Contents
Chair’s Message
Key Achievements &
Core Strategies
Geographic Expansion
Our Products
4
6
8
10
NorthStar 3D Mapping System
12
Timeline
Board of Directors
Executive Team
Operating & Financial Review
Directors Report
Remuneration Report
Financial Report
Additional Stockholder
Information
Corporate Directory
14
16
18
20
22
25
30
59
62
Imricor Medical Systems,
AGM Details
Imricor will hold its Annual Meeting of Stockholders on
Friday, 12 May 2023 at 8:00 am Sydney time (on Thursday,
11 May 2023, at 5:00 pm U.S. Central Daylight Time).
This is a completely virtual Annual Meeting. Stockholders
can watch and participate in the Annual Meeting virtually
via the online platform by visiting www.meetnow.global/
MDVKVKA 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.
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 2022.
Chairman's Letter
Dear Shareholder,
Welcome to the 2022 Annual Report for Imricor Medical
Systems, Inc. (Company or Imricor) (ASX:IMR).
Imricor is a US-based company that develops MRI-
compatible medical devices for cardiac catheter ablation
procedures. We aim to improve the success rates and
reduce the overall costs of such procedures, thereby
making a significant
impact on patients, healthcare
professionals, and healthcare facilities worldwide.
The foundations of our mission to change the standard
of care for cardiac catheter ablation, as well as 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, that doctors
can perform with our products. This happens through
clinical trials that demonstrate the safe and effective use
of our devices for these expanded indications and the
subsequent regulatory approvals that follow. 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, New
Zealand, and most recently the Middle East.
I am pleased to report that we made significant progress
in 2022. We grew our contracted sites, improved and
increased our product range, signed further agreements
with our partners, and surpassed significant milestones in
the clinical trial processes that aim to expand our products’
indications and expand our geographic reach. These
achievements all advance the foundational strategies I
mentioned.
I’d like to highlight a couple of key achievements from
2022 and provide an outlook for 2023 and beyond.
EXPANDING INDICATIONS - VENTRICULAR
TACHYCARDIA TRIAL
The progress made towards ventricular tachycardia (VT)
in 2022 is considerable. After years of developing various
Imricor devices and partnering with multiple third-party
companies for additional products, our team completed the
extensive testing and documentation required to submit
for regulatory approval to initiate the "Vision-MR Ablation
of VT" or VISABL-VT trial. The amount of work involved in
this process was extraordinary, as clinical trial submissions
typically only involve a single device or a small set of devices.
In our case, the VISABL-VT trial includes 10 investigational
Imricor devices, and two third-party investigational devices.
Our VISABL-VT trial aims to expand the indications for our
products to include ventricular tachycardia ablations in the
iCMR lab. The trial has received approval from the Ethics
Committee at the Leipzig Heart Center and is currently under
review by the German Competent Authority. Once final
approval is granted, we expect to begin enrollment in the
coming months.
Furthermore, as we complete the final testing and
documentation for our NorthStar 3D mapping system, which
I’ll discuss below, we plan to seek approval to initiate the
VISABL-VT trial in the Netherlands, as well, and include sites
utilising the Siemens MRI platform in that country.
NORTHSTAR 3D MAPPING SYSTEM - SUPPORTING
GEOGRAPHY AND INDICATION EXPANSION AND
CONTROLLING OUR TIMING
The NorthStar 3D mapping system is one of our most
significant achievements of 2022. It supports so much of what
we do now and what we plan to do in the future. NorthStar is
a 3D mapping system that connects to both the MRI scanner
Imricor’s Advantage-MR EP Recorder/Stimulator.
and
NorthStar allows the user to control the MRI scanner, receive
MR images in real-time from the scanner, display those MR
images in 3D, actively track Imricor trackable devices, and
create 3D electroanatomical maps that include intracardiac
electrogram signals from the Advantage-MR system. Our
team was able to complete the development of NorthStar in
less than a year and in December we successfully evaluated
the system in first-in-human cases at Haga Hospital in the
Netherlands. NorthStar is not yet approved for sale, but we
are moving quickly toward the required approvals.
NorthStar is currently compatible with Siemens MRI scanners,
and we secured the agreements with Siemens to deploy
NorthStar wherever a customer has the appropriate Siemens
MR scanner – no further approvals from Siemens are required.
As the documentation and testing of NorthStar are finalized
for submission to the VISABL-VT trial, we are also working
to adapt NorthStar for use with Philips and GE Healthcare
MRI platforms. Together, these three MRI manufacturers
cover the majority of MRI systems sold worldwide. The goal
is to provide a consistent user experience, through NorthStar,
across all MRI platforms used in iCMR labs.
Importantly, NorthStar finally removes our reliance on
others to develop 3D mapping systems needed for complex
ablation procedures, and it puts control of our timelines back
in our hands.
EXPANDING GEOGRAPHIES – GROWING BEYOND
EUROPE
As I mentioned, it’s important that we expand beyond Europe,
and we are progressing this on many fronts, including in
Australia, New Zealand, and the Middle East.
But one of the most significant and difficult geographic
markets to break into is the US. That’s why we were so
pleased that the US FDA approved our Investigational Device
Exception (IDE) in January to commence a global clinical trial
called "Vision-MR Ablation of Atrial Flutter" or VISABL-AFL.
The VISABL-AFL trial, which we are planning to conduct
in parallel with the VISABL-VT trial starting in the coming
months, aims to support FDA approval of our platform of
devices in the US.
4
LOOKING TO THE YEAR AHEAD
Today, we are treating atrial flutter in Europe. This is,
and always has been, just the start. Starting with a
straightforward ablation procedure like atrial flutter gives
us the opportunity to establish iCMR ablations as a clinical
procedure, and to obtain approval for the devices we and
others produce to support such procedures – we have been
building a foundation. We are following this path outside of
Europe as well, including in the US.
Next, we will expand our indications to treat more complex
arrhythmias, where we believe MRI will add the most value.
These are the kinds of procedures I had in mind when I
started the company. The two main targets are ventricular
tachycardia (VT) and atrial fibrillation (AF). As I mentioned,
we are targeting VT first, but we are also planning smaller
pilot studies this year to demonstrate the benefits of MRI for
AF ablations.
Looking ahead, we have many exciting things on the horizon.
We will, of course, continue to focus on launching our
products in the post-pandemic environment and re-building
the momentum lost during COVID. We will start the VISABL-
VT and VISABL-AFL trials at sites in Europe and the US as
I mentioned, which we expect will grow our indications and
geographies in big ways.
And this means that now is the beginning of the future
of Imricor. We showed, through atrial flutter
ablations, that routine cardiac ablations can
be performed in the iCMR lab, and now
we plan to show all the advantages
MRI adds
to complex ablation
procedures, like VT. We are building
a future around the advantages MRI
can offer to patients, physicians, and
healthcare systems in general. We
see a future where our NorthStar
3D mapping system, connected
to an MRI and enabled with AI,
helps physicians diagnose the
root cause of diseases. We see a
future where NorthStar provides
a simple environment in which to
treat these diseases in the iCMR lab
with individualized strategies based
on each patient’s unique anatomy
and disease state. And we
see a future, where we
expand into new and
exciting areas,
such as
pulsed field ablation (PFA), where we believe MRI will add
the same value that it does to RF ablation, or cardiac biopsy
or targeted regenerative therapy.
This is the moment we’ve been working toward, and it is a
great time to be Imricor.
I would like to thank our Management and staff for their
efforts over the past year, which have been considerable
given our progress amid a somewhat challenging operating
environment. Our team has worked with dedication,
determination, and the shared belief and focus that we are
changing the world of interventional medicine.
I also thank my fellow Board members for their contributions,
and importantly, I thank our Shareholders for their support
and belief in Imricor’s mission and our ability to deliver on
our goals.
With our strong foundations in place, I could not be more
excited about the progress we will make in 2023 and beyond.
Steve Wedan
Executive Chair, President and CEO
"This is the
moment we’ve
been working
toward, and it
is a great time
to be Imricor."
5
ANNUAL REPORT 2022
Key Achievements & Core Strategies
DELIVERING ON OUR STRATEGIC PLAN
1 More
active sites 2 Grow
indications 3 Expand
approved
geographies
2022 KEY ACHIEVEMENTS
SITES
PRODUCTS
NEW FUNDING SECURED
• 9 active sites across
Europe
• Contracted 2 new sites
across Europe
• Expanded Company's
geographical footprint
into Croatia and Italy
• Renewed sales focus
on sites owned by
Cardiology department
• Second generation
ablation catheter
submitted for approval in
Europe
• First clinical evaluation
of NorthStar 3D Mapping
System
• Diagnostic Catheter
Technical Review
Complete
• Secured a US$1.5 million
loan under the North
Dakota Commerce
Department’s Innovation
Technology Loan Fund
program
• US$5 million convertible
note deal
• A$2.92m placement
completed in the
September quarter
PARTNERSHIPS
TRIALS
OTHER
• Two agreements signed
• Submitted for approval
to commence VT ablation
trial
• Trial named Vision-
MR Ablation of VT or
VISABL-VT
• US restriction on CHESS
depository Interests
removed
• Hosted virtual open
house investor session
• Jonathon Gut promoted
• Received first of two
to CFO role
approvals from Leipzig
Heart Centre Ethics
Committee
with Siemens
• First agreement was
an Access-I License
Agreement
• Second agreement
was a Local Coil
Agreement
6
ANNUAL REPORT 2022
KEY INITIATIVES TO SUPPORT OUR STRATEGY
GROW
CUSTOMER
BASE
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
EXPAND
GEOGRAPHIES
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
EXPAND
INDICATIONS
Integration with 3rd party systems
MiRTLE Medical
Integration with 3rd party systems
MRI compatible defibrillation system
NEW PRODUCT
DEVELOPMENT
NorthStar 3D
Mapping System
Steerable Sheath and
Transeptal Needle
Diagnostic Catheter
Cardiac Biopsy
(Biopsy-MR Catheter)
7
Expanding Indications and
Geographical Reach
14
CUSTOMER SITES
4
CONTINENTS
POSITIONED
9
COUNTRIES WE
HAVE PRESENCE
UNITED STATES
FDA strategy well advanced
Received approval from FDA for Investigational
Device Exemption in January 2023
Clinical trials expected to enroll in mid-2023
EUROPE
CE mark received
9 active sites across four countries
VT Clinical trials expected to enroll in mid-2023
AUSTRALIA AND NEW ZELAND
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
8
ANNUAL REPORT 2022
THE NETHERLANDS
Lübeck University Heart
Centre, UKSH
Herz- und Diabeteszentrum NRW, Bad Oeynhausen
Amsterdam University Medical Centre
Haga Hospital
Maastricht University Medical Centre
Münster
University
Hospital
Charité Medical University Virchow-Kilinikum Campus
Helios Hospital Berlin Buch
German Heart Centre Berlin
Leipzig Heart Centre
Dresden Heart Centre
Rhön Clinic Bad Neustadt Campus
South Paris
Cardiovascular
Institute
Semmelweis University
Heart and Vascular Centre
GERMANY
SWITZERLAND
Clinical Hospital Dubrava
HUNGARY
FRANCE
CROATIA
Clinical site established at Policlinico Casilino
ITALY
Henry Dunant Hospital Centre
GREECE
FRANCE
Clinical site established at South Paris
Cardiovascular Institute
THE NETHERLANDS
Clinical sites established at Haga Hospital, Amsterdam
UMC and Maastricht University Medical Centre
SWITZERLAND
Imricor products included in Sana GPO approved
catalogue of materials
HUNGARY
Clinical site signed at Semmelweis University
Heart and Vascular Centre
GERMANY
Nine clinical sites with signed purchase
agreements across Germany
GREECE
Clinical site established at Henry Dunant
Hospital Centre
Imricor products included in Sana GPO approved
catalogue of materials
9
Our Products
Vision-MR Ablation Catheter
Advantage-MR EP Recorder/
Stimulator System
Vision-MR Dispersive
Electrode
DESCRIPTION
• The Vision-MR Ablation
Catheter is an MR-
• Advantage-MR EP
Recorder/Stimulator
• The Vision-MR
Dispersive electrode
TECHNICAL
SPECIFICATION
Conditional (1.5T
RF ablation catheter
containing patented
System provides proven
is used with the
technology that allows
Advantage-MR EP
the physician to utilize
Recorder/Stimulator
technology that allows
it to be used while the
both the EP recording
system and a cardiac
patient is being actively
stimulator while
scanned with MRI. It
is designed to look,
feel, and function like
a traditional ablation
catheter.
ablating within the
iCMR environment.
system. It acts like
a standard ablation
dispersive electrode,
but also minimizes eddy
currents induced on the
device’s conductive pads
during MR scanning.
• 9F (3.0mm) catheter
with a 4mm open-
• Provides the
functionality of both
• Dual-lobe dispersive
electrode used with a
irrigated deflectable tip
a conventional EP
and two gold electrodes
recording system and a
(1.3mm spacing)
• 3.7mm tip electrode
and a 1.4mm ring
cardiac stimulator
• Compatible with the
Imricor Vision-MR
detached cable
• Includes adhesive
conductive gel
(hydrogel) to ensure
full contact with the
electrode
Ablation Catheter
patient’s skin
• 2 MR-receive coils in the
distal end for realtime
MR active catheter
imaging
TYPE OF
PRODUCT
• Disposable
• Received CE mark
January 2020
• Capital Good
• Received CE mark
January 2016
• Disposable
• Received CE mark
January 2020
10
NavTrac-MR Transseptal Kit
Vision-MR Diagnostic Catheter
Biopsy Catheter
• The NavTrac-MR Transseptal Kit is a designed
to access the left atrium during iCMR EP
• The Vision-MR Diagnostic
Catheter is an MR-
• The Imricor Biopsy-MR
Catheter is designed to
procedures. NavTrac-MR includes an actively
Conditional (1.5T) 9F
obtain intracardiac tissue
tracked dilator to allow for precise anatomical
diagnostic catheter
specimens while the patient
containing patented
is being actively scanned
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.
with MRI.
• Innovative delivery sheath
design with best-in-class
torque transfer and superior
curve retention through
tortuous anatomy.
• 9F (3.0mm) catheter with a
deflectable tip and two gold
• 7Fr catheter with an
actuatable forceps at the tip
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
• 2 MR-receive coils in the
distal end for realtime MR
active catheter imaging
positioning during left-sided EP procedures.
• 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
• Disposable
• In development
Notified Body
11
ANNUAL REPORT 2022 NorthStar 3D Mapping System
TAKING CONTROL OF OUR TIMELINE AND FUTURE
DESCRIPTION
• System evaluated successfully in human setting
• Planning to also apply NorthStar to other MRI platforms, such as GE and Philips, so the
user has the same 3D mapping system experience no matter what kind of MRI system
you have
• Imricor no longer reliant on MRI manufacturers to commercialize their mapping systems
• Planning rapid development and expansion in coming years
12
ANNUAL REPORT 2022
1313
ANNUAL REPORT 2022 Timeline
Imricor signs its
first commercial-
ization contract in
Netherlands with
the Amsterdam
University Medical
Centre.
HISTORICAL
Received
Medsafe
approval for
all products in
New Zealand
Signed a Sales
Distribution
Agreement
with MiRTLE
Medical
2022
Re-commenced
procedures at
Haga Teaching
Hospital and
Amsterdam
University
Medical Center
Second
generation
catheter
submitted for
CE Mark
Received
TGA approval
for Imricor’s
Advantage-MR
System
Signed a Sales
Agreement with
NordicNeuroLab
Imricor iCMR
Ablation
Summit
Signed
agreements
to support
deployment
of Northstar
3D Mapping
System on
newer Siemens
MRI scanners
Commenced
procedures at
Henry Dunant
Hospital Centre
and Policlinico
Casilino
14
ANNUAL REPORT 2022
Successfully
raised
A$2.92m in
a US private
placement
First clinical
evaluation
of NorthStar
3D Mapping
System
Received
approval
from FDA for
Investigational
Device
Exemption
EARLY 2023
TGA approval
in Australia
FUTURE
CE Mark
approval for
NorthStar
3D Mapping
System
Atrial
Flutter
Ablations
approval in
the US
Pulsed
Field
Ablation
(PFA)
devices
Submitted
application
to commence
VISABL-VT
trial in Europe
Secured
US$5m
convertible
note1
Memorandum of
Understanding
with GE
HealthCare
for product
collaboration
Commercial
release of
Diagnostic
catheter
CE Mark
approval for
VT ablations
in Europe
Myocardial
Biopsy
system
moves into
next phase
1.
The convertible note was issued in two tranches. The first US$2.3m was issued in December 2022 and the second US$2.7m was issued
in March 2023.
15
Board of Directors
STEVE WEDAN
President, 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 OMEDZA.com,
Inc. and Operandi, Inc.; Poiesis Medical LLC’s Chief Strategy
Officer and Executive Committee Member; an owner and
managing member of STEM Fuse, LLC, one of the largest
providers of digital K-12 STEM curriculum in the U.S.; and the
Managing Director of Strategic Stage Ventures, LLC.
Prior to his current roles, Mr Tibbles was a Board member
of the Nerdery, LLC as well as an owner and member of
Intuitive Technology Group until it was sold in 2017. Mr
Tibbles was also a 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.
16
ANNUAL REPORT 2022
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
Mr McGregor has over 30 years’ experience in senior finance
and management roles, including having been a partner in
the investment banking firm of Goldman Sachs JBWere and
a managing director in the institutional banking & markets
division of Commonwealth Bank of Australia. He is also
a former Chief Financial Officer of the ASX50 transport
company, Asciano Limited (ASX: AIO), and Chief Operating
Officer of ASX listed Australian Infrastructure Fund Limited
(ASX: AIX).
Mr McGregor is an experienced company director, and
currently serves as a director of Pivotal Systems Corporation
(ASX:PVS), True Infrastructure Management Pty Ltd and
Chain Collective Pty Ltd.
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 has over 35 years of experience in the health care
and benefits industry, most recently as the Chief Integration
Officer at AccentCare where she was responsible for the
successful integration of merged and acquired entities
accross all areas of the business.
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.
17
Executive Team
STEVE WEDAN
JONATHON GUT
GREGG STENZEL
DAN SUNNARBORG
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.
President and Chief
Executive Officer,
& Chair
Vice President of
Finance and Chief
Financial Officer
Chief Operating
Officer
Vice President of
Engineering
Refer to page 16
Mr Gut joined Imricor in
2020 and has served
as the Company’s Chief
Financial Officer since
July 2022.
Mr Gut has over 14 years
of accounting and finance
experience, the last 10
of them in the medical
device industry, having
previously worked for
both private and publicly
owned companies,
including Galil Medical
and Boston Scientific.
Mr Gut holds a Bachelor
of Accounting from the
University of Minnesota-
Duluth and a Master of
Accountancy from the
University of Minnesota-
Twin Cities. He is a
licensed Certified Public
Accountant.
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 25
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 25 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.
18
ANNUAL REPORT 2022
VIC FABANO
NICK TWOHY
GREG ENGLEHARDT
KATE LINDBORG
THOMAS WORGUL
Vice President of
Operations
Vice President of
Marketing
Executive Director
of Sales
Director of Clinical
Affairs
Director of Sales
Europe
Mr Fabano has more
than 25 years of
experience in the
medical device industry,
holding executive
positions in Operations,
Quality, and Product
Development. His
expertise is efficiently
scaling up the supply
chain and operations
infrastructure to
support rapid growth,
profitability, and quality.
Prior to joining Imricor,
Mr Fabano was Vice
President of Operations
and Quality at Osprey
Medical for 11 years,
and served in a similar
capacity for several
start-ups to midsize
medical device firms
in the Twin Cities. Mr
Fabano has a bachelor’s
degree in Mechanical
Engineering from the
University of North
Dakota.
Mr. Worgul joined
Imricor in 2022 and as a
Director of Sales Europe
and is leading the team
in Europe to expand
our footprint in various
markets.
Mr. Worgul has
more than 25 years
of experience in the
medical device industry
and has held in the past
several positions as a
Sales Director. His main
focus was working in the
cardiology and radiology
space and launching
new technologies. Prior
to his role at Imricor he
worked for example at
Acist Medical Systems,
RenalGuard and
MedAlliance in several
management positions.
Mr. Worgul has a degree
in Master of Business
Administration.
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.
Dr. Lindborg joined
Imricor in 2020
and is responsible
for developing the
company’s clinical
strategy and leading
preclinical and clinical
investigations.
Mr Englehardt has
more than 20 years
of experience working
in the medical device
industry with 18 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.
Dr. Lindborg has over
12 years of experience
in the medical device
industry primarily
focused on clinical study
development, execution,
and evidence generation.
Prior to joining the
Company, Dr Lindborg
held various roles within
Medtronic’s Cardiac
Rhythm and Heart
Failure and Diagnostics
Clinical organizations.
Dr Lindborg’s roles
included leading pre
and post-market clinical
investigations, managing
evidence generation,
and clinical strategy
development to gain
and maintain market
approval of novel
devices.
Dr Lindborg holds a
Doctor of Philosophy
and Master of Science in
Physiological Sciences
from the University of
Arizona as well as a
Bachelor of Arts from
Gustavus Adolphus
College.
19
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 real-time MRI guidance with the
intent of enabling higher success rates along with a faster and safer treatment compared to conventional procedures
using x-ray guided catheters. The Company also has approval for the sale of its capital product, the Advantage-MR EP
Recorder/Stimulator System, in the European Union.
Imricor is in the early stage of commencing the sale of its capital and consumable products to hospitals and clinics for use
in Interventional Cardiac Magnetic Resonance Imaging (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 collaborates with the three leading, global MRI vendors: GE, Philips and Siemens, who provide MRI systems for
iCMR labs.
The Company has performed contract research on and liscenced 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 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 seventeen sites having executed purchased agreements across Germany, The
Netherlands, France, Hungary, Greece, Italy and Croatia. Imricor aims to expand its installed base with a 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. The Company is focused on establishing new iCMR labs which
are owned and controlled by cardiology to support higher procedure volumes at each site. 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 received approval for an Investigational Device Exception (IDE) from the US Food and
Drug Administration (FDA) to initiate a global clinical trial: “Vision-MR Ablation of Atrial Flutter” or VISABL-AFL. The study is
a prospective, single-arm multi-centre interventional investigation designed to demonstrate the safe and effective use of
the Vision-MR Ablation Catheter 2.0 for the treatment of type 1 atrial flutter and will enroll up to 91 patients at sites in the
US and Europe, with an enrollment cap of 50% of the total enrollment population coming from outside the US. An interim
analysis will be completed after 76 patients have achieved the 7-day follow-up with final follow-up occuring 3 months after
the procedure. The Company expects to begin enrolling patients in the study around mid-year.
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). To further this effort, during the year the Company submitted for approval to
20
commence a real-time iCMR-guided ventricular tachycardia (VT) ablation clinical trial in Europe. The study, named “Vision-
MR Ablation of VT” or VISABL-VT, is a prospective, single-arm multi-centre interventional investigation of the safety and
efficacy of radiofrequency (RF) ablation of ventricular tachycardia associated with ischemic cardiomyopathy performed with
the Vision-MR Abalation Catheter 2.0 in the iCMR environment. The study calls for treating 64 patients and includes a 6-
month follow-up for each patient, as is typical. The Company received the first of two required approvals to initiate the trial
in Germany at the Leipzig Heart Center and the submission is now under review by the Federal Institute for Drugs and
Medical Devices (BfArM), the German Competent Authority. The Company expects to submit for approval to commence the
trial at other sites in Europe, including in the Netherlands.
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.
Going concern: The Company continues to incur losses from operations and negative cash flows from operations and is
in need of additional working capital to fund future operations. Under U.S. generally accepted accounting principles
(U.S. GAAP), these conditions raise substantial doubt about its ability to continue as a going concern. If the Company is
not able to raise additional working capital through an equity or debt offering, it would have an adverse effect on the
operations of the Company and continuing research and development of its product, as well as commercialization.
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 2022, the Company generated revenue of US$0.816 million compared to US$0.696
million for the prior corresponding period due to increased product sales, largely driven by more active sites able to perform
procedures and the easing of COVID related restrictions throughout the current year. Total product sales of US$0.647 million
were up approximately US$0.276 million, or 74%, compared to the prior corresponding period. The Company’s sales have
been limited by lingering impacts of the pandemic and MRI availability at sites where cardiology departments do not yet own
their own MRI; however, the Company expects both effects to diminish as time passes and additional hospitals invest in a
dedicated iCMR lab. Further, the Company is making steady progress toward obtaining CE Mark on our devices needed to
perform complex ablations, such as VT in Europe, and FDA approval for atrial flutter devices in the U.S., which will expand
the Company’s reach for treating patients.
Imricor reported a net loss of US$17.356 million compared to US$19.733 million in the prior corresponding period due to
decreased compensation expenses and research and development costs, reflecting the cost reduction measures which were
implemented earlier in the year.
Financial position
For the 12-month period ending 31 December 2022, Imricor’s net cash outflow from operations was US$16.510 million
compared to US$17.489 million for the prior year. Net cash outflows from investing activities of US$0.239 were down
slightly compared to US$0.695 million for the prior year.
Net cash inflows from financing activities of US$3.943 million were predominately associated with Imricor’s September US
placement and the convertible note issued in December.
At 31 December 2022, Imricor maintained a cash balance of US$5.688 million (FY21 US$18.516 million) which supports the
continuation of its commercialisation plans and growth strategy
21
ANNUAL REPORT 2022
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
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 20 to 21 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
Peter McGregor
Anita Messal
Appointed
May 2006
September 2014
May 2019
March 2021
The specific duties, qualifications and experience of each Director are set out on pages 16 to 17 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
Peter McGregor
Anita Messal
Held
Attended
Held
Attended
Held
Attended
3
3
3
3
3
3
3
3
–
7
7
7
–
7
7
7
–
2
2
2
–
2
2
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.
22
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
4,983,586
3,417,132
5,943,582
407,253
83,791
526,806
246,906
38,340
Subsequent events
On 6 January 2023, the Company obtained a $1.5 million loan from the Bank of North Dakota under the North Dakota
Commerce Department’s Innovation Technology Loan Fund (LIFT) to further support Imricor’s growth strategy.
On 28 March 2023, the Company issued the second tranche of convertible notes and warrants under the Securities Purchase
Agreement announced on 18 December 2022 in exchange for gross proceeds of approximately $2.7 million, which will be
used to further support Imricor’s growth strategy.
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. The Company will also
continue efforts to raise funds in order to support these operating activities of the business.
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.
23
ANNUAL REPORT 2022
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, BDO USA, LLP, did not perform other services beyond the audit and review of the
financial statements.
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
6 April 2023
24
Remuneration Report
Imricor is a Delaware domiciled company 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;
Chief Financial Officer (CFO), Jonathon Gut (appointed 1 July 2022); and
Former Chief Financial Officer (CFO), Lori Milbrandt (retired 30 June 2022).
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, Jonathon Gut.
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), Peter
McGregor, and Anita Messal.
The Nomination and Remuneration Committee has a formal charter which can be viewed on the Company’s website at
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. No external advisors were engaged to provide
remuneration benchmarking services during the year.
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.
2022 remuneration structure
Imricor’s executive compensation packages include a mix of fixed and variable compensation, and short and long-term
performance-based incentives.
25
ANNUAL REPORT 2022
Remuneration Report (cont.)
Fixed component
Executive remuneration during the year
The Company aims to provide a competitive base salary with reference to the role, market and experience of the
The remuneration of key management personnel in respect of the financial year ended 31 December 2022 is
individual. The performance of the Company and the individual are considered during the annual remuneration
summarised below. The options to be granted under the long-term incentive plan for the CEO in relation to 2023
review.
remuneration must be approved by stockholders at the 2023 Annual Meeting of Stockholders (AGM).
Short-term incentive component
The Company allocates cash bonuses linked to annual performance targets determined by the Board. These targets
Executive
are established to promote and reward outstanding performance, beyond what is expected in the ordinary course of
Steve Wedan
business. The target STI opportunity is set as a percentage of fixed remuneration. For 2022 the maximum target
President and CEO
opportunity was 50% for the President and CEO, Steve Wedan, 40% for the COO, Gregg Stenzel, and 30% for the CFO,
Jonathon Gut. The Former CFO, Lori Milbrandt, was not eligible for STI due to her planned retirement in the middle of
the fiscal year.
Base salary
US$464,900
1,098,627 options granted on 9 May 2022 at an
exercise price of US$0.282
174,264 options granted on 26 July 2022 at an
Long-term incentive
Nil
exercise price of US$0.212
Short-term
Incentive1
Performance targets determined by the Board in relation to 2022 were based 50% on sales revenue, clinical
study enrollment and FDA approval of the IDE for the VISABL-AFL trial and 50% based upon departmental
objectives. While strong progress was made toward achieving many of these goals during the year, the Board
US$300,000
Gregg Stenzel
exercised discretion and determined no payout of STI to KMP was warranted for 2022.
COO
Nil
793,671 options granted on 9 May 2022 at an
exercise price of US$0.282
1,426,949 options to be granted following
stockholder approval3
Long-term incentives component
Jonathon Gut
US$207,500
Nil
Imricor’s 2019 Equity Incentive Plan (2019 Plan) provides equity-based compensation for individuals that is linked to
CFO
service, the growth and profitability of the Company, and increases in stockholder value. The 2019 Plan is designed
Lori Milbrantd
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.
Former CFO5
US$157,500
Nil
Nil
180,000 options granted on 10 February 2022 at
an
exercise price of US$0.654
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
1. Determined at the discretion of the Board as discussed above.
the ASX on 30 August 2019 and copies are available on the ASX Announcements section of the Company’s website at
2.
https://imricor.com/investors/.
Percentage of
2022 Options
Vesting Conditions
2022 Options:
v
Tranche
Other benefits
50%
Certain other benefits are afforded to the executives including medical insurance, life and disability insurance,
1
health savings and flexible spending account, and participation in the Company’s 401(k) Plan. Since listing on the
2
ASX, the Company matches employee contributions made to the 401(k) Plan to a maximum of 4% of the employee’s
annual income.
3
Five clinical sites installed in the United States
First occurrence of profitable HY results
Three clinical sites installed in Australia
30%
20%
Share options
3. Options value determined based on 50% of base salary for 2023 and short-term incentive paid in 2023 for 2022, subject to stockholder approval at
Options granted
Imricor’s 2023 AGM. As set out in the Company’s Notice of Meeting, the number of Options proposed to be issued to Mr Wedan was determined by
dividing the LTI Grant Value by the Black-Scholes value of an Option assuming an exercise price per Option equal to the closing sale price of a CDI as of
the immediately preceding trading day prior to the Record Date, converted from Australian dollars to U.S. dollars using the prevailing exchange rate.
The following options were granted during FY22:
• 205,000 options with exercise price of US$0.65, expiring 10 February 2032
• 50,000 options with exercise price of US$0.47, expiring 6 April 2032
Tranche
Vesting Conditions
Percentage of
2023 Options
• 3,099,244 options with exercise price of US$0.28, expiring 9 May 2032
1
Three clinical sites installed in Australia
35%
• 199,264 options with exercise price of US$0.21, expiring 26 July 2032
Five clinical sties installed in the United States
2
35%
• 1,130,000 options with exercise price of US$0.31, expiring 18 August 2032
3
First clinical sale for VT ablation
30%
The options shall vest annually over four years, 25% on each anniversary of the appointment of Mr Gut as CFO (1 July 2022).
4.
5. Ms Milbrandt retired from the Company on 30 June 2022.
26
Unissued shares
At the date of this report, unissued Shares under option are:
Expiry date
17 June 2023
19 May 2024
15 March 2029
30 August 2029
17 December 2029
6 January 2030
18 January 2030
20 February 2030
13 May 2030
7 October 2030
7 April 2031
5 May 2031
7 May 2031
10 February 2032
6 April 2032
9 May 2032
26 July 2023
18 August 2032
Exercise
price US$
Time-Based
Performance-Based
Total Number of
Shares
0.60
0.60
0.52
0.98
0.75
0.80
0.80
1.14
0.89
1.96
1.61
1.55
1.57
0.65
0.47
0.28
0.21
0.31
60,000
60,000
4,332,487
576,665
425,000
168,619
25,000
25,000
748,970
210,000
35,000
255,900
120,132
205,000
25,000
125,000
25,000
890,000
-
-
-
-
-
53,956
-
-
60,000
60,000
4,332,487
576,665
425,000
222,575
25,000
25,000
524,476
1,273,446
-
-
-
698,665
-
-
2,974,244
174,264
-
210,000
35,000
255,900
818,797
205,000
25,000
3,099,244
199,264
890,000
These options do not entitle the holder to participate in any share issue of the Company.
Shares issued on exercise of options
During FY22 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
59,300
Amount paid on each Share
US$0.52
27
ANNUAL REPORT 2022
Remuneration Report (cont.)
Executive remuneration during the year
The remuneration of key management personnel in respect of the financial year ended 31 December 2022 is
summarised below. The options to be granted under the long-term incentive plan for the CEO in relation to 2023
remuneration must be approved by stockholders at the 2023 Annual Meeting of Stockholders (AGM).
Executive
Steve Wedan
President and CEO
Base salary
US$464,900
Short-term
Incentive1
Long-term incentive
Nil
1,098,627 options granted on 9 May 2022 at an
exercise price of US$0.282
Gregg Stenzel
COO
Jonathon Gut
CFO
Lori Milbrandt
Former CFO5
US$300,000
US$207,500
US$157,500
174,264 options granted on 26 July 2022 at an
exercise price of US$0.212
1,426,949 options to be granted following
stockholder approval3
793,671 options granted on 9 May 2022 at an
exercise price of US$0.282
180,000 options granted on 10 February 2022 at
an exercise price of US$0.654
Nil
Nil
Nil
Nil
1. Determined at the discretion of the Board as discussed above.
2.
2022 Options:
Tranche
1
2
3
Percentage
of 2022
Options
Vesting Conditions
50%
First occurrence of profitable HY results
30%
Five clinical sites installed in the United States
20%
Three clinical sites installed in Australia
3. Options value determined based on 50% of base salary for 2023 and short-term incentive paid in 2023 for 2022, subject to stockholder approval at
Imricor’s 2023 AGM. As set out in the Company’s Notice of Meeting, the number of Options proposed to be issued to Mr Wedan was determined
by dividing the LTI Grant Value by the Black-Scholes value of an Option assuming an exercise price per Option equal to the closing sale price of a
CDI as of the immediately preceding trading day prior to the Record Date, converted from Australian Dollars to US Dollars using the prevailing
exchange rate.
Tranche
1
2
3
Percentage
of 2023
Options
Vesting Conditions
35%
Three clinical sites installed in Australia
35%
Five clinical sites installed in the United States
30%
First clinical sale for VT ablation
The options shall vest annually over four years, 25% on each anniversary of the appointment of Mr Gut as CFO (1 July 2022).
4.
5. Ms Milbrandt retired from the Company on 30 June 2022.
28
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 2022 is summarised below:
Non-Executive Director
Peter McGregor
Mark Tibbles
Anita Messal
Cash fees
US$80,000
US$80,000
US$75,000
Restricted Stock
Granted1
107,253
107,253
83,297
1. Restricted stock vests annually over four years, 25% on each anniversary of the grant date.
29
ANNUAL REPORT 2022
IMRICOR MEDICAL SYSTEMS, INC.
Minneapolis, Minnesota
Including Independent Auditor’s Report
As of and for the years ended December 31, 2022 and 2021
30
IMRICOR MEDICAL SYSTEMS, INC.
Minneapolis, Minnesota
Including Independent Auditor’s Report
As of and for the years ended December 31, 2022 and 2021
IMRICOR MEDICAL SYSTEMS, INC.
TABLE OF CONTENTS
Independent Auditor’s 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 - 27
31
ANNUAL REPORT 2022
Tel: 612-367-3000
Fax: 612-367-3001
www.bdo.com
800 Nicollet Mall, Suite 600
Minneapolis, MN 55402
Independent Auditor’s Report
Stockholders and Board of Directors
Imricor Medical Systems, Inc.
Burnsville, Minnesota
Opinion
We have audited the financial statements of Imricor Medical Systems, Inc. (the Company), which
comprise the balance sheet as of December 31, 2022, and the related statements of operations,
stockholders’ equity, and cash flows for the year then ended, and the related notes to the
financial statements.
In our opinion, the accompanying 2022 financial statements present fairly, in all material
respects, the financial position of the Company as of December 31, 2022, and the results of its
operations and its cash flows for the year then ended in accordance with accounting principles
generally accepted in the United States of America.
Basis for Opinion
We conducted our audit in accordance with auditing standards generally accepted in the United
States of America (GAAS). Our responsibilities under those standards are further described in the
Auditor’s Responsibilities for the Audit of the Financial Statements section of our report. We are
required to be independent of the Company and to meet our other ethical responsibilities, in
accordance with the relevant ethical requirements relating to our audit. 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 described in Note 3 to the financial statements, the Company has
suffered recurring losses from operations, 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 3. 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.
Other Matter
The 2021 financial statements of the Company were audited by other auditors, whose report
dated February 23, 2022 expressed an unmodified opinion on those statements.
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
BDO USA, LLP, a Delaware limited liability partnership, is the U.S. member of BDO International Limited, a UK company limited by guarantee, and forms part of
the international BDO network of independent member firms.
BDO is the brand name for the BDO network and for each of the BDO Member Firms.
32
Tel: 612-367-3000
Fax: 612-367-3001
www.bdo.com
800 Nicollet Mall, Suite 600
Minneapolis, MN 55402
Independent Auditor’s Report
Stockholders and Board of Directors
Imricor Medical Systems, Inc.
Burnsville, Minnesota
Opinion
We have audited the financial statements of Imricor Medical Systems, Inc. (the Company), which
comprise the balance sheet as of December 31, 2022, and the related statements of operations,
stockholders’ equity, and cash flows for the year then ended, and the related notes to the
financial statements.
In our opinion, the accompanying 2022 financial statements present fairly, in all material
respects, the financial position of the Company as of December 31, 2022, and the results of its
operations and its cash flows for the year then ended in accordance with accounting principles
generally accepted in the United States of America.
Basis for Opinion
We conducted our audit in accordance with auditing standards generally accepted in the United
States of America (GAAS). Our responsibilities under those standards are further described in the
Auditor’s Responsibilities for the Audit of the Financial Statements section of our report. We are
required to be independent of the Company and to meet our other ethical responsibilities, in
accordance with the relevant ethical requirements relating to our audit. 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 described in Note 3 to the financial statements, the Company has
suffered recurring losses from operations, 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 3. 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.
Other Matter
The 2021 financial statements of the Company were audited by other auditors, whose report
dated February 23, 2022 expressed an unmodified opinion on those statements.
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
BDO USA, LLP, a Delaware limited liability partnership, is the U.S. member of BDO International Limited, a UK company limited by guarantee, and forms part of
the international BDO network of independent member firms.
BDO is the brand name for the BDO network and for each of the BDO Member Firms.
(cid:31)(cid:30)(cid:29)(cid:28)(cid:27) (cid:26)(cid:25)(cid:26)(cid:24)(cid:23)(cid:23)(cid:22)(cid:24)(cid:23)(cid:21)(cid:21)(cid:21)(cid:27)
(cid:20)(cid:19)(cid:18)(cid:28)(cid:27) (cid:26)(cid:25)(cid:26)(cid:24)(cid:23)(cid:23)(cid:26)(cid:24)(cid:17)(cid:26)(cid:16)(cid:21)(cid:27)
(cid:15)(cid:15)(cid:15)(cid:14)(cid:13)(cid:12)(cid:11)(cid:14)(cid:10)(cid:11)(cid:9)(cid:27)
(cid:31)(cid:30)(cid:29)(cid:28)(cid:27) „(cid:26)(cid:8)(cid:24)(cid:17)(cid:16)„(cid:24)(cid:21)(cid:25)(cid:23)(cid:21)(cid:27)
(cid:20)(cid:19)(cid:18)(cid:28)(cid:27) „(cid:26)(cid:8)(cid:24)(cid:17)(cid:22)ƒ(cid:24)(cid:25)(cid:26)(cid:26)(cid:26)(cid:27)
(cid:27)
(cid:8)(cid:8)(cid:27)(cid:7)(cid:11)(cid:6)(cid:5)(cid:11)(cid:30)(cid:27)(cid:4)(cid:3)(cid:30)(cid:6)(cid:2)(cid:30)(cid:27)(cid:1)(cid:127)(cid:129)(cid:27)(cid:141)(cid:2)(cid:143)(cid:144)(cid:30)(cid:27)(cid:16)(cid:21)(cid:21)(cid:27)
(cid:157)(cid:5)(cid:19)(cid:6)(cid:12)(cid:27) (cid:19) (cid:143)(cid:12)€(cid:129)(cid:27)(cid:7)‚(cid:27)(cid:22)(cid:8)ƒ(cid:21)(cid:17)(cid:27)
(cid:27)
„(cid:25)(cid:25)(cid:27)…(cid:19)€(cid:144)(cid:27)(cid:127)(cid:19)(cid:144)(cid:30)(cid:5)(cid:27)(cid:141)(cid:144)(cid:5)(cid:30)(cid:30)(cid:144)(cid:129)(cid:27)(cid:141)(cid:2)(cid:143)(cid:144)(cid:30)(cid:27)(cid:17)(cid:21)(cid:21)(cid:27)
†(cid:19)(cid:29)(cid:19)(cid:9)(cid:19)‡(cid:11)(cid:11)(cid:129)(cid:27)(cid:7)‚(cid:27)(cid:22)(cid:8)(cid:21)(cid:21)(cid:23)(cid:27)
(cid:27)
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 the
Company’s ability to continue as a going concern within one year after the date that the financial
statements are issued or available to be issued.
Auditor’s 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
auditor’s 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 the Company’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 the Company’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.
February 22, 2023
33
ANNUAL REPORT 2022
IMRICOR MEDICAL SYSTEMS, INC.
BALANCE SHEETS
As of December 31, 2022 and 2021
CURRENT ASSETS
Cash
Accounts receivable
Inventory
Prepaid expenses and other current assets
Total Current Assets
ASSETS
2022
2021
$ 5,687,816
125,544
2,276,743
1,594,211
9,684,314
$ 18,516,208
94,735
2,582,813
1,505,556
22,699,312
ACCOUNTS RECEIVABLE-LONG TERM
228,984
201,544
PROPERTY AND EQUIPMENT, NET
2,563,356
2,951,924
OTHER ASSETS
227,779
363,676
OPERATING LEASE RIGHT OF USE ASSETS
996,428
647,951
TOTAL ASSETS
$ 13,700,861
$ 26,864,407
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
Convertible note
Contract liabilities, net of current portion
Operating lease liabilities, net of current portion
Finance lease liability, net of current portion
Other long-term liabilities
Total Liabilities
COMMITMENTS AND CONTINGENCIES (NOTE 7)
STOCKHOLDERS' EQUITY
Preferred stock, $0.0001 par value:
25,000,000 shares authorized and 0 shares outstanding as of both
December 31, 2022 and 2021
Common stock, $0.0001 par value:
535,000,000 shares authorized as of both December 31, 2022 and
2021 and 151,347,625 and 143,234,637 shares issued and
outstanding as of December 31, 2022 and 2021, respectively
Additional paid
Accumulated deficit
in capital
-
Total Stockholders' Equity
$ 259,267
924,936
23,358
198,073
160,680
508,424
2,074,738
$ 686,724
1,354,428
175,286
186,498
332,157
-
2,735,093
2,182,900
492,853
1,329,890
65,999
44,041
6,190,421
-
509,604
992,319
226,677
-
4,463,693
-
-
15,135
97,456,289
(89,960,984)
7,510,440
14,324
94,991,107
(72,604,717)
22,400,714
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
$ 13,700,861
$ 26,864,407
See accompanying notes to financial statements
Page 3
34
IMRICOR MEDICAL SYSTEMS, INC.
STATEMENTS OF OPERATIONS
For the Years Ended December 31, 2022 and 2021
2022
2021
IMRICOR MEDICAL SYSTEMS, INC.
STATEMENTS OF OPERATIONS
For the Years Ended December 31, 2022 and 2021
$ 647,230
120,835
47,946
816,011
2022
$ 371,340
69,223
255,704
696,267
2021
$ 647,230
2,342,795
120,835
2,804,769
47,946
7,946,129
816,011
4,982,404
18,076,097
$ 371,340
2,592,191
69,223
2,868,360
255,704
9,675,493
696,267
5,819,622
20,955,666
2,342,795
(17,260,086)
2,804,769
7,946,129
4,982,404
107,999
18,076,097
-
(17,955)
(17,260,086)
(177,917)
14,200
(22,508)
107,999
-
(96,181)
(17,955)
(177,917)
$ (17,356,267)
14,200
(22,508)
2,592,191
(20,259,399)
2,868,360
9,675,493
5,819,622
16,725
20,955,666
757,714
(42,990)
(20,259,399)
(108,849)
-
(95,741)
16,725
757,714
526,859
(42,990)
(108,849)
$ (19,732,540)
-
(95,741)
REVENUES
Product revenue
Service revenue
Government contract revenue
Total Revenues
REVENUES
COSTS AND EXPENSES
Product revenue
Cost of goods sold
Service revenue
Sales and marketing
Government contract revenue
Research and development
General and administrative
Total Revenues
Total Costs and Expenses
Loss from Operations
Total Costs and Expenses
OTHER INCOME (EXPENSE)
COSTS AND EXPENSES
Cost of goods sold
Sales and marketing
Research and development
General and administrative
Interest income
Employee retention credit
Foreign currency exchange loss
Loss from Operations
Interest expense
Fair value change in convertible note
Other expense
Interest income
Employee retention credit
Total Other Income (Expense)
Foreign currency exchange loss
Interest expense
NET LOSS
Fair value change in convertible note
Other expense
OTHER INCOME (EXPENSE)
EARNINGS PER SHARE:
Basic and diluted loss per common share
Basic and diluted weighted average shares outstanding
Total Other Income (Expense)
$ (0.12)
(96,181)
145,744,865
$ (0.15)
526,859
130,801,707
NET LOSS
EARNINGS PER SHARE:
See accompanying notes to financial statements
$ (17,356,267)
$ (19,732,540)
Basic and diluted loss per common share
Basic and diluted weighted average shares outstanding
$ (0.12)
145,744,865
$ (0.15)
130,801,707
See accompanying notes to financial statements
Page 4
Page 4
35
ANNUAL REPORT 2022
IMRICOR MEDICAL SYSTEMS, INC.
STATEMENTS OF STOCKHOLDERS' EQUITY
For the Years Ended December 31, 2022 and 2021
Common Stock
Shares
Amount
Additional
Paid-in Capital
Accumulated Total Stockholders'
Deficit
Equity
125,549,550
IMRICOR MEDICAL SYSTEMS, INC.
81,675,671
$
STATEMENTS OF STOCKHOLDERS' EQUITY
1,149,598
For the Years Ended December 31, 2022 and 2021
87,828
12,556
-
18
185,259
$
-
$
(52,872,177)
-
-
$
28,816,050
1,149,598
87,846
Common Stock
Accumulated Total Stockholders'
BALANCES, December 31, 2020
Stock-based compensation expense
Exercise of stock options, net of fees
Issuance of common stock, net of
issuance costs of $716,863
Net loss
BALANCES, December 31, 2021
BALANCES, December 31, 2020
Stock-based compensation expense
Stock-based compensation expense
Exercise of stock options, net of fees
Exercise of stock options, net of fees
Issuance of common stock, net of
Issuance of common stock and
issuance costs of $716,863
restricted stock, net of issuance
costs of $22,924
Net loss
BALANCES, December 31, 2021
Issuance of warrants, net of fees
Net loss
Stock-based compensation expense
Exercise of stock options, net of fees
Issuance of common stock and
BALANCES, December 31, 2022
restricted stock, net of issuance
costs of $22,924
Issuance of warrants, net of fees
Net loss
17,499,828
Shares
-
143,234,637
125,549,550
-
-
185,259
59,300
17,499,828
-
8,053,688
143,234,637
-
-
-
151,347,625
59,300
8,053,688
-
-
$
$
1,750
Amount
-
14,324
12,556
-
-
18
6
1,750
-
805
14,324
-
-
-
15,135
6
$
$
Additional
12,078,010
Paid-in Capital
-
$
$
94,991,107
81,675,671
1,149,598
320,835
87,828
29,825
12,078,010
-
-
$
1,992,673
94,991,107
121,849
320,835
97,456,289
29,825
$
Deficit
(19,732,540)
(72,604,717)
(52,872,177)
$
$
$
$
(19,732,540)
(72,604,717)
$
$
(17,356,267)
(89,960,984)
$
$
12,079,760
Equity
(19,732,540)
22,400,714
28,816,050
1,149,598
320,835
87,846
29,831
12,079,760
(19,732,540)
1,993,478
22,400,714
121,849
(17,356,267)
320,835
7,510,440
29,831
-
-
-
-
-
-
-
-
-
-
-
-
BALANCES, December 31, 2022
151,347,625
$
See accompanying notes to financial statements
1,992,673
121,849
805
-
-
15,135
-
$
97,456,289
(17,356,267)
(89,960,984)
$
1,993,478
121,849
(17,356,267)
7,510,440
$
See accompanying notes to financial statements
Page 5
Page 5
36
IMRICOR MEDICAL SYSTEMS, INC.
STATEMENTS OF CASH FLOWS
For the Years Ended December 31, 2022 and 2021
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss
Adjustments to reconcile net loss to net cash flows from operating
activities:
Depreciation
Stock-based compensation expense
Loss on disposal of property and equipment
Change in inventory reserves
Foreign currency exchange loss
Change in fair value of convertible note
Amortization of issuance costs of convertible note
Changes in assets and liabilities
Accounts receivable
Inventory
Prepaid expenses and other assets
Accounts payable
Accrued expenses
Contract liabilities
Net Cash Flows used in Operating Activities
2022
2021
$ (17,356,267)
$ (19,732,540)
712,491
320,835
509
682,187
17,955
(14,200)
103,937
689,114
1,149,598
82,970
668,464
42,990
-
-
(68,217)
(444,967)
585,196
(404,192)
(476,809)
(168,679)
(16,510,221)
154,062
(181,357)
(823,616)
148,762
218,125
94,882
(17,488,546)
CASH FLOWS FROM INVESTING ACTIVITIES
Equity investment
Purchases of property and equipment
Net Cash Flows used in Investing Activities
-
(238,859)
(238,859)
(69,560)
(625,745)
(695,305)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from exercise of stock options
Proceeds from financing obligation
Payments on financing obligation
Proceeds from convertible note and warrant
Debt issuance costs on convertible note
Proceeds from issuance of common stock
Issuance costs of common stock and restricted stock
Payments on finance lease liability
Net Cash Flows provided by Investing Activities
29,831
839,148
(864,121)
2,325,000
(47,749)
2,016,402
(22,924)
(332,155)
3,943,432
87,846
-
(337,804)
-
-
12,079,760
-
(243,498)
11,586,304
Net Change in Cash
CASH - Beginning of Year
Effect of foreign currency exchange rate changes on cash
CASH - End of Year
(12,805,648)
18,516,208
(22,744)
$ 5,687,816
(6,597,547)
25,139,812
(26,057)
$ 18,516,208
Supplemental cash flow disclosure
Cash paid for interest
Noncash investing and financing activities
$ 73,932
$ 176,674
Property and equipment included in accounts payable
Transfer from inventory to property and equipment
$ 16,723
$ 68,850
$ -
$ -
Leasehold improvements paid by landlord
$ 35,041
$ -
Operating lease right of use assets in exchange for operating
lease liability
$ 570,752
$ -
Issuance costs included in accounts payable and accrued
expenses
$ 62,239
$ -
See accompanying notes to financial statements
Page 6
37
ANNUAL REPORT 2022
IMRICOR MEDICAL SYSTEMS, INC.
NOTES TO FINANCIAL STATEMENTS
As of and for the years ended December 31, 2022 and 2021
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 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 is the Vision-MR Ablation Catheter, which
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 dollars, which is also the
functional currency.
Impact of COVID-19 Pandemic
During the years ended December 31, 2022 and 2021, the Company’s revenue was impacted by the COVID-
19 pandemic. The Company continued to observe intermittent suspension of many elective procedures
associated with various surges in COVID-19, including procedures that utilize the Company’s products. The
impact of COVID-19 has varied by region and by healthcare facility. As a result, lab adoption and procedure
volumes have been constrained. While restrictions on elective procedures have now been lifted, there have
been shortages of personnel at hospitals which has hampered the ability to perform procedures using the
Company’s products.
The Company is unable to accurately predict the full impact that COVID-19 will have on its results from
operations, financial condition, liquidity, and cash flows due to numerous uncertainties, including the duration
and severity of outbreaks and containment measures, the emergence of new variants, and the impact on the
Company’s customers and its vendors. The Company’s future results of operations and liquidity could be
adversely impacted by delays in payments from customers, supply chain disruptions, product design changes,
and uncertain demand which could lead to expiration of inventory. The Company will continue to monitor the
situation and take further actions that it determines are in the best interest of its 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
38
IMRICOR MEDICAL SYSTEMS, INC.
NOTES TO FINANCIAL STATEMENTS
IMRICOR MEDICAL SYSTEMS, INC.
As of and for the years ended December 31, 2022 and 2021
NOTES TO FINANCIAL STATEMENTS
As of and for the years ended December 31, 2022 and 2021
NOTE 1 – Summary of Significant Accounting Policies (cont.)
NOTE 1 – Summary of Significant Accounting Policies (cont.)
Accounts Receivable and Customer Concentrations
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
Accounts receivable are unsecured, are recorded at net realizable value, and do not bear interest except if a
to collect outstanding receivables based upon significant patterns of uncollectability, historical experience,
revenue transaction has a significant financing component. The Company makes judgments as to its ability
and managements’ evaluation of specific accounts and provides an allowance for credit losses when
to collect outstanding receivables based upon significant patterns of uncollectability, historical experience,
collection becomes doubtful. The Company performs credit evaluations of its customers’ financial condition
and managements’ evaluation of specific accounts and provides an allowance for credit losses when
on an as-needed basis. Payment is generally due 30 days from the invoice date and accounts past 30 days
collection becomes doubtful. The Company performs credit evaluations of its customers’ financial condition
are individually analyzed for collectability. When all collection efforts have been exhausted, the account is
on an as-needed basis. Payment is generally due 30 days from the invoice date and accounts past 30 days
written off against the related allowance. To date the Company has not experienced any significant write-offs
are individually analyzed for collectability. When all collection efforts have been exhausted, the account is
or significant deterioration of its accounts receivable aging, and therefore, no allowance for doubtful accounts
written off against the related allowance. To date the Company has not experienced any significant write-offs
was considered necessary as of December 31, 2022 or 2021. During the year ended December 31, 2022,
or significant deterioration of its accounts receivable aging, and therefore, no allowance for doubtful accounts
the Company had sales from 4 customers that accounted for 72% of revenue and accounts receivable from
was considered necessary as of December 31, 2022 or 2021. During the year ended December 31, 2022,
5 customers that represented 97% of the accounts receivable balance. During the year ended December 31,
the Company had sales from 4 customers that accounted for 72% of revenue and accounts receivable from
2021, the Company had sales from 3 customers that accounted for 67% of revenue and accounts receivable
5 customers that represented 97% of the accounts receivable balance. During the year ended December 31,
from 3 customers that represented 96% of the accounts receivable balance.
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.
Accounts receivable includes unbilled receivables of $41,874 and $37,205 as of December 31, 2022 and
2021, respectively, which represents the current portion of minimum royalties due to the Company during the
Accounts receivable includes unbilled receivables of $41,874 and $37,205 as of December 31, 2022 and
following year. The accounts receivable-long term relates to minimum royalties due to the Company for years
2021, respectively, which represents the current portion of minimum royalties due to the Company during the
ending after December 31, 2023.
following year. The accounts receivable-long term relates to minimum royalties due to the Company for years
ending after December 31, 2023.
Inventory
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
Inventories are stated at the lower of cost or net realizable value, with cost determined on the first-in, first-out
usage and estimated exposure on specific inventory items. Inventories are as follows:
(“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:
December 31,
2022
December 31,
2021
Raw materials
Work in process
Raw materials
Finished goods
Work in process
Less: excess and obsolescence reserves
Finished goods
Less: excess and obsolescence reserves
$
$
$
$
2022
1,456,282
400,059
1,456,282
997,871
400,059
(577,469)
997,871
2,276,743
(577,469)
2,276,743
$
$
$
$
2021
1,476,630
549,303
1,476,630
1,512,106
549,303
(955,226)
1,512,106
2,582,813
(955,226)
2,582,813
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 Company utilizes significant estimates in determining the realizable value of its inventory, including the
the inventory values recorded as of December 31, 2022 and 2021. Management continually evaluates the
future revenue forecasts that will result in product sales. These estimates have a corresponding impact on
likelihood of future sales based on current economic conditions, restrictions on ability for customers to perform
the inventory values recorded as of December 31, 2022 and 2021. Management continually evaluates the
elective procedures, expiration timing of products, and product design changes prior to sale of product on
likelihood of future sales based on current economic conditions, restrictions on ability for customers to perform
hand. If actual conditions are less favorable than those the Company has projected, it may need to increase
elective procedures, expiration timing of products, and product design changes prior to sale of product on
its reserves for excess and obsolete inventories. Any increases in the Company’s reserves will adversely
hand. If actual conditions are less favorable than those the Company has projected, it may need to increase
impact its results of operations. The establishment of a reserve for excess and obsolete inventory establishes
its reserves for excess and obsolete inventories. Any increases in the Company’s reserves will adversely
a new cost basis in the inventory. Future sales of inventory on hand at December 31, 2022 will result in
impact its results of operations. The establishment of a reserve for excess and obsolete inventory establishes
recognition of cost of sales based on initial inventory costs, net of reserves taken for expected realization
a new cost basis in the inventory. Future sales of inventory on hand at December 31, 2022 will result in
values.
recognition of cost of sales based on initial inventory costs, net of reserves taken for expected realization
values.
Page 8
Page 8
39
ANNUAL REPORT 2022
IMRICOR MEDICAL SYSTEMS, INC.
NOTES TO FINANCIAL STATEMENTS
As of and for the years ended December 31, 2022 and 2021
NOTE 1 – Summary of Significant Accounting Policies (cont.)
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 $113,888 for the year ended December
31, 2022, which is included in Cost of goods sold on the statements of operations. The Company had a
balance of $194,823 in Accrued expenses on the balance sheets related to these commitments at December
31, 2022. For the year ended December 31, 2021, the Company recorded an expense of $212,931 related
to these commitments, which is included in Cost of goods sold on the statements of operations and in Accrued
expenses on the balance sheets.
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 - 5 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 of $69,560 made during the year ended December 31, 2021. The equity
investment is held at cost, less impairment plus or minus changes resulting from observable price changes.
There have been no impairment losses or observable price changes recognized for the years ended December
31, 2022 and 2021.
Patents
Expenditures for patent costs are charged to operations as incurred.
Page 9
40
IMRICOR MEDICAL SYSTEMS, INC.
NOTES TO FINANCIAL STATEMENTS
As of and for the years ended December 31, 2022 and 2021
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 145,744,865 and 130,801,707 for
the years ended December 31, 2022 and 2021, 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 outstanding 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, 2022 and 2021.
The table below provides potentially dilutive securities not included in the calculation of the diluted net loss per
share for the years ended December 31 because to do so would be anti-dilutive:
Exercise of stock options
Conversion of convertible note
Exercise of warrant
Total
2022
2021
12,913,186
8,659,794
907,141
22,480,121
11,253,506
-
-
11,253,506
Foreign Currency Exchange Gains (Losses)
During the years ended December 31, 2022 and 2021, the Company had accounts payable that are
denominated in Australian dollars, British pound sterling, 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).
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,
the timing of which varies on an individual customer basis.
Page 10
41
ANNUAL REPORT 2022
IMRICOR MEDICAL SYSTEMS, INC.
NOTES TO FINANCIAL STATEMENTS
As of and for the years ended December 31, 2022 and 2021
NOTE 1 – Summary of Significant Accounting Policies (cont.)
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.
All revenue is derived from foreign countries. 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.
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.
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 $47,946 and $255,704 as
revenue during the years ended December 31, 2022 and 2021, respectively.
Contract Liabilities
In 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.
A total of $373,333 of this amount is deferred and is included in long-term contract liabilities as of December
31, 2022 and 2021. 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, 2022 and 2021, the Company had total current
and long-term contract liabilities of $516,211 and $684,890, respectively, of which $492,853 and $509,604
was included in long-term liabilities as of December 31, 2022 and 2021, respectively.
Page 11
42
IMRICOR MEDICAL SYSTEMS, INC.
NOTES TO FINANCIAL STATEMENTS
As of and for the years ended December 31, 2022 and 2021
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:
Equipment revenue
Service revenue
2022
2021
$
684,890
$
590,008
(97,842)
(73,419)
-
(40,202)
Increase for revenue deferred as the performance
obligation has not been satisfied
Balance at the end of the year
$
2,582
516,211
$
135,084
684,890
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.
The Company’s policy is to account for forfeitures as they occur and compensation expense is recognized on
a straight-line basis over the vesting period for awards with service and market conditions; for awards with
performance conditions, expense is recognized for those that are probable of being achieved. 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 9 for further details and assumptions regarding the Black-Scholes pricing model.
Fair Value Measurement
ASC 820, Fair Value Measurements, (“ASC 820”) provides guidance on the development and disclosure of fair
value measurements. Under this accounting guidance, fair value is defined as an exit price, representing the
amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between
market participants at the measurement date. As such, fair value is a market-based measurement that should
be determined based on assumptions that market participants would use in pricing an asset or a liability.
The accounting guidance classifies fair value measurements in one of the following three categories for
disclosure purposes:
Level 1:
Level 2:
Level 3:
Quoted prices in active markets for identical assets or liabilities.
Inputs other than Level 1 prices for similar assets or liabilities that are directly or indirectly
observable in the marketplace.
Unobservable inputs which are supported by little or no market activity and values determined
using pricing models, discounted cash flow methodologies, or similar techniques, as well as
instruments for which the determination of fair value requires significant judgment or estimation.
Page 12
43
ANNUAL REPORT 2022
IMRICOR MEDICAL SYSTEMS, INC.
NOTES TO FINANCIAL STATEMENTS
As of and for the years ended December 31, 2022 and 2021
NOTE 1 – Summary of Significant Accounting Policies (cont.)
The Company evaluates assets and liabilities subject to fair value measurements on a recurring basis to
determine the appropriate level at which to classify them for each reporting period. This determination requires
significant judgments to be made by the Company.
The carrying value of financial assets and liabilities recorded at fair value is measured on a recurring or
nonrecurring basis. Financial assets and liabilities measured on a non-recurring basis are those that are
adjusted to fair value when a significant event occurs. The Company had no financial assets or liabilities carried
and measured on a nonrecurring basis during the reporting periods. Financial assets and liabilities measured
on a recurring basis are those that are adjusted to fair value each time a financial statement is prepared. The
convertible note (Note 8) is recognized at fair value on a recurring basis at December 31, 2022 and is a Level
3 measurement. There have been no transfers between levels.
As of December 31, 2022 and 2021, the recorded values of cash, prepaid expenses, accounts payable, and
accrued expenses and other liabilities approximate their fair values due to the short-term nature of these items.
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.
The Company qualified for the ERC as it experienced a significant decline in gross receipts in 2021 and 2020.
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.
Page 13
44
IMRICOR MEDICAL SYSTEMS, INC.
NOTES TO FINANCIAL STATEMENTS
As of and for the years ended December 31, 2022 and 2021
NOTE 1 – Summary of Significant Accounting Policies (cont.)
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 related to transfers of assets from governments to
business 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 balance of $474,445 and $757,714 as of December
31, 2022 and 2021, respectively, is included in Prepaid expense and other current assets on the balance sheets.
The Company collected the remaining receivable balance in January 2023.
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 does not expect the adoption of this ASU to have a material impact on the financial statements.
In August 2020, the FASB issued Accounting Standards Update (“ASU”) 2020-06, Debt - Debt with Conversion
and Other Options (Subtopic 470-20) and Derivatives and Hedging - Contracts in Entity’s Own Equity (Subtopic
815-40) (“ASU 2020-06”), which simplifies accounting for convertible instruments by removing major
separation models required under current GAAP. The ASU also removes certain settlement conditions that
are required for equity-linked contracts to qualify for scope exception, and it simplifies the diluted earnings per
share calculation in certain areas. ASU 2020-06 is effective for fiscal years beginning after December 15, 2023
and should be applied on a full or modified retrospective basis, with early adoption permitted beginning on
January 1, 2021. The Company has elected to early adopt ASU 2020-06 on January 1, 2022. Adoption of the
ASU did not impact the Company’s financial position, results of operations or cash flows upon adoption.
Page 14
45
ANNUAL REPORT 2022
IMRICOR MEDICAL SYSTEMS, INC.
NOTES TO FINANCIAL STATEMENTS
As of and for the years ended December 31, 2022 and 2021
NOTE 2 – Out of Period Adjustment
During the year ended December 31, 2022, an error was identified relating to financing arrangements entered
into in 2019, 2020, and 2021 in connection with obtaining annual insurance contracts. The Company has
corrected this immaterial error by recognizing a prepaid insurance asset and financing liability in the amount
of $533,000 pertaining to the financing arrangement that existed as of December 31, 2021. Accordingly, the
statements of cash flows for the year ended December 31, 2022 reflects the $533,000 cash provided from
operating activities and $533,000 cash used in financing activities as a result of the out of period adjustment
related to this arrangement. The Company evaluated the error both quantitatively and qualitatively and
concluded that the errors are not material for any prior periods and has adjusted the amounts on a cumulative
basis in 2022.
NOTE 3 – Going Concern
The accompanying financial statements have been prepared on a going concern basis, which contemplates
the realization of assets and satisfaction of liabilities and commitments in the normal course of business. The
Company incurred losses from operations and negative cash flows from operations for both of the years ended
December 31, 2022 and 2021, had an accumulated deficit as of December 31, 2022 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 4 – Accrued Expenses
Accrued expenses consisted of the following:
Compensation
Firm inventory commitments
Other accruals
December 31,
2022
2021
$
$
147,453
194,823
582,660
924,936
595,942
212,931
545,555
1,354,428
$
$
Page 15
46
IMRICOR MEDICAL SYSTEMS, INC.
NOTES TO FINANCIAL STATEMENTS
As of and for the years ended December 31, 2022 and 2021
NOTE 5 – Property and Equipment
Substantially all property and equipment is held in the U.S. as of December 31, 2022. Property and
equipment consisted of the following:
December 31,
2022
2021
Office furniture and equipment
Lab and production equipment
Computer equipment
MRI scanner
Leasehold improvements
Less: accumulated depreciation and amortization
$
$
272,267
1,754,068
240,669
1,200,000
1,641,837
5,108,841
(2,545,485)
2,563,356
293,216
1,525,226
264,859
1,200,000
1,597,087
4,880,388
(1,928,464)
2,951,924
$
$
Depreciation expense was $712,491 and $689,114 for the years ended December 31, 2022 and 2021,
respectively.
NOTE 6 – 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. The lease was amended to increase the square footage
and extend the term for five years. Upon commencement of the amended lease in March 2022, the Company
recorded a right to use asset and lease liability of $570,752. As part of the amendment, the landlord also agreed
to reimburse the Company for $35,041 in leasehold improvements. The Company received the reimbursement
in October 2022.
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 the leases do not provide an implicit rate, the Company uses its 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, 2022 and 2021, the remaining lease term was 6.4 and 7.9 years, respectively, and the
discount rate was 5.5%. For the year ended December 31, 2022 and 2021, the operating cash outflows from
operating leases for office and manufacturing space was $227,210 and $221,136, respectively.
Page 16
47
ANNUAL REPORT 2022
IMRICOR MEDICAL SYSTEMS, INC.
NOTES TO FINANCIAL STATEMENTS
As of and for the years ended December 31, 2022 and 2021
NOTE 6 – Leases (cont.)
As of December 31, 2022, maturities of the Company’s operating lease liabilities are as follows:
2022
2023
2024
2025
2026
2027
2028 and thereafter
Total lease payments
Less: interest
Present value of lease liabilities
Less: current portion
Operating lease liability, net of current portion
$
277,973
292,571
301,375
310,467
217,689
426,754
1,826,829
(298,866)
1,527,963
(198,073)
1,329,890
$
The cost components of the Company’s operating leases, which were included in General and administrative
expenses on the statements of operations were as follows for the years ended December 31, 2022 and 2021:
December 31,
2022
2021
Operating lease cost
Variable lease cost
Finance Lease Liability
$
$
$
$
227,210
137,997
365,207
221,136
122,880
344,016
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 was 36 months with a monthly
rental payment of $54,865 and an implied interest rate of 21.5%. 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. 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, with the
Company owning the scanner outright at the conclusion of the extension term. Consequently, the lease no
longer qualified as a financing obligation and was classified as a finance lease liability on the balance sheets
beginning December 31, 2021. Beginning June 1, 2022, the start of the amended agreement term, the monthly
rental payment is $13,342 and the implied interest rate is 7.0%.
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.
Page 17
48
IMRICOR MEDICAL SYSTEMS, INC.
NOTES TO FINANCIAL STATEMENTS
As of and for the years ended December 31, 2022 and 2021
NOTE 6 – Leases (cont.)
As of December 31, 2022, maturities of the Company’s finance lease liabilities are as follows:
2022
2023
2024
Total payments
Less: amount representing interest
Present value of total payments
Less: current portion
Finance lease liability, net of current portion
Vendor concentration
$
171,370
67,159
238,529
(11,850)
226,679
(160,680)
65,999
$
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.
NOTE 7 – Commitments and Contingencies
For the year ended December 31, 2022, the Company had accounts payable to three vendors that accounted
for 11%, 10% and 10% of the total outstanding balance. For the year ended December 31, 2021, the Company
had accounts payable to one vendor that accounted for 16% of the total outstanding balance.
Purchase Commitments
At December 31, 2022 and 2021, the Company had $1,294,613 and $1,195,602 in outstanding firm purchase
commitments, respectively. As of December 31, 2022, payment of the purchase commitments is expected to
be made within one year.
Financing Obligation
The Company entered into an agreement to finance a portion of an annual insurance premium for the policy
period beginning August 2022. The financing obligation is to be paid in 10 monthly installments of $86,203
beginning in September 2022, and the stated interest rate is 5.91%.
Retirement Plan
The Company maintains retirement plans for its employees in which eligible employees can contribute a
percentage of their compensation. The Company contributed $257,480 and $309,929 to these plans during the
years ended December 31, 2022 and 2021, respectively.
Employment Agreements
The Company has employment agreements with the CEO and certain 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 18
49
ANNUAL REPORT 2022
IMRICOR MEDICAL SYSTEMS, INC.
NOTES TO FINANCIAL STATEMENTS
As of and for the years ended December 31, 2022 and 2021
NOTE 8 – Convertible Note with Warrant
On December 16, 2022, the Company entered into a Securities Purchase Agreement for the issue of unsecured,
unquoted convertible promissory notes, to be issued in two tranches, to raise a maximum aggregate amount of
$5,000,000.
The first tranche was issued on December 23, 2022. The Company received $2,325,000 in gross proceeds
from the issuance of the convertible note. The convertible note bears interest of 10% per annum, compounded
annually. All or a portion of the principal is convertible into CDIs at a price of $0.2691 per share at the election
of the holder following the 36 month anniversary of the closing date. All or a portion of accrued and unpaid
interest is convertible into CDIs at a price of $0.2563 per share at the election of the holder during the same
time frame. The maximum number of CDIs to be issued upon conversion of the principal amount and interest
is no more than 12,849,949 CDIs.
The maturity date on the note is the earliest occurrence of (i) a change-in-control event, at which time the
Company would be required to pay the holder the greater of 125% of the then outstanding balance plus accrued
and unpaid interest or the amount the holder would receive if the principal and accrued and unpaid interest had
been converted to CDIs at a conversion price equal to the variable weighted average price (“VWAP”) of the
CDIs for the 10 day period ending on the change-in-control event date; or (ii) December 23, 2026, the four year
anniversary of the closing date.
Also on December 23, 2022, pursuant to the Securities Purchase Agreement, the Company issued a warrant
exercisable for 907,141 CDIs, with an exercise price of $0.2563 per share. The warrant expires five years after
the date of issuance.
The Company accounts for its convertible promissory note under ASC 815, Derivatives and Hedging ("ASC
815"). Under 815-15-25, the election can be made at the inception of a financial instrument to account for the
instrument under the fair value option under ASC 825. The Company has made such election for its convertible
promissory note. Using the fair value option, the convertible promissory note is required to be recorded at its
initial fair value on the date of issuance, and each balance sheet date thereafter. Changes in the estimated fair
value of the note are recognized as non-cash change in the fair value of the convertible promissory note in the
statements of operations.
The convertible note was recorded as a liability on the balance sheets at the date of issuance. The following
table provides a summary of change in fair value of the convertible note as of December 31, 2022:
Fair market value at issuance
Fair value change in convertible note
Fair market value at December 31, 2022
$
$
2,197,100
(14,200)
2,182,900
The fair value of the convertible note is measured in accordance with ASC 820 “Fair Value Measurement” using
the “Monte Carlo Method” modeling incorporating the following inputs:
December 31,
December 23,
2022
2022
0%
80%
3.90%
0.2514
0.2691
$
$
0%
80%
4.03%
0.2481
0.2691
$
$
Page 19
Expected dividend yield
Expected stock-price volatility
Risk-free interest rate
Stock price
Conversion price
50
IMRICOR MEDICAL SYSTEMS, INC.
NOTES TO FINANCIAL STATEMENTS
As of and for the years ended December 31, 2022 and 2021
NOTE 8 – Convertible Note with Warrant (cont.)
Significant assumptions used to determine the fair value of the convertible note include the estimated probability
of a change in control event, which is based on management’s expectation of future transactions, and the
volatility of the stock price, which is estimated 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 due to the limited volatility
history for the Company’s shares relative to the term of the note.
The Company evaluated the warrant under ASC 480, “Distinguishing Liabilities from Equity” and ASC 815. The
warrant does not meet the characteristics for liability classification under either provision and as such is
classified as equity under ASC 815. Given that the convertible note was subject to fair value remeasurement,
the fair value of the convertible note was carved out from gross proceeds and the remainder of the gross
proceeds of $127,900 was allocated to warrants. The warrant was recorded as Additional paid-in capital on the
balance sheets at the date of issuance. No subsequent remeasurement of the warrant is required.
The issuance costs attributable to the convertible note of $103,937 were recorded as interest expense given
the fair value accounting treatment, in accordance with ASC 825-10-25-3. Issuance costs allocated to the
warrant of $6,051, were recorded in Additional paid-in capital given the equity classification of the warrants.
The second tranche of the convertible promissory notes to be issued, which is subject to stockholder approval,
calls for $2,675,000 of gross proceeds to be received. The second tranche is subject to the same terms as the
first tranche. The Securities Purchase Agreement calls for a warrant exercisable for 1,043,699 CDIs, to be
issued concurrently with the second tranche of the convertible promissory notes.
NOTE 9 – Stockholders' Equity
Capital Stock Authorized
As of both December 31, 2022 and 2021, 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, depositary 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 is held by a depositary, CHESS Depositary
Nominees Pty Ltd (“CDN”), which is a wholly-owned subsidiary of the ASX, and is an approved general
participant of ASX Settlement.
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.
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.
Page 20
51
ANNUAL REPORT 2022
IMRICOR MEDICAL SYSTEMS, INC.
NOTES TO FINANCIAL STATEMENTS
As of and for the years ended December 31, 2022 and 2021
NOTE 9 – Stockholders' Equity (cont.)
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.
During January 2022, a total of 59,300 options to purchase common stock were exercised at $0.52 per share
for total proceeds of $29,831, net of expenses.
During May 2022, the Company issued 298,297 shares of restricted stock to its three independent board
directors. See Restricted Stock section below for further detail.
In September 2022, the Company completed an equity raise from US investors which consisted of 7,755,391
shares of common stock at $0.26 US dollar per share for proceeds of $1,994,445, 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 stockholders, 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 stockholders 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. On April
6, 2022, the Board of Directors approved an increase of 848,695 shares to the option pool.
Page 21
52
IMRICOR MEDICAL SYSTEMS, INC.
NOTES TO FINANCIAL STATEMENTS
As of and for the years ended December 31, 2022 and 2021
NOTE 9 – Stockholders' Equity (cont.)
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 have been issued to the executive
management team that vest upon completion of certain milestones, performance requirements, and market
conditions; as of December 31, 2022, 4,506,538 of these options are issued and outstanding. For these
performance-based awards, expense is recognized when it is probable the performance condition will be
achieved. If at any point the Company determines that the performance condition is improbable, any previously
recognized expense is reversed. Adjustments for forfeitures are recorded as the occur. In no event are the
options exercisable for more than ten years after the date of grant. The Company issues new shares of common
stock when stock options are exercised.
Information regarding the Company's stock options is summarized below:
Number of
Option Shares
Weighted-Average
Exercise
Price
Aggregate
Intrinsic
Value
Options outstanding - December 31, 2021
Exercised
Forfeited and expired
Granted
Options outstanding - December 31, 2022
Options exercisable - December 31, 2022
Weighted average fair value of options granted
during the year ended December 31, 2022
Weighted average fair value of options granted
during the year ended December 31, 2021
11,253,506
(59,300)
(2,964,528)
4,683,508
12,913,186
6,090,036
$
0.81
0.52
0.78
0.30
0.64
0.66
$
$
$
7,971
$
-
$
0.19
$
0.96
As of December 31, 2022, the Company had 829,811 shares available for grant under the Plan.
The weighted average remaining contractual life of options outstanding and exercisable was 7.27 and 5.51
years, respectively, as of December 31, 2022.
The intrinsic value of options exercised during the years ended December 31, 2022 and 2021 was $16,379 and
$202,923, 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
2022
2021
5.70 - 6.82 years
63.58% - 64.96%
2.00% - 3.01%
0%
5.57 - 6.95 years
66.16%
1.24%
0%
Page 22
53
ANNUAL REPORT 2022
IMRICOR MEDICAL SYSTEMS, INC.
NOTES TO FINANCIAL STATEMENTS
As of and for the years ended December 31, 2022 and 2021
NOTE 9 – Stockholders' Equity (cont.)
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 due to the limited volatility history for the Company’s shares
relative to the expected life of the option awards granted. 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. The Company’s policy
is to account for forfeitures as they occur and records stock-based compensation expense only for those awards
that are expected to vest.
Total stock-based compensation expense resulting from options is charged to the Company’s statements of
operations as follows:
December 31,
2022
2021
Cost of goods sold
Sales and marketing
Research and development
General and administrative
$
$
31,309
81,914
62,913
131,207
307,343
36,894
112,220
233,991
766,493
1,149,598
$
$
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, 2022, the total unrecognized compensation cost related to unvested stock options then
outstanding was $2,021,199. Future stock-based compensation expense is expected to be as follows for the
years ending December 31:
2022
2023
2024
2025
2026
Total related to options expected to vest
Performance grants not probable of achievement
Total unrecognized compensation expense
$
522,792
290,325
105,672
39,422
958,211
1,062,988
2,021,199
$
The performance grants not probable of achievement are generally related to the receipt of regulatory approvals
or sales milestones predicated on the receipt of regulatory approvals not yet received. Under current U.S.
GAAP, these milestones are generally not considered probable until the regulatory approval is obtained.
Issuance of additional options subsequent to December 31, 2022 could affect future expected amounts.
Page 23
54
IMRICOR MEDICAL SYSTEMS, INC.
NOTES TO FINANCIAL STATEMENTS
As of and for the years ended December 31, 2022 and 2021
NOTE 9 – Stockholders' Equity (cont.)
Restricted Stock
On May 9, 2022, the Company issued 298,297 shares of restricted stock to its three independent board
directors. The restricted stock vests annually over four years on the anniversary of the grant date, provided that
the participant continuously provides services to the Company through the applicable vesting date. The fair
market value on the date of grant was $0.28 per share.
Total stock-based compensation expense resulting from grants of restricted stock was $13,492 for the year
ended December 31, 2022. 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, 2022, the total unrecognized compensation cost related to unvested restricted stock was
$70,032. Future unrecognized stock-based compensation expense is expected to be as follows for the years
ended December 31 thereafter:
2022
2023
2024
2025
2026
Total
Warrant
$
$
20,867
20,867
20,866
7,432
70,032
As part of the convertible note issuance, the Company issued a warrant to purchase CDIs which are
summarized below:
Warrants outstanding - December 31, 2021
Warrants issued
Warrants exercised
Warrants expired/forfeited
Warrants outstanding - December 31, 2022
Warrants exercisable - December 31, 2022
NOTE 10 – Income Taxes
Number of
Warrants
Weighted-Average
Exercise Price
-
907,141
-
-
907,141
907,141
$
-
0.2563
-
-
0.2563
0.2563
$
$
As of December 31, 2022, the Company had generated approximately $73,312,000 of net operating losses
(“NOL”) for federal tax purposes. As a result of the Tax Cuts and Jobs Act, for U.S. income tax purposes, NOLs
generated prior to December 31, 2017 can still be carried forward for up to 20 years, while NOLs generated
after December 31, 2017 carryforward indefinitely, but are limited to 80% utilization against taxable income. Of
the total federal NOL of $73,312,000, $18,662,000 will begin to expire in 2028 and $54,650,000 will not expire
but will only offset 80% of future taxable income.
Page 24
55
ANNUAL REPORT 2022
IMRICOR MEDICAL SYSTEMS, INC.
NOTES TO FINANCIAL STATEMENTS
As of and for the years ended December 31, 2022 and 2021
NOTE 10 – Income Taxes (cont.)
As of December 31, 2022, the Company had also generated approximately $35,184,000 of state NOLs. The
state NOLs can be carried forward for up to 15 years and are limited to 80% utilization against taxable income.
The state NOLs begin to expire in 2023 if they are not used.
As of December 31, 2022, the Company had approximately $1,584,000 of federal research and development
(“R&D”) credit carryforwards available for federal tax purposes. As of December 31, 2022, the Company also
had approximately $881,000 of state R&D credit carryforwards available for Minnesota. The federal and state
R&D credits carryforwards begin to expire in 2027 and 2028, respectively, if they are not used.
Pursuant to Sections 382 and 383 of the Internal Revenue Code of 1986, as amended (the “Code”), annual use
of the Company’s NOLs and R&D credit carryforwards may be limited if there is a cumulative change in
ownership of greater than 50% within a three-year period. The amount of annual limitation is determined based
on the value of the Company immediately prior to the ownership change. Subsequent ownership changes may
further affect the limitation in future years. If limited, the related tax assets would be removed from the deferred
tax asset schedule with a corresponding reduction in the valuation allowance. A preliminary analysis of past
and subsequent equity offerings by the Company, and other transactions that have an impact on the Company’s
ownership structure, concluded that the Company may have experienced one or more ownership changes
under Sections 382 and 383 of the Code. As such, the Company has established a valuation allowance as the
realization of its deferred tax assets have not met the more likely than not threshold requirement.
The Company conducts intensive research and experimentation activities, generating R&D tax credits for
Federal and state purposes under Section 41 of the Code. The Company has not performed a formal study
validating these credits claimed in the tax returns. Once a study is prepared, the amount of R&D tax credits
available could vary from what was originally claimed on the tax returns.
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)
2022
2021
$
-
-
-
$
-
-
-
(3,961,000)
305,000
(3,656,000)
3,656,000
(4,310,000)
(1,104,000)
(5,414,000)
5,414,000
$
-
$
-
Page 25
56
IMRICOR MEDICAL SYSTEMS, INC.
NOTES TO FINANCIAL STATEMENTS
As of and for the years ended December 31, 2022 and 2021
NOTE 10 – Income Taxes (cont.)
Components of deferred income taxes are as follows as of December 31:
Deferred tax assets:
Net operating loss carryforwards
Research and development credit carryforwards
Section 174 Capitalization of R&D
Stock-based compensation
Accrued expenses
Deferred revenue
Fixed assets
Depreciation and amortization
Gross deferred tax assets
Valuation allowance
Deferred tax assets, net
Deferred tax liabilities:
Section 174 Amortization of R&D
Prepaid expenses and other assets
Foreign currency exchange
Fair value change in convertible note
Net deferred tax assets (liabilities)
2022
2021
$
18,119,000
2,280,000
753,000
294,000
372,000
111,000
210,000
-
22,139,000
(21,730,000)
409,000
$
15,481,000
1,943,000
-
222,000
363,000
178,000
-
16,000
18,203,000
(18,074,000)
129,000
63,000
303,000
40,000
3,000
$
-
-
74,000
55,000
-
$
-
The change in the valuation allowance was $3,656,000 and $5,414,000 for the years ended December 31,
2022 and 2021, respectively.
The effective tax rate for the year ended December 31, 2022 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.
The Company has recognized a reserve of approximately $615,000 and $486,000 for uncertain tax positions
which was recorded directly against the valuation allowance as of December 31, 2022 and 2021, respectively.
If recognized, these benefits would favorably impact the effective tax rate.
The tax years from inception through December 31, 2022 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 statements of operations.
Changes in tax laws and rates may affect recorded deferred tax assets and liabilities and the Company’s
effective tax rate in the future.
NOTE 11 – Subsequent Events
For the year ended December 31, 2022, the Company evaluated, for potential recognition and disclosure,
events that occurred through the date the financial statements were available for issuance, February 22, 2023.
On January 6, 2023, the Company obtained a $1.5 million loan from the Bank of North Dakota under the North
Dakota Commerce Department’s Innovation Technology Loan Fund (“LIFT”). The loan matures in five years
and has an interest rate of 0% for the first 3 years and 2% for the next two years of the loan, with monthly
interest payments due.
Page 26
57
ANNUAL REPORT 2022
IMRICOR MEDICAL SYSTEMS, INC.
NOTES TO FINANCIAL STATEMENTS
As of and for the years ended December 31, 2022 and 2021
NOTE 11 – Subsequent Events (cont.)
The loan includes certain restrictions on the use of the funds. The Company may use the funding only to conduct
applied research, experimentation, or operational testing within the state of North Dakota. The funds may not
be used for capital or building investments or for general corporate purposes to support existing operations
outside the state of North Dakota.
As of the date of these financial statements, the Company has not drawn on the loan.
Page 27
58
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 22 March 2023, 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
1. Includes shares held by CHESS Depositary Nominees Pty Limited (100,833,615).
Number of Securities
151,347,625
100,833,615
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
CITICORP NOMINEES PTY LIMITED
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
BNP PARIBAS NOMINEES PTY LTD
SIEMENS MEDICAL SOLUTIONS USA INC
WARREN G HERREID II
BNP PARIBAS NOMS(NZ) LTD
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED - A/C 2
KAHR FOUNDATION
STEVEN R WEDAN
BAUER PRIVATE EQUITY FUND VI LLC
STEVEN R WEDAN & CHERRI J WEDAN JT TEN
MERRILL LYNCH (AUSTRALIA) NOMINEES PTY LIMITED
RONALD D BERGER
PACIFIC PREMIER TRUST CUST FBO JEFFREY J QUINN IRA
BRADICA NOMINEES PTY LTD
ALL STATES SECRETARIAT PTY LIMITED
1
EQUITY TRUST COMPANY CUST FBO KRISTIN KNIGHT IRA
7
18
19
20
BNP PARIBAS NOMS PTY LTD
FLEITMAN KOPPA INVESTMENTS LLC
SHEAR FAMILY GROUP PTY LTD
Top 20 holders
Remaining holders
Total
19,376,860
12,151,749
8,870,165
8,384,150
7,819,431
6,373,066
3,365,707
2,950,988
2,693,720
1,696,555
1,427,373
1,393,726
1,300,000
1,288,462
1,160,421
1,000,000
961,538
928,581
901,530
874,123
84,918,145
66,429,480
151,347,625
12.80
8.03
5.86
5.54
5.12
4.21
2.22
1.95
1.78
1.12
0.94
0.92
0.86
0.85
0.77
0.66
0.64
0.61
0.60
0.58
56.11%
43.89%
100.00%
59
ANNUAL REPORT 2022
Additional Stockholder Information (cont.)
Substantial Holders
The names of substantial holders in the Company and their respective holdings of equity securities (to the best of the
Company’s knowledge) are as follows:
Name
Warren G. Herreid II & KAHR Foundation
Saville Capital
BlackRock Group
Siemens Medical Solutions USA, Inc.
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
10,770,419
10,000,000
8,696,947
8,384,150
% voting
7.12
6.61
5.75
5.54
Number % of issued capital
No. of holders
107,225
745,804
911,438
3,535,643
146,047,515
151,347,625
0.06
0.50
0.60
2.34
96.50
100.00
205
263
116
409
202
1,195
There are 243 investors holding less than a marketable parcel of CDIs or Shares, based on a minimum of A$500 parcel
at A$0.33 per CDI or Share (close of trade price on 21 March 2023)
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
-
9,400
50,000
1,253,640
11,425,338
12,738,378
-
0.07
0.39
9.84
89.70
100
1
2
7
32
15
57
Warrants and Convertible Note
As at 22 March 2023, the Company has 907,141 Warrants and One Convertible Note issued to the K.A.H.R. Foundation
(see ASX announcement dated 19 December 2022 for full details).
Securities Subject to Voluntary Escrow (VE)
Restricted Stocks Granted to Directors
Expiry of VE
Number
May 9th 2023
74,574
May 9th 2024
74,574
May 9th 2025
74,574
May 9th 2026
74,575
Total
298,297
60
ANNUAL REPORT 2022
Placement Shares Issued in September 2022
Expiry of VE
Number
September 16th 2023
7,755,391
Total
7,755,391
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 (i.e., 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.
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.
61
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.
150 Royall Street
Canton, Massachusetts 02021
United States
www.computershare.com
Australian Legal Advisor
Johnson Winter & Slattery
Level 14, 50 Bridge Street
Sydney NSW 2000
Australia
Telephone: +61 2 8274 9555
www.jws.com.au
US Legal Advisor & Patent Attorney
Fox Rothschild LLP
City Center
33 South Sixth Street Suite 3600
Minneapolis, Minnesota 55402
United States
Telephone: +1 612 607 7000
www.foxrothschild.com
Auditor
BDO USA, LLP
800 Nicollet Mall, Suite 600
Minneapolis, Minnesota 55402
United States
Telephone: +1 612 367 3000
www.bdo.com
ASX Code
ASX: IMR
Website
www.imricor.com
62
63
ANNUAL REPORT 2022 64