
Milestone Payments
At the inception of each arrangement that includes development milestone payments, the Company
evaluates whether the milestones are considered probable of being achieved and estimates the amount
to be included in the transaction price using the most likely amount method. If it is probable that a
significant reversal of cumulative revenue would not occur, the associated milestone value is included
in the transaction price. Milestone payments that are not within the control of the Company or the
licensee, such as regulatory approvals, are not considered probable of being achieved until those
approvals are received. The Company evaluates factors such as the scientific, clinical, regulatory,
commercial, and other risks that must be overcome to achieve the particular milestone in making this
assessment. There is considerable judgment involved in determining whether it is probable that a
significant reversal of cumulative revenue would not occur. At the end of each subsequent reporting
period, the Company reevaluates the probability of achievement of all milestones subject to constraint
and, if necessary, adjusts its estimate of the overall transaction price. Any such adjustments are
recorded on a cumulative catch-up basis, which would affect revenues and earnings in the period of
adjustment.
Page 10
32
IMRICOR ME DICAL SYS TEMS
NOTES TO FINANCIAL STATEMENTS (CONT)
AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2019 AND 2018
IMRICOR MEDICAL SYSTEMS INC.
NOTES TO FINANCIAL STATEMENTS
As of and for the years ended December 31, 2019 and 2018
l
y
n
o
e
s
u
l
a
n
o
s
r
e
p
NOTE 1 - Summary of Significant Accounting Policies (cont.)
Royalties
Minimum guaranteed royalties are recognized upon the execution of the license agreement as these
proceeds are not variable consideration. If it is determined that there is a significant financing component
in the agreement, revenue is reduced for the amount that represents future interest income. For
agreements that include sales-based royalties, including milestone payments based on a level of sales,
and the license is deemed to be the predominant item to which the royalties relate, the Company
recognizes revenue at the later of (i) when the related sales occur, or (ii) when the performance
obligation to which some or all of the royalty has been allocated has been satisfied (or partially satisfied).
Stock-Based Compensation
The Company recognizes compensation expense for all stock-based payment awards made to employees
and non-employee directors and consultants in its statements of operations based on their fair values at the
date of grant based on the Black-Scholes pricing model. Stock-based compensation expense is recognized
on a straight-line basis over the vesting period for all awards, net of an estimated forfeiture rate, resulting in
the recognition of compensation expense for only those shares expected to vest. Compensation expense is
recognized for all awards over the vesting period to the extent the employees or directors meet the requisite
service requirements, whether or not the award is ultimately exercised. Conversely, when an employee or
director does not meet the requisite service requirements and forfeits the award prior to vesting, any
compensation expense previously recognized for the award is reversed. See NOTE 8 for further details and
assumptions regarding the Black-Scholes pricing model.
Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the
United States of America requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the reporting period. Actual results
could differ from those estimates.
Subsequent Events
For the year ended December 31, 2019, the Company evaluated, for potential recognition and disclosure,
events that occurred prior to the issuance of the financial statements through February 19, 2020.
r
o
F
Page 11
201 9 ANNUAL REPORT
33
IMRICOR MEDICAL SYSTEMS INC.
NOTES TO FINANCIAL STATEMENTS
As of and for the years ended December 31, 2019 and 2018
l
y
n
o
e
s
u
l
a
n
o
s
r
e
p
r
o
F
NOTE 1 - Summary of Significant Accounting Policies (cont.)
Recent Accounting Standards
During February 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards
Update (ASU) No. 2016-02, “Leases.” ASU No. 2016-02 was issued to increase transparency and
comparability among organizations by recognizing all lease transactions (with terms in excess of 12 months)
on the balance sheet as a lease liability and a right-of-use asset (as defined). ASU No. 2016-02 is effective for
fiscal years beginning after December 15, 2018 (for public entities), and interim periods within fiscal years
beginning after December 15, 2018 (for public entities), with earlier application permitted. The original
guidance required application on a modified retrospective basis with the earliest period presented. In August
2018, the FASB issued ASU 2018-11, Targeted Improvements to ASC 842, which includes an option to not
restate comparative periods in transition and elect to use the effective date of ASC 842, Leases, as the date
of initial application of transition. The Company has performed a review of the requirements of the new
guidance and has identified which of its leases are within the scope of ASU 2016-02. The Company has
reviewed all of its lease contracts and applied the new standard to the lease contracts and compared the
results to our former accounting methods. The Company adopted this ASU beginning on January 1, 2019
using the transition option provided under ASU 2018-11. The impact of the adoption on January 1, 2019 was
an increase of $220,000 to other long-term assets and current and long-term liabilities, respectively, on the
balance sheet, with no impact to the statement of operations. In addition, the Company elected the package
of practical expedients permitted under the transition guidance within the new standard which allowed it to
carry forward the historical lease classification. (See NOTE 6).
NOTE 2 – Revenue Recognition
Effective January 1, 2018, the Company adopted ASC 606 using the modified retrospective method. This
standard applies to all contracts with customers, except for contracts that are within the scope of other
standards, such as leases, insurance, and financial instruments.
Impact of Adoption
As a result of adopting the standard, the Company recognized an adjustment to reduce the accumulated deficit
by $3,214,372 mainly related to accelerating revenue related to minimum royalties and license and
development arrangements where the Company has fulfilled their performance obligations as of December 31,
2017.
Royalties and License Fees
On June 1, 2012, the Company licensed certain intellectual property to a customer in exchange for an upfront
non-refundable license fee and milestone payments, which could total up to $6,000,000. All these milestone
payments, including the non-refundable license fee, were collected on or before October 2015. In addition, the
agreement provides for a royalty of 3% of product sales, subject to a minimum of $50,000 per year.
The Company determined that the promises pursuant to the agreement were not distinct from one another, as
the license has limited value without the remaining obligations. All obligations were fulfilled on or before October
2015. Prior to the adoption of ASC 606, a portion of the initial upfront payment was included in contract liabilities
(formerly deferred revenue) and was being recognized as revenue over the life of the license. The adoption of
ASC 606 resulted in the elimination of the remaining balance of $1,333,333 in contract liabilities, as the
performance obligation has been fulfilled.
Page 12
34
IMRICOR ME DICAL SYS TEMS
NOTES TO FINANCIAL STATEMENTS (CONT)
AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2019 AND 2018
IMRICOR MEDICAL SYSTEMS INC.
NOTES TO FINANCIAL STATEMENTS
As of and for the years ended December 31, 2019 and 2018
NOTE 2 – Revenue Recognition (cont.)
l
y
n
o
e
s
u
l
a
n
o
s
r
e
p
In addition, the adoption of ASC 606 resulted in the recognition of the portion of remaining minimum royalty
payments to be received, less the portion which represents future interest income. The amount expected to be
received within 12 months is included in Accounts Receivable and the amounts expected to be received in
future periods beyond 12 months are included in Accounts Receivable-Long term. Any royalties received in the
future which are more than the minimum guaranteed royalty will be recognized when they are earned.
On November 27, 2013, the Company licensed certain intellectual property to a customer in exchange for an
upfront non-refundable license fee and milestone payments, which can total up to $7,000,000. The Company
collected $6,000,000 of these milestone payments, including the non-refundable license fee, on or before
October 2016.
The Company determined there were three distinct performance obligations pursuant to the agreement each
related to a separate product development program. The first milestone was completed in October 2014. The
second milestone has effectively been cancelled. The Company currently has no intention to engage in the
development program and there is no contractual obligation to do so. The customer paid the third milestone
payment, in advance of final completion of the obligation, as the customer put the project on hold and did not
want to lose their exclusive rights to the intellectual property.
Prior to the adoption of ASC 606, a portion of the initial upfront payment was included in contract liabilities
(formerly deferred revenue) and was being recognized as revenue over the life of the license. The adoption of
ASC 606 resulted in an allocation of the upfront payment to the first and third milestones on a relative standalone
value basis. No allocation of the upfront payment was made to the second milestone, given the Company’s
position that this development program has been effectively cancelled. The Company has estimated that 72%
of the third milestone was completed prior to January 1, 2018. As a result of the adoption of ASC 606, the
remaining contract liability associated with the first milestone and 72% of the contract liability associated with
the third milestone was eliminated. $373,333, which represents 28% of the third milestone as well as the relative
portion of the upfront payment, is included in long-term contract liabilities as of December 31, 2019 and 2018.
The customer sold the portion of the business which held this license in May 2018. The license has been
assigned to the purchaser. The project is still on hold with no plans to work on final development during the
next 12 months, and therefore, the contract liability is included in long-term liabilities.
In November 2017, the Company licensed certain intellectual property to a customer in exchange for an upfront
non-refundable license fee and milestone payments, which can total up to $2,250,000. The non-refundable
license fee of $500,000 was collected in November 2017 and two milestone payments totaling $500,000 were
collected during the year ended December 31, 2018.
The Company determined that the promises pursuant to the agreement were not distinct from one another, as
the license has limited value without the remaining obligations.
r
o
F
Prior to the adoption of ASC 606, a portion of the initial upfront payment was included in contract liabilities and
was being recognized as revenue over the life of the license. The adoption of ASC 606 resulted in a change in
recognition of the upfront payment from over the life of the license to over the period of expected performance.
As of December 31, 2018, the Company determined that it would not be able to fulfill the remaining two
milestones in the timeframe as outlined in the agreement. The Company was in negotiations with the customer
to amend the agreement to change the dates for completion of the remaining milestones. However, as of
December 31, 2018, the Company had completed all of its performance obligations related to the milestone’s
probable of completion. Consequently, the Company recognized the remaining upfront non-refundable license
fee of $461,538 during the year ended December 31, 2018. In addition, during the year ended December 31,
2018, the Company recognized $350,000 related to the achievement of the first two milestones which was
recognized over time as the performance obligation was fulfilled, subject to constraint.
The agreement was amended in March 2019. The timelines for the two remaining milestones were extended
through the year ended December 31, 2019. The agreement was again amended in October 2019 to extend
the timelines to June 30, 2020 and revenue will be recognized upon completion of each remaining milestone.
No revenue was recognized related to this contract during the year ended December 31, 2019.
Page 13
l
y
n
o
e
s
u
l
a
n
o
s
r
e
p
r
o
F
201 9 ANNUAL REPORT
35
IMRICOR MEDICAL SYSTEMS INC.
NOTES TO FINANCIAL STATEMENTS
As of and for the years ended December 31, 2019 and 2018
NOTE 2 – Revenue Recognition (cont.)
Government Contract Revenue
The Company was awarded a contract with the government on September 26, 2017 for up to $2,402,951 to
develop a Magnetic Resonance Imaging (MRI) compatible injection catheter for MRI-guided procedures. The
Company recognized revenue for this contract over time using the “as invoiced” practical expedient. There was
no change in the pattern of revenue recognition under ASC 606 for this contract. The Company recognized
$263,383 and $190,911 as revenue during the years ended December 31, 2019 and 2018, respectively. The
Company cancelled the contract in December 2019 to allow engineering resources to focus on the development
of its core pipeline products.
Contract Liabilities
Amounts received prior to satisfying the above revenue recognition criteria are recorded as contract liabilities
in the accompanying balance sheets, with the contract liabilities to be recognized beyond one year being
classified as non-current contract liabilities. As of December 31, 2019, and 2018, the Company had contract
liabilities of $607,410 and $592,853, respectively.
The following table sets forth information related to the contract liabilities for the years ended December 31:
Balance at the beginning of the year
Decrease a result of cumulative catch-up arising from the
adoption of ASC 606
Decrease from revenue recognized for completion of
performance obligations that was included in contract
liabilities at the beginning of the period
2019
$ 592,853
2018
$ 3,719,695
-
-
(2,815,303)
(311,539)
Cash received in advance for service contract
Balance at the end of the year
14,557
$ 607,410
-
$ 592,853
The cumulative effect of the changes made to our balance sheet as of January 1, 2018 for the adoption of ASC
606 were as follows:
Balance as of
December 31,
2017
Balance as of
January 1,
2018
Adjustment
CURRENT ASSETS
Accounts receivable
Total Current Assets
ACCOUNTS RECEIVABLE-LONG TERM
TOTAL ASSETS
CURRENT LIABILITIES
Current portion of contract liabilities
Total Current Liabilities
LONG-TERM LIABILITIES
Contract liabilities, net current portion
Total Liabilities
STOCKHOLDERS’ DEFICIT
Accumulated deficit
$
2,175,757
-
- $ 41,874 $ 41,874
41,874 2,217,631
357,195
$ 2,345,391 $ 399,069 $ 2,744,460
357,195
$ 465,759 $ (154,220 ) $ 311,539
680,104
(154,220 )
834,324
3,253,936
6,453,452
(2,661,083 )
(2,815,303 )
592,853
3,638,149
(24,897,618) 3,214,372
(21,683,246)
(4,108,061)
TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT $ 2,345,391
Total Stockholders’ Deficit
3,214,372
(893,689)
$ 399,069 $ 2,744,460
Page 14
l
y
n
o
e
s
u
a
n
o
s
r
e
p
36
IMRICOR ME DICAL SYS TEMS
NOTES TO FINANCIAL STATEMENTS (CONT)
AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2019 AND 2018
IMRICOR MEDICAL SYSTEMS INC.
NOTES TO FINANCIAL STATEMENTS
As of and for the years ended December 31, 2019 and 2018
NOTE 3 – Going Concern
The accompanying financial statements have been prepared on a going concern basis, which contemplates
the realization of assets and satisfaction of liabilities and commitments in the normal course of business. The
Company incurred losses from operations and negative cash flows from operations for both of the years ended
December 31, 2019 and 2018, had an accumulated deficit as of December 31, 2019 and is in need of additional
working capital to fund future operations. These conditions raise substantial doubt about its ability to continue
as a going concern for twelve months from the report date.
To continue in existence and expand its operations, the Company will be required to, and management plans
to, raise additional working capital through an equity or debt offering and ultimately attain profitable operations.
If the Company is not able to raise additional working capital, it would have a material adverse effect on the
operations of the Company and continuing research and development of its product, as well as
commercialization.
NOTE 4 – Property and Equipment
l
Property and equipment consisted of the following:
Office furniture and equipment
Lab and production equipment
Computer equipment
MRI scanner
Leasehold improvements
Less: Accumulated depreciation and amortization
December 31,
2019
$ 186,030
1,099,744
194,890
1,200,000
723,952
3,404,616
(1,119,226)
2,285,390
$
2018
$ 179,133
742,977
178,259
1,200,000
717,283
3,017,652
(902,550)
2,115,102
$
Depreciation expense was $257,300 and $77,531 for the years ended December 31, 2019 and 2018,
respectively. The MRI scanner and leasehold improvements related to new space for the MRI scanner were
placed in service in May 2019, which is when depreciation began on those assets.
NOTE 5 – Convertible Notes
r
o
F
During September and October 2017, the Company issued $2,325,000 in unsecured convertible notes (“2017
Notes”) with several equity investors, including $885,000 issued to related parties. The notes bore interest at
a rate of six percent annually from the date of issuance and principal and interest were due on August 31,
2018. The 2017 Notes, including accrued interest, were automatically convertible into the next round of equity
financing if at least $5,000,000 in new funding was raised (“Qualified Financing”) prior to the maturity date, at
a conversion price equal to 94% of the price per share paid by investors in the Qualified Financing. As the
conversion features were contingent upon completion of a Qualified Financing, no beneficial conversion
feature was recorded upon commencement of the notes.
Page 15
201 9 ANNUAL REPORT
37
IMRICOR MEDICAL SYSTEMS INC.
NOTES TO FINANCIAL STATEMENTS
As of and for the years ended December 31, 2019 and 2018
l
y
n
o
e
s
u
l
a
n
o
s
r
e
p
r
o
F
NOTE 5 – Convertible Notes (cont.)
During April 2018, the 2017 Notes and accrued interest of $2,398,115 were converted, with a six percent
discount of $153,071, into $2,551,186 in new unsecured convertible notes (“2018 Notes”), of which $967,686
was to related parties. The Company also issued $7,379,420 of new 2018 Notes with several current and new
investors, including $260,000 to related parties. In connection with the issuance of the 2018 Notes, a strategic
investor invested $3,400,000 consisting of $1,000,000 in cash, and $2,400,000 of in-kind contribution. The in-
kind contribution included $1,200,000 for an MRI scanner, $500,000 for a four-year prepaid service agreement
on the MRI scanner, and $700,000 in a leasehold improvement allowance to build out space for the MRI
scanner. The MRI scanner and leasehold improvements are included in property and equipment as of both
December 31, 2019 and 2018. The prepaid service agreement is included in other long-term assets. In
connection with the 2018 Notes, the Company incurred debt issuance costs of $278,007, of which $228,660
were settled with the issuance of additional 2018 Notes. These debt issuance costs were being amortized
straight-line over the expected maturity date and recognized as interest expense. The remaining unamortized
balance was expensed upon the Company’s completion of its Australian Initial Public Offering (IPO). The 2018
Notes bore interest at a rate of eight percent compounded annually from the date of issuance until the
outstanding principal is paid or converted.
On February 4, April 3 and April 4, 2019, the Company issued $1,745,932 in additional convertible notes, (“2019
Notes”), respectively, including $662,506 to related parties. The notes bore interest at a rate of eight percent
compounded annually from the date of issuance until the outstanding principal was converted.
The 2018 and 2019 Notes and accrued interest totaling $12,533,764 automatically converted into 29,217,437
Conversion Shares immediately prior to, and contingent upon, the allotment of CHESS Depositary Interests
(CDIs) as a result of the IPO, (see NOTE 8). The number of Conversion Shares issued upon conversion of the
2018 and 2019 Notes was 75% of the IPO share price of $0.5654 per share. The Company recorded $578,295
in interest expense related to the 2018 and 2019 Notes for the year ended December 31, 2019. The Company
recorded $695,144 in interest expense for the year ended December 31, 2018 related to the 2017 and 2018
Notes, of which $153,071 represented the six percent discount related to the 2017 Note conversion, and
$35,926 of additional accrued interest converted, both of which were included in the convertible debt balance
and $506,147 which is included in accrued interest as of December 31, 2018.
A beneficial conversion feature expense of $4,129,856 was recorded upon completion of the Company’s IPO
and is included as “beneficial conversion feature expense” in the Statement of Operations for the year ended
December 31, 2019.
During 2016 and 2017, the Company issued $2,680,000 in unsecured convertible notes (“Notes”) with several
equity investors, including $100,000 to related parties. The notes bore interest at a rate of six percent annually
from the date of issuance and were due on August 1, 2017. In August 2017, the Company converted the Notes
and accrued interest totaling $2,798,674 into 3,833,799 shares of Common stock. In the event the Company
issued securities within the 180-day period immediately following the conversion of the Notes (“Qualified
Financing”), the Noteholders were to receive additional shares of Common stock such that total shares issued
would be based upon a price that was 94% of the price paid by the subsequent investors. The 2017 Notes
(described above) met the definition of a Qualified Financing. Consequently, in connection with the IPO, the
Company issued 3,187,375 additional shares such that the total shares received was based upon an adjusted
purchase price of $0.3986 per share in 2019. The fair value of the additional shares issued was $1,802,129
and is included as “Down round expense” in the Statement of Operations for the year ended December 31,
2019 (See NOTE 8). The fair value of this Down round liability as of December 31, 2018 was immaterial.
Page 16
38
IMRICOR ME DICAL SYS TEMS
NOTES TO FINANCIAL STATEMENTS (CONT)
AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2019 AND 2018
IMRICOR MEDICAL SYSTEMS INC.
NOTES TO FINANCIAL STATEMENTS
As of and for the years ended December 31, 2019 and 2018
NOTE 5 – Convertible Notes (cont.)
The following table summarizes the Convertible notes, discount and interest as of December 31, 2018:
$ 1,227,686
8,542,967
9,770,653
(174,044)
$ 9,596,609
$ 68,844
437,303
$ 506,147
December 31,
2019
$ 93,721
484,574
$ 578,295
December 31,
2018
$ 140,580
554,564
$ 695,144
Convertible notes-related parties
Convertible notes-all other
Total Convertible notes
Debt discount
Convertible notes, net of discount
Accrued interest-related parties
Accrued interest-all other
Total Accrued interest
Interest expense is as follows:
Convertible notes-related parties
Convertible notes-all other
Total convertible notes
NOTE 6 – Leases
Operating Leases
l
y
n
o
e
s
u
l
a
n
o
s
r
e
p
r
o
F
In March 2007, the Company entered into an operating lease agreement for its office space which was originally
set to expire in July 2014. The lease was extended through July 2019. In June 2019, the lease was extended
through October 2022. The Company entered into a second operating lease agreement for office and
warehouse space in August 2018 which commenced on January 1, 2019 and expires in March 2026. Neither
lease includes renewal or extension rights. Both lease agreements require the Company to pay a pro rata
portion of the lessor’s actual operating expenses which are considered variable lease costs as the expenses
are trued up on an annual basis. Rent expense of $120,234 was incurred for the year ended December 31,
2018.
On January 1, 2019, the Company recorded a $220,000 right to use asset and lease liability associated with
these leases in accordance with ASC 842. In June 2019, when the extension for the office space lease was
executed, the Company recorded a $358,506 right to use asset and lease liability associated with the lease
extension.
As our operating leases do not provide an implicit rate, we use our incremental borrowing rate based on the
information available at the lease commencement date in determining the present value of the lease payments.
As of December 31, 2019, the remaining lease term was 4.0 years and discount rate was 8.0%. For the year
ended December 31, 2019, the operating cash outflows from our operating leases for office and manufacturing
space was $144,195.
Page 17
201 9 ANNUAL REPORT
39
IMRICOR MEDICAL SYSTEMS INC.
NOTES TO FINANCIAL STATEMENTS
As of and for the years ended December 31, 2019 and 2018
NOTE 6 – Leases (cont.)
As of December 31, 2019, maturities of our operating lease liabilities are as follows:
2020
2021
2022
2023
2024
2025 and thereafter
Total lease payments
Less interest
Present value of lease liabilities
$ 150,453
151,305
121,662
31,008
32,664
42,113
529,205
(79,559)
$ 449,646
The cost components of the Company’s operating leases were as follows for the year ended December 31,
2019:
Operating lease cost
Variable lease cost
Total
$ 154,687
73,375
$ 228,062
Finance Lease Liability
Prior to the adoption of ASC 842, the Company acquired various equipment during 2014 under capital leases.
The cost of the equipment capitalized was $104,017. Accumulated amortization as of December 31, 2019 and
2018 was $104,017 and $100,381, respectively. Amortization expense is included in general and administrative
expenses on the statement of operations as depreciation expense. The lease terminated in April 2019.
In December 2019, the Company entered into a $36,580 finance lease agreement for certain equipment. The
Company traded in fully depreciated equipment worth $26,250. The total equipment value of $62,380 is
included in property and equipment. The interest rate implied in the finance lease is 5.4% and the term of the
lease is four years.
The Company’s remaining payments under the terms of the finance lease are as follows as of December 31,
2019:
2020
2021
2022
2023
Total payments
Less amount representing interest
Total present value of total payments
Less current portion
Finance lease liability, net of current portion
$ 10,188
10,188
10,188
10,188
40,752
(4,172)
36,580
(8,420)
$ 28,160
l
y
n
o
e
s
u
l
a
n
o
s
r
e
p
r
o
F
Page 18
l
y
n
o
e
s
u
l
a
n
o
s
r
e
p
40
IMRICOR ME DICAL SYS TEMS
NOTES TO FINANCIAL STATEMENTS (CONT)
AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2019 AND 2018
IMRICOR MEDICAL SYSTEMS INC.
NOTES TO FINANCIAL STATEMENTS
As of and for the years ended December 31, 2019 and 2018
NOTE 6 – Leases (cont.)
Financing Obligation
On June 1, 2019, the Company entered into a sale leaseback agreement for the purchase of its MRI scanner
($1,200,000) and related Service Agreement ($500,000). The term of the lease is 36 months with a monthly
rental payment of $54,865. Based on ASC 842, the lease meets the requirements to be classified as a finance
lease. Therefore, the agreement is considered a failed sale leaseback arrangement and is not accounted for
as a lease under ASC 842, but rather is accounted for as a financing obligation. The lease agreement includes
an option to repurchase the related assets for $425,000 at the end of the lease term, which the Company deems
it is reasonably certain to do. The MRI scanner is included in property and equipment and the Service
Agreement is in Long-term assets. The interest rate implied in the financing obligation is 21.5%.
The Company’s remaining payments under the terms of the financing obligation are as follows as of December
31, 2019:
2020
2021
2022
Expected buy out at end of lease term
Total payments
Less amount representing interest
Total present value of total payments
Less current portion
Financing obligation, net of current portion
$ 658,380
658,380
274,325
425,000
2,016,085
(530,086)
1,485,999
(374,023)
$ 1,111,976
NOTE 7 - Commitments and Contingencies
Retirement Plan
The Company maintains a 401(k) retirement plan for its employees in which eligible employees can contribute
a percentage of their compensation. The Company may also make discretionary contributions. The Company
contributed $22,770 during the year ended December 31, 2019. The Company did not make any contributions
for the year ended December 31, 2018.
Employment Agreements
The Company has employment agreements with the CEO and senior executives of the Company. The
agreements require severance of twelve and six months, respectively, of current annual salary and medical
insurance in the event employment is terminated without cause, respectively.
r
o
F
Page 19
201 9 ANNUAL REPORT
41
l
y
n
o
e
s
u
l
a
n
o
s
r
e
p
r
o
F
IMRICOR MEDICAL SYSTEMS INC.
NOTES TO FINANCIAL STATEMENTS
As of and for the years ended December 31, 2019 and 2018
NOTE 8 - Stockholders' Equity (Deficit)
Capital Stock Authorized
As of December 31, 2019, the Board of Directors of the Company had authorized 560,000,000 shares of capital
stock, consisting of 535,000,000 shares of common stock and 25,000,000 shares of preferred stock. As
December 31, 2018, the Board of Directors of the Company had authorized 145,000,000 shares of capital stock,
consisting of 120,000,000 shares of common stock and 25,000,000 shares of preferred stock.
Common Stock
During April 2018, 20,000 options to purchase common stock were exercised at $0.552 per share for total
proceeds of $11,040.
During January and March 2019, 150,000 warrants to purchase common stock were exercised at $0.341 per
share for total proceeds of $51,150.
During January 2019, a total of 2,400,000 options to purchase common stock were exercised with a portion of
the exercise via a cashless exercise. 1,282,474 options to purchase common stock were exercised at $0.097
per share for total proceeds of $124,400. In addition, 1,117,526 options to purchase common stock were
exercised at $0.097 per share on a cashless exercise basis at a fair market value of $0.52 per share, resulting
in the issuance of 909,064 shares of common stock.
On August 29, 2019, the Company completed its Initial Public Offering and associated listing on the Australian
Securities Exchange (ASX). The ASX uses an electronic system called CHESS for the clearance and settlement
of trades on the ASX. The State of Delaware does not recognize the CHESS system of holding securities or
electronic transfers of legal title to shares. To enable companies to have their securities cleared and settled
electronically through CHESS, depository instruments called CDIs are issued. CDIs are units of beneficial
ownership in shares and are traded in a manner similar to shares of Australian companies listed on the ASX.
The legal title to the shares are held by a depository, CDN, which is a wholly-owned subsidiary of the ASX, and
is an approved general participant of ASX Settlement. The equity capital raise consisted of 14,578,313 CDIs
representing the same number of shares of common stock at $0.83 Australian dollars per share and 1,084,337
common shares at $0.5654 US dollars per share in a concurrent US Private Placement, for total proceeds of
$7,016,305, net of expenses.
180,722 CDIs were issued in exchange for services related to the Company’s equity financing. 3,187,375
shares of common were issued to Noteholders in connection with the down round liability (see NOTE 5).
In December 2019, 90,000 options to purchase common stock were exercised at $0.341 per share for total
proceeds of $30,690.
Dividend Rights
Subject to the prior rights of holders of all classes of stock at the time outstanding having prior rights as to
dividends, the holders of the common stock shall be entitled to receive, out of any assets of the Corporation
legally available therefore, any dividends as may be declared from time to time by the Board of Directors. The
right to such dividends shall not be cumulative, and no right shall accrue by reason of the fact that dividends
are not declared in any prior period.
Voting Rights
The holder of each share of common stock shall have the right to one vote for each such share, and shall be
entitled to notice of any stockholders’ meeting in accordance with the Bylaws of the Corporation, and shall be
entitled to vote upon such matters and in such manner as may be provided by law.
Page 20
l
y
n
o
e
s
u
l
a
n
o
s
r
e
p
r
o
F
42
IMRICOR ME DICAL SYS TEMS
NOTES TO FINANCIAL STATEMENTS (CONT)
AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2019 AND 2018
IMRICOR MEDICAL SYSTEMS INC.
NOTES TO FINANCIAL STATEMENTS
As of and for the years ended December 31, 2019 and 2018
NOTE 8 - Stockholders' Equity (Deficit) (cont.)
Stock Option Plans
The Company and its stockholders adopted a stock incentive plan (the “2006 Plan”) in 2006. The 2006 Plan,
as amended on January 26, 2011 by the shareholders, reserved 10,918,500 shares of the Company’s common
stock for the granting of incentive and nonqualified stock options to employees, directors and consultants. On
May 22, 2016, the Company replaced the 2006 Plan with the 2016 Plan, as the 2006 Plan was expiring. The
terms of the 2016 Plan were the same as the 2006 Plan. In August 2018, the Board of Directors approved an
increase of 500,000 shares to the option pool. On February 14, 2019, the Board of Directors terminated the
2016 Plan and approved the 2019 Plan, reserving 11,418,500 shares of the Company’s common stock for the
granting of incentive and nonqualified stock options to employees, directors and consultants. On February 14,
2019, the Board of Directors also authorized the Company to offer to current employees, directors and
consultants an option to exchange certain previously issued options for repriced options with additional vesting
requirements ranging from two to four years. As a result, 5,462,600 incentive and nonqualified stock options
were cancelled and reissued on March 15, 2019 resulting in incremental value of $563,546 which will be
expensed over the revised vesting terms. On June 4, 2019, the Board of Directors approved an increase of
2,000,000 shares to the option pool and provided that on the first day of each of the Company’s fiscal years
during the term of this 2019 Plan beginning in 2020, the number of shares of Common Stock available for
issuance from time to time under this 2019 Plan will be increased by an amount equal to the less of (i) five
percent (5%) of the aggregate number of shares reserved under this Plan on the last day of the immediately
preceding fiscal year, and (ii) such number of shares determined by the Board (the “Annual Increase”). Prior to
the Company’s offering on the ASX, the Board of Directors determined the exercise price of all options, but the
exercise price of incentive options shall not be less than the fair value of the common stock at the date of grant.
Options granted after completion of the offering on the ASX are granted at a price equal to the closing sale
price of a CDI as of the date of grant, converted from Australian dollars to US dollars using the prevailing
exchange rate. Vesting terms of outstanding options range from immediate to four years. In no event are the
options exercisable for more than ten years after the date of grant. The Company issues new shares of common
stock when stock options are exercised.
Information regarding the Company's stock options is summarized below:
Options outstanding - December 31, 2018
Exercised
Cancelled
Cancelled and regranted
Regranted
Granted
Options outstanding – December 31, 2019
Options exercisable – December 31, 2019
Weighted average fair value of options granted
during the year ended December 31, 2019
Weighted average fair value of options granted
during the year ended December 31, 2018
Number of
Options
Weighted- Average
Exercise
Price
Aggregate
Intrinsic
Value
9,935,833 $ 0.56
0.11
(2,490,000)
0.72
(610,900)
0.76
(5,462,600)
0.52
5,462,600
0.89
1,230,000
8,064,933 $ 0.58 $ 2,175,380
1,522,333 $ 0.56 $ 423,860
$ 0.46
$ 0.43
As of December 31, 2019, the Company had 1,489,167 shares available for grant under the Plan.
The weighted average remaining contractual life of options outstanding and exercisable was 8.10 and 2.96
years, respectively, as of December 31, 2019.
The intrinsic value of options exercised during the years ended December 31, 2019 and 2018 was $1,059,729
and $5,960,
respectively.
Page 21
201 9 ANNUAL REPORT
43
IMRICOR MEDICAL SYSTEMS INC.
NOTES TO FINANCIAL STATEMENTS
As of and for the years ended December 31, 2019 and 2018
l
y
n
o
e
s
u
l
a
n
o
s
r
e
p
r
o
F
NOTE 8 - Stockholders' Equity (Deficit) (cont.)
The fair value of option awards granted was determined using the Black-Scholes option pricing model utilizing
the following assumptions:
Expected life
Volatility
Risk-free interest rate
Dividend Yield
2019 2018
5 - 7 years 5 - 7 years
48.12%
2.83%
0%
48.12%
2.50%-2.83%
0%
The Company reviews its current assumptions on a periodic basis and adjusts them as necessary to determine
the option valuation. The expected life represents the period that the stock option awards are expected to be
outstanding and is based on an evaluation of historic expected lives from the Company’s stock option grants.
Volatility is based on historic volatilities of traded shares from a selected publicly traded peer group, believed
to be comparable after consideration of size, maturity, profitability, growth, risk and return on investment. The
Company did not use its own historical volatility as the majority of stock option grants were issued prior to or in
connection with the IPO and the Company has limited volatility history. The risk-free interest rate is based on
the yield of constant maturity U.S. treasury bonds with a remaining term equal to the expected life of the awards
at the grant date. The expected dividend yield is zero, as the Company has not paid or declared any dividends
to common stockholders and does not expect to pay dividends in the foreseeable future. Historical data is used
to estimate pre-vesting forfeitures and the Company records stock-
based compensation expense only for those awards that are expected to vest.
Total stock-based compensation expense resulting from options granted was $533,110 and $437,120 for the
years ended December 31, 2019 and 2018, respectively, and charged to the Company’s Statement of
Operations as follows:
Sales and marketing
Research and development
General and administrative
December 31,
2019
$ 26,798
184,991
321,321
533,110
$
2018
$ 200,557
208,232
28,331
437,120
$
No income tax benefits were recognized related to this compensation expense due to the full valuation
allowance provided on the Company’s deferred income tax assets.
As of December 31, 2019, the total unrecognized compensation cost related to unvested stock options was
$1,446,089. Future stock-based compensation expense is expected to be as follows for the years ending
December 31:
2020
2021
2022
2023
Total
Total
$
614,908
454,462
259,504
117,215
$ 1,446.089
Page 22
44
IMRICOR ME DICAL SYS TEMS
NOTES TO FINANCIAL STATEMENTS (CONT)
AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2019 AND 2018
IMRICOR MEDICAL SYSTEMS INC.
NOTES TO FINANCIAL STATEMENTS
As of and for the years ended December 31, 2019 and 2018
NOTE 8 - Stockholders' Equity (Deficit) (cont.)
Stock Warrants
The Company has also issued warrants to purchase shares of common stock which are summarized below:
Warrants outstanding – December 31, 2018
Warants exercised
Warrants outstanding – December 31, 2019
Remaining weighted average contractual life in years, as
of December 31, 2019
Number of
Warrants
Weighted- Average
Exercise
Price
937,909 $ 0.67
(150,000) 0.34
787,909 $ 0.73
0.33
During January and March 2019, 150,000 warrants to purchase common stock were exercised at $0.341 per
share for total proceeds of $51,150.
l
Royalty Conversion Rights
The Company has issued rights to 7,200,000 shares of common stock upon the earlier of an acquisition
transaction, an initial public offering pursuant to an effective registration statement under the US Securities Act
of 1933 (an initial public offering in the US), or the expiration of certain license agreements.
NOTE 9 - Income Taxes
The Company has generated both federal and state net operating losses (NOL) of approximately $30,847,000
and federal and state research and development credit carryforwards of approximately $1,685,000 as of
December 31, 2019, which, if not used, will begin to expire in 2023. The Company believes that its ability to
fully utilize the existing NOL and credit carryforwards could be restricted by changes in control that may have
occurred or may occur in the future and by its ability to generate net income. The Company has not yet
conducted a formal study of whether, or to what extent, past changes in control of the Company impairs its NOL
and credit carryforwards because such NOL and credit carryforwards cannot be utilized until the Company
achieves profitability. The Company has established a full valuation allowance as of December 31, 2019 and
2018, that offsets the net tax benefits associated with the NOL and credit carryforwards since realization of
these tax benefits is not more likely than not.
Income tax expense (benefit) consists of the following for the year ended December 31:
l
y
n
o
e
s
u
a
n
o
s
r
e
p
r
o
F
Current:
Federal
State
Deferred:
Federal
State
2019
2018
$ -
-
-
$ -
-
-
(1,936,000)
-
(1,936,000)
1,936,000
$ -
(590,000)
-
(590,000)
590,000
$ -
Deferred tax asset valuation allowance
Total provision (benefit)
Page 23
201 9 ANNUAL REPORT
45
IMRICOR MEDICAL SYSTEMS INC.
NOTES TO FINANCIAL STATEMENTS
As of and for the years ended December 31, 2019 and 2018
NOTE 9 - Income Taxes (cont.)
Components of deferred income taxes are as follows as of December 31:
Deferred tax assets (liabilities):
Net operating loss carryforwards
Research and development credit carryforwards
Stock-based compensation
Accrued expenses
Deferred revenue
Prepaid expenses and other assets
Foreign currency exchange
Depreciation and amortization
Gross deferred tax assets (liabilities)
Less valuation allowance
Net deferred tax assets
2019
2018
$
$
8,020,000
1,348,000
154,000
5,000
158,000
(130,000)
(43,000)
7,000
9,519,000
)
(9,519,000
-
$
$
6,086,000
1,168,000
138,000
136,000
154,000
(104,000)
-
5,000
7,583,000
)
(7,583,000
-
The change in the valuation allowance was $1,936,000 and $590,000 for the years ended December 31, 2019
and 2018, respectively.
The effective tax rate for the year ended December 31, 2019 differs from the federal and state statutory tax
rates mainly due to the change in full valuation allowance, non-deductible down round expense and beneficial
conversion feature expense, incentive stock option expense, and research and development credits.
The Company has recognized a reserve of approximately $337,000 and $292,000 for uncertain tax positions
which was recorded directly against the valuation allowance as of December 31, 2019 and 2018, respectively.
If recognized, these benefits would favorably impact the effective tax rate.
The tax years from inception through December 31, 2019 remain subject to examination by all major taxing
authorities due to the net operating loss carryovers. The Company is not currently under examination by any
taxing jurisdiction. In the event of any future tax assessments, the Company has elected to record the income
taxes and any related interest and penalties as income tax expense in the Company’s Statement of Operations.
Changes in tax laws and rates may affect recorded deferred tax assets and liabilities and our effective tax rate
in the future.
l
y
n
o
e
s
u
l
a
n
o
s
r
e
p
r
o
F
Page 24
46
IMRICOR ME DICAL SYS TEMS
ADDITIONAL STOCKHOLDER INFORMATION
l
y
n
o
e
s
u
1.
Rank
3
1
4
2
5
a
n
o
s
r
e
p
10
12
11
8
7
9
6
The Company has CHESS Depositary Interests (CDIs) quoted on the Australian Securities Exchange (ASX) trading under the
ASX code IMR. Each CDI represents an interest in one share of Class A common stock of the Company (Share). Legal title to
the Shares underlying the CDIs is held by CHESS Depositary Nominees Pty Ltd (CDN), a wholly owned subsidiary of the ASX.
The Company’s securities are not quoted on any other exchange.
All information provided below is current as at 6 April 2020, except as otherwise stated. To avoid double-counting, the
holding of Shares by CHESS Depositary Nominees Pty Limited (underpinning the CDIs on issue) have been disregarded in the
presentation of the information below, unless otherwise stated.
SHARE CAPITAL
Type of Security
Total number of issued shares1
Total number of issued CDIs
Number of Securities
104,765,868
39,931,218
Includes shares held by CHESS Depositary Nominees Pty Limited (39,931,218).
l
TOP 20 HOLDERS OF CDIS AND SHARES COMBINED
Name
Number % of issued capital
JP Morgan Nominees Australia Pty Limited
Mr Warren G Herreid II & KAHR Foundation
Siemens Medical Solutions
HSBC Custody Nominees (Australia) Limited
Mark Tibbles
Steven R Wedan
Merrill Lynch (Australia) Nominees Pty Limited
CS Third Nominees Pty Limited
National Nominees Limited
Bauer Private Equity Fund VI LLC
Albert C Lardo and Jennifer S Lardo
Pensco Trust Company LLC CUST FBO David Cartwright IRA
13
Pensco Trust Company LLC CUST FBO Thomas Tulp IRA
15
14
r
o
F
18
16
17
19
HSBC Custody Nominees (Australia) Limited – A/C 2
Citicorp Nominees Pty Limited
James Dobchuk
Ramsey & Co FBO Gerald P Floden IRA
Beverly A Mancl Revocable Trust Dated December 11 1995
Fulong Sun
20
Western Funds Management Pty Ltd
Top 20 holders
Remaining holders
Total
10,850,748
10,496,447
8,384,150
5,712,660
4,581,878
4,424,733
3,144,565
3,134,989
2,010,099
1,696,555
1,440,000
867,896
786,225
729,239
683,699
657,809
608,681
551,438
537,364
537,364
61,836,539
42,929,329
104,765,868
10.36
10.02
8.00
5.45
4.37
4.22
3.00
3.00
1.92
1.62
1.37
0.83
0.75
0.70
0.65
0.63
0.58
0.53
0.51
0.51
59.02
40.98
100.00
201 9 ANNUAL REPORT
47
l
y
n
o
e
s
u
l
a
n
o
s
r
e
p
r
o
F
SUBSTANTIAL HOLDERS
The names of substantial holders in the Company and their respective holdings of equity securities (to the best of the
Company’s knowledge) are as follows:
Name
Warren G. Herreid II & KAHR Foundation
Siemens Medical Solutions USA, Inc.
Regal Funds Management Pty Ltd
DISTRIBUTION OF CDIS AND SHARES
Range
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
100,001 and over
Total
DISTRIBUTION OF OPTIONS
Range
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
100,001 and over
Total
Number of
equity securities
10,494,488
8,761,342
6,310,277
% voting
10.02
8.00
6.02
Number % of issued capital
No. of holders
55,187
334,100
430,772
8,330,274
95,615,535
104,765,868
0.05
0.32
0.41
7.95
91.27
100
84
121
56
188
146
595
Number % of issued capital
No. of holders
-
-
45,400
781,133
7,730,014
8,556,547
-
-
0.53
9.13
90.34
100
-
-
5
16
16
37
Note: 125,000 options were exercised on 13 April 2020 and are not included in the above table.
DISTRIBUTION OF WARRANTS
Range
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
100,001 and over
Total
Number % of issued capital
No. of holders
-
10,960
36,985
465,992
273,972
787,909
-
1.39
4.69
59.14
34.77
100
-
4
5
21
2
32
At 6 April 2020 there are 34 investors holding less than a marketable parcel of CDIs or Shares, based on a minimum A$500
parcel at A$0.84 per CDI or Share (close of trade price on 6 April 2020).
48
IMRICOR ME DICAL SYS TEMS
ADDITIONAL STOCKHOLDER INFORMATION (CONT)
l
y
n
o
e
s
u
a
n
o
s
r
e
p
r
o
F
SECURITIES SUBJECT TO ESCROW AT 6 APRIL 2020
Last day of escrow ASX imposed Or Voluntary
Number of escrowed
Shares/CDIs
Number of escrowed
Options/Warrants
29 May 2020
29 August 2020
29 November 2020
29 August 2021
Voluntary
ASX Imposed and voluntary
Voluntary
8,290,582
9,550,584
7,915,004
ASX Imposed and voluntary
12,413,848
-
-
-
2,665,500 Options
273,972 Warrants
Note: the above table discloses the net effect of number of securities to be released from escrow including overlap between ASX imposed
and voluntary escrows.
REQUIRED STATEMENTS
• There is no current on-market buy-back of the Company’s securities.
l
• The Company is incorporated in the state of Delaware in the United States of America.
• The Company is not subject to Chapters 6, 6A, 6B and 6C of the Corporations Act 2001 (Cth) dealing with the
acquisition of shares (ie, substantial holdings and takeovers).
• The Company’s securities are not quoted on any exchange other than the ASX.
• The Company’s Australian Company Secretary is Mr Kobe Li.
• Under the Delaware General Corporation Law, shares are generally freely transferable subject to restrictions imposed by
US federal or state securities laws, by the Company’s certificate of incorporation or bylaws, or by an agreement signed
with the holders of the shares at issue. The Company’s amended and restated certificate of incorporation and by-laws
do not impose any specific restrictions on transfer. The Company’s CDIs were issued in reliance on the exemption from
registration contained in Regulation S of the US Securities Act of 1933 (Securities Act) for offers which are made outside
the US. Accordingly, the CDIs have not been, and will not be, registered under the Securities Act or the laws of any state
or other jurisdiction in the US. As a result of relying on the Regulation S exemption, the CDIs are ‘restricted securities’
under Rule 144 of the Securities Act. This means that you are unable to sell the CDIs into the US or to a US person for
the foreseeable future except in very limited circumstances after the expiration of a restricted period, unless the re-sale
of the CDIs is registered under the Securities Act or an exemption is available. To enforce the above transfer restrictions,
all CDIs issued bear a ‘FOR US’ designation on the Australian Securities Exchange (ASX). This designation restricts any
CDIs from being sold on the ASX to US persons. However, you are still able to freely transfer your CDIs on the ASX to
any person other than a US person. In addition, hedging transactions with regard to the CDIs may only be conducted in
accordance with the Securities Act.
• From the time of the Company’s admission to the ASX until 31 December 2019, the Company has used the cash and
assets in a form readily convertible to cash, that it had at the time of admission, in a way that is consistent with its
business objectives at that time.
• As described in section 9.3 of the Company’s replacement prospectus dated 14 August 2019, the Company is party to
certain royalty agreements with each of Dr. Henry Halperin and Dr. Ronald Berger entered into in 2007. Under the royalty
agreements, Imricor must pay a royalty to each of Dr. Halperin and Dr. Berger equal to 2% and 1% respectively, of the
gross revenues and fees received by the Company from the sale of Imricor’s products relating to the Company’s licence
agreement with Johns Hopkins University. In 2009, the parties agreed to the conversion of the royalties into a calculable
number of Shares. Accordingly, up to 4,800,000 Shares may be issued to Dr Halperin and up to 2,400,000 Shares may
be issued to Dr Berger (i.e. a total of up to 7,200,000 Shares) (Royalty Shares) upon the earlier of: (i) the acquisition
of the Company, (ii) the expiration of the licence with Johns Hopkins University (which expired on 12 April 2020), (iii)
the completion of an initial public offering of the Company’s securities pursuant to registration statement in the United
States, and (iv) mutual agreement to the conversion. The number of Royalty Shares will decrease as royalties are paid by
Imricor in cash.
No Royalty Shares were issued during the 2019 financial year or as at 6 April 2020. As the Company’s licence with Johns
Hopkins University expired on 12 April 2020, the Company expects to issue the Royalty Shares shortly. The number of
Royalty Shares issued will be slightly less than the maximum numbers set out above due to a small cash royalty paid by
Imricor to Dr Halperin and Dr Berger.
201 9 ANNUAL REPORT
49
VOTING RIGHTS
Every holder of Shares present in person or by proxy is entitled one vote for each Share held on the record date for the
meeting on all matters submitted to a vote of stockholders. Options and Warrants do not carry a right to vote.
CDI holders may attend and vote at the Company’s general meetings. The Company must allow CDI holders to attend
any meeting of stockholders unless relevant US law at the time of the meeting prevents CDI holders from attending those
meetings.
In order to vote at such meetings, CDI holders may:
•
•
instruct CDN, as the legal owner, to vote the Shares underlying their CDIs in a particular manner. A voting instruction
form will be sent to CDI holders with the notice of meeting or proxy statement for the meeting and this must be
completed and returned to the CDI Registry before the meeting.
inform the Company that they wish to nominate themselves or another person to be appointed as CDN’s proxy for the
purposes of attending and voting at the general meeting: or
• convert their CDIs into a holding of Shares and vote these at the meeting. Afterwards, if the former CDI holder wishes to
sell their investment on the ASX, the holder would need to convert the Shares back to CDIs. In order to vote in person,
the conversion of CDIs to Shares must be completed before the record date for the meeting. For information on the
process for converting CDIs to common stock, please contact the CDI registry.
One of the above steps must be undertaken before CDI holders can vote at stockholder meetings. CDI voting instruction
forms and details of these alternatives will be included in each notice of meeting or proxy statement sent to CDI holders.
l
y
n
o
e
s
u
l
a
n
o
s
r
e
p
r
o
F
50
IMRICOR ME DICAL SYS TEMS
CORPORATE DIRECTORY
Australian Legal Advisor
Johnson Winter & Slattery
Level 25, 20 Bond Street
Sydney NSW 2000 Australia
Telephone: +61 2 8274 9555
www.jws.com.au
U.S. Legal Advisor & Patent Attorney
Fox Rothschild LLP
Campbell Mithun Tower,
Suite 2000 222 South Ninth St.
Minneapolis, Minnesota 55402-3338
United States
Telephone: +61 612 607 7000
Auditor
Baker Tilly Virchow Krause, LLP
225 S. 6th St., Ste 2300
Minneapolis, Minnesota 55402-466
United States
Telephone: +1 612 876 4500
www.bakertilly.com
ASX Code
ASX:IMR
Website
www.imricor.com
Kobe Li
l
l
y
n
o
e
s
u
a
n
o
s
r
e
p
r
o
F
U.S. Office and Headquarters
Imricor Medical Systems, Inc.
400 Gateway Boulevard
Burnsville, Minnesota 55337
United States
Telephone: +1 952 818 8400
Board of Directors
Steve Wedan (Chief Executive Officer)
Mark Tibbles (Non-executive Director)
Doris Engibous (Non-executive Director)
Peter McGregor (Non-executive Director)
Local Agent & Company Secretary
Australian Registered Address
c/- Case Governance Pty Ltd
Level 13, 41 Exhibition Street,
Melbourne VIC 3000 Australia
CDI Registry
Computershare Investor
Services Pty Limited
GPO Box 2975
Melbourne, Victoria 3001
Australia
Telephone: 1300 850 505
(within Australia) or
+61 3 9415 4000 (outside Australia)
www.computershare.com
Share Registry
Computershare Trust Company, N.A.
250 Royal Street
Canton, Massachusetts 02021
United States
www.computershare.com
201 9 ANNUAL REPORT
iii
l
y
n
o
e
s
u
l
a
n
o
s
r
e
p
r
o
F
ideate
Co.
l
y
n
o
e
s
u
l
a
n
o
s
r
e
p
r
o
F