Imricor Medical Systems, Inc (ASX:IMR)
Annual Report 2021
Contents
Chair’s Message
Key Achievements & Core Strategies
European Customer Base
Geographic Expansion
Our Products
Timeline
Board of Directors
Executive Team
Operating & Financial Review
Directors Report
a. Remuneration Report
Financial Report
Additional Stockholder Information
Corporate Directory
2
4
6
8
10
12
14
16
18
20
23
27
52
iii
109%
Growth in Workforce
year over year
58
Patents
Produced by Imricor development team
169
Years of Combined Experience
8
Languages Spoken
ii – Imricor Medical Systems
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 US, 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 2021.
Annual Report 2021
AGM Details
Imricor will hold its Annual Meeting of Stockholders on
Wednesday 4 May 2022 at 9:00am, Sydney time (Tuesday 3 May
2022 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. To
participate online visit https://meetnow.global/MT5LJH7 on your
smartphone, tablet or computer. You will need the latest versions
of Chrome, Safari, Edge or Firefox. Please ensure your browser is
compatible.
Further details are provided to stockholders in Imricor’s Notice of
Annual Meeting.
“
We successfully increased
our customer base with
the signing of five new
hospitals during the year,
two of which were in
new markets for Imricor:
Hungary and Greece.”
”
1
Chair’s Message
Dear Shareholder,
On behalf of the Board of Directors, I am pleased to present Imricor’s
Annual Report for 2021.
Throughout the year, we continued to deliver on our strategic goals
while navigating the many challenges presented by the COVID-19
pandemic, and we find ourselves well positioned as we enter 2022.
The foundations of our mission to change the standard of care for
cardiac catheter ablation, and other life-changing and life-saving
interventions, are based on three key strategic pillars. First, we
are growing the customer base of sites that have Interventional
Cardiac Magnetic Resonance (iCMR) capabilities and are performing
procedures with our products. Secondly, we are working to increase
the number of different types of ablation procedures, known as
indications, doctors can perform with our products. This happens
through product development – making the new devices needed
for the procedures and working with third parties to develop other
needed equipment – and by gaining regulatory approval for the new
indications. Thirdly, we are working to broaden the geographic reach
of our products by pursuing regulatory approvals outside of our core
European markets, such as in the US, Australia and New Zealand.
Growing the Customer Base and Procedure Volumes
Throughout much of 2021, COVID-19 caused significant disruptions
in European hospital systems, which presented challenges for our
commercialisation efforts. For much of the year, most hospitals
across our core European markets were restricted from performing
elective procedures, such as atrial flutter ablations, and hospital
administrators found it difficult to consider adopting new technology
as resources and management time were focused on responding to
the pandemic.
Nonetheless, we successfully increased our customer base with the
signing of five new hospitals during the year, two of which were in
new markets for Imricor: Hungary and Greece. This brought the total
number of sites for us to 14 at year-end.
In addition, four of Imricor’s sites were operational throughout 2021,
performing procedures when pandemic-related restrictions allowed.
Expanding Indications and Product Development
Expanding the types of procedures, or indications, that our products
can be used to treat is a key strategic aim for Imricor, and is
exemplified by our plans to expand into the ablation of ventricular
tachycardia, or VT.
Ventricular tachycardia is an important arrythmia for us to target,
as it is one of the key procedures I had in mind when I founded the
Company in 2006, and I am pleased to report that we are poised to
make realtime iCMR VT ablations a reality.
In order to perform VT ablation in the iCMR environment, several
things were needed. First, we needed to develop a means for our
products to cross from the right side of the heart to the left side
of the heart. This is typically done via a maneuverer known as
transseptal puncture, which involves making a small hole in the
heart’s atrial septum through which devices are then advanced.
2 – Imricor Medical Systems
To facilitate transseptal puncture in the iCMR, Imricor developed an
MRI-compatible bi-directional steerable sheath, an MRI-compatible
actively tracked dilator for use with the sheath, and an MRI-
compatible transseptal needle. At the same time, we also designed a
non-actively tracked dilator that enables our sheath and needle to be
used for transseptal puncture in conventional labs as well.
In addition, we updated our Vision-MR ablation catheter to make
it more manoeuvrable in the heart’s ventricle, and also more
cost-effective to produce.
Finally, we needed to ensure the availability of the third-party
equipment required for VT ablations, namely an MRI-compatible
12-lead ECG system and an MRI-compatible cardioverter-
defibrillator.
The focus and dedication of our research and development team has
enabled us to solve the many challenges that come with developing
ground-breaking new technologies, and I am pleased to report that
our devices are now in the final stage of Design Verification Testing.
These devices are being readied for use in our planned VT ablation
clinical study, which is scheduled for this year.
Imricor also successfully expanded its relationship with key third-
party equipment providers during the year. Throughout 2021, our
relationship with MiRTLE Medical, LLC (MiRTLE), the maker of an
MRI-compatible 12-lead ECG system, continued to expand as we
concluded a joint development agreement to interface their system
with our Advantage-MR EP Recorder/Stimulator, followed by a sales
distribution agreement that allows us to sell MiRTLE’s system to
our customers, creating a more streamlined end-to-end process.
Finally, in late in 2021, we made a strategic investment in MiRTLE
that provided us with a small equity stake in MiRTLE itself, as well
as ownership of three systems we can use in our planned VT clinical
trial and other commercial rights.
Throughout the year we continued to work with a German
company Mammendorfer Institut für Physik und Medizin (MIPM),
as they developed an MRI-compatible cardioverter-defibrillator.
This relationship continued to grow in early 2022, and we recently
entered into a joint development agreement with MIPM to make its
system available for our planned VT clinical trial.
Upon a successful preclinical VT study in early 2022, Imricor will be
ready to make a submission to the European Competent Authorities
for approval to commence a clinical trial, which is designed to
provide the important clinical evidence demonstrating that iCMR
ablations with Imricor’s products are a safe and effective way to
treat patients with VT. Upon the successful completion of the
trial, it is expected that we will receive CE mark certification of the
expanded VT indication for our products. We continue to target the
end of 2023 for the expanded VT indications.
Broadening our Geographies
During the year, we achieved several milestones that support our
strategy to expand our geographic footprint.
In the US, we completed our pre-submission meetings with the Food
and Drug Administration (FDA) and the filing of our application for
an Investigational Device Exemption (IDE) to commence a clinical
Annual Report 2021
trial for iCMR atrial flutter ablation. Once the IDE is approved, we
can begin a US clinical trial that is designed to ultimately support FDA
approval of Imricor’s devices.
In Australia, we appointed the Regional Health Care Group
(RHCG) as our local agent to help facilitate the Therapeutic Goods
Administration (TGA) approval in Australia and Medsafe approval
in New Zealand. We have already received Medsafe approval for
all Imricor’s products in New Zealand, and our products have now
been registered in the WAND database for medical devices. We also
received TGA approval for Imricor’s Advantage-MR system.
Looking to the Year Ahead
As we enter 2022, our focus remains clear. First, we aim to continue
growing our customer base and our procedure rates. Secondly, we
will continue driving toward expanding our indications to encompass
VT. Third, we want to continue progressing toward approvals in the
US as well as Australia and New Zealand.
We have been very encouraged by the renewed engagement we
are seeing from physicians and hospitals across Europe in the early
part of 2022 as the effects of the COVID-19 pandemic diminish.
We expect to continue adding new sites to our customer base
throughout the year, and we are working with each site to get them
up and running as soon as possible. As a result, I am confident that
the year ahead will be more in line with our expectations prior to the
pandemic.
This year will also be exciting as we complete preclinical VT work,
apply for approval to start a VT clinical trial in Europe, and engage
with our clinical sites to execute the clinical trial. I very much look
forward to updating you on our progress throughout the year.
The prospects for expansions in the US, Australia and New Zealand
are also exciting, and while these regulatory processes are lengthy,
we will continue driving these forward throughout 2022.
I would like to acknowledge the tremendous work and achievements
of the Imricor team over 2021. Our team has met the challenges of
the past year with dedication, determination, and the shared belief
and focus that we are changing the world of interventional medicine.
On behalf of the Board and Management, I would like to thank our
employees for their continued commitment, hard work and resilience
through another challenging year. I am immensely proud of our
achievements and excited about our potential in the years ahead.
Finally, thank you to our shareholders for your continued support.
We look forward to updating you on our further success throughout
the year.
Steve Wedan
Executive Chair, President and CEO
Imricor Medical Systems, Inc.
“
This year will be
exciting as we complete
preclinical VT work, apply
for approval to start a VT
clinical trial in Europe, and
engage with our clinical
sites to execute the
clinical trial.
”
3
Key Achievements & Core Strategies
Delivering on our
Strategic Plan
1
More sites
to do procedures
2
More procedures
per site
3
Higher ASP and margin
improvement
Grow Customer Base
Expand Geographies
Expand Indications
New Product Development
Key achievements
Five new sites signed
Procedures
re-commenced across
four sites
4 – Imricor Medical Systems
Annual Report 2021
Key initiatives to support our Strategy
Regulatory Approval
Europe
Site Expansion
Hospital
Engagement
Strategic
Partnerships
Manufacturing
Grow sales & marketing
opportunities
Engagement with Key
Opinion Leaders
Growing exposure
through conferences
and journals
Regulatory Approval
US
Regulatory Approval
Australia
Regulatory Approval
New Zealand
Label Translation for
European countries
Ventricular Tachycardia (VT) indication
Integration with 3rd party systems
Active MR Tracking
Integration with 3rd party systems
Integration with 3rd party systems
Mirtle Medical
MRI compatible defibrillation system
Cardiac Biopsy
Steerable Sheath and
(Biopsy-MR Catheter)
Transeptal Needle
Diagnostic Catheter
Appointed a local
agent in Australia
Filed application for an
Investigational Device
Exemption with the FDA
Two new strategic
agreements signed
Successfully raised
A$17.5 million
5
European Customer Base
Site expansion plans underpinned by strong pipeline
Helios Hospital
Berlin-Buch
Germany
Helios Hospital Berlin-Buch, part of one of the largest hospital systems in
Germany, is the second Helios hospital to sign a purchase agreement with
Imricor to establish an iCMR lab to perform cardiac ablations. The equipment
was installed in January 2022, two training sessions have been completed and
first cases are expected to start in April.
Semmelweis University Heart and Vascular Centre signed on with Imricor to
establish an iCMR lab under the direction of Prof. Béla Merkely. Prof. Merkely is
an interventional cardiologist, Director of the Heart and Vascular Centre, as well
as Rector of Semmelweis University. He and his team are currently modifying
the iCMR lab set-up and expect to begin procedures as soon as possible with an
anticipated start during Q2 2022.
The prestigious German Heart Centre Berlin signed on in December of 2021 to
adopt Imricor’s iCMR ablation solutions. Their team is internationally known for
their leadership in cardiovascular magnetic resonance imaging and their CMR
Academy, which teaches courses for radiologists and cardiologists all over the
world. This site will be one of our primary Centres of Excellence for training.
They expect to begin performing procedures in Q2 and, as part of the Sana
Einkauf & Logistik Group (Sana), will purchase Imricor’s catheters and other
consumable devices under Imricor’s pricing agreement with Sana.
As a leading hospital in electrophysiology, as well as cardiovascular image
analysis, Charité expect to begin iCMR ablations in Q2 and will utilize the iCMR
lab at the German Heart Centre. As part of the Sana Group, they will also
purchase Imricor’s catheters and accessories under Imricor’s pricing agreement
with Sana.
Semmelweis
University
Heart and
Vascular
Centre
Hungary
German Heart
Centre Berlin
Germany
Charité
Medical
University
Virchow-
Klinikum
Campus
Germany
Henry Dunant
Hospital
Centre
Greece
Henry Dunant Hospital, one of the largest and most technologically advanced
hospital centres in Southeast Europe, is the first hospital in Greece to sign on
to outfit an existing MR facility for iCMR procedures. Installation is expected to
take place in April, and they plan to begin with Imricor’s iCMR ablation solutions
in early May under the direction of Prof. George Andrikopoulos, Director of
Electrophysiology. They plan to cooperate with other hospitals in Athens to
select patients for their atrial flutter procedures in the iCMR.
6 – Imricor Medical Systems
Annual Report 2021
Annual Report 2021
Heart Center
Dresden
Germany
Helios Leipzig Heart
Centre
Lübeck University
Hospital
Germany
Germany
Heart Center Dresden was the first
hospital to sign a commercialization
agreement with Imricor and began
the first cardiac arrhythmia ablations
in the iCMR in 2020.
Helios Leipzig Heart Centre, one
of Imricor’s Centres of Excellence,
started in 2020 and after slowdowns
due to COVID-19 has started again
doing procedures weekly.
Lübeck University Heart Center
signed on with Imricor in October
2020. Their new Clinic for
Rhythmology just re-opened in 2022
and expect to begin cases in Q3.
Rhön Clinic Bad
Neustadt Campus
Münster University
Hospital
Maastricht University
Medical Centre
Germany
Germany
The Netherlands
Rhön Clinic Bad Neustadt, who
signed on with Imricor in September
2020, will begin cases later in 2022
in their Radiology lab.
University Hospital in Münster
signed a purchase agreement in
October 2020. Covid restrictions
delayed their start until February
2022 and cases expect to ramp up
in April.
While a new iCMR lab is being built,
MUMC uses a diagnostic MRI suite
to do cardiac ablations with Imricor’s
products. Cases began in 2021 with
expected increases in 2022.
Amsterdam University
Medical Center (VUMC)
Haga
Hospital
South Paris Cardiovascular
Institute (ICPS)
The Netherlands
The Netherlands
France
VUMC, the first hospital in sign on
with Imricor to perform iCMR ablations
in The Netherlands, is converting a
diagnostic lab to an iCMR and expects
cases to restart in May 2022.
Haga Hospital was the first non-
university hospital to move toward
iCMR ablations. After a long pause
in procedures due to Covid-19, they
expect to restart cases in Q2.
ICPS is the first in France to adopt
Imricor’s technology for realtime iCMR
ablations. Cases started in 2021.
The business is well positioned, with an exciting outlook
as we work to expand our clinical sites, indications for our
products, our product range and geographic footprint.
7
Geographic Expansion
UNITED STATES
FDA strategy well advanced
Have submitted Investigational Device
Exemption with the FDA
Clinical trials planned for early 2023
EUROPE
CE mark received
14 signed sites across
five countries
VT Clinical trials expected in late 2022
14
4
9
Customer Sites
Continents positioned
Countries where we have a presence
8 – Imricor Medical Systems
T H E N E T H E R L A N DS
T H E N E T H E R L A N DS
Lübeck University Heart
Centre, UKSH
Lübeck University Heart
Centre, UKSH
Amsterdam University
Amsterdam University
Medical Centre
Medical Centre
Haga Hospital
Haga Hospital
Maastricht University
Medical Centre
Maastricht University
Medical Centre
South Paris
Cardiovascular
South Paris
Institute
Cardiovascular
Institute
F R A N C E
F R A N C E
AUSTRALIA &
NEW ZEALAND
Appointed Regional Health Care
Group (RHCG) in Australia to help
facilitate TGA and Medsafe approvals
Medsafe approval received for all
Imricor products in New Zealand
Received TGA approval on Imricor’s
Advantage-MR System
Münster University Hospital
Charité Medical University
Virchow-Kilinikum Campus
Helios Hospital Berlin Buch
German Heart Centre Berlin
Leipzig Heart Centre
Leipzig Heart Centre
Dresden Heart Centre
Münster
G E R M A N Y
University
Hospital
Rhön Clinic Bad Neustadt Campus
Dresden Heart Centre
Rhön Clinic Bad Neustadt Campus
G E R M A N Y
Semmelweis University
Heart and Vascular Centre
Semmelweis University
Heart and Vascular Centre
S W I T Z E R L A N D
S W I T Z E R L A N D
H U N G A RY
H U N G A RY
Henry Dunant Hospital Centre
Henry Dunant Hospital Centre
G R E EC E
G R E EC E
FRANCE
Clinical site established at South Paris Cardiovascular
Institute
THE NETHERLANDS
Clinical sites established at Haga Hospital, Amsterdam
UMC and Maastricht University Medical Centre
GERMANY
Eight clinical sites with signed purchase agreements
across Germany
Imricor products included in Sana GPO approved
catalogue of materials
SWITZERLAND
Imricor products included in Sana GPO approved
catalogue of materials
HUNGARY
Clinical site signed at Semmelweis University Heart
and Vascular Centre
GREECE
Clinical site signed at Henry Dunant Hospital Centre
9
Our Products
DESCRIPTION
TECHNICAL
SPECIFICATION
Vision-MR Ablation
Catheter
Advantage-MR EP
Recorder/Stimulator
System
Vision-MR Dispersive
Electrode
• The Vision-MR Ablation
Catheter is an MR-
Conditional (1.5T)
RF ablation catheter
containing patented
technology that allows
it to be used while the
patient is being actively
scanned with MRI. It
is designed to look,
feel, and function like
a traditional ablation
catheter.
• 9F (3.0mm) catheter with
a 4mm open-irrigated
deflectable tip and two
gold electrodes (1.3mm
spacing)
• 3.7mm tip electrode and
a 1.4mm ring electrode
• 2 MR-receive coils in the
distal end for realtime MR
active catheter imaging
• Advantage-MR EP
Recorder/Stimulator
System provides proven
technology that allows
the physician to utilize
both the EP recording
system and a cardiac
stimulator while ablating
within the iCMR
environment.
• The Vision-MR Dispersive
electrode is used with
the Advantage-MR EP
Recorder/Stimulator
system. It acts like
a standard ablation
dispersive electrode,
but also minimizes eddy
currents induced on the
device’s conductive pads
during MR scanning.
• Provides the functionality
of both a conventional EP
recording system and a
cardiac stimulator
• Compatible with the
Imricor Vision-MR
Ablation Catheter
• Dual-lobe dispersive
electrode used with a
detached cable
•
Includes adhesive
conductive gel (hydrogel)
to ensure full contact
with the patient’s skin
TYPE OF PRODUCT
• Disposable
• Capital Good
• Disposable
• Received CE mark January
• Received CE mark January
• Received CE mark January
2020
2016
2020
10 – Imricor Medical Systems
Annual Report 2021
NavTrac-MR Transseptal Kit
Vision-MR Diagnostic
Catheter
Biopsy Catheter
• The Imricor Biopsy-MR
Catheter is designed to
obtain intracardiac tissue
specimens while the
patient is being actively
scanned with MRI.
•
Innovative delivery sheath
design with best-in-class
torque transfer and
superior curve retention
through tortuous
anatomy.
• 7Fr catheter with an
actuatable forceps at
the tip
• 2 MR-receive coils in the
distal end for realtime MR
active catheter imaging
• The NavTrac-MR Transseptal Kit is a designed to access the
• The Vision-MR Diagnostic
Catheter is an MR-
Conditional (1.5T) 9F
diagnostic catheter
containing patented
technology that allows
it to be used while the
patient is being actively
scanned with MRI. It
facilitates sensing and
pacing during cardiac
electrophysiology
procedures.
• 9F (3.0mm) catheter with
a deflectable tip and two
gold electrodes (1.3mm
spacing)
• 1.5mm tip electrode and
a 1.4mm ring electrode
• 1 MR-receive coil in the
distal end for realtime MR
active catheter imaging
left atrium during iCMR EP procedures. NavTrac-MR includes
an actively tracked dilator to allow for precise anatomical
positioning during left-sided EP procedures.
NavTrac-MR name is currently going through the trademark
process
•
Includes trackable dilator, steerable sheath, and transseptal
needle
Deflectable/Steerable Sheath
• 16 F outside diameter
• Curl diameter 30mm
• Usable length 71cm
Actively TrackWSWWed Dilator
• Dilator outside diameter .152”
• 2 MR-receive coils in the distal end for realtime MR active
catheter imaging. (Coil spacing 5mm)
• Dilator reveal length .97”
Needle
• Tip outer diameter: 0.028”
• Overall Length (including handle): 43.4”
• Useable Length (just tubing with tip): 41.1”
• Hollow shaft to allow a guidewire to pass through to facilitate
access to the atrial septum
• Needle reveal of .275”
• Disposable
•
In development
• Disposable
•
In regulatory review with
Notified Body
• Disposable
•
In development
11
Timeline
Commenced
procedures across
Helios Leipzig
Heart Centre,
Dresden Heart
Centre, Maastricht
University
Medical Centre
and South Paris
Cardiovascular
Institute
Imricor
signs its first
commercialisation
contract in
Netherlands with
the Amsterdam
University Medical
Centre.
HISTORICAL
2021
Signed new
purchase
agreement with
Helios Hospital
Berlin Buch
Received
Medsafe
approval for
all products in
New Zealand
Signed a Sales
Agreement with
NordicNeuroLab
Successfully
raised A$17.5
million in an
institutional
placement
and security
purchase plan
Filed an
application for
an Investigational
Device Exemption
(IDE) from the US
Food and Drug
Administration
(FDA)
IPO Launched
1: Signed
distribution
agreement
with Regional
Health Care
Group (RHCG)
Received TGA
approval for
Imricor’s MR-
Advantage
System
Registered all
products in the
WAND database
for medical
devices in New
Zealand
Signed a Sales
Distribution
Agreement with
MiRTLE Medical
New lab adoption
at Semmelweis
University in
Hungary
1: Regional Health Care Group (RHCG)
In March, the Company entered into a Distribution Agreement with
Regional Health Care Group (RHCG) in Australia and New Zealand.
Under the terms of the agreement, RHCG will be the exclusive
distributor of Imricor’s consumable products, and non-exclusive
distributor of Imricor’s capital equipment. RHCG will also help facilitate
the necessary regulatory approvals and support of Imricor’s products.
12 – Imricor Medical Systems
Annual Report 2021
Signed new
agreement
with German
Heart Centre
Berlin
Munster
University
Hospital
First iCMR
Procedure
Started VT
Ablation
preclinical
study
TGA
approval in
Australia
CE Mark
approval
for VT
ablations
in Europe
Myocardial
Biopsy
system
moves into
next phase
EARLY 2022
FUTURE
2: Strategic
investment
made in
MiRTLE
Medical
Added Charité
Medical University
Virchow-Klinikum
Campus
3: Signed
fourteenth
site at Henry
Dunant
Hospital
Centre
Imricor
iCMR
Ablation
Summit
Transseptal
needle &
steerable sheath
(NavTrac-MR
used in VT pre-
clinical study)
Commercial
release of
Diagnostic
catheter
Atrial Flutter
Ablations
approval in
the US
2: MiRTLE Medical
Imricor first partnered with MiRTLE in October 2017 with the
establishment of a Joint Development Agreement to work on
interfacing MiRTLE’s 12-lead ECG system with Imricor’s Advantage-MR
EP Recorder/Stimulator in the MRI environment. In September this year,
the Company announced the expansion of its relationship with MiRTLE
through the establishment of a Sales Distribution Agreement, under
the terms of which Imricor is a non-exclusive distributor of MiRTLE’s
12-lead ECG system.
3: Henry Dunant Hospital Centre
The Company signed an Equipment and Disposable Pricing Agreement
in December with the Henry Dunant Hospital Centre, one of the
largest and most technologically advanced hospital centres in
Southeast Europe, making it the fourteenth Imricor site in Europe and
the first in Greece.
13
Board of Directors
Steve Wedan
President and Chief
Executive Officer, and Chair
Mark Tibbles
Deputy Chair and Lead Independent Director
Joined Board in May 2006
Chair of the Nomination and Remuneration Committee
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.
Member of the Audit and Risk Committee
Joined Board in September 2014
Mr Wedan has over 30 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 Board of Directors of Medical
Device Research Forum, Inc. and Water Rescue Innovations, Inc., as
well as the Advisory Board of Poiesis Medical, LLC.
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.
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 a Board member of THE NERDERY, LLC,
OMEDZA.com, Inc., Poiesis Medical LLC’s Chief Strategy Officer and
Executive Committee Member, the Managing Director of Strategic
Stage Ventures, LLC.
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 holds a Bachelor of Arts from Oral Roberts University.
14 – Imricor Medical Systems
Annual Report 2021
Peter McGregor
Non-executive Director
Anita Messal
Non-Executive Director
Chair of the Audit and Risk Committee
Member of the Audit and Risk Committee
Member of the Nomination and Remuneration Committee
Member of the Nomination and Remuneration Committee
Joined Board in May 2019
Joined Board in March 2021 and will stand for election at
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 Chairman of Nutrano Produce Group Pty Ltd, and is a
director of Pivotal Systems Corporation (ASX: PVS) and the Brisbane
Lions Australian Football Club.
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.
Ms. Messal currently serves as the Chief Integration Officer
at AccentCare where she is responsible for the successful
integration of merged and acquired entities across all areas
of the business, while delivering upon expected synergy.
Ms. Messal has over 35 years of experience in the health care and
benefits industry. Prior to AccentCare, she most recently served as
President & Chief Operating Officer of PlanSource.In this role she was
responsible for company technology & operations including all aspects
of Technology, Product, Service Delivery, Legal, and Human Resources.
Anita has experience in health plan services, health care
delivery, care management, and benefits administration. She
has worked with self-funded, fully insured and CMS funded
care. Her customers and partners include large and mid-
size employers, health plans, insurance carriers, brokers,
resellers, enterprise software companies and consumers.
Ms. Messal has participated in fund raising from start-up through
IPO and sale to strategic buyers and private equity. Anita has worked
in both F100 and start-up companies with experience in public,
private and non-profit businesses. Her experience includes working
in domestic and international markets, with time spent developing
programs and partnerships in the United Kingdom and Europe.
15
Executive Team
Steve Wedan
President and
Chief Executive Officer, & Chair
Refer to page 12.
16 – Imricor Medical Systems
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
35 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 Incstar) and
spent the first seven years
of her career with KPMG.
Ms Milbrandt currently
serves on the board of
the Minneapolis Heart
Institute Foundation.
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
Chief Operating
Officer
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.
Mr Stenzel commenced
his role as Chief Operating
Officer in January 2021
and is responsible for
leading the execution of
Imricor’s strategic plan
across most functional
areas of the business.
Mr Stenzel was previously
Imricor’s Vice President
of Operations with
responsibility for the
Company’s operations
and the development of
manufacturing strategies,
including personnel,
facilities and outsourcing.
He has over 20 years of
medical device experience
with deep knowledge
in new product
development, supply chain
management, quality and
regulatory systems and
customer support.
Prior to joining Imricor in
2007, 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.
Annual Report 2021
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
Nick Twohy
Vice President
of Marketing
Greg Englehardt
Tyler Sheeley
Executive Director
of Sales
Director of
Operations
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.
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.
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.
Mr Sheeley joined
Imricor in 2021
and is responsible
for developing and
leading operations
strategies related
to manufacturing,
procurement, IT, and
field service.
Prior to joining Imricor,
Mr Sheeley worked at
Altec Inc since 2009
where he was promoted
to several leadership
roles including multiple
Plant Manager positions.
Mr Sheeley holds a
Bachelor of Science in
Electrical Engineering
(summa cum laude) from
the Missouri University of
Science and Technology.
17
Operating & Financial Review
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 realtime 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 (iCMR) 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, Philips and Siemens. In addition, the Company has a sales
distribution agreement with Philips.
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 estimated to be in excess of US$5.5 billion
worldwide, with a CAGR of 8.2%. 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
across Europe, with fourteen sites having executed purchased agreements across Germany, The Netherlands, France, Hungary, and Greece.
Imricor aims to expand its customer base with dedicated European sales team targeting clinical sites across these and other European
countries.
Within each targeted country, Imricor will first target ablation centres which historically have carried out larger volumes of procedures
or which have influential key opinion leaders. Imricor believes targeting locations which are geographically proximate to existing clinical
sites may also promote growth.
In Australia, Imricor has entered into a distribution agreement with Regional Health Care Group (RHCG), based in Sydney, who will be the
exclusive distributor of Imricor’s consumable products and a non-exclusive distributor of Imricor’s capital equipment. RHCG will also help
facilitate the necessary regulatory approvals and support of Imricor’s products.
In the United States, Imricor has applied for an Investigational Device Exception (IDE) from the US Food and Drug Administration.
Upon approval of the IDE, the Company will be allowed to initiate a clinical trial designed to demonstrate the safe and effective use
of its prodcuts for the treatment of type 1 atrial flutter.
In conjunction with organic growth across existing products, the Company is targeting growth through expanding its product line, providing
the opportunity for Imricor’s products to be used across a broader range of MR-guided interventional procedures (i.e. beyond type 1 atrial
flutter).
18 – Imricor Medical Systems
Annual Report 2021
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 on the outcome.
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.
Financial performance
For the year ended 31 December 2021, the Company generated revenue of US$0.696 compared to US$0.702 million for the previous
corresponding period. Imricor reported a net loss of US$19.733 million (FY20 US$12.446 million). This net loss increased from the prior
year due to higher operating costs associated with R&D prototyping and testing, additional staffing and an increase in inventory reserves.
Financial position
For the 12-month period ending 31 December 2021, Imricor’s net cash outflow from operations was US$17.489 compared to US$12.231
million for the prior year. Net cash outflows from investing activities of US$0.695 were down slightly compared to US$0.774 million for the
prior year.
Net cash inflows from financial activities of US$11.586 were predominately associated with Imricor’s September placement and the October
Security Purchase Plan.
At 31 December 2021, Imricor maintained a cash balance of US$18.516 million (FY20 $US25.140 million) which supports the continuation of
its commercialisation plans and growth strategy.
19
Directors’ Report
Principal activities
Imricor is a US-based medical device company focused on addressing 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
During the year, the Company began resuming in-person sales, marketing and physician education activities as local restrictions implemented
in response to the COVID-19 pandemic were eased. Other internal adjustments made during 2020 in response to the pandemic were
reevaluated and updated to protect the health and safety of our employees while continuing the progression of the Company’s strategic plans
of geographic expansion, indication expansion, and product development.
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 18 to 19 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
Anita Messal
*Resigned on 1 March 2021.
Appointed
May 2006
September 2014
April 2019
May 2019
March 2021
The specific duties, qualifications and experience of each Director are set out on pages 14 to 15 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.
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
Board
Audit & Risk Committee
Nomination &
Remuneration Committee
Steve Wedan
Mark Tibbles
Doris Engibous
Peter McGregor
Anita Messal
Held
Attended
Held
Attended
Held
Attended
5
5
1
5
4
5
5
1
5
4
-
6
2
6
4
-
6
2
6
4
-
5
3
5
2
-
5
3
5
2
Held: represents the number of meetings held during the time the director held office or was a member of the relevant committee.
Mr Wedan is an invitee and attends the Audit & Risk Committee and Nomination & Remuneration Committee meetings.
20 – Imricor Medical Systems
Annual Report 2021
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
Peter McGregor
Anita Messal
Directors’ directorships in other listed entities
Please refer to the Board of Directors section above.
Dividends
No dividends were paid or declared by Imricor during the year.
Number of
Shares
Number of
Options
4,599,733
2,144,241
4,756,878
Nil
Nil
526,806
246,906
38,340
Subsequent events
On 10 February 2022, the Company announced the scheduled retirement of Lori Milbrandt as its Chief Financial Officer, effective 30 June
2022 and the appointment of Jonathon Gut as the incoming Chief Financial Officer, effective 1 July 2022.
Likely developments
Imricor will continue to pursue its product and geographic-led growth strategy, with a focus on product distribution and the establishment of
new customer sites in existing markets, as well as expansion into new markets.
Due to the continued effects of the COVID-19 pandemic, such as hospital restrictions on external personnel and quarantine requirements for
hospital staff who test positive for, or have been exposed to, the virus, Imricor has experienced delays in the establishment of European clinical
sites in which its products can be used to perform cardiac catheter ablation procedures..
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.
21
Directors’ Report (cont.)
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 has 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 audit and other services:
Taxation services
Audit or review of the financial statements
2021 US$
2020 US$
8,245
98,171
9,730
92,515
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.
Steve Wedan
Chairman
8 April 2022
22 – Imricor Medical Systems
Remuneration Report
Imricor is a Delaware corporation headquarted in Minnesota that is listed on the Australian Securities Exchange and as such is subject to
remuneration disclosure requirements 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;
– Chief Operating Officer (COO), Gregg Stenzel; 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, COO, Gregg Stenzel 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 (to March 2021)
and Peter McGregor. Anita Messal replaced Doris Engibous in March 2021.
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 2021. These services were provided to the Nomination and Remuneration Committee free from any undue influence by
management. The total amount incurred to 21-Group in 2021 was US$1,750.
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.
2021 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.
23
Remuneration Report (cont.)
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 2021 the maximum target opportunity was 50% for the President and CEO, Steve Wedan, 40% for the
COO, Gregg Stenzel, and 30% for the CFO, Lori Milbrandt.
Performance targets determined by the Board in relation to 2021, were based 50% on cash management, clinical study enrollment and
successful implementation of an electronic Quality Management System and 50% based upon departmental objectives. Commercialization
efforts continued to be negatively impacted due to COVID in 2021. As such the Board exercised discretion in granting short-term incentives
for 2021 in recognition of the achievements delivered by the management team during the year, including signing of 5 additional labs,
re-commencing produres at four sites, filing an application for an Investigational Device Exemption from the US Food and Drug Adminstration,
appointing a local agent in Australia, executing various strategic agreements, and completing a financing.
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.
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 employee contributions
made to the 401(k) Plan to a maximum of 4% of the employee’s annual income.
Share options
Options granted
The following options were granted during FY21:
• 185,000 options with exercise price of US$1.61, expiring 7 April 2031
• 449,200 options with exercise price of US$1.55, expiring 5 May 2031
• 1,075,483 options with exercise price of US$1.57, expiring 7 May 2031
• 2,000 options with exercise price of US$1.55, expiring 10 May 2031
• 8,800 options with exercise price of US$1.55, expiring 17 May 2031
24 – Imricor Medical Systems
Annual Report 2021
Unissued shares
At the date of this report, unissued Shares under option are:
Expiry date
17 June 2023
19 May 2024
15 July 2025
15 March 2029
30 August 2029
17 December 2029
6 January 2030
18 January 2030
20 February 2030
13 May 2030
14 July 2030
7 October 2030
7 April 2031
5 May 2031
7 May 2031
10 May 2031
17 May 2031
10 February 2032
Exercise price US$
Time-Based
Performance-Based
Total Number of Shares
0.600
0.600
0.730
0.520
0.980
0.750
0.800
0.800
1.140
0.890
1.100
1.960
1.610
1.550
1.570
1.550
1.550
0.650
60,000
60,000
124,000
5,311,662
635,000
450,000
225,603
25,000
25,000
844,300
100,000
110,000
185,000
394,000
120,132
2,000
8,800
205,000
-
-
-
-
-
-
202,349
-
-
689,424
-
-
-
-
889,383
-
-
-
60,000
60,000
124,000
5,311,662
635,000
450,000
427,952
25,000
25,000
1,533,724
100,000
110,000
185,000
394,000
1,009,515
2,000
8,800
205,000
These options do not entitle the holder to participate in any share issue of the Company.
Shares issued on exercise of options
During FY21 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
50,995*
50,000
33,639
50,625
US$0.00
US$0.50
US$0.52
US$0.98
*Shares were issued as part of a cashless exercise, as approved by the Board under the 2006 Plan
25
Remuneration Report (cont.)
Executive remuneration during the year
The remuneration of key management personnel in respect of the financial year ended 31 December 2021 is summarised below.
Executive
Steve Wedan
President and CEO
Gregg Stenzel
COO
Lori Milbrandt
CFO
Base salary Short-term Incentive1
Long-term incentive
US$464,000
US$276,000
US$315,000
US$112,738
24% of base salary
304,254 options granted on 7 May 2021 at an exercise
price of US$1.572
US$60,168
22% of base salary
161,372 options granted on 7 May 2021 at an exercise
price of US$1.572
US$61,425
20% of base salary
190,718 options granted on 7 May 2021 at an exercise
price of US$1.572
1. Determined at the discretion of the Board as discussed above and paid in January 2022.
2. 2021 Options:
Tranche
Percentage of
2021 Options
Vesting Conditions
1
2
3
50%
First sale of product in the United States following FDA approval
25%
First sale of product in Australia following TGA approval
25%
First sale of product for use in a Ventricular Tachycardia ablation procedure following CE Mark approval
Non-executive Directors (NED)
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 NED fees at a level that provides the Company with the ability to attract and retain NED of high calibre with relevant
professional expertise and reflects the demands that are made on, and the responsibilities of, the NED, while incurring a cost that is acceptable
to stockholders. As Imricor’s operations are in the initial stages of commercialisation, the Company has structured NED fees to include both
cash remuneration and options in order to maintain appropriate remuneration structures and preserve cash flow. Options issued to NED do
not have performance hurdles attached.
NED serving on the board of directors will receive US$65,000 in annual fees. Committee chairs will receive an additional US$10,000 in annual
fees. Committee members will receive an additional US$5,000 in annual fees. All fees for Australian NED are inclusive of superannuation. The
Chairman, Mr Steve Wedan, receives no remuneration.
The remuneration of Non-Executive Directors in respect of the financial year ended 31 December 2021 is summarised below:
Non-Executive Director
Peter McGregor
Doris Engibous2
Mark Tibbles
Anita Messal2
1. The options shall vest over four years 25% on each anniversary of grant date.
2. Doris Engibous resigned on 1 March 2021 and Anita Messal was appointed on 1 March 2021.
Cash fees
US$80,000
US$12,500
US$80,000
US$62,500
Options Granted1
40,896
Nil
40,896
38,340
26 – Imricor Medical Systems
Annual Report 2021
IMRICOR MEDICAL SYSTEMS, INC.
Minneapolis, Minnesota
Including Independent Auditors' Report
As of and for the years ended December 31, 2021 and 2020
27
IMRICOR MEDICAL SYSTEMS, INC.
TABLE OF CONTENTS
Independent Auditors' Report
Financial Statements
Balance Sheets
Statements of Operations
Statements of Stockholders' Equity
Statements of Cash Flows
Notes to Financial Statements
1
3
4
5
6
7 - 23
28 – Imricor Medical Systems
Independent Auditors’ Report
Independent Auditors' Report
To the Stockholders and Board of Directors of
Imricor Medical Systems Inc.
Opinion
We have audited the financial statements of Imricor Medical Systems, Inc., which comprise the balance
sheets as of December 31, 2021 and 2020 and the related statements of operations, stockholders' equity and
cash flows for the years then ended and the related notes to the financial statements.
In our opinion, the accompanying financial statements present fairly, in all material respects, the financial
position of Imricor Medical Systems, Inc. as of December 31, 2021 and 2020 and the results of its operations
and its cash flows for the years then ended in accordance with accounting principles generally accepted in the
United States of America.
Basis for Opinion
We conducted our audits in accordance with auditing standards generally accepted in the United States of
America (GAAS). Our responsibilities under those standards are further described in the Auditors'
Responsibilities for the Audit of the Financial Statements section of our report. We are required to be
independent of Imricor Medical Systems, Inc. and to meet our other ethical responsibilities, in accordance
with the relevant ethical requirements relating to our audits. We believe that the audit evidence we have
obtained is sufficient and appropriate to provide a basis for our audit opinion.
Substantial Doubt About the Company's Ability to Continue as a Going Concern
The accompanying financial statements have been prepared assuming that the Company will continue as a
going concern. As discussed in Note 2 to the financial statements, the Company has incurred recurring losses
from operations, has an accumulated deficit and has stated that substantial doubt exists about the Company's
ability to continue as a going concern. Management's evaluation of the events and conditions and
management's plans regarding these matters are also described in Note 2. The financial statements do not
include any adjustments that might result from the outcome of this uncertainty. Our opinion is not modified
with respect to this matter.
Responsibilities of Management for the Financial Statements
Management is responsible for the preparation and fair presentation of the financial statements in accordance
with accounting principles generally accepted in the United States of America and for 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.
In preparing the financial statements, management is required to evaluate whether there are conditions or
events, considered in the aggregate, that raise substantial doubt about Imricor Medical System Inc.'s ability to
continue as a going concern within one year after the date that the financial statements are available to be
issued.
1
29
Baker Tilly US, 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.
Independent Auditors’ Report (cont.)
Auditors' Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free
from material misstatement, whether due to fraud or error and to issue an auditors' report that includes our
opinion. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not
a guarantee that an audit conducted in accordance with GAAS will always detect a material misstatement
when it exists. The risk of not detecting a material misstatement resulting from fraud is higher than for one
resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations or the
override of internal control. Misstatements are considered material if there is a substantial likelihood that,
individually or in the aggregate, they would influence the judgment made by a reasonable user based on the
financial statements.
In performing an audit in accordance with GAAS, we:
Exercise professional judgment and maintain professional skepticism throughout the audit.
Identify and assess the risks of material misstatement of the financial statements, whether due to
fraud or error and design and perform audit procedures responsive to those risks. Such procedures
include examining, on a test basis, evidence regarding the amounts and disclosures in the financial
statements.
Obtain an understanding of internal control relevant to the audit 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 Imricor Medical System Inc.'s internal control. Accordingly, no such opinion is
expressed.
Evaluate the appropriateness of accounting policies used and the reasonableness of significant
accounting estimates made by management, as well as evaluate the overall presentation of the
financial statements.
Conclude whether, in our judgment, there are conditions or events, considered in the aggregate,
that raise substantial doubt about Imricor Medical System Inc.'s ability to continue as a going
concern for a reasonable period of time.
We are required to communicate with those charged with governance regarding, among other matters, the
planned scope and timing of the audit, significant audit findings and certain internal control–related matters
that we identified during the audit.
Minneapolis, Minnesota
February 23, 2022
2
30 – Imricor Medical Systems
Balance Sheets
As of 31 December 2021 and 2020
ASSETS
2021
2020
CURRENT ASSETS
Cash
Accounts receivable
Inventory
Prepaid expenses and other current assets
Total Current Assets
$ 18,516,208
94,735
2,582,813
1,505,556
$ 25,139,812
223,237
3,069,920
491,628
22,699,312
28,924,597
ACCOUNTS RECEIVABLE-LONG TERM
201,544
238,749
PROPERTY AND EQUIPMENT, NET
OTHER ASSETS
2,951,924
363,676
3,094,721
515,984
OPERATING LEASE RIGHT OF USE ASSETS
647,951
795,365
TOTAL ASSETS
$
26,864,407
$
33,569,416
LIABILITIES AND STOCKHOLDERS' EQUITY
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
$ 686,724
1,354,428
175,286
186,498
332,157
-
$ 529,132
1,068,908
40,202
189,143
8,886
462,961
2,735,093
2,299,232
Other long-term liabilities
Contract liabilities, net of current portion
Operating lease liabilities, net of current portion
Finance lease liability, net of current portion
Financing obligation, net of current portion
-
509,604
992,319
226,677
-
67,395
549,806
1,168,644
19,274
649,015
Total Liabilities
4,463,693
4,753,366
COMMITMENTS AND CONTINGENCIES (NOTE 6)
STOCKHOLDERS' EQUITY
Preferred stock, $0.0001 par value:
25,000,000 shares authorized and 0 shares outstanding as of both
December 31, 2021 and 2020
Common stock, $0.0001 par value:
-
-
535,000,000 shares authorized as of both December 31, 2021 and 2020 and
143,234,637 and 125,549,550 shares issued and outstanding as of
December 31, 2021 and 2020, respectively
Additional paid-in capital
Accumulated deficit
Total Stockholders' Equity
14,324
94,991,107
(72,604,717)
22,400,714
12,556
81,675,671
(52,872,177)
28,816,050
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
$
26,864,407
$
33,569,416
See accompanying notes to financial statements
Page 3
31
Statements of Operations
For the years ended 31 December 2021 and 2020
REVENUES
Product revenues
Service revenue
Consulting revenue
Government contract revenue
Total Revenue
COSTS AND EXPENSES
Cost of goods sold
Sales and marketing
Research and development
General and administrative
Total Costs and Expenses
2021
$ 371,340
69,223
-
255,704
696,267
2020
$ 468,263
38,009
100,000
95,889
702,161
2,592,191
2,868,360
9,675,493
5,819,622
20,955,666
1,099,833
1,683,653
5,546,324
4,328,611
12,658,421
Loss from Operations
(20,259,399)
(11,956,260)
OTHER INCOME (EXPENSE)
Interest income
Employee retention credit (NOTE 1)
Foreign currency exchange loss
Interest expense
Other expense
16,725
757,714
(42,990)
(108,849)
(95,741)
29,237
-
(198,398)
(300,637)
(20,415)
Total Other Income (Expense)
526,859
(490,213)
NET LOSS
$ (19,732,540)
$ (12,446,473)
EARNINGS PER SHARE:
Basic and diluted loss per common share
Basic and diluted weighted average shares
outstanding
$ (0.15)
$ (0.11)
130,801,707
110,137,915
See accompanying notes to financial statements
Page 4
32 – Imricor Medical Systems
Statements of Stockholders’ Equity (Deficit)
For the years ended 31 December 2021 and 2020
Common Stock
Additional
Total
Shares
Amount
Paid-in
Capital
Accumulated
Stockholders’
Deficit
Equity
BALANCES, December 31, 2019
92,682,535
$9,268
$47,449,853
$(40,425,704)
Stock-based compensation expense
Exercise of warrants, net of fees
Exercise of stock options, net of fees
Issuance of royalty conversion shares
-
406,849
413,333
7,197,634
Issuance of common stock, net of issuance costs
paid in cash of $1,863,233
24,849,199
Net loss
-
-
41
41
720
2,486
-
821,952
295,384
174,154
(720)
32,935,048
-
-
-
-
-
$7,033,417
821,952
295,425
174,195
-
32,937,534
-
(12,446,473)
(12,446,473)
BALANCES, December 31, 2020
125,549,550
$12,556
$81,675,671
$(52,872,177)
$28,816,050
Stock-based compensation expense
Exercise of stock options, net of fees
Issuance of common stock, net of issuance costs
paid in cash of $716,863
Net loss
-
185,259
17,499,828
-
-
18
1,750
-
1,149,598
87,828
12,078,010
-
-
-
1,149.598
87,846
12,079,760
-
(19,732,540)
(19,732,540)
BALANCES, December 31, 2021
143,234,637
$14,324
$94,991,107
$(72,604,717)
$22,400,714
See accompanying notes to financial statements
Page 5
33
Statements of Cash Flows
For the years ended 31 December 2021 and 2020
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss
Adjustments to reconcile net loss to net cash flows from operating
2021
2020
$ (19,732,540)
$ (12,446,473)
activities
Depreciation
Stock-based compensation expense
Loss on disposal of property and equipment
Change in inventory reserves
Foreign currency exchange loss
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
Equity investment
Purchases of property and equipment
Net Cash Flows from Investing Activities
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from exercise of options and warrants
Payments on financing obligation
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
689,114
1,149,598
82,970
668,464
42,990
154,062
(181,357)
(823,616)
148,762
218,125
94,882
(17,488,546)
-
(69,560)
(625,745)
(695,305)
87,846
(337,804)
12,079,760
(243,498)
11,586,304
(6,597,547)
25,139,812
(26,057)
528,089
821,952
-
209,852
198,398
71,378
(2,059,156)
(24,958)
(281,175)
768,806
(17,402)
(12,230,689)
(32,146)
-
(741,886)
(774,032)
469,620
(374,023)
32,937,534
(8,420)
33,024,711
20,019,990
5,048,893
70,929
CASH - End of Year
$ 18,516,208
$ 25,139,812
Supplemental cash flow disclosure
Cash paid for interest
Noncash investing and financing activities
Leasehold improvements paid by landlord
Operating lease right of use asset
$ 176,674
$ 300,637
$ -
$ -
$ 595,534
$ 606,277
See accompanying notes to financial statements
Page 6
34 – Imricor Medical Systems
Notes to Financial Statements
As of and for the years ended 31 December 2021 and 2020
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 Magnetic Resonance Imaging (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. 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 revenue from licensing some of its IP for use in implantable devices and
performing contract research but expects to generate most of its future revenue 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, which is also the
functional currency.
Impact of COVID-19 Pandemic
During the years ended December 31, 2021 and 2020, the Company’s revenue was impacted by the COVID-
19 pandemic. The Company has continued to observe intermittent suspension of many elective procedures
associated with various surges in COVID-19. Its products treat conditions that are considered elective. The
impact of COVID-19 has varied by region and by healthcare facility. Lab adoption and procedure volumes have
continued to be constrained. While restrictions on elective procedures have now been lifted, the most seriously
ill patients are being prioritized over elective procedures, including procedures with our product. There have
been shortages of personnel at hospitals which has hampered the ability to perform our procedures. While
much of Europe is moving to exit emergency measures, we are unable to accurately predict the full impact that
COVID-19 will have on our results from operations, financial condition, liquidity, and cash flows due to numerous
uncertainties, including the duration and severity of the pandemic and containment measures, the emergence
of new variants, and the impact on our customers and our vendors, for an indefinite period of time. Our future
results of operations and liquidity could be adversely impacted by delays in payments from customers, supply
chain disruptions, expiration of inventory, product design changes, and uncertain demand.
We will continue to monitor the situation and take further actions that we determine are in the best interest of
our stakeholders.
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.
Page 7
35
Notes to Financial Statements (cont.)
As of and for the years ended 31 December 2021 and 2020
NOTE 1 - Summary of Significant Accounting Policies (cont.)
Accounts Receivable and Customer Concentrations
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. 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 provides 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 significant write-offs
or significant deterioration of its accounts receivable aging, and therefore, no allowance for doubtful accounts
was considered necessary as of December 31, 2021 or 2020. During the year ended December 31, 2021,
the Company had sales from 3 customers that accounted for 67% of revenue and accounts receivable from
3 customers that represented 96% of the accounts receivable balance. During the year ended December 31,
2020, the Company had sales from 5 customers that accounted for 80% of revenue and accounts receivable
from 2 customers that represented 96% of the accounts receivable balance.
Accounts receivable includes unbilled receivables of $37,205 and $38,321 as of December 31, 2021 and
2020, respectively, which represents the current portion of minimum royalties due to the Company during the
following year. The accounts receivable-long term relates to minimum royalties due to the Company for years
ending after December 31, 2022.
Inventory
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. Inventories are as follows as of December 31, 2021
and 2020:
Raw materials
Work in process
Finish goods
Less: excess and obsolescence reserves
December 31,
2021
$ 1,476,630
549,303
1,512,106
(955,226)
$ 2,582,813
2020
$ 1,216,964
423,666
1,716,052
(286,762)
$ 3,069,920
The Company utilizes significant estimates in determining the realizable value of its inventory, including the
future revenue forecasts that will result in product sales. These estimates have a corresponding impact on
the inventory values recorded as of December 31, 2021 and 2020. Management continually evaluates the
likelihood of future sales based on current economic conditions, restrictions on ability for customers to perform
elective procedures, expiration timing of products, and product design changes prior to sale of product on
hand. If actual conditions are less favorable than those we have projected, we may need to increase our
reserves for excess and obsolete inventories. Any increases in our reserves will adversely impact our results
of operations. The establishment of a reserve for excess and obsolete inventory establishes a new cost basis
in the inventory. Future sales of inventory on hand at December 31, 2021 will result in recognition of cost of
sales based on initial inventory costs, net of reserves taken for expected realization values.
The Company recognizes an expense for commitments of inventory purchases that will not provide future
economic benefit when that is known. Based upon estimates of future demand for its products, and the timing
of future generation products, the Company recorded an expense of $212,931 for the year ended December
31, 2021, which is included in Cost of goods sold on the statement of operations and Accrued expenses on
the balance sheet.
Page 8
36 – Imricor Medical Systems
Annual Report 2021
NOTE 1 - Summary of Significant Accounting Policies (cont.)
Property and Equipment
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
Lesser of useful life or remaining lease term
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.
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 and financing
obligations and an equity investment made during the year ended December 31, 2021.
Other Long-term Liabilities
A certain portion of the Company’s share of Social Security tax was deferred in accordance with The
Coronavirus, Aid, Relief and Economic Security Act and was included in other long-term liabilities for the year
ended December 31, 2020.
Patents
Expenditures for patent costs are charged to operations as incurred.
Page 9
37
Notes to Financial Statements (cont.)
As of and for the years ended 31 December 2021 and 2020
NOTE 1 - Summary of Significant Accounting Policies (cont.)
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 130,801,707 and 110,137,915 for
the years ended December 31, 2021 and 2020, 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 options 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, 2021 and 2020.
Foreign Currency Exchange Gains (Losses)
During the years ended December 31, 2021 and 2020, the Company had accounts payable that are
denominated in both Australian dollars and Euros and cash accounts and accounts receivable denominated in
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).
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.
Revenue Recognition
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.
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.
Page 10
38 – Imricor Medical Systems
Annual Report 2021
NOTE 1 - Summary of Significant Accounting Policies (cont.)
Royalties
On June 1, 2012, the Company licensed certain intellectual property to a customer which included a royalty of
3% of product sales, subject to a minimum of $50,000 per year. The minimum guaranteed royalties were
recognized upon the execution of the license agreement as these proceeds were not variable
consideration. The remaining minimum royalty payments to be received, less the portion which represents
future interest 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.
Consulting Revenue
In June 2015, the Company entered into a Joint Research Agreement. The Agreement was amended in August
2017 whereby the Company received an upfront payment of $100,000 to cover costs incurred in the course of
providing certain services, which had been included in Contract liabilities-net of current portion. The agreement
was to terminate upon the earlier of completion of the project or five years. The project was not completed and
has terminated. Therefore, $100,000 was recognized as Consulting revenue for the year ended December 31,
2020.
Government Contract Revenue
The Company recognizes revenue for government contracts over time using the “as invoiced” practical
expedient.
The Company was awarded a contract with the U.S. government on September 25, 2020 for up to $399,539 to
develop an MRI compatible myocardial biopsy system. The Company recognized $255,704 and $95,889 as
revenue during the years ended December 31, 2021 and 2020, respectively.
Contract Liabilities
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.
$373,333 is included in long-term contract liabilities as of December 31, 2021 and 2020. 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.
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, 2021 and 2020, the Company had contract
liabilities of $684,890 and $590,008, respectively.
Page 11
39
Notes to Financial Statements (cont.)
As of and for the years ended 31 December 2021 and 2020
NOTE 1 - Summary of Significant Accounting Policies (cont.)
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 from revenue recognized for completion of
performance obligations that were included in contract
liabilities at the beginning of the period included in:
Consulting revenue
Service revenue
2021
$ 590,008
2020
$ 607,410
-
(40,202)
(100,000)
(14,557)
Increase for revenue deferred as the performance
obligation has not been satisfied
135,084
97,155
Balance at the end of the year
$ 684,890
$ 590,008
Stock-Based Compensation
The Company measures and records compensation expense using the applicable accounting guidance for
share-based payments related to stock option awards granted to directors and employees. The fair value of
stock options, including performance awards, without a market condition is estimated at the date of grant, using
the Black-Scholes option-pricing model. The fair value of stock options with a market condition is estimated at
the date of grant using the Monte Carlo Simulation model. The Black-Scholes and Monte Carlo Simulation
valuation models incorporate assumptions as to stock price volatility, the expected life of options or awards, a
risk-free interest rate and dividend yield.
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 7 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.
Employee retention credit
On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) was signed into
law providing numerous tax provisions and other stimulus measures, including an employee retention
credit (“ERC”), which is a refundable tax credit against certain employment taxes. The Taxpayer Certainty and
Disaster Tax Relief Act of 2020 and the American Rescue Plan Act of 2021 extended and expanded the
availability of the ERC.
Page 12
40 – Imricor Medical Systems
Annual Report 2021
NOTE 1 - Summary of Significant Accounting Policies (cont.)
The ERC is calculated as a percentage of qualified wages (as defined in the CARES Act, as amended) paid by
an eligible employer. The Company qualified for the ERC as it experienced a significant decline in gross
receipts (for 2020, defined as a 50% decline in gross receipts when compared to the same calendar quarter in
2019, and for 2021, defined as a 20% decline in gross receipts when compared to the same quarter in 2019).
As a small employer, all of the Company’s otherwise qualified wages were eligible for the ERC. For 2020, the
ERC equaled 50 percent of an employee’s qualified wages up to $10,000 per employee per calendar quarter
with a maximum annual credit for each employee of $5,000. For 2021, the ERC equaled 70 percent of an
employee’s qualified wages up to $10,000 per employee per calendar quarter with a maximum annual credit of
$21,000 for each employee. The Company determined that it was eligible for the ERC as follows:
Quarter ended September 30, 2020
Quarter ended December 31, 2020
Quarter ended September 30, 2021
Total
Total
$ 269,654
22,995
465,065
$ 757,714
As it relates to the 2020 amounts, the Company applied for the ERC by amending its previously filed forms 941
and, as a result, the Company has accounted for this government grant by way of analogy to Financial
Accounting Standards Board (FASB) Accounting Standards Codification (ASC) 410, Asset Retirement and
Environmental Obligations. ASC 410-30-35-8 indicates that a claim for recovery should be recognized only
when the claim is probable of recovery as defined in ASC 450-20-25-1 (i.e. Contingencies). Accordingly, the
Company believes that the recovery of employment tax amounts previously paid is probable and, therefore,
has recorded amounts shown above.
As it relates to the 2021 amounts, the Company has elected to account for the credit as a government grant.
U.S. GAAP do not include grant accounting guidance for for-profit entities, therefore, the Company has elected
to follow the grant accounting model in International Accounting Standard (IAS) 20, Accounting for Government
Grants and Disclosure of Government Assistance. In accordance with IAS 20, the Company cannot recognize
any income from the grant until there is reasonable assurance (similar to the “probable” threshold in U.S. GAAP)
that any conditions attached to the grant will be met and that the grant will be received. Once it is reasonably
assured that the grant conditions will be met and that the grant will be received, grant income is recorded on a
systematic basis over the periods in which the Company recognizes the payroll expenses for which the grant
is intended to compensate. Income from the grant can be presented as either other income or as a reduction
in the expenses for which the grant was intended to compensate.
During the year ended December 31, 2021, the Company recorded ERC benefits of $757,714 in other income
(expense) on the statements of operations. The receivable is included in Prepaid expense and other current
assets on the balance sheet as of December 31, 2021.
Page 13
41
Notes to Financial Statements (cont.)
As of and for the years ended 31 December 2021 and 2020
NOTE 1 - Summary of Significant Accounting Policies (cont.)
Recent Accounting Pronouncement
During June 2016, the FASB issued ASU No. 2016-13, Measurement of Credit Losses on Financial
Instruments. ASU 2016-13 requires financial assets measured at amortized cost to be presented at the net
amount expected to be collected, through an allowance for credit losses that is deducted from the amortized
cost basis. The measurement of expected credit losses is based on relevant information about past events,
including historical experience, current conditions, and reasonable and supportable forecasts that affect the
collectability of the reported amount. During November 2018, April 2019, May 2019, and November 2019, the
FASB also issued ASU No. 2018-19, Codification Improvements to Topic 326, Financial Instruments - Credit
Losses; ASU No. 2019-04, Codification Improvements to Topic 326, Financial Instruments - Credit Losses;
ASU No 2019-05, Targeted Transition Relief and ASU No. 2019-11, Codification Improvements to Topic 326,
Financial Instruments - Credit Losses. ASU No. 2018-19 clarifies the effective date for nonpublic entities and
that receivables arising from operating leases are not within the scope of Subtopic 326-20, ASU Nos. 2019-
04 and 2019-05 amend the transition guidance provided in ASU No. 2016-13, and ASU No. 2019-11 amends
ASU No. 2016-13 to clarify, correct errors in, or improve the guidance. ASU No. 2016-13 (as amended) is
effective for annual periods and interim periods within those annual periods beginning after December 15,
2022. Early adoption is permitted for annual and interim periods beginning after December 15, 2018. The
Company is currently assessing the effect that ASU No. 2016-13 (as amended) will have on its results of
operations, financial position and cash flows.
Subsequent Events
For the year ended December 31, 2021, the Company evaluated, for potential recognition and disclosure,
events that occurred prior to the issuance of the financial statements through February 23, 2022.
NOTE 2 – 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, 2021 and 2020, had an accumulated deficit as of December 31, 2021 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. These financial statements do not include any adjustments related to the recoverability and
classification of recorded assets or the amounts and classification of liabilities or any other adjustments that
might be necessary should the Company be unable to continue as a going concern.
NOTE 3 – Accrued Expenses
Accrued expenses consist of the following:
Compensation
Firm inventory commitments
Other accruals
Total accrued expenses
December 31,
2021
$ 595,942
212,931
545,555
$ 1,354,428
2020
$ 504,372
-
564,536
$ 1,068,908
Page 14
42 – Imricor Medical Systems
Annual Report 2021
NOTE 4 – Property and Equipment
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,
2021
$ 293,216
1,525,226
264,859
1,200,000
1,597,087
4,880,388
(1,928,464)
2,951,924
$
2020
$ 390,160
1,414,136
277,821
1,200,000
1,459,919
4,742,036
(1,647,315)
3,094,721
$
Depreciation expense was $689,114 and $528,089 for the years ended December 31, 2021 and 2020,
respectively.
NOTE 5 – Leases
Operating Leases
In March 2007, the Company entered into an operating lease agreement for its office and manufacturing space
(Gateway) 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. In October 2021, the lease was amended to include an
increase of approximately 2,465 square feet to a total of approximately 15,115 square feet and an increase to
the term for five years starting on the expansion date, which is defined as the earlier of 30 days after the date
the landlord delivers possession of the expansion premises or the date that we begin operating our business in
the expansion premises. The expansion date is expected to occur in 2022. Upon commencement of the
amended lease during 2022, the Company will reallocate the remaining consideration and the lease liability will
be remeasured.
The Company entered into a second operating lease agreement for office and warehouse space (Design
Center) in August 2018 which commenced on January 1, 2019 and was originally set to expire in March 2026.
In February 2020, this lease was amended to include an expansion of space and an increase to the term through
May 2030. In addition, the landlord agreed to pay $593,534 in leasehold improvements. Upon commencement
of the lease in June 2020, the Company recorded $593,534 in leasehold improvements, a $606,277 right to
use asset, and a $1,201,811 lease liability.
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.
As our 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, 2021 and 2020, the remaining lease term was 7.9 and 8.5 years, respectively, and the discount
rate was 5.5%. For the year ended December 31, 2021 and 2020, the operating cash outflows from our
operating lease for office and manufacturing space was $221,136 and $192,166, respectively.
Page 15
43
Notes to Financial Statements (cont.)
As of and for the years ended 31 December 2021 and 2020
NOTE 5 – Leases (cont.)
As of December 31, 2021, maturities of our operating lease liabilities are as follows:
2022
2023
2024
2025
2026
2027 and thereafter
Total lease payments
Less interest
Present value of lease liabilities
Less current potion
Operating lease liability, net of current portion
$ 236,191
148,966
153,437
158,050
162,805
593,594
1,453,043
(274,226)
1,178,817
(186,498)
$ 992,319
The cost components of the Company’s operating leases were as follows for the years ended December 31,
2021 and 2020:
Operating lease cost
Variable least cost
Total
Finance Lease Liability
2021
$ 221,136
122,880
$ 344,016
2020
$ 192,166
117,356
$ 309,522
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.
In December 2021, the Company amended its lease on its MRI Scanner and related service agreement which
resulted in a change in classification from a financing obligation to a finance lease (see Financing Obligation
below).
The MRI scanner is included in property and equipment and the Service Agreement is included as Prepaid
Service Agreement. The interest rate implied on the amended lease is 7.0%.
The Company’s remaining payments under the terms of the finance leases are as follows as of December 31,
2021:
2022
2023
2024
Total payments
Less amount representing interest
Total present value of total payments
Less current portion
Finance lease liability, net of current portion
$ 378,537
171,372
67,160
617,069
(58,235)
558,834
(332,157)
$ 226,677
Page 16
44 – Imricor Medical Systems
Annual Report 2021
NOTE 5 – 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. The lease originally met the requirements to be classified as a financing obligation.
It was considered a failed sale leaseback arrangement as the lease agreement included an option to repurchase
the related assets for $425,000 at the end of the lease term, which the Company deemed it was reasonably
certain to do. In October 2021, the Company received a proposal from the lessor with an option to extend the
lease with favorable terms and reassess the lease term and option to purchase the underlying assets and
determined it would no longer elect to exercise the purchase option. On December 8, 2021, the Company
executed a revised lease to extend the term of lease for an additional 24 months after the expiration of the
original lease. Consequently, the lease no longer qualifies as a financing obligation but is now classified as a
finance lease. The Company reassessed the lease term at the time of the receipt of the proposal from the
lessor in October 2021 and began accounting for it as a finance lease. When the lease was initially entered
into, the interest rate implied in the financing obligation was 21.5%.
NOTE 6 - Commitments and Contingencies
Vendor concentration
Certain components and products that meet the Company’s requirements are available only from a single
supplier or a limited number of suppliers. The inability to obtain components and products as required, or to
develop alternative sources, if and as required in the future, could result in delays or reductions in product
shipments, which in turn could have a material adverse effect on the Company’s business, financial condition,
and results of operations. The Company believes that it will be able to source alternative suppliers or materials
if required to do so.
For the year ended December 31, 2021, the Company had accounts payable to one vendor that accounted for
16% of the total outstanding balance. For the year ended December 31, 2020, the Company had accounts
payable to two vendors that accounted for 12% and 11% of the total outstanding balance.
Purchase Commitments
At December 31, 2021 and 2020, the Company had $1,195,602 and $241,431 in outstanding firm purchase
commitments, respectively.
Retirement Plan
The Company maintains retirement plans for its employees in which eligible employees can contribute a
percentage of their compensation. The Company contributed $309,929 and $170,062 to these plans during the
years ended December 31, 2021 and 2020, respectively.
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.
Page 17
45
Notes to Financial Statements (cont.)
As of and for the years ended 31 December 2021 and 2020
NOTE 7 - Stockholders' Equity
Capital Stock Authorized
As of both December 31, 2021 and 2020, 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.
Common Stock
The Australian Securities Exchange (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 CHESS Depositary Interests (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.
In February 2020, the Company completed an equity raise on the ASX which consisted of 12,083,333 CDIs
representing the same number of shares of common stock at $1.68 Australian dollars per share for proceeds
of $12,653,221, net of expenses.
During April 2020, 406,849 warrants to purchase common stock were exercised at $0.73 per share for total
proceeds of $295,425, net of expenses.
In February 2007, the Company issued rights to 7,200,000 shares of common stock (as adjusted for a
subsequent stock split) 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. The number of shares to be issued was to be reduced for the value
of any royalties paid. In April 2020, the agreements related to these rights expired and the Company issued
7,197,634 shares of common stock. The number of shares issued was reduced by 2,366 to reflect the value of
royalties paid. The value of the shares was recorded as an expense upon issuance, which was when the
liability was fixed and determinable.
During the year ended December 31, 2020, 413,333 options to purchase common stock were exercised at
prices ranging from $0.341 to $0.60 per share for total proceeds of $174,195, net of expenses.
In October 2020, the Company completed an underwritten placement on the ASX which consisted of
12,106,383 CDIs representing the same number of shares of common stock at $2.35 Australian dollars per
share for proceeds of $19,195,477, net of expenses.
In November 2020, the Company completed an underwritten security purchase plan on the ASX which
consisted of 659,483 CDIs representing the same number of common stock at $2.35 Australian dollars per
share for proceeds of $1,088,836, net of expenses.
During January 2021, a total of 120,000 options to purchase common stock were exercised with a portion of
the exercise via a cashless exercise. 50,000 options to purchase common stock were exercised at $0.50 per
share for total proceeds of $23,384, net of expenses. In addition, 70,000 options to purchase common stock
were exercised at $0.50 per share on a cashless exercise basis at a fair market value of $1.83 per share,
resulting in the issuance of 50,995 shares of common stock.
During June 2021, a total of 50,625 options were exercised at $0.98 per share for total proceeds of $47,983,
net of expenses.
Page 18
46 – Imricor Medical Systems
Annual Report 2021
NOTE 7 - Stockholders' Equity (cont.)
During July 2021, a total of 33,639 options were exercised at $0.52 per share for total proceeds of $16,479, net
of expenses.
In September 2021, the Company completed an equity raise on the ASX which consisted of 16,500,000 CDIs
representing the same number of shares of common stock at $1.00 Australian dollar per share for proceeds of
$11,351,689, net of expenses.
In October 2021, the Company completed a security purchase plan on the ASX which consisted of 999,828
CDIs representing the same number of common stock at $1.00 Australian dollar per share for proceeds of
$728,071, net of expenses.
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.
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 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 the 2019 Plan beginning in 2020, the number
of shares of Common Stock available for issuance from time to time under the 2019 Plan will be increased by
an amount equal to the lesser 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”). On April 20, 2020, the Board of Directors approved an increase of 3,470,925
shares to the option pool, which was approved by the shareholders at the Annual Meeting on May 12, 2020.
On January 14, 2021, the Board of Directors approved an increase of 844,471 shares to the option pool.
Options 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. Generally, vesting terms of outstanding
options range from immediate to four years. In addition, some options issued to the executive management
team vest upon completion of certain milestones, performance requirements, and market conditions. 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.
Page 19
47
Notes to Financial Statements (cont.)
As of and for the years ended 31 December 2021 and 2020
NOTE 7 - Stockholders' Equity (cont.)
Information regarding the Company's stock options is summarized below:
Options outstanding - December 31, 2020
Exercised
Cancelled
Granted
Options outstanding – December 31, 2021
Options exercisable – December 31, 2021
Weighted average fair value of options granted
during the year ended December 31, 2021
Weighted average fair value of options granted
during the year ended December 31, 2020
Number of
Options
Weighted- Average
Exercise
Price
Aggregate
Intrinsic
Value
9,963,094 $ 0.68
(204,264)
0.62
1.13
(225,807)
1.57
1,720,483
11,253,506 $ 0.81 $ 1,202,221
6,762,568 $ 0.59 $ 1,127,451
$ 0.96
$ 0.58
As of December 31, 2021, the Company had 1,998,393 shares available for grant under the Plan.
The weighted average remaining contractual life of options outstanding and exercisable was 7.38 and 6.60
years, respectively, as of December 31, 2021.
The intrinsic value of options exercised during the years ended December 31, 2021 and 2020 was $202,923
and $306,453, respectively.
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
2021
5.57-6.95 years
66.16%
1.24%
0%
2020
7 years
68.3%
0.64%
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.
Page 20
48 – Imricor Medical Systems
Annual Report 2021
NOTE 7 - Stockholders' Equity (cont.)
Total stock-based compensation expense resulting from options granted was $1,149,598 and $821,952 for the
years ended December 31, 2021 and 2020, respectively, and charged to the Company’s Statement of
Operations as follows:
Cost of goods sold
Sales and marketing
Research and development
General and administrative
December 31,
2021
$ 36,894
112,220
233,991
766,493
1,149,598
$
2020
$ -
64,315
296,421
461,216
821,952
$
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, 2021, the total unrecognized compensation cost related to unvested stock options then
outstanding was $2,344,149. Future stock-based compensation expense is expected to be as follows for the
years ending December 31:
2022
2023
2024
2025
Total
Total
$ 1,067,451
773,115
403,921
99,662
$ 2,344,149
Issuance of additional options subsequent to December 31, 2021 could affect future expected amounts.
Stock Warrants
The Company had issued warrants to purchase shares of common stock which are summarized below:
Warrants outstanding – December 31, 2019
Warrants cancelled
Warrants exercised
Warrants outstanding – December 31, 2020
Number of
Warrants
Weighted- Average
Exercise
Price
787,909 $ 0.73
0.73
(381,060)
(406,849) 0.73
- $ -
During April 2020, 406,849 warrants to purchase common stock were exercised at $0.73 per share for total
proceeds of $295,425, net of expenses. The intrinsic value was $46,121. The remaining 381,060 warrants
were cancelled.
Page 21
49
Notes to Financial Statements (cont.)
As of and for the years ended 31 December 2021 and 2020
NOTE 8 - Income Taxes
The Company has generated both federal and state net operating losses (NOL) of approximately $59,544,000
and federal and state research and development credit carryforwards of approximately $1,943,000 as of
December 31, 2021, 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, 2021 and
2020, 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:
Current:
Federal
State
Deferred:
Federal
State
Deferred tax asset valuation allowance
Total provision (benefit)
2021
2020
$ -
-
-
$ -
-
-
(2,516,000)
(4,310,000)
(1,104,000)
(5,414,000)
5,414,000
$ -
(625,000)
(3,141,000)
3,141,000
$ -
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
2021
2020
$
$
15,481,000
1,943,000
222,000
363,000
178,000
(74,000)
(55,000)
16,000
18,074,000
)
(18,074,000
-
$
$
10,752,000
1,498,000
185,000
17,000
153,000
(73,000)
18,000
110,000
12,660,000
)
(12,660,000
-
The change in the valuation allowance was $5,414,000 and $3,141,000 for the years ended December 31,
2021 and 2020, respectively.
The effective tax rate for the year ended December 31, 2021 differs from the federal and state statutory tax
rates mainly due to the change in full valuation allowance, incentive stock option expense, and research and
development credits.
Page 22
50 – Imricor Medical Systems
Annual Report 2021
NOTE 8 - Income Taxes (cont.)
The Company has recognized a reserve of approximately $486,000 and $374,000 for uncertain tax positions
which was recorded directly against the valuation allowance as of December 31, 2021 and 2020, respectively.
If recognized, these benefits would favorably impact the effective tax rate.
The tax years from inception through December 31, 2021 remain subject to examination by all major taxing
authorities due to the net operating loss carryforwards. 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.
Page 23
51
Additional Stockholder Information
Additional Stockholder Information
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.
Except where noted, all information provided below is current as at 23 March 2022, 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
143,293,937
98,295,236
1.
Includes shares held by CHESS Depositary Nominees Pty Limited (98,295,236).
Top 20 Holders of CDIs and Shares Combined (based on share registry reports)
Rank
Name
Number % of issued capital
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
CITICORP NOMINEES PTY LIMITED
J P MORGAN NOMINEES AUSTRALIA PTY LIMITED
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
Siemens Medical Solutions Usa Inc
NATIONAL NOMINEES LIMITED
Warren G Herreid Ii
BNP PARIBAS NOMINEES PTY LTD
CS THIRD NOMINEES PTY LIMITED
MERRILL LYNCH (AUSTRALIA) NOMINEES PTY LIMITED
Kahr Foundation
Steven R Wedan
Bauer Private Equity Fund Vi Llc
Steven R Wedan &
RONALD D BERGER
HENRY R HALPERIN
Fleitman Koppa Investments Llc
ALBERT C LARDO AND JENNIFER S LARDO
PENSCO TRUST COMPANY LLC
BNP PARIBAS NOMINEES PTY LTD SIX SIS LTD
Johns Hopkins University
Top 20 holders
Remaining holders
Total
52 – Imricor Medical Systems
19,209,476.00
12,269,784.00
12,023,548.00
8,384,150.00
8,137,737.00
7,819,431.00
5,799,757.00
5,702,642.00
3,260,798.00
2,950,988.00
2,518,720.00
1,696,555.00
1,427,373.00
1,300,000.00
1,300,000.00
901,530.00
900,333.00
867,896.00
836,581.00
698,180.00
98,005,479.00
45,288,458.00
143,293,937.00
13.41
8.56
8.39
5.85
5.68
5.46
4.05
3.98
2.28
2.06
1.76
1.18
1.00
0.91
0.91
0.63
0.63
0.61
0.58
0.49
68.39
31.61
100.00
Annual Report 2021
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
BlackRock Group
Warren G. Herreid II & KAHR Foundation
Siemens Medical Solutions USA, Inc.
Regal Funds Management Pty Ltd
Saville Capital
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
Number of
equity securities
% voting
17,529,317
10,771,092
8,384,150
8,311,716
7,180,000
12.23
7.52
5.85
5.80
5.01
Number % of issued capital
No. of holders
121,467
672,782
966,621
11,088,003
130,445,064
143,293,937
0.00
0.00
0.01
0.08
0.91
100.00
219
239
126
324
72
980
There are 242 investors holding less than a marketable parcel of CDIs or Shares, based on a minimum of A$500 parcel at A$0.385 per CDI or
Share (close of trade price on 21 March 2022)
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 issued capital
No. of holders
-
51,300
96,800
816,702
9,927,566
10,892,368*
-
0.47
0.89
7.50
91.14
100
*502,713 options lapsed and 205,000 options were granted since the last Appendix 2A was lodged with the ASX on 24 February 2022.
-
18
11
23
17
69
53
Additional Stockholder Information (cont.)
Required Statements
• There is no current on-market buy-back of the Company’s securities.
• 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 bylaws 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.
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.
54 – Imricor Medical Systems
Corporate Directory
US 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 (Chairman and CEO)
Mark Tibbles (Non-executive Director)
Anita Messal (Non-executive Director)
Peter McGregor (Non-executive Director)
Local Agent & Company Secretary
Kobe Li
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
Australian Legal Advisor
Johnson Winter & Slattery
Level 25, 20 Bond Street
Sydney NSW 2000 Australia
Telephone: +61 2 8274 9555
www.jws.com.au
US Legal Advisor & Patent Attorney
Fox Rothschild LLP
Suite 2000 222 South Ninth Street
Minneapolis, Minnesota 55402-3338
United States
Telephone: +1 612 607 7000
www.foxrothschild.com
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
ideate
Co.
iii